Wochenausblick: FOMC-Sitzungsberichte, Walmart Gewinne, nächste PMI-Runde im Fokus

US-Discounter Walmart und Target, sowie die Baumärkte Home Depot und Lowe’s veröffentlichen diese Woche ihre Gewinne. Mit der Ausnahme von Target, haben diese Aktien die Ergebnisse des S&P 500 dramatisch übertroffen. Die Aussicht zur globalen Geldpolitik erhält diese Woche, dank der Sitzungsberichte der FOMC, EZB und RBA, ein Update, während Flash-PMIs für August helfen werden, die Wachstumsaussicht für Q3 zu formen.

Gewinne: Walmart, Target, Home Depot, Lowe’s

Discounter wie Walmart und Target, sowie Baumärkte wie Home Depot und Lowe’s schossen seit dem Tiefpunkt im März in die Höhe. Walmart liegt 11% über dem Startniveau von Anfang 2020, obwohl das im Vergleich zu den 28% von Home Depot und den 30% von Lowe`s gering erscheint. Target ist die Ausnahme, obwohl die bisherigen Jahreszugewinne von 5% der Aktie den weiteren Markt etwas übertreffen.

Laut Analysten der Bank of America, könnten Target und Walmart starke Gewinne bekannt geben, dank erweiterten Einkommensgebieten, einer frühzeitigen Ausweitung des eCommerces und sinkenden Kosten – außerdem wurden im Q1 der Großteil der von Covid verursachten Kosten verbucht.

Home Depot und Lowe’s schossen in die Höhe, da Anleger auf eine starke Konsumnachfrage, durch Menschen, die genug von den Häusern haben, in denen sie seit Monaten festsitzen. Beide konnten im ersten Quartal geöffnet bleiben, obwohl andere Geschäfte schließen mussten, was half, die Verkäufe zu steigern. Die Märkte werden darauf achten, ob dies mit der Wiedereröffnung anderer Firmen insgesamt zu einer Mäßigung im zweiten Quartal geführt hat.

FOMC- und RBA-Sitzungsberichte, EZB-Jahresabschluss

Wir werden diese viele Einblicke in die Gedanken der Zentralbänker der Welt erhalten, dank der jüngsten Sitzungsberichte des Federal Open Market Committees, der Europäische Zentralbank und der Reserve Bank of Australia.

Die Fed, EZB und RBA haben in ihren jüngsten Treffen ihre Politik alle unverändert belassen, während sie ihren Einsatz zur Unterstützung der Wirtschaft wiederholten. Das Protokoll wird weitere Informationen zu ihren jeweiligen Aussichten und zur Sorge der politischen Entscheidungsträger über die Risiken der zweiten Welle enthalten.

Flash-PMIs werden helfen, Q3-Aussicht zu formen

Jetzt da für das zweite Quartal die BIP-Daten der größten Volkswirtschaften da sind (in vorläufiger Form zumindest), kann sich der Fokus auf die Aussicht für Q3 verschieben. Die nächsten Flash-PMIs von Markit decken den August ab und werden dazu beitragen, die Erwartungen an das Erholungstempo in diesem Quartal zu prägen.

Die neuesten Herstellungs-, Dienstleistungs- und Kompositzahlen werden für die Eurozone, England und die USA erwartet. Die Kompositzahlen vom Juli zeigten, dass die Wirtschaftstätigkeit in der Eurozone am schnellsten seit etwas mehr als zwei Jahren gewachsen war, während die Expansion in Großbritannien die schnellste seit Juni 2015 war.

UK-Inflation, Einzelhandelsabsatz

Das Preiswachstum in Großbritannien lag im Juni leicht über der Prognose und stieg von 0,5% auf 0,6% zum Vorjahr, gegenüber den Erwartungen eines Rückgangs auf 0,4%. Die Inflation liegt dennoch beim vier-Jahres-Tief und Analysten glauben nicht, dass der Anstieg im Juni der Beginn eines anhaltenden Aufwärtstrends ist. Es wird erwartet, dass die Reservekapazität in der Wirtschaft das Preiswachstum bremsen bzw. weiter verlangsamen wird.

Einzelhandelsabsätze stiegen im Juni stärker als erwartet und sprangen in dem Monat 13,9%, folgend auf die 12,3% Wachstum im Mai. Trotz dieses Wachstums haben viele Geschäfte in letzter Zeit den Abbau von Arbeitsplätzen angekündigt. Daten des Verbands des Britischen Einzelhandels deuten auf weiteres Absatzwachstum im Juli hin, da Online-Verkäufe hier aber den Großteil ausmachen, ist die Gefahr für die englischen Ladengeschäfte noch nicht gebannt.

Highlights auf XRay diese Woche

Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings.

07.15 UTC Daily European Morning Call
12.00 UTC 17⁠-⁠⁠Aug Master the Markets
From 15.30 UTC 18-⁠⁠Aug Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 19-⁠⁠Aug Using candlestick charts to form the basis of your trading analysis
17.00 UTC 20⁠-⁠⁠Aug Election2020 Weekly

Top Quartalsberichte diese Woche

22.30 GMT 17-Aug BHP Billiton – Q4 2020
Pre-Market 18-Aug Walmart – Q2 2021
Pre-Market 18-Aug Home Depot – Q2 2020
Pre-Market 19-Aug Lowe’s Companies – Q2 2020
Pre-Market 19-Aug Target Corp – Q2 2020
After-Market 19-Aug NVIDIA – Q2 2021
After-Market 20-Aug Ross Stores – Q2 2020

Die wichtigsten Wirtschafts-Ereignisse

Behalten Sie die wichtigsten Ereignisse des wirtschaftlichen Kalenders dieser Woche im Auge:

01.30 GMT 18-Aug RBA Monetary Policy Meeting Minutes
06.00 GMT 19-Aug UK Inflation
14.30 GMT 19-Aug US EIA Crude Oil Inventories
18.00 GMT 19-Aug US FOMC Meeting Minutes
11.30 GMT 20-Aug ECB Monetary Policy Meeting Accounts
12.30 GMT 20-Aug US Weekly Jobless Claims
14.30 GMT 20-Aug US EIA Natural Gas Storage
06.00 GMT 21-Aug UK Retail Sales
07.15 – 08.00 GMT 21-Aug Eurozone Flash PMIs (Composite, Manufacturing, Services)
08.30 GMT 21-Aug UK Flash PMIs (Composite, Manufacturing, Services)
12.30 GMT 21-Aug Canada Core Retail Sales
13.45 GMT 21-Aug US Flash Manufacturing PMI

Wochenausblick: Arbeitsmarktzahlen im Fokus angesichts durch US-Lockdowns gefährdeter Erholung

Die Earning-Season neigt sich dem Ende zu, aber der Q3-Bericht von Walt Disney wird diese Woche noch im Fokus stehen. Auf der volkswirtschaftlichen Seite halten die RBA und die BoE beide Treffen zur Geldpolitik und die Freitag erscheinenden Berichte zu den Nonfarm-Payrolls drohen die Volatilität der Märkte bis zum Wochenende zu erhalten.

