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[Markets] Apple Seeks To Boost Lagging Subscription Sales With "Amazon Prime"-Style 'Bundles' Apple Seeks To Boost Lagging Subscription Sales With "Amazon Prime"-Style 'Bundles' Tyler Durden Thu, 08/13/2020 - 09:45

Apple shares are riding high right now, after reporting blockbuster Q2 earnings with revenue from device sales beating expectations, and the company announced a stock split that has helped push its market capitalization even further into record territory.

However, as we noted at the time, there were a few blemishes on what was otherwise a sterling report, most prominent among them being a rare sequential decline in service revenue, which dipped to $13.156BN from $13.348BN last quarter.

Although investors didn't seem to care when Apple announced the results last month, CEO Tim Cook has increasingly pushed growth in the company's services segment as the key driver of future growth. And although Apple didn't release forecasts for the year ahead. Clearly, Apple CEO Tim Cook is acutely aware of this, and the company is already planning a new initiative to try and maximize revenue from its subscription services at a time when most Americans are using these types of services more than they ever have before.

According to Bloomberg, Apple is reportedly planning to launch a subscription bundle akin to Amazon's popular "Prime" service, that will combine everything from health and wellness, to streaming of TV shows, movies and music, to video games.

The decline in services revenue reported a few weeks back isn't the only motivator for Apple to switch to a bundle, instead of offering all of these services a-la-cart. Last month, the New York Times announced that it would part ways with Apple's "News+" service, a sign that the tech giant has struggled to strike deals with publishers like the NYT, LAT and other papers, even as WSJ and its owner, the News Corp.-owned Dow Jones, insisted that they would stick with Apple News as the platform has brought in "a significantly new audience."

However, a bundle package with News+ included would boost revenue, and leverage, for a service that the company hopes will entice at least a majority of its customers in the US. Apple has already hinted at this possibility as its agreements with publishers have included a warning that services could be offered as part of a bundle.

The "Apple One" package, as it is known inside the company, will featured tiered subscription models, which also fits with Apple's decision to offer some "cheaper" phone models as it struggles to grow its handset market share.

Here's more from BBG:

Apple Inc. is readying a series of bundles that will let customers subscribe to several of the company’s digital services at a lower monthly price, according to people with knowledge of the effort.

The bundles, dubbed “Apple One” inside the Cupertino, California-based technology giant, are planned to launch as early as October alongside the next iPhone line, the people said. The bundles are designed to encourage customers to subscribe to more Apple services, which will generate more recurring revenue.

There will be different tiers, according to the people, who asked not to be identified discussing private plans. A basic package will include Apple Music and Apple TV+, while a more expensive variation will have those two services and the Apple Arcade gaming service. The next tier will add Apple News+, followed by a pricier bundle with extra iCloud storage for files and photos.

Apple plans to leverage its deep trove of user data to allow devices to "suggest" different bundle packages to their owners, based on their previous app usage. Here's a rundown of other salient details from the BBG report.

  • The new bundles will also be built on the company's "family sharing" system, which provides access to up to 6 people for each service.

  • Apple’s plans, and the structure of the bundles, may change. But the goal is to offer groups of services at lower prices than would be charged if consumers subscribed to each offering individually. An Apple spokesman declined to comment.

  • The iPhone and iPad will suggest different packages to users based on which Apple apps and services they already use. This feature will come later this year as part of iOS 14, the next software update for Apple’s devices.

  • The new bundles will be geared toward families, meaning they will work with Apple’s Family Sharing system that provides access to as many as six people for each service. 

  • Bundles will save consumers between $2 and $5 a month, depending on the package chosen. For example, if a family subscribes today to all of Apple’s major services, plus the highest iCloud storage tier, that would cost about $45 a month, but a bundle would presumably knock about $5 off of that price (will this jolt of tech-induced deflation help offset rising food prices? That's probably a problem for another day).

  • The "Apple One" project is being spearheaded internally by Peter Stern, who reports to Apple's longtime services chief Eddy Cue.

  • Last year, BBG reported that "bundles" would launch before the end of 2020. The company is reportedly planning to unveil the service during its upcoming product event.

  • Note: Apple doesn’t plan to integrate the bundles with services such as AppleCare support or monthly payment plans for new iPhones and iPads.

  • In addition to the services bundles, Apple is planning new software and hardware bundles, including giving buyers of the Apple TV set-top box a free year of Apple Arcade.

Apple tested the waters last year by offering students free access to Apple TV+ combined with a subscription to Apple Music.

Furthermore, just as Facebook often mimics the most successful features of rival platforms, Apple is building a subscription service for workout classes, a direct challenge to Peloton, which has soared during the pandemic after a lackluster trading debut last year.

The company is also developing a new subscription for virtual fitness classes that can be used via an app for the iPhone, iPad and Apple TV, the people said. That service will be offered in a higher-end bundle with the rest of Apple’s services. Codenamed "Seymour," the workout package would rival virtual classes offered by companies including Peloton Interactive Inc. and Nike Inc., according to the people.

The news clearly blindsided investors, as Peloton shares slumped nearly 5% in response.

Apple’s services segment is one of the company’s fastest growth areas and has become a $50 billion-a-year business. While services like those for advertising and AppleCare were down in recent quarters due to the impact of Covid-19, digital offerings like the App Store, iCloud and video products set records.

So, to sum up, Apple shares are spiking to new record highs after confirming with their 'Apple One' bundle that services revenue is slowing...

Published:8/13/2020 8:54:32 AM
[Markets] S&P 500 dips at open as labor market rebound falters The Dow Jones Industrial Average fell 54.33 points, or 0.19%, at the open to 27,922.51 and the S&P 500 opened lower by 7.40 points, or 0.22%, at 3,372.95. The Nasdaq Composite gained 14.62 points, or 0.13%, to 11,026.86 at the opening bell. Published:8/13/2020 8:54:31 AM
[Markets] Apple’s Split to End Dominion of Dow Average’s Biggest Stock (Bloomberg) -- Apple Inc.’s planned stock split will diminish its influence on the Dow Jones Industrial Average after the iPhone maker’s 100% surge since March lows nearly dragged the price-weighted measure back to an all-time high.At its current price of $452 a share, Apple has the biggest weighting in the index at 11%. A 4-to-1 split now would drop its price tag to about $113 and send its ranking in the Dow Average down to 16th. Apple has rallied almost 55% in 2020, adding more than 1,100 points to a stock measure that’s fallen about 2% during that time. The split is scheduled to take effect Aug. 31.In a world where passive investing rules the stock market, a drop of weight in indexes like the Dow Average is likely to prompt outflows from money managers who mimic benchmark changes. About $31.5 billion was either indexed or benchmarked to the gauge at the end of 2019, according to data from S&P Dow Jones Indices.A stock split “is an appeal to retail,” said Charles Day, a UBS managing director and private wealth adviser with more than $600 million in assets under management. “It will make a difference for the Dow.”The split, however, won’t affect Apple’s No. 1 position in the S&P 500, an index that’s weighted by market capitalization, rather than stock prices.Apple has rallied the most in the Dow this year as locked-down consumers snapped up new iPhones, iPads and Mac computers to stay connected during the pandemic. While any selling as a result of the weighting change may pale in comparison to the company’s market value of $1.9 trillion, it’s nonetheless not good news for a stock whose relentless gains are stirring angst at a time when tech shares have lagged behind the market over the past month amid valuation concerns.Apple’s split is “theoretically decreasing demand from passive indexers,” Julian Emanuel, chief equity & derivatives strategist at BTIG LLC, wrote in a note. “Combined with a generalized loss of momentum in the Nasdaq 100, AAPL could succumb to Newton’s Law of Gravity in the weeks ahead.”(Updates prices on second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:8/12/2020 2:14:39 PM
[Markets] Dow Rises as August Stock Market Rally Resumes Stocks rebounded Wednesday after the S&P 500 posted its first decline in eight trading sessions amid uncertainty over the next U.S. coronavirus stimulus package. The Dow Jones Industrial Average was up 268 points, or 0.97%, to 27,955, the S&P 500 gained 0.95% and the Nasdaq jumped 1.12%. The S&P 500 had traded higher for most of Tuesday's session and approached an all-time record but turned lower following a slide in technology stocks. Published:8/12/2020 8:43:18 AM
[World] Market Snapshot: Stock-index futures point higher after Dow, S&P 500 snap 7-day winning streak Stock-index futures point to the upside Wednesday, with U.S. equities on track to resume a march to the upside a day after the Dow Jones Industrial Average and the S&P 500 snapped a seven-day winning streak
Published:8/12/2020 6:21:10 AM
[Markets] S&P Futures Hit All Time Highs On Stimulus, Vaccine Hopes; Gold, Silver Tumble S&P Futures Hit All Time Highs On Stimulus, Vaccine Hopes; Gold, Silver Tumble Tyler Durden Tue, 08/11/2020 - 08:27

S&P 500 futures hit a record high as investors shrugged off continuing U.S.-China tensions and instead focused on news of an approved, if largely unclear, Russian vaccine, and more stimulus optimism as President Donald Trump said he’s considering a tax cut on capital gains. According to Reuters calculations at the current levels, the benchmark index is set to open about 12 points below its Feb. 19 record peak of 3,393.52.

American Airlines and Carnival led a boom in travel shares in the premarket. The S&P 500 closed less than 1% below its record high on Monday as investors extended a rotation into value stocks from heavyweight tech-related names. At 8:00 a.m. ET, S&P 500 e-minis were up 23.25 points, or 0.69%, topping an all-time high of 3,372.25 points last hit on Feb. 20.
A rally in the tech megacaps including Amazon.com, Netflix and Apple that thrived during the shutdowns helped the Nasdaq reclaim its all-time high in June, while the Dow still remains about 6% below its peak.

“Equity has never looked cheaper compared to fixed income and the like,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said in a Bloomberg TV interview. “If you want any return, any yield, any income or even any growth you have to go to equities.”

In Europe and Asia, a broad rally from industrial goods to health-care shares set the Stoxx Europe 600 Index headed for its best increase since mid-June. The Stoxx 600 Europe index rose more than 2% , with auto shares leading the way after a surge in Chinese car sales. Gains for Asian equities ignited a rally in European stocks that lifted Stoxx 50 as much as 2.8% and weighed on bunds, pulling Treasuries along. Elsewhere, the resignation of Lebanon’s government after the devastating explosion in Beirut threatened to upend prospects of a debt restructuring deal in the next few months.

Earlier in the session, Asian shares ex-Japan gained nearly 1%, with Japan's Nikkei rising 1.9% after a Monday holiday. There were hopes Beijing’s sanctions on 11 U.S. citizens  may end this round of tit-for-tat moves between the two powers.

“It has left the White House untouched,” said Vishnu Varathan, head of economics at Mizuho Bank in Singapore. “That gives some relief that China is still giving some priority to the (trade deal) dialogue,” he said.

Market participants remain eager to see an agreement on the fifth federal aid bill to help Americans battle with the health crisis was far from over with U.S. cases surpassing 5 million last week. The mood remains cautious as sparring continues in the U.S. Congress over extending fiscal stimulus while economic data such as a steep drop in South Korean exports and a rise in UK jobless rates remain a cause for concern. But upbeat comments by U.S. Treasury Secretary Steven Mnuchin on the prospects for a bipartisan stimulus deal supported Brent crude futures at near five-month highs and kept the dollar index near a one-week peak.

Commerzbank analysts said markets were shrugging off doubts over the legality of Trump’s order and appeared convinced Congress would agree a deal

"Not without good reason, because in the election campaign both parties have an interest in presenting  themselves well,” they said. "Who wants to be seen as the stingy bad guy even in times of great need?"

General optimism kept safe haven assets under gentle pressure, with gold falling back under $2000 an ounce, down more than 2%, even as the dollar slumped. Precious metals dropped with spot gold south of $2000 and spot silver just about holding onto a USD 28/oz handle having briefly dipped below the figure. No fundamental news flow coincided with the losses across precious metals but action could merely be a function of tech play alongside some profit taking/stops being triggered. But the most likely reason for the back down in gold prices is that 10Y real rates - which gold has been tracking tick for tick - also dipped from recent record lows.

In FX, the dollar slipped as European stocks follow Asian equities higher, with markets taking encouragement from falling hospitalization rates in California and New York and decreasing new infections in Hong Kong. The euro rose as much as 0.5% after ZEW data revealed investors raised their expectations of a rebound for the German economy in August. Italy’s 10-year yield premium over its German equivalent tightened to its lowest level since February.

In rates, ten-year U.S. Treasury yields were near a two-week high of 0.5870% while German yields likewise rose to two-week highs. Treasury yields were cheaper by 1bp to 2.5bp across the curve led by long end, steepening 2s10s, 5s30s by 1.6bp and 1bp; 10-year yields around 0.60% while bunds, gilts both lag by ~1bp. Ahead of 3-year auction, WI yield is ~0.160%, 3bp richer than July’s record low stop at 0.19%; refunding includes $38b 10-year Wednesday and $26b 30-year Thursday; all sizes are records.

