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A Bird's Eye View Blog

Fireside Charts: Gold and Semiconductors Surge, and Economists' Interest Rate Predictions

By:BCM Investment Team | Date:Jul27, 2020 | Category: Equity, Economics, Market Highlights, Fireside Charts

There is a lot of news coming this week including key earnings announcements, the FOMC meeting and today's reveal of the Republican's proposed stimulus plan. Stay tuned for more on those topics but today, we are seeing a continued surge in Gold's price as the dollar sits at its weakest level since January. Could fears of stagflation be contributing? While we await news from the Fed meeting, most economists are are not expecting interest rate hikes any time soon. Goldman Sachs economist Jan Hatzius, in addition to revealing his predictions on the new stimulus package, said he doesn't see the Fed hiking rates again until at least 2025. Continued deterioration of U.S. and China relations have hurt many industries and companies, but there are some that are benefiting from the conflict. And despite the effects of the pandemic, the U.S. housing market is holding up surprisingly well. While we can't consider anything about today's proposed stimulus plan as more than a starting point for negotiations with democrats, beyond unemployment and stimulus check, proposed measures also include money for schools and virus testing. Will this help quell parents' fears of sending their kids back to school? A look at the current status of school openings is worldwide shows a pessimistic view on the pandemic and many parents in the U.S. are saying they won't send their kids no matter what their local district decides.

1. The U.S. Dollar price of Gold has reached a new all-time high, eclipsing its previous high during the European Debt Crisis.

Chart of Gold price in USD

Source: Koyfin, as of 7/27/20



2. Economists aren’t expecting rate hikes any time soon.


Economists Rate Hike Predictions

Source: WSJ Daily Shot, from 7/27/20



3. TSM, rising today on news that Intel may outsource manufacturing of certain chips, is also a near-term beneficiary of souring U.S. / China relations.


Taiwan Semiconductor vs Taiwan MSCI

Source: Koyfin, as of 7/27/20



4. The housing market has remained surprisingly robust.


US Housing Market

Source: WSJ Daily Shot, from 7/24/20



5. As one Twitter user commented... it would be interesting to quantify “how technology enables every other industry to contribute more to GDP.”  


GDP vs. Stock Market

Source: WSJ Daily Shot, from 7/24/20



6. As we approach the last month of summer vacation, here is the current status of school openings globally. Many parents are saying they won’t sent their kids either way. We will have to wait and see... as we've learned, everything can change on a daily basis. 


Status of School Openings

Source: WSJ Daily Shot, from 7/27/20




In addition to our written 2Q20 Commentary, click below to get a 5-minute video update with BCM's Lead Portfolio Manager, Dave Haviland, for a quick summary of the markets over the second quarter. 


Watch now:  BCM's Market Commentary


Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.