Gold climbs to 7-yr high as virus woes boost safety demand
February 20, 2020
“Gold prices rose to their highest level in seven-years on Thursday as investors sought safe haven assets after a rise in the number of new coronavirus cases in South Korea added to worries over the global economic impact of the outbreak. Spot gold was up 0.4% at $1,617.52 per ounce by 1227 GMT, its highest since Feb. 2013. U.S. gold futures rose 0.6% to $1,620.50.
‘As long as the coronavirus problem is in the headlines, gold prices will be very well supported at current levels, if the situation deteriorates prices can even go higher,’ said SP Angel analyst Sergey Raevskiy. We were seeing some profit taking after the last run up in the prices, but overall the environment is very favourable for gold prices, he added. Even as the number of new coronavirus cases in China slowed, a spike in new infections and a first death in South Korea intensified fears that the disease could spread more widely. European shares eased from record highs after a raft of disappointing earnings. China cut the benchmark lending rate and banks in Shanghai have issued 1.31 billion yuan ($186.8 million) in loans to 48 key firms to support an economy jolted by the crisis.”
KITCO NEWS/Jim Wyckoff
Gold, silver bulls have solid power to suggest still more upside
February 20, 2020
“Gold and silver prices moderately up in early U.S. futures trading Thursday, with spot gold hitting a seven-year high in some world markets. Featured this week in the precious metals is a marked uptick in safe-haven demand as the negative economic consequences from the coronavirus outbreak appear to be increasing. April gold futures hit a new contract high overnight and were last up $7.70 an ounce at $1,619.50. March Comex silver prices were last up $0.014 at $18.325 an ounce.
Asian and European shares were mixed overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins, on some profit taking.
The coronavirus outbreak remains on or close to the front burner of the global marketplace, and today the concerns seem a bit greater. China’s central bank cut its one-year loan prime rate to 4.05% from 4.15% and the five-year loan rate to 4.75% from 4.80%. The move was not surprising and is an effort to keep the world’s second-largest economy afloat as the negative impact of the covid-19 outbreak is growing. China’s manufacturers are running out of needed materials and some have shut their doors.”
MARKET WATCH/Barbara Kollmeyer
Goldman Sachs warns of imminent risk for stocks due to complacency on coronavirus
February 20, 2020
“Stocks look ready to take a breather and you can blame that on some fresh coronavirus worries. Japan reported two deaths from a cruise ship and South Korea told 2.5 million people to stay home following its first casualty. While investors may be tired of hearing how virus-complacent they are, as stocks keep busting records, our call of the day from Goldman Sachs is saying exactly that. ‘In the nearer term…we believe the greater risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the risks of a correction are high,’ chief global equity strategist Peter Oppenheimer told clients.
The virus history books — SARS in 2003 — reveal that setbacks for markets are often temporary. But China’s economy is ‘six times bigger now than it was then,’ with Chinese tourism a 0.4% chunk of global GDP and missed work days in China equal to a two-month unplanned break for the entire U.S., he notes. Oppenheimer points to Apple’s latest warning that Wall Street largely shrugged off, noting that the company has been driving better-than-expected fourth-quarter earnings results.”
THE WALL STREET JOURNAL/Liz Hoffman
Morgan Stanley Is Buying E*Trade, Betting on Smaller Customers
February 20, 2020
“Morgan Stanley is buying E*Trade Financial Corp. in a $13 billion deal that will reshape the storied investment bank and firmly stake its future on managing money for regular people. The all-stock takeover, announced Thursday, will combine a Wall Street firm in the late innings of a decadelong turnaround with a discount broker built on the backs of dot-com day traders. It is the biggest takeover by a giant U.S. bank since the 2008 crisis. E*Trade brings five million retail customers, their $360 billion in assets and an online bank with cheap deposits that Morgan Stanley can funnel into loans. Its CEO, Michael Pizzi, is coming along to run the e-brokerage business, which will keep its brand, its handful of retail storefronts and its buzzy and well-funded ad campaigns, Morgan Stanley Chief Executive James Gorman said.
E*Trade’s future has been uncertain since November, when its two main competitors, Charles Schwab Corp. and TD Ameritrade Holding Corp., announced their own merger. Schwab had thrown an elbow weeks before by cutting the trading fees it charges customers to zero. The move sent E*Trade shares tumbling and raised questions about whether the brokerage, dwarfed by a merged competitor, could survive alone. Morgan Stanley already has 15,500 human advisers catering to millionaires and last year rolled out an online-only tool for customers with less money and less-complicated financial lives. E*Trade will slot into that wealth-management arm, which will have more than eight million users and $3.1 trillion in client money once the deal closes.”
FOX BUSINESS/Cortney Moore
Some Americans have more credit card debt than emergency savings
February 20, 2020
“More than a quarter of Americans have more credit card debt than they do in emergency savings, according to a new survey released by Bankrate on Thursday. However, the personal finance company found that 49% find themselves in the opposite circumstance. The number of U.S. adults who have more credit card debt than emergency savings went down by one percent when compared to last year’s 29%. It is also on par with the highest level seen between 2011 and 2018, which ranged between 21% and 28%.
Conversely, the number of U.S. adults who have more in emergency savings than credit card debt increased by five percent from last year’s 44%. Though, at the same time, they are not saving as much as they used to. Between 2011 and 2018, American emergency funds surpassed credit card debt with a range that fluctuated between 51% and 58%, according to Bankrate. ‘High rate credit card debt should be attacked with urgency,’ said Bankrate Chief Financial Analyst Greg McBride, who is also a designated Chartered Financial Analyst. ‘Utilize zero percent balance transfer offers, trim other expenses, and generate additional income through freelance work or a second job to make 2020 the year you pay off credit card debt for good,’ he advised in an official statement from Bankrate … Younger Millennials between the ages of 24 and 30 were found to be more likely to have more credit card debt than emergency savings when compared to their older counterparts.”
MARKET WATCH/Mark DeCambre
Tesla, gold and the dollar soar—an ‘everything rally’ has some stock-market investors fearing how it all ends
February 20, 2020
“What happens when everything rises all at once? That’s what some investors are scratching their heads about as they look out at the current landscape on Wall Street. On Wednesday, the Dow Jones Industrial Average the S&P 500 and the Nasdaq Composite indexes drifted toward record territory—seemingly inoculated from coronavirus contagion … Gold prices are trading near the richest levels since 2013 and the U.S. currency, as measured by the ICE U.S. Dollar Index is hovering near its loftiest level against a basket of a half-dozen rival currencies, in more than a year. Another asset, bitcoin is barreling above $10,000, approaching its highest level since August.
Michael Antonelli, market strategist at Robert W. Baird & Co., said that the market’s multiasset rise can be attributed to one thing: ‘unprecedented stimulus.’ Notably, easy-money policies from the Federal Reserve, which has kept U.S. benchmark rates at a 1.50%-1.75% range … Fresh stimulus from China and an accommodative Fed may not provide much comfort, said Vincent Deluard, a strategist at INTL FCStone. He paints a picture teeming with potential excess, where newly minted ‘traders share screenshots of their extraordinary gains on Reddit and Twitter and savagely roast anyone who is not leveraged long their favorite highflying tech stocks.’ Deluard says one of his bigger concerns is that the rally isn’t supported by solid fundamentals.”