Morning Minutes 7/27/2020

Morning Minutes

New All-Time High For Gold Amid US-China Tensions and Stimulus Talk

July 27, 2020

At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Gold and Silver are in the spotlight to start the new trading week with gold rallying 2.2% and breaking out over $1,920/oz to trade at a new high near $1,940, while Silver has popped 7.6% to trade near $24.60/oz. Precious metals have been attracting new interest from several factors including a falling US Dollar, continued US-China political tensions, and the potential for more US economic stimulus.

The Republicans are expected to announce a $1 Trillion fiscal stimulus package this morning and start negotiations with the Democrats who have been looking for $3 Trillion in stimulus. Regardless of where the final number ends up, the US government is going to need to borrow a lot of money in the coming months, putting pressure on the Fed to continue and possibly even accelerate its government bond asset purchase program which has increased thy supply of paper money and depressed its value relative to hard assets like precious metals. The Fed is meeting this week and while no immediate changes are expected, investors may look to the statement for hints toward the central bank’s future plans.

Beyond fiscal and monetary stimulus related talk, the economic calendar is pretty light heading into month end on Friday. US Q2 GDP is due on Thursday while early PMI reports (China and Chicago) are expected before the weekend.

US index futures have been pointing toward a positive open with gains of 0.4% for the Dow to 1.1% for the NASDAQ as investors await stimulus news and earnings reports. The only earnings reports of note today are West Fraser Timber this afternoon and Hasbro, which is down 6.6% in premarket trading this morning. The toymaker announced sales fell 29% from a year ago to $860M which was well short of the $922M street estimate, with EPS also coming in below expectations. Management blamed stores being closed and supply chain disruptions for the shortfall. Management also noted that sales of board games were strong during the lockdowns while action figures slowed because tie-in movies were delayed.

We continue to move through the heart of earnings season this week with results due from a broad spectrum of sectors including: Technology, Energy, Mining, Consumer Discretionary and Industrials. Headliners include:

Tuesday: McDonalds, Starbucks, and AMD

Wednesday: Facebook, Boeing, GE, GM, Shopify*, Agnico-Eagle, Great-West, and Cameco

Thursday: Apple*, Amazon.com*, Alphabet, Ford, Newmont, ConocoPhillips

Friday, Exxon Mobil, Imperial Oil, Chevron, Caterpillar, Merck and Transalta

*Shares of Apple, Amazon.com and Shopify are held in some portfolios managed by SIA Wealth Management.

SIA Wealth In The Media

Chief Market Strategist Colin Cieszynski recently appeared on BNN Bloomberg speaking about the recent rally in Gold and summer trends for stock markets. The replay link is below.

It’s a stock pickers market: SIA Wealth’s Cieszynski

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.