Read the 2020 Wealthiest Angelenos Special Issue to learn how these billionaires’ fortunes have fared during the Covid-19 pandemic and over the past year. (Kitco News) – Unprecedented central bank action to pump stimulus into financial markets to support the global economy devastated by the COVID-19 pandemic pushed prices to all-time highs in August. Now one fund manager is expecting a new factor to drive prices back above $2,000 an ounce. Stocks were lower Tuesday morning, setting the three major indices up for a third straight session of losses after last week’s tech-led selloff. Washington • The prospect of a vaccine to shield Americans from coronavirus infection emerged Monday as a point of contention in the White House race as President Donald Trump accused Democrats of “disparaging” for political gain a vaccine he repeatedly has said could be available before the election.
Monday, September 7, 2020
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Author: By James Cutchin, Scott Robson
Gold miners present strong value as gold prices rise – Franklin Templeton Investments
(Kitco News) – Unprecedented central bank action to pump stimulus into financial markets to support the global economy devastated by the COVID-19 pandemic pushed prices to all-time highs in August. Now one fund manager is expecting a new factor to drive prices back above $2,000 an ounce.
Steve Land, vice president and portfolio manager of Franklin Gold and Precious Metals Fund within the Franklin Equity Group, said that despite gold nearly 30% rally this year, the precious metal still has room to run higher. He added that he sees gold prices pushing back above $2,000 as market volatility starts to pick up.
“Gold may benefit from bouts of elevated market volatility and mounting concerns over the coronavirus’s economic impact as investors seek perceived safe-haven assets,” he said in a report published last week. “A classic feature of gold is its very low correlation with other asset classes, supporting increased interest in owning it as a portfolio diversification tool in uncertain markets.”
The comments come as U.S. equity markets saw their worst weekly performance since early-June. The Dow Jones Industrial Average lost 3% in a two-day selloff last week. The blue-chip index hit significant resistance at 29,000 points.
With gold prices expected to push higher, Land said that he recommends investors paying more attention to the equity mining space. He sees three factors to drive mining equities higher.
“In our view, peak gold prices present gold producers with opportunities to redefine themselves as a vital part of a diversified investment portfolio,” he said.
The first factor making the mining sector attractive is low costs compared to rising prices. Land noted that mining production costs have been relatively stable between 2013 and 2019. He added that he doesn’t expect costs to exceed $1,200 an ounce for most mining companies anytime soon, especially as energy costs remain subdued.
“Higher gold prices can flow straight to the bottom line,” he said. “In our view, the recent rally in gold prices should provide a significant lift in cash flow across the industry. Management teams look increasingly focused on turning higher gold prices into free cash flow that can be returned to shareholders via dividends or reinvested in high-return projects.”
The second factor to drive value for investors is increased merger and acquisition activity in the mining sector. Land said that with more cash on hand, mining companies will look to expand their production and market capitalization, which would make them more attractive to larger investment funds.
“Companies with multiple mining assets also help to diversify portfolio risk for generalist investors,” he said. “Additionally, in a world dominated by index funds, we believe there are tangible advantages to having a larger market capitalization and better trading liquidity.”
The third factor Land said he sees driving the gold prices is a further evolution in the physical market. More than a decade ago, the investment market was transformed as exchange-traded products gave investors direct access to gold. Land said he sees the potential for physical gold.
“Most of the gold items sold today are almost identical to those made 100 years ago. We believe more should be done to support the physical ownership of gold; new product introductions could represent a solid source of demand growth looking forward,” he said.
Stock market news live updates: Tech stocks lead markets lower for a third straight day
Stocks fell Tuesday morning, setting the three major indices up for a third straight session of losses as last week’s tech-led selloff rolled on.
Shares of mega-cap technology stocks extended declines as investors continued to rotate away from the equity leaders of the past several months. Shares of Facebook (FB), Amazon (AMZN), Apple (AAPL) and Netflix (NFLX) were each off by at least 3%. Tesla (TSLA) shares slid by the most since March’s selloff after the company was bypassed for S&P 500 inclusion, and as competitor Nikola (NKLA) inked a strategic partnership with General Motors (GM). The Nasdaq sank 3.3%, or more than 350 points, shortly after the opening bell.
“The sell-off in risky assets has been concentrated in US Tech and momentum stocks, while credit has been more resilient and outperformed its beta to equity,” according to a note from Goldman Sachs strategists over the weekend. “This is likely due to the unwinding of some of the popular positions into the largest US stocks. In fact, the US equity rally has been very concentrated so far with very low breadth.”
