1)Gilead’s remdesiver shows some promise. Vaccine hope with the story out of Oxford University that starting at the end of May they will be doing human trials on 6,000 people with an inoculation that proved successful on monkeys. Also, news on the testing front is getting better as CVS and Walgreens give news on how they will role out its testing processes at its pharmacies. Walmart and Kroger are rolling out its testing capabilities as well.
2)We’ll see how it goes but more states open up parts of their economy. WEAR A MASK!
3)The Fed expanded the eligibility requirements of companies wanting to tap the Main Street Lending Program.
4)With another 2 bps down tick in the average 30 yr mortgage rate to 3.43%, a fresh record low, buyers of homes stepped up for a 2nd week as purchase applications rose 11.6% w/o/w. They are still down 20% y/o/y.
5)The April state sector weighted Chinese manufacturing and services composite index rose a touch to 53.4 from 53 with a bounce in services to 53.2 from 52.3 offset by a drop in manufacturing to 50.8 from 52. Services were a bit better than expected while manufacturing was slightly less. Much of the weakness in manufacturing not surprisingly was the export side which fell sharply to 33.5 from 46.4. Within services, new orders got back above 50 and business activity expectations rose to 60.1 from 57.3.
1)The April ISM manufacturing index fell to 41.5 from 49.1 but that was better than the estimate of 36. The underlying details though matter here. The main reason for the ‘beat’ was the 11 pt jump in Supplier Deliveries to 76 and that is because of the broken supply chains. ISM said on this: “Suppliers continue to struggle to deliver…The Covid 19 pandemic was the primary cause of global and domestic supply chain disruptions, with suppliers impacted by plant shutdowns, transportation challenges and the continuing difficulty in importing parts and components.” Elsewhere, new orders fell to 27.1 from 42.2, backlogs declined by 8.1 pts to 37.8, export orders dropped to 35.3 from 46.6 and employment got down to just 27.5 from 43.8. Inventories rose and imports were up slightly to 42.7. Prices paid fell by 2.1 pts. In terms of breadth of the weakness, only 2 saw growth vs 10 last month, and that was in paper products (all those boxes used for e-commerce) and food/beverage & tobacco products. 15 experienced a contraction vs 6 last month.
2)Initial claims totaled 3.84mm, above the estimate of 3.5mm but down from 4.42mm last week, 5.24mm the week before that and 6.62mm the week before that. The 4 week average is now 5.033mm vs 5.79mm the week prior. Continuing claims, delayed by a week in its calculation, now total 17.9mm vs 15.8mm the week before.
3)The March income and spending data was weaker than expected. Spending in particular fell 7.5% m/o/m, more than the forecast of down 5.1% which means Q1 GDP estimates will be revised lower. Both headline PCE and the core inflation rate both fell m/o/m but are still up 1.3% and 1.7% y/o/y respectively.
4)Pending home sales in March fell 20.8% m/o/m, well worse than the estimate of down 13.6%.
5)Refi’s fell 7.3% w/o/w but are still up 218% y/o/y. The growing level of forbearance continues to cause problems in the mortgage market and is now impacting the volume of refi’s.
6)US GDP in Q1 contracted by 4.8% q/o/q annualized. The estimate was down 4%. Personal spending led the way with a 7.6% decline, more than the estimate of a 3.6% drop as spending on durable goods contracted by 16.1% and that on services by 10.2%. Spending on nondurable goods, think toilet paper, hand sanitzers and food at the supermarket, jumped by 6.9%. Non residential fixed investment fell 8.6% from Q4 with particular weakness in structures and equipment spending. IP spending hung in real well, coming in little changed vs Q4. Trade was a boost to GDP but only because of the quirky math of it. Imports plunged by 15.3% due to obviously weak demand and damaged supply chains but that in turn actually lifts the GDP calculation. Exports fell by 8.7%. Inventories were a drag of 50 bps on GDP. Government spending was really the only positive as Federal non defense spending rose by 3.1% while state and local budgets are completely squeezed and spending here was flat.
7)US consumer confidence in April sunk to 86.9 from 118.8 in March which was down from 132.6 in February. The Present Situation plunged to 76.4 from 166.7, the largest one month move on record. But there is hope that it can’t get any worse and things will get better as the economy reopens as the Expectations component rose to 93.8 from 86.8 though still down from 108.1 in February. Interestingly, one year inflation expectations jumped to 5.3% from 4.5%. Spending intentions were all lower.
8)South Korea’s exports fell 24.3% y/o/y, a touch more than the estimate of a 23% decline. Imports were lower by 15.9% vs the forecast of a 14% drop. The economy ministry said “Demand in export markets has plunged amid lockdowns and plant shutdowns in the US and Europe, while China’s economic recovery continues to be protracted. This triggered a decline in exports across the board.” There was particular weakness in auto’s and auto parts and also smartphone exports which fell 43.6% y/o/y.
9)Australia’s manufacturing PMI was revised to 44.1 from 45.6 initially and down from 49.7 in March.
10)Japan’s manufacturing index was changed to 41.9 from 43.7 in the first print and that is down from 44.8 in March and 47.8 in February.
11)The private sector weighted Chinese manufacturing index for April fell to 49.4 from 50.1. The estimate was 50.5. Caixin said simply “China’s economic recovery was hindered by shrinking foreign demand, despite the domestic epidemic being largely contained.”
12)Japan’s consumer confidence index fell to just 21.6 from 30.9 in March. That was 6 pts below the forecast and the lowest print on record dating back to 1982.
13)The BoJ said they are going full on monetization and nationalization of the JGB market as they took the 80T yen annual limit on asset purchases. They will be buying more CP and corporate bonds along with more ETF’s.
14)In the UK, its manufacturing PMI was lowered to 32.6 from 32.9 initially and that is down from 47.8 in March and 51.7 in February.
15)The number of unemployed in Germany in April skyrocketed to 373k, well more than the estimate of up 74.5k and the unemployment rate jumped to 5.8% from 5%.
16)The initial GDP read for the Eurozone in Q1 saw a decline of 3.8% q/o/q (14.4% annualized) as expected with the month of March reflecting the shutdowns.
17)The April Eurozone CPI rose .4% y/o/y, above the estimate of up .1% and the core rate rose .9% y/o/y, above the forecast of up .7%.
18)The April Economic Confidence index for Europe fell to 67 from 94.2. That was 6 pts below the estimate. Weakness was weak across the board with sharp drops in all the components of manufacturing, services, consumer, retail and construction confidence.