CNBC/Patti Domm
BlackRock sees risks for U.S. stocks in the second half from virus and politics

“BlackRock’s global chief investment strategist said after the market’s strong gains, he is more cautious on U.S. stocks into the second half of the year because of risks from fading fiscal stimulus and potential election volatility.

The BlackRock Investment Institute, in its second-half outlook, said it retains equities at neutral, or benchmark weight in portfolios. Within that, it has an overweight on European stocks, underweight on emerging markets and neutral, or more cautious view on U.S. equities. It also favors higher-quality names across the board.

‘We entered the year overweight equities and credit. At the very end of February, as the storms gathering around the coronavirus became apparent, we cut those investments back to neutral weight,’ said Mike Pyle, global chief investment strategist at BlackRock. But when he returned to an overweight in risk in early April, it was just in credit, an asset class the Fed and other central banks are purchasing.”

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Kitco/Neils Christensen

Gold is the only commodity that looks good through 2020 – UOB Group

gold bars and gold chart“Hope that the global economy, devastated by the COVID-19 pandemic, will see a sharp recovery is driving broad commodity prices higher; however, one international bank is not convinced the current optimism will last.

In its third-quarter market outlook, United Overseas Bank Group said that gold is the only key commodity with a positive outlook for the rest of the year.

‘The question for gold is not one of whether the recent strength is sustainable? This more pertinent question for gold is how strong the rally will be?’ the analysts said.

The comments come as gold prices remain near their highest level in nearly eight years and continue to test critical resistance at $1,800 an ounce.  However, the bank said that the break might not come until the end of the third quarter.”

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 Fox Business/ Brittany De Lea

Top US CEOs see coronavirus economic effects enduring

going out of business sign“U.S. business leaders do not expect the effects of the coronavirus pandemic to wear off quickly even as the economy shows early signs of recovery, a new survey shows.

Executives at the country’s top companies are not optimistic about their capital spending, hiring plans or sales expectations throughout the remainder of the year, according to Business Roundtable’s Q2 2020 CEO Economic Outlook Survey. In the second quarter, the index’s overall reading was 34.3 – marking a contraction and the lowest reading since 2009.. now forecast it’ll hit a record $2,000 an ounce in 12 months.

Most businesses do not expect to recover to pre-pandemic levels until the end of next year, with more than one-quarter of respondents saying it could take even longer.

CEOs expected GDP to contract by 3.8 percent for the year.”

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If history repeats itself, gold prices headed to $4,000 in three years – Frank Holmes

two gold bars“Gold prices have seen a positive correlation to the expansion of the Federal Reserve’s assets, and as the Fed embarks on the largest stimulus program in its history, the yellow metal is set rally in the same fashion as in the aftermath of the last recession, said Frank Holmes, CEO of U.S. Global Investors.

‘In the next three years, if we look back, if [history] repeats itself, from 2008, 2009 to 2011, that three year run saw gold go from a $750 – $800 range up to $1,900. If we forecast that because we have the same expansion of the balance sheet of the Fed then it would project, if cycles are exactly the same, gold could go to $4,000,’ Holmes said.

Holmes noted that although trillions of dollars have already been injected into the monetary system this year through the Fed’s quantitative easing program, more stimulus is still on its way.

‘This is going to cost the U.S. government approximately $10 trillion in fiscal and monetary policy to get the economy back, so I think that number you’re seeing after 2008, 2009 after Lehman Bros. went bankrupt, you saw the balance sheet expand from $1 trillion to $3 trillion. I think it’s got to hit the overall $10 trillion,’ he said.

What’s different this time is the policies toward trade from global leaders.”

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