“With the Federal Reserve back in business backstopping corporate credit, and printing money to lend to companies directly, it was immediately back to business as usual for the peak-virus, buy-everything herd,” Jeffrey Halley, senior market analyst at Oanda, told clients Tuesday.
The stimulus news is sending stocks higher after a bout of volatility. The S&P 500 finished 0.8% higher on Monday and is up 1.3% in premarket trading.
But that doesn’t mean Wall Street is entirely bullish. Per Bank of America’s June survey of fund managers published Tuesday, investors are past “peak pessimism,” but their optimism is “fragile” and “neurotic.”
The largest number of fund managers since 1998 think the stock market is “overvalued.” Just 37% of those polled are prepared to say we’re in a new bull market, while 53% still call recent stock gains a “bear market rally” and are bracing for another fall.
Oil demand won’t recover for years due to aviation crisis
Oil demand is starting to bounce back from its biggest drop in history, but continued strain on the aviation industry means demand won’t fully recover until at least 2022.
“The aviation industry is facing an existential crisis,” the IEA said. “Jet and kerosene demand will remain under pressure well beyond this year.”
Some improvement: The IEA raised its 2020 demand forecast by nearly 500,000 barrels per day due to a stronger-than-expected pickup in China in March and April, and a sharp rise in demand in India in May. Even so, the 2020 decline will be the worst on record.
See here: The IEA noted that bike lanes have recently been created in more than 150 major cities as an alternative to public transport. But fear of public transit could also lead more people to use cars in the near term.
Investor insight: Brent crude futures, the global benchmark for oil prices, are trading back above $40 per barrel Tuesday as an uptick in demand catches up with recent supply cuts from OPEC and other producers. But oil prices have been unable to push much higher recently, and remain far below where they started the year.
Could this summer yield record job gains?
Job postings remain well below levels seen last year, but there are signs of gradual improvement.
Where jobs are coming back: Indeed said that job postings have rebounded more, after falling less to begin with, in smaller cities and more rural areas. Larger cities with more social distancing measures in place continue to struggle.
Goldman Sachs said in a note to clients this week that it expects “historically strong” job gains this summer, with 2 million or more positions added per month on average.
However, stimulus from Congress will remain crucial to prop up disposable income, according to the investment bank. Support will be needed well into 2021, chief economist Jan Hatzius said, or the recovery could be at risk.
US retail sales for May post at 8:30 a.m. ET.
- US industrial production data for May arrives at 9:15 a.m. ET.
- Federal Reserve Chair Jerome Powell testifies before the US Senate starting at 10 a.m. ET.
Coming tomorrow: Powell’s testimony continues before the US House of Representatives.