Pre-market actions: America and Europe need billions more to boost

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But without additional government incentives, economists warn that the nascent recovery could be threatened – especially as the cases of Covid-19 in the country continue to increase.

What’s going on: U.S. retail sales rose 7.5% in June from the previous month, exceeding Wall Street expectations. This strong jump was attributed in part to generous assistance from the federal government, including $ 600 in additional weekly unemployment benefits for workers who lost their jobs.

“This is a remarkable achievement given the spike in unemployment that the US economy has experienced and serves to highlight the effectiveness of the government support program,” said James Knightley, international chief economist at ING, to customers.

So far, the US government has agreed to inject more than $ 2 trillion into the economy.

However, the additional benefit of $ 600 per week is set to expire at the end of this month, and Congress is still debating whether to go ahead with an extension. This creates a possible “cliff of benefits” that could hit the US economy hard as coronavirus cases accelerate in many states.The United States reported more than 77,000 new coronavirus infections on Thursday, the highest daily jump to date.

“If this program expires at the end of this month as planned, there will be [be a] a huge drop in income for these millions of people at a time when the reinstatement of containment measures for Covid-19 limits the possibilities of finding work, “said Knightley.

On the radar: Senate Republicans are expected to release their additional stimulus spending plans next week, which will seriously revive the debate in Washington. However, there is little clarity on how – and when – Congress and the White House will meet on an agreement.

Speaking of recovery: European leaders meet Friday and Saturday in Brussels, their first summit in person since the start of the Covid-19 crisis. They will debate the proposal presented by the European Commission in May which plans to raise 750 billion euros (857 billion dollars) on the financial markets in order to disperse loans and grants to hard-hit EU states.

But big problems, including the overall size of a stimulus package, the mix of grants and loans, and the conditions, have yet to be resolved. Analysts say another summit may have to be called later this month or early August.

The aid package would add to 540 billion euros ($ 617 billion) in the EU’s current recovery efforts.

How the pandemic could undermine the dollar king

When the new coronavirus sent investors to show up for outings in March, there was a mad rush to recover US dollars, the world’s ultimate safe haven.

But as the United States battles further Covid-19 outbreaks that weigh on economic recovery, the dollar has fallen. Now, some on Wall Street are warning that it could fall further, in part because of President Donald Trump’s handling of the crisis and isolationist policies.

See here: “We expect the US dollar to follow a path of reduced dominance and weaken over the long term,” Nomura said this week in a report to customers.

The dollar – an important symbol of America’s global position – remains the primary currency of choice for investors, who use it to trade a wide range of assets. It is also the world’s first reserve currency, held in large quantities by governments, central banks and other large financial institutions. Dollar bulls and skeptics note that there is currently no real alternative.

However, investors are less and less optimistic about the outlook for the dollar. Growing debt and Trump’s commitment to America First policies have increased the risks. A diminishing role of the United States on the world stage could encourage the Allies to increase their holdings in other leading currencies.

Another headwind: asset managers like BlackRock encourage clients to consider investment opportunities in Europe, where countries seem to have better control of the health and economic challenges posed by the virus. This could encourage traders to sell dollars and buy euros.

These trends could hurt the value of the dollar in the months to come – although experts warn that any substantial change in the global monetary regime would take decades.

Netflix subscriber boom could be over

Netflix (NFLX) has a warning to investors: the massive growth it experienced at the start of the pandemic will not be sustainable the rest of the year.

Between April and June, Netflix continued to soar. The company said on Thursday that it added 10 million subscribers to its streaming service last quarter, exceeding its own expectations.

But Netflix has said it expects to bring only 2.5 million subscribers between July and September, about half of what analysts have expected, reports my Frank CNO Business College at CNN. The shares are down 7% in trade before marketing on the news.

Remember: the pandemic has spurred the demand for streaming services as more and more people are looking for home entertainment (remember when everyone was watching “Tiger King”). Netflix stock has climbed 63% since the start of the year.

But the massive subscription madness could end as restrictions ease in many parts of the world. Netflix is ​​also facing new competition from Disney +, Peacock and HBO Max, which is owned by parent company CNN WarnerMedia.

In the C-suite: Netflix also said on Thursday that Ted Sarandos, the company’s longtime content chief, would become co-CEO alongside Reed Hastings.

“Ted has been my partner for decades,” said Hastings in a statement. “This change makes formal what was already informal – that Ted and I share the leadership of Netflix. “

following

Black rock (BLK), Ericsson and State Street publish their results before the opening of the American markets.

Also today:

  • Housing starts and building permits in the United States for the month of June at 8:30 a.m.ET.
  • The first reading of the University of Michigan consumer sentiment survey for July arrives at 10 a.m.ET.

Coming up next week: the profit season continues with big names like Coca Cola (KO) and Microsoft (MSFT) report results.

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