News / Analysis
Finance Update – Setting Up the DominoesJuly 29, 2020
Commodities – Bitcoin receives CFTC head approbation
Oil continues trending sideways in a narrowing range. Continuing its zig-zag pattern, the API yesterday provided a 6.83 mB decline in crude inventories. US refiners, in their upcoming earnings reports, are expected to report their worst 2nd Q in a decade.
After peaking at 1973 on Monday, gold entered an engulfing pattern that finds it this morning at $1947 per troy ounce -trending sideways in anticipation of this afternoon’s FED rate announcement.
And Bitcoin, which at last seems to be tracking the golden trend, peaked at 11,176 yesterday – nearly hitting last year’s record – before dropping below the 11K mark this morning.
Yesterday, the Chairman of the US Commodity Futures Trading Commission (CFTC), Heath Tarbert conceded that participants in the crypto frontier are essentially “building within a decade or less an entire economic system based on human incentives and trust,” a system that could lead “a large part of our financial system …(to) exist in blockchain format.”
Meanwhile, the EU has unveiled the minimum technical requirements for its proposed European blockchain services network (EBSI). While Visa and Mastercard Monday published statements supporting cryptocurrencies for digital payments. The two were pioneering partners in Facebook’s doomed Libra expedition.
Americas – FED ahead
US markets lost between 1.27% (Nasdaq) and 0.65% (S&P) yesterday. The resulting weakness in the US dollar is a threat to Asian and European markets, whose own currencies are strengthening, comparatively, but a blessing for emerging economies, who are now finding it easier to service their dollar-linked loans.
This afternoon, the FED releases its latest policy announcement, which is expected to provide a sharp U-turn from last report’s “guarded optimism”, according to Reuters. Expect warnings of a slowdown in business and hiring amidst other economic restrictions. No new measures are expected as board members await to see the results of current programmes.
Redbook Research yesterday presented a 1% drop for July in its year-over-year same-store sales index to -8.7%. Case Shiller also provided a 2-tick YoY decline in May’s house prices to 3.7%. And the Conference Board published a 5.5 point decline to 92.6 in June.
Asia – Aussie FM to US: Keeping China, thanks
Asian markets are mostly up this morning, the Shenzhen Composite adding 1.85% but the Hang Seng marginally down and the Nikkei losing 1.2% on a week-long rise in the Yen, as the government is expected tonight to report a 4.5% contraction in GDP for the March 2020-2021 fiscal year.
This morning, strict anti-COVID measures are being instituted in Hong Kong, as Gov. Carrie Lamb warns of a large-scale outbreak on the horizon, this while Russia announced that it would approve the world’s 1st COVID vaccination within 2 weeks – this despite the drug only being in phase-2 testing stages.
Meanwhile, in a meeting with her US counterpart (Pompeo), Australia’s foreign minister, Marise Pyne said she had no intention of harming the more important aspects of her relationships with China.
Europe –EU Poll approves growth
European markets were mixed yesterday, the CAC losing 0.22% and the FTSE adding 0.4%. A Reuters poll this morning indicates that Eurozone growth will be stronger than anticipated next year thanks to the Union’s €750 bn support fund.
In Germany, June’s import price index this morning showed a better-than-anticipated 0.6% increase.
The Confederation of British Industry Distributive Trends Survey yesterday presented a 4% increase in short-term retail & wholesale trends for July, up from the previous 37% contraction. Last night’s BRC Shop Price index shows a 3-tick improvement in June to -1.3% YoY.
Corporate – Netflix gets 160 Emmy nominations
Facebook, Amazon, Google and Apple CEOs appear before Congress today to explain their positions on antitrust. Zuckerburg is expected to warn lawmakers about the threat of Chinese competition in their deliberations.
eBay shares were down 5.55% after hours despite reporting an 18% increase in revenues to $2.29 bn, beating expectations. VISA also lost nearly 2% after hours yesterday despite topping analyst expectations with a 14% drop YoY in revenues to 4.48 bn, which provided an EPS of $1.07 – 4 cents more than expected.
3M was down 4.85% after announcing a 12.2% drop in revenues, while Raytheon added 2.55% after showing a 22.5% decline in sales to $14.1 bn. McDonald’s slid 3.35% after net income plunged 68% YoY, whereas Starbucks added almost 2% despite a 40% drop in sales.
This morning, Santander remains level after posting an 11.4% drop in revenues, as did Deutsche Bank after posting a 1.4% increase in revenues.
Finally, Netflix shares were down 1.44% yesterday despite earning a record 160 nominations for the upcoming Emmy Awards in September.
Today, expect earnings from PayPal, Boeing, GM, GE, General Dynamics, GlaxoSmithKline, Yum Brands, Avalonbay, Qualcomm, Apache, Rio Tinto, Taylor Wimpey, Barclays, British Land and BASF.
Marvell Technology and Netapp will be paying dividends.
|08:00 AM GMT||Italy||PPIs|
|08:30 AM GMT||UK||Consumer Credit & Mortgage Approvals|
|11:00 AM GMT||US||Mortgage Applications. Wholesale Inventories at 11:30, Goods Trade Balance at 12:30, Pending Home Sales at 2, and the FED’s interest rates & policy statement at 6.|
|10:45 PM GMT||NZ||Building Permits. Business Confidence and activity at 1 AM (+1)|
|11:50 PM GMT||Japan||Foreign Investments and Retail Sales|
|01:30 AM GMT (+1)||Australia||Building permits & Import/Export Prices|