In commodities, WTI and Brent continue to grind higher in early trade, with upside more-so a function of the overall risk tone as opposed to fresh fundamental catalysts, albeit prices remain underpinned by the recent upbeat assessment from Saudi, Iraq and Gulf members alongside the constructive outlook by Saudi Aramco post-earnings. Looking ahead, traders will be eyeing the weekly API inventory release, with expectations for crude stockpiles to decline by almost 4mln barrels, but ahead of the weekly release, participants will pay attention to the EIA Short Term energy Outlook which will include US crude production forecasts for the rest of 2020 and 2021. In terms of base metals, Dalian iron ore futures snapped its two-day losing streak as prices were bolstered by falling portside inventories, whilst LME copper prices saw early downside.

Looking at the day ahead, and data releases out include UK unemployment data for June, the German ZEW survey for August, as well as July’s PPI reading and the NFIB small business optimism index from the US. Otherwise, Fed speakers today include Barkin, Daly and Brainard.

Market Snapshot

  • S&P 500 futures up 0.6% to 3,371.75
  • STOXX Europe 600 up 1.8% to 371.07
  • MXAP up 1.1% to 169.75
  • MXAPJ up 0.6% to 562.38
  • Nikkei up 1.9% to 22,750.24
  • Topix up 2.5% to 1,585.96
  • Hang Seng Index up 2.1% to 24,890.68
  • Shanghai Composite down 1.2% to 3,340.29
  • Sensex up 0.9% to 38,507.25
  • Australia S&P/ASX 200 up 0.5% to 6,138.65
  • Kospi up 1.4% to 2,418.67
  • German 10Y yield rose 1.3 bps to -0.513%
  • Euro up 0.3% to $1.1768
  • Brent Futures up 0.8% to $45.33/bbl
  • Italian 10Y yield fell 0.8 bps to 0.795%
  • Spanish 10Y yield fell 0.2 bps to 0.253%
  • Brent Futures up 0.8% to $45.33/bbl
  • Gold spot down 2.1% to $1,985.04
  • U.S. Dollar Index down 0.2% to 93.44

Top Overnight News from Bloomberg

  • Britain’s mounting labor market crisis was underscored by a 220,000 slump in employment during the height of the coronavirus lockdown, the worst decline since the global financial crisis
  • Even as China continues to hit back at the Trump administration, leaders in Beijing are also signaling they want to ease tensions with the U.S. as the clock ticks down to the presidential election
  • Lebanon’s political leaders are expected to launch parliamentary consultations to choose a new prime minister after Hassan Diab’s government resigned on Monday over the devastating explosion at Beirut’s port
  • Hong Kong’s worst coronavirus outbreak is showing signs of coming under control as the city reported the lowest number of new local infections since its resurgence began over a month ago

A quick look at global markets courtesy of NewsSquawk:

Asian equity markets traded higher as risk appetite in the region improved on the tepid performance seen on Wall St where most major indices finished in the green but tech underperformed and indecision lingered amid the ongoing stimulus talks stalemate, mixed views on President Trump’s recent executive orders and ongoing US-China tensions. ASX 200 (+0.5%) was positive as top-weighted financials spearheaded the advances and with the broad sector gains offsetting the weakness in gold miners and tech, while Nikkei 225 (+1.8%) was buoyed on return from an extended weekend helped by a predominantly weaker currency and after bank lending increased by its fastest pace on record. Hang Seng (+2.1%) and Shanghai Comp. (-1.2%) conformed to the upbeat mood after the PBoC upped its liquidity efforts with a CNY 50bln reverse repo injection and although China announced sanctions against officials in retaliation to US sanctions on Hong Kong, they refrained from imposing them on Trump administration officials. Furthermore, casino stocks are red-hot after reports China is to remove the quarantine requirement for Macau effective tomorrow and Next Digital shares surged over 400% in an extension of yesterday’s sharp intraday turnaround as activists piled into the shares in a show of support following the founder’s recent arrest and amid speculation it could sell its listed entity as a shell for other firms to acquire for a back-door listing. Finally, 10yr JGBs were lower and approached 152.00 to the downside as they played catch up to the recent weakness in T-notes and as havens were shunned amid gains in riskier assets, while the lack of BoJ presence in the market also added to the dampened mood for JGBs.

Top Asian News

  • One of World’s Strongest Rallies Propels Kospi to Two-Year High
  • Tough-to-Impress Harvard Grad Molds Fortunes of China’s Rich
  • Singapore’s Economy Posts Worse Contraction in Second Quarter
  • Iron Ore Futures Gain as China’s Economic Recovery Fuels Demand

European equities trade higher across the board [Euro Stoxx 50 +2.7%], with upside accelerating after the cash open as sentiment improved following an initially bleak APAC handover – prompting DAX cash and Sept futures to gain above 13k, albeit fresh fundamental catalysts remain light throughout the session thus far; some modest impetus coincided with vaccine updates from Russia. Firm gains are also seen across all European sectors, with cyclicals/value clearly outpacing defensives, whilst the breakdown paints a similarly performance, with Travel & Leisure topping the chart, closely followed by Oil & Gas, Autos and Banks, whilst the other side of the spectrum sees Healthcare and Chemicals as the laggards. In terms of individual movers, UK listed Cineworld (+17%) extended on earlier gains and resides at the top of the Stoxx 600 amid reports that the group could go private. BP (+3.7%) coattails on the back of firmer energy prices coupled with source reports the group is said to be mulling the sale of its German chemicals’ unit DHC Solvent Chemie. Mediobanca (+5.9%) extends on opening gains after the ECB gave the green-light for shareholder Del Vecchio to increase his stake in the Co. to 13-14% from 10%.

Top European News

  • Hungary Inflation Surges, Putting Rate Policy Back in Focus
  • U.K. Jobs Crisis Worsens as Employment Drops Most Since 2009
  • Vestas Shares Surge as 2020 Revenue Guidance Reintroduced
  • Unilever Warns of Dutch Tax Proposal’s Risk for Plan to Move

In FX, another back up in US Treasury yields and mild steepening along the curve into record refunding has underpinned the Dollar to a degree, but a deeper retracement in spot bullion to test support around the psychological Usd 2000/oz level coincided with the DXY marginally eclipsing Monday’s high at 93.729. However, the Greenback has lost momentum against the backdrop of extended gains in global equities that is keeping high beta/cyclical currencies supported and safe-haven demand suppressed.

  • AUD/NZD/CAD/NOK – As noted above, the Aussie is benefiting from bullish risk sentiment to the extent that declines in NAB business sentiment and conditions have not weighed on Aud/Usd unduly, while the Kiwi is just keeping tabs with 0.6600 ahead of Wednesday’s RBNZ policy meeting even though the bias may be skewed towards a more dovish event compared to the prior assessment and guidance, while NZ reports a local outbreak of COVID-19 cases after a 100+ day run of no infections at all. Elsewhere, elevated crude prices are helping the Loonie and Norwegian Crown remain afloat around 1.3300 and 10.5800 vs the Buck and Euro respectively, with the former now looking for some independent impetus via Canadian housing starts.
  • EUR/CHF/GBP – All benefiting from the aforementioned Dollar fade, with the index now back under 93.500 again and Euro rebounding between 1.1723-83 parameters following a somewhat mixed ZEW survey, the Franc paring losses within a 0.9168-34 range and Pound maintaining 1.3050+ status, but not quite able to retest yesterday’s best a few pips over 1.3100 in wake of mostly weaker than forecast UK labour and pay data.
  • JPY – The Yen is marginally underperforming either side of 106.00 on a loss of safety premium and with Japanese markets back from their long holiday weekend, but little lasting reaction to a wider than anticipated Japanese current account surplus.
  • EM – Oil’s ongoing resurgence is helping the Rouble and Mexican Peso supplement gains vs the flagging Greenback. but the SA Rand has not been deterred by Gold’s meltdown or looming data and has breached key technical resistance in the form of the 100 DMA (17.6240) on the way up towards 17.5400. Similarly, the Turkish Lira is back in recovery mode as tighter CBRT funding conditions prompt some short covering, while Brazil’s Real awaits BCB COPOM minutes from the last meeting.

In commodities, WTI and Brent front-month futures continue to grind higher in early trade, with upside more-so a function of the overall risk tone as opposed to fresh fundamental catalysts, albeit prices remain underpinned by the recent upbeat assessment from Saudi, Iraq and Gulf members alongside the constructive outlook by Saudi Aramco post-earnings. The benchmarks experienced modest downside heading into the European cash open, in which prices briefly dipped below 45/bbl for the Brent Oct contract, whilst WTI Sep tested 42/bbl, before recovering lost ground and some more. Looking ahead, traders will be eyeing the weekly Private Inventory release, with expectations for crude stockpiles to decline by almost 4mln barrels, but ahead of the weekly release, participants will pay attention to the EIA Short Term energy Outlook which will include US crude production forecasts for the rest of 2020 and 2021. Elsewhere, precious metals are under pressure this morning with spot gold south of USD 2000/oz and spot silver just about holding onto a USD 28/oz handle having briefly dipped below the figure. No fundamental news flow coincided with the losses across precious metals but action could merely be a function of tech play alongside some profit taking/stops being triggered. In terms of base metals, Dalian iron ore futures snapped its two-day losing streak as prices were bolstered by falling portside inventories, whilst LME copper prices saw early downside amid the firming USD at the time; albeit, has since nursed losses.

US Event Calendar

  • 6am: NFIB Small Business Optimism 98.8, est. 100.5, prior 100.6
  • 8:30am: PPI Final Demand MoM, est. 0.3%, prior -0.2%; PPI Ex Food and Energy MoM, est. 0.1%, prior -0.3%
  • 8:30am: PPI Final Demand YoY, est. -0.7%, prior -0.8%; PPI Ex Food and Energy YoY, est. 0.0%, prior 0.1%

DB's Jim Reid concludes the overnight wrap

The last 24 hours has pretty much fit the bill as far as slow news days are concerned in markets. That being said there was a somewhat notable milestone reached yesterday as the S&P 500 surpassed the all-time highs from February on a total return basis. This is a fairly astonishing feat when you consider that in late-March the index was down as much as -33.79% from those highs. In price terms it finished +0.27% yesterday which means it’s just -0.76% lower than its all-time closing high. That move also marked the S&P’s 7th consecutive advance for the first time since April 2019.

While the S&P nudged higher, the Dow Jones saw a much larger +1.30% gain, which is somewhat unusual given the strong correlation between the two indices. Indeed, it’s only the 6th time in the last decade that the Dow’s daily move has been more than one percentage point different to the S&P’s (even if 5 of them have been since the pandemic hit). At the other end of the spectrum though, the NASDAQ (-0.39%) slipped for a rare second consecutive session. At the margin the macro news acted as a bit of headwind and included the news of further Chinese sanctions on US officials after similar measures were announced by the US on Friday, with those sanctioned by China including the Republican senators Marco Rubio, Ted Cruz and Tom Cotton. Chinese Foreign Ministry spokesman Zhao Lijan said yesterday that “China has decided to impose sanctions on those individuals who behaved badly on Hong Kong-related issues”. And in a further sign that US-China tensions are showing no sign of abating any time soon, US Secretary of State Mike Pompeo tweeted yesterday that the arrest of Jimmy Lai under Hong Kong’s national security law was “further proof that the CCP has eviscerated Hong Kong’s freedoms and eroded the rights of its people.”

Meanwhile, markets continue to turn a bit of a blind eye to the lack of any progress on the next US fiscal package with no updates to report of yesterday. Nevertheless there was some more positive coronavirus news from the US, with the number of hospitalisations in New York State at the lowest since the start of the pandemic, and the number of cases in Florida at their lowest in over 6 weeks. California and Texas also reported a fall in hospitalizations. Overall, cases in the US grew by 44,647 in last 24 hours or +0.9% while at the same point last week cases had grown by 46,918 or 1.0%. Globally, the number of cases have crossed the 20 million mark. It is worth highlighting that it took 6 months for cases to reach 10 million after the first infection surfaced in China while the second 10 million took only 6 weeks. On the positive side, China has said that it will resume issuing tourist visas for visitors to Macau which has helped casino stocks rally in the region.

Indeed most Asian bourses have posted strong gains this morning. The Hang Seng (+2.40%) has led the way after underperforming on Monday, while the Nikkei (+1.81%) is up following Monday’s holiday. The Kospi (+1.60%) and ASX (+0.84%) all also up while futures on the S&P 500 are also up +0.26%. It’s been fairly quiet for overnight news, however President Trump did say that he’s “very seriously” considering a capital gains tax cut “which would create a lot more jobs”.

