Quite a bit of action on the markets in the middle of the summer season. We’re almost half way through the reporting season. As I wrote here the downbeat expectations make the 2Q20 positive aggregate earnings surprises quite impressive. A lot is going on in some of the commodities as well as the monetary and political/fiscal front. Let’s get on it:
-> Gold hit an all time record high on Monday and is now a touch away from $2000/ounce. Same reasons for it being so bid still: virus, trade tensions, more stimulous expected, augmenting inflation expectations. Also note that silver is having tremendous times with it being more then double up from the March lows now around $23-25/ounce. See the gold bullion graph below:
-> the Congress wrangled about the next coronairus stimulous bill all week long, as current benefits expired this Friday. There’s also been a discussion about the benefits being discouraging for some low-earners to work.
-> On Wednesday the star stock was the once-bankrupt Kodak (KODK), “after the U.S. government awarded the company a $765 million loan to start producing drug ingredients under the Defense Production Act.” (CNBC). Stock surged over 1700%, but eventually ended +940%.
-> Same day the FOMC announced its rates decision, leaving them unchanged and flagging to the markets that more needs to be done in terms of stimulous.
-> Thursday was the bussiest reporting season day so far with such tech giants as Apple (AAPL), Amazon (AMZN), Alphabet (GOOG) and Facebook (FB) in the front. AAPL reported $59.7bn in revenues vs. $52.3bn expected as locked-up consumers snapped up its products (iPhones, etc). AAPL also announced a 4-1 split. It’s EPS hit $2.58 vs. $2.07 expected. AMZN also beat both on revenues and NP with EPS at $10.5 vs. $1.46 expected. Online shopping trend keeps supporting AMZN massively. GOOG EPS was $10.13 vs. $8.27 expected and all in all numbers were a positive surprise. And last but not least FB: renenues $18.69bn vs. $17.3bn and EPS $1.8 vs. $1.39 expected. All the big-techs climbed 2-5% in after-hours trading.
-> On the macro front we got to know the 2Q GDP (biggest drop in history, but better than expected) and the weekly jobless data, which turned out as follows:
-> Mr.Trump announced on Twitter on Thursday that he thinks it would be plausible to put off elections due to Covid. The President has no such power as a rule and the Congress would have to decide.
-> Friday brought a nice rally fueled by good big-tech numbers. AAPL closed at all time highs at $425 (+10.5%), FB +8.2%, AMZN +3.7% and only GOOG slipped over 3%.
-> As an effect US markets heavily outperformed both EU and Asia this week.
-> Effective weekly index changes: S&P500 +1.7%, Nasdaq +3.7%, EuroStoxx600 -3%, DAX -4.1%, Nikkei225 -4.6%.
Other markets events:
-> Bonds: US yield curve (10y-FF) narrowed again to 0.45% and the 10y yield made an all time low at 0.535%, German curve (10Y Bunds-3M) also narrowed at 0.04% with 10Y Bunds at -0.52%, not much action in High Yield Spreads at around 5.
-> Commodities (ex oil): Gold ripped +4.9% on week to new all-time highs ending at $1994, Silver was even better ending +7.2% on week. Commodities are on fire.
-> Currencies: DXY (Dollar Index) continues to weaken and ended -1% on week, EURUSD +1.1%.
Major macro events: (times are CET):
Next Week’s major macro events:
Disclaimers: None of the ideas, views and thoughts presented here shall ever be taken as a recommendation to buy or sell stocks,bonds,FX,commodities or any other financial instruments as stated in REGULATION (EU) No 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC or the Regulation of the Polish Minister of Finance of 19 October 2005 on information constituting recommendations regarding financial instruments, their issuers or exhibitors (Journal of Laws of 2005, No. 206, item 1715) or the Polish Act of 10 February 2017 amending the act on trading in financial instruments and some other acts. The article is for educational reasons and purely presents private views of the author, thus the author shall not be claimed eligibile for any losses of a third party resulting from trading activities based upon this article. The author uses his best knowledge and data from sources believed to be reliable, but makes no representations as to the accuracy of the data.Full Disclaimers&Liability Limitations page.