The U.S. unemployment rate fell below 10% for the first tine since March last month, but a politicized process—and a week-over-week rise in new claims—is undercutting confidence in the recovery. Equities had their own crisis of confidence yesterday with Big Tech leading the major U.S. indices to their sharpest losses in months—is it just a natural (and healthy) pullback or a sign of trouble ahead? And global manufacturing has fully recovered to pre-pandemic levels, but is it sustainable when second waves of infection are taking hold and many economists are bracing for a “double-dip” recession?

The U.S. goods trade deficit surged 11.7% to $79.3 billion in July—the second largest deficit on record—as imports climb back to pre-pandemic levels on recovering consumer demand. Meanwhile, as U.S. equities move to wrap up their best August since the 1980’s today, thanks largely to the tech mega-caps, stocks remain extremely expensive in yet another reminder of 1999. And as the bond market continues to inch back toward “normal,” the sinking USD is giving a boost to commodity prices. Could it ultimately benefit U.S. exports too?

The U.S. goods trade deficit surged 11.7% to $79.3 billion in July—the second largest deficit on record—as imports climb back to pre-pandemic levels on recovering consumer demand. Meanwhile, as U.S. equities move to wrap up their best August since the 1980’s today, thanks largely to the tech mega-caps, stocks remain extremely expensive in yet another reminder of 1999. And as the bond market continues to inch back toward “normal,” the sinking USD is giving a boost to commodity prices. Could it ultimately benefit U.S. exports too?

Durable goods orders—excluding transportation—grew for the third month in a row in July after significant contraction during the early days of the Covid-19 crisis, indicating a renewed openness from consumers to long-term capital investments. While much of the overall durable goods spike was thanks to new auto sales, the 2.4% ex-transportation bump is largely attributable to strong home sales as the suburban migration continues in an enduring work-from-home era trend.

New home sales surged 13.9% in July to their highest level since 2006 in a pandemic-era trend that could spur more overall economic activity. Meanwhile, despite record performance, S&P 500 Index® dividend yields are sinking. Is it all due to Covid or is it a sign of something more?

The S&P 500® Index closed at a new record high on Friday, boosted by stronger-than-expected manufacturing and housing data. The mega-cap outliers are still running the show though as small- and mid-caps—and even ~60% of S&P 500 companies—post losses.

Some interesting charts today…

The NY Fed’s Manufacturing Index backed up a bit in August after a near perfect v-shaped comeback while recovery in other advanced economies of the world also seems to have plateaued. Large-caps continue to outperform mid- and small-caps although that outperformance can almost entirely be attributed to select subset of companies and sectors.

Q2 earnings expectations as a whole had the largest margin of surprise to the upside in the last decade. This itself was not a huge surprise though after seeing some of the largest downward expectation revisions.

While the U. S. unemployment situation is still dire, we hit a milestone this week: for the first time since mid-March, first-time claims for state unemployment insurance fell below one million. U.S. consumer prices have risen more than projected though as states continue to ease lockdown restrictions, and it has some concerned about inflation…