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Week Ahead – What Can We Expect After This Crazy Week?

Week Ahead – Market Recovery Under Threat?

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This article was originally published by MarketPulse.

FacebookTwitterEmail The New Normal Another crazy week comes and goes and thing that has really stuck with me is how normal the extraordinary suddenly seems. On Thursday, the Dow fell almost 7% and, sure, it was newsworthy but it wasn’t shocking. This is the 22nd biggest ever drop in the index – going back more than 100 years – and yet this year it doesn’t even make the top three. This could be a sign of the fragility that remains in the markets but then, the NASDAQ hit new record highs in each of the prior four days and breached 10,000 for the first time ever. This comes before the end of what could be the worst quarter in a century for the economy. Incredible. Speculation around new waves of coronavirus cases is going nowhere any time soon, as countries look to reopen their economies and save businesses and jobs. But next week also brings a plethora of interest rate decisions as well which means more rate cuts and more asset purchases. In other words, more fuel for the fire. The disconnect between the markets and the global economy isn’t going to improve any time soon. Key Economic Releases and Events Monday 15th June
Time (UK) Country Indicator Name Period
00:01 United Kingdom House Price Rightmove MM May
03:00 China (Mainland) Urban Investment (YTD)YY May
03:00 China (Mainland) Industrial Output YY May
03:00 China (Mainland) Retail Sales YY May
03:30 Singapore Unemployment Rate Final SA Q1
Indonesia Trade Balance (Bln of $) May
Tuesday 16th June
07:00 United Kingdom Claimant Count Unem Chng May
07:00 United Kingdom ILO Unemployment Rate Apr
07:00 United Kingdom Employment Change Apr
07:00 United Kingdom Avg Wk Earnings 3M YY Apr
07:00 United Kingdom Avg Earnings (Ex-Bonus) Apr
09:30 Hong Kong Unemployment Rate May
10:00 Germany ZEW Economic Sentiment Jun
13:30 United States Retail Sales Ex-Autos MM May
13:30 United States Retail Sales MM May
13:30 United States Retail Ex Gas/Autos May
14:00 Russia Industrial Output May
14:15 United States Industrial Production MM May
14:15 United States Capacity Utilization SA May
14:15 United States Industrial Production YoY May
15:00 United States Business Inventories MM Apr
21:30 United States API weekly crude stocks 8 Jun, w/e
Japan JP BOJ Rate Decision 16 Jun

Wednesday 17th June
00:50 Japan Trade Balance Total Yen May
01:30 Singapore Non-Oil Exports MM May
01:30 Singapore Non-Oil Exports YY May
07:00 United Kingdom Core CPI YY May
07:00 United Kingdom CPI YY May
08:30 Sweden Unemployment Rate May
08:30 Sweden Total Employment May
10:00 Euro Zone Construction Output MM Apr
10:00 Euro Zone HICP Final MM May
10:00 Euro Zone HICP Final YY May
12:00 South Africa Retail Sales YY Mar
13:30 United States Building Permits: Number May
13:30 United States Housing Starts Number May
13:30 Canada CPI Inflation MM May
13:30 Canada CPI Inflation YY May
14:00 Russia GDP YY Quarterly Revised Q4
15:30 United States EIA Weekly Crude Stocks 12 Jun, w/e
23:45 New Zealand GDP Prod Based QQ, SA Q1
23:45 New Zealand GDP Prod Based YY, SA Q1
23:45 New Zealand GDP Prod Based, Ann Avg Q1
23:45 New Zealand GDP Exp Based QQ, SA Q1

Thursday 18th June
02:30 Australia Employment May
02:30 Australia Full Time Employment May
02:30 Australia Participation Rate May
02:30 Australia Unemployment Rate May
08:30 Switzerland SNB Policy Rate Q2
09:00 Norway Key Policy Rate 18 Jun
12:00 United Kingdom BOE Bank Rate Jun
12:00 United Kingdom Asset Purchase Prog Jun
12:00 United Kingdom GB BOE QE Gilts Jun
12:00 United Kingdom GB BOE QE Corp Jun
12:00 United Kingdom BOE MPC Vote Hike Jun
12:00 United Kingdom BOE MPC Vote Unchanged Jun
12:00 United Kingdom BOE MPC Vote Cut Jun
13:30 United States Initial Jobless Claims 8 Jun, w/e
13:30 United States Jobless Claims 4-Wk Avg 8 Jun, w/e
13:30 United States Continued Jobless Claims 1 Jun, w/e
13:30 United States Philly Fed Business Indx Jun
14:00 Russia Cbank Wkly Reserves 8 Jun, w/e
15:00 United States Leading Index Chg MM May
Indonesia 7-Day Reverse Repo Jun
Indonesia Deposit Facility Rate Jun
Indonesia Lending Facility Rate Jun