PMIs von Markit, Caixin, ISM auf dem Weg

Eine Reihe PMIs wird diese Woche weitere Informationen zum Zustand der Weltwirtschaft liefern. Abschließende PMIs für Produktion und Dienstleistung werden für die Eurozone, England und die USA erwartet. Der genau im Auge behaltene chinesische Caixin Manufacturing PMI erscheint bereits am Montag, der Services PMI zur asiatischen Sitzung am Mittwoch.

Außerdem erwartet werden diese Woche die ISM Manufacturing- und Nonmanufacturing-Indizes. Vom Nonmanufacturing-Index wird ein leichter Rückgang erwartet, nach dem Ansprung von 12 im Bericht von Juni, bleibt dabei aber stabil im Wachstumsbereich.

Treffen der Reserve Bank of Australia – kommt eine Reaktion auf die jüngste Deflation?

Die Reserve Bank of Australia trifft sich vor dem Hintergrund steigender Coronavirus-Fälle, weltweit und im eigenen Land.

Neue Einschränkungen bedrohen die Wiedereröffnung der Wirtschaft und vor kurzem erschienene VPI-Zahlen legen offen, dass das Preisniveau im Q2 aufs Jahr gerechnet zum ersten mal seit 1997 gefallen ist und der Verbraucherpreisindex den größten Einbruch seit Beginn der Aufzeichnungen verbucht hat.

Die Märkte werden wahrscheinlich von der Politik erwarten, mehr zur Stimulation einer Inflation zu tun. Da Zinsraten effektiv bereits bei null liegen und es kein Interesse gibt noch tiefer zu gehen, lieft der Fokus darauf, ob die RBA jetzt oder in naher Zukunft andere Konjunkturmaßnahmen für nötig hält.

Walt Disney Gewinne

Investoren werden auf drei Schlüsselfaktoren ganz besonders achten im Q3-Gewinnbericht von Disney, der nach Börsenschluss am 4. August erwartet wird. Der Großteil des Einkommens der Firma kommt aus Vergnügungsparks – einige davon sind wieder geöffnet, aber andere bleiben über die ursprünglich angepeilten Eröffnungstermine hinaus wegen steigender Corona-Fallzahlen geschlossen.

Verzögerungen, nicht nur in der Veröffentlichung von Blockbuster-Filmen, sondern auch in der der Produktion, werden einen Einfluss auf das Saldo und Empfehlungen haben.

Disney+ könnte hier einen Lichtblick bedeuten – die Maßnahmen zum Coronavirus haben zu einem raketenhaften Anstieg der Abo-Zahlen für den Rivalen Netflix gesorgt und Investoren werden genau zusehen, ob Disney einen ähnlichen Boom genossen hat.

Bank of England Zinsentscheidung, Inflationsbericht

Der geld- und währungspolitische Ausschuss der Bank of England wird am Donnerstag die jüngsten Entscheidungen zur Geldmarktpolitik bekannt geben.

Chefökonom Andy Haldane sagte vor kurzem dem Treasury Select Committee, dass er glaube, dass sich die englische Wirtschaft um „etwa die Hälfte“ von den riesigen Einbrüchen im März und April erholt hätte, warnte aber davor, dass die Arbeitslosigkeit Höhen erreichen könnte, die man seit den 80er Jahren nicht mehr gesehen hat.

Haldane nannte einige Strategien, die die Bank of England einsetzen könnte, wenn die Politik diese für nötig erachten würde – jedes Wort zu Negativzinsen wäre direkt in den Schlagzeilen, aber die MPC könnten auch zusätzliche quantitative Lockerungen, Credit Easing und Forward Guidance in Betracht ziehen.

Es werden gerade aber keine Änderungen der Zinsrate oder der quantitative Lockerung erwartet. Die BoE wir außerdem am Donnerstag die neuesten Zahlen zur Inflation veröffentlichen.

Nonfarm-Payrolls – verlangsamen neue Corona-Einschränkungen die Erholung des Arbeitsmarktes?

Die US-Zahlen zu Nonfarm-Payrolls werden am Freitag erwartet. Die letzten zwei Berichte haben eine enorme Erholung nach dem Wegfall von 20 Millionen Stellen im April gezeigt, mit 2,7 Millionen neuen Stellen im Mai und 4,8 Millionen im Juni. Ökonomen erwarten die Schaffung 2,2 Millionen zusätzlicher Stellen für Juli zu sehen.

Es ist noch ein langer Weg, bis die USA wieder auf dem Beschäftigungsniveau von vor der Corona-Krise angelangt sind und steigende Corona-Fallzahlen und frische Einschränkungen auf Geschäfte in vielen Staaten könnte sich negativ auf zukünftiges Stellenwachstum auswirken.

Highlights auf XRay diese Woche

Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings.

07.15 UTC Daily European Morning Call
12.00 UTC 03-Aug Master the Markets with Andrew Barnett
From 15.30 UTC 04-Aug Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 06-Aug Election2020 Weekly
12.00 UTC 07-Aug Marketsx Platform Walkthrough

Top Quartalsberichte diese Woche

Hier sind einige der größten, für diese Woche angekündigten Quartalsberichte:

05.30 UTC 04-Aug Bayer – Q2
04-Aug Sony – Q1
Pre-Market (UK) 04-Aug BP – Q2
After-Market 04-Aug Walt Disney – Q3
05.00 UTC 05-Aug Allianz – Q2
Pre-Market 05-Aug Regeneron
06.00 UTC 06-Aug Glencore – Q2
06-Aug Adidas – Q2
Pre-Market 06-Aug Siemens – Q3
06-Aug Uber – Q2

Die wichtigsten Wirtschafts-Ereignisse

Behalten Sie die wichtigsten Ereignisse des wirtschaftlichen Kalenders dieser Woche im Auge:

