| Wednesday, August 05, 2020 Headlines 1. US markets rally behind strong earnings and stimulus hopes 2. US and China trade officials to meet next week on phase one 3. Gold tops a new record high as ETF demand surges 4. Sea Ltd. has been the stealth top-performing large cap since 2019 5. Stocks making all-time highs Markets Closed
 Photo courtesy GettyImages/Jana Chytilova/Freestyle Photo/Stringer
Markets Today U.S. markets powered higher today behind strong earnings from a variety of sectors, some positive developments in the new stimulus bill negotiations, and promising vaccine news. The S&P 500 rallied for the fourth day in a row and is just 2% below its record high, which was set earlier in the year before the planet fell into a pandemic.
Gold topped another record high, and the appetite for the soft metal is so strong among investors that the World Gold Council reported that demand for gold ETFs is causing a record amount of physical gold to flow into the sector.
U.S. lawmakers are said to be closer to a potential deal over the next round of stimulus measures. They've indicated that they will stay in D.C. until a deal is reached, and since we know they like their summer breaks, there is hope that a deal may come soon. It can't come soon enough for the nearly 40 million unemployed Americans who have been relying on that extra unemployment insurance to make ends meet over the past several months. Headlines:
 Chart courtesy World Gold Council
Disposable Income Has Evaporated We know the personal savings rate in the U.S. climbed in May and June as many Americans banked their stimulus checks, and the newly unemployed saved their unemployment checks for a rainy day. But what we didn't know until recently is that those checks represented the only meaningful growth in overall disposable income from February to June. According to analysis from Treasury economist, Ernie Tedeschi, nearly every category that is counted as disposable income lost ground in that four-month stretch.  chart courtesy @ernietedeschi
More Urgency Around Stimulus The nearly 40 million job losses during that stretch put a huge dent in Wages & Salaries, as did the loss of income from small businesses and rentals.
Disposable income is a key component in consumer spending for obvious reasons. As Congress reportedly gets closer on an agreement over the next stimulus bill, another round of $1,200 checks and a continuation of pandemic unemployment insurance will be required to keep this income in people's pockets.  Can You Sea Me Now? I never get tired of reading about a company that comes out of nowhere and racks up ridiculous returns for investors while flying under the radar.
That happened today when I read Bloomberg's article about Sea Limited (SE), the Singapore-based gaming, e-commerce, and payments company. It's listed on U.S. exchanges, and it's a large cap company, so it wasn't trying to hide, but I'd never heard of it.
That's surprising when you realize that it has returned over 1,200% to investors since the beginning of 2019. According to the article, demand for Sea's mobile games and online-shopping platform has surged during the pandemic, and the company is bidding on a Singapore digital-banking license to accelerate its push into financial services. Revenue has also grown quickly, jumping 163% to $2.2 billion in 2019. Its losses, however, totaled $1.46 billion.
Talk about winning by losing... Sea has turned it into a game.  All-Time Highs It's been awhile since we've looked at stocks making all-time highs, but since markets have been surging across all sectors, now is as good a time as any.
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(chart courtesy YCHARTS)  Shares of Assurant are up by over 14% after the insurance company reported Q2 earnings results that beat analyst estimates. Disney's stock price rose by 9% after its streaming service, Disney+, hit 60 million subscribers.  Shares of Arista fell by 11% after the computer networking company posted Q3 guidance indicating an 11% revenue drop from the same quarter last year. Similarly, Microchip Technology's stock price fell by over 8% amid the semiconductor manufacturer posting Q2 earnings guidance that is projected to fall short of analyst estimates. Word of the Day The savings rate is a measurement of the amount of money, expressed as a percentage or ratio, that a person deducts from their disposable personal income to set aside as a nest egg or for retirement. In economic terms, saving is a choice to forego some current consumption in favor of increased future consumption, so the savings rate reflects a person or group's rate of time preference. The savings rate is also related to the marginal propensity to save.  Image courtesy loc.gov
Today in History Aug. 5, 1861: Federal income tax was inflicted on the public for the first time, as the Revenue Act of 1861 became law, assessing a tax of 3% on all personal income in excess of $800 a year to help pay for the Civil War.
https://www.history.com/this-day-in-history/lincoln-imposes-first-federal-income-tax
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Wednesday, August 5, 2020
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