[Market Madness] Edition 0086
Melt Up Potential
Goldman and Moderna deliver
Well folks, we are seeing a really good start to the trading day on Tuesday. Despite the political banter that took place in the Rose Garden yesterday, the futures overnight chose to focus on optimism toward a vaccine and further recovery developments. This morning, those wishes came true as Moderna releases positive trial results regarding their vaccine in development. Goldman Sachs also crushed their earnings for the quarter, reporting per share earnings of $6.26 as compared to analyst estimates of only $3.78.
Around the markets, U.S. Treasuries and gold are down on positive stock momentum, volatility is cooling off, and oil is up as well. Overseas, Asia and Europe closed in the green. At the midday, the Dow Jones and S&P continued to hold onto positive gains (albeit much lower than from the open), and the NASDAQ also marked some position gains on the day.
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Fundamentals
Wednesday Close:
Dow Jones Industrial Avg: +0.85%
S&P 500: +0.91%
NASDAQ: +0.59%
US 10 YR: 0.634%
Crude OIL: $40.97
Market Madness Portfolio: +0.67%
COVID 19 Global Cases: 13,405,694
Indices Overseas:
FTSE 100: +2.00%
Nikkei 225: +1.59%
Hang Seng: +0.014%
TEDRATE: 0.12
LIBOR (3 month): 0.27088%
See the copper lining
In the commodity space, the market is seeing the quickest rally in copper ever. Money managers are getting very bullish on the metal, suggesting there is an overarching sense of optimism toward reopening and recovery. Unlike gold and silver, which are primarily investment vehicles for safe haven investors, copper is a primary ingredient in most of the goods we manufacture across the globe. From technology inputs, such as batteries, and other chips, to inputs for homebuilding and wiring, the metal has impact on many different sectors of the global economy. China is a leader is consuming copper, buying up nearly half the world’s supply each year.
The rising price has collected interest among market watchers more broadly, seeing the optimism behind the rise. Prices of a good are affected when either supply, demand, or both change. As manufacturing looks to make a comeback, companies in the space will be looking to purchase this metal for their processes. What will be interesting to look at would be how much mining activity is taking place now, and how that is impacting the demand for copper. If mining is lagging behind the demand, we could experience an available supply shortage, driving up the price of copper.
“Analysts project long-term copper shortages due to a dearth of investments in new mines. More recently, mine and refinery disruptions in key producing nations like Chile due to the coronavirus threaten to lower production. A worker strike at a Chilean mine operated by Antofagasta PLC and co-owned by Barrick Gold Corp. marks the latest potential copper supply disruption.” (excerpted from article)
Some feel that this boost in the pricing is atypical of the current economic conditions. Given the global climate — the fallout of the second phase of the U.S.-China trade deal, rising global tensions among many global leaders, and the looming difficulty imposed by the coronavirus — it is hard to see the bullish appeal moving forward. The possibility of retractions to globalization-type economic policies can further damped trade outlooks and commodity prices across the globe.
“Meanwhile, coronavirus cases continue to rise in states such as California, Texas and Florida, dulling hopes for a swift U.S. economic rebound. And President Trump recently damped expectations for a phase-two trade accord between the U.S. and China, potentially weakening global trade flows and hurting copper demand. Copper is shaking off those concerns for now, but some traders are skeptical the steady climb will continue.” (excerpted from article)
Industry experts suggest treading cautiously around this and other commodity rallies until more of the dust settles.
Quick Takes
IMPORTANT READ: White House tells hospitals to bypass CDC on COVID 19 data. (via Axios) What good comes from this?
Goldman Sachs crushes Q2 earnings, gives boost to overall market. (via CNBC)
More on banks protections from potential loan losses. (via WSJ)
Moderna provides an update on its COVID 19 vaccine trial. (via CNBC)
WH war of words continues. (via CNBC)
Goya Foods leader receiving backlash for Trump comments. (via NY Times)
Reader’s Corner
The reader has every right to be upset because the editor forgot to complete this section yesterday. We all make mistakes. To make up for this, please enjoy this extra take on Tesla and its outer space stock price. (via FT) Tesla is currently trading at 345 times earnings, according to FactSet.
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