EconomyxAI · Sector Watch May 2020Released May 27, 2020 |
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Conditions index −0.64 avg of 11 sectors, −2 to +2 |
| Outlook index −0.41 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released May 27, 2020, with information collected on or before May 18, 2020. | | ■ | Economic activity declined in all districts, falling sharply in most, reflecting COVID-19 disruptions. | | ■ | Consumer spending fell further with leisure and hospitality nearly idle; auto sales sharply lower though improving recently; manufacturing dropped sharply in autos, aerospace and energy. | | ■ | Home sales plunged; retail tenants missed rent; bankers saw strong PPP demand; energy activity plummeted to record-low rig counts; outlook highly uncertain and mostly pessimistic. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Staples
XLP
▶ Steady | +0.43 |
| Communication Services
XLC
▲ Turning up | −0.02 |
| Utilities
XLU
▶ Steady | −0.04 |
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| Weakest prospects Consumer Discretionary
XLY
▶ Steady | −1.29 |
| Energy
XLE
▼ Weakening | −1.25 |
| Industrials
XLI
▼ Weakening | −1.11 |
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All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
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| 1 | Consumer Staples
XLP | | +0.43 | Leaning Favorable | +0.62 | +0.50 | ▶ +0.21 | | 2 | Communication Services
XLC | | −0.02 | Neutral | +0.00 | +0.00 | ▲ +0.20 | | 3 | Utilities
XLU | | −0.04 | Neutral | −0.09 | +0.00 | ▶ −0.09 | | 4 | Health Care
XLV | | −0.14 | Neutral | −0.20 | +0.00 | ▼ −0.30 | | 5 | Information Technology
XLK | | −0.34 | Leaning Unfavorable | −0.59 | +0.00 | ▶ −0.45 | | 6 | Materials
XLB | | −0.38 | Leaning Unfavorable | −0.35 | −0.50 | ▲ +0.06 | | 7 | Financials
XLF | | −0.40 | Leaning Unfavorable | −0.16 | −0.50 | ▲ −0.04 | | 8 | Real Estate
XLRE | | −0.89 | Unfavorable | −1.27 | −0.50 | ▼ −1.25 | | 9 | Industrials
XLI | | −1.11 | Unfavorable | −1.58 | −1.00 | ▼ −1.11 | | 10 | Energy
XLE | | −1.25 | Unfavorable | −1.53 | −1.50 | ▼ −0.61 | | 11 | Consumer Discretionary
XLY | | −1.29 | Unfavorable | −1.92 | −1.00 | ▶ −1.28 |
Prospect Score blends current conditions, district outlooks, momentum, a sector-specific macro tilt and margins. Now = weighted current conditions; Outlook = n/a when too few districts gave one; Mom. = change vs the average of the two prior releases. |
National Summary, scored −2 to +2 Macro backdrop | Overall Economic Activity | | −2.00 |
Activity declined in all districts, sharply in most. | Employment decreased in all districts with steep losses in most. | | Inflation Pressure (higher = headwind) | | −0.75 |
Prices steady to down modestly; discounting in apparel, hotels and airfare. | Strong PPP demand offset by weaker conventional lending and rising delinquencies. | Outlook highly uncertain; most contacts pessimistic about pace of recovery. |
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Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
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| Information TechnologyXLK | · | −1 | · | · | · | · | · | · | · | −1 | · | −1 | | Health CareXLV | · | −1 | · | · | · | · | · | −1 | · | −1 | · | · | | FinancialsXLF | · | −1 | · | +1 | −1 | · | +1 | −1 | · | −1 | −1 | +1 | | Consumer DiscretionaryXLY | −2 | −2 | −1 | −2 | −2 | −2 | −2 | −1 | −2 | −2 | −2 | −2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −2 | −2 | −2 | −2 | −1 | −2 | −1 | −2 | −2 | −2 | −1 | | Consumer StaplesXLP | +1 | · | · | +1 | · | +1 | +1 | +1 | · | −1 | +1 | +1 | | EnergyXLE | · | · | · | −1 | · | −1 | −1 | · | −2 | −2 | −2 | −1 | | UtilitiesXLU | · | · | · | · | · | · | −1 | · | · | · | · | · | | Real EstateXLRE | −1 | −2 | −2 | −1 | −1 | −1 | −2 | −1 | · | −2 | −1 | −1 | | MaterialsXLB | · | · | · | −1 | · | · | · | · | −1 | −1 | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary −2 Broad-based Retail and hospitality nearly idle under mandated closures. Why it matters: Broadest and deepest decline. | Energy −2 Dallas Drilling and completion activity fell to record lows. Why it matters: Dallas carries the largest Energy weight. | Industrials −2 New York, Philadelphia, Cleveland, Richmond, Chicago, Minneapolis, Kansas City, Dallas Manufacturing shipments and orders dropped steeply. Why it matters: Deep Industrials decline. | Real Estate −2 New York, Philadelphia, Chicago, Kansas City Home sales plunged; construction paused. Why it matters: Large RE weights. | Energy −2 Kansas City, Minneapolis Energy activity collapsed further. Why it matters: Broad Energy collapse. | Financials +1 Cleveland, Chicago, San Francisco PPP lending surged; financial conditions improved modestly. Why it matters: Partial Financials offset. |
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Twelve Fed districts District roundup Boston Contracting −1.5 Outlook ▼ Continued to decline. |
| New York Contracting −2.0 Outlook ▼ Contracted substantially again. |
| Philadelphia Contracting −2.0 Outlook ▼ Continued to fall sharply. |
| Cleveland Contracting −1.5 Outlook ▼ Deteriorated further. |
| Richmond Contracting −1.5 Outlook ▼ Continued to decline. |
| Atlanta Contracting −1.5 Outlook ▼ Continued to decline. |
| Chicago Contracting −2.0 Outlook ▼ Declined sharply. |
| St. Louis Contracting −1.0 Outlook ▼ Declined at a moderately slower pace. |
| Minneapolis Contracting −1.5 Outlook ▼ Declined further. |
| Kansas City Contracting −2.0 Outlook ▼ Declined substantially. |
| Dallas Contracting −1.5 Outlook ▼ Contracted sharply in April. |
| San Francisco Contracting −2.0 Outlook ▼ Contracted markedly. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — Near-uniform -2 keeps weighted and unweighted scores close to the floor.
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| | Energy — Dallas -2 with the largest Energy weight drives the weighted score well below the unweighted average.
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How to read this. Each Fed district’s report is scored −2 (strong contraction) to +2 (strong expansion) for each GICS sector, then weighted by the district’s share of that sector’s activity. The Prospect Score blends current conditions (25%), district outlooks (35%), momentum (20%), a sector-specific macro tilt (10%) and margin pressure (10%). The Beige Book describes regional activity, not earnings or valuations. Weights and sensitivities are illustrative. This newsletter is for information only and is not investment advice. Source: Federal Reserve Beige Book · Scored by EconomyxAI |