Powell’s Words Calm Markets, Manufacturing Surveys are Mixed, and Covid Cases are on the Rise Across the Globe

Fed Chairman Jerome Powell spoke before a House panel yesterday where he noted the increase in inflation but remains confident that it will back off as the economy returns to normal. It seems his words were enough to ease markets’ concerns after the CPI surprise. Mortgage applications remain soft relative to last year’s extraordinary levels—yet another sign of “normalization.” Meanwhile, Fed Manufacturing surveys varied for June with the NY Fed’s index surging to a record 4.3. However, many analysts suggest this may be an outlier as the Philly Fed index showed a disappointing fall, making the Empire spike seem a little suspicious. Turning to commodities, oil continues to rebound after OPEC seemingly reached a deal with the UAE while other commodities continue to soar. From a global perspective, the biggest concern still lies with Covid as the new Delta variant continues to ravage Europe, putting daily worldwide cases above 500,000 once again. Here in the states the cases are rising as well and could be signs of yet another wave.

1. So far, inflation has surprised to the upside for most measures. Yet a simple speech by Chairman Powell can calm the markets…

Source: The Daily Shot, from 7/15/21

2. The surge in housing prices, rate increases from earlier in the year, and perhaps waning demand has new mortgage applications down almost 30% from the peak. More “normalization”:

Source: The Daily Shot, from 7/15/21

3. Normalization may also occur at the regional level as different states grapple with the Delta variant and supply issues. The Tale of Two Cities:

Source: The Daily Shot, from 7/16/21

4… So which is “correct”? 

Source: The Daily Shot, from 7/16/21

5. Lumber prices have been normalizing but other commodities are still flying:

Source: The Daily Shot, from 7/15/21

6. Food inflation has been robust:

Source: Bloomberg, 7/15/21

7. OPEC+ aside, U.S. oil production is kicking in again:

Source: The Daily Shot, from 7/15/21

8. Global cases of Covid, led by the highly transmissible Delta variant, are back above 500,000/day.

Source: JHU CSSE, as of 7/15/21

9. Europe is exploding again:

Source: The Daily Shot, from 7/15/21

10. Please get vaccinated! 2/3rds of U.S. States have Covid cases rising again and a whole new wave is starting.  The Delta variant is infecting all age groups. Here is Missouri:

Source: JHU CSSE, as of 7/15/21

11. “And now for something completely different”: Despite the U.S. Women’s soccer team’s success on the field (they actually win a lot), their pay is inexcusably a small fraction of the men:

Source: Statista, from 7/16/21