Yahoo Finance/Reuters/Brijesh Patel
Gold recovers some lost ground as slowdown fears persist
Gold rose on Friday, having declined over 1% in the previous session, as persistent concerns over the pandemic-led economic slump boosted the metal’s appeal, although gains were restricted by a jump in U.S. Treasury yields.
Spot gold was up 0.4% at $1,936.64 per ounce by 0316 GMT. U.S. gold futures rose 0.6% to $1,943.20.
“Realistically, we are probably a year or two away from the economy really recovering again,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
“We are going to have lower interest rates for a lot longer and the changes with the amount of stimulus we are getting behind the economy right now inflation could start to pick-up, which should help gold.”
Rising coronavirus cases has cast a shadow on hopes of quick economic recovery and has prompted central banks to reduce interest rates and loosen their monetary stance, helping gold prices climb 28% so far this year.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion, which is also seen as a hedge against inflation and the fear of currency debasement.
CNN Business/Matt Egan
Even Corporate America thinks the stock market is overvalued
Even Corporate America thinks Wall Street’s meteoric recovery may be getting out of hand.
A stunning 84% of Fortune 500 CFOs say the US stock market is overvalued, according to a survey released Thursday by Deloitte. That’s up from the 55% who felt that way a quarter ago. Just 2% of finance chiefs say US stocks are undervalued.
The findings add to the mounting evidence suggesting the slingshot rise in stocks created in part by the Federal Reserve may be overdone.
Even as elevated levels of unemployment show that the real economy is still suffering from the pandemic, the S&P 500 has skyrocketed 55% since its March 23 lows. Not only has the index recovered all its losses, but it’s even set new highs. The Nasdaq has climbed a staggering 70% over that span.
Yet the leaders of Corporate America are not nearly as euphoric as Wall Street’s blockbuster numbers would suggest. CFOs’ optimism about their own companies rebounded sharply off record lows, 60% of those surveyed by Deloitte say the North American economy is in bad or very bad shape. Just 7% say economic conditions are good.
For the first time in the decade Deloitte has been doing the survey, CFOs were more bullish on the Chinese economy than on North America’s. Moreover, the percentage of CFOs who expect better economic conditions in the next year in North America dropped from 58% to 42%.
CNBC/Yen Nee Lee
A ‘double dip’ in the U.S. economy is ‘still possible,’ says former Fed official
The U.S. economy looks set to rebound in the current quarter from the previous three months’ deep contraction — but it could sink again if the coronavirus outbreak is not managed well, warned a former Federal Reserve official.
Dennis Lockhart, president of the Atlanta Fed from 2007 to 2017, was among economists and experts who have raised the possibility of a “double-dip” recession in the U.S. economy. A double dip means an economy returning to a period of decline after a brief recovery.
“I continue to believe that looking forward you have to consider a range of scenarios and among those scenarios would be, obviously, a pessimistic one and that could be a double dip,” Lockhart told CNBC’s “Squawk Box Asia” on Friday.
Before Lockhart, other prominent policymakers and economists who have warned about the possibility of a double dip include Kansas City Fed President Esther George and former Morgan Stanley Asia Chairman Stephen Roach.
Fox Business/Associated Press
US economy plunged an annualized 31.7% in second-quarter
The U.S. economy shrank at an alarming annual rate of 31.7% during the April-June quarter as it struggled under the weight of the viral pandemic, the government estimated Thursday. It was the sharpest quarterly drop on record.
The Commerce Department downgraded its earlier estimate of the U.S. gross domestic product last quarter, finding that the devastation was slightly less than the 32.9% annualized contraction it had estimated at the end of July.
The previous worst quarterly drop since record-keeping began in 1947 was a 10% annualized loss in 1958.
Last quarter, businesses shuttered and millions of workers lost jobs as the world’s largest economy went into lockdown mode in what succeeded only fitfully in limiting the spread of reported viral infections.