For the moment, sentiment is swinging. The unexpected rise in U.S. jobless claims to a million and the lack of a bipartisan deal on a new round of stimulus amplified doubts about the recovery, while the White House struck another upbeat note on the economy and continued affirmation of a trade deal with China. In the current session, the focus is on a series of PMI readings from Europe and the US that could provide further clues on the economic recovery. In other news, President Trump suffered another major setback when a judge ordered him to hand over his tax returns.
On Thursday, the Labor Department released a report on unemployment benefits that showed initial claims for benefits totaled 1.106 million on a seasonally adjusted basis in the week ended Aug. 15, beating economists’ expectations of 925,000. The previous week’s figure was also slightly higher, rising from 963,000 to 971,000. It shows that the pace of employment recovery remains slow.
Economists said it was unclear why applications rebounded last week, but some said the economy needed more stimulus to sustain the rebound.
“If we continue to see the Numbers go up and the federal, state and local governments don’t do anything,” said Diane Swonk, chief economist at the international accounting firm Grant Thornton, “it could be a big headwind in the fall and it could easily create a ripple that would drag the Numbers back down again.”
Swonk said jobless claims rose in 36 states last week, reinforcing expectations that the labor market recovery is faltering and the outlook is mixed.
The volatility in claims came at the end of July after the expiration of the $600-a-week in additional unemployment benefits. Congressional Democrats and the White House have yet to agree on an extension of the program.
“Investors are ignoring the current downturn and expecting the economy to start recovering at some point, especially with the Fed providing support to companies,” said Brian Reynolds, chief market strategist at Reynolds Strategies. Right or wrong, that’s where the market is right now. But I think the market is a little too strong.”
Kudlow is optimistic about the economy before talking about a U.S. -china trade agreement
U.S. stocks opened under pressure after the initial data, but gains in weighted technology overshadowed the gloomy data and White House officials also pared losses on the economy.
White House economic adviser Larry Kudlow expects the U.S. economy to grow 20 percent or more in the third and fourth quarters.
“We’re going to see an incredible economic rebound as long as the opportunity exists,” he told the Fox Business Network.
Kudlow added that U.S. Trade Representative Robert Lighthizer believes China is complying with the terms of the trade agreement and is buying a lot of goods, especially agricultural products.
He said the first phase of the U.S.-China trade agreement is still in place and that he is pleased with the progress made so far, especially with Regard to Beijing’s purchases of U.S. goods.
Kudlow said the talks referred to by The Chinese were “normal assessments.” “It’s part of this big trade deal, and it’s part of the regulatory process. We have a lot of huge complaints about China, but on trade agreements, we are engaged.”
The United States and China plan to reschedule trade talks postponed over the weekend to assess progress six months before the first phase of a trade agreement is signed, according to several U.S. media reports.
The two sides have agreed to hold a phone call in the near future, Said Gao Feng, spokesman for China’s Ministry of Commerce, at a regular online press conference on Tuesday.
Trump has suffered a major setback.
A US judge on Thursday dismissed a lawsuit by President Donald Trump that sought to block a grand jury subpoena for his eight years of personal and corporate tax records.
Manhattan District Court Judge Victor Marrero issued the ruling a second time, adding that Marrero had already rejected trump’s application to do the same.
In the 103-page ruling, Marrero ruled that Mr Trump’s recent attempt to block Cy Vance, the New York state district attorney, from subpoenaing his tax returns was a roundabout way for the President to exercise his immunity from judicial process.
Thursday’s ruling is the latest setback for Mr. Trump on the issue. Since Last September, he has been resisting a subpoena from The Vance prosecutor. The prosecutor’s subpoena requested the President’s tax returns and financial documents as part of the grand jury investigation.
Mr. Trump, who is running for re-election in November, is battling with lawmakers and prosecutors to gain access to his tax records. The record will reveal his financial transactions. Mr. Trump has also refused to release his tax returns, a precedent for presidential candidates in decades.
Mr Trump’s lawyers immediately appealed the ruling and urgently applied for a stay on the tax bill. As a result, Trump’s accountants are temporarily exempt from complying with a writ of summons from Manhattan prosecutor Cyrus Vance to set up a grand jury and from handing over eight years of tax returns.
A grand jury issued the writ of summons in August 2019 in response to Vance’s investigation into Trump and his family’s business. Mr Trump invoked presidential immunity from prosecution to block the proceedings. Earlier, the Supreme Court ruled that the President’s immunity from prosecution did not prevent a grand jury from obtaining Mr Trump’s tax bill.
The secrecy surrounding the appeal and grand jury means Mr Trump’s tax bill is unlikely to come to light until after the November election.
The dollar fell against a basket of currencies on Thursday, falling to a key level of 93 as a rise in U.S. jobless claims hit the greenback last week.
The dollar’s continued retreat came as spot gold sought to rebound from Wednesday’s sharp sell-off, with gold surging nearly $20 to close near 1945 after continuing to hover around that level in Asian trading on Friday.
Michael Matousek, chief trader at U.S. Global Investors in New York, said: “The Fed minutes reaffirmed the need for Investors to hold gold as they remain concerned about the outbreak and its impact on the economy, suggesting they want to keep policy loose to help consumers weather the storm.”
Edward Meir, an analyst at ED&F Man Capital Markets, said the fundamentals of gold had not changed despite the previous session’s sharp sell-off.
SkyBridge Capital expects gold to continue to move higher to record highs on the back of substantial currency depreciation and further stimulus.
“Commodity king” Jim Rogers says gold has room to rise. “If I am right, gold has a lot of room to go up before this crisis is over and it could even enter a bubble.” But I don’t want it to turn into a bubble, because then it’s time to sell, but I don’t want to sell forever. I want my children to have my gold and silver.”