Tag: news

While BLM would have one believe that cops are inherently evil and must be abolished, a new Gallup poll finds that’s most minorities in America don’t feel that way. Of those surveyed, 61% of Black Americans are just fine with current levels of police presence in their area, while 20% say they want more patrols.

Overall, 67% of all US adults prefer the status quo while 19% say they want police to spend more time in their area.

Which group wants the most reductions to policing in their area? Asians, at 28%, followed by Black Americans at 19%, Hispanics at 17% and White Americans at 12%. On average, 86% of American adults want the same or more level of policing in their area.

When it comes to how often police are seen in a neighborhood, Asians report the most at 47%, followed by Whites at 42%, Blacks at 41% and Hispanics at 37%.

According to the poll, “the slightly elevated frequency with which Black Americans see police in their neighborhood has limited impact on their preferences for changing the local police presence. About a third of Black Americans who say they often see the police in their neighborhood think the police should spend less time there (34%); however, the majority of adults in this group think they should spend the same amount of time (56%) or more time (10%).”

That said, while Black Americans are about as comfortable as the overall population with the amount of police presence in their area, less than 20% of Blacks feel ‘very confident’ that they would be treated with courtesy and respect by the police. 24% of Asians say the same, while 40% of Hispanic Americans and 56% of Whites are confident they would be treated well in an interaction with cops.

When factoring in those who are at least somewhat confident that the police would treat them well, a majority of Black Americans (61%) are generally confident, but this is still below the 85% seen nationally, including 91% of White Americans. -Gallup

Overall, of the small proportion of Black Americans who are “not at all confident” that the police wouldn’t treat them well, 59% of them want police to spend less time in their area – while the majority of Blacks in America, including those “not too confident” about receiving positive treatment, want cops to spend the same amount of time or more where they live.

Gallup also found:

Notably, simply having an interaction with the police in the past year has no bearing on Black Americans’ preference for local police presence in their area:

• Seventy-nine percent of those who have had an interaction with the police in the past 12 months say they want the police to spend more or the same amount of time in their neighborhood; 21% favor less time.
• Eighty-two percent of those who have not had an interaction want the same or greater police presence; 18% want less.

What does matter is the quality of the interaction:

• Forty-five percent of Black Americans who report not being treated with courtesy or respect by the police within the past 12 months want less of a police presence in their neighborhood. Meanwhile, 55% want the same or more police presence.
• By contrast, just 13% of those who did feel they were treated respectfully want the police to spend less time in their neighborhood; 87% want them there as much or more often.

In short, most Black Americans don’t want changes in police presence, though nearly 40% feel they’re less likely to have a positive encounter with cops than other races. 

Despite Turkey’s draconian “Plan Z” measures where it effectively nationalizes the FX market,  the world is rejecting Turkish Lira today, sending Erdogan’s currency to a new record low against the dollar…

Additionally, the CDS markets are starting to price in an economy is on the verge of collapse,

A view, as we recentlky detailed, reaffirmed by the FT which writes that Turkey’s tourism sector – a key source of economic growth – continues to reel due to convid.

At this time of year, Murat Tugay, who runs the 240-room Hotel Aqua in the Mediterranean resort of Marmaris, should be dealing with a packed guestbook and all the challenges of peak season. Instead, the hotel is closed and Mr Tugay is banking on a late summer recovery. “We still have August. We still have September,” he says.

This implosion in Turkey’s tourism sector comes at a time when President Recep Tayyip Erdogan has been desperately seeking to assure the population (and much needed foreign investors) that all is well, hailing a sharp fall in interest rates and praised measures taken to block “malicious” attacks on the Turkish lira. Such steps, he said, were “strengthening the immune system of our economy against global turbulence.”

That could not be further from how most economists see the Turkish picture. The collapse in tourism as a result of the coronavirus pandemic has left a gaping hole in the country’s finances. Foreign investors have fled, pulling out a large volume of funds from the country’s local-currency bonds and stocks over the past 12 months.

In the face of those outflows, the country has burnt through tens of billions of dollars of reserves this year in a bid to maintain an unofficial currency peg – a move that marks a rupture with a two-decade policy of allowing a free float. But, in a sign that those efforts are floundering, as we showed last week, the lira lurched towards a record low against the dollar even as authorities spent billions trying to defend it.

