WEEKEND WRAP: Banks To Report All Week As Second Quarter Earnings Season Gets Underway; Gold, Silver Soar

In what's become something of a recurring theme, stocks ramped ahead on Friday, sending the Dow and NYSE into positive territory for the week. As usual, the NASDAQ sent home the biggest gains, popping another four percent as the tech-heavy index scored record closing highs every day except Tuesday.

Large caps chopped ahead. The S&P put in it's ninth week of gains against six losers since hitting bottom in March. Weighed down by Walgreen's, the Dow managed to close positive, thanks to a big upside move on Friday. Ditto