This will surely be a bad scene, the numbers have fallen off a cliff!

There Will Be No Second Wave

Jun. 22, 2020 7:34 AM ETDDM, DIA, DOG…103 Comments33 Likes


  • This is a weekly series focused on analyzing the previous week’s economic data releases.
  • The objective is to concentrate on leading indicators of economic activity to determine whether the economy is strengthening or weakening, and the rate of inflation is increasing or decreasing.
  • This week we examine weekly unemployment claims, retail sales, industrial production and housing starts.
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Unemployment Claims

Weekly claims were 200,000 higher than expected last week at 1.57 million, and if we include the self-employed receiving Pandemic Unemployment Assistance, the number increases to 2.2 million. That is virtually unchanged from the week before. Notable is the fact that the number of workers applying for Pandemic Unemployment Assistance rose to 760,000, bringing the total close to ten million.

The greater concern is that those continuing to receive unemployment benefits is not declining, despite the 2.5 million that returned to work, based on the most recent jobs report. Jobs are being lost at nearly the same rate that the temporarily unemployed are returning to work. If we include all assistance programs, continuing claims are 29.1 million as of May 30, which is down from 29.5 the week before. This does not reflect a V-shaped recovery.

Retail Sales

Retail sales bounced back sharply in May, rising 17.7%, which was a record number. Yet it follows record declines of 14.7% in April and 8.2% in March, resulting in year-over-year sales still down 6.1%. The rebound should have been expected, given the reopening of most state economies, several of which now look to have been extremely premature. There was huge pent-up demand for goods and services after weeks of shutdowns, and many consumers were flush with found money from the stimulus checks.

Those categories realizing the greatest increase in sales were the same ones that suffered the greatest decrease in sales during the shutdown. They include clothing and accessories, furniture and home furnishings, and motor vehicles and parts. The improvement in retail sales should wane in the months ahead after stimulus checks have been spent and enhanced unemployment benefits end. It will take many months, if not a year, for retail sales to increase on an annual basis again.

Industrial Production

Industrial production rose 1.4% in May, which stops the bleeding from the 12.5% decline in April, but it remains down 15.3% from a year ago. The utilization rate rose slightly to 64.8%, but that is 15% below its average. The entire increase was a result of auto manufacturing output. This doesn’t look like a V-shaped recovery, but more like a falling knife.

Housing Starts

New home construction rose 4.3% in May to an annual rate of 974,000, which was well below estimates for a 1.13 million rate. Still, this is a step in the right direction, aided by the economic reopening and record low mortgage rates. On the brighter side, permits to build new homes rose 14.4% to 1.22 million, which bodes well for a recovery in the sector moving forward.


The greatest risk to our economic recovery was that a second wave of coronavirus would hit us in the fall, forcing states to shut down a second time to contain it. That is no longer a risk, because a second wave is out of the question. The first wave never ended. Despite the epicenter of the pandemic being fully contained in New York, the seven-day average of new cases is now on the rise nationwide. This is due to the premature openings in states like Florida, Texas, Arizona and the Carolinas.

This surely won’t stop the younger crowd from crowding into bars and restaurants or partying on the beaches, but it will force the older crowd to curtail their activities, and they are the ones with the money. For an economy that is 70% dependent on consumer spending, that is a death knell.

To that point, Bloomberg recently pointed out that the richest quarter of Americans cut their spending the most during the pandemic.

This is not only because the richest 25% do most of the spending, because they also reduced it by a much larger percentage. The wealthy have cut back on credit card spending by 17%, while middle income cut back 10% and lower income just 4%. Therefore, so long as the coronavirus continues to rage on, the only way we will see greater improvement in spending will be to have a vaccine and treatment that restores confidence in this demographic. Based on the seven-day case count, we are moving in the wrong direction.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Lawrence Fuller is the Managing Director of Fuller Asset Management, a Registered Investment Adviser. This post is for informational purposes only. There are risks involved with investing including loss of principal. Lawrence Fuller makes no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made by him or Fuller Asset Management. There is no guarantee that the goals of the strategies discussed by will be met. Information or opinions expressed may change without notice, and should not be considered recommendations to buy or sell any particular security.33 Likes103 CommentsLikeShareCommentFollow SPY to get breaking news and analysis alertsFollow

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Comments (103)