And now, it appears that Turkey is running out of reserves to sell and “control” the lira, and instead it is resorting to the bazooka approach, one which it can use to nuke the occasional short here and there, but which in the longer run will cripple the Turkish economy, and merely accelerate its downfall.

And sure enough, after the lira briefly strengthened in the spot market on Tuesday – as a result of record surge in overnight rates – it has promptly plunged to a new record low again suggesting that it is no longer shorts that are in the driver’s seat, that Turkey’s panicked attempt to punish them will have little impact on the continued decline in the currency, and that a full blown currency crisis in Turkey may be about to hit.

Finally, things are not about to get any better for the ,as we noted recently, it is not surprising that young Turks in the 21st century do not want to be strangled by the unpredictable dictates of an Islamist regime. Erdoğan might sit down and ask himself: Why do the youths whom he wanted to make “devout” want to flee their Muslim country and live in “infidel” lands?

Initial Jobless Claims was above a million last week for the twentieth straight week, but, after two straight week of rising, fell last week from 1.435mm last week to ‘just’ 1.186 million new Americans signing up for jobless claims for the first time.

Following yesterday’s plunge in ADP payrolls, Continuing Jobless Claims confounded and fell (improved) after rising last week for the first time in eight weeks…

A total of 55.31 million Americans have now applied for jobless benefits for the first time since the pandemic lockdowns began (that’s over 330 layoffs for every COVID death in America), and massively more than the 22.1 million during the great financial crisis.

However, as Michael Snyder detailed previously, under the surface of these numbers, things are far from rosy looking forward.

When millions of Americans were losing their jobs at the beginning of this pandemic, we were told not to worry because the lockdowns were just temporary and virtually all of those workers would be going back to their old jobs once the lockdowns ended.  Well, now we are finding out that was not even close to true.  Over the last 18 weeks, more than 52 million Americans have filed new claims for unemployment benefits, and a very large percentage of them are dealing with a permanent job loss.  In fact, one brand new survey discovered that 47 percent of all unemployed workers now believe that their “job loss is likely to be permanent”.  The following comes from a USA Today article entitled “Almost half of all jobs lost during pandemic may be gone permanently”…

In April, 78% of those in households experiencing job loss felt that that situation would be temporarily. But now, 47% think that job loss is likely to be permanent, according to The Associated Press-NORC Center for Public Affairs Research.

What that number tells us is that we are facing the worst employment crisis since the Great Depression of the 1930s.

All of those permanently unemployed workers are eventually going to need new jobs, but meanwhile the U.S. economy as a whole is in a free fall that is absolutely stunning.  On Thursday, we are scheduled to get the GDP number for the second quarter, and everyone is expecting that it will be really bad…

Data due Thursday are forecast to show U.S. gross domestic product plummeted an annualized 34.8% in the second quarter, the most in records dating back to the 1940s, after the spread of Covid-19 prompted Americans to stay home and states to order widespread lockdowns.

This downturn has been particularly hard on small businesses.  Just check out these numbers…

• Yelp reported 71,500 businesses that were listed on their site have closed for good since March 1.

• 80% of independent restaurants aren’t sure they’ll survive the COVID-19 pandemic.

• Nearly half of all small-business members of the San Francisco Chamber of Commerce lost 100% of their sales or closed down completely.

What a nightmare.

But the third quarter was when the U.S. economy was supposed to come roaring back to life.

We were told that it would be the greatest economic comeback in our history, but instead the numbers are telling us that the economy is actually starting to slow down once again.

In fact, U.S. consumer confidence in July is much lower than it was in June…

U.S. CONSUMER confidence fell in July to a reading of 92.6 as coronavirus cases surged around the country, shuttering some bars and other businesses and raising concerns about the future of the economy.

The Conference Board reported Tuesday that the index fell in July from a reading of 98.3 in June. The drop is more significant than economists predicted, and is due mainly to a decrease in consumers’ economic expectations for the short-term future.

In addition, we just witnessed the largest decline in wholesale inventories since the peak of the last financial crisis…

June was supposed to be the month of second-derivative beats in economic data, reaffirming the manic bid in stocks. For Wholesale Inventories it was not.

Against expectations of a rebound from a 1.2% drop in May to a 0.5% drop in June, wholesale inventories actually tumbled 2.0% MoM, the worst since the peak of the great financial crisis…

So it doesn’t look like any sort of a “recovery” is happening.

