Morning Minutes 7/22/2020

Morning Minutes

Gold and Silver Soar on Growing Political Tensions

July 22, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

Increasing political strife between the US and China after the US ordered China to close its consulate in Houston and China threatened retaliation has sparked a rally in precious metals are soaring today as investors seek safe havens in hard currencies. Gold is up 0.9% trading near $1,860/oz its highest level since 2011, while silver has soared 7.4% today to its highest level since 2013. Action within paper currencies has been more mixed with the US Dollar today falling 0.3% relative to the Canadian Dollar and 0.4% against the Euro but rising 0.2% against both the Japanese Yen and British Pound.

Stock markets around the world have been giving back some of yesterday’s gains as investors digest a growing number of earnings reports.US Index Futures are mixed today varying between a 0.2% decline for Dow Futures to a 0.1% increase for NASDAQ futures. Overseas, the FTSE is down 0.6%, the Dax is down 0.3%, the Hang Seng fell 2.25% but Shanghai rise 0.3%.

Today is the first big day for results from Canadian companies. Last night, railroad Canadian National reported Q2 adjusted EPS of $1.28, in line with expectations but down 26% from a year ago. During the quarter, shipments of petroleum products, autos and containers plunged, while grains and fertilizers held steady. More recently, volumes for autos and lumber have started to rebound and the company has started to call back employees who had been laid off. Rogers Communications has also reported results this morning with Canadian Pacific and Suncor Energy expected to report after the close.

Its also a busy morning for earnings in the United States. Several companies have reported results that beat expectations including: Texas Instruments ($1.48 vs street $0.88), NASDAQ ($1.54 vs street $1.45), Thermo Fisher* ($3.89 vs street $3.42), and Biogen ($10.26 vs street $8.03). One interesting report came from iRobot, producer of the Roomba automatic vacuum cleaner and similar devices whose sales soared during the pandemic lockdown. It sounds like people who could no longer bring in house cleaning services due to the quarantines may have turned to iRobot products as an alternative. iRobot reported EPS of $1.06 for Q2, well above the $0.29 street estimate.

US companies scheduled to report results later today include Microsoft* and Tesla.

*Shares of Thermo Fisher and Microsoft are held in some portfolios managed by SIA Wealth Management.

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