Observations from July.....
On the back of very strong 2nd quarter corporate earnings in the US, equity markets in July continued their march higher allowing both the S&P 500 and ASX200 to make fresh all time highs. America’s largest bank by assets JP Morgan Chase kicked off earnings season with numbers well ahead of expectations but perhaps more instructive than an earnings beat was confirmation that economic recovery is officially underway.
Spending on debit and credit cards at the bank were up 45% on the 2nd quarter of 2020, spending on travel and entertainment is back, mortgages are up 44% from a year ago and thanks to an infusion of government stimulus and vaccines, loan losses just didn’t materialize.
If your eyes aren’t watering yet, Amazon reported its third straight quarter of revenue greater than $100 billion and on a gross margin of 42.5%, Apple posted revenue of $89 billion and rubber stamped a stock buyback worth $90 billion.
However, as the exuberance of reopening fades and April stimulus cheques run dry, it would appear that growth may have peaked and may now track at a more moderate pace. This allowed some heat to come out of the AUD which was down just over 2% for the month and took some sting out of US 10-year treasury yields that collapsed from 1.5% to 1.2%.
COVID-19 continues to deliver no shortage of interesting statistics to ponder. Despite a huge surge in new daily confirmed COVID-19 cases, activity remains firm. Overall mobility remains near a pre-pandemic all time high with air travel and seated dine-in activity, just 5% below where they were in 2019. It also seems clear that in the US, vaccinated states are doing much better than those with lower vaccination rates. Sounds logical.
|