Back to yesterday, and over in Europe the moves were pretty similar to the US in terms of the upward direction for equities, though the STOXX 600 (+0.30%) still remains nearly 16% beneath its own record high in February, with European indices having underperformed their US counterparts since the pandemic hit. Energy stocks led the rally on both sides of the Atlantic thanks to a strong performance in oil prices, and both WTI (+1.75%) and Brent (+1.33%) saw solid gains. Staying with the commodities sphere, it’s worth noting that silver was up +2.93% at a 7-year high of $29.13/oz yesterday, though gold (-0.40%) continued to come down from Thursday’s record high with a 2nd successive decline. Looking at other markets, sovereign bonds advanced modestly in Europe, with yields on 10yr bunds (-1.7bps), OATs (-2.3bps) and BTPs (-0.8bps) all moving lower. Indeed yields on 10yr BTPs were down to 0.918%, their lowest level in nearly 6 months. US Treasuries gave up their gains however, with 10yr yields ending the session up +1.2bps at 0.577%. The MOVE index of implied Treasury volatility did nudge up yesterday however still remains just 2 points off the all-time lows from the end of July. Speaking of volatility, the VIX is now down to 22.13, the lowest since 21 February.

Elsewhere, in terms of data yesterday there weren’t a great deal of releases, though we did get the JOLTS job openings from the US, which rose to 5.889m in June (vs. 5.3m expected). That’s their second monthly increase since their low of 4.996m in April, but still over a million lower than their levels in January and February of just over 7m. On a less positive note however, the New York Fed’s Survey of Consumer Expectations showed that households’ expectations on their employment prospects and year-ahead financial situation worsened in July following two months of improvements.

To the day ahead now, and data releases out include UK unemployment data for June, the German ZEW survey for August, as well as July’s PPI reading and the NFIB small business optimism index from the US. Otherwise, Fed speakers today include Barkin, Daly and Brainard.

Published:8/11/2020 7:40:25 AM
[Markets] Dow Jones Leads Stock Market Up; Cruise Shares, Airlines Soar Monday was another tale of two stock markets. The Dow Jones Industrial Average (DJINDICES: ^DJI) soared on strength in key industrial, consumer goods, and energy stocks, but losses in the Nasdaq Composite held back the broader market. Published:8/10/2020 4:32:05 PM
[Markets] Market Extra: ‘Golden cross’ materializing in Dow transports, Russell 2000 A week after a bullish golden cross pattern formed in the Dow Jones Industrial Average, a pair of important stock-market indexes are also beginning to generate upbeat chart formations—suggesting that a mostly technology-driven rally may be fanning out somewhat to other sectors of the market.
Published:8/10/2020 4:32:05 PM
[Markets] FedEx, UPS stocks surge to power Dow transports to 9th-straight gain Shares of FedEx Corp. and United Parcel Service Inc. surged Monday, to provide a more-than 100-point boost to the Dow Jones Transportation Average, amid bullish analyst comments on the package delivery giants given signs of increasing e-commerce volumes.
Published:8/10/2020 3:31:55 PM
[Markets] Dow Higher, Nasdaq Trades Lower as Tech Shares Stumble Stocks traded mixed Monday with declines in tech shares leading the Nasdaq lower. The Dow Jones Industrial Average was up 263 points, or 0.96%, to 27,697, the S&P 500 rose 0.09% and the Nasdaq slumped 0.67%, led by declines in Tesla and Nvidia . The Dow rose 3.8% last week, while the S&P 500 and Nasdaq racked up gains of 2.5%. Published:8/10/2020 11:03:14 AM
[Markets] S&P 500 and Nasdaq Turn Lower as Tech Shares Stumble Stocks turned mixed Monday with declines in tech shares leading the S&P 500 and Nasdaq lower. The Dow Jones Industrial Average was up 187 points, or 0.68%, to 27,620, the S&P 500 fell 0.2% and the Nasdaq slumped 1.06%, led by declines in Tesla and Nvidia . The Dow rose 3.8% last week, while the S&P 500 and Nasdaq racked up gains of 2.5%. Published:8/10/2020 10:31:19 AM
[Markets] NewsWatch: A bullish ‘golden cross’ forms in the Dow industrials A golden cross has formed in the Dow Jones Industrial Average, more than five months after a bearish chart pattern materialized in the aftermath of the carnage wrought by the COVID-19 pandemic.
Published:8/6/2020 4:09:43 PM
[Markets] Market Extra: A bullish ‘golden cross’ is forming in the Dow industrials A golden cross has formed in the Dow Jones Industrial Average, more than five months after a bearish chart pattern materialized in the aftermath of the carnage wrought by the COVID-19 pandemic.
Published:8/6/2020 2:05:27 PM
[Markets] Dow Jones Futures Signal Modest Gains Ahead Of Fed Rate Decision; Apple Rises On iPhone Sales, While AMD Soars 11% On Earnings Dow Jones futures were in focus early Wednesday. Four stock market leaders near key support levels include Apple and Microsoft. AMD surged on earnings late. Published:7/29/2020 5:42:04 AM
[Markets] Dow Jones Futures Fall 75 Points After Stock Market Sells Off On Coronavirus Stimulus Debate; AMD Soars 10% On Earnings Dow Jones futures were in focus early Wednesday. Four stock market leaders near key support levels include Apple and Microsoft. AMD surged on earnings late. Published:7/28/2020 11:05:05 PM
[Markets] Dow Jones Futures Rally 50 Points After Stock Market Sells Off On Coronavirus Stimulus Debate; AMD Soars 10% On Earnings Dow Jones futures were in focus late Tuesday. Four stock market leaders near key support levels include Apple and Microsoft. AMD surged on earnings late. Published:7/28/2020 9:35:08 PM
[Markets] Dow Jones Futures Turn Lower After Stock Market Sells Off On Coronavirus Stimulus Debate; AMD Soars 10% On Earnings Dow Jones futures were in focus late Tuesday. Four stock market leaders near key support levels include Apple and Microsoft. AMD surged on earnings late. Published:7/28/2020 9:05:16 PM
[Markets] Dow Jones Futures Rise After Stock Market Sells Off On Coronavirus Stimulus Debate; AMD Soars 10% On Earnings Dow Jones futures were in focus late Tuesday. Four stock market leaders near key support levels include Apple and Microsoft. AMD surged on earnings late. Published:7/28/2020 5:34:56 PM
[Markets] Dow Jones Futures: Stock Market Sells Off On Coronavirus Stimulus Debate; AMD Soars 10% On Earnings Dow Jones futures were in focus late Tuesday. Four stock market leaders near key support levels include Apple and Microsoft. AMD surged on earnings late. Published:7/28/2020 4:09:43 PM
[Markets] Dow Jones Slides As Pfizer, McDonald's Stock Report Earnings The Dow Jones Industrial Average posted mild losses in today's stock market while the Nasdaq composite also moved lower. Published:7/28/2020 2:36:33 PM
[Markets] Dow Jones Resilient Despite Intel Sell-Off; 5 Top Growth Stocks Test Key Support Level The Dow Jones held up well in afternoon trading Friday despite a nasty sell-off in Intel shares. Several top growth stocks rebounded after early weakness. Published:7/24/2020 2:07:55 PM
[Markets] Dow Jones Loses 200 Points As Intel, China Tensions Fuel Stock Market Sell-Off Stocks were firmly lower midday as China tensions weighed and Intel's sharp drop hit the Dow Jones Industrial Average. Published:7/24/2020 12:38:00 PM
[Markets] Dow Jones Loses 170 Points As Intel, China Tensions Fuel Stock Market Sell-Off Stocks were firmly lower midday as China tensions weighed and Intel's sharp drop hit the Dow Jones Industrial Average. Published:7/24/2020 11:38:13 AM
[Markets] Dow Jones Drops 150 Points On China Retaliation; Intel Crashes 17% On Earnings And Tesla Dives 9% On Downgrade The Dow Jones Industrial Average fell 150 points on rising China tension. Intel dove on earnings, while Tesla skidded on an analyst downgrade. Published:7/24/2020 9:37:33 AM
[Markets] Dow Jones Dives Up To 400 Points As Apple, Microsoft Fall, Jobless Claims Weigh Selling ramped up late Thursday with the Dow Jones Industrial Average at one point plunging nearly 400 points to new session lows. Published:7/23/2020 2:32:14 PM
[Markets] Dow Jones Dives 300 Points As Stocks Sell Off On Jobless Claims, Earnings Selling ramped up Thursday afternoon with the Dow Jones Industrial Average down nearly 300 points, to new session lows. Published:7/23/2020 1:30:11 PM
[Markets] Dow Jones Today, Futures Reverse Gains After Jobs Data; Tesla's Unexpected Profit, Twitter's 186-Million Surprise Twiter and Tesla were learly leaders, as Pfizer led. Microsoft lagged on the Dow Jones today, ahead of weekly jobless claims data. Published:7/23/2020 8:33:01 AM
[Markets] Dow Jones Today, Futures Edge Up Ahead Of Jobs Data; Tesla's Unexpected Profit, Twitter's 186-Million Surprise Twiter and Tesla were learly leaders, as Pfizer led, Microsoft lagged on the Dow Jones today, ahead of weekly jobless claims data. Published:7/23/2020 7:31:26 AM
[Markets] Dow Jones Surpasses 27,000 On 3rd Straight Gain; This Medical Stock Shines After Earnings While the Dow Jones Industrial Average finished up 0.6%, the Nasdaq cut its early mild losses to close ahead 0.2%. Published:7/22/2020 4:23:04 PM
[Markets] Dow Rises but Wall Street Wobbles on Escalating U.S.-China Tensions Stocks fluctuated Wednesday on escalating tensions between the U.S. and China. Equities had been given a boost earlier in the session after Pfizer reached a coronavirus vaccine agreement with the U.S. government. The Dow Jones Industrial Average rose 62 points, or 0.23%, to 26,903, the S&P 500 rose 0.18% and the Nasdaq was down 0.19%. Published:7/22/2020 1:58:43 PM
[Markets] Stocks Wobble on Escalating U.S.-China Tensions, Pfizer Holds Higher Stocks fluctuated Wednesday on escalating tensions between the U.S. and China. Equities had been given a boost earlier in the session after Pfizer reached a coronavirus vaccine agreement with the U.S. government. The Dow Jones Industrial Average rose 13 points, or 0.05%, to 26,854, the S&P 500 rose 0.03% and the Nasdaq was down 0.31%. Published:7/22/2020 1:22:34 PM
[Markets] Dow Jones Rises 100 Points Amid U.S.-China Tension, As Pfizer Soars On Coronavirus Vaccine Deal; Microsoft, Tesla Earnings Due Late The Dow Jones Industrial Average turned higher amid rising U.S.-China tensions. Dow Jones drug giant Pfizer soared on coronavirus vaccine news. Published:7/22/2020 11:22:13 AM
[Markets] Dow Jones Rises Amid U.S.-China Tension, As Pfizer Soars On Coronavirus Vaccine Deal; Microsoft, Tesla Earnings Due Late The Dow Jones Industrial Average turned higher amid rising U.S.-China tensions. Dow Jones drug giant Pfizer soared on coronavirus vaccine news. Published:7/22/2020 10:03:09 AM
[Markets] Dow Gets Lift From Pfizer, Wall Street Eyes U.S.-China Tensions Stocks rose Wednesday despite escalating tensions between the U.S. and China and after President Donald Trump warned the coronavirus outbreak probably will get worse before it gets better. The Dow Jones Industrial Average rose 71 points, or 0.27%, to 26,911, the S&P 500 rose 0.32% and the Nasdaq was up 0.56%. Pfizer was the biggest gainer on the Dow rising 3.3% after the drugmaker and its German partner BioNTech reached an agreement to receive $1.95 billion from the U.S. government for 600 million doses of their developing coronavirus vaccine once it's approved by regulators. Published:7/22/2020 9:20:25 AM
[Markets] Dow Jones Futures Fall 100 Points On U.S.-China Tensions; Snap Plunges On Earnings Dow Jones futures were in focus early Wednesday. Four stock market winners with big moves include Apple and Tesla. Snap plunged on earnings after the close. Published:7/22/2020 5:20:40 AM
[Markets] Dow Jones Futures Rise 125 Points: 4 Big Stock Market Winners In Coronavirus Rally; Snap Plunges On Earnings Dow Jones futures were in focus late Tuesday. Four stock market winners with big moves include Apple and Tesla. Snap plunged on earnings after the close. Published:7/21/2020 10:19:52 PM
[Markets] Dow Jones Futures: 4 Big Stock Market Winners In Coronavirus Rally; Snap Plunges On Earnings Dow Jones futures were in focus late Tuesday. Four stock market winners with big moves include Apple and Tesla. Snap plunged on earnings after the close. Published:7/21/2020 4:48:14 PM
[Markets] Dow Jones Jumps 160 Points, Led By Chevron, Exxon Mobil; Tesla, EBay Weigh On Nasdaq The Dow Jones ended near its session low Tuesday, but a euro zone stimulus package boosted the price of oil, helping the cause of Chevron and Exxon Mobil. Published:7/21/2020 3:47:45 PM
[Markets] Gold Soars, Euro Roars As Dollar Dumps And Stocks Slump Gold Soars, Euro Roars As Dollar Dumps And Stocks Slump Tyler Durden Tue, 07/21/2020 - 16:03

For much of the day, the dominant theme was one of dollar weakness which saw the Bloomberg dollar index tumble below 1,200 and also take out the June 10 lows...