Instead, it appears that we are sliding into the next chapter of this new economic depression.

In June, 19 percent of all U.S. small businesses were closed, but now that number is up to 24.5 percent.

That certainly isn’t progress.

With each passing day, more companies are announcing layoffs.  And every worker that gets laid off is another American that doesn’t have a paycheck to spend.  During the last recession, millions of Americans slid out of the middle class, and we are watching it happen again.

Our elected leaders in Washington are desperate to do something about this, and almost all of them seem to agree that more socialist programs are the answer.  A fifth “stimulus bill” is being put together but remains stuck in gridlock, and the Urban Institute is warning that if Congress does not hurry we could see the poverty rate in this country rise substantially…

Millions more Americans will be thrown into poverty if Congress fails to enact three policies meant to help families get through economic hardships related to the pandemic, according to a new study by the Urban Institute.

The report finds that the poverty rate for the last five months of 2020 will rise to 11.9% if expanded unemployment-insurance benefits, a second round of stimulus checks, and increased SNAP allotments are not approved, a significant increase over the projected annual rate of 8.9%.

If the Urban Institute thinks that an 11.9 percent poverty rate is bad, just wait until they see what things will be like in this country a few years from now.

Our entire system is in the process of melting down, but it will take some time for the drama that we are watching to fully play out.  Our leaders in Washington and the bureaucrats over at the Federal Reserve will keep flooding the system with money in a misguided attempt to fix things, and this will result in exceedingly painful inflation.

The cost of everything (including essentials such as food) will be going way up, and that means that your money will increasingly become less and less valuable.

If you could print your way to prosperity, Venezuela and Zimbabwe would be the wealthiest nations on the entire planet today.

At this point, almost everyone in Venezuela is a “millionaire”, but almost everyone is also living in extreme poverty.

History has shown that wildly printing money doesn’t work, but the U.S. is going down the exact same path, and it isn’t going to be pretty.

Even though things are quite crazy out there right now, this is our window of opportunity to get prepared for the troubled times that are ahead, because things are not going to be getting any easier from here on out.

*  *  *

And with the latest round of virus relief continuing to be stuck in gridlock, we suspect things will get depressingly worse before they get better.

Summary:

• Global cases near 19 million
• Deaths top 700k
• Germany reports more than 1,000 new cases for first time since May
• Philippines now worst outbreak in Southeast Asia
• Victoria reports another 471 new cases

* * *

The number of new coronavirus cases slowed on Thursday, but the global tally of cases neared 19 million, with the outbreak on track to surpass that number by the end of the week.

The biggest news overnight comes out of Europe, where Germany just suffered its largest jump in new cases since May, with more than 1000 new cases reported in a day.

The Robert Koch Institute reported 1,045 new cases on Thursday, bringing Germany’s total to 213,067. Its death toll is 9,175. This comes as the RKI warns that any figure above 1,000 a day would make it much more difficult for local health authorities to carry out effective tracking and tracing, and to keep the virus under control, Reuters reports.

German schools have begun to reopen in some parts of the country, which has been widely blamed for the uptick in new cases.

Surging case numbers are reviving fears of a return to economically damaging lockdown in Germany.

Health Minister Jens Spahn said on Thursday free compulsory testing would be offered beginning Saturday, although a big factor in the increase on Thursday was a surge in tests being run.

In neighboring Poland, officials will introduce new containment measures against the virus in some of the most badly affected counties after fresh infections set new records in the past weeks. The country will impose limits on restaurants, sport events, mass transportation and weddings in 19 of its 380 counties starting Saturday, said Health Minister Lukasz Szumowski.

Typically quiet Southeast Asia is also seeing some alarming new developments as the Philippines surpasses Indonesia for the biggest outbreak in the region, despite imposing the longest, and most strict, lockdown in the entire region earlier this year.The country reported 3,381 new cases on Thursday (these numbers are reported with a 24 hour delay).

coronavirus cases in the Philippines have now surged to almost 120,000 (119,460 according to Worldometer), eclipsing Indonesia to become the region’s biggest outbreak. The country re-imposed this week a second lockdown on its capital and nearby areas to curb infection spread, even as the economy suffered its deepest contraction on record, shrinking 16.5% in the second quarter from a year ago.

