Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of July 11–17, 2020.


The week that was

  • On Monday, stocks were up handsomely, hitting a post-March high—and then they took a nosedive after California’s governor said the state’s bars, restaurants, and movie theaters need to stop indoor service. Stocks recovered with encouraging news on different vaccines and treatments for COVID-19. It looks like there may be an effective treatment for people who contract the disease and an effective vaccine to help prevent contracting it. That could help spur the economic recovery along.



  • China’s second-quarter gross domestic product (GDP) increased 11.5% quarter over quarter and is now up 3.2% year over year. Industrial production rose 1.3% month over month in June while retail sales rose 1.34%. The year-over-year numbers are still negative, but I think the month-over-month numbers are much more informative when trying to gauge the direction and strength of the recovery. The improvement in industrial production is slowing a bit, but it looks like the retail sales numbers are gaining some momentum.
  • In June, U.S. industrial production rose 5.4%, manufacturing output increased 7.2%, and retail sales rose 7.5%. These results surpassed expectations.
  • In the week of July 6–10, the U.K. launched another round of stimulus. This past week, France unveiled a stimulus program composed of tax cuts for companies and incentives to support youth employment.
  • The Bank of Canada left its policy stance unchanged. It projects Canada’s GDP will reach pre-coronavirus levels in 2022.
  • The U.S. Federal Reserve’s Beige Book—a collection of qualitative information around the country—said economic activity has increased but remains well below the pre-coronavirus levels. While economic activity has increased, the report highlights that the outlook is still highly uncertain. The report said that businesses are having difficulty bringing back workers because of “health and safety concerns, childcare needs, and generous unemployment insurance benefits.”
  • The European Central Bank kept the stance of monetary policy steady. President Christine Lagarde said, “The Governing Council remains fully committed to doing everything necessary within its mandate to support all citizens of the euro area through these extremely challenging times.”



  • China announced it will sanction U.S. officials, including Senators Marco Rubio and Ted Cruz. The sanctions are viewed as a retaliation against the U.S.’s sanctions against Chinese officials for China’s treatment of ethnic minorities in the Xinjiang region. The U.S. said it rejects China’s claims to territories in the South China Sea, an issue that has been popping up on the radar every now and then as China claims or builds islands in the area. Also, President Trump ordered an end to Hong Kong’s special status with the U.S., and he signed legislation that sanctions Chinese officials who crack down on political dissent in Hong Kong.
  • California’s governor said indoor operations of bars, restaurants, and gyms had to close thanks to more coronavirus cases. The L.A. and San Diego school districts said fall classes would start online.


The week to come

  • Earnings season continues. Going into earnings season, for the S&P 500 Index on a year-over-year basis, earnings were expected to fall more than 44% and sales were expected to fall 11%, according to FactSet.
  • Existing home sales in the U.S. for June will be released. The consensus is calling for a big bounce from the May numbers given that activity picked up after the shutdowns ended and interest rates stayed incredibly low.
  • Friday is purchasing managers’ Friday, with data firm IHS Markit Ltd. releasing a number of preliminary readings of purchasing managers’ indices for July. The hope is that economic activity is gaining some traction rather than slipping. Yes, hope is not an investment strategy, but neither is despair. The reality is that while coronavirus cases might be rising in the U.S., other countries and regions have been seeing continued low case counts, and their economic activity may be accelerating.


Thanks for reading, stay informed!



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