... the direct result of not just cable strength, as the sterling hit its 5-week highs, but mostly due to the ongoing surge in the EURUSD which continued its recent ascent, catalyzed by today's successful conclusion of the EU summit where the stimulus package was finally approved after five days of discussions.

And as the dollar tumbled, gold has continued its impressive surge, rising to $1,840 and now less than $100 away from its all time highs hit in September 2011. Even more remarkable, perhaps is that silver has also finally caught a bid, surging by more than $1 today, to trade at $21.20, surpassing the highs set in 2016, and now trading at a level not seen since 2014.

A zoomed in version of the chart above just covering the YTD period shows the impressive acceleration in silver in recent days...

... and if one goes by the long-term gold/silver ratio chart, silver still has a ways to go before catching up to its average of 60x. All else equal, if one assumes a gold price of $1,840, silver has about $10 of upside to go just to catch up to its historical "fair value".

So what about stocks? Well Europe was happy, with the Stoxx 600 rising to a new 5 month high, if still having a ways to go until it is unchanged for the year, a feat which Germany's DAX has almost achieved already.

In the US, things were more dramatic, with the Dow Jones blasting off out of the gate, while the Nasdaq slumped erasing some of its massive Monday gains as traders took profit in the FAAMGs even as IBM jumped after sales topped forecasts.

The Nasdaq 100 edged lower after closing at an all-time high on Monday, up 25% YTD, with investors awaiting a barrage of megacap tech earnings later this week. And while the S&P and the Dow were trading notably higher for much of the day, they gave up all most gains shortly after 3pm when Senate GOP leader Mitch McConnell was quoted as saying he does not expect the next stimulus bill to pass by next week, in effect ending the massive benefits that US consumer have gotten used to in the past three months, and hammering consumer shares.

It only got worse toward the close, when a sizable $1.8BN Market on Close sell imbalance hammered stocks, and sent the S&P cash into the red, and less than 1% up on the year.

Oil’s surge lifted Exxon Mobil and Chevron in the Dow Jones Industrial Average. Brent jumped more than $1, rising just shy of $45, while WTI traded at $41.76, both hitting the highest levels since March on hopes reflation will bloom thanks to Europe's €750BN stimulus fund.

Meanwhile, with bonds no longer reflecting anything besides the Fed's liquidity and YCC intentions, the 10Y went nowhere - and has gone nowhere in the past week - keeping the curve trading in a painfully narrow range.

Finally, with the VIX sliding to its lowest level since March, the "fear index" ramped higher all day, and closed just shy of session highs in what may be an ominous reversal which kept the VIX just above 25.

Published:7/21/2020 3:16:50 PM
[Markets] Forget The Fed, "Don't Fight The Narrative" Is The New Mantra Forget The Fed, "Don't Fight The Narrative" Is The New Mantra Tyler Durden Tue, 07/21/2020 - 14:05

Authored by James Rickards via The Daily Reckoning,

It’s widely believed that the stock market looks ahead and discounts the future. But consider this November’s presidential election...

Joe Biden has a substantial lead over President Trump in the polls. But Biden’s platform is not what you would call market friendly. For example, it calls for a 39.6% tax rate on dividends and capital gains.

But the stock market is near all-time highs again, with the Dow Jones Industrial Average nearing 27,000, the S&P over 3,200 and the Nasdaq actually at record highs.

What more proof do you need that stock markets are clueless when it comes to discounting future outcomes?

Now, it’s true you can’t always trust the polls. I know it well since I was one of very few analysts who predicted a Trump victory in 2016, even though he was behind in the polls.

But the same analytical tools that led me to predict a Trump win last time are showing me his chances are poorer this time.

OK, a true believer might say, but maybe the market’s anticipating a robust economic recovery. That’s why it’s rebounded so strongly.

But that argument just doesn’t hold much water.

Yes, unemployment dropped from over 13% to just over 11% last month, but that’s still the highest level since the end of World War II.

And there’s good reason to believe the unemployment rate will surge again heading into August as Payroll Protection Plan loans run out, lockdowns resume and states catch up with a backlog of claims that have not been processed yet.

Big business may be doing fine because it’s crowded into technology, finance and telecommunications, which are relatively unaffected by the pandemic.

But almost half the economy and half of all jobs are the domain of small-and-medium sized enterprises that have been decimated.

These restaurants, salons, dry cleaners, boutiques and other mainstays of neighborhoods across America are operating at half-capacity (at best) or have shut their doors permanently (at worst).

Meanwhile, a wave of bankruptcies is sweeping across the nation.

In other words, the V-shaped recovery that many analysts have been touting simply isn’t in the cards.

My own estimate is that this year may be even worse than the Great Depression.

We’re probably in for an L-shaped recovery, where the economy goes down steeply and is followed by low growth for an indefinite period of time.

But it’s full speed ahead for the stock market.

The market dip in March was the shortest bear market in history. Someone who just looked at stock charts could not be blamed for believing that the pandemic had never really happened.

So, why the strong stock market in a weak economy?

The simplest answer is that the stock market doesn’t have much to do with the economy. It’s just a casino driven by fear, greed, momentum, robots and indexation. There’s certainly something to that.

A more sophisticated answer is given by Nobel Prize-winning economist Robert Shiller.

Shiller writes that stock markets are driven by “narratives” or stories market participants tell each other.

  • From January to mid-February, even as the coronavirus was spreading out of control, the narrative was that the virus was contained to China. Markets reached new highs.

  • In March and April, the narrative changed to panic as Italy shut down and the U.S. did likewise. This is when the market fell over 30% ending the record bull market of 2009-2019.

  • The third phase started in late April as the market rallied 40% based on massive Fed money printing and $5 trillion of new government spending. The narrative was that easy money would rescue the market.

All of these narratives were wrong in the sense that the virus was not under control in February, it did not necessitate a lockdown in April, and the money printing and spending won’t solve the problem today.

Still, the narratives prevailed. “Don’t fight the Fed” is one of the oldest sayings on Wall Street.

The new conventional wisdom might be, “Don’t fight the narrative.”

Published:7/21/2020 1:17:22 PM
[Markets] Dow Jones Up 300 Points As Oil Stocks Surge, But Nasdaq Backs Off New High The Dow Jones Industrial Average rallied 300 points midday Tuesday amid hopes for more stimulus to aid the coronavirus-wracked economy. Published:7/21/2020 12:50:51 PM
[Markets] Dow Jones Rallies 300 Points On Coronavirus Stimulus Hopes; Nasdaq Pauses The Dow Jones Industrial Average rallied 300 points midday Tuesday amid hopes for more stimulus to aid the coronavirus-wracked economy. Published:7/21/2020 11:46:19 AM
[Markets] Dow Jones Jumps Over 300 Points On Coronavirus Stimulus; Coca Cola, IBM Rally On Earnings, While Lululemon, Vertex In New Buy Zones The Dow Jones Industrial Average rallied 300 points early Tuesday after the European Union agreed to a coronavirus stimulus fund. Published:7/21/2020 10:37:08 AM
[Markets] Dow Jones Jumps 300 Points On Coronavirus Stimulus; Coca Cola, IBM Rally On Earnings, While Lululemon, Vertex In New Buy Zones The Dow Jones Industrial Average rallied 300 points early Tuesday after the European Union agreed to a coronavirus stimulus fund. Published:7/21/2020 9:52:08 AM
[Markets] Dow Turns Higher, Nasdaq Jumps as Tech Shares Rally Stocks were higher Monday as Wall Street came off its third straight week of gains and investors turned their attention to a flurry of earnings reports. Investors also assessed promising data from an early stage trial of a key coronavirus vaccine study from Oxford University and AstraZeneca . The Dow Jones Industrial Average rose points, or 0.1%, to 26,698, the S&P 500 rose 0.58% and the Nasdaq was jumping 1.79%, getting a boost from Amazon.com which was up more than 6%. Published:7/20/2020 1:09:21 PM
[Markets] Dow Jones Gets Boost From These 4 Key Stocks; Nasdaq Eyes New Closing High The Dow Jones Industrial Average was near session highs midday after falling as much as 167 points, while the Nasdaq was on track for a new closing high. Published:7/20/2020 12:39:24 PM
[Markets] Dow Down as Wall Street Assesses Vaccine Data, Nasdaq Soars Stocks were mixed Monday as Wall Street came off its third straight week of gains and investors turned their attention to a flurry of earnings reports. Investors also assessed promising data from an early stage trial of a key coronavirus vaccine study from Oxford University and AstraZeneca . The Dow Jones Industrial Average fell 44 points, or 0.17%, to 26,627, the S&P 500 rose 0.42% and the Nasdaq was jumping 1.51%, getting a boost from Amazon.com which was up nearly 6%. Published:7/20/2020 11:39:57 AM
[Markets] Dow Jones Cuts 150 Point Loss As Coronavirus Stock Market Rally Continues; Pfizer Jumps On Covid-19 Vaccine News The tech-heavy Nasdaq composite outpaced the Dow Jones industrials and the S&P; 500 early Monday. Amazon stock jumped on price-target hikes. Published:7/20/2020 10:07:32 AM
[Markets] Dow Jones Falls 150 Points As Coronavirus Stock Market Rally Continues; Pfizer Jumps On Covid-19 Vaccine News The tech-heavy Nasdaq composite outpaced the Dow Jones industrials and the S&P; 500 early Monday. Amazon stock jumped on price-target hikes. Published:7/20/2020 9:39:18 AM
[Markets] Dow Jones Today Propped BY Pfizer-U.K. Vaccine Deal; Stocks Mixed, Quest Diagnostics In Buy Range Quest Diagnostics and eBay were early leaders amid mixed trade Monday. Pfizer led the Dow Jones today on a vaccine deal with the U.K. Published:7/20/2020 9:05:54 AM
[Markets] Dow Jones Today Gets A Boost From Pfizer-U.K. Vaccine Deal; Futures Mixed, Quest Diagnostics In Buy Range Quest Diagnostics and eBay were early leaders amid mixed trade Monday. Pfizer led the Dow Jones today on a vaccine deal with the U.K. Published:7/20/2020 7:41:47 AM
[Markets] Big Weekly Gain For The Dow As Pfizer Advances In Coronavirus Drug Race Stocks finished mixed Friday as the Nasdaq and S&P; 500 held modest gains but the Dow Jones Industrial Average gave up 0.2%. Published:7/17/2020 4:47:48 PM
[Markets] Dow Jones Jumps 2.3% This Week As Pfizer Advances In Coronavirus Drug Race Stocks finished mixed Friday as the Nasdaq and S&P; 500 held modest gains but the Dow Jones Industrial Average gave up 0.2%. Published:7/17/2020 4:28:43 PM
[Markets] Dow Jones Stocks Mixed As Biotechs Rise On Johnson & Johnson Vaccine News The Dow Jones traded slightly higher in today's stock market as the S&P; 500 and Nasdaq composite also posted mild gains of less than 1% each. Published:7/17/2020 12:49:54 PM
[Markets] Dow Holds 650-Point Weekly Gain; Why Ericsson, Wingstop, Zoetis Hit Buy Points Today The Dow Jones Industrial Average had trouble padding its recent gains, yet the action in stocks today points to a market in a confirmed uptrend. While the Dow's opening gain of 0.3% was much smaller than some of its strong daily increases, and eroded during the first 45 minutes of trading, the 30-stock blue chip index continues to stay at five-week highs. At this week's high of 27,071, the Dow industrials have now risen 48% off its coronavirus stock market crash low of 18,213. Published:7/17/2020 9:45:38 AM
[Markets] Market Snapshot: Stock-index futures edge higher after Thursday decline; Netflix falls premarket Stock-index futures see modest gains Friday, a day after the Dow Jones Industrial Average broke a four-day winning streak,
Published:7/17/2020 6:15:02 AM
[Markets] Dow Jones Fades Weekly Gains; Netflix Falls On Q2 Earnings Miss The Dow Jones Industrial Average fell in today's stock market as the S&P; 500 and Nasdaq composite also posted mild declines of less than 1% each. Published:7/16/2020 4:23:16 PM
[Markets] Dow Jones Dips, But UnitedHealth, Caterpillar Strong; Netflix Reverses Higher Ahead Of Earnings The Dow Jones, S&P; 500 and Nasdaq composite were down 0.7% to 0.9% in afternoon trading. It was an orderly pullback even though growth stocks lagged again. Published:7/16/2020 2:13:42 PM
[Markets] Dow Jones Stuck In Red As Coronavirus, Jobless Claims Weigh On Stock Market Stocks remained under pressure midday with the Dow Jones Industrial Average on track to end a four-day win streak as jobless claims weighed. Published:7/16/2020 12:46:39 PM
[Markets] Market Recap: Wednesday, July 15 The three major averages finished higher on Wednesday, after a strong set of earnings results from companies such as Goldman Sachs and UnitedHealth before market open added to earlier hopes for a coronavirus vaccine after news from Moderna. The Dow Jones Industrial average and Russell 2000 both logged their sixth straight day of gains. The Final Round panel discusses the day’s market action. Published:7/15/2020 4:04:13 PM
[Markets] Dow Vaults 1,365 Points In 4 Days, Moderna Soars 29% For Week; These Stocks Also Lead The Dow Jones Industrial Average is finding newfound strength in the stock market today, partially getting a boost by Wall Street giants in banking and investment management. While U.S. equities eased off session highs, the Dow Jones' 0. Published:7/15/2020 11:41:08 AM
[Markets] Dow Jones Up 300 Points As Coronavirus Drug News Fuels Stock Market Rally Key market indexes eased after gapping up sharply at the open, sending the Dow Jones Industrial Average up as much as 429 points. Published:7/15/2020 10:07:57 AM
[Markets] Dow Jones Futures Signal Stock Market Rally On Moderna Coronavirus Vaccine News; Tesla Gains On Cybertruck Tax Breaks Dow Jones futures rose on positive Moderna coronavirus vaccine news, following a stock market rally rebound. Apple and Tesla climbed on news, Published:7/15/2020 6:36:37 AM
[Markets] Global Stocks Soar On Vaccine Optimism Global Stocks Soar On Vaccine Optimism Tyler Durden Wed, 07/15/2020 - 07:33

Global stocks surged, and US equity futures jumped rising to the Monday pre-dump highs, on coronavirus vaccine optimism (with headlines now conveniently appearing every time stocks appear poised for a selloff) and looking past record daily death rates in some states and brewing tensions between Washington and Beijing. Yields rose and the dollar slumped to a one month low.