HoofleDoofleComments (43)Today, 9:21 AMWhat about, say Germany or China, where a second wave is progressing? We just focusing on the US because it’s a completely self-dependent economic envelope?ReplyLike(1)

nestor7Comments (2.43K)Today, 9:17 AMDespite or perhaps in spite of the “experts” attempting to gain control of the situation, there is a tremendous amount of disinformation and propaganda driven information and total confusion between the two. It may be decades, if ever, before we get the truth about this event. And who can we trust to be honest? My trusted sources have dwindled to a handful or two, at best.There will be no safe vaccine for another 4-5 years, if at all. It usually takes 5-10 years to develop safe vaccines. Many current corona viruses (there are over 30) and other diseases have no vaccines after years of trying to make them. But in any event, Wall Street will go on its merry way because with the endless backing of the Fed, the top 10% will be well cared for. The top 10% own over 80% of stocks.ReplyLike

JohnB InvestorComments (821)Today, 9:16 AMYou conclude that there will be no second wave because the first wave never ended. First, that’s not true if you look at daily deaths, not at all. They’ are way way down, from a 7 day avg of 2000 plus to under 650. Now whether the “second wave” will happen or not depends on whether the higher numbers of new cases are due to actual increases in the virus or in the testing, and that information, despite all my efforts, is as of yet impossible to know.ReplyLike(3)

frogmaierComments (6.09K)Today, 9:13 AM”there sill be no second wave”
“He who is fortune teller often loses a fortune”!!!ReplyLike

John NaccarelliComments (943)Today, 9:08 AMthe virus will spread, especially in urban areas, and there will be no shutdowns as done before. I can’t predict the outcome economically, nor do I have a strong opinion about the decision to shutdown or let the spread of the disease run its course. I will say (IMO) that there will be a second wave of unemployment filing starting this month and through July as well as bankruptcies at smaller businesses once the PPP loan money runs dry.ReplyLike(1)

kevinconwayComments (5.96K)Today, 9:07 AMThis article from Tokyo on response time and restrictions is the global reality. “The total number of deaths in the U.S. has topped 110,000. A study by Colombia University pointed out that if stringent policies had been implemented a week earlier in March, the country would have saved at least 36,000 lives.”…%%user_id%%ReplyLike

JPVComments (632)Today, 9:07 AMI am amazed by you statement that there will not be a second wave!The first wave is clearly not yet finished but a second wave is a high probability, especially if the the restrictive measures are abandoned too early or safety measures are not being respecten also after the lockdown.Your opinion on this viral infection does not reflect well on your opinions about investing even if you know something more about that subject.Guesswork is dangerous, especially if it is about advising people how to invest their money.
We know and learned that from the banks!ReplyLike

sarichterComments (1.10K)Today, 9:17 AM@JPVHave you not checked out other countries? There are many that have contained the spread infinitely well without having to go full alarmist and commit to shutdowns.ReplyLike

kimbillroComments (17.99K)Today, 9:07 AMThe first wave could draw to an end in August.ReplyLike

MOT54Comments (28)Today, 9:04 AMContinued first wave or second wave not needed for stock market to fall. Economic damage has already been done and will take years to repair. The gov/fed moves have airs of desperation. I actually hope people continue to believe in them.ReplyLike

Exile of the MainstreamComments (10.61K)Today, 9:03 AMClick bait title was very good.ReplyLike(2)

Contango82Comments (4.80K)Today, 8:50 AMJust look at Sweden, the virus will peter out by itself. More cases is due to more testing. Once the young are immune, the virus has nowhere to go. One “big” wave is very bullish as it guarantees no second lockdown. The cure can not be worse than the disease.ReplyLike(10)

Andrej ChernyshComments (70)Today, 8:53 AMDo you realize that Sweden has a death/1Mpopulation ratio that is double that of the US? US has already lost more to C19 than World War One and you want this number to double again?ReplyLike(4)

Stock nomadComments (457)Today, 8:58 AM@Andrej Chernysh do you realize that Sweden’s mortality dramatically down for weeks now? Do you realize that they’re probably soon over the whole thing with herd immunity while rest of the world is still in panic. It is a way too early to pass judgement on that model right now. We can do that in a few months time…ReplyLike(7)

Vinci1452Comments (147)Today, 9:12 AM”’Sweden ‘wrong’ not to shut down, says former SWEDISH state epidemiologist”’ the news from Sweden….they are suing the government because of all the horrible and unnecessary elderly deaths caused by the ‘no lockdown’ policy………the ‘SWEDEN GOT IT RIGHT’ nonsense is hyped by the right wing media machine in order to open the economy without precautions so trump has a chance of winning in Nov….its that simple…the virus is NOT petering out any time soon….before its over, we will have half a million deaths….not to worry…they are mostly elderly, black and Latinowe are truly an IDIOCRACY…led by a complete and total idiot….SADReplyLike(1)Load More Replies

fdoComments (21)Today, 8:49 AMI am an ER doctor in Texas. We are finally seeing lots of cases here. I honestly never seen anything like this before…ReplyLike(13)


chadlupkesComments (3)Today, 8:48 AMI think “wave” might be the wrong analogy. This is a tsunami, and just because it peaked doesn’t mean that the damage is over. We’re going to be seeing the new infection rate continue to decrease over time, with some spikes, but we’re not going to see new infections go to minimal numbers for months. I agree with your conclusion. We’re in deep trouble.ReplyLike(3)

