Economic Data Deluge

Markets are modestly in the green to start a new trading week in the early markets Monday, with $1 trillion in stimulus expected from the congressional GOP today and a phase 3 trial beginning for Moderna’s MRNA COVID-19 vaccine candidate. We also saw a better-than-expected economic read, as well as a trajectory for gold prices which may bring the precious metal upwards of $2000 per ounce.

Republicans in Congress will be bringing their new pandemic relief extension bill to the floor this week — the same week, as it happens, that will expire the previous relief package by Friday. Reduced federal unemployment benefits to 70% of current rates, combined with business liability protection, are the key items. Analyst expect this proposal to have little in common with Democrats’ package, unveiled previously and already passed by the House. But lawmakers had ought to work quickly to find compromise — literally millions of Americans’ well-being are at stake if Capitol Hill cannot respond to the extended pandemic conditions.

Moderna’s phase 3 trial will be the largest in the world to date, with over 30K people involved in the testing of the company’s coronavirus vaccine. The company reported has received $472 million in taxpayer money from the U.S. government to help fund the testing. Results may be expected as soon as October or November of this year. Passing phase 3 in the manner Moderna’s candidate has passed phase 1 and phase 2 will likely put the company in the lead for first-to-market COVID-19 vaccine. Shares of the company are +8% in the pre-market.

August gold futures rose another 2%+ to an all-time high $1938.10, with analysts now openly conversing about the possibility of $2000/oz gold prices in the near future. This would be predicated by a risk-on equities game plan and a further dwindling of the U.S. dollar index, which would promote the buying of gold in the overall marketplace. Of course, this would be a hedge on progress in things like a coronavirus vaccine and successful reopening of the U.S. economy, which currently are receiving the benefit of the doubt. Yet the hedge bet is real, demonstrated clearly in new gold prices.

Durable Goods for June came in stronger than expected this morning, with a headline of +7.3% ahead of the +5.4% estimated, though down from June’s downwardly revised +15.1%. Pent-up demand appears to remain part of this equation, with motor vehicle sales +85% in the month. Ex-transportation, this number melts to 3.3%, same as Core Capital Goods, non-Defense, ex-Aircraft (a proxy for general business investment), which doubled the +1.6% expected for the month.

We do see some rising inventories in these numbers, which is the least-useful type of economic growth (excess inventories eventually must be worked off, signaling slowing growth at a point in the future), though Shipments versus Orders came in at +3.4%, an indication that growth — at least in near-term demand — is genuine on a more macro level.

This is also a huge week for Q2 earnings reports: Apple AAPL, Amazon AMZN, Alphabet GOOGL and Boeing BA will be among those industry leaders posting results — and that’s just with a glance at the top of the alphabetical list. Once this week of earnings reports is concluded, we will be on our way toward the Retailers reporting, which will represent the final leg of Q2 earnings season.

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