In repeating the gloomy discovery of last Sunday (which completely changed overnight with futures beautiful and green in the morning), futures fell after opening at 18:00 with the advent of two key catalysts: i) deaths from coronaviruses worldwide exceeded half a million, and infections continued to US states combined with ii) concerns over the growing boycott of Facebook advertisers.
Futures on the S & P 500 opened below 3000, like last Sunday, falling to 2988, or 0.6%, along with oil and the dollar, while gold rose. However, this weekend there was some consolation from the latest Chinese “data,” which showed that the country’s industrial production growth in May was + 6.0% year-on-year compared to -4.3% year-on-year, which is the first positive growth in the year after the appearance of the virus. The outbreak, as in the sectors engaged in the processing industry, profit growth continued to be observed compared with the sectors processing the mining, and the total profit margin increased in May (this suggests that now we doubt that anyone will believe in any Chinese reporting).
The shift in this upswing has heightened concerns about Facebook’s revenue base, as an increasing number of advertisers have announced their intention to stop spending on social networks, undermining the company’s sales prospects and putting further pressure on its shares. An incomplete list of companies that claim to reduce advertising costs on Facebook and its counterparts is shown below:
- North facade
- Ben and Jerry
- Eddie bower
- Magnolia Pictures
Bloomberg writes that “as more and more brands report their plans to join the boycott or otherwise curb advertising spending, Facebook shares remain under pressure. On Friday, stocks fell 8.3% after one of the world’s largest advertisers, Unilever, announced that it would stop spending on Facebook properties. year, excluding a market value of $ 56 billion and reducing the equity of CEO Mark Zuckerberg by more than $ 7 billion. Shares closed at $ 216.08 on Friday after reaching a record $ 242.24 the previous Tuesday. ”
While no company can significantly influence Facebook’s growth, which generated $ 17.7 billion in profit in the last quarter alone, a rising rate exacerbates pressure on other brands to follow suit, and coupled with the pandemic downturn, Facebook’s threat ,
“Given the amount of noise it attracts, it will have a significant impact on Facebook’s business,” writes Bradley Gastworth, an analyst at Wedbush Securities, in a research note. “Facebook needs to quickly and efficiently solve this problem to prevent ads from getting out of hand.”
In addition to Facebook, the continued emergence of coronavirus in several US hot spots has been the dominant topic for short-term sentiment. As of this weekend, the number of confirmed cases in the world has exceeded 10 million worldwide, and the death toll is approaching 500,000. As such, Strengthen Trading writes that “it’s still important to remain vigilant about future updates with daily case numbers in the USA … now this is the main feature of the daily calendar. The following is a snapshot of the total number of cases and deaths in the United States as of June 28, 2020 through NYTimes. “
Amid growing uncertainty due to the growing number of hidden infections and concerns about Facebook’s technical dominance, last week’s position may continue.
Of course, central banks are on their way: as Bloomberg notes, China’s central bank said it will introduce new monetary instruments to ensure that liquidity reaches the real economy. The People’s Bank of China said it will increase the share of small companies, loans and industrial loans, and will continue to lower lending rates, while at the same time confirming that it will maintain the stability of the renminbi.
Looking ahead, here are some of the key events and features to watch out for, kindly Strengthen Trading:
Payrolls & powder
US markets are closed on Friday due to July 4th Independence Day. Thus, the latest report on US employment will be released on Thursday, and I would like to note that the week as a whole will be somewhat busy. Recent US economic indicators in the United States continued to surprise; the Citi Economic Surprise Index was at a record high.
The United States is expected to add another 3.074 million jobs last month, with unemployment expected to decline again to 12.3% from 13.3%.
However, I think it would be unwise to accept these figures at face value, as happens with the advent of the second wave virus in several major US states, in addition to the methodological features that underestimate the real level of unemployment, I think that the data will do little to change the current thinking of the markets.
ING analysts also note that the average hourly wage will fall sharply, but this is a statistical effect caused by the fact that many relatively low-wage workers return to work, reducing the “average” level of hourly wages – therefore, it makes no sense.
