Positives
1)Moderna’s coronavirus vaccine will proceed to Phase 2 study. Phase 3 could begin in early summer of 2020.
2)We’ll see how it goes but more states and countries elsewhere are further reopening.
3)Initial claims totaled 3.17mm, 170k more than expected but down from 3.84mm last week. As awful these figures are, it is the least amount of claims since mid March as we’ve likely cycled thru the worst of the forced shutdown. Continuing claims, delayed by a week in its calculation, totaled 22.65mm, above the estimate of 19.8mm.
4)The average 30 yr mortgage rate ticked lower by another 3 bps to a fresh record low of 3.40%. This helped to lift purchases by 5.8% w/o/w and slowed the y/o/y decline to 19% from 20% last week and 31% in the week prior. Refi’s though fell by 1.7% w/o/w and that’s down for a 3rd week although is still up by 210% y/o/y. Refi’s, more so than purchase mortgages, have been more clogged up by the rising forbearance situation and its impact of the origination of new mortgages.
5)While down 93% y/o/y, US airline passenger traffic rose 26% from last week.
6)Chinese exports surprised to the upside with a 3.5% increase y/o/y vs the estimate of a decline of 11%. Call it catch up (particularly to other Asian countries) as Chinese factories come back online and there was a spike in medical supply shipments for reasons we know. Imports though, many of which are used as an input to eventual exports, fell by 14.2% y/o/y, more than the forecast of a 10% decline.
7)Shanghai Disney is reopening, albeit at 30% capacity but it’s a start.
8)An automotive industry association in China said that sales in April rose y/o/y for the first time in two years.
9)Taiwan’s April exports fell 1.3% y/o/y, a bit worse than the estimate of up .6%. Exports to China/Hong Kong jumped by 14% as China continues to reopen but shipments elsewhere to the region fell sharply. Exports to the US had a slight gain of 1.5%. Imports up .5% y/o/y were about as expected.
10)The April UK consumer confidence index remained depressed at -33 vs -34 in March though that is slightly better than the estimate of -37.
11)Can’t wait for this, //www.youtube.com/watch?v=ONOTl3nbXOE.
12)To the mothers out there, happy mom’s day.
Negatives
1)April payrolls shrunk by 20.5mm, awful but not as bad as the estimate of -22mm. A big part of that differential was within manufacturing where 1.33mm jobs were lost vs the estimate of -2.5mm. The household survey saw a loss of 22.37mm and combined with the 6.4mm person decline in the size of the labor force resulted in an unemployment rate of 14.7% from 4.4% in March. The BLS said to add 500 basis points to this if many rightly classified themselves as unemployed rather than just absent from work. The U6 rate is more reflective of this and it jumped to 22.8% from 8.7%. Average wages jumped but only because so many low paying jobs were lost, particularly in leisure and hospitality. Aggregate hours fell sharply.
2)The April ISM services index fell to 41.8 from 52.5 and while not as bad as the 38 estimate it was above that for the wrong reason. It was the jump in Supplier Deliveries which was due to “supply problems related to Covid 19.” This component spiked by 16.2 pts to a record high. Measuring the true state of things was the Business Activity component which fell to 26 from 48. Of the 18 industries surveyed, just 2 saw growth vs 9 in March and 16 in February. Those were the ‘Public Administration’ and ‘Finance & Insurance.’ The balance of 16 saw a contraction. The bottom line from ISM is what we all know, “Respondents are concerned about the continuing coronavirus impacts on the supply chain, operational capacity, human resources and finances, as well as the uncertain timelines for the resumption of business and a return to normality.”
3)The Fed’s balance sheet, while slowing its rate of ascent, for now, stands at $6.7 Trillion, up $65b on the week.
4)The private sector weighted Chinese Caixin services PMI rose slightly to still a contraction level of 44.4 from 43 in March. The hope was it would get back to 50 as things turn back on. Caixin said “In April, the severe export shock on China’s economy had a knock on impact on household income and consumption, as well as business investment. As the recovery of domestic consumption was limited and increased infrastructure spending was not enough to offset the plunge in external demand, the country’s economy continued to decline year-on-year.” The positive within the number is the expectation that things will get better from here. “The gauge for business expectations for the coming 12 months rose noticeably, suggesting that companies grew more optimistic about the prospects of a recovery in consumption.”
5)Singapore’s PMI fell to 28.1 from 33.3 while India’s services index literally collapsed to 5.4 from 49.3. Australia’s services PMI was slightly revised lower to 19.5 from the initial print and that is down from 38.5 in March.
6)The manufacturing PMI’s in Asia fell sharply in April. Here they are: South Korea 41.6 vs 44.2, Taiwan 42.2 vs 50.4, India 27.4 vs 51.8, Indonesia 27.5 vs 45.3, Vietnam 32.7 vs 41.9, Malaysia 31.3 vs 48.4 and the Philippines 31.6 vs 39.7.
7)The Eurozone final read for services was 12 from 11.7 initially but down from 26.4 in March and 52.6 in February.
8)The April Eurozone manufacturing PMI was revised slightly lower to 33.4 from the 1st print of 33.6 and down from 44.5 in March “reflecting a combination of factors including widespread factory closures, slumping demand and supply shortages” due to you know what.
9)The UK services PMI was revised to 13.4 from the 1st April print of 12.3 but that is down from 34.5 in March and 53.2 in February.
10)Hong Kong’s economy lost 8.9% y/o/y in Q1 vs the estimate of down 6.5%.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.