This comes as Q2 GDP data shows Philippines economy shrank 16.5% in the quarter, descending into a deep recession.

FInally, Australia’s Victoria state reported 471 new cases as Premier Daniel Andrews dismissed a report by the Australian newspaper that government modeling showed average daily infections would peak at 1,100 by the end of next week. The state reported a record 725 new cases on Wednesday. Additionally, Aussie PM Scott Morrison warned Thursday that the lockdowns in Victoria (including especially restrictive measures in Melbourne) would shave 2.5% off quarterly growth.

While Alexandria Ocasio-Cortez (whose close friend and fellow activist Cori Bush just upset a longtime incumbent in a Missouri Congressional primary earlier this week) pushes for a ‘first-in-the- nation’ wealth tax that most reasonable people fear would destroy the state’s tax base by driving the billionaires and multimillionaires who finance more than half of the state’s budget to leave, NY Gov Andrew Cuomo is begging rich people to “please come back” to NYC.

During a briefing earlier this week, Cuomo shared an amusing anecdote with reporters as he tried to illustrate the importance of retaining wealthy taxpayers during a period of fiscal crisis (remember, NY is seeking $60 billion in federal money to plug a gaping hole in its budget). Cuomo said that he had been calling up wealthy New Yorkers and asking them to please return to the city from their second homes out in the Hamptons, or Palm Beach, or Greenwich.

“I literally talk to people all day long who are now in their Hamptons house who also lived here, or in their Hudson Valley house, or in their Connecticut weekend house, and I say, ‘You got to come back! We’ll go to dinner! I’ll buy you a drink! Come over, I’ll cook!’” Cuomo said.

Unfortunately, a personal overture from one of the country’s most recognizable governors – in many cases – simply isn’t enough to convince rich people to return to a city where crime has just skyrocketed to levels unseen since the 1990s, rattling even “Ultra-Wealthy” neighborhoods like the Upper East Side.

“They’re not coming back right now. And you know what else they’re thinking? ‘If I stay there, I’ll pay a lower income tax,’ because they don’t pay the New York City surcharge,” he added.

Just remember: When pandering politicians like AOC inflame public anger toward the wealthy and successful, they know what they’re doing – and they’re doing it for a reason.

If the state’s finances collapse and NYC returns to the “bad old New York” of bygone decades, then that should translate into even more support for demagogues who have already indoctrinated a whole generation to blame “capitalism” for all their problems.

This isn’t the first time Cuomo has brought up the need to coax rich people to return to the city and the state: Here’s another clip from July 23, where Cuomo goes into more detail about the “aggravating factors” driving people away.

US stock index futures dropped on Thursday alongside European stocks as investors looked forward to the latest weekly jobless claims report to gauge the pace of a rebound in the labor market, while also anticipating a new fiscal stimulus bill.

The top decliner among components of the Nasdaq 100 index was Western Digital shares, which sank 8.9% pre-market after the hard drive maker reported weaker-than-expected fourth-quarter revenue and forecast a soft current quarter outlook.

In Europe, mining giant Glencore Plc led losses among peers after scrapping its dividend. U.K. broadcaster ITV Plc slumped after saying it wouldn’t provide an outlook for the rest of the year after the pandemic led to its worst-ever drop in advertising sales. Turkey’s lira tumbled to its lowest level against the dollar as interventions by state banks failed to reassure markets.

Earlier in the session, Asian stocks were little changed, with materials and energy rising, after rising in the last session. Most markets in the region were up, with South Korea’s Kospi Index gaining 1.3% and India’s S&P BSE Sensex Index rising 1.1%, while Hong Kong’s Hang Seng Index dropped 0.7%. The Topix declined 0.3%, with Japan Sys Tech and Grace falling the most. The Shanghai Composite Index rose 0.3%, with Sichuan Hongda and Bohai Automative Systems posting the biggest advances. Chinese shares dropped after Secretary of State Pompeo warned of ‘significant threat’ from ‘untrusted Chinese apps’.

“There are some risks of the market relying too heavily on positive news around the fiscal stimulus and an earnings season that still wasn’t that great, even if many companies did beat,” Kerry Craig, global market strategist at JPMorgan Asset Management in Melbourne, said on Bloomberg TV. “There’s a case for markets, in the U.S. particularly, taking a pause from here on out rather than continuing this rally, given how strong it has been.”