01.45 UTC 03-Aug China Caixin Manufacturing PMI
07.15 UTC – 08.00 UTC 03-Aug Finalised Eurozone Manufacturing PMIs
08.30 UTC 03-Aug Finalised UK Manufacturing PMI
14.00 UTC 03-Aug US ISM Manufacturing PMI
04.30 UTC 04-Aug RBA Interest Rate Decision
22.45 UTC 04-Aug New Zealand Quarterly Employment Change / Jobless Rate
01.45 UTC 05-Aug China Caixin Services PMI
07.15 UTC – 08.00 UTC 05-Aug Finalised Eurozone Services PMIs
08.30 UTC 05-Aug Finalised UK Services PMI
14.00 UTC 05-Aug US ISM Nonmanufacturing PMI
14.30 UTC 05-Aug US EIA Crude Oil Inventories
11.00 UTC 06-Aug Bank of England Rate Decision, Monetary Policy Report
12.30 UTC 06-Aug US Weekly Jobless Claims
14.30 UTC 06-Aug US Natural Gas Storage
01.30 UTC 07-Aug RBA Monetary Policy Statement
06.00 UTC 07-Aug Germany Industrial Production / Trade Balance
12.30 UTC 07-Aug US Nonfarm Payrolls, Average Earnings, Jobless Rate

Wochenausblick: Riesenwoche für Geschäftsberichte, Federal Reserve Treffen wie geplant

In dieser Woche – wird die Federal Reserve sich auf Anleihenrenditen stützen, und können Amazon, Alphabet, Apple und Facebook die hohen Erwartungen zu ihren Geschäftsberichten erfüllen?

Geschäftsberichte

Anleger konzentrieren sich immer mehr in einer Hand voll großer Namen, vor allem im sehr beliebten Tech-Bereich. Die Konzentration ist so groß, dass die größten fünf Aktien beinahe ein Viertel der gesamten Marktkapitalisierung des S&P 500 ausmachen. Diese Aktien haben 35% YTD gewonnen, während die verbleibenden 495 Aktien ein Minus von 5% verzeichnet haben. Mit solch hohen Konzentrationen in Big Tech werden Ertrags-Updates von vier der fünf maßgeblich die Richtung des Marktes beeinflussen.

Von Facebook (FB), Amazon.com (AMZN), Apple (AAPL) und Alphabet (GOOGL) werden diese Woche Zahlen erwartet. Dies gibt dem Markt einen klaren Hinweis zur Belastbarkeit der Gewinne der höchst-kapitalisierten Aktien, sowie eine wichtige Orientierungshilfe für die kommenden Quartale.  Lesen Sie unsere Vorschau zu den Amazon Zahlen.

In einer geschäftigen Woche für Quartalsberichte, sind Royal Dutch Shell und AstraZeneca die zwei größten englischen Aktien die ihre Zahlen veröffentlichen, während Luxus unter der Lupe steht, mit den Zahlen von Hermes und LVMH.

Treffen der Federal Reserve – auf das Front-End gelehnt?

Die Rede von einer Zinskurvenkontrolle hält die Leitzinsen niedrig und belastet die Realzinsen, aber es ist unklar, ob die Federal Reserve versuchen wird, sich am Mittwoch weiter auf das Front-End der Kurve zu stützen. Vorsitz Jay Powell betonte, dass die Fed nicht einmal daran denkt, die Zinsen zu erhöhen, während der Rückgang der US-Realrenditen auf Rekordtiefs ein Zeichen dafür ist, dass der Markt möglicherweise glaubt, dass die Fed mehr tun könnte.

Auf der Sitzung in dieser Woche wird keine Änderung der Politik erwartet, aber die Gespräche werden wahrscheinlich die Voraussetzungen für einen Schritt im Herbst schaffen, um den Markt weiter zu unterstützen, nach dem letzten Monat die Fed sagte, dass eine äußerst akkommodierende Politik wahrscheinlich viele Jahre andauern wird. Auf der letzten FOMC-Sitzung wurde vereinbart, dass die Beamten eine genauere Analyse der Zinskurvenkontrolle benötigen, aber es bestand Einigkeit darüber, dass explizitere Leitlinien für die Zinssätze erforderlich sind, die möglicherweise an konkrete Ziele für die Inflation oder das Beschäftigungsniveau gebunden sind. Dies könnte das Front-End der Zinsstrukturkurve weiter verankern und als De-facto-Kontrollmechanismus fungieren.

BIP-Zahlen – wie schlimm war es?

Nach der Fed, gibt es am Donnerstag noch die Veröffentlichung der vorgerückten US-BIP-Zahlen für das zweite Quartal. Das GDPNow-Model der Fed aus Atlanta deutet darauf hin, dass die größte Marktwirtschaft der Welt im zweiten Quartal um 35% geschrumpft ist. Wir wissen jedoch bereits, dass das Juni-Quartal schrecklich war – die rückwärtsgerichteten Daten könnten sich als weniger aufschlussreich erweisen als der jetzt am Donnerstag fällige US-Wochenbericht zu den Arbeitnehmerzahlen. Vor diesen und vor Beginn der europäischen Sitzung werden die jüngsten deutschen BIP-Zahlen veröffentlicht.

 

Highlights auf XRay diese Woche

Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings. 

07.15 UTC  Daily  European Morning Call 
12.00 UTC  27-Jul  Master the Markets 
From 15.30 UTC  28-Jul  Weekly Gold, Silver, and Oil Forecasts 
17:00 UTC  30-Jul  Election2020 Weekly 
19.30 UTC  30-Jul  Daily FX recap 

  

Top Quartalsberichte diese Woche 

Hier sind einige der größten, für diese Woche angekündigten Quartalsberichte:

27-Jul  SAP 
27-Jul  LVMH 
28-Jul  3M 
28-Jul  Starbucks 
28-Jul  McDonald’s 
28-Jul  Amgen 
28-Jul  Visa 
28-Jul  Pfizer 
29-Jul  PayPal 
29-Jul  Facebook 
29-Jul  Boeing 
30-Jul  Nestle 
30-Jul  Samsung 
30-Jul  Procter & Gamble 
30-Jul  Alphabet 
30-Jul  Amazon 
30-Jul  Apple 
30-Jul  Shell 
30-Jul  AstraZeneca 
30-Jul  Hermes 
31-Jul  Chevron 

  

Die wichtigsten Wirtschafts-Ereignisse

Behalten Sie die wichtigsten Ereignisse des wirtschaftlichen Kalenders dieser Woche im Auge:

08.0UTC  27-Jul  German Ifo Business Climate 
12.30 UTC  27-Jul  US core durable goods orders 
07:0UTC  28-Jul  Spain unemployment rate 
14:00 UTC  28-Jul  US CB consumer confidence 
01.30 UTC  29-Jul  Australia CPI inflation 
14:0UTC  29-Jul  US pending home sales 
14.30 UTC  29-Jul  US EIA Crude Oil Inventories 
18.00 UTC  29-Jul  Federal Reserve statement + press conference 
06:00 UTC  30-Jul  German preliminary GDP 
12.30 UTC  30-Jul  US Weekly Jobless Claims 
12:30 UTC  30-Jul  US advanced Q2 GDP 
14.30 UTC  30-Jul  US EIA Natural Gas Storage 
01.00 UTC  31-Jul  China PMIs 
12:30 UTC  31-Jul  US core PCE inflation, spending 

 Find every event in our economic calendar.

