US Close – Tech’s big week, US consumer will spend this week, Oil’s demand problem, Gold steady despite dollar bounce

The Nasdaq is on fire after a couple major tech events have investors rushing back to maximizing their mega-cap tech exposure.  Apple’s big event and Amazon Prime Day will attract strong demand as consumers continue to adopt more work-from-home strategies and try to take advantage of big discounts for big ticket electronic items. 

Three weeks until the election and stimulus hopes are diminishing as relief talks falter with both sides of the aisle.  The House is not expected to vote on stimulus this week as Democrats hold out for more concessions on testing strategy, worker protections, and Republicans disapprove of state & local funding, healthcare tax credits and the size of the proposed bill.

Investors are a bit optimistic that this week will show that US shoppers will continue to spend despite the shortfalls of stimulus and that iPhone 12 launch will trigger strong demand.  Earnings season will be a mixed bag but should show the economy is heading in the right direction and performing fairly well despite the lack of support from Congress.  Fiscal stimulus will happen, Americans might just need to wait shortly after the election. 

The biggest iPhone event in years

Apple’s event tomorrow is expected to unveil the iPhone 12 lineup of smartphones.  The phones will embrace 5G, even as the networks won’t be ready for quite some time, possibly a couple years for the major cities.  Apple should release 4 devices, which include a 6.7-inch iPhone model, which might be names the iPhone 12 Pro Max.  Leaks indicate that the new lineup of smartphones will have an A14 bionic chip and longer battery life. 

This is a big event for the semiconductor sector and optimism is high broad strength could keep technology stocks such as Nvidia, Intel, Advanced Micro, Qualcomm, and Broadcom in favor. 

Prime Day

Amazon’s 48-hour sales extravaganza is almost here and expectations are for $220 million in sales, an increase of 40% from last year.  With Wall Street convinced the consumer will continue spending, it is no surprise Walmart, Target and Best Buy will also perform well with their sales events. 

Oil

Oil prices plummeted as both Europe and America appear poised to deliver tougher measures to contain the coronavirus and as Gulf of Mexico and Norway production started to return.  It seems oversupply concerns are creeping back after Libya’s National Oil Corp ended force majeure to the Sharara oil field, their largest with a capacity of up to 300,000 bpd. 

Energy markets are looking beyond hurricane season and focused on the glut concerns as the demand outlook appears vulnerable to restrictive measures since the northern hemisphere can’t get the virus under control before the dreaded winter wave.  Oil prices will benefit from a weaker dollar and hopefully good news on the vaccine front, but right now the short-term demand outlook is looking shaky.  It is hard to argue for WTI crude to trade above the $40 level until the virus spread slows.

Gold/USD

Gold’s uneventful day stemmed from lack of progress with fiscal stimulus talks, significant stock market buying on a holiday, and expectations that the US presidential election is a done deal for Democrats.  Gold still looks bullish in the short-term and today’s bounce in the dollar looks temporary.  The dollar bounced back after the PBOC abandoned a two-year rule that made it costly to bet against the yuan. 

Gold should continue to rise as the stimulus stalemate might only last a little while beyond the election.  The northern hemisphere is struggling with the fight against COVID and that just means fiscal support is coming.  

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