Gold pushed further above $2,000 an ounce for a third day before news on whether the U.S. will approve another trillion-dollar aid package (or much bigger) to counter the coronavirus. Silver prices were up 25% in July, the second-biggest monthly gain for the white metal on record, anbd are extending gains this week, with spot silver spiking above $28 this morning…

And gold rising too…

In FX, the dollar index halted its slide after falling for two sessions after California reported its second-deadliest day from the virus and Florida’s tally topped 500,000. Traders are monitoring negotiations for the next virus aid package while Cleveland Federal Reserve President Loretta Mester said more fiscal support is needed after a sharp drop in U.S. employment gains in July.  The pound strengthens as much as 0.5% against the U.S. dollar as the BOE points to the pitfalls of negative rates, and leaves them on hold at a record low of 0.1%. Turkey’s lira tumbled to its lowest level against the dollar as interventions by state banks failed to reassure markets. The Norwegian krone trimmed some of its gains after it reached its highest levels since January on Wednesday as a rally in oil prices falters. Australia’s dollar also trims its gains after rising on an uptick in iron ore prices.

China’s yuan weakened for the first time in three sessions, following a rapid advance a day earlier that some traders saw as excessive. The currency dropped 0.16% to 6.9458 per dollar as of 5:14 p.m. in Shanghai. The slide came after the yuan rallied 0.6% on Wednesday, driven by optimism on China-U.S. relations as senior officials from the two countries planned to discuss the trade deal this month. That hopefulness then faded as the U.S. stepped up its attack on Chinese technology firms. The earlier advance took the yuan’s 14-day relative strength index versus the dollar beyond a level which to some traders signaled the gains were overdone

In rates, treasuries bull-steepen as long-end yields shed up to 4bp, extending slide in early U.S. session as S&P 500 futures fall, led by European stocks on earnings. Yields were lower by 1bp to 4bp across a flatter curve with 2s10s, 5s30s spreads tighter by 2.5bp and 1.4bp; 30-year touched 1.179%, lowest since April. Dip-buying during Asia session and a flurry of futures activity including block trades sparked the move, which continued through European morning.

Looking at today’s initial claims report, consensus expects a 1.415 million Americans filed for state unemployment benefits in the latest week, down slightly after two consecutive weeks of huge increases triggered fears of a stalled recovery in the labor market.

Market Snapshot

• S&P 500 futures up 0.1% to 3,320.00
• STOXX Europe 600 down 0.2% to 364.28
• MXAP up 0.1% to 169.72
• MXAPJ up 0.4% to 567.44
• Nikkei down 0.4% to 22,418.15
• Topix down 0.3% to 1,549.88
• Hang Seng Index down 0.7% to 24,930.58
• Shanghai Composite up 0.3% to 3,386.46
• Sensex up 1.2% to 38,101.69
• Australia S&P/ASX 200 up 0.7% to 6,042.19
• Kospi up 1.3% to 2,342.61
• German 10Y yield fell 0.9 bps to -0.515%
• Euro down 0.06% to $1.1856
• Brent Futures down 0.3% to $45.03/bbl
• Italian 10Y yield rose 2.5 bps to 0.847%
• Spanish 10Y yield fell 1.3 bps to 0.296%
• Brent futures down 0.2% to $45.06/bbl
• Gold spot up 0.7% to $2,051.33
• U.S. Dollar Index down 0.01% to 92.86

Top Overnight News from Bloomberg

• Twitter Inc. and Facebook Inc. blocked a video shared by accounts linked to U.S. President Donald Trump for violating their policies on coronavirus misinformation in clip of an interview in which he said children were “virtually immune” from Covid-19
• German manufacturing continued its recovery in June, with orders rising much stronger than forecast after restrictions to contain the coronavirus were loosened
• Investors should consider the risk of a successful coronavirusvaccine unsettling markets by sparking a sell-off in bonds and rotation out of technology into cyclical stocks, warned Goldman Sachs Group Inc
• Glencore Plc won’t pay its deferred dividend after net debt spiked because the commodities giant poured money into its trading business to cash in on volatile price swings