Wochenausblick: Impfstoff-Hoffnungen und Tesla Gewinne im Fokus

In dieser Woche aktuelle – kann Tesla genug tun, um die massive Bewertung mit den Gewinnzahlen des zweiten Quartals zu rechtfertigen?

Tesla Q2-Gewinne

Tesla (TSLA) verzeichnete 2020 eine beeindruckende Entwicklung, mit einem Anstieg von bisher 270%. In den letzten 12 Monaten, ist die Aktie, in einer der atemberaubendsten Trendwenden der Firmengeschichte, um mehr als 500% gestiegen. Im gleichen Zeitraum hat der S&P 500 in etwa 7% gemacht. Die Bewertungen sind raus und die Aktie wird mit technischen Multiplikatoren gehandelt – einige würden sagen zu recht, aber das Short-Interesse an der Aktie – der Prozentsatz der Aktien, die an Händler verliehen wurden, die wetten, dass die Aktie fallen wird – bleibt mit 7,5% relativ hoch.

Tesla-Aktien schossen im letzten Jahr in die Höhe 

Aber diese Woche geht es wieder ans Eingemachte, da Tesla seine Zahlen für das zweite Quartal 2020 veröffentlicht. Es wird erwartet, dass das Unternehmen am 22. Juli für das vierte Quartal in folge einen Gewinn berichtet, was den Weg zum S&P 500 freimachen würde und den jüngsten Ansturm erklären könnte, da Fonds beschlossen haben, einen Teil davon besitzen zu müssen.

Die Aktie stieg auf ein Allzeithoch von 1.800 USD nachdem das Unternehmen bekannt gab, im zweiten Quartal 90.650 Fahrzeuge ausgeliefert zu haben, weit über dem was das Unternehmen angepeilt hatte und über der Erwartung der Wall Street von 83.000 Fahrzeugen. Das Unternehmen hat erfolgreich die Produktion am Fremont Standort hochgefahren und die Fabrik in Shanghai ist nach der Covid-bedingten Schließung im ersten Quartal auch wieder aktiv. Absatzzahlen für China steigen und Tesla hat im Mai beinahe 12.000 Model 3 verkauft. Die Aktie erhielt außerdem Rückenwind nachdem Wedbush Securities das Preisziel der Aktie von 1.000 USD auf 1.250 USD erhöhte, während das bullische Szenario bei 2.000 USD lag.

Analysten bleiben zu Tesla gespaltener Meinung … 

… aber Hedgefonds haben ihre Anteile erhöht

Weitere wichtige Ergebnisse kommen diese Woche von Microsoft, Coca-Cola und Unilever.

AstraZeneca und Oxford University Impfstoff Ergebnisse

Die Stimmung am Aktienmarkt wird weiterhin von der Hoffnung auf einen Impfstoff geprägt, obwohl es Anzeichen für eine langsamere Erholung, als den erhofften V-förmigen Aufschwung gibt. Große Hoffnungen werden auf den von AstraZeneca und der Oxford University entwickelten Impfstoff-Kandidaten gesetzt – die Ergebnisse der klinischen Studie Phase I werden am Montag erwartet und könnten den Ton für die restliche Woche an den Aktienmärkten bestimmen.

Achten Sie auf die Reaktion der AstraZeneca-Aktien, die dieses Jahr zur größten Aktie des FTSE 100 geworden ist.

Die wichtigsten Wirtschaftszahlen

Wie immer am Donnerstag erwarten wir ein wichtiges Update aus den USA, das helfen wird, das Tempo der Wiedereröffnung und der wirtschaftlichen Erholung in Form wöchentlicher neuer und bestehender Arbeitslosenansprüche aufzuzeigen.

Am Freitag haben wir die Einzelhandelsabsatzzahlen für England für Juni, die nach dem gesunden Plus von 12% im Mai auf das Minus von 18% im April folgend, zum Höhepunkt der Einschränkungen, erwartungsgemäß eine Verbesserung zeigen werden.

Am Freitag erhalten wir außerdem die jüngsten PMIs für die Eurozone, die letzten Monat eine solide Erholung gezeigt hat. PMIs, was Diffusionsindices sind, werden besonders von der Geschwindigkeit und Größe der Wirtschaftskontraktion herausgefordert. Also auch wenn sich eine V-Form ergibt, heißt das nicht, dass die Erholung V-förmig ist. PMIs fragen nur, ob die Teilnehmer glauben, dass sich die Situation im Vergleich zum Vormonat verbessert oder verschlechtert, sodass sie eine imperfekten Abbildung der wirtschaftlichen Aktivitäten in Krisenzeiten bieten. Ein Wert von über 50 besagt nur, dass die Dinge besser liegen als im Vormonat, was gerade nicht besonders schwierig sein sollte.

Highlights auf XRay diese Woche

Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings.

07.15 UTC Daily European Morning Call
17.00 UTC 20-Jul Blonde Markets
From 15.30 UTC 21-Jul Weekly Gold, Silver, and Oil Forecasts
14.45 UTC 23-Jul Master the Markets with Andrew Barnett
17.00 UTC 23-Jul Introduction to Currency Trading – Is it For Me?

Top Earnings Reports this Week

Here are some of the biggest earnings reports scheduled for this week:

After-Market 20-Jul IBM – Q2
07.00 GMT 21-Jul UBS – Q2
Pre-Market 21-Jul Coca-Cola Co – Q2
Pre-Market 21-Jul Philip Morris – Q2
Pre-Market 22-Jul Biogen – Q2
After-Market 22-Jul Tesla – Q2
After-Market 22-Jul Microsoft – Q2
After-Market 22-Jul Gilead Sciences – Q2
07.00 GMT 23-Jul Unilever – Q2
Pre-Market 23-Jul AT&T – Q2
Pre-Market 23-Jul Twitter – Q2
After-Market 23-Jul Intel – Q2
23-Jul Southwest Airlines – Q2
Pre-Market 24-Jul Verizon – Q2
Pre-Market 24-Jul American Express – Q2

Key Events this Week

Watch out for the biggest events on the economic calendar this week:

01.30 GMT 21-Jul RBA Monetary Policy Meeting Minutes
02.30 GMT 21-Jul RBA Governor Lowe Speech
12.30 GMT 21-Jul Canada Retail Sales
00.30 GMT 22-Jul Japan Flash Manufacturing PMI
01.30 GMT 22-Jul Australia Retail Sales
12.30 GMT 22-Jul Canada CPI
14.30 GMT 22-Jul US EIA Crude Oil Inventories
06.00 GMT 23-Jul German GfK Consumer Climate
12.30 GMT 23-Jul US Weekly Jobless Claims
14.30 GMT 23-Jul US EIA Natural Gas Storage
06.00 GMT 24-Jul UK Retail Sales
07.15-08.00 GMT 24-Jul Flash Eurozone Services, Manufacturing PMIs
08.30 GMT 24-Jul Flash UK Services, Manufacturing PMIs
13.45 GMT 24-Jul US Flash Manufacturing PMI

Amazon earnings – what to expect from Q2?

