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ETF Tracker Newsletter For August 14, 2020

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WAVERING INTO THE WEEKEND

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Bobbing and weaving best describes today’s market action with the major indexes clinging to their respective unchanged lines. Bulls were not in a buying mood with news about economic data lacking spunk, as did the stalled negotiations about extending the coronavirus aid.

Weaker-than-expected retail sales pulled the all-important question about the economic rebound back on the front burner, but it’s all a guessing game at this point. I believe any thoughts of a V-shape recovery is merely wishful thinking and not based on reality.

The data “underscores that wary consumers have turned more cautious amid a virus resurgence and fading stimulus support,” said Lydia Boussour, senior economist at Oxford Economics. She said the data also matches up with a stall in the firm’s own recovery tracker, confirming that “consumers are likely to keep a tight rein on their spending until a medical solution to the pandemic is found.”

(source: Marketwatch)

For the week, the S&P 500 eked out a meager +0.66%, while gold was not able to recoup all of its losses sustained early in the week. The precious metal ended down -4.5% breaking a nine-week winning streak.  

The same fate happened to bonds with Treasury yields spiking 19 basis points (30-year) this week sending prices reeling. Weakness continued in the US dollar as well, which experienced its sixth drop in the last seven weeks, according to ZH.

In the end, all future equity moves higher depend predominantly on the Fed’s balance sheet continuing to expand, as Bloomberg demonstrates in this chart.

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