Jonathan Garber


The DOJ is reviewing actions against big tech

U.S. equity markets took a sharp turn lower in the final hour of trading with technology and energy shares pacing the declines.

The Nasdaq Composite lost 3% as Google Inc. and Facebook Inc. were among the hardest hit after President Trump met with officials from the Department of Justice and Attorneys General to discuss the efforts to protect Americans from social media abuse and to combat censorship of lawful speech online.

The Dow Jones Industrial Average fell 525 points, or nearly 2%, with Chevron Corp. and Microsoft Corp. coming under pressure.

The S&P 500, meanwhile, slipped 2.37%.

Tesla Inc.’s Battery Day event failed to deliver the 1 million-mile battery that Wall Street analysts were expecting. The headlines were instead a new battery pack that will reduce kilowatt-hour costs by 50% and improve vehicle range by 16%.

Additionally, Elon Musk’s company filed a suit to block the Trump administration’s tariffs on products made in China.

Johnson & Johnson’s single-shot COVID-19 vaccine candidate is moving ahead to a Phase 3 trial that will include up to 60,000 adults. There is no clear timeline for when a successful vaccine would be available for distribution.

Looking at earnings, Nike Inc. shares soared to a record high, bucking the downtrend, after the sports-apparel giant reported quarterly profit rose 11% from a year ago as COVID-19 resulted in surging online sales of sneakers and workout apparel.

KB Home beat on both the top and bottom lines, but the number of homes delivered fell 16% year-over-year to 2,545 amid disruptions caused by the pandemic.

Stitch Fix Inc. reported a deeper-than-expected loss while sales grew 9% from the prior quarter as the subscription-based personal shopping platform worked through supply chain issues caused by COVID-19.

Elsewhere, Lululemon Athletica Inc. resumed its share buyback program that was paused amid the COVID-19 pandemic. The program, which expires on Jan. 31, 2021, has $263.6 million remaining.

Looking at commodities, gold fell $38.70 to $1,859.90 an ounce and West Texas Intermediate crude oil inched up 13 cents to $39.93 per barrel.

U.S. Treasurys fell, causing the yield on the 10-year note to climb 2.5 basis points to 0.689%.

European markets were higher with Britain’s FTSE gaining 1.2%, France’s CAC advancing 0.62% and Germany’s DAX gaining 0.39%.

In Asia, markets ended little changed with Japan’s Nikkei off 0.06% while Hong Kong’s Hang Seng and China’s Shanghai Composite edged up 0.11% and 0.16%, respectively.

Author: Jonathan Garber

Source: Fox Business: Dow drops 525 points, tech slides as DOJ eyes crackdown on censorship

Gold could reach $2,200 an ounce: Analyst

Gold prices are set to spring higher after more than a month of moving sideways, according to one analyst.

Drivers include a positive technical backdrop and the likelihood of sustained low interest rates in the world’s largest economies that may prompt investors to seek better returns in other “safe haven” investments.

Gold has “worked off the momentum, sentiment and positioning extremes seen at the peak and looks set to resume its uptrend” wrote Laurence Balanco of Hong Kong-based capital markets and investment group CLSA Ltd.

Gold topped out at $2,051 an ounce on Aug. 6 and four trading days later plunged more than $100 to around $1,935. The precious metal has spent the last five weeks trading in a tight range between $1,900 and $2,000.

More recently, price action has managed to break the downtrend off the August high while also holding above the 50-day moving average.

“Price action is now pricing the apex of this pattern, and something has to give,” Balanco wrote. He thinks a close above $1,966.60 would confirm a breakout to the upside that targets $2,185 to $2,200, up as much as 12% from the $1,960.20 where the precious metal settled on Wednesday.

The upbeat technical backdrop is getting an assist from monetary policy. The Bank of Japan on Thursday held its key rate at -0.1% and warned the economy remains in a challenged state, but is showing some signs of recovery. The Bank of England also kept policy on hold on.

The announcements come a day after the Federal Reserve held its benchmark interest rate at a range between 0% and 0.25% and said it expects to keep rates low through 2023 while navigating the U.S. economy through its sharpest slowdown of the post-World War II era.

The central bank put into place the policy strategy announced last month that would let inflation run above its 2% target for some time.

“We would look at adding new long gold positions,” Balanco said.