Amazon (AMZN) is due to report earnings July 30th and is set for another strong quarter of revenue growth, albeit costs are also increasing. The stock has jumped more than 60% YTD – can the rally continue?

First of all, the range of estimates for the second quarter is unusually wide and is extremely hard to navigate.

Amazon’s own Second Quarter 2020 Guidance

Net sales are expected to be between $75.0 billion and $81.0 billion, or to grow between 18% and 28% compared with second quarter 2019. This guidance anticipates an unfavourable impact of approximately 70 basis points from foreign exchange rates.

Operating income (loss) is expected to be between $(1.5) billion and $1.5 billion, compared with $3.1 billion in second quarter 2019. This guidance assumes approximately $4.0 billion of costs related to COVID-19.

What the analysts think of Amazon

Cowen 5-star analyst John Blackledge expects Amazon to deliver another strong quarter of growth with revenue and operating income at the high end of the guided range. The key drivers will be AWS, Advertising and an acceleration in e-commerce growth, which he says will post +29% growth vs +17% in Q2 2019.

Investors should be able to shrug off upwards of $4bn in Covid-related investments flagged in the last earnings release as likely weighing on Q2 EPS numbers. As ever with this kind of growth stock, EPS can be lumpy.

EPS will also be determined by AWS growth. Last quarter AWS revenues exceeded $10bn for the first time and whilst it generated 13.5% of total revenue, it delivered 77% of operating income. However as flagged in the past, the growth in AWS is slowing.

Overall analysts remain very bullish…

And hedge funds still like this stock…

Amazon share price: technical signals calling for pullback closer to 200-day moving average?

MACD crossover looks bearish, whilst the recent extension beyond the 200-day moving average has historically preceded a pullback. More broadly we are starting to see signs that the Nasdaq and tech stocks are retracing some gains after the run up in the second quarter.

Dutch PM Rutte ‘not optimistic’ ahead of EU summit, Netflix misses

European stocks were choppy and likely set for a volatile finish to the week as EU leaders gather in Brussels for a key summit, with market participants squarely focused on whether the EU can agree to a broad recovery fund as part of the talks over the bloc’s budget for 2021-27.

Whilst the EU seems to be edging closer to a deal and Merkel and Macron should ultimately get the consensus they need for something like a €500bn-€750bn package of support, there is a risk the market has put too much on this particular meeting and is left disappointed if there is no final decision taken this weekend.

We may get an agreement in principle on the fund that will be made up of a mix of grants and loans, with details on the total money value and attached reform requirements to be finessed. Even that might be a stretch though – Merkel warned this week that it could take until the end of the summer to achieve a deal and today said talks would be tough.

Dutch PM Rutte said this morning he’s ‘not optimistic’ ahead of the talks. Indeed, I would not expect much more than a political declaration affirming member states commitment to achieving some kind of a deal.

This not an ordinary summit – what’s being talked about is mutual debt issuance for the first time. A deal would be a major breakthrough for the EU and show that the bloc has the ability to respond to an era-defining crisis with one voice.  Merkel is throwing all her political capital behind the European Recovery Fund, so there more than just EU solidarity riding on it.

The Frugal Four of Sweden, Austria, Denmark and the Netherlands remain the main barrier to achieving a deal as they are still to be convinced on why they should be sharing the burden of weaker states, but most countries will be out to fight their corner too. At least they are all back in a room and can talk through the night to trade horses and get something done – not so easy on Zoom, albeit it’s an absolute hangar of a room.

ECB’s Lagarde dismisses tapering chatter

Yesterday, the ECB left rates on hold as expected and Christine Lagarde appeared to push back against the tapering chatter by saying the ECB would use the full PEPP envelope of €1.35tn ‘barring surprises’. She also seemed confident member states would agree on the fiscal response to the crisis, which gave the euro a little nudge up at the time.

EURUSD is back under 1.14 this morning – a recovery fund deal would likely take it over 1.15 and set it up for further gains. Near term the support is around the 1.12 region.

Stocks on Wall Street finished lower on Thursday, led by a decline in tech. It’s probably too early to say this is part of a rotation out of growth into value – which could be a trade to consider if you assume that a vaccine is coming and things get back to normal – but there may be an element of profit-taking in big tech as investors take stock of events and consider the uncertainty over the pandemic, reopening rates, stimulus, earnings outlooks and stretched valuations in some corners of the market vs many stocks being in the bargain basement, among others.

Netflix subscribers and earnings growth miss

Netflix shares plunged 9% to $480 in after-hours trade as the company signalled weaker subscriber growth and profits missed expectations. Revenues were a tad better than forecast at $6.15bn, and as I expected, net subscriber additions in excess of 10m were ahead of estimates for about 7.5m, but earnings per share were a little soft at $1.59 vs $1.80 expected.

But guidance on future growth in subscribers was soft with the company only anticipating 2.5m net adds in September quarter. Maintaining Covid-era subscriber growth was always a tall order, if not impossible, but 2.5m would represent its weakest growth rate for a long time.

Although EPS was a miss, it was largely down to the timing of a California research and development tax credit charge. Netflix earnings have always been lumpy and net subscriber adds has always been a greater guide. The company expects 16% operating margin in 2020 and 19% for 2021, which CEO Reed Hastings said was ‘tamping down the expectations’.

Competition remains a headwind as new streaming services come online, but increasingly even social media is considered a rival. Netflix cited TikTok as a competitor – good news then that the US wants to ban the Chinese social media app.

There are of course questions about whether Netflix will manage to attract eyes in the way it did during lockdown – cinemas reopening, bars and restaurants luring people off the sofa etc, whilst the impact of Covid-related shutdowns on production is still being understood. Moreover coronavirus has simply pulled forward a lot of net adds from the coming quarters – expect slower growth but the company remains in a very good place.

US jobless claims mixed, homebuilder sentiment climbs

Economic data from the US was mixed. Initial jobless claims hit 1.3m, almost unchanged from the prior week. The improving trend has all but halted and may reflect the spike in coronavirus cases that has coincided with renewed lockdown measures in a number of economically important states such as Texas and Florida. California’s decision to roll back reopening signals worse could be ahead.

