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For the first time from the market channel, the U.S. inventory market And the economy seems to be diverging.
In recent weeks, the immediate spread of coronavirus has caused further blockages or delays in reopening plans in some economic states: California, Texas, and Florida, for example. This is evident in the economic data.
According to OpenTable, stocks of seated eaters have stagnated nationwide, as the slowdown in states where the coronavirus is higher has compensated for a slight improvement in the Northeast.
Data from Homebase, a human resources planning and monitoring tool for small businesses, showed a sharp decrease in the number of hours worked by workers in recent days, with decreases in states dealing with COVID-19 epidemics.
Finally, the first unemployment records, one more often indicator, have stopped improving. After steady falls, the improvement in unemployment demands and, to some extent, the labour market as a whole have stagnated.
Stocks are the economy, however, they are a matrix. So why do markets recover from bad economic news? Several explanations are plausible.
First, there is no shortage of bad news about coronavirus. The market’s willingness to forget about the economic benefits can be attributed to some other budget dose expected by the end of July.
As talks continue in Washington, stimulus measures for U.S. families and businesses, adding some other stimulus controls circular, an extension of progressive unemployment benefits, and more small business loans, are expected to be part of the deal. If the source of income for the economy continues, the market would possibly be willing to look beyond the adverse economic effects now.
Second, medical news about coronavirus is a two-step story, a step backwards. Yes, there’s a lot of depression in the news with reports of a build-up of hospitalizations. But the news turns out to be quite positive about the progression of vaccines and other treatments. If a vaccine is widely distributed late this year or early next year, life would likely return to general a little earlier than expected.
Thirdly, the rest of the world, especially Europe, is fine. While some parts of the United States are slowing to reopen, some parts of Europe are accelerating the procedure as the number of cases continues to decline. The strongest news helped push the dollar down, giving a boost, that is, to publicly traded companies that make the most of their outdoor profits in the United States.
And the relative strength of the rest of the world to deal with the pandemic is also evident in the market, as U.S. stocks perform lower than the rest of the world. The United States is following, but at the forefront, a recovery in the global inventory market.
Finally, it’s so much that the U.S. economy. It is relevant, however, that the sectors most affected by outages (restaurants, movie theaters, retail portions) matter a lot to the U.S. inventory market. Or for the economy.
In fact, the percentage of personal GDP for restaurants, hotels and recreational activities is less than 5%. American stocks are more focused on technology and industry, not videos or restaurants: Apple and Boeing, not AMC or their local mom-pop restaurant.
In short, the U.S. economy is an explanation for why to distrust U.S. actions. But the national economy is only one component of market performance. Turns out there’s enough positive news below the surface for the concentration to continue.
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