Phil DumfeeComments (653)Today, 8:44 AMDeath rates are dropping. Virus is mutating to an asymptomatic political allergy.ReplyLike(7)

jbspryComments (21)Today, 8:42 AM[…the seven-day average of new cases is now on the rise nationwide. This is due to the premature openings in states like Florida, Texas, Arizona and the Carolinas.]I take issue with that statement.
It stands to reason that, as more testing is done, there will be “more cases” that is, more identified persons exposed. But exposure does not mean illness; the question is not total cases of exposure but total hospitalizations and deaths. What are the statistics on those questions?
I don’t accuse the author of obfuscation, but certainly there is a lot of politically-motivated obfuscation going on. We need to strive to understand the issue and the data clearly.ReplyLike(6)

edaskewComments (1.07K)Today, 8:50 AM@jbspry It’s the percentage of tests that are positive you need to look at. It had been down to about 5%, now rising. When it gets to 10% it’s out of control.ReplyLike(3)

locum2Comments (126)Today, 9:12 AM@jbspry, no doubt the headline number of cases tells a limited story. I lost confidence in the health authorities when many backed large BLM gatherings. A more interesting analysis might be the number of new cases per number tested over time.ReplyLike

fawleyComments (4)Today, 9:18 AM@jbspry I’ve seen plenty of reports that when antibody testing is positive, people are being added to the “new cases” counts, no matter if they have symptoms or not, no matter how long ago they may have been exposed.ReplyLike(1)

I_Am_The_WalrusComments (389)Today, 8:42 AMBeing stuck inside or wearing masks all the time has accomplished one thing for sure; providing humans with a compromised immune system. Read up on how cases of adult chickenpox have continued to grow ever since a chickenpox vaccine stopped traces of the virus from naturally occurring in the air and strengthening the human immune system. Oops!Once humans start going out more and stop wearing silly masks, humans will see a rise in many illnesses, for a short time.But what scares Bill the most is a fully restored immune system, one immune to covid 19 the most scary of all!ReplyLike(1)

Stock nomadComments (457)Today, 8:39 AMI think the Covid panic should stop. New cases are sharply increasing worldwide not only in the US but death is also decreasing in the meantime. You dont have to be a genious to realize that the virus is actually mutates to a more stable cold virus as it was expected. It is not nearly as deadly as it was a few months ago in Italy, NYC and China. So before everyone is bunkering for another year let us use some common sense and treat this as it is. A more like strong flu virus rather than a deadly disease by now.ReplyLike(6)

dawgydaddyComments (711)Today, 8:54 AM@Stock nomad Cases up and deaths down means one thing – the newly infected people haven’t had time to die yet. And the case reduction from distancing and shutdowns is just now hitting the death rates. In other words, it’s evidence that we reopened the economy too soon IF the goal was to prevent the spread of the disease (clearly it wasn’t)ReplyLike(4)

Stock nomadComments (457)Today, 9:02 AM@dawgydaddy yeah for a month?…interestingly in NYC few months ago they started dying really quickly. US numbers are pretty much over 20,000 cases continuously yet the the deceased are going down. Not much less cases in the past 1-2 months yet I dont see the mortality growing actually the…ReplyLike

kbabaComments (8.84K)Today, 9:03 AM”You dont have to be a genious to realize that the virus is actually mutates to a more stable cold virus as it was expected.”It’s the poetry of the universe when someone says a dangerous ignorant thing that implies their superior perspective on something and misspells genius in the process.Lots and lots of people are still dying worldwide. Most of the 50 million Spanish flu deaths happened in the Autumn.ReplyLike(1)Load More Replies

ukpdamComments (371)Today, 8:37 AMI ran some stats for PA through June 19th separating covid deaths in nursing homes from covid deaths in the general population. So far about 10% of PA’s nursing home patients have died with covid as a contributing factor. In the general population outside of nursing homes about 0.02% or 2 out of 10,000 persons have died. It is useful to keep this vast difference in death rates and risk of death in mind. Essentially what we have here is a kick ass case of the flu.ReplyLike(7)

shaner1Comments (1.32K)Today, 9:05…ReplyLike

Smacketh DownethComments (16)Today, 9:21 AM@ukpdam Obviously you have no idea about the difference between a “flu” and “Covid”. Might want to perform some simple google searches to find out more and educate yourself. Scary part is 5 folks liked your comment. Put aside confirmation bias when doing your “stats” as well please.ReplyLike