Continuing claims fell to 17.3m vs the 18m last week, which was a tad better than the 17.6m expected. The total number of people claiming benefits in all programmes for the week ending June 27th fell to 32m a decrease of 430k from the previous week. What’s clear is the rate of change is not moving in the right direction – getting back to pre-Covid levels will take a long time.

However, homebuilder sentiment rose 14 points to 72 in July, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). That’s where the index reached in March before the crisis hit and it slumped to 30 in April.

Oil and gold are both still in consolidation mode. WTI (August) cannot make a move beyond $41 stick, whilst gold is still crabbing sideways around the $1800 level and appears to set its new low and near-term support at $1796. US real rates (10yr TIPS) made new 7-year lows at –0.79%.

Stocks retreat before ECB, US + UK jobless numbers in focus

European stocks pulled back a little after a rally in the previous session as upward pressure on equities continues to hold firm despite rising case numbers as hopes for a vaccine are the new hopes for a US-China trade deal. Moderna has reported encouraging results from initial trials, while there is a lot of hope being pinned on AstraZeneca’s phase one trials, results of which are due to be published July 20th.

Whilst nothing is certain, it seems things are moving in the right direction for a vaccine to emerge by next year.

Shanghai fell 4% and Hong Kong was down almost 2% overnight after a mixed bag of Chinese economic data. US stocks rallied yesterday with the S&P 500 posting its highest close since the June peak, though futures point to the index opening around 20 points lower. The Dow is seen opening about 200 points lower.

UK jobless data reveals first wage drop in six years

The number of employees on payrolls in the UK fell by 650,000 between March and June, but the worst of the employment is still in front of us. Vacancies are at their lowest level since records began in 2001, earnings fell for the first time in six years, and the ONS noted that the standard definition of unemployment does not include half a million employees temporarily away from their jobs specifically for coronavirus-related reasons, who are receiving no pay while their job was on hold.

Unemployment claims were better than feared but we can pin this on furlough schemes which are extending the pretence, delaying the worst and providing a soft landing; but the jobless numbers clearly do not reflect the true extent of what’s coming. Meanwhile the number of hours worked – a key metric for the nation’s productivity – has collapsed.

China GDP rebounds, consumption lags

Chinese GDP grew 3.2% in Q2, up from the –6.8% contraction in Q1, which was better than forecast, albeit we apply the usual caveats about Chinese economic data. Industrial production rebounded 4.8%, but retail sales were down –1.8% vs an expected +0.3% improvement.  Richemont flagged a strong recovery in China despite sales globally falling 47% in its first quarter, with luxury goods stocks weaker. Burberry shares fell another 3%.

US data was solid enough, with industrial production +5.4% in June whilst the Empire State manufacturing index hit 17.2, a beat on the 10 expected and a big jump from the –0.2 in the prior month. It remains to seen however to what extent the rate of change in the recovery turns lower as data starts to reflect the ‘second wave’ of cases and the imposing of some fresh lockdown restrictions in some key states.

In the Fed’s Beige Book, the Dallas Fed noted that while the outlook has improved, the upward trend in new COVID-19 cases has increased uncertainty. “Economic activity increased in almost all Districts, but remained well below where it was prior to the COVID-19 pandemic,” the national summary read.

US-China tensions are bubbling away – plans by the White House to impose travel restrictions on millions of Chinese Communist party members is the latest in the saga.

Goldman Sachs earnings crushed expectations with a stunning quarter of trading revenues. Bond trading revenue jump 150% to $4.24bn, while equities trading revenue climbed 46% to $2.94bn. For me all it did was underscore the divergence we are seeing between the real economy and the market, which is benefitting hugely from two-pronged monetary and fiscal stimulus.

Oil still rangebound after OPEC agrees to begin tapering production cuts

Oil couldn’t break free from its narrow range as OPEC+ extended cuts but began tapering with production curbs in August down from 9.7m barrels per day to 7.7m bpd, although the total effective cuts will be around 8.1m-8.3m barrels a day as countries which overproduced in May and June would make additional compensation cuts in August and September. OPEC will need to play this carefully – the longer its barrels are off the market the more it could encourage higher cost US oil to come back on.

Inventory data from the States was bullish with the –7.5m drawdown much higher than the –1.3m expected. Gasoline inventories also fell by more than expected at –3m. WTI (Aug) rallied from the medium-term trend support around $39.20 yesterday to press on the $41 handle but it continues to lack momentum – the CCI divergence on the daily timeframe chart points to the rally running out of legs and buyer exhaustion that could call for a further pullback.

In focus today: ECB, Netflix, US jobless claims and retail sales

Lots coming up today…

ECB meeting: Following the top-up to the PEPP programme in June to €1.35tn, the European Central Bank should be keeping its powder dry with the key EU summit starting tomorrow to hammer out the budget.

I expect Christine Lagarde to stress the importance of the fiscal side and leave policy unchanged but stress that ECB’s accommodative position – this is not the time for a discussion of tapering or the details of how much of the envelope you need to use.

In a recent interview she said the central bank had ‘done so much that we have quite a bit of time to assess [the incoming economic data] carefully’. The EU recovery fund is more important for EUR crosses right now – agreement this week may push EURUSD beyond the key 1.15 level.

Netflix earnings: The ultimate stay-at-home company, Netflix (NFLX) has made hay in the pandemic, with the stock hitting an all-time high and clearing $520. In the March quarter, Netflix added 15.77m new subscribers, which was more than double the original forecast of 7m net adds.

The company has forecast 7.5m new adds in the June quarter and may easily beat this with around 10m subscriber additions.  Sequentially lower net adds should not weigh on the stock given the exceptional performance in the first quarter. ARPU could benefit from a depreciation in the dollar since it last reported.

As Netflix itself noted in its Q1 report, there is a lot of unknown to its forecasts. “Given the uncertainty on home confinement timing, this is mostly guesswork. The actual Q2 numbers could end up well below or well above that, depending on many factors including when people can go back to their social lives in various countries and how much people take a break from television after the lockdown.”

The market expects $6.1bn in sales and EPS of $1.8, with paid subscribers to hit 190m.

US weekly unemployment claims: Last Thursday’s data was better than expected for the week ending Jun 27th, however the total number of people claiming benefits in all programmes, including both regular state and all others, and including Covid-related programmes, rose 1.4m to 32.9m in the week to Jun 20th.

Initial claims today are seen falling again to 1250k from 1314k the previous week, with continuing claims seen down to 17500k from 18062k last week.

US retail sales: Expect to see continued improvement as the economy recovers off the lockdown lows. Retail sales should print another strong reading as consumers binge on their $600-a-week stimulus checks, which are due to finish this month.

