Overview of TOP weekly news 5.8.2020

05 / 08 / 2020
Trading is risky and your entire investment may be at risk

Gold surpassed $2,000 for the first time

Gold crossed the $2,000 per troy ounce mark for the first time on Tuesday. It has grown by almost a third since the beginning of the year, supported by the negative economic effects of the coronavirus crisis. Demand for gold is also currently supported by increased tensions in relations between the United States and China. Yesterday’s explosions in Beirut, Lebanon, which at least ten people survived, according to Reuters, also contributed to the rise in the price of gold.

Analyst Bob Haberkorn of RJO Futures said: “People want security and right now security is gold.”

Performance of gold futures (Source of the graph: Tradingview)

British banks are worse off than the rest of Europe

In their second quarter, British banks gave a negative view of the direction of banking business like almost all of their European counterparts, as fears of coronavirus, Brexit and low-interest rates led them to include more negative scenarios in their risk models. Provisions for potential loan losses at Barclays, Standard Chartered, Lloyds, NatWest Group and HSBC reached $ 22 billion, bounced analysts’ forecasts and increased the pressure to sell shares already caused by the pandemic this year.

Cost reductions are likely to include further branch and office closures with any investment spending shifting to digital services.

According to OECD forecasts in June, the British economy is expected to contract by 11.5% this year, while in the euro area it will be contractually agreed to 9.1%. At the same time, however, warnings are emerging that the outlook could worsen and drastically reduce its worst-than-expected forecasts for the economy, predicting a decline in GDP of up to 17% in 2020.

Virgin Galactic plans to produce a supersonic commercial aircraft

Shares of Virgin Galactic Holdings rose 3.5% on Monday afternoon after a press release announced a partnership with Rolls-Royce to develop a high-speed commercial aircraft. Virgin has entered into a non-binding memorandum of understanding with Rolls-Royce to design and develop engine propulsion technology for a commercial airliner that can fly at speeds above March 3.

However, the stock fell sharply when the company announced plans to sell new shares and would postpone plans to relocate founder Richard Branson into space until early next year – a milestone flight considered the start of a tourism business.

Supersonic travel for commercial purposes was suspended in 2000 when Air France Flight 4590 crashed shortly after takeoff. In the late 1920s, however, it sought to revive supersonic travel, and even after 2030, there was talk of supersonic flight.

Performance of Virgin Galactic’s value (Source of the graph: Tradingview)

Commerzbank suffers more from Wirecard than epidemics

Commerzbank was hit by the collapse of Wirecard in the second quarter more than the economic downturn in the coronavirus pandemic. Commerzbank did not mention Wirecard in its release of profits but said the provisions included a fee of “175 million EUR” in a single case. People familiar with the details told the Financial Times that it was related to Wirecard.

Commerzbank’s operating profit fell by 34 per cent to EUR 205 million in the three months to June, compared with the previous year, while its net profit fell by 21% to EUR 220 million. Both figures were better than analysts expected, but the bank warned investors that it would turn into a net loss for the whole year, as credit losses and restructuring fees are likely to increase.

The creditor was part of a consortium of 15 banks that provided a revolution to the 1.75 billion loan facility. At the time of the Wirecard collapse, 90 per cent had been used up. Commerzbank, one of the four main credit intermediaries, provided a credit facility of EUR 200 million.

Wells Fargo reduces spending

Wells Fargo is aiming to dramatically reduce its consulting costs to consultants following an internal resistance to the bank’s $1 billion – $1.5 billion a year expenses for companies. The savings are an essential part of the new efficiency plans to be presented by CEO Charlie Scharf and will include thousands of job cuts, approximately 266,000 employees worldwide. In addition to the absolute costs, there were concerns that Wells’ overuse of consultants meant that key skills were not built in internally and that outsourced projects lacked “responsibility”.

Wells has been operating since 2018 as part of a series of “consent orders” from US regulators requiring it to establish various risk management and compliance processes to lift restrictions, including asset restrictions.

Performance of Wells Fargo’s value (Source of the graph: Tradingview)

Watch this week:

Thursday, August 06, 2020

The United Kingdom will publish the interest rate after the central bank meeting. The expectation is an unchanged key interest rate of 10 basis points

Germany will publish the development of German factory orders in June. Expectations are 10.1% growth in orders on a month-on-month basis.

Friday, August 07, 2020

The United States will publish unemployment developments in July on Friday. Analysts expect unemployment to fall from 11.1% to 10.5%.

Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview

Disclaimer: The content of the Reports constitutes Marketing Communication and does not constitute Investment Advice or Investment Research or an offer for any transactions in financial instrument. The content of the Reports represents the view of our experts on a generic basis, and does not take into consideration individual readers personal circumstances, investment experience or current financial situation. In addition, the Reports have not been prepared in accordance with legal requirements designed to promote the independence of Investment Research, and are not subject to any prohibition on dealing ahead of the dissemination of Investment Research. Readers using the Reports should consider the possibility of encountering substantial losses. The past performance is not a guarantee of future results. Therefore, Goldenburg Group Limited shall not accept any responsibility for any losses of traders due to the use and the content of its Reports.