Insights

Top News:

7/27: Moderna announced it has received additional governmental funding to kick off Phase 3 of its vaccine study.  Meanwhile, Germany saw a continuing rebound in business sentiment in July, boosting hopes for a quicker economic recovery in the Euro zone.

 

7/28: U.S. home prices saw a 4.5% annual increase in May, rising at a slower pace than prior month.  Meanwhile, amidst case explosions in hotspots, consumer confidence dipped in July, owing to less sanguine near-term outlook.

 

7/29:  Noting the path of the U.S. economy “will depend significantly on the course of the virus,” the Federal Reserve maintained a dovish stance at its meeting.  CEOs of Amazon, Apple, Facebook and Google testified in front of a House Judiciary subcommittee as part of its antitrust probe.

 

7/30: In the worst quarterly plunge ever, U.S. reported 2Q GDP shrank 32.9% on an annualized basis. Moreover, new and continuing jobless claims rose in the latest weekly tally, a stark reminder of the long recovery ahead.

 

7/31: The Fed’s preferred price pressure barometer showed inflation remaining tame.  Separately, another consumer survey for July was revised lower “due to the continued resurgence of the coronavirus.” Such negative news notwithstanding, strong earnings posted by Amazon, Apple and Facebook anchored the market.  Finally, EU’s 2Q GDP contracted 14.4% versus one-year ago.

 

Heard on the Street:

“The negative relationship between long term US real yields and gold futures has held up fairly well over the longer term. That is because when long term US real yields increase, gold is less attractive relative to US interest bearing securities since gold has no income earning ability.  The fall in US 10-year real yields is primarily being driven by an increase in US 10 year inflation expectations.”

— Vivek Dhar, analyst at Commonwealth Bank of Australia, as gold reached record high on 7/27/2020

 

“Our view is that gold is only appropriate if you have a very strong view that the U.S. dollar is going to be debased. We don’t have that view. We think the dollar maintains its status as the reserve currency. The dollar can cheapen a little bit because it’s moderately overvalued but that doesn’t mean that it’s going to be debased, that we are going to have huge inflation and that gold is a good substitute.”

— Sharmin Mossavar-Rahmani, CIO of private wealth management at Goldman Sachs on 7/30/2020

 

Longer Game:

Echoing others on concerns over the “soundness of our money,” Ray Dalio of Bridgewater Associates, founder of the world’s largest hedge fund,  warned of the implications of a U.S. capital war with China.

 

Bonus:

Two renowned U.S. infectious disease experts shared sobering thoughts on: 1) why vaccines may not be the panacea for a return to normalcy, and 2) the need to adjust to “living in a 24-7 Covid world.”