Asian equity markets traded mixed amid a lack of fresh catalysts and with the region failing to take advantage of the mild tailwinds from Wall St where cyclicals led the upside and the DJIA outperformed its major peers after the blue-chip index received a boost from a surge in Disney shares post-earnings and with Boeing also flying high after optimism on its ability to navigate through the aviation crisis. Furthermore, participants continue to hang on COVID-19 relief discussions where the latest headlines suggested that progress must be made by this Friday or else President Trump is ready to take executive action. ASX 200 (+0.7%) was positive with the index kept afloat of the 6000 level, supported by the commodity-related sectors and with the RBA continuing its QE operations for a 2nd consecutive day. Nikkei 225 (-0.4%) was subdued by a firmer currency and as earnings remained in focus with Honda Motor and Mitsui Engineering & Shipbuilding among the worst hit after posting losses during the prior quarter, while KOSPI (+1.3%) benefitted alongside strength in index heavyweight Samsung Electronics after it unveiled a new phablet, foldable smartphone and wearable products. Hang Seng (-0.7%) and Shanghai Comp. (+0.3%) failed to hold on to early gains with sentiment dampened by a continued PBoC liquidity drain and ongoing US-China tensions with the US said to want untrusted Chinese apps removed from US app stores and President Trump criticized that Hong Kong will not be a successful financial exchange anymore in which the city will dry up and fail. Finally, 10yr JGBs were weaker amid spill-over selling from USTs and with prices also dampened by weaker demand at the 10yr inflation-indexed auction.

Top Asian News

• India’s Central Bank Holds Rates, Focuses on Financial Stability
• Thailand Picks Ex-Banker as Finance Chief to Fight Crisis
• Philippines Raises Budget Deficit Ceiling Until 2022
• Japan Stocks Fall as Traders Shift Holdings Before Summer Break

A choppy day in European stock markets [Euro Stoxx 50 -0.4%] as losses seen at the open where met with a bout of buying – which took most of Europe into positive territory – but price action thereafter reversed. UK’s FTSE 100 (-1.3%) remains the underperformer in the region in the aftermath of the BoE monetary policy decision, which prompted a firmer GBP thus providing unfavourable currency conditions. On the other side of the spectrum, DAX (Unch) has remained somewhat resilient amid post-earning gains from a number of heavyweights including Siemens (+2.7%) and Adidas (+4.0%) who hold 8.3% and 4.4% weightings respectively. Sectors are mostly lower with the exception of industrials – which benefits from the broader losses across materials – but broader sectors do not show a particular risk bias. The breakdown paints a similar picture and sees Industrial Goods & Services leading the gains, with Travel & Leisure now flat after Lufthansa (Unch) trimmed gains, albeit the Co. reported less dire-than-expected numbers. Individual movers again are largely oriented around earnings: Adecco (+1.1%), Credit Agricole (-0.5%), ING (-0.2%), Glencore (-5.9%) – with the latter narrowing its FY20 copper production guidance after reporting deteriorations in both revenue and adj. EBIT.              

Top European News

• Merck KGaA Lifts Profit Outlook as Pandemic Seen Abating
• Pound Gains, Bonds Fall as Prospect of BOE Negative Rates Fades
• Lufthansa Rises as Airline Widens Job Cuts, Analysts Cite Beats
• Hammerson to Raise $1.1 Billion as Covid Hurts Malls

In FX, EUR/GBP – The cross has drifted back down towards 0.9000 following a much more pronounced Euro retreat from post-German data peaks relative to Sterling after a less pessimistic BoE near term outlook via the latest MPC minutes and MPR. Indeed, Eur/Usd has reversed sharply from 1.1915 to circa 1.1840, while Cable is holding firm on the 1.3100 handle between 1.3113-82 even though the Dollar has clawed back losses against most major counterparts and vs GOLD that has been instrumental in terms of the Greenback’s downfall. Back to the Pound, post-policy meeting comments from Governor Bailey underlined the message that NIRP remains under review and in the toolbox, but not currently on the agenda.

