Did we just witness “an epic signal of a blow-off top”… ? Yes, says Gary Evans of the Global Macro Monitor blog who pointed to Barstool Sports founder Dave… U.S. stock markets ended mixed on Tuesday as investors waited for Fed’s latest FOMC policy decision. Gambling is about all the two cities have in common. Market Nuggets compiles all of the day’s top expert analysis on the gold market. They offer a short synopsis of bank forecasts, and the outlook of famed economists like Dennis Gartman and Nouriel Roubini. Kitco Nuggets are constantly updated throughout the day. U.S. stocks tumbled early Thursday as investors worried about signs of coronavirus cases rising again and digested Wednesday’s downbeat economic outlook from…
Did we just witness “an epic signal of a blow-off top”… ? Yes, says Gary Evans of the Global Macro Monitor blog who pointed to Barstool Sports founder Dave Portnoy as the reason why. See full story.
At a moment when America’s attention is trained directly on racial issues, this fund may get some attention, which at least one analyst thinks it deserves. See full story.
With the country entering its third week of protests over social justice, the spotlight has been cast again on the state of blacks in the workforce — in particular, the glacial progress of diversity in tech. See full story.
As Joe Biden’s campaign works on picking his running mate, the effort is drawing heightened interest for several reasons — some of them arising from 2020’s unprecedented tumult. See full story.
Australian think tank the Institute for Economics and Peace warns a sharp fall in the oil price will affect political regimes in the Middle East, especially in Saudi Arabia, Iraq and Iran. See full story.
Extending the extra $600 could create a disincentive to return to work, some lawmakers say. See full story.
Stock Market News for Jun 10, 2020
U.S. stock markets ended mixed on Tuesday as investors waited for Fed’s latest FOMC policy decision. Moreover, the NBER’s statement that the economy has fallen in recession since mid-February also dented investors’ confidence. Meanwhile, the Nasdaq Composite touched a significant milestone and closed in the green while both the Dow and the S&P 500 finished in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1.1% or 300.14 points to close at 27,272.30, snapping its sixth straight positive close. Notably, 26 components of the 30-stock blue-chip index ended in the red while 4 finished in green.
The S&P 500 declined 0.8% to close at 3,207.18. The Energy Select Sector SPDR (XLE), the Industrials Select Sector SPDR (XLI) and the Financials Select Sector SPDR (XLF) plummeted 3.8%, 2.5% and 2.1%, respectively. Notably, 10 out of eleven sectors of the benchmark index closed in negative territory and only one in positive territory.
However, the tech-heavy Nasdaq Composite closed at 9,953.75, gaining 0.3% due to strong performance of large-cap tech stocks. During the intraday trading session, Nasdaq Composite briefly touched the 10,000 level at 10,002.5 for the first time in history. Additionally, the tech-laden index has posted a fresh all-time high closing on Tuesday.
Large-cap tech stocks like Apple Inc. AAPL, Netflix Inc. NFLX, Facebook Inc. FB and Amazon.com Inc. AMZN rallied more than 3%. Apple and Netflix carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) increased 6.8% to close at 27.57. A total of 13.82 billion shares were traded on Tuesday, higher than the last 20-session average of 12.54 billion. Decliners outnumbered advancers on the NYSE by a 3.09-to-1 ratio. On Nasdaq, a 1.84-to-1 ratio favored declining issues.
Fed’s FOMC Meeting
The 2-day FOMC meeting of the Fed has started from Tuesday. The central bank has done exceptionally well with respect to maintain credit flow during the period of lockdowns. Market participants expect the Fed to continue its unlimited asset purchase program and to keep the benchmark interest rate at 0% to 0.25%. The Fed chairman Jerome Powell will give a statement after the meeting. Market participants will closely monitor any clue about the Fed’s future intentions and about its view of the economy.
U.S. Economy in Recession
On Jun 8, the National Bureau of Economic Research (NBER) stated that the U.S. economy is indeed in recession since mid-February, ending the historically longest 128 months of expansions. According to the NBER’s Business Cycle Dating Committee “The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.”
Moreover, the world Bank has estimated that the global economy will shrink around 5.2% in 2020 due to the coronavirus-induced mayhem. The International Monetary Fund has said that the ongoing global recession may be worse than the Great Depression.