Friday 19th June
00:30 Japan CPI, Core Nationwide YY May
00:30 Japan CPI, Overall Nationwide May
07:00 United Kingdom Retail Sales MM May
07:00 United Kingdom Retail Sales Ex-Fuel MM May
07:00 United Kingdom Retail Sales YY May
07:00 United Kingdom Retail Sales Ex-Fuel YY May
11:30 Russia Central bank key rate Jun
13:30 Canada Retail Sales MM Apr
13:30 Canada Retail Sales Ex-Autos MM Apr
Russia GDP YY Monthly May
Russia Retail Sales YY May
Russia Unemployment Rate May
Russia Real Wages YY Apr
Country US It seems a second wave of the coronavirus is hitting the US and could very well derail a lot of the reopening momentum that was taking place.  As states reopen and Americans return to pre-pandemic behavior, it is expected that a rise in new coronavirus cases would occur.  The White House is convinced they have yet to see any relationship between reopening and increased cases.  If hospitalizations continue to increase, you could see many individuals decide to remain a part of the stay-at-home economy.  If the virus spread intensifies, restrictions will be tightened and that will put a damper on the economic recovery prospects.   On Tuesday, Fed Chair Powell will follow his downbeat FOMC presser with his semi-annual monetary policy report to the Senate Banking Committee.  With little time between events, it is unlikely for Powell to deviate from Wednesday’s rate decision.  Traders will also pay close attention to the release of US retail sales, which is expected to show a rebound from the record low seen in April.   US Politics Economic jitters and virus concerns will likely push the Trump administration into supporting a second round of stimulus payments for Americans.  Coronavirus relief talks were not supposed to happen until late July, but that should change given the recent jump in cases throughout the country.  On Friday, President Trump returns to the campaign trail in Oklahoma, his first live rally since March.   Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters. UK The UK experienced its sharpest contraction on record in April, the first full month of the lockdown. The economy contracted by 20.4% at the start of the second quarter which is expected to be the worst month of the three.  Next week the Bank of England is expected to increase its bond buying in response to the pandemic, with £100-200 billion added to its quantitative easing program. This comes as government borrowing spikes to fund the crisis which would have otherwise risked pushing up borrowing costs. Brexit High level talks between Boris Johnson and Ursula Von Der Leyen are expected to take place next week, possibly as early as Monday, as the two sides look to reconcile the significant differences ahead of the 31 December transition expiry. As it stands, no deal is the default and the UK is expected to formally rule out an extension once again. We’ve seen this all before though and compromise tends to come late in the day. Still, business could very much do without this in a pandemic year. Russia The Central Bank of Russia is expected to cut interest rates by 50-100 basis points when it meets next week, from 5.5% where it currently stands. Like many others, the economy has been ravaged by the coronavirus crisis and contracted 12% in April, and May is not expected to be any better. Switzerland The SNB is not expected to cut interest rates next week, with the main policy rate remaining at -0.75%. The central bank is active in FX markets, with its holdings of foreign currencies recently rising above 800 billion Swiss francs – greater than the output of its economy – as it seeks to stop the currency rising too far as a result of safe haven flows. The central bank hasn’t set an official floor for the EURCHF pair – hopefully learning lessons of the past – but 1.05 is believed to represent the informal level.  Norway The Norges Bank is not expected to cut interest rates next week, with the main policy rate currently sitting at 0%. China China Industrial Production (4.5%E) and Retail Sales (-2.0%E) on Monday. Poor number could see Asian markets weaken depending on Wall Street’s friday performance. Ongoing tensions with the US over HK, trade and Covid-19.  No other significant data this week. Hong Kong Protests have died down for now over the securities law. Possible resurgence this weekend. HSBC and Stan Chart under fire for backing China’s HK security law. No significant data this week. India Economy continues reopening but Covid-19 cases are spiking, markets negative. Standoff with China continues in the Himalayas but negotiations continue. Australia Australian stocks and Australian Dollar sold heavily on equity correction into the week’s end. Negative results on Friday for Wall Street should see that trend continue into the first part of the week. Australian markets are among most vulnerable to deep bull market correction. RBA minutes Tuesday. Will look for talk about negative interest rates.Potentially bullish for stocks. Unemployment Thursday (6.9% E) will drive intraday volatility. Otherwise what happens in the US will drive sentiment. Japan BOJ policy meeting Tuesday. Unchanged at -0.10% but looking out for more stimulus measures. Stocks positive. Tankan and Trade Balance Wednesday. Unlikely to impact markets. Markets will be led by Wall Street after sell-offs this week. Market Oil Oil didn’t escape yesterday’s backlash, with crude falling more than 5% on apparent fears around rising case numbers. Again, we have to take this in the context of an asset class that has done rather well over the last couple of months. It’s been some rebound and I think some serious profit taking may have kicked in. It’s creeping higher again today but $40 may remain an upside barrier for WTI. Gold Gold has been range-bound for the last couple of months since it first tried to break $1,750 only to quickly run out of steam. It’s tried again a few times since, each as unsuccessful as the last, and it looks to be suffering the same fate again this time. It’s pushing a little higher again as it looks to capitalize on dollar weakness but we could see it run into difficulties once again, unless the greenback continues its journey south.