Author: Jonathan Garber

Source: Fox Business: Gold prices set to soar as Fed signals years of low interest rates

U.S. equity markets tumbled Thursday, posting their worst session since June, as investors wrestled with uncertainty over the timing of a potential COVID-19 vaccine and generally positive economic data.

The Dow Jones Industrial Average fell 807 points, or nearly 3%, but recovered from a drop of s many as 1,000 points in the final hour of trading. Microsoft Inc. and Boeing Co. were among the biggest decliners while Verizon Communications Inc. posted modest gains.

The Nasdaq fell nearly 5 percent as Tesla continued its slide for a third straight day after announcing a $5 billion share sale. The stock began trading at its split-adjusted price on Monday.

Tech also paced the selling in the S&P, driven by Apple and Amazon, as the broadest measure of stocks fell nearly 3.5%.

The selling accelerated mid-morning after Dr. Anthony Fauci dashed hopes that a COVID-19 vaccine was coming soon, contradicting documents from the Centers for Disease Control and Prevention.

Fauci told CNN a vaccine was unlikely to be ready by the end of October. In a separate interview with NBC News’ “Today,” Fauci said a vaccine was likely by the end of the year.

His comments coincided with positive news on the economy after the U.S. labor market continues to show signs of incremental improvement. Initial jobless claims for the week ended Aug. 29 totaled 881,000, down from a revised 1.011 million the week prior. Continuing claims, meanwhile, fell to 13.254 million in the week ended Aug. 22, down from a revised 14.492 the week prior. Both numbers were better than expected.

On Friday, the monthly jobs report is due and economists expect U.S. employers added 1.4 million jobs in August.

In other hiring news, FedEx announced plans to hire 70,000 seasonal workers, 27% more than the same period a year ago. The company is predicting “unprecedented” seasonal demand. UPS has yet to release its seasonal plans.

Elsewhere, Novavax Inc. announced positive early-stage data for its experimental COVID-19 vaccine was published in the New England Journal of Medicine. NanoViricides Inc. investors await an update from the company on its COVID-19 drug. The Centers for Disease Control and Prevention said on Wednesday to be prepared for a vaccine by Nov. 1.

On Friday, the monthly jobs report is due and economists expect U.S. employers added 1.4 million jobs in August.

Meanwhile, Costco Wholesale Corp. said sales at stores open at least 12 months rose 13.1% from a year ago, outpacing the 10.7% gain that analysts were anticipating. Digital sales were up 102%.

Looking at earnings, Campbell Soup Co. reported quarterly results that beat on both the top and bottom lines amid “unprecedented demand” for its food and beverages.

PVH Corp., which operates Calvin Klein and Tommy Hilfiger, reported a surprise profit amid strong online demand for comfortable clothing.

Looking at commodities, West Texas Intermediate crude oil fell 14 cents to $41.37 per barrel while gold slipped $6.80 to $1,927.60 an ounce.

U.S. Treasurys ticked higher, pushing the yield on the 10-year note down to 0.621%.

Markets slid across Europe with France’s CAC down 0.44%, Germany’s DAX losing 1.4% and Britain’s FTSE shedding 1.52%.

In Asia, Japan’s Nikkei outperformed, ending up 0.94%, while Hong Kong’s Hang Seng and China’s Shanghai Composite fell 0.45% and 0.58%, respectively.

Author: Jonathan Garber

Source: Fox Business: Dow drops 807 points as stocks post worst day since June

US stocks shed bulk of coronavirus losses

Stocks hit record highs, giving the S&P 500 a long-awaited record not seen since February. Strong housing data and better-than-expected retail earnings served as a catalyst.

The S&P 500 climbed 0.23%, eclipsing its intraday high of 3,393.52, before surpassing its February peak and closing at 3,389.78, the 129th record close under President Trump.

Meanwhile, the Nasdaq Composite gained 0.73%, making its own record high as Tesla shares zoomed above $1,900 apiece for the first time before settling lower. The recent run in the stock has made Elon Musk the fourth wealthiest person in the world.

Apple also rose, coming closer to the $467.77 a share needed to garner a $2 trillion market capitalization.

The Dow Jones Industrial Average lagged, slipped 0.24% as two members gave back earlier gains despite solid earnings.