Stocks firm, earnings unmask weakness, OPEC+ decision eyed

European markets moved up again this morning after stocks rallied on Wall Street and futures indicate further gains for US equity markets despite big bank earnings underlining the problems on Main Street. Sentiment recovered somewhat after Moderna’s vaccine candidate showed ‘promising’ results from phase 1 trials. It is too early to call a significant breakthrough, but it’s certainly encouraging.

Cyclical components led the way for the Dow with top performers the likes of Caterpillar and Boeing, as well as energy names Exxon and Chevron up over 3% as the index rose over 500pts, or 2.1%, its best day in over two weeks. Apple shares regained some ground to $388 ahead of an EU court ruling today on whether the company should repay €13bn in unpaid taxes.

Asian markets were mixed, with China and Hong Kong lower as US-China tensions rose, but shares in Japan and Australia were higher. European shares advanced around 0.75% in early trade, with the FTSE reclaiming 6,200 and the DAX near 12,800.

However, Tuesday’s reversal off the June peak may still be important – lots of things need to go right to extend the rally and you must believe this reporting season will not be full of good news, albeit EPS estimates – such as they are – may be relatively easy to beat.

My sense is what while the stock market does not reflect the real economy, this does not mean we are about to see a major drawdown again like we saw in March. The vast amount of liquidity that has been injected into the financial system by central banks and the fiscal splurge will keep stocks supported – the cash needs to find a home somewhere and bonds offer nothing. It will likely take a significant escalation in cases – a major second wave in the winter perhaps – to see us look again at the lows.

For the time being major indices are still chopping around the Jun-Jul ranges, albeit the S&P 500 and DAX are near their tops. Failure to breakout for a second time will raise the risk of a bigger near-term pullback, at least back to the 50% retracement of June’s top-to-bottom move in the second week of that month.

Trading revenues, loan loss provisions surge at US banks

US bank earning highlighted the divergence between the stock market and the real economy. JPMorgan and Citigroup posted strong trading revenues from their investment bank divisions but had to significantly increase loan loss provisions at their consumer banks. Wells Fargo – which does have the investment banking arm to lean on – increased credit loss provisions in the quarter to $9.5bn from $4bn in Q1, vs expectations of about $5bn.

This begs the question of when the credit losses from bad corporate and personal debt starts to catch up with the broader market. Moreover, investors need to ask whether the exceptional trading revenues are all that sustainable. Shares in Citigroup and Wells Fargo fell around 4%, whilst JPMorgan edged out a small gain. Goldman Sachs, BNY Mellon and US Bancorp report today along with Dow component UnitedHealth.

UK retail earnings

In the UK, retail earnings continue to look exceptionally bleak. Burberry reported a drop in sales of 45% in the first quarter, with demand down 20% in June. Asia is doing OK, but the loss of tourist euros in Europe left EMEIA revenues down 75% as rich tourists stayed clear of stores because of lockdown. Sales in the Americas were down 70% but there is a slight pickup being seen. Encouragingly, mainland China grew mid-teens in Q1 but grew ahead of the January pre COVID level of 30% in June, Burberry said. Shares opened down 5%.

Dixons Carphone reported a sharp fall in adjusted profit to £166m from £339m a year before, with a statutory loss of £140m reflecting the cost of closing Carphone stores. Electricals is solid and online sales are performing well, with the +22% rise in this sector including +166% in April. Whilst Dixons appears to have done well in mitigating the Covid damage by a good online presence, the Mobile division, which was already impaired, continues to drag.

Looking ahead, Dixons says total positive cashflow from Mobile will be lower than the previous guidance of about £200m, in the range of £125m-£175m. Shares fell 6% in early trade.

White House ends Hong Kong special status, US to impose sanctions

US-China tensions are not getting any better – Donald Trump signed a law that will allow the US to impose sanctions on Chinese officials in retaliation for the Hong Kong security law. The White House has also ended the territory’s special trade status – it is now in the eyes of the US and much of the west, no different to rest of China. This is a sad reflection of where things have gone in the 20+ years since the handover.  Britain’s decision to strip Huawei from its telecoms networks reflects a simple realpolitik choice and underscores the years of globalisation are over as east and west cleave in two.

The Bank of Japan left policy on hold but lowered its growth outlook. The forecast range by BoJ board members ranged from -4.5% to -5.7%, worse than the April range of -3% and –5%. It signals the pace of recovery in Japan and elsewhere is slower than anticipated.

Federal Reserve Governor Lael Brainard talked up more stimulus and suggested stricter forward guidance would be effective – even indicating that the central bank could look at yield curve control – setting targets for short- and medium-term yields in order to underpin their forward guidance.

EUR, GBP push higher ahead of US data; BOC decision on tap

In FX, we are seeing the dollar offered. EURUSD has pushed up to 1.1430, moving clear of the early Jun peak, suggesting a possible extension of this rally through to the March high at 1.15. GBPUSD pushed off yesterday’s lows at 1.2480 to reclaim the 1.26 handle, calling for a move back to the 1.2670 resistance struck on the 9-13 July.

Data today is focused on the US industrial production report, seen +4.3% month on month, and the Empire State manufacturing index, forecast at +10 vs -0.2 last month. The Bank of Canada is expected to leave interest rates on hold at 0.25% today, so we’ll be looking to get an update on how the central bank views the path of economic recovery.  Fed’s Beige Book later this evening will offer an anecdotal view of the US economy which may tell us much more than any backward-looking data can.

Oil remains uncertain ahead of OPEC+ decision

Oil continues to chop sideways ahead of the OPEC+ decision on extending cuts. WTI (Aug) keeps bouncing in and off the area around $40 and price action seems to reflect the uncertainty on OPEC and its allies will decide. The cartel is expected to taper the level of cuts by about 2 million barrels per day from August, down from the current record 9.7 million bpd. Secretary General Mohammad Barkindo had said on Monday that the gradual easing of lockdown measures across the globe, in tandem with the supply cuts, was bringing the oil market closer to balance.

However, an unwinding of the cuts just as some economies put the brakes on activity again threatens to send oil prices lower. OPEC yesterday said it expects a bullish recovery in demand in the second half, revising its 2020 oil demand drop to 8.9m bpd, vs the 9m forecast in June. The cartel cited better data in developed nations offsetting worse-than-expected performance in emerging markets. EIA inventories are seen showing a draw of 1.3m barrels after last week produced an unexpected gain of 5.7m barrels.

JPM shares rise on record trading revenues

Extrapolating too much from a single bank’s earnings is always an easy trap to fall into … but the quarterly numbers from JPMorgan indicate Main Street is not doing nearly as well as Wall Street – this is not a surprise, but it begs the question of when the credit losses from bad corporate and personal debt starts to catch up with the broader market. Moreover, investors need to ask whether the exceptional trading revenues are all that sustainable.