National Federation of Independent Business (NFIB) reported that the U.S. Small Business Optimism Index got a strong momentum in May increasing 94.4 from 90.9 in April. Eight of the 10 components of the index improved in the last month while two declined. per the report, majority of owners are optimistic about future business conditions and expect the recession to be short-lived.
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Why Las Vegas May Bounce Back Faster Than Macao
Las Vegas casinos reopened last week after more than two months of being closed and with new social distancing protocols in place.
Investors might be tempted to use the experience of the integrated resort operators in Macao to get a sense of how casinos on the Las Vegas Strip will fare, but U.S. resorts might actually do a lot better than their counterparts in China, where gaming revenue has all but dried up despite casinos being open since mid-February.
Image source: Getty Images.
Gaming revenue in Macao plunged 93% in May, following a 97% dropoff in April and an 80% decline in March. Casinos have seen almost three-quarters of their revenue vanish so far this year, and after eight straight months of falling revenue, there doesn’t seem to be any sign of it recovering any time soon.
In its first-quarter earnings report, which only covered the time period of the coronavirus pandemic up to March 31, Las Vegas Sands (NYSE:LVS) reported revenue had plummeted 51% year over year and operating income was down 94%. Chairman and CEO Sheldon Adelson said: “I have never seen anything like it in my over seventy years in business.”
Yet Sands only generates about two-thirds of its revenue from Macao, unlike Wynn Resorts (NASDAQ:WYNN), which generates 75% of its revenue from China, and it saw a similar decline in revenue and profits.
MGM Resorts (NYSE:MGM) was fortunate because of the three world-class resort operators with feet in both Las Vegas and Macao, its operations are skewed more heavily toward U.S. markets, realizing revenue that accounts for only 23% of its total.
Since U.S. resorts didn’t close until mid-March, MGM only saw its revenue decline 29%, but its second-quarter earnings report will bear the brunt of those subsequent closures, while Sands and Wynn will still be dealing with the lack of gambling occurring in China.
Data source: Macau Gaming Inspection & Coordination Bureau. Chart by author.
Now that Las Vegas is reopening for business, should MGM expect its results to continue being just as devastated as both Sands and Wynn?
Not really. Despite Macao and Vegas both relying primarily upon gambling for revenue, the comparisons really end right there. China’s gambling mecca is heavily dependent upon VIP gambling for sustenance, whereas domestic casinos are, if not family-oriented, at least more mass market-facing.
Beijing has tried to minimize Macao’s reliance upon high-rollers, which is why the Cotai district resorts feature less gaming and more entertainment and retail, but it is still the VIP gambler who generates the most revenue and weighs heavily on the region’s results.
Yet even in the regional markets of the U.S., where casinos such as Boyd Gaming (NYSE:BYD) and Penn National Gaming (NASDAQ:PENN) rule and don’t necessarily have the same spectacle as Vegas, investors can expect the domestic resorts to respond more readily to the reopening now occurring.
China still maintains very strict travel restrictions in and around Macao that won’t be present in the U.S. For example, travelers from Macao to Hong Kong and Guangdong province, the two areas from where most of the city’s tourists come, are required to undergo a two-week period of quarantine.
Air travel to Macao is also heavily restricted, making the Guangdong Gongbei border gate one of the few points of entry or egress with the city. As a result, VIPs and mass market gamblers have largely avoided visiting Macao.
For example, fewer than 1,000 people visited Macao over the three-day Easter holiday, compared to over 556,000 people in 2019, and Trading Economics says data from Macao’s Statistics & Census Service shows just 11,000 people visited the city in April, down 99.7% from last year. It’s clear Macao is a ghost town.
But that’s not what’s happening in Las Vegas, or any of the other U.S. regional markets opening. While social distancing protocols are being enforced and cleaning stations will be offered, as well as enhanced cleaning of the casinos by personnel, consumers wanting to gamble aren’t facing quarantine upon arrival or leaving, meaning there are few disincentives to visit.
Las Vegas still isn’t going to bounce back fast. There are no large-scale events occurring at the moment that typically draw visitors to the Strip, and now the focus is getting the basic services up and running again.
Even so, Las Vegas will undoubtedly bounce back faster than Macao, and regional markets may recover even faster than the Strip. That makes domestic casino operators like MGM, Boyd, Caesars Entertainment, and Penn a better bet for investors than those like Sands and Wynn that rely much more heavily on Macao.
Author: Rich Duprey
TDS: ‘can you hear the stampede of bulls on the horizon’ in gold market?