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Millions of people at risk of missing coronavirus stimulus checks, watchdog warns

Millions of people at risk of missing coronavirus stimulus checks, watchdog warns

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coronavirus stimulus checks age Austrians coronavirus stimulus checks coronavirus stimulus checks memes DeNaples Health Crisis Recession coronavirus relief package americans

Almost seven months have passed since Congress first passed the $2.2 trillion CARES Act. Still, at least 8.7 million Americans haven’t yet received their coronavirus stimulus checks and risk never seeing the money. A report from a government watchdog claims that inadequate IRS and Treasury Department records are to be blamed for this.

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8.7 million risk losing coronavirus stimulus checks

On Monday, the Government Accountability Office (GAO) said that millions of Americans are at risk of losing out on the coronavirus stimulus checks.

In its 371-page report, the government watchdog noted that in April, the Treasury Department determined that it does not have any data on 14 million people. These people are those who do not normally file taxes or get federal benefits, but are eligible for the stimulus benefits.

Further, the report noted that the Treasury Department followed the advice and extended the deadline to the end of September to allow those 14 million people to register to get the payment. Through July 31, at least 5.3 million of such people have used the IRS tool to apply for the stimulus payment, the GAO report said.

This means that at least 8.7 million eligible people have not yet gotten the stimulus check. GAO estimates that “potentially millions of individuals” are still “at risk of missing" their stimulus checks. As per the calculation by Forbes, about $10,440,000,000 money is still unclaimed.

As per the report, the Treasury Department and the IRS still do not have “updated information on how many eligible recipients have yet to receive these funds.”

Who else didn’t get the payment?

GAO found that the biggest demographic affected are the people who don’t file taxes. Thus, the IRS doesn’t have information on how much money they make annually. A primary reason why people don’t file taxes is that their gross income is below the threshold needed to file a tax return.

It’s not that all those who don’t file taxes haven’t gotten the stimulus checks. As per the GAO report, over 26 million people who don't file taxes have gotten the stimulus payment, including about five million who followed the IRS guidelines to register for the payment online.

Apart from the 8.7 million who didn’t get the coronavirus stimulus checks yet, the report found that 1.1 million didn’t get the full payment they were eligible for. Of these 1.1 million, around 355,000 are non-filers with children who didn’t get the $500 dependent payment. Further, it also includes domestic abuse victims, who don’t have access to the bank account in which the checks were deposited, as well as widows who didn’t get the direct payment because their spouse died.

GAO recommends that the IRS and Treasury “update and refine” their estimate on the eligible Americans who have yet to give their information to get the direct payment.

The post Millions of people at risk of missing coronavirus stimulus checks, watchdog warns appeared first on ValueWalk.

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US Dollar Spikes As Investors Flee Market Selloff, Seek Safe-Haven Shelter

US Dollar Spikes As Investors Flee Market Selloff, Seek Safe-Haven Shelter

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One dollar note with an American eagleThe US dollar is rallying against most of its currency competitors to kick off the trading week. The greenback, which has cratered about 10% since peaking at 103.00, is extending its gains in September as investors flee the broader financial market selloff and seek shelter in a traditional safe-haven asset.

The rising number of new COVID-19 infections has eaten away at risk appetite. With the upcoming cold and flu season on the horizon, many investors are concerned that a resurgence could put a dent on the stock market rally, particularly among the stock benchmark indexes. The United States is approaching seven million confirmed cases and 200,000 deaths, and the country is experiencing an uptick in cases after witnessing a steep drop-off this month.