JPM rose in pre-market trade – the shares of JPM and other investment banks (C, GS, MS, BAC) can rally from this because they are relatively cheap and have not participated in the rally since March in the same way as the broad market. However, the implications for the broader market are interesting – do impairments matter for the rest of the market, for consumer cyclicals for example? Given the way the investment bank is doing all the lifting, what are the implications for financials like the XLF ETF? Or Russell 1000 financials? The outlook there must be a lot more challenging.

JPMorgan beat on the top and bottom line. Revenues topped $33.8bn vs the $30.5bn expected, whilst earnings per share hit $1.38 vs $1.01 expected. There was a huge range of estimates so the consensus numbers were always going to be a little out.

The bank earned $4.7bn of net income in the second quarter despite building $8.9 billion of credit reserves thanks to its highest-ever quarterly revenue.

Loan loss provisions were $10.5bn, which was more than expected and the quarter included almost $9bn in reserve builds largely due to Covid-19. The company reaffirmed suspension of share buybacks at least through the end of Q3 2020.

The consumer bank reported a net loss of $176 million, compared with net income of $4.2 billion in the prior year, predominantly driven by reserve builds. Net revenue was $12.2 billion, down 9%. Credit card sales were 23% lower, with average loans down 7%, while deposits rose 20% as consumers deleveraged. The provision for credit losses in the consumer bank was $5.8 billion, up $4.7 billion from the prior year driven by reserve builds, chiefly in credit cards.

Trading revenues were phenomenal, rising 80% with fixed income revenues doubling, which indicates the investment banks on Wall Street are in good shape thanks largely to their trading arms. But the numbers elsewhere don’t suggest Main St is in good shape at all, which indicates the more diversified investment banks are going to be in better shape than many others. As we discussed in the preview to this week, the massive about of investment grade corporate bond issuance and mortgage refinancing as companies and household refinanced to take advantage of lower rates has been a big help, albeit far bigger than we had thought. Assets under management rose 15% but this probably broadly reflects the rally in the equity markets since the last earnings release.

My sense is what while the stock market does not reflect the real economy, and the JPM numbers reinforce this view, this is not a barrier to further gains. The vast amount of liquidity that has been injected into the financial system will keep stocks supported – the cash needs to find a home somewhere and bonds offer nothing. However there is clearly a risk that Main Street starts to bite at the ankles of Wall Street and results in another pullback like we saw in the second week of June. We should remember that there could some very hard yards ahead for the US economy as states pause reopening – loan loss provisions may need to rise a lot more.

Meanwhile Delta Airlines reported an ugly loss of $4.43 vs $4.07 expected, though revenues were a little ahead of forecast. Net loss of $3.9bn with Q2 revenues the lowest since the mid-80s. It has the cash to last 19 months despite burning through $27m a day in cash – down from $100m at the peak of the crisis.

Wells Fargo and Citigroup coming up next….

Stocks pull back as California shuts up shop again, pound retreats

A rolling back of the reopening process in California and rising US-China tensions left Wall St and Asian markets weaker, with stocks in Europe following their lead as surprisingly good Chinese trade data was not enough to calm markets.

European equity indices fell back in early trade on Tuesday after stocks on Wall Street suffered a stunning reversal late in yesterday’s session. At one point the S&P 500 touched its highest since level since the end of February at 3,235 before sellers sold hard into that level and we saw a very sharp pullback to 3,155 at stumps.

After threatening to break free from the Jun-Jul trading range, the fact the S&P was unable to make good on its promise could signal fresh concerns about the pandemic but also investor caution as we head into earnings season – the fact is the market should not be up for the year. Although it’s hard to get a real feel for valuations because so many companies scrapped earnings guidance, the S&P 500 is trading on a forward PE multiple that is way too optimistic, you would feel. Earnings season gets underway properly today with JPMorgan and Wells Fargo.

The Nasdaq also slipped 2% as tech stocks rolled over, with profit-taking a possible explanation after a) a very strong run for the market has left prices very high and, b) signs of a pullback for the broader market indicated now might be a good time to take stock. Tesla rode a $200 range in a wild day of trading that saw the stock open at $1,659, rally to $1,795 and close down 3% at $1,497.

Stocks retreat as California rolls back reopening, US-China tensions rise

California’s economy is larger than that of the UK or France, so when Governor Gavin Newsom rolled back the reopening of the state on Monday, investors took notice. The closure of bars, barbers and cinemas among other business venues followed moves in economically important states like Texas, Florida and elsewhere, indicating the rate of change in the recovery is not going to improve.

Whilst the market had developed a degree of immunity to case numbers rising, it is susceptible to signs that the economic recovery will be a lot slower than the rally for stocks in the last three months suggests.

Overnight Chinese trade data surprised to the upside with exports up 0.5% in June and imports rising 2.7%, beating expectations for a decline and signalling that domestic demand is holding up well. Singapore’s economy plunged into a recession with a 41.2% drop in GDP, while Japan’s industrial production figures were revised lower.

Tensions between the US and China took another sour turn as the White House rejected China’s claims to islands in the South China Sea, which aligns the US with a UN ruling in 2016. It had previously declined to take sides – the move indicates Washington’s displeasure and willingness to go up against China on multiple fronts now.

UK economy undershoots forecasts with tepid recovery

The UK is already seeing what a non-V recovery looks like. GDP growth rebounded 1.8% in May, which was well short of the 5.5% expected. In the three months to May, the economy contracted by 19.1%. Some of the numbers are truly horrendous and it’s hard to see how the economy can deliver the +20% rebound required to get back to 2019 with confidence sapped like it is and unemployment set to rise sharply.

UK retail sales rose 10.9% in June on a like for like basis excluding temporarily closed stores, whilst overall sales rose a more modest 3.4% and non-food sales in stores were down a whopping 46.8% for the quarter. Suffice to say that headlines of rebounds mask many ills.

Sterling extended a selloff after the GDP numbers disappointed. The reversal in risk appetite late yesterday saw GBPUSD break down through the channel support and this move has continued to build momentum overnight and into the European morning session. The rejection of the 1.2667 region seems to have made the near-term top for the rally. The 38.2% retrace line at 1.250 may offer support before the old 50% retracement level at 1.2464.

WTI (Aug) was a little softer under $40 as market participants eye the OPEC+ JMMC meeting on Wednesday. This will decide whether to roll back some of the 9.6m barrels or so in production cuts by the cartel and allies. The risk is that if OPEC acts too earnestly to raise production again the market could swiftly tip back into oversupply should the economic recovery globally fail to build the momentum required.

Another factor to consider is whether giving the green light to up production is taken by some members as an excuse to open the taps again and result in more production than agreed – compliance remains the ever-present risk for any OPEC deal.

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