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?
1. Covid makes the trade wars seem like a distant memory, but our deficit in goods is back near the record…
![](https://blog.investbcm.com/hubfs/8-31%20Covid%20makes%20the%20trade%20wars%20seem%20like%20a%20distant%20memory-png.png)
Source: The Daily Shot, from 8/31/20
2. The rate of ascent for the mega-techs keeps getting steeper. What is a sustainable?
![](https://blog.investbcm.com/hubfs/8-31%20The%20rate%20of%20ascent%20for%20the%20mega-tech-png.png)
Source: TheChartStore.com, from 8/31/20
3. Yes, Covid has thrown earnings into unknown territory, but as earnings expectations regain a solid footing, reality has to set in sometime… It does feel like 1999 but no Y2K….
![](https://blog.investbcm.com/hubfs/8-31%20Yes,%20Covid%20has%20thrown%20earnings%20into%20unknown%20territory-png.png)
Source: The Daily Shot, from 8/31/20
4. The Fed’s new policy of allowing inflation to run a bit has helped yields steepen at the long end and furthers along the “normalizing” of the shape of the curve…
![](https://blog.investbcm.com/hubfs/8-31%20The%20Feds%20new%20policy%20of%20allowing%20inflation-png.png)
Source: TheChartStore.com, from 8/31/20
5. “Yield starvation” has helped push junk bonds back to pre-pandemic highs. If only the pre-pandemic conditions and bankruptcy levels were the same…
![](https://blog.investbcm.com/hubfs/8-31%20Yield%20starvation%20has%20helped%20push%20junk%20bonds-png.png)
Source: TheChartStore.com, from 8/31/20
6. The USD is still falling, If it takes out the 2017 lows, are the 2014 levels in play?
![](https://blog.investbcm.com/hubfs/8-31%20The%20USD%20is%20still%20falling-png.png)
Source: TheChartStore.com, from 8/31/20
7. As the USD weakens, commodity prices get a tail wind…
![](https://blog.investbcm.com/hubfs/8-31%20As%20the%20USD%20weakens-png.png)
Source: TheChartStore.com, from 8/31/20
8. Industrial metal prices are at pre-pandemic levels…
![](https://blog.investbcm.com/hubfs/8-31%20Industrial%20metal%20prices%20are%20at%20pre-pandemic%20levels----png.png)
Source: The Daily Shot, from 8/31/20
9. Solid PMI data in China almost seems “too perfect”, similar to their Covid numbers.
![](https://blog.investbcm.com/hubfs/8-31%20Solid%20PMI%20data%20in%20China%20almost%20seem-png.png)
Source: The Daily Shot, from 8/31/20