As the COVID-19 pandemic continues to spook markets, the equities arena is experiencing a sea of red ink. The Dow Jones Industrial Average fell more than 800 points, the S&P 500 shed 2.2%, and the Nasdaq Composite Index dropped 1.3%. The energy and metal commodities are also sliding: US crude plunged 4.2%, natural gas declined 10%, gold plunged $50, and silver cratered 10%.

Congress failing to reach another COVID-19 stimulus and relief package has also dampened the mood on the New York Stock Exchange. Although a $1.5 trillion blueprint is on the table, the federal government has yet to pass, approve, and sign the bill into law. This has led to worries about its broader implications for the stock market and overall economy.

The bond market is bleeding red ink. The benchmark 10-year Treasury decreased 2.3 basis points to 0.671%, the two-year note dipped 0.2 basis point to 0.137%, and the 30-year bond slipped 2.6 basis points to 1.426%.

All eyes will be on Federal Reserve Chair Jerome Powell’s testimony on Capitol Hill on Tuesday and Wednesday. The Federal Open Market Committee (FOMC) left interest rates unchanged at near-zero last week, and it pledged that it would keep rates low for a few more years. The US central bank also formalized the new inflation approach that would allow it to stay above the 2% target rate.

It has been quiet on the data front to start the trading week. This week, home sales and prices, purchasing managers’ index (PMI) readings, and durable goods orders will be released.

The USD/CAD currency pair rose 0.8% to 1.3312, from an opening of 1.3207, at 19:07 GMT on Monday. The EUR/USD plunged 0.63% to 1.1767, from an opening of 1.1840.


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US Open – Fed Vigilance, Oil’s supply concerns, Gold higher, Bitcoin teeter

US Open – Fed Vigilance, Oil’s supply concerns, Gold higher, Bitcoin teeter

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Nasdaq continues to be the flavor of the month, with technology stocks remaining where investors want to be positioned even if a second wave hits the US.  Roughly $3 trillion is still on the sidelines and investors will want to see if the Fed remains very accommodative and ready to act if necessary. 

Wall Street is slightly growing nervous that COVID-19 is far from over.  New cases are emerging in Asia and Latin America appears to be going through the worst of it right now. 

Over 100 vaccines are being evaluated, with Moderna’s phase-three trial starting in July. The initial optimism that a vaccine is nearing is turning to cautiousness as investors brace for the possible disappointment if Moderna and Oxford don’t see their vaccines pass the phase 3 trials this summer.  If the front runners don’t get a vaccine, the focus will primarily shift to finding a treatment.  

Presidential election focus will start to take hold now and President Trump will try to narrow the gap with former-VP Biden.  Biden has a comfortable lead in the battleground states, but Trump is still better viewed at handling the economy and that should only improve as the recovery from reopening accelerates. 

Fed

Fed Chair Powell will likely soothe jittery investors, acknowledging the recovery is on its way but signaling they will remain vigilant as several risks to the outlook remain in place.  The Fed will signal no change in interest rates are expected over the next two years and that the next move will be a hike when the labor situation improves significantly.  The Fed is in a holding pattern and this meeting should show policymakers are skeptical of the economic recovery. 

Given the strong start to the economic rebound, negative rates seem unnecessary now and Fed watchers will want to find out if discussions begun about adopting yield curve control.  The Fed will do their part to ensure a low interest rate environment stays in place over the next few years. 

Treasury traders will look to see if the Fed commits to changing from daily to monthly bond buying. 

Oil

The API report raised expectations oil producers are itching to get shut-in production back. As the global economic recovery accelerates, crude demand will improve, but oil-producing nations will quickly want to make up for lost revenue and we could see the oil market struggle to find balance this month. Energy traders will pay close attention to the EIA crude oil inventory report to see if US production shows signs of stabilizing.  WTI crude seems to poised to settle around the mid-$30s as the oil market works its way to balance. 

Gold

Gold is benefiting from modest safe-haven flows this morning, but ultimately should see further support from a Fed that will likely signal they will remain vigilant.  New COVID-19 cases are a risk that is not going away anytime soon and that focus could grow over the coming days.  Gold should see further support as investors remain skeptical that US stocks may only have the room to go up another 5% from current levels for the remainder of the year.  Gold has a plethora of fundamental catalysts that could help trigger the climb back towards the $1800 level. 

Bitcoin

Bitcoin prices are teetering as crypto-watchers are waiting to see if the dollar resumes its slide.  Bitcoin’s momentum from growing institutional interest has run its course and  if the rally is going to finally sustain a move above $10,000, a broad rally for risky assets needs to occur.  Bitcoin fundamentals have been exhausted and cryptocurrency traders need a fresh catalyst. 

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