The US consumer continues to spend but labor market doubts and uncertainty over the upcoming school year point to a sluggish rest of summer.  Initial jobless claims continue to print over a million every week, while continuing claims is struggling to decline.  The gradual reversal of reopening efforts across the US will likely continue to lead to deteriorating outlook for the labor market and that should keep the pressure on the US government to deliver more fiscal stimulus before the end of the month.

Retail sales delivered another strong beat across the board, but Wall Street is concerned back-to-school sales will disappoint as many Americans are uncertain a normal opening in the Fall will happen.  The ECB policy meeting was a nonevent that has them locked in wait-and-see mode until they will enhance their stimulus efforts.

EU Council meeting

EU leaders will have their first face-to-face summit in five months.  The two-day meeting is expected to provide a breakthrough on how to spend 1-trillion euros in over seven years and finalizing the terms for the EU recovery fund.  The political support is there for a deal and the frugal four (Denmark, Sweden, Austria and the Netherlands) may use this summit to voice their final concerns over joint debt and grants for the weaker states.  Wall Street is fully expecting EU leaders to get this stimulus package done, but there is a chance it doesn’t get finalized this week.  A deal will be made, it just might take a couple more weeks longer.

Netflix results

Netflix shares plummeted after disappointing earnings and anemic subscriber guidance.  Netflix is struggling to produce new content and that will hurt subscriber growth.  With new big movies not coming until the second half of 2021, it is hard to get excited about their outlook over the next 12 months.   Netflix and all streaming related companies, such as ROKU will selloff following this corporate update.

The first of the mega-cap techs earnings report will likely see investors continue to scale-down their tech heavy bets. Asian equities are not getting favors following Netflix’s outlook and Trump’s conditions for the next fiscal stimulus package.


OPEC+ did the right thing, but it’s a whole new ballgame. The decision to taper production cuts gives them some room to maneuver in case a second wave of the coronavirus forces a return of lockdowns that will shock crude demand.  Oil prices are slumping as the global economic recovery is threatened by risks of new closures and as US unemployment remains high and China’s consumer struggles to bounce back.

WTI Crude remains trapped in the low-$40s but that could break if the slow labor market recovery is not met with a strong fiscal response next week.  Right now, oil prices will take their queue primarily on demand headlines, which means its all about coronavirus lockdowns and travel restrictions.


Gold’s slump may turn into further weakness tentatively if risk aversion continues to drive the dollar rebound.  Gold prices fell after US retail sales beat forecasts and on President Trump’s comment that he would not sign the next COVID relief bill without a payroll tax.  It is widely expected for the US to see another fiscal stimulus package, but Trump’s comment threatened the immediacy of one passing.  Gold’s fundamentals still support the climb to record high territory, but in the short-term prices could see a retest near last week’s low.

By Ed Moya