On Tuesday, Fed Chairman Powell is due to testify again in Washington, along with Treasury Secretary Stephen Mnuchin, about the incentives and lending mechanisms to support the economy in a pandemic. Although this event is unlikely to become a market move, it may provide some insight into the timing and appetite for further incentive measures by the US government after Trump’s comments last week that he prefers to send Americans another incentive test.
Meanwhile, on Wednesday evening, the latest FOMC protocols are published, which will be thoroughly tested to understand the risks of recovery and the methods that the central bank can take if the situation changes.
Is Trump too far behind Biden?
An FT article explains how Trump’s rating plummeted as he was criticized for managing to block and react to the murder of George Floyd. This led the president to hit the road again, holding rallies in Oklahoma and Arizona, the latter being an important political pawn, given the recent increase in the number of COVID cases and a key battlefield in the upcoming elections.
By comparison, Biden was hunched over and, similar to what we saw as former Labor leader Jermey Corbin launched a war against Theresa May during the initial Brexit negotiations, he seems pleased that Trump is self-harming while the political hot potato cools down . The problem arises when at some point Biden needs to step out and confront the militant president, and that is the problem in my memory.
The FT notes that Biden was struggling to arouse Obama’s coalition among young people and people of color, and this is exactly where Trump has already set his sights on Democrat candidate in numerous ridicule and memes.
Although people are fully aware of the tactics of distracting and rejecting Trump on Twitter, I still think that this direct and steady line of communication is as effective as before for the US president.
At the moment, I believe that the wound of the split after the financial crisis has not really been cured, and the pandemic has only further strengthened the fundamental inequality that exists in American society today. Although this should be a catalyst for change, I think that in the coming months it will only polarize the narrative of the rule of law, be it protesters or the Chinese virus. As a result, I still see Trump winning the November election, despite what polls show today.
This weekend I asked my followers on Twitter what they think – here is the result:
Growing problems in China
The Central Bank of China said on Sunday that the country’s economic growth is facing challenges related to the global coronavirus pandemic, despite signs of improvement amid the re-opening of the business. Caution is ahead of official June production PMI data scheduled for release on Tuesday, which is expected to hit 50.6.
Despite the headline reflecting the expansion of the manufacturing sector, many analysts began to doubt the strength of the recent restoration of self-confidence, as the rest of the world continues to face increasing cases of COVID and the consequent impact on Chinese goods orders.
In addition, SCMP reports this weekend said the county in northern China (Anxin) was “closed,” and its 400,000 residents were subjected to severe restrictions after more than a dozen cases of Covid-19 were reported – all of which are related to Xinfadi cluster market in Beijing.
CALENDAR FEATURES via newsquawk
- Data: Japan Retail Sales, EZ Consumer Confidence Index (final), Economic Sentiment, Germany Consumer Price Index (Preliminary)
- Speakers: Daily from the Fed, Williams, Bailey and Wliege from the Bank of England, Schnabel from the ECB
- Data: Japan’s unemployment, China’s official index of business activity in national industry, UK GDP, EZ CPI (Flash), Canadian GDP, US consumer confidence.
- Speakers: Feds Powell and US Treasury Mnuchin Testif, Williams and Brainard, Bank of England Haldane and Canliff, ECB de Gindos, Debella RBA
- Delivery: Germany
- Data: Japanese tankan, China PMI manufacturing index (final), German retail sales, unemployment and manufacturing business activity index, EZ, UK and US manufacturing index (final), US ADP and ISM production
- Events: Riksbank rate decision, FOMC protocol
- Speakers: Panetta ECB, Haskell BoE
- Delivery: UK
- Data: US Labor Market Report, Initial Jobless Claims and Factory Orders
- Speakers: Mersch & Schnabel ECB
- Delivery: France and Great Britain
- Data: Australia Retail Sales, Trade Balance, EZ & UK Services & Composite PMI (Final)
- Speakers: ECB Node
- Holiday: US Independence Day