• DXY/NZD/CAD/AUD – Consolidation, short covering and a technical rebound may all be contributing to the broad Buck bounce after the index breached the prior ytd low, but held close to 92.500 at 92.495 in the run up to Friday’s jobs data. However, 93.000 is capping the recovery for now as US Treasury yields and the curve stabilises amidst dip and block buying after Wednesday’s post-Quarterly Refunding bear-steepening and a bumper NFP print could yet prompt renewed Dollar selling given the likely boost to overall risk sentiment. Nevertheless, the Loonie has pared gains from 1.3250+ towards 1.3300, Kiwi is back below 0.6650 and Aussie sub-0.7200 against the backdrop of retracements in crude and commodities.
• CHF/JPY – Both displaying degrees of resilience in the context of the aforementioned Greenback revival, as the Franc maintains 0.9100+ status and Yen stays comfortable afloat of 106.00 within a raft of hefty option expiries spanning 105.00 to 106.25 – for full details check out the headline feed at 7.30BST. Ahead, Japanese household spending data may provide some independent impetus for the Jpy before the monthly US labour report.
• SCANDI/EM – The Norwegian and Swedish Crowns have been undermined by waning risk appetite on top of the downturn in oil prices, with Eur/Nok and Eur/Sek hovering around 10.6400 and 10.3100 respectively even though the single currency remains well off early highs, but the Turkish Lira is plunging further below 7.0000 vs the Dollar and looks destined to revisit record lows (7.2690), at least, as the rout continues and some market participants speculate whether the CBRT is compliant if not complicit with Try depreciation as a means of addressing the country’s deteriorating finances having depleted reserves and approaching the limits of monetary easing. Conversely, a Rupee rebound after the RBI confounded consensus for a 25 bp rate cut and remained on hold, while the Czech Koruna is anticipating the CNB to stand pat later.                

In commodities, WTI and Brent futures remain in the doldrums in early European trade as a firmer Dollar and subdued risk sentiment weighs on prices amid a lack of fresh fundamental catalysts for the complex, whilst analysts at JPM have trimmed their H2 2020 pol demand forecast by 1.5mln BPD – potentially on account of second wave woes. On the docket, traders will be eyeing the possible release of Saudi Aramco’s OSPs for September – which could come later this week or early next week according to sources. Expectations point towards an OSP cut to their flagship grade to Asia amid the easing of supply cuts from OPEC+. Elsewhere, spot gold ekes mild gains relative to recent performance and trades on either side of USD 2050/oz, whilst spot silver remains the outperformer, some analysts cite the sharp recovery in global industrial activities coupled with constrained mining activity as factors behind the rally. Finally, Shanghai base metals had. a session of firm gains with prices hitting multi-month highs – with Nickel prices closing higher by almost 3% after a key miner Philippines reimposed lockdown measures, whilst Dalian iron ore rose some 3% on a rosier Chinese steel demand outlook

US Event Calendar

• 7:30am: Challenger Job Cuts YoY, prior 305.5%
• 8:30am: Initial Jobless Claims, est. 1.4m, prior 1.43m; Continuing Claims, est. 16.9m, prior 17m
• 9:45am: Bloomberg Consumer Comfort, prior 44.3

Silver prices were up 25% in July, the second-biggest monthly gain for the white metal on record, anbd are extending gains this week, with spot silver spiking above $28 this morning…

And gold rising too…

But, as SchiffGold.com notes, silver is still significantly undervalued compared to gold.

The spot price of the white metal gained even more than silver futures last month. When gold pushed above its previous record price last week, silver went along for the ride, rising to nearly $26 an ounce. It has settled back and is currently trading in the $24 range. On June 29, silver closed at just over $18 an ounce. That’s a 33% gain on the month. Going back to March, the white metal was below $12.

Former US Mint director Ed Moy told MarketWatch silver is going up for the same reason as gold.

What is driving gold prices now are mainly the fear of inflation due to the magnitude of the monetary and fiscal stimulus worldwide, and the flight to safety due to the uncertainty around how and when the global economy will recover.”

Moy pointed out that the silver-gold ratio remains historically wide. That means either gold is overvalued or silver is undervalued. If silver is underpriced, “there is a lot of money to be made,” he told MarketWatch.

Given the economic dynamics, it seems far more likely silver will climb to close the gap rather than the price of gold dropping.

The silver-gold ratio is simply the number of ounces of silver it takes to buy one ounce of gold. It has been historically high for months. It was well over 100-1 back in March.

It’s dropped to about 75-1 this morning (its lowest since April 2017), but that is still high by historical standards. The modern average over the last century has been between 40 and 60-1. In essence, the wide silver-gold ratio is silver on sale.

Ross Norman, CEO of Metals Daily, told MarketWatch:

“It has been clear for some time that silver was excessively cheap compared to gold.”

He agreed that the ratio is still historically high, “suggesting there is scope for greater gains in silver still.”