“While aggregate US equity future net length is not very stretched, Nasdaq net equity future positioning is close to historical highs,” the analysts said. They added that an increase in the 10-year Treasury yield off the pandemic-era lows also likely triggered a rotation out of longer-duration stocks, including growth and tech names.
Still, the analysts added they “expect the current bull market to continue as the improved growth outlook coupled with supportive monetary policies should maintain the search for yield elevated and foster a compression of the ERPs [equity risk premiums].”
Elsewhere, investors eyed developments on the Covid-19 vaccine front. Tuesday morning, the CEOs of some of the pharmaceutical companies front-running the race toward creating on a vaccine wrote a public letter vowing to avoid cutting corners in the development process, even as they work with an expedited timeline to try and quickly distribute an inoculation.
“In the interest of public health, we pledge to always make the safety and well-being of vaccinated individuals our top priority,” according to the letter, signed by the CEOs of companies including AstraZeneca (AZN), Johnson & Johnson (JNJ) and Moderna (MRNA).
In news conference yesterday, President Donald Trump said he believed a Covid-19 vaccine could be approved as soon as October. Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases said seeing a vaccine receive approval by October was “unlikely” but “not impossible,” according to a recent interview with CNN.
Virgin Galactic (SPCE) shares rose Tuesday morning after UBS initiate coverage on shares of the newly public space tourism company with a Buy rating and $25 price target, implying 57% upside from Friday’s closing prices.
Shares of Virgin Galactic are up 38% for the year to date, even after falling 29% since the beginning of August.
“We see Virgin Galactic as the only way for consumers to gain entry into the ~560 member astronaut club in the next 5 years,” the analysts said. “There will be competitors, but the curation of the VG product from marketing to life-long brand connection, in addition to an operating model supporting a uniquely high flight-rate, separates the VG experience from the others.”
The analysts added they expected Virgin Galactic to kick off commercial service in 2021, and they see space tourism growing into a $3 billion per-year industry by 2030. An even larger addressable market exists in the transportation industry supersonic flight, which is another area Virgin Galactic is working to tap into, they added.
Tesla (TSLA) shares slid 16% shortly after market open Tuesday morning for its worst one-day drop since March. This came after the S&P 500 committee decided late Friday not to include the stock in the blue-chip index, in a surprise move after the electric car-maker delivered its fourth consecutive quarterly profit in July.
Separately, Tesla announced Tuesday that it had completed a $5 billion share sale as of Friday, with settlement of shares sold expected to be completed by Wednesday. The dilution added to the negative sentiment around the stock Tuesday.
The stock also came under pressure after competitor Nikola (NKLA) announced a strategic partnership with General Motors (GM), giving the latter an 11% stake in the company. Analyst Dan Ives of Wedbush called the partnership “potential game changing deal,” with Nikola “importantly getting access to the GM battery and fuel cell technology/infrastructure to help produce the Badger and its core line of semi trucks over the coming years,” according to a note Tuesday morning.
Here were the main moves in markets, as of 9:34 a.m. ET:
S&P 500 (^GSPC): -70.97 points (-2.07%) to 3,355.99
Dow (^DJI): -449.3 points (-1.6%) to 27,684.01
Nasdaq (^IXIC): -359.85 points (-3.18%) to 10,960.89
Crude (CL=F): -$2.58 (-6.49%) to $37.19 a barrel
Gold (GC=F): -$13.70 (-0.71%) to $1,920.60 per ounce
10-year Treasury (^TNX): -4.6 bps to yield 0.677%
Here were the main moves in equity markets, as of 7:16 a.m. ET:
S&P 500 futures (ES=F): 3,398.75, down 18.75 points or 0.55%
Dow futures (YM=F): 28,058.00, down 16 points or 0.06%
Nasdaq futures (NQ=F): 11,341.5, down 207.25 points, or 1.79%
Crude (CL=F): -$2.09 (-5.26%) to $37.68 a barrel
Gold (GC=F): -$11.00 (-0.57%) to $1,923.30 per ounce
10-year Treasury (^TNX): -3.3 bps to yield 0.69%
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on March 11, 2020 in New York. – Wall Street stocks dove deeper into the red in afternoon trading on March 11, 2020, with losses accelerating after the World Health Organization declared the coronavirus a global pandemic. Near 1710 GMT, the Dow Jones Industrial was down more than 1,200 points, or 5.0 percent, at 23,777.17. The broad-based S&P 500 slumped 4.6 percent to 2,749.88, while the tech-rich Nasdaq Composite Index tumbled 4.4 percent to 7,979.15. (Photo by Bryan R. Smith / AFP) (Photo by BRYAN R. SMITH/AFP via Getty Images)
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Author: Emily McCormickReporter
COVID-19 vaccine latest flashpoint in White House campaign
(Patrick Semansky | AP) President Donald Trump speaks during a news conference on the North Portico of the White House, Monday, Sept. 7, 2020, in Washington.