KingofKingsComments (1.38K)Today, 8:36 AMWhenever I hear actual vs. Estimates and actual does not meet, then the estimate was wrong. Period. Foolishness to estimate what’s going to happen in the future and even more foolish to buy and sell stocks based on whether housing or unemployment met or didn’t meet. Rant over.ReplyLike(1)

dmaurici51Comments (14)Today, 8:36 AMUmmm. The first wave ended with the flattening. It bottomed last week. The second wave starts with the current small increases of newly infected followed by increases in the number of daily dead. The second wave will be acknowledged between now and October, depending on the acceleration.As we approach 40% SARS-CoV-2 penetration, unemployment will increase as 20% of infections result in severe Covid-19. Without effective treatment, Debilitating illness will last a minimum of 3 weeks for those between 40 and 65. Two to five percent will be unable to return to work due to post-illness lung disfunction or death. These are the simple facts of the pandemic.ReplyLike

kevinconwayComments (5.96K)Today, 9:12 AM@dmaurici51 This virus is far from simple…but thanks for your “simple facts”.ReplyLike

henry133Comments (20)Today, 8:29 AMSadly you are right Lawrence. There is zero hope of a vaccine in 2020 and there may never be one despite all the efforts worldwide. They have tried to find one for AIDS for 40 years without success.We will have to live with this for many a year probably and that will impact behaviour, jobs, investment and incomesReplyLike(4)

Arnold LayneComments (137)Today, 8:37 AMYour first paragraph is most likely true, your second is just an extension of your negative viewpoint.ReplyLike(2)

locum2Comments (126)Today, 9:17 AM@henry133, actually history shows differently. Throughout time, there have been waves of outbreaks of cholera, typhoid, tuberculosis, polio, and other plagues. Not to mention deadly flu strains.ReplyLike

pjw3Comments (173)Today, 8:20 AMCan’t see the forest for the trees.
People are fussing about 2nd way/ 1st wave and missing the point.
I agree that the virus will lose strength, but that will not cause wealthier Americans, especially older ones to head back out and ramp up the consumer economy again.I believe that the main idea is that we are in for a new normal and if I am reading this correctly, the new normal is reduced economic activity based on reduced consumerism by the wealthy. I agree with that assessment.In addition we will also have reduced economic activity from the even more impoverished middle and lower rungs. This will continue as a result of the reduced consumerism by the wealthy.Tack on a whole bunch of state and local debt which has immediate consequences, along with huge federal debt which I pray never comes home to roost, and things may not be all hip and groovy real soon.But, hey, we have the Powell put, so log me in to Robin Hood. Hold on honey, we’re gonna be RICH!ReplyLike(6)

Chicken of the CaveComments (1.41K)Today, 8:26 AM”I agree that the virus will lose strength, but that will not cause wealthier Americans, especially older ones to head back out and ramp up the consumer economy again.”Hopefully this has not been your basis of your investing strategy for the past number of weeks.Good luck!ReplyLike(1)

LaughingTraderComments (663)Today, 8:46 AMI see lots of stories that say that due to the rich cutting way back on their spending, the middle and lower classes are suffering job losses. That is of course the very definition of trickle down economics at work, negatively in this case.ReplyLike(1)

pjw3Comments (173)Today, 9:05 AMNot really, but its not like I am riding the tiger’s tail either. (cruise, airline, gaming, etc.)
The best I can do is to invest, not “trade”. For that, its worth keeping in…ReplyLike

Andrej ChernyshComments (70)Today, 8:16 AMThis will pass once 225 mill Americans are contacted by this virus.
That is exactly the strategy Italy, UK and Sweden tried in the beginning. With disastrous, horrible consequences which led them to abandon that strategy.ReplyLike(3)

LaughingTraderComments (663)Today, 8:48 AMTrying to achieve herd immunity is a long game strategy. You don’t pass judgement on a long term strategy in the early phases. We have yet to see how the alternative approach plays out. If there is indeed a second wave and it is as bad or worse than the first, their strategy may in the end save lives. Too soon to tell.ReplyLike(1)

CoinmerchantComments (22)Today, 9:18 AMAll depends on when a vaccine/cure arrives, wich strategy was correctReplyLike

excenterComments (2.22K)Today, 8:09 AMThis is the 2nd wave.ReplyLike(2)

Carson7Comments (2.70K)Today, 8:05 AMSure, and I expect you stayed at a Holiday Inn Express last night. No clue..ReplyLike(4)


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Published by technofiend1

Kazan- Kazan National Research Technical University Казанский национальный исследовательский технический университет имени А. Н. Туполева he graduated in Economics in 1982

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