/ 20 Jul 2020
First week of US Earnings. In the first week of earnings season for 2Q 2020 there were a total of 28 companies in the S&P 500 that reported earnings, the majority of which were in the financial sector (~60%). However, the largest company by market capitalization to report earnings was Johnson & Johnson. For the companies reporting last week, revenues in total were 4.5% better than expected and earnings came in approximately 25% better than expected.
/ 13 Jul 2020
New Fed’s Stress Test Restrics Banks’ Dividends. The Federal Reserve (Fed) recently released the results for the 2020 stress tests for the 33 largest US-based bank holding companies. The Fed does this annual test as part of the regulations that were passed after the 2008 financial crisis. The Fed evaluates the capital adequacy and has a forward-looking component to see if the banks have enough capital to absorb losses under different economic scenarios. The Fed also evaluates the banks' plans for returning capital in the form of dividend payments and share repurchases.
/ 6 Jul 2020
Divergence of Pandemic and Credit Markets. Returns in risky markets such as CCC bonds and S&P500 have been anticipating COVID cases in the US for most of this year, displaying a clear negative relationship (i.e. higher returns ahead of falling COVID cases). These risky markets correctly rebounded in late March, anticipating a decline in COVID cases during April and May. Returns in CCC bonds and S&P 500 priced in a resurgence in COVID cases in early June, which effectively took place a week or so later.
/ 30 Jun 2020
Lost in the Post ... Looking at the latest US Labour Market data, one could easily be forgiven for thinking that someone neglected to tell the workers of America that the economy had, after a brief interlude, got back to normal extraordinarily quickly following the disruption of the Covid-19 shutdown. The US benefits system is both complicated, variable across States, and arcane, but the following table shows just how many Americans were receiving Government benefits (or in the processing pipeline for benefits) in mid-June.