Home Depot Inc. reported better-than-expected top and bottom lines as U.S. comparable sales rose 25% from a year ago.

And fellow Dow member Walmart Inc. said online sales rose 97% versus last year, helping drive a 79% jump in profit.

Looking at the economy, housing starts rose 23% to a seasonally adjusted annualized rate of 1.496 million, beating the 1.24 million that was anticipated by analysts surveyed by Refinitiv. Building permits, meanwhile, climbed 19% to 1.495 million, ahead of the 1.32 million that was expected.

The results sent shares of homebuilders, like Toll Brothers Inc., Pulte Group and Lennar Corp. higher.

Meanwhile, Boeing job cuts will extend beyond its initial plan to eliminate 10% of its workforce. The company is offering workers, mostly in its commercial airplanes unit, services division and corporate operation, a second voluntary layoff opportunity.

Oracle is in talks to acquire the U.S., Canadian, Australian and New Zealand assets of the social-media app TikTok from Chinese owner ByteDance, according to CNBC, citing a person familiar with the matter.

Looking at commodities, gold climbed $14.40 to $1,999.40 an ounce while West Texas Intermediate crude oil slid was unchanged at $42.89 a barrel.

U.S. Treasurys were little changed with the yield on the 10-year note holding near 0.68%.

In Europe, Germany’s DAX lost 0.3% while France’s CAC and Britain’s FTSE fell 0.68% and 0.83%, respectively.

Asian markets finished mixed with China’s Shanghai Composite adding 0.36%, Hong Kong’s Hang Seng edging up 0.08% and Japan’s Nikkei slipping 0.2%.

Author: Jonathan Garber

Source: Fox Business: S&P 500 secures record, Nasdaq notches another

The precious metal finished at $1,889.10 an ounce

Gold prices rallied to record highs on Thursday as the U.S. dollar sank to its lowest level in nearly two years.

Futures traded at the COMEX for the front-month July contract surged $25 to $1,889.10, edging out its previous high close of $1,888.70 set on August 22, 2011.

Gold has been “making record highs consistently for a couple of years now in other currencies, so the dollar was the lone exception,” said Peter Schiff, CEO and president of Westport, Connecticut-based Euro Pacific Capital. “Now the dollar’s joining the party.”

Ed Moy, chief strategist at gold retailer Valaurum and head of the U.S. Mint from 2006 to 2011, told FOX Business that gold’s recent surge has some similarities to the last time the precious metal reached a new peak – in the aftermath of the 2008 financial crisis.

This time around, as during the crisis, the government has “put together record fiscal and monetary stimulus” Moy said, pointing to Congress injecting $2.2 trillion, the Federal Reserve printing $2.2 trillion and extending another $5 trillion through loans to banks.

By comparison, during the financial crisis, there was a total of $1.2 trillion of fiscal stimulus and about $4 trillion worth of money-printing over a five-year period.

Moy called the scale of the COVID-19 stimulus “staggering” compared with 2008, and said all of that money sloshing around in the system has people worried about the possibility of inflation. He predicted gold prices would continue to rise until a COVID-19 vaccine is discovered and several treatments prove effective.

Schiff, meanwhile, warned the U.S. faces a “very serious reckoning” in the not-too-distant future as foreigners dump Treasurys and corporate bonds and begin the process of “de-dollarizing.”

He believes the result will be a “tremendous upward pressure on domestic inflation,” leaving the Fed in a bind.

At that point, Shiff said the central bank will have to decide between saving the dollar by selling Treasurys or buying more bonds and letting the dollar spiral lower.

The former would cause interest rates to rise and take the stock market down and “crush the real-estate market” and economy while the latter would result in a “currency crisis and hyperinflation like in Argentina or Zimbabwe,” he said.

Schiff said one thing is for certain, though: Whichever path the Fed chooses, “gold goes much higher.”

Author: Jonathan Garber

Source: Fox News: Gold prices zoom into record books, set sights on further gains

Mortgage costs have tumbled after the Federal Reserve slashed interest rates to nearly zero

Mortgage rates in the U.S. tumbled to historic lows in the week ended July 16.

The rate on a 30-year fixed mortgage dropped to 2.98 percent, falling below the 3 percent level for the first time since record-keeping began in 1971, according to mortgage investor Freddie Mac.

