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Status Check from Mace News: FOMC, US GDP and More Nasdaq Woes?

Mace News has produced a status check of developments in the US that can influence economic, health and political outcomes, here are the key factors.

  • The VIX stayed about the same at 25.84 Friday after US stocks were modestly negative for a second day. The DJIA finished -0.68%/-`82.94 and off 0.76% for the week. S&P -0.67%/-20.03 and also down for the week by 0.29%. The Nasdaq that early in the week had performed spectacularly finished the day -0.94%/-98.24 and off 1.52% for the week. It was the first negative weekly sweep in a month. In fact, around the world only the RTX RUB (blue chip Moscow stocks) ended up Friday. Tesla was  down 6.35% finishing better than the -10% hit intraday, the most of any day in two months. Now Tesla is up only 240% this year. Intel fell 16.24% after acknowledging a six-month delay in delivering its next gen chip.
  • The US 10-year yield dropped as low as 5.59% overnight to recover to 0.591% Friday night, as it and several of its brethren along the yield curve flirted with historic lows and weighing on market sentiment. In FX, dollar/euro sank 0.51%, off 1.96% for the week while its inverse euro/dollar was up 2% as the $860 billion Europe relief effort was encouraging for a change. Gold went above $1,900 for the first time since 2011 and priced in euros at one point hit a record high.
  • Market pessimists were fearful the good old days of the pandemic may have passed and now it begins to cut more deeply. Sectoral pleas for renewed government help, from state and local governments, hospitals, landlords, renters and many more seemed to be way bigger than the numbers being tossed about for the still pending US Phase 4 virus response legislation.
  • About Phase 4, analysts were waking up to the fact a lot of existing help finishes up in a few days and it will take a massive effort on Capitol Hill, of which no one is sure it is capable, to have anything on paper by August 1. The Republican set of proposals won’t surface until next week and the calculation that the timeline would pressure House Democrats into some concessions seemed to have backfired. When talks with Democrats finally get underway it will be Republicans under pressure, threatened with having nothing ready as some eviction pauses go away along with enhanced unemployment benefits. The Senate’s August work period not set to start until Aug. 8, making that a sort of deadline. House stays in session until something is passed.
  • President Trump surprised again Friday, after a week in which he suddenly embraced mask wearing, cancelled large Republican gatherings like the Jacksonville component of the Republican National Convention, gave up on his pet payroll tax holiday idea, said he would after all go along with more money for testing of school children and acknowledged the pandemic will get worse before it gets better. The latest surprise was an admission that he actually regrets some of his tweets, or at least some of his retweets. Trump issued four executive orders to lower prescription drug prices, including insulin and EpiPens. Medicare gets the low price. A federal judge ruled the government can keep its militarised police in Portland. Also notable, 26 House Republicans voted NOT to cut the EPA’s budget.
  • About China, the White House remained vague about the reasons it ordered China’s Houston consulate closed. Some equally vague reporting suggested it was somehow linked to encouragement of some of the urban turmoil. China followed through with its retaliation, kicking the U.S. out of its Chengdu consulate in the capital city of Sichuan, reputedly of some real use to the United States, probably not because the city is the site of the famed Giant Panda Breeding Center. The Department of Homeland Security announced a China workin g group to combat what it said are increased threats in cybersecurity, trade, intellectual property and immigration.
  • The White House’s new focus on pandemic safety, which spokeswoman Kayleigh McEnany Friday insisted has been there all along, has not yet extended to the all-court press for students to get back into schools. Additional CDC guidelines, previously criticised by the president as too tough and expensive, did seem to be watered down somewhat. McEnany’s briefing was mostly on the law and order theme. She began with a video of presumably Portland violence that was so graphic even the Fox News Network cut away in the middle with the anchor saying, “We didn’t expect that.” Trump is spending the weekend at his Bedminster, golf club.
  • Upcoming US data next week includes second quarter GDP, previewed in depth by Kevin Kastner on macenews.com, along with next week’s Federal Open Market Committee meeting.
  • On the virus front, deaths topped 145,000 Friday (145,178 NYT tracker) and total cases went to 4.112 million. It was California’s turn for record daily deaths at 159.
  • Hurricane Douglas still expected to weaken somewhat as its winds begin to rake Hawaii Sunday, a little later than thought on Thursday. Tropical Storm Hanna, stirring up things in the Gulf of Mexico, is projected to hit southern Texas around Corpus Christi with massive rainfall Saturday.

denny@macenews.com

www.macenews.com

Colin Lambert

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