CNN Business/Anneken Tappe
Last quarter was probably the worst on record for the US economy
The US economy is emerging from what experts think will be its worst quarter on record. Although that’s behind us now and conditions have improved since the country ground to a halt in April, the recovery remains fragile and could ultimately disappoint hopeful economists.
The Bureau of Economic Analysis will report just how bad the second quarter was on Thursday, in its first estimate of gross domestic product, the broadest measure of the economy.
Economists polled by Refinitiv expect an annualized decline of 34.1% between April and June. That would be the worst quarter since the BEA began keeping quarterly records in 1947. It would also be more than four times worse than the decline during the 2007-09 financial crisis.
That would confirm what experts have been saying for months: America is in a recession, commonly defined as two straight quarters of economic contraction. Between January and March, the economy contracted by 5%.
Fox Business/Jonathan Garber
Gold may eclipse dollar as reserve currency after outsize coronavirus spending: Goldman Sachs
The U.S. dollar’s longstanding status as the world’s reserve currency is at risk after the greenback’s weakening by unprecedented government efforts to shore up the economy during the COVID-19 pandemic, according to Goldman Sachs Group Inc.
Ballooning federal debt levels and a potential shift in favor of inflation at the Federal Reserve amid increased geopolitical hostilities, domestic unrest and an onslaught of new COVID-19 cases are among the headwinds the greenback faces, according to the firm’s strategists.
“Real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” wrote a team of Goldman strategists led by Jeffrey Currie.
Those concerns may give an opening to an even older value-storage option, he said: “We have long maintained gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their currencies and pushing real interest rates to all-time lows.”
CNBC/Abigail Ng and Eustance Huang
Gold prices could hit $3,500 in two years, analyst says
The gold market is “very strong” and could hit $3,500 in two years, one analyst told CNBC this week.
Prices have surged and reached record highs on Monday amid worries over the coronavirus pandemic and tensions between the U.S. and China.
“What is really significant is how quickly it went through that $1,923 which was the previous high. The other thing which was … very, very important was the fact that it went through $1,800 and with similar ease,” said Barry Dawes, executive chairman at Martin Place Securities. “That’s basically saying to me that this is a very, very strong market.”
Spot gold traded about 0.55% lower at about $1,931.24 per ounce on Tuesday afternoon in Asia.
“I’m looking for $3,500 within two years,” Dawes told CNBC’s “Street Signs Asia.” He said some consolidation is “probable,” but the underlying strength of the rally is “very significant.”
Brace for major market correction should China-U.S. conflict become ‘real’
As China closed down a U.S. consulate in Chengdu last week, everyone is watching rising geopolitical tensions between the world’s two largest economies.
Steve Hanke, professor of applied economics at Johns Hopkins University, said that relations between the U.S. and China are not going to improve in the short-term.
“Things are not about to get better between China and the U.S. any time soon. I don’t see any clever diplomats working the street that could calm that down, so we can expect some bad news events leading to significant market corrections even though we’re in an up market in equities,” Hanke said.
The fundamental force behind a drift in relations is a difference in ideologies, Hanke said.
“It’s real and it’s ramping up,” he said. “The idea of [a real conflict] has been around for a while. Number one, you’ve got a communist regime…it’s not a capitalist, private property system, it’s still politically a communist system, so that’s one thing. And then you’ve got key advisors in the White House that are important, Peter Navarro for one, that are always taking the position that China is basically ripping off the rest of the world, stealing their intellectual property, and basically confiscate lands in the South China Sea that are not Chinese by any stretch of the imagination,” he said.