Silver is much more volatile than gold due to its industrial role, but at its core, it is still a monetary metal and it tends to track relatively consistently with gold over time. When gold goes up, it almost always takes silver with it. In fact, silver has historically outperformed gold in a gold bull market.

Even with its big gains last month, silver is still a long way from its record highs. The white metal has a double-top of around $50. It first got to that level in 1980 and then again in 2011. Peter Schiff recently said $50 is the real resistance level. Once it breaks through, it will go much higher.

Fifty-dollars looms very large. But there’s an old saying about these double-tops. I think they’re made to be broken, and silver is going to break this double-top. And the fact that it’s been there for so long means that when it does break — look out!”

The supply and demand fundamentals also look good for silver.

Investors have been piling into the white metal since the beginning of the year. Investment demand for silver was up 10% in the first half of 2020, according to the latest data compiled by the Silver Institute.

• Strong growth in silver ETFs led the way. Gold ETFs have taken in record levels of metal this year and silver funds have followed suit.  As of June 30, global silver holdings in ETFs reached a fresh all-time high of 925 million ounces. That equals about 14 months of mine supply. ETFs added 196 million ounces of silver through the first six months of the year. We have already eclipsed the highest annual inflow of 149 million ounces set back in 2009.

• Silver coin and bar sales have also helped drive investment demand for silver. Retail bullion coin sales jumped by an estimated 60% year-on-year. Strong demand led to shortages of many silver bullion products, resulting in extended delivery time and higher premiums.

• Industrial demand has been flat due to the economic slowdown from the coronavirus pandemic. Even so, there are expectations of increasing industrial demand, particularly in the solar energy sector.  Even if the global economy is slow to recover, silver may get a boost from government stimulus as various programs funnel money into “green energy” projects.

• Meanwhile, silver mine output was already trending downward and it has been further squeezed by mine shutdowns due to COVID-19. Analysts at the Silver Institute say they expect mine supply to continue its four-year slide this year. Even with most mines back online, the institute projects a 7% decline in mine output in 2020. Global mine production fell by 1.3% in 2019.

Tropical Storm Isaias is long gone, but there’s widespread damage along the East Coast and more than 2 million homes in the Northeast without power. 

According to PowerOutage.US, 2.2 million of the 6.4 million affected electric customers remain without power in the aftermath of Isaias. 

PowerOutage.US said utility workers from across the nation have responded to East Coast states to aid in the recovery effort to restore power. So far, 65% of affected customers have seen their lights turned back on. 

From the Carolinas to the Delmarva Peninsula to New Jersey to New York City, Isaias unleashed tropical storm conditions earlier this week. For those who are curious, here’s the full track map of the storm:

At one point, nearly 100 tornado warnings were issued across ten states as the storm raced up the East Coast. 

Isaias spawned at least a dozen confirmed twisters. 

Here’s some video of the damage:

The aftermath of a tornado in Doylestown, Pennsylvania. 

TORNADO DAMAGE IN DOYLESTOWN, PENNSYLVANIA

Video taken from #Doylestown Hospital in SE PA shows significant tornado damage, including overturned cars. #Isaias pic.twitter.com/hO1aSxp8Qr

— Ben Ames (@BenAmesWx) August 4, 2020

Buildings ripped apart in Dover, Deleware. 

Tornado touched down in Cape May, New Jersey. 

BREAKING: Tornado touches down in Cape May, NJ as Tropical Storm Isaias moves up East Coast – WPIX@NorEasterNick

pic.twitter.com/EJ5EJVuURW

— Breaking911 (@Breaking911) August 4, 2020

Homes damaged in Maryland.

Here are some more pictures of the Eastern Shore tornado damage after #Isaias @wjz pic.twitter.com/bGW9vd94Kv

— Mike Hellgren (@HellgrenWJZ) August 5, 2020

“Damage from isaias in Courtland va  I worked down there today it was unreal first real tornado damage I’ve seen first hand,” said one Twitter user.

Damage from isaias in Courtland va I worked down there today it was unreal first real tornado damage I’ve seen first hand @MegWiseNBC12 @AndrewNBC12 @NBC12 @StephanieAbrams @JimCantore pic.twitter.com/dHgWHBGeqi

— Jamie (@JLynchRVA) August 6, 2020

What Americans saw on the news this week… 

Stressful times.