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Barcelona lost 2-8 to Bayern Munich, Belarusians are suffering from Europe’s ‘last dictator’, Republicans and Democrats can’t agree on the fifth stimulus relief package, meanwhile U.S./China trade discussions were postponed.
The bull party in Wall Street had been still further encouraged by the news of the Russian coronavirus vaccine. The problem is that the world’s first approved vaccine for Covid-19, apparently, hasn’t gone through the equivalent of Phase 3 trials.
Despite the certain positivism regarding Covid-19 evolution, the U.S. unemployment rate remains above 10%. Even though, the number of Americans who filed new claims for unemployment benefits fell below 1 million (963,000) for the first time in 21 weeks.
Retail sales in July, on the other hand, grew 1.2%. U.S. productivity rose at a 7.3% rate in the second quarter as the number of hours worked fell by nearly half. The increase in productivity was the largest since 2009. Labor costs also jumped, rising 12.2%. Finally, U.S. industrial production rose 3% in July, marking third-straight monthly increase.
The U.S. election time is getting closer, so it should not be a surprise we get more news on the us-china trade war. U.S. President Donald Trump said on Saturday he could exert pressure on more Chinese companies such as technology giant Alibaba. It’s important to mention that on Friday the United States ordered its Chinese owner ByteDance on Friday to divest the U.S. operations of TikTok within 90 days, the latest effort to ramp up pressure over concerns about the safety of the personal data it handles.
TikTok is not the only company suffering from attacks. Canada’s Competition Bureau said it has opened an investigation into Amazon’s marketplace conduct in the country and whether it has hurt businesses and companies operating in the country. Epic Games, in turn, filed lawsuits against Apple and Google after the tech titans decided to remove its Fortnite title from their respective app stores because it violated their policies regarding in-app payments.
Earnings season is сoming to an end with more than 80% beat earnings estimates and almost two-thirds posted better than expected revenue growth. We should also highlight that Apple and Tesla announced stock splits. The question now is if it will prompt other companies with high-price shares to consider such a move. Airbnb, meanwhile, may finally see a long-awaited initial public offering. The company apparently plans to file its IPO paperwork with the Securities and Exchange Commission later this month.
In the end, despite the fact that oil prices have recovered, it will take years for the sector to recover. In addition, the world is shifting to cleaner/greener energy thus no one can’t guarantee fossil fuel prices will remain high. BP Plc said on Aug. 4 that it would no longer do any exploration in new countries.
Charts of the week
Macroeconomic Data & Events
Slowly but steadily the world is recovering from the man-made crisis. The global PMI data suggests a strengthening of economic growth during July, but further improvement remained subdued by containment measures. And the reason for that is very simple – some countries reimposed lockdowns in fear of the second COVID wave. The cure shouldn’t be worse than the disease but that is exactly the case.
Let’s just look at Argentina, where in spite of 150 days of lockdown, the country’s infection rate and death toll continue to rise. This is causing many to question the effectiveness of the measures imposed. In this context, it shouldn’t be a surprise the job market continues to suffering, even despite widespread government policy support. If the situation keeps deteriorating, consumption may fall once again and frustrate the recovery in the months ahead.
For that reason, this week markets will focus on PMIs data all over the world as it will give some insights into the prospects of further economic recovery. Besides that, the release of FOMC minutes will be closely watched, as it may give clues regarding any future policy decisions.
August 17: Japan industrial output (Final, Jun), UK household finance index (Jul), and US NY Empire State manufacturing.
August 18: RBA meeting minutes, US housing starts, building permits (Jul), and Japan trade (Jul), machinery orders (Jun).
August 19: UK inflation (Jul), Visa’s UK consumer spending index (Jul), Euro area inflation (Final, Jul), and FOMC minutes.
August 20: People’s Bank of China will announce their interest rate decisions, Euro area construction output (Jun), US jobless claims, and UK consumer confidence (Aug) with Japan inflation (Jul).
August 21: Flash PMI for Japan, US, Eurozone, and UK (Aug), UK retail sales (Jul), Euro area consumer confidence (Flash, Aug), and US existing home sales (Jul).
