US Open – Play Ball, Jobless Claims show recovery is stalling, Oil slips, Gold eyes record territory, Bitcoin rises

US stocks struggled to hold onto gains after investors assessed a downbeat weekly jobless claims report.  Initial jobless claims increased to 1.416 million last week, worse than the consensus estimate which called for a steady 1.3 million reading.  Continuing claims improved to 16.2 million.  The recovery appears to be stalling as jobless claims rose for the first time since March and as continuing claims remain elevated. Washington DC will focus on the total number of claims which improved slightly to 31.8 million, likely keeping the pressure for the fiscal stimulus package to get done before the end of the month.  The economy does not seem to be on sound footing anymore and the with high uncertainty with the direction of the coronavirus, businesses will likely struggle to justify hirings.

A wrath of earnings came in mixed with many investors focusing on Tesla’s fourth consecutive quarter of profits, making it eligible to join the S&P 500 index.  Microsoft shares slump despite strong earnings results as cloud growth eased.

Much attention will be drawn to the start of MLB delayed and shortened season.  The importance of the return of baseball on Wall Street could mean some of the new traders that COVID-19 created will return their focus to sports betting.  Stock trading popularity might start to lose some of its sizzle as sports make their return and as summer trading ranges persist.

Oil

Energy traders weary of higher crude prices may not have long to wait as a very active storm period begins.  It has already been an active season as seven weak storms have already formed, the busiest beginning since 1851.  Tropical Storm Gonzalo is poised to become a hurricane and Bristow Group have already evacuated staff from some of their oil and natural gas platforms in the Gulf of Mexico.

For now, WTI crude continues to respect the gap that was created after the fallout between the Russians and Saudis ended in an all-out price war.  The oil demand outlook should struggle in the short-term as geopolitical tensions put global trade relations at risk and as the coronavirus spread seems to have crippled reopening momentum.

Also weighing on oil prices is the consistent rhetoric being delivered by airlines.  This morning, Southwest noted that air travel demand will remain depressed until a vaccine or therapeutics are available to combat the infection and spread of COVID-19.  United CEO had similar comments earlier in the week that they won’t be ‘anywhere close to normal’ until there’s vaccine.

Gold

Gold’s five-day rally is accelerating as the dollar slump continues, coronavirus concerns, and on intensifying tensions between Beijing and Washington.  Too many risks to the global outlook means gold might not struggle to capture the psychological $1900 level this week.  If Asia continues to see steep rises with infections, their will be little hope that the US and Latin America will get the virus under control.

Gold is also benefiting from a surge of retail interest that remains fixated on rising stimulus bets and as real yields fall deeper into negative territory.  The 2-year TIPS rate finally broke below -1.0%.  The gold trade is overcrowded but the fundamentals strongly support that climb to record high territory over the next month.  The major risk for gold is if one of the top vaccine bets has impressive phase 3 results and that won’t happen for many weeks as the trials are just getting started.

Bitcoin

Bitcoin got a boost after the Office of the Comptroller of the Currency (OCC) noted that national banks have authority to provide fiat bank accounts and cryptocurrency custodial services to cryptocurrency custodial services.  Bitcoin’s progress into the banking system is gaining steam and this should be positive for the entire crypto space.

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