Morning Minutes 7/27/2020

Morning Minutes

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

July 27, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+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*,*, Alphabet, Ford, Newmont, ConocoPhillips

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

*Shares of Apple, 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

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