US stocks staged a late session surge on Tuesday after news that Moderna’s coronavirus vaccine produced antibodies to the coronavirus in all patients tested in an initial safety trial. The vaccine developments brought optimism to financial markets that have been struggled to make headway recently in the face of new outbreaks across the U.S. and Asia.

Moderna shares surged 18% in pre-market trading following late Tuesday news that it was safe and provoked immune responses in all 45 healthy volunteers in an ongoing early-stage study, while AstraZeneca rose after a report that a medical journal will release positive news on the coronavirus vaccine the company is developing with University of Oxford researchers. American Airlines, United Airlines Holdings, Carnival Corp, Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd rose between 6% and 6.8%.

“The vaccine news is clearly a positive development,” said Mark Nash, head of global fixed income at Merian Global Investors. “But it’s still long way off. The fear of the W-shaped recovery is probably very high at the moment. Good news is that markets still have a chance to ride it out because the Fed has bought time, so financial conditions can stay easy until growth kicks in.”

Europe's Stoxx 600 Index extended gains to 1.3% shortly before noon in London, with travel leading among sectors, amid positive sentiment in markets on the back of progress in developing a coronavirus vaccine. European index heads for a third day of gains in four sessions The Travel & Leisure sector rose 2.7%, led by Carnival while the Stoxx Europe 600 Industrial Goods & Services +2.5%, boosted by Schneider Electric, Adyen. Banks and telecom gauges are the only two trading lower. Atlantia SpA surged 22% as Italy’s government moved to resolve a long-running dispute linked to a 2018 bridge collapse.

Earlier in the session, Asian stocks gained, led by industrials and materials, after falling in the last session. Most markets in the region were up, with India's S&P BSE Sensex Index gaining 1.9% and Australia's S&P/ASX 200 rising 1.9%, while Shanghai Composite dropped 1.6%. Trading volume for MSCI Asia Pacific Index members was 17% above the monthly average for this time of the day. The Topix gained 1.6%, with Danto and SERAKU rising the most.

Surprisingly, Chinese markets underperformed with the Hang Seng and Shanghai Comp. (-1.6%) both negative after US President Trump signed legislation and an executive order to hold China accountable for actions in Hong Kong, with the executive order to remove preferential treatment for Hong Kong and which will now be treated the same as China. Furthermore, China later responded that it strongly opposes US signing the sanctions bill and that it will implement its own sanctions on US officials and entities. Reports of China state funds continuing to sell shares also did not help in which a pension fund was said to have offloaded 42.3mln BoCom A-shares on Tuesday. Qianjiang Water Resources Development and Shanghai LongYun Media Group Co Ltd posting the biggest drops.

In FX, the Bloomberg Dollar Spot Index fell to a one-month low as Norway’s Krone led G-10 gains followed by the pound; the krone was also supported by higher oil prices, while sterling got a boost after U.K. inflation surprisingly accelerated last month. The euro rose a fourth day against the dollar to a four- month high of 1.1445, and the cost to hedge one-day fluctuations in euro-dollar suggests market makers see a good chance that year-to-date highs may come to test as Thursday’s European Central Bank meeting comes into focus. Sweden’s krona touched its strongest level in 17 months against the euro as risk sentiment improved and following a report that showed Swedish inflation expectations didn’t drop further.

In rates, Treasury yields moved higher with gilt yields also rising after a debt sale. US Treasury yields were higher by 2bp-3bp at long end, remaining inside weekly ranges, 10-year by ~2bp at 0.643; U.K. 10-year yield higher by 2.6bp, gilts leading declines for sovereign bond markets. UST 5s30s steeper for first day in five, approaching 104bp.

In commodities, oil gained after a report pointed to a drop in U.S. crude stockpiles; gold remained well above $1800.

 

Top Overnight News from Bloomberg

  • German Chancellor Angela Merkel said she’s prepared to compromise in difficult talks on assembling a European recovery plan this weekend in Brussels, as Spanish Prime Minister Pedro Sanchez urged leaders to reach an accord at the meeting
  • The EU Council needs to make a decision on a European recovery plan by the end of July, Italy’s Prime Minister Giuseppe Conte tells lawmakers on Wednesday
  • Bank of Japan Governor Haruhiko Kuroda said Japan’s economy was past the worst, but warned the recovery would be slow, adding that he remains ready to take further action if needed; said that excessively low super-long yields could cause problems
  • The U.K. will sell nearly twice as many bonds than it did during the height of the financial crisis, according to estimates of primary dealers
  • Bank of England policy maker Silvana Tenreyro says current pace of recovery will be slowed by social distancing, restrictions in some sectors and higher unemployment
  • U.K. levels of Covid-19 infection fell faster than previously reported in May, according to a study of 120,000 people that took place before the country’s lockdown was eased
  • OPEC+ is seeking extra production cuts from members that have missed their targets again in June, potentially tempering the impact of the supply resumption planned by the wider coalition next month.

Market Snapshot

  • S&P 500 futures up 0.8% to 3,208.00
  • STOXX Europe 600 up 0.9% to 370.81
  • MXAP up 1.1% to 166.57
  • MXAPJ up 0.8% to 548.07
  • Nikkei up 1.6% to 22,945.50
  • Topix up 1.6% to 1,589.51
  • Hang Seng Index up 0.01% to 25,481.58
  • Shanghai Composite down 1.6% to 3,361.30
  • Sensex up 1.9% to 36,710.28
  • Australia S&P/ASX 200 up 1.9% to 6,052.92
  • Kospi up 0.8% to 2,201.88
  • German 10Y yield fell 1.1 bps to -0.458%
  • Euro up 0.3% to $1.1438
  • Italian 10Y yield fell 2.4 bps to 1.085%
  • Spanish 10Y yield fell 1.4 bps to 0.394%
  • Brent futures up 1.5% to $43.54/bbl
  • Gold spot little changed at $1,810.36
  • U.S. Dollar Index down 0.4% to 95.91

Asian equity markets were mostly positive as the regional bourses tracked the cyclical-led gains in US peers and on vaccine hopes after Moderna’s COVID-19 vaccine produced antibodies in all 45 patients tested in an initial study. ASX 200 (+1.9%) and Nikkei 225 (+1.6%) were lifted from the open with Australia’s tech sector and gold miners front-running the broad advances in the index which surpassed the 6000 milestone, while the Japanese benchmark printed its highest level in over a month and withstood the ongoing virus concerns in Tokyo which prompted the city to switch to its highest COVID-19 alert status. Chinese markets underperformed with the Hang Seng (U/C) and Shanghai Comp. (-1.6%) both negative after US President Trump signed legislation and an executive order to hold China accountable for actions in Hong Kong, with the executive order to remove preferential treatment for Hong Kong and which will now be treated the same as China. Furthermore, China later responded that it strongly opposes US signing the sanctions bill and that it will implement its own sanctions on US officials and entities. Reports of China state funds continuing to sell shares also did not help in which a pension fund was said to have offloaded 42.3mln BoCom A-shares on Tuesday. Indian markets were also notable gainers with the NIFTY up 0.2% and the NIFTY IT index gaining around 3% in early trade alongside Wipro shares which hit 10% upper circuit following a beat on earnings. Finally, 10yr JGBs were lacklustre amid the gains in stocks and unsurprising BoJ policy hold, while there was notable corporate supply with Nissan pricing a JPY 70bln 3-tranche in its first JPY-denominated bond offering since 2016.

Top Asian News

  • Hong Kong’s Beaten Down Stocks Face Yet Another Blow from Trump
  • Central Banker Urges Israel to Seize Cheap Debt Opportunity
  • Hillhouse Invested About $1 Billion In Beigene’s Share Sale
  • ChemChina, State Funds Said in Talks for Syngenta’s Pre-IPO

European equities trade higher across the board (Eurostoxx 50 +1.1%) following the recovery in the latter half of yesterday’s session for US equities. As has been the case throughout the week, there wasn’t a great deal of narrative-altering newsflow for the majority of the session with many of the same macro factors that are in focus having been present for some time now. Some of the positivity late doors emanated from a COVID-19 drug update from Moderna, however, the latest update doesn’t necessarily mark a breakthrough from the data already published in May with the latest findings instead from a larger sample group than prior. More recently, global bourses took another leg higher and moved back into proximity to session highs on reports via ITV’s Peston that positive news is on the way, perhaps as soon as tomorrow, for AstraZeneca’s (+2.9%) COVID-19 vaccine – which is seeing a rare ‘twin effect’ in terms of the response for both antibodies and T-cells. In terms of sectoral performance for Europe, travel & leisure names are the clear outperformer with the sector noted as one of the purest reopening plays. Carnival (+5.3%), Ryanair (+5.1%), Tui (+3.2%) and easyJet (+2.9%) all trade with notable gains, however,  there has been little in the way of sector-specific newsflow in the past 24 hours for European airline names. Elsewhere, Auto names are also trading firmer today with Renault the outperformer in the sector after reports that Nissan is to start selling an EV. To the downside, Telecom names lag peers in a potential pullback from some of the upside seen yesterday in the wake of the UK’s decision to bar Huawei from the UK’s 5G network by 2027. In terms of individual movers, Atlantia (+24.2%) sit at the top of the Stoxx 600 as the company appears to be making progress in striking a deal with the Italian government, whilst Burberry (-6.9%) are a notable underperformer after its latest trading update in which it expects a potential 50% decline in H1 sales.

Top European News

  • The 700 Billion-Euro Man Counting Each Cent to Keep Italy Afloat
  • Kremlin Plots Pullback from Stimulus Despite Rising Infections
  • Sunak Orders Review of U.K. Capital Gain Tax After Virus Splurge
  • BOE’s Tenreyro Is Ready to Boost Stimulus Again If Needed

In FX, it was a woeful start to Wednesday’s EU session for the Greenback as losses accumulate across the board on various fundamental and technical factors, including a rebound in broad risk sentiment due to more positive COVID-19 vaccine reports and somewhat contradictory persistent/latent concerns about the resurgence of the virus in US states. The index has fallen below 96.000 and close to June lows (95.716) at 95.866 as several Dollar/major pairs extend beyond or breach round number levels that have been providing some support for the Buck and resistance in terms of G10 counterparts. Ahead, a busy midweek US data docket and more Fed speak from Harker before the latest Beige Book.

  • GBP - Sterling has benefited most from the Greenback’s ongoing travails, with Cable back above 1.2600, but the Pound also reclaiming losses vs the Euro from sub-0.9100 lows yesterday on a technical retracement rather than anything specifically Gbp supportive. On that note, UK CPI data was a tad firmer than expected, but still benign and BoE’s Tenreyro subsequently countered with a disinflationary outlook, while adding that NIRP is a live issue for the MPC currently under review.
  • AUD/NZD/EUR/JPY/CAD/CHF - All firmer against the US Dollar as noted above, with the Aussie hitting fresh 1+ month highs with the aid of momentum buying when 0.7005 was breached, but meeting offers into 0.7020 ahead of jobs data on Thursday. Meanwhile, the Kiwi continues to lag around 0.6550 and 1.0680 in Aud/Nzd cross terms awaiting Q2 CPI tonight in contrast to the Euro that has extended gains on the 1.1400 handle to circa 1.1445 and surpassing June 10’s 1.1422 best along the way pre-ECB tomorrow. Elsewhere, the Yen has rebounded from 107.30 to 106.90 and the Loonie is pivoting 1.3600 in the run up to the BoC with options pricing in a 57 pip break-even on the event, while the Franc remains mixed either side of 0.9400 vs the Buck and down to 1 month lows against the single currency near 1.0740.
  • SCANDI/EM - The Norwegian and Swedish Crowns are both nudging key markers vs the Euro at 10.6500 and 10.3500 respectively, with the former buoyed by firm crude prices and latter maintaining post-inflation data impetus even though June’s trade deficit widened significantly and almost all CPI/CPIF projections from Prospera were unchanged. Similarly, the Rand has taken weaker than forecast SA inflation in stride on overall Dollar weakness and despite potential implications for the SARB policy meeting next week given a relatively reserved -25 bp consensus vs -1/2 point last time.

In commodities, WTI and Brent remain bolstered ahead of the JMMC meeting, with sentiment generally positive this morning and after last nights larger than expected draw in private inventories. Firstly, the JMMC, which energy correspondents note is expected to commence from around 13:00BST/08:00ET but as with any OPEC related event the timing should be taken as guidance only. Indications heading into the JMMC meeting point towards the committee recommending that the level of production cuts is reduced, which would be in-line with the original plan. As a reminder, the JTC committee met yesterday to discuss the planned easing of cuts to 7.7mln BPD; note, Saudi is said to be looking to keep export figures steady for the month of August. JMMC aside, much of the upside price action follows on from yesterday’s private inventories where crude stocks printed a larger than expected draw of 8.3mln vs. Exp. draw of 2.1mln; focus turns to today’s EIA stocks for confirmation of this reading with expectations pointing to a draw of 2.09mln. Turning to metals, spot gold has been choppy this morning with the upside just after the European cash open derived from further USD downside as well as resistance levels lying in proximity to the current high. Elsewhere, Antofagasta is calling for further negotiations to resolve the strike action in Chile; but, the strike action has not been sufficient to bolster copper prices thus far.

US Event Calendar

  • 8:30am: Export Price Index MoM, est. 0.8%, prior 0.5%; Import Price Index MoM, est. 1.0%, prior 1.0%
  • 8:30am: Empire Manufacturing, est. 10, prior -0.2
  • 9:15am: Industrial Production MoM, est. 4.3%, prior 1.4%; Manufacturing (SIC) Production, est. 5.65%, prior 3.8%
  • 2pm: U.S. Federal Reserve Releases Beige Book

DB's Jim Reid concludes the overnight wrap

Unless I’m forgetting a random trip, I drove a car yesterday for the first time since lockdown and also wore a mask for the first time. Luckily I didn’t do the two together as my glasses kept on steaming up wearing it. Watch that mobility data climb in the U.K.. It was only 4 minutes to a local physio as I’ve hurt my hip and back over the last month and it won’t go away, especially when my wife asks me to do something. The physio has managed to diagnose it. It’s got quite a complicated name so bear with me. She said it’s likely “middleagemanovergolfingintheeveningsinlockdownitis”. In short I’m having spasms all over my lower back. Interestingly she said that since she reopened she is seeing a surge in patients as people have either done too little exercise in lockdown or too much.

Talking of aches and pains, US markets leapt off Monday’s treatment table to power to 5 week highs overnight as earnings season got underway. The US rally has continued into Asia as we’ll see below. The S&P 500 advanced by +1.34% yesterday as cyclicals such as energy (+3.61%), materials (+2.54%) and industrials (+2.18%) led the way. Tech stocks underperformed somewhat, as the NASDAQ rose ‘only’ +0.94%, while the Dow Jones saw a much stronger +2.13% advance on the back of CAT (+4.83%). In terms of the earnings details we heard from 3 major US banks. JPM rose +0.57% as Q2 profits were down just over 50%, a smaller drop than analyst’s forecasted as the firm set a record for trading revenue in the Spring at $9.72bn. Citigroup (-3.93%) also saw a large rise in trading, but saw their shares fall on loan-loss provisions. Such provisions, as well as one off costs and the lack of a large trading operation, saw Wells Fargo (-4.57%) post its first quarterly loss since 2008 as it also lowered its dividend. The three banks set aside nearly $28bn for defaulted loans this past quarter, only the last quarter of 2008 and the heights of the Financial Crisis saw a larger total provision. On the back of all of this, US banks were the only S&P industry group to finish lower on the day, falling -1.19%.

While we’re on the subject of earnings, our Chart of the Day yesterday highlighted that our equity strategists see a quarter where we’re likely to see a notable collective beat as analysts expectations lagged data surprises in the last few weeks of the quarter. We also show how bifurcated the S&P 500 is with 490 stocks range trading since early April while the 10 mega cap growth stocks (27% of market cap) power ahead to new highs. If you missed the CoTD see it here with all the links to our equity strategists pieces contained within. Please email Jim-Reid.ThematicResearch@db.com to get added to this new daily CoTD.

Futures on the S&P 500 are up another +0.73% this morning after Moderna announced post the market close that their Covid-19 vaccine produced antibodies in all 45 patients tested in an early round of trials. This is a key threshold for US regulators and raises hopes that the vaccine may be within sight. However a number of patients did experience side effects with some being severe. The vaccine now moves onto a much later-stage trial which will most likely determine whether the US approves it for use. According to the results published in the New England Journal of Medicine, antibody levels produced in the trial were equivalent to the upper half of what’s seen in patients who get infected with the virus and recover. The stock was up over +16.5% in after-market trading following the report.

Overnight, the Bank of Japan left its monetary policy unchanged even as their price and growth forecasts were revised down. The latest forecasts point to a deeper slump this year, but suggest a slightly faster pick up in the following years. Outside of US futures, Asian markets are trading mixed this morning with the Hang Seng (-0.55%), CSI (-1.04%) and Shanghai Comp (-1.39%) lower likely helped by the US Hong Kong legislation news mentioned below while the Nikkei (+1.26%), Kospi (+0.48%) and Asx (+1.35%) are trading up boosted in part by the vaccine news.

Back in Europe yesterday the picture was more negative as much of the US rally occurred after the European close as they caught down to the previous day’s US declines. By the close the STOXX 600 (-0.84%), the CAC 40 (-0.96%) and the DAX (-0.80%) had all seen noticeable declines. Sovereign bonds performed strongly however given the earlier risk-off, and yields fell across the continent. Gilts were the strongest performer (more on which below), but otherwise bunds (-3.0bps), OATs (-3.0bps) and BTPs (-2.5bps) all saw similar moves. In the US, 10yr Treasuries ended the session +0.5bps.

The advances for US equities came in spite of the fact that the number of coronavirus cases there continues to rise. Tuesday is often a day with weekend catch up so we have to be a bit careful with the data, but some states did actually record cases under their weekly average. Florida posted a further 3.3% rise in cases yesterday, under the 7 day average of 4.6%, however the state recorded 132 deaths, well above the 7 day average of 72. On the other hand, Arizona had its most recorded cases in nearly 2 weeks. The 3.5% increase in cases was well above the 7 day average of 2.9%, as the number of cases over each of the past 2 days were far below the 3200 per day average observed over the last week, indicating a good deal of catch-up. California was another state that saw a higher case load than their weekly average, with 10,898 new cases vs. 7800. Overall the pace of new cases in the US rose in line with the weekly average at 2%. This week and early next week will be key to see if some shutdown measures undertaken in the Southern US begin to work and also whether we see a larger spike in deaths in heavily affected areas. So far fatalities have been notably lower per recorded case than they were in the first wave.

Over in New York, where case growth was at a much-more subdued 0.2%, a further 4 states were added to its 14-day quarantine list, bringing the total to 22. And in Philadelphia, ABC-6 reported that the city would ban big public events through February 2021. Meanwhile, Tokyo has said overnight that it will raise the Covid-19 warning one notch to the highest level on a scale of 4. Tokyo has reported daily infections exceeding 200 for four consecutive days and cases of unknown origin are rising. On the positive side, China is set to allow tour agencies and online tourism companies to run local group tours and hotel bookings across provinces, though foreign tourism will still be banned.

With the virus picture murky in the US, Fed Reserve Governor Brainard said yesterday that, “A thick fog of uncertainty still surrounds us, and downside risks predominate.” She noted that the central bank should ensure that both forward guidance and asset purchases provided long-term accommodations for financial markets. Like others at the Fed, she espoused on how important fiscal support would be for the recovery, while saying it was “unclear” whether the recent pace of labour-market recovery would endure. Brainard also weighed in on YCC, saying that the time may come for the central bank to reinforce forward guidance by selectively targeting parts of the yield curve, while also making very clear that was imminent in that regard. Later, we heard from Federal Reserve Bank of St. Louis President James Bullard and he said that he sees little need for stronger forward guidance or yield curve control because markets are already projecting very low interest rates for the indefinite future. He also cited Homebase data as a guide for the US employment report and said, “You would see a positive report for July but it wouldn’t be as big of a gain as for May and June. That wouldn’t be surprising because those gains were quite large”.

Here in the UK, the main announcement yesterday was official confirmation that masks would be compulsory in English shops from July 24, punishable by a £100 fine. That said, the case numbers in the UK are substantially lower than in the US, and the latest official death statistics from England and Wales yesterday showed that the total number of deaths from all causes in the week ending July 3 were below the five-year average for a 3rd consecutive week. Similar moves on masks are taking place in France, with president Macron saying he wanted people to wear masks in all indoor public spaces by the start of August.

Moving on, we got a number of China headlines yesterday as tensions continue to ratchet up between them and the US. Firstly, we got the news that China would be imposing sanctions on Lockheed Martin, following the decision of the United States to approve the sale of missile parts to Taiwan. Separately, we then heard later in the day that the UK would completely remove Huawei from its 5G networks by the end of 2027, and that there would also be a total ban on the purchase of any new 5G kit from Huawei after the end of this year. The decision follows new advice from the UK’s National Cyber Security Centre on the impact of US sanctions on Huawei. Meanwhile, President Trump said overnight that he has issued an order to end Hong Kong’s special status with the US and signed legislation that would sanction Chinese officials responsible for cracking down on political dissent in the city. In response, China has vowed to take strong countermeasures and sanction US officials and entities over the Hong Kong law while, urging the US to “correct its wrongdoings” and to stop interfering in Hong Kong affairs.

While we’re on China, yesterday our economist Yi Xiong released his H2 outlook for the country (link here). According to him, the V-shaped recovery is largely complete, and he forecasts +4.5% year-on-year GDP growth by Q4 2020. Interestingly, he says that sectoral divergence will be the main theme in the second half, thanks to changes in consumer preferences and business models. This will mean that some sectors see permanent revenue losses, while others have the potential to achieve above-trend growth.

Back to yesterday and here in the UK, we got some disappointing GDP data for May yesterday, with just a +1.8% month-on-month expansion (vs. +5.5% expected). Even with the growth in May, that still leaves economic activity for the month down by -24.5% compared with February’s level, and raised concerns that the hoped-for V-shaped recovery won’t be materialising any time soon. Gilts outperformed after the release as investors hoped for further monetary stimulus, with 10yr yields (-3.6bps) closing at an all-time low of 0.15%. Furthermore, at one point in the day, 2-year gilts were actually yielding less than their Japanese counterparts for the first time in living memory. Our UK team also updated their fiscal projections yesterday (link here), and now see borrowing rising to £375bn in 2020/21, with risks firmly tilted to the upside.

In terms of yesterday’s data, the main highlight was the US CPI reading for June, with inflation rising to +0.6% year-on-year, in line with expectations, while core inflation remained at +1.2%. The month over month measure rose to 0.6%, just above expectations of 0.5% and the highest one month pickup since Jan 2017. Elsewhere, the NFIB small business optimism index also rose to 100.6 (vs. 97.8 expected).

To the day ahead now, and earnings season continues apace, with highlights including UnitedHealth Group, Goldman Sachs, US Bancorp, BNY Mellon and Infosys. Otherwise, there’ll be a rate decision from the Bank of Canada, the release of the Fed’s Beige book, as well as remarks from the BoE’s Tenreyro and the Fed’s Harker. Finally, data highlights include the UK CPI reading for June, while from the US there’s the June industrial production and capacity utilisation numbers, along with July’s Empire State manufacturing survey.

Published:7/15/2020 6:36:37 AM
[Markets] Dow Jones Futures Rise On Moderna Coronavirus Vaccine News After Stock Market Rally; UnitedHealth, Goldman, ASML Earnings On Tap Dow Jones futures rose on positive Moderna coronavirus vaccine news, following a stock market rally rebound. Three key earnings reports loom. Published:7/14/2020 4:57:59 PM
[Markets] Dow Jones Up 340 Points As Bank Stocks Kick Off Earnings Season The Dow Jones Industrial Average rose on today's stock market, reclaiming it's all-important 200-day line. Meanwhile, the Nasdaq composite extended losses. Published:7/14/2020 12:56:18 PM
[Markets] Dow Jones Rallies 300 Points To Regain Key Support; Nasdaq Pares Losses Stocks were mostly higher midday as the Dow Jones Industrial Average rallied 300 points and the Nasdaq pared earlier losses. Published:7/14/2020 11:26:18 AM
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[Markets] Dow Jones Futures Signal Gains For Coronavirus Stock Market Rally; Analog Devices To Buy Maxim Integrated; Apple, Amazon, Tesla, Netflix In Focus Dow Jones futures: Apple, Amazon, Tesla, Netflix are fueling the coronavirus market rally. Analog Devices will buy Maxim Integrated for over $17 billion in a big chip deal Published:7/13/2020 5:22:01 AM
[Markets] Dow Jones Set To Post Weekly Gain; Netflix Stock Soars To New Highs The Dow Jones Industrial Average rose on today's stock market as Netflix stock jumped to new highs of 555.88 on analyst upgrades. Published:7/10/2020 2:32:00 PM
[Markets] Dow Jones Leads Market On Coronavirus Vaccine Hopes, But Nasdaq Dips Into Red The Dow Jones Industrial Average was up 200 points Friday afternoon as the stock market got a boost from bullish coronavirus vaccine news. Published:7/10/2020 12:05:22 PM
[Markets] Dow Jones Rallies 220 Points To Lead Stock Market; Is A Coronavirus Vaccine Near? The Dow Jones Industrial Average extended its gains to 200 points midday as the stock market got a boost from bullish coronavirus vaccine news. Published:7/10/2020 11:32:26 AM
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[Markets] Dow Jones Falls, Nasdaq Climbs As China Stocks Lead The Dow Jones Industrial Average sold off on today's stock market, but the Nasdaq composite closed higher. A handful of China stocks led the market. Published:7/9/2020 3:54:28 PM
[Markets] Dow Pounded 541 Points, Alibaba Still Extended; Will Costco Lead Retailers Again? The 30-stock Dow Jones has gained as much as 5.1% since the June 26 sell-off and key test of its rising 50-day moving average. Published:7/9/2020 10:52:09 AM
[Markets] Dow Sinks 309 Points, Alibaba Still Extended; Will Costco Lead Retailers Again? The 30-stock Dow Jones has gained as much as 5.1% since the June 26 sell-off and key test of its rising 50-day moving average. Published:7/9/2020 9:52:02 AM
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[Markets] Dow Jones Today, Futures Turn Up As China Stocks Rally; Brazil Overtakes Europe On Covid; Walgreens Earnings Miss Atlassian and Chipotle rose in buy ranges Thursday, while Walgreens dragged on the Dow Jones, after above-forecast jobless claims data. Published:7/9/2020 7:53:25 AM
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[Markets] Futures Drift As Gold Soars Futures Drift As Gold Soars Tyler Durden Wed, 07/08/2020 - 08:00

S&P futures traded in a narrow range even as European stocks slid amid new tensions between Washington and Beijing, as well as worries that an alarming rise in coronavirus caseloads across the country pose a risk to the recovery in business activity and will hit consumer spending. The dollar was flat as gold continued its surge, rising  above $1,800 and rapidly approaching its Sept 2011 all time high.

Global markets have been struggling for traction ever since the Fed's balance sheet started shrinking modestly in mid-June...

... after a sharp rally last week amid concern it’ll take a long time for the broader economy to recover from the pandemic. Many Americans are planning to spend less on things like movies, event tickets or at bars, even as states allow businesses to start re-opening, according to Bloomberg.

On Tuesday the Nasdaq notched yet another intraday record high but all the three main stock indexes finished lower as investors booked profits following a strong run after a batch of upbeat data strengthened the case for a bounce back in economy.

European shares gave up gains early in the trading session after Hungarian Prime Minister Viktor Orban said regional leaders will probably fail to agree on a massive spending plan aimed at reviving their economies. Negotiations at a summit next week will be "very tough" and will likely need to continue throughout the summer, he said.

“It’s not unusual for stocks to take a breather at this point,” Susan Schmidt, a portfolio manager at Aviva Investors, said on Bloomberg TV. “We could see ourselves in a bit of a trading range in the next couple of weeks,” before U.S. earnings season ramps up.

Asian stocks were little changed, with communications rising and industrials falling, after falling in the last session. Most markets in the region were up, with Jakarta Composite gaining 1.8% and the Shanghai Composite rising 1.7%, its seventh daily rise in a row to the highest level since the 2018 start of the U.S.-China trade war, with Nanjing Iron & Steel and Jilin Yatai posting the biggest advances.

Trading volume for MSCI Asia Pacific Index members was 69% above the monthly average for this time of the day. The Topix declined 0.9%, with Teac and Airtech Japan falling the most. Australia's S&P/ASX 200 dropped 1.5%. Emerging-market equities resumed gains, heading for the highest level since February.

China stocks rose even as HSBC Holdings slumped after a report that some of Donald Trump’s advisers proposed a move to destabilize Hong Kong’s currency peg to the dollar as a way of punishing China.

Meanwhile, China on Wednesday said it will restrict visas for U.S. officials for what it called “egregious” behavior over Tibet,  reciprocating a move announced by Secretary of State Michael Pompeo a day earlier.

Eastern European currencies weakened, while gains for the Mexican peso and South African rand limited losses on the MSCI Inc.’s gauge for emerging-market exchange rates. Stock market gains in China have even pushed the country’s financial publications to caution investors about overheating. But as The Trump administration is said to be considering options to punish China for recent moves to chip away at Hong Kong’s political freedoms, markets “appear to be learning to look past the noise,” according to Credit Agricole’s Eddie Cheung. “While valuations would suggest that there is ground for China’s markets to continue to rally, it remains to be seen whether that alone can continue to be a driving force regionally, especially with Western markets trading more tentatively,” the Hong Kong-based strategist said in note.

In rates, Treasuries were slightly weaker across the curve on low volumes, with long-end yields higher by 1bp and front end little changed. Price action creates small concession in 7- to 10-year sector for $29b 10-year note auction at 1pm ET that may draw a record low yield. Treasury 10-year yields hover around 0.65% ahead of auction, steepening 2s10s by 0.8bp; bunds outperform by 3.5bp vs. Treasuries, gilts by 2.5bp. Futures volumes as of 7am ET were 70% to 90% of 20-day average levels across the curve, Bloomberg reported. German Bunds bull-flattened, outperforming Treasuries.

In FX, the dollar erased a decline as investors measured signs of renewed political tension between the U.S. and China. Hong Kong’s Dollar remained at the strong end of its established trading range after a report that advisers to President Trump suggested undermining the currency’s peg to the greenback after Beijing’s moves to curb the island’s political freedoms. Australia’s dollar weakened against all of its Group-of-10 peers after rising infection rates in the nation’s second-most populous state and S&P Global Ratings warned that the return to lockdown in Victoria would put pressure on its economic recovery. “From an economic point of view, this is potentially disastrous,” said Michael McCarthy, chief market strategist with CMC Markets Asia Pacific. "Forex traders are certainly expressing their growth outlook worries by selling the Aussie, and we’re likely to see support for the havens like the dollar, yen and Swiss franc."

In commodities, the biggest mover was once again gold, which continues its tremendous ascent, topping $1,800 an ounce, with silver needing to catch up.

Upside in WTI and Brent front month contracts were hampered by a surprise build in private inventories (crude stocks +2mln vs. Exp. -3.1mln), and the relevant headlines overnight were also on the bearish side with ADNOC set to boost oil exports next month and Total’s Port Arthur refinery said to be running at 60% capacity due to subdued demand.

Looking at the day ahead now, we have central bank speakers including ECB Vice President de Guindos and the Fed’s Bostic, while data releases from the US include consumer credit for May and the weekly MBA mortgage applications.

Market Snapshot

  • S&P 500 futures up 0.2% to 3,143.25
  • STOXX Europe 600 down 0.3% to 367.88
  • MXAP up 0.07% to 164.44
  • MXAPJ up 0.5% to 544.63
  • Nikkei down 0.8% to 22,438.65
  • Topix down 0.9% to 1,557.23
  • Hang Seng Index up 0.6% to 26,129.18
  • Shanghai Composite up 1.7% to 3,403.44
  • Sensex up 0.04% to 36,687.46
  • Australia S&P/ASX 200 down 1.5% to 5,920.30
  • Kospi down 0.2% to 2,158.88
  • German 10Y yield fell 1.6 bps to -0.445%
  • Euro up 0.1% to $1.1286
  • Italian 10Y yield fell 3.6 bps to 1.077%
  • Spanish 10Y yield fell 1.0 bps to 0.415%
  • Brent futures down 0.2% to $43/bbl
  • Gold spot up 0.2% to $1,797.93
  • U.S. Dollar Index up 0.1% to 97

Top Overnight News

  • Some top advisers to President Donald Trump want the U.S. to undermine the Hong Kong dollar’s peg to the U.S. dollar as the administration considers options to punish China for the recent imposition of a security law in the former British colony.
  • The threat of U.S. action to undermine Hong Kong’s longstanding U.S. dollar peg is highly unlikely to become reality given the practical difficulties of pursing such a path and the damage it would do to U.S. interests, economists say.
  • HSBC Holdings Plc, which draws more than two-thirds of its pretax income from Hong Kong, slumped as advisers to U.S. President Donald Trump were also said to be discussing measures against banks there.
  • Boris Johnson warned Germany’s Angela Merkel that the U.K. is ready to do without a trade deal if the European Union wasn’t prepared to compromise.
  • Japan’s investors are flocking to Australia’s sovereign bond market, lured by cheaper currency-hedging costs and some of the highest yields among developed nations.

Asian equity markets were mixed as attempts to shrug off the weak handover from global peers were somewhat hindered by the record infection rates stateside and a slew of punchy US-China related headlines. ASX 200 (-1.5%) was subdued as Australia’s 2nd largest city heads into a 6-week lockdown and with the declines in the index led by notable losses in consumer stocks and financials, while Nikkei 225 (-0.8%) was pressured by the ongoing virus flare up in Tokyo where more than 100 new cases were reported for a 6th consecutive day, but with downside stemmed after data showed the largest increase in bank lending on record. Hang Seng (+0.6%) and Shanghai Comp. (+0.7%) were supported as the latest coronavirus updates from Beijing showed zero new cases for a 2nd consecutive day although caution was also observed on the inauguration day of China’s national security office in Hong Kong and as reports continued to suggest increasing tensions between the world’s largest economies. This includes confirmation by US President Trump that he is looking at banning TikTok in the US and his administration also warned the Railroad Retirement Fund against Chinese investments due to risks of additional sanctions, while the White House is considering executive actions which involve targeting Chinese businesses operating in the US and aides were also said to propose undermining the USD/HKD peg although this was not put forward to President Trump and certain officials have opposed the idea. Finally, 10yr JGBs were initially copy as they conformed to the unsettled overnight tone across asset classes, but eventually edged only marginal gains amid a subdued risk tone in Tokyo and the BoJ’s presence in the market for JPY 870bln of government bonds with up to 5yr maturities.

Top Asian News

  • AirAsia Is Said to Weigh Raising $234 Million Via Rights Issue
  • Itochu Makes $5.4 Billion Bid for Rest of Japan’s FamilyMart
  • Hong Kong’s Resilient Markets Just Knocked Down Another Big Test
  • Singapore in Survival Mode Looks to Reinvent Itself. Again

European stock markets initially attempted to nurse losses seen at the open before losing steam as the mid-week session goes underway [Euro Stoxx 50 -0.9%], following on from a mixed APAC lead overnight. Fresh fundamental newsflow has been light for the session, with the calendar also sparse, albeit key risk events, aside from COVID-19 US-China headlines, could include UK Chancellor Sunak’s fiscal unveiling alongside the European Commission’s potential compromise recovery fund proposal. Sectors are all in negative territory with a clear defensive bias, with the detailed breakdown also painting a similar picture. Financial names underperform, likely on the back of HSBC (-4.0%) amid reports President Trump’s aides were said to propose undermining the USD/HKD peg, although the idea had not been put forward to President Trump and certain officials opposed the idea. In terms of other individual movers, Nokia (-7.5%) shares extend on losses amid a negative broker move coupled with speculation that Verizon may be dropping the Co. as a 5G partner, Nokia stated that it continues working with Verizon amidst these reports. On the flip side, Deutsche Post (+0.8%) remains buoyed after reporting an improvement in Q2 prelim figures whilst noting FY22 EBIT in the least favourable case of EUR 4.7bln and the most favourable case in excess of EUR 5.3bln.

Top European News

  • Serbia’s Vucic Sees Rising Risk of Regional Conflict in Europe
  • Volkswagen Management Tumult Spills Over to Truck Subsidiary
  • Medtronic Is Said to Make Offer for Medical Device Maker Intersect
  • Analysts Applaud Deutsche Post Earnings, Dividend Proposal

In FX, the Dollar and its G10 currency counterparts are stuck in a rut after 2 volatile sessions, but ultimately no clear direction amidst fluctuating and flaky risk sentiment on coronavirus updates interspersed with economic data and surveys supporting the recovery from first wave pandemic lows. Major pairings are muted and the subdued state of affairs exemplified by the DXY showing little sign or inclination to stray too far either side of the 97.000 level that has been magnetic of late. Moreover, Wednesday’s agenda does not bode well in terms of market-moving potential, barring any surprises from UK Chancellor Sunak and/or an unscheduled event given a blank US agenda beyond weekly mortgage applications and then consumer credit.

  • CHF/EUR/CAD - All marginally firmer against the Greenback, but within relatively tight confines as noted above, as the Franc hovers just below 0.9400, Euro shy of 1.1300 where a hefty 1.9 bn option expiry resides and Loonie pivots 1.3600 ahead of Canadian housing starts and an update from Finance minister Morneau on the economy in context of measures taken to combat COVID-19.
  • JPY/XAU/NZD/GBP/AUD - The Yen remains tethered between 107.70-40 parameters with a light underlying bid that is also apparent in Gold as bullion continues its assault on Usd 1800/oz, while the Kiwi is still straddling 0.6550 and fractionally outpacing the Aussie around 1.0600 in cross terms due to the return to lockdown in Melbourne. As such, Aud/Usd is capped circa 0.6950 in similar vein to Cable on the 1.2550 axis in advance of the aforementioned Economic Update. Note, contacts are touting stops at 1.2530 that are currently being tested and could be filled in conjunction with the absorption of offers in Eur/Gbp close to 0.9000.
  • SCANDI/EM - Not much lasting reaction to weaker than forecast Norwegian GDP data hot on the heels of a drop in manufacturing output yesterday, with Eur/Nok flitting either side of 10.7000 and Eur/Sek likewise around 10.4300. However, more pronounced activity in the Hkd overnight following reports that the US may target the peg in response to China’s security legislation with the HKMA forced into concerted intervention.                

In commodities, a choppy session thus far for the crude complex, albeit prices remain somewhat flat and within tight ranges amid a lack of notable catalysts. Overnight, upside in WTI and Brent front month contracts were hampered by a surprise build in private inventories (crude stocks +2mln vs. Exp. -3.1mln), while the relevant headlines overnight were also on the bearish side with ADNOC set to boost oil exports next month and Total’s Port Arthur refinery said to be running at 60% capacity due to subdued demand. On the flip side, EIA lifted 2020 world oil demand growth forecast by 190k BPD (to 8.15mln BPD Y/Y fall) but cut 2021 world oil demand growth view by 190k BPD (to 6.99mln BPD Y/Y increase) – with participants awaiting the IEA report on Friday. Looking ahead, aside from COVID-19 headlines and sentiment-driven moves, the complex will likely eye the weekly DoE release for confirmation of the Private Inventory data, whilst State-side production will also be in focus as some believe output has bottomed. Elsewhere, spot gold has extended on gains but has decoupled from its safe-haven status, whilst Dollar dynamics also provided little influence on prices. The yellow metal has eclipsed the 1800/oz mark for the first time since 2012 before immediately running into selling pressure at the key figure. Copper meanwhile briefly topped USD 2.8/lb to levels last seen in January amid supply woes coupled with hopes of a rebounding Chinese economy.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior -1.8%
  • 3pm: Consumer Credit, est. $15.0b deficit, prior $68.8b deficit

DB's Jim Reid concludes the overnight wrap

Yesterday I boasted about nearly 5 year old Maisie winning a race at Sports Day. I’ve since got the video from the school and I must admit if I was another parent I would be questioning whether she false started. Put kindly she anticipated the “B” of the Bang a bit too perfectly. Still a victory is a victory. On that the latest in my 15 month journey to remodel my golf swing left me finishing 3rd last in the first cup competition at my club after lockdown on Sunday. It was my worst round since I was 11. You may say that at least I wasn’t last. However I should add that the two below me were octogenarians who were only too delighted to be out after isolating during lockdown. Meanwhile I’ve been practising hard most evenings where I can. I have a heart to heart planned with my golf coach tomorrow night to see if there is any light at the end of the tunnel. He says I’m on the verge of a major breakthrough. I feel I’m on the edge of a breakdown.

Markets broke down yesterday, albeit nowhere near as much as my golf swing. A drip-feed of negative stories on the economic outlook as well as covid headlines from all around the world dampened investor sentiment. By the end of the session, the S&P 500 had fallen -1.08%, and unable to reach a 6th successive move higher which would have been a first since April 2019. Over 85% of the index was lower on the day, with the worst performing industries being energy (-3.18%) and banks (-3.16%). Tech stocks outperformed slightly, with the NASDAQ down -0.86%. The Dow Jones was the worst performer, down -1.51% (Boeing -4.8% and Goldman Sachs -3.9%). Bourses also fell across Europe with the STOXX 600 (-0.61%) and DAX (-0.92%) lower. Just like with the S&P, European banks were among the worst performers, with the STOXX Banks index down by -1.34%.

Markets in Asia are a bit more mixed this morning. While we’ve seen modest declines for the Nikkei (-0.24%), Kospi (-0.29%) and ASX (-0.61%), the Shanghai Comp (+0.74%) and Hang Seng (+0.34%) are up along with S&P 500 futures (+0.20%). The main talking point overnight has been a Bloomberg story suggesting that some top advisers in the Trump administration are weighing proposals to undermine Hong Kong’s dollar peg to the greenback as a way of penalizing China. However, the report added that the idea has not been pitched to senior levels of the White House which suggests that it hasn’t gained serious traction yet.

Back to yesterday and after Senate Majority Leader McConnell signalled a willingness to pass another stimulus bill with case numbers rising across the country, the White House announced they want the package by the first week of August. Vice President Pence’s top aide said, “we want to make sure that people that are still unemployed or hurting are protected but at the same time, we want to take into consideration the fact the economy is bouncing back and want to try to contain the amount of spending.” This is aligned with Senate Republicans who want to keep the overall price tag south of $1 trillion. President Trump said that there would be another round of stimulus checks for Americans, though it will likely be even more targeted this time around. With some states pausing reopening and even re-entering shutdowns, additional stimulus is likely needed in order for economic data to continue improving.

Meanwhile, the slowdown in reopenings continues to be driven by the US seeing high numbers of new cases. Texas had over 10,000 new cases in one day for the first time yesterday, with cases rising 5% compared to a weekly average of 3.9%. Daily increases in some other recent hot spots were below the weekly average, which while encouraging may still be experiencing after-effects of the holiday weekend. Florida reported a 3.6% rise in new cases, under the 5% 7-day average, however the 7-day rolling total of 61,360 cases was the highest yet. Fatalities rose by 1.7%, with the 7-day average at just under 48 per day. Arizona meanwhile recorded a record 98 new fatalities yesterday, however the data has clearly seen big lags on Sunday and Monday in the past. Overall the 7 day average of covid fatalities in the state is roughly 40 per day, while cases are rising by just under 3700 per day. When New York state was at 3700 and 8700 (similar to Florida now), it was seeing around 85 and 630 deaths per day, and so both Arizona and especially Florida are seeing better case fatality rates at this time. However, this could change and requires a high level of scrutiny as hospital conditions and capacity constraints are going to be different in different regions. Speaking of New York, the state continues to add more regions to its quarantine list, which is now 19 states long, with Delaware, Kansas and Oklahoma travellers all being asked to isolate for 14 days upon arriving. Overnight, the US Department of Health and Human Services has said that it is ramping up coronavirus testing in Louisiana, Texas and Florida as health officials attempt to get a firm grasp on how the fast-moving pandemic is evolving.

For more details on the current US virus outbreak and what it could mean for upcoming policy decisions, you can join a conference call today at 11:00 EDT/16:00 UK time hosted by our chief US economist Matt Luzzetti. He will be joined by two guest speakers to discuss the outlook for health policy and small businesses. You can find the full details here.

Back to markets and it’s fair to say that the huge pre-covid momentum into ESG was temporarily sidetracked by the pandemic. However this is undoubtedly a multi-year trend and there are signs the topic is springing back to life. Here at Deutsche Bank Research we have launched dbSustainability, a new offering with research reports focused on sustainability issues and spanning thematic, macro, quantitative and individual company analysis. Recent reports include; ‘ESG through the pandemic’. Luke Templeman, Thematic Research (link to report and video), ‘Decarbonisation: Can Mining & Steel sustain in a low carbon world?’ from Head of European Mining And Metals, Liam Fitzpatrick (link to report) and from Juliana Lee, Chief Economist, Asia, ‘Asia Thematic Analysis:Households' ESG action’ (link to report). We will continue to put out research under this banner so best to let Luke.Templeman@db.com on my team know if you want to be added to any future reports. He is on hols but he’ll pick up and add you on Monday.

In terms of those economic stories we alluded to earlier, we firstly had some underwhelming numbers on German industrial production, which saw just a +7.8% increase in May. This was lower than the +11.1% rebound expected and still leaves IP -19.3% below its levels a year earlier. Furthermore, it comes just a day after some worse-than-expected data on factory orders, adding to fears that the German recovery won’t be as rapid as hoped for. Next, we had the European Commission’s summer economic forecasts, which revised down their economic forecasts for Euro Area growth both this year and next. They now see the economy contracting by -8.7% this year compared with -7.7% before back in May. And 2021 growth was revised down two-tenths to +6.1%. And finally, we had a warning from Atlanta Fed President Bostic in the FT yesterday, who said that the high-frequency data had pointed to a “levelling off” in activity. We also heard from the Fed’s Vice Chairman Clarida later who said that the Fed can turn to additional forward guidance and asset purchases if the economy needs more aid and Cleveland Fed President Loretta Mester said that “If we don’t get further fiscal support, things won’t come back as well as they could” while adding, with disruption from the virus lasting longer than expected, “this is a period where we need to be supporting both individuals and businesses who but for the pandemic would have been healthy.”

Given this negative newsflow yesterday, safe havens performed relatively strongly, and gold hit another milestone as it closed above its 2012 peak to reach an 8-year high of $1795/oz. Other metals performed reasonably well too, with copper up +0.78% to advance for a 6th successive session. Over in fixed income, there was clear differentiation in core sovereign bonds, with yields on 10yr Treasuries down -3.6bps and those on bunds up +0.2bps. However that mostly reflected a post European close rally for USTs. There was a further narrowing in peripheral spreads however, with yields on Italian 10yr debt over bunds falling by -3.8bps to 163bps, their tightest level since late March, and Greek spreads down -3.7bps to their tightest since late February.

Here in the UK, sterling was the strongest performing of the G10 currencies yesterday, as it strengthened by +0.46% against the US dollar. It comes ahead of Chancellor Sunak’s much-awaited “Summer Economic Update” before the House of Commons today, in which he’s expected to announce a package of measures to aid the economic recovery. We’ve already had some announcements in recent days, with Prime Minister Johnson announcing last week that £5bn of capital investment projects would be brought forward, as well as a subsequent £1.57bn package for the arts. Our UK economists’ base case is that Sunak will broadly stick to the mandate set out by PM Johnson last week, possibly topping up the package by another 0.2% of GDP, focusing particularly on apprenticeship schemes, and modest wage subsidies to get furloughed employees back into work. There’s certainly been a fair amount of speculation in the media as to what to expect, including reports that a Stamp Duty holiday could be announced on homes under £500k.

Elsewhere in Europe, we heard from ECB Executive Board member Schnabel, who said in an interview that positive confidence indicators “suggests that the recession could turn out somewhat milder than expected”. She also waded in to the debate on the EU recovery fund, saying to the Dutch newspaper NRC Handelsblad that “If most of the fund is made up of loans, this could create a public debt overhang after the crisis. That could then cause problems of its own.” It comes ahead of the summit of EU leaders in just over a week, which is scheduled to begin on 17 July.

There wasn’t a great deal of other data yesterday, though the number of job openings in the US unexpectedly increased in May to 5.397m (vs. 4.5m expected), while the number of hirings rose to a record high of 6.487m. Furthermore, in a sign of the labour market recovery, the quits rate of voluntary separations that generally correlates with economic strength ticked up to 1.6% from 1.4% the previous month, even if it still remained some way down from the 2.3% recorded in February. Our US Economist Matt Luzzetti noted that private quits rate is a good leading indicator for wage growth and it remained low at 1.8%, down from a 2.6% peak late last year. This indicated that there could be a collapse in wage growth in the coming months. The ratio of unemployed people per job opening remained elevated in May, with 3.9 unemployed per job opening. This compares to a sub-1.0 figures late last year, however it is well below GFC levels of over 6.0. Lastly, he noted that change in job openings can proxy for employment data and that doing so would suggest that job loss was much more extreme in March, less extreme in April, and not as robust in May, with 2.4m jobs created vs the NFP tally of 3.2m.

To the day ahead now, and one of the highlights will be the previously mentioned UK economic statement from Chancellor Sunak. Central bank speakers today include ECB Vice President de Guindos and the Fed’s Bostic, while data releases from the US include consumer credit for May and the weekly MBA mortgage applications.

Published:7/8/2020 7:14:19 AM
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[Markets] Dow's nearly 450-point rally highlighted by gains in shares of Goldman Sachs, Boeing The Dow Jones Industrial Average is rallying Monday afternoon with shares of Goldman Sachs and Boeing delivering the strongest returns for the blue-chip average. The Dow (DJIA) was most recently trading 440 points higher (1.7%), as shares of Goldman Sachs (GS) and Boeing (BA) have contributed to the blue-chip gauge's intraday rally. Goldman Sachs's shares are up $10.08, or 5.1%, while those of Boeing are up $7.46, or 4.1%, combining for an approximately 120-point bump for the Dow. Published:7/6/2020 3:00:58 PM
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