Fox Business/ Jonathan Garber
Gold price flirts with $1,800 as pandemic reshapes markets

Gold Bars“Gold topped $1,800 an ounce Wednesday morning, before giving up its gains, as investors sought to protect their wealth from pandemic-induced declines in other assets.

Front-month gold futures rose as much as 0.82 percent to $1,807.70 an ounce before rolling over. The precious metal has not closed above the $1,800 level since Sept. 21, 2011.

“Traders and holders of gold are very concerned with upcoming currency values, interest rates and pandemic headlines,” George Gero, managing director at RBC Global Wealth Management and a member of the COMEX board of directors, told FOX Business.

Open interest, or the total number of futures contracts outstanding, has increased every day for the past month and exchange-traded funds, or ETFs, have been adding to their gold holdings each day for the past month and a half.

Gero believes the buying is a “haven against upcoming inflation,” which he says is “starting to rear its head” after an unprecedented policy response to the steepest economic downturn of the postwar era.”

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Marketwatch/Rex Nutting
Fed warns stock market of a second recession if the coronavirus pandemic isn’t brought under control

Masks

“The Federal Reserve is a lot more worried about the economy than the stock market or the president are. Officials and staff economists at the Fed caution that a second wave of recession could sweep over the country later this year if the coronavirus pandemic isn’t brought under control, according to a lengthy summary of the Fed’s policy meeting held on June 9-10.

The consensus forecast of Fed policy makers calls for a gradual recovery in the economy over the next several years, but the minutes of that June meeting released on Wednesday indicate that a more pessimistic projection was judged as “no less plausible than the baseline forecast,” by the staff economists who work up the most detailed (but classified) forecast of the economy.

It’s all going to depend on the health of the American people. The meeting took place before the latest surge of infections that have derailed or delayed plans to further open up businesses in several states.”

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Reuters
Fed’s Bullard warns of financial crisis risks as virus cases spike: FT

James Bullard“St. Louis Federal Reserve Bank president James Bullard has warned that a growing number of bankruptcies due to the coronavirus outbreak could lead to a financial crisis, the Financial Times reported.

“Without more granular risk management on the part of the health policy, we could get a wave of substantial bankruptcies and (that) could feed into a financial crisis,” Bullard said in an interview with the newspaper on Wednesday.

He warned of “twists and turns” in the health crisis and said “it’s probably prudent to keep our lending facilities in place for now, even though it’s true that liquidity has improved dramatically in financial markets.””

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Marketwatch/Andrea Riquier
The coronavirus crisis is costing states and locals hundreds of billions, analysis finds

Neighborhood“Just how bad is the economic impact of the COVID-19 pandemic?

On the national and international level, things are tough, but perhaps a little more manageable than many analysts had feared at the onset of the crisis. Corporations are reporting earnings that are better than Wall Street expected, jobs were added, not lost, in May, and central banks and fiscal policymakers stepped up with robust aid packages.

On the state and local level, it’s a whole different ballgame, and observers of public finance and the municipal bond market are bracing for a long, slow burn. States, counties, cities and towns are on the hook for most of the costs associated with the pandemic — health care, emergency responses, and so on — even as their tax revenues, mostly from income and sales taxes, dwindle. Even revenue streams often seen as safe, like usage fees for things like airports, toll roads, arena ticket charges, and so on, have swooned in line with economic activity.

On Monday, Stephan D. Whitaker, a policy economist at the Cleveland Federal Reserve, released a fresh analysis of just how bad the budget situation is for state and local governments. Whitaker reckons that they’ve lost $141 billion in revenue from all sources in fiscal year 2020 — that is, through June 30.”

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