(Kitco News) – Gold has bounced from Friday’s sell-off that was prompted by a strong U.S. jobs report, and TD Securities looks for further gains. As of 9:10 a.m. EDT, spot metal was up $8 for the day to $1,722.60 an ounce after falling to the low $1,670 area on Friday. “Can you hear the stampede of bulls on the horizon? Gold’s consolidation over the past few months has placed a cloud of doubt over the bull market, as money managers repeatedly sold the yellow metal in response to risk-on behavior in markets, with global equity indices posting an incredibly strong performance,” TDS said. However, analysts said, “those selling gold in response to risk-on could be missing the forest through the trees— the Fed will maintain its uber-easy policy for the foreseeable future, and may even utilize more tools (such as yield-curve control) to support yields amid massive Treasury issuances.” Real interest rates, which are adjusted for inflation, are likely to remain “suppressed” for the foreseeable future, TDS said. All of this means that “macro drivers will continue to drive capital to seek shelter in the yellow metal.”
Dow opens more than 800 points lower as U.S. coronavirus cases rise, after Fed’s grim economic outlook
U.S. stocks swooned Thursday as coronavirus cases continued to rise and investors digested Wednesday’s downbeat economic outlook from the Federal Reserve.
The market moves came even as the number of Americans filing for jobless benefits for the first time continued to decline in the most recent week.
On Wednesday, the Dow fell 282.31 points, or 1%, to end at 26,989.99. The S&P 500 shed 17.04 points, or 0.5%, finishing at 3,190.14. The Nasdaq climbed 66.59 points, or 0.7%, to close at 10,020.35.
While both the S&P 500 and the Dow are up about 45% from the low in late March, the S&P 500 is down 1.2% this year and the Dow is down 5.4% for 2020, though the Nasdaq Composite rose for eight days in the past nine sessions, bringing its 2020 gains to nearly 10%.
The number of U.S. coronavirus infections passed the two million mark and over 112,000 Americans have died, according to Johns Hopkins University. Despite fewer cases being recorded in some cities and states, the seven-day average of new cases over the last two weeks is still rising in more than 20 states, leading investors to worry about a second wave of the epidemic just as business activity is resuming.
President Trump announced he will resume holding election rallies with the first in Tulsa, Oklahoma on June 19th but he is not expected to require that attendees practise social distancing.
The global case tally for the coronavirus climbed to 7.39 million on Thursday, according to data The death toll rose to 417,022.
“Up until yesterday financial markets didn’t appear overly concerned about the prospect of a second wave,” said Michael Hewson, chief market analyst at CMC Markets UK, in a Thursday research note. However, he noted that the “prospects, appear to have concentrated minds in the wake of recent gains, and sending the usual suspects of travel, as well as oil and gas stocks sharply lower”
Meanwhile, on Wednesday the Fed’s updated policy statement and projections indicate that it expects a 6.5% contraction by the end of the year on a year-over-year basis, with the unemployment rate ending at 9.3%, well above the Fed’s estimate of the long-run rate forecast of 4.1%.
The central bank’s dour outlook has a lot to do with the stock market sell-off, said Kristina Hooper, Invesco chief global market strategist.
“The stock market has almost had blinders on,” Hooper said in an interview. “More than one in three companies in the S&P 500 are dispensing with earnings guidance. So investors have anchored to data, which has been relatively positive about reopenings in various states, improvements in PMIs and the jobs report last week. In one fell swoop Jay Powell threw a lot of cold water on that narrative.”
Hooper thinks the market moves of this week aren’t necessarily the start of a sustained leg downward. “Typically the initial reaction to the Fed press conference is not the subsequent reaction. There needs to be some digestion by investors.”
FED RECAP: Fed provides update on economic outlook and policy thinking
In U.S. economic data Thursday, another 1.54 million Americans filed for initial jobless claims, the government said. That beat expectations for 1.565 million people seeking unemployment benefits, according to the Econoday consensus.
Although new jobless claims have been falling since March, more than 2.2 million applications for unemployment compensation were filed in the last week of May through state and federal relief programs. That is almost as many as the 2.5 million jobs regained by the economy in the entire month.
Producer prices moved fractionally upward in May, the government said, notching their first increase in four months. Economists had forecast another decline/
Looking ahead, investors also will watch an update on the Fed’s balance sheet, which hit $7.21 trillion last week, and the money supply at 4:30 p.m. Eastern.
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