Archives of “July 2020” month

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Fitch on Japan: Affirms rating at ‘A’ , but lowers its outlook to negative

  
  Analysis
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Fitch Ratings

  • projects Japan’s economy to contract by 5% for full year in 2020, before rebounding to 3.2% growth in 2021
  • fiscal support & expected recovery in external demand should set stage for return to quarterly growth in 2h20 under fitch’s baseline for Japan
  • says sharply wider fiscal deficits in 2020 and 2021, will add significantly to Japan’s public debt
  • project Japan’s deficit to narrow to 10.9% of gdp in 2021 and 5.3% in 2022
  • expects BOJ to maintain current interest-rate settings through at least end of 2022 under its yield-curve control framework for japan

Goldman Sachs says real concerns about USD as reserve currency. Barclays says No.

  
Analysis, Forex
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GS is alarmed, says “Real concerns about the future of the US Dollar as the world’s reserve currency have started to emerge.”

Barclays says nope, the US “isn’t anywhere close to losing its reserve currency status”. Barclays cite:
  • “depth of capital markets and overwhelming volume of USD denominated global transactions” 

On the recent decline in the dollar:

  • “Reserve managers and investors have spent the better part of the last few years accumulating USD assets and with the recent developments, simply find it prudent to diversify into less USD denominated exposures” 

Barclays comments via Bloomberg.

I’m with Barclays on this one.
GS is alarmed, says "Real concerns about the future of the US Dollar as the world'sreserve currency have started to emerge."

US stocks end the day near session lows.

  
Analysis, US Market
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A soft ending to the stock day

The US stocks are ending the day just off the lows for the day. The NASDAQ index by the way with a -1.27% decline.
The final numbers are showing:
  • S&P index -20.97 points or -0.61% at 3218.44.
  • NASDAQ index fell -134.17 points or -1.27% at 10402.09
  • Dow industrial average fell by -205.49 points or -0.77% at 26379.28
After the close Starbucks is reporting a less than expected loss and a sales beat. They also expect the 4th quarter to show a significant rebound. Earnings-per-share came in at $-0.46 vs. $-0.59 expectations. The revenues also be at $4.2 billion vs. $4.06 billion estimate.
Amgen earnings and revenues came in better-than-expected. However after an early rise, the price is currently trading lower in after hour trading.  Earnings-per-share came in at $4.25 I was higher than the $3 and 84 expected. Revenues grew by $6.21 billion vs. expectations of $6.18 billion.
These earnings-per-share came in a little bit better at $1.07 vs. $1.03 expectations. Revenues were little light however at $4.8 billion vs. $4.82 billion expected
Ebay earnings came and at $1.08 vs. $1.06 expectations. They also raised their year end outlook

European stocks are ending mixed

  
Analysis, Global Indices

Major indices off the session lows

The major European stock indices are ending the session with mixed results. However most of the indices are well off there intraday lows. The provisional closes are showing

  • German DAX up 0.06%. The low was at -0.72%
  • France’s CAC, -0.11%. The low was at -0.93%
  • UK’s FTSE 100, +0.49%. The low was at -0.35%
  • Spain’s Ibex, +1.0%.. The low was at unchanged
  • Italy’s FTSE MIB, -0.5%. The low was at -1.6%

Florida coronavirus cases rise 9243. Deaths hit record

  
Analysis, COVID-19
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The latest data from Florida

  • Cases rise 2.1% vs 2.6% prior
  • Cases 9243 vs 8886 yesterday
  • Median age 42 vs 43 yesterday
  • Positivity 11.69% vs 11.37% yesterday
  • Deaths hit record 186
  • Hospitalizations down 75 in past 24 hours
Positivity has been trending lower in part because of better reporting, but the trend has been higher in the median age (yesterday was a peak). With more elderly people getting it, a rise in deaths isn’t a surprise.

Timing vs. Price

  
  Analysis
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Probably one of the biggest hurdles most traders are struggling with is their obsession with entry prices. You will often hear people brag about their entry price and how they picked a bottom. You mostly never hear them talk about their overall performance. Let alone the bad trades they made. Throw a few darts – you’ll be lucky every now and then.

 

Here is an example to show what I mean. One of the stocks I plan to enter is PCX – Patriot Coal. It is on my public list and I’ve annotated it. What I am looking for is a flag pattern to develop. If we get one – and right now it looks like PCX is indeed starting to build one – I will be watching it very closely. I will watch for clues if my entry rationale is still valid. Is price retreating in orderly fashion? Is volume decreasing during the consolidation?

So what about price? Does it make any difference if I buy at 9.00 or 8.50 or 8.00? You guessed it. I couldn’t care less. If the pressure is there and the stock is acting right I want to buy. If my timing is right I will make money. My entry price won’t matter.

Timing is more important than price!

US’ Fauci: Cautiously optimistic that vaccine will be available by late fall

  
  Analysis

Fauci says that he has not misled the public under any circumstances This comes after Trump retweeted posts yesterday calling Fauci a fraud and that he has misled the public on the whole virus situation. As much as Fauci has had some good standing when it comes to the coronavirus saga, the vaccine remarks are pretty much a recycle of what you would expect from an official in the Trump administration at this point in time. US futures not really paying much attention to this as they are still down ~0.3%. The market is keeping cautious ahead North American trading today, with the dollar slightly ahead but gains are relatively mild after a stronger showing earlier in the session.

UK think tank says unemployment will reach 10% this year

  
  Analysis
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UK think tank, NIESR, comments on the UK economy

UK
  • Sees unemployment rate hitting almost 10% this year due to “premature” end to the government’s furlough program
  • Says government is making a mistake by cutting furlough program in October
  • Says that increases the risks of economic scarring
  • Forecasts UK economy to shrink by 10.1% in 2020, before growing by 6.1% in 2021

That is one take on the whole situation but if the health crisis gets worse in the coming months, who is to say that the UK government would not use that as an excuse to keep the furlough program running until the year-end.

For now, a lot about UK economic data – especially in relation to the labour market – is largely masked by the fact that the government’s furlough program is in place.
We will only get a better idea of how the economy is standing on its own two feet once the program expires. Things may be looking “good” for now but should there be substantial layoffs to come, it could lead to a bigger hit to the economy down the road.
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