The economy is showing more signs of life as the end of Q2 approaches. The Chicago Fed National Activity Index has crossed sharply into growth territory, beating expectations by a more than 12 point gap, and manufacturing activity is following a similar trajectory. Meanwhile, new home sales may have surged 16.6% in May, but existing home sales have plummeted nearly 27% year-over-year and inventories of existing homes for sale are hovering at multi-year lows. Competition among apartment-dwellers turned house-hunters looks poised to remain stiff as the pandemic wears on. And the S&P 500® Index again owes the bulk of its performance to just five companies (we’re sure the names won’t surprise you) as 495 of the 500 are still struggling at a weighted average of -8%. The Nasdaq though has been leaving the other major indices in its dust. The index just hit another record high and the gap between it and the S&P and Dow is the largest it’s been since 1983. But could a declining USD be enough to undermine its success? Turning to the international stage, the European recovery looks to still be going strong, but despite its success in managing COVID-19, Japan is struggling. Will the island nation be further battered by COVID-induced disruptions to the supply chain?
1. More good news from the Chicago Fed…
![](https://blog.investbcm.com/hubfs/6.24%20More%20good%20news%20from%20the%20Chicago%20Fed-1.png)
Source: WSJ Daily Shot, from 6/23/20
2. U.S. manufacturing enjoyed a solid rebound and is just a hair below expansion mode (greater than 50)!
![](https://blog.investbcm.com/hubfs/6.24%20U.S.%20manufacturing%20enjoyed%20a%20solid%20rebound-1.png)
Source: WSJ Daily Shot, from 6/24/20
3. The regional Fed surveys continue to show recovery….
![](https://blog.investbcm.com/hubfs/6.24%20The%20regional%20Fed%20surveys%20continue%20to%20show%20recovery-1.png)
Source: WSJ Daily Shot, from 6/23/20
4. Sales are down partly due to supply of homes being down…
![](https://blog.investbcm.com/hubfs/6.24%20Sales%20are%20down%20partly%20due%20to%20supply%20of%20homes%20being-2.png)
Source: WSJ Daily Shot, from 6/23/20
5. Despite increased demand to move out of large apartment buildings, many homeowners don’t want the public in their homes during a pandemic…
![6.24 Despite increased demand to move out of large buildings-2](https://blog.investbcm.com/hs-fs/hubfs/6.24%20Despite%20increased%20demand%20to%20move%20out%20of%20large%20buildings-2.png?width=540&name=6.24%20Despite%20increased%20demand%20to%20move%20out%20of%20large%20buildings-2.png)
Source: WSJ Daily Shot, from 6/23/20
6. Within the S&P 500, 5 stocks are up 23% while the remaining ~495 are down 8%.
![6.24 Within the S&P 500-2](https://blog.investbcm.com/hs-fs/hubfs/6.24%20Within%20the%20S&P%20500-2.png?width=456&name=6.24%20Within%20the%20S&P%20500-2.png)
Source: WSJ Daily Shot, from 6/24/20
7. The tech-heavy NASDAQ has outperformed the S&P 500 by 20% over the past year…
![](https://blog.investbcm.com/hubfs/6.24%20The%20tech-heavy%20NASDAQ-1.png)
Source: WSJ Daily Shot, from 6/24/20
8. It is hard to see what might derail the tech juggernaut. Might it be a declining USD?
![](https://blog.investbcm.com/hubfs/6.24%20It%20is%20hard%20to%20see%20what%20might%20derail%20the%20tech%20juggernaut-1.png)
Source: WSJ Daily Shot, from 6/23/20
9. Does the emperor have any clothes? The Fed now owns almost 40% of all U.S. Treasury bonds with maturities of 10-30 years…
![6.24 Does the emperor have any clothes-2](https://blog.investbcm.com/hs-fs/hubfs/6.24%20Does%20the%20emperor%20have%20any%20clothes-2.png?width=531&name=6.24%20Does%20the%20emperor%20have%20any%20clothes-2.png)
Source: WSJ Daily Shot, from 6/23/20
10. Europe also enjoyed a significant economic recovery:
![](https://blog.investbcm.com/hubfs/6.24%20Europe%20also%20enjoyed%20a%20significant%20economic%20recovery-1.png)
Source: WSJ Daily Shot, from 6/23/20
11. However, Japan, which so far has largely avoided Covid, is still reeling…
![](https://blog.investbcm.com/hubfs/6.24%20However,%20Japan,%20which%20so%20far%20has%20largely%20avoided%20Covid-1.png)
Source: WSJ Daily Shot, from 6/23/20
12. Covid is not just infecting our seniors…
![6.24 covid is not affecting seniors-2](https://blog.investbcm.com/hs-fs/hubfs/6.24%20covid%20is%20not%20affecting%20seniors-2.png?width=618&name=6.24%20covid%20is%20not%20affecting%20seniors-2.png)
Source: WSJ Daily Shot, from 6/24/20