Washington • The prospect of a vaccine to shield Americans from coronavirus infection emerged Monday as a point of contention in the White House race as President Donald Trump accused Democrats of “disparaging” for political gain a vaccine he repeatedly has said could be available before the election.
“It’s so dangerous for our country, what they say, but the vaccine will be very safe and very effective,” the president pledged at a White House news conference.
Trump leveled the accusation a day after Sen. Kamala Harris, the Democrats’ vice presidential candidate, said she “would not trust his word” on getting the vaccine. “I would trust the word of public health experts and scientists, but not Donald Trump,” Harris said.
Democratic presidential candidate Joe Biden amplified Harris’ comments Monday after he was asked if he would get a vaccine for COVID-19, the disease caused by the novel coronavirus. Biden said he’d take a vaccine “tomorrow”want to see what the scientists have to say, too.
Biden said Trump has said “so many things that aren’t true, I’m worried if we do have a really good vaccine, people are going to be reluctant to take it. So he’s undermining public confidence.”
Still, the former vice president said, “If I could get a vaccine tomorrow I’d do it, if it would cost me the election I’d do it. We need a vaccine and we need it now.”
The back-and-forth over a coronavirus vaccine played out as three of the candidates fanned out across the country on Labor Day, the traditional start of the two-month sprint to the election. Harris and Vice President Mike Pence campaigned in Wisconsin and Biden went to Pennsylvania. Trump added the news conference to a schedule that originally was blank.
Harris, a California Democrat, said in a CNN interview broadcast Sunday that she would not trust a coronavirus vaccine if one were ready at the end of the year because “there’s very little that we can trust that … comes out of Donald Trump’s mouth.” She argued that scientists would be “muzzled” because Trump is focused on getting reelected.
Trump dismissed her comments as “reckless anti-vaccine rhetoric” designed to detract from the effort to quickly ready a vaccine for a disease that has killed nearly 190,000 Americans and infected more than 6 million others, according to a count by Johns Hopkins University.
“She’s talking about disparaging a vaccine so that people don’t think the achievement was a great achievement,” Trump said, answering reporters’ questions as he stood at a lectern placed at the front door of the White House on the Pennsylvania Avenue side of the mansion.
“They’ll say anything,” he said.
Trump insisted he hasn’t said a vaccine could be ready before November, although he said so repeatedly and as recently as Friday.
The president then proceeded to say what he had just denied ever saying.
“What I said is by the end of the year, but I think it could even be sooner that that,” he said about a vaccine. “It could be during the month of October, actually could be before November.”
Under a program Trump calls “Operation Warp Speed,” the goal is to have 300 million doses of a coronavirus vaccine in stock by January. He has spent hundreds of billions of dollars on what amounts to a huge gamble since vaccine development usually takes years.
Concerns exist about political influence over development of a vaccine, and whether one produced under this process will be safe and effective.
Dr. Anthony Fauci, the government’s top infectious-disease expert and a member of the White House coronavirus task force, told CNN last week that it is unlikely but “not impossible” that a vaccine could win approval in October, instead of November or December.
Fauci added that he’s “pretty sure” a vaccine would not be approved for Americans unless it was both safe and effective.
Stephen Hahn, commissioner of the Food and Drug Administration, has said the agency would not cut corners as it evaluates vaccines, but would aim to expedite its work. He told the Financial Times last week that it might be “appropriate” to approve a vaccine before clinical trials were complete if the benefits outweighed the risks.
White House press secretary Kayleigh McEnany, meanwhile, has given assurances that Trump “will not in any way sacrifice safety” when it comes to a vaccine. And executives of five top pharmaceutical companies pledged that no COVID-19 vaccines or treatments will be approved, even for emergency use, without proof they are safe and effective.
Some concerns were sparked by a letter dated Aug. 27 in which Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, asked governors to help government contractor McKesson Corp. make sure vaccine distribution facilities are up and running by Nov. 1.
Redfield did not say a vaccine would be ready by then.
Three COVID-19 vaccines are undergoing final-stage, or Phase 3, clinical trials in the U.S. Each study is enrolling about 30,000 people who will get two shots, three weeks apart, and then will be monitored for coronavirus infections and side effects for anywhere from a week to two years.
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