Meanwhile, the 15-year fixed mortgage rate slid to a fresh low of 2.48 percent while a 5-year hybrid adjustable-rate mortgage had a rate of 3.06 percent, up slightly from last week’s reading of 3.02 percent.

The drop in rates has “led to increased homebuyer demand,” according to the weekly report from Freddie Mac, which was created by Congress and supports the housing market by purchasing home loans from banks.

The report noted that new COVID-19 infections have been a “countervailing force,” causing the economic recovery to stagnate and putting jobs at risk.

Rock- bottom mortgage rates have been a result of the Federal Reserve cutting interest rates to nearly zero to support the U.S. economy amid its sharpest slowdown of the post-World War II era.

The U.S. economy contracted by 5 percent during the first quarter and is expected to have shrunk by more than 30 percent in the three months through June as shutdowns aimed at slowing the spread of COVID-19 forced non-essential businesses to close their doors.

More than 51 million Americans have filed for unemployment claims since the outbreak began.

Author: Jonathan Garber

Source: Fox Business: 30-year fixed mortgage rate drops below 3% for first time

45M Americans have lost their jobs amid the COVID-19 pandemic

U.S. equity markets plunged Thursday with the selloff accelerating in the final hour of trading as investors reacted to a resurgence in COVID-19 infections as more states reopened and also after the Federal Reserve warned of a slower economic recovery.

The Dow Jones Industrial Average fell 1,861 points or 6.9 percent, the fourth worst one-day point drop on record. The S&P 500 and the Nasdaq Composite sank 5.89 percent and 5.27 percent, respectively. The selling marked the sharpest one-day decline for the major averages since March 16.

All of the S&P’s sectors fell, led by financials, energy and materials. Oil took a sharp turn lower with West Texas Intermediate crude oil sliding 8.23 percent to $36.34 a barrel.

The major averages finished mixed on Wednesday, with the Nasdaq closing above 10,000 for the first time, after the Federal Reserve said interest rates would remain near zero through 2022 to support the economic recovery.

President Trump, a frequent critic of the central bank who has long pushed for low-interest rates, nonetheless disputed the Fed’s prediction that the comeback would be prolonged; he promised Twitter followers an upswing as soon as this fall.

In the meantime, initial jobless claims for the week through June 6 totaled 1.5 million, the government said Thursday, boosting the total number of job losses to 45 million since the shutdowns began in mid-March.

Meanwhile, Arizona and Texas were among the states that saw the number of new COVID-19 cases hit a fresh high on Wednesday while others, like California and Florida, saw infection counts near their previous peaks.

Looking at stocks, airlines, cruise operators and hotels were in the crosshairs amid fears a new wave of infections could stunt a rebound in bookings.

Drugmaker Regeneron Pharmaceuticals began human testing for an experimental COVID-19 treatment. The company will know the effectiveness of its antibody cocktail within a month.

The announcement comes after Reuters reported just before Wednesday’s closing bell that fellow drugmaker Eli Lily said one of its treatments could be authorized by September as long as trials go well.

Meanwhile, financial institutions remained under pressure for a second day as investors worried that an extended period of low interest rates would hurt returns.

Banks typically boost profitability by passing interest-rate increases on to borrowers more quickly than depositors, the main source of their cash. Periods of declining or unchanged rates stymie that practice.

In the food sector, GrubHub is merging with Amsterdam-based Just Eat in an all-stock deal that values the Chicago-based online food-delivery platform at $75.15 a share, or $7.3 billion. The deal comes after merger talks between GrubHub and ridesharing app Uber collapsed last month amid regulatory concerns.

In retail, Target hiked its quarterly dividend by 3 percent, or 2 cents, to 68 cents per share.

As for metals, gold shot up 1.09 percent to $1,732 an ounce and U.S. Treasurys saw modest gains, pushing the yield on the 10-year note to 0.651 percent.

In Europe, France’s CAC paced declines, down 4.71 percent, while Germany’s DAX and Britain’s FTSE dropped 4.47 percent and 3.99 percent, respectively.

Markets were lower across Asia, with Japan’s Nikkei sliding 2.82 percent, Hong Kong’s Hang Seng off 2.27 percent and China’s Shanghai Composite down 0.78 percent.

Author: Jonathan Garber

Source: Fox Business: Dow tanks 1,861 points as stocks post worst session since March

The Nasdaq Composite secured a record high Monday as investors remained optimistic over the reopening of the U.S. economy from COVID-19 lockdowns and as the Federal Reserve announced plans to enhance its Main Street lending program.

The tech-heavy Nasdaq closed at 9,924.75, up 1.1 percent, extending its annual gain to 10.6 percent.

The S&P 500 rose 1.2 percent, turning fractionally positive for the year, while the Dow Jones Industrial Average gained 461 points or 1.72 percent.

New York City entered phase one of its reopening plan on Monday, allowing construction and manufacturing to restart and retailers to open their doors for curbside and in-store pickups and drop-offs. Retailers and restaurants in Massachusetts also began reopenings.

Additionally, the Federal Reserve announced enhancements to its Main Street lending program to further aid small businesses.

Looking at stocks, airlines, cruise operators, booking sites and other travel-related names continued to shine as the reopening of America has yet to produce a feared second wave of COVID-19 infections.

Gun-related names surged as former Vice President Joe Biden secured enough delegates to clinch the Democratic nomination on Friday. Gun sales, which climbed to a record in May amid the COVID-19 lockdowns and riots, typically see a boost during election years amid concerns a new administration could bring increased regulatory measures.

Drugmaker AstraZeneca has approached rival Gilead Sciences about a potential merger that would be the largest health care deal of all-time, Bloomberg reported, citing people familiar with the matter. The report said Gilead is not interested in selling itself or merging with another big pharmaceutical company.

Meanwhile, Facebook shares underperformed after CEO Mark Zuckerberg said the company would review its content policies. The social-media space has come under increased scrutiny in recent weeks after Twitter recently labeled some of President Trump’s tweets.

Oil major BP announced plans to lay off 10,000 workers, or 14 percent of its global workforce, due to disruptions caused by COVID-19.

Chinese e-commerce company is planning a secondary listing in Hong Kong amid the threat foreign companies listed in the U.S. could face increased regulatory requirements. Elsewhere, Luckin Coffee Chairman Lu Zhengyao will likely to face criminal charges in China after authorities uncovered emails showing he instructed employees to commit fraud, according to state-run media company Caixin.

On the earnings front, recreation vehicle maker Thor Industries reported a surprise profit and revenue that topped expectations. The company said sales have improved since dealerships reopened last month from their COVID-19-related shutdowns.

West Texas Intermediate crude oil slipped 3.44 percent to $38.19 a barrel after OPEC and its allies on Sunday agreed to extend historic production cuts through July. Earlier in the session, WTI crossed $40 a barrel for the first time since March 9. Meanwhile, gold posted modest gains closing at $1,698 an ounce.

U.S. Treasurys were little changed with the yield on the 10-year note at 0.883 percent.

European markets showed modest declines with Britain’s FTSE down fractionally by 0.18 percent, Germany’s DAX fell 0.22 percent and France’s CAC closed lower by 0.43 percent.

In Asia, Japan’s Nikkei gained 1.37 percent, China’s Shanghai Composite added 0.24 percent and Hong Kong’s Hang Seng ticked up 0.03 percent.

Author: Jonathan Garber

Source: Fox Business: Nasdaq hits record as Fed expands Main St. lending program and cities reopen

U-shaped recoveries from recessions ‘never really happen’

The U.S. economy will come roaring back to life after the COVID-19 pandemic caused the deepest contraction of the post-World War II era, according to one Wall Street strategist.

Stay-at-home orders aimed at slowing the spread of COVID-19 eliminated nonessential travel, bringing the U.S. economy to a grinding halt and causing a record 20.5 million job losses in April.

“We will see a V-shaped recovery for two reasons – the historic steepness of the decline in activity, and the unprecedented policy response,” wrote Michael Wilson, chief U.S. equity strategist at Morgan Stanley.

The U.S. economy contracted by a seasonally adjusted annualized rate of 4.8 percent in the three months through March, according to an advanced release from the Commerce Department. The major Wall Street banks all expect the economy to shrink by at least 30 percent in the second quarter of the year.

To combat the economic weakness, the Federal Reserve announced open-ended asset purchases and several lending facilities designed to improve the flow of credit to those households and businesses most severely impacted by the virus. Additionally, Congress has passed several bills, extending trillions of dollars in aid.

Wilson says while most investors no longer think the stock market will retest its March lows, they remain skeptical of the rally and want to know “how high it really can trade given all the uncertainties we face in the recovery.”

He pointed investor sentiment at bearish levels typically seen when stocks are at 52-week lows rather than in the midst of a 30 percent rally and money market balances at record levels.

David Kostin, chief U.S. equity strategist at Goldman Sachs has noticed the same skepticism in his discussions with clients, noting “varying degrees of concern about how swiftly the market has rebounded” and uneasiness about current valuations and forward return potential.

Among the top concerns from Goldman clients is the narrow breadth, or number of stocks participating in the rally. Just five companies – Facebook, Amazon, Apple, Microsoft and Google – make up 21 percent of the S&P, the highest concentration in over 30 years, the firm said.

Both Wilson and Kostin have a yearend S&P 500 price target of 3,000, or 2 percent above where the index finished Friday, but warn there is likely to be a pullback before the index continues higher. Kostin says the S&P could fall 18 percent to 2,400 while Wilson is calling for a drop of as much as 10 percent.

As for the shape of the economic recovery, Wilson said most investors he speaks with are “in the ‘U’ camp.” However, he warns U-shaped recoveries from recessions “never really happen,” which is why he’s betting on a “V.”

Author: Jonathan Garber

Source: Fox Business: US economy to see V-shaped recovery: Morgan Stanley

WTI oil plunged 305% to -$36.73 a barrel as demand remains scarce

U.S. equity markets tumbled on Monday as oil saw a historic hammering with prices turning negative for the first time in history.

The Dow Jones Industrial Average fell over 592 points or 2.3 percent. The S&P 500 and Nasdaq Composite were down 1.79 percent and 1.03 percent, respectively.

Ongoing concerns over swelling oil inventories, with little demand to ease the pile up due to the ongoing fallout from the coronavirus, sent West Texas Intermediate crude for May delivery plunging 305 percent to a record low -$36.73 per barrel. At a price below zero, buyers would be paid to take delivery as there are costs associated with transportation and storage.

Early indicators show oil may slide deeper into negative territory.

The plunge in crude prices pressured oil majors Exxon Mobil and Chevron, which were the biggest decliners among Dow components.

Elsewhere in the space, oil services provider Halliburton lost $1.02 billion in the first quarter and said it would cut costs by $1 billion as the crash in oil prices has decimated investment. Those shares bucked the downtrend inching higher.

Explorers Continental Resources and EOG Resources were among the other energy names in focus.

President Trump said during his coronavirus task force update on Sunday evening that lawmakers were closing in on a deal that would replenish funding for small businesses ravaged by the economic fallout from COVID-19. An agreement would also provide funding for testing and to hospitals that have been overwhelmed with patients.

Monday’s briefing is set for 5 p.m. ET.

United Airlines lost a larger-than-expected $2.1 billion in the first quarter and the company said it could borrow up to $4.5 billion through the CARES Act. Over the weekend, the airline reached a sale and leaseback deal for 22 Boeing aircraft with Singapore-based Bank of China Aviation.

Hard-hit Norwegian Cruise Line Holdings has enlisted Goldman Sachs to explore financing alternatives, according to the Wall Street Journal.

Meanwhile, Walmart sales soared by almost 20 percent in March, the Journal reported, citing company documents.

Shake Shack said it would return the $10 million small business loan it received from the U.S. government after raising $150 million in an equity offering last week.

Embattled Cheesecake Factory Inc. received a $200 million investment from private-equity firm Roark Capital.

U.S. Treasurys rallied, pushing the yield on the 10-year note down to 0.625 percent and in commodities Gold rose to $1,701.60 an ounce.

In Europe, France’s CAC paced the decline, down 0.65 percent, while Germany’s DAX and Britain’s FTSE were off 0.47 percent and 0.45 percent, respectively.

Overnight, Japan’s Nikkei fell 1.15 percent, China’s Shanghai Composite lost 0.49 percent and Hong Kong’s Hang Seng slipped 0.21 percent.

Author: Jonathan Garber

Source: Fox Business: Stocks tank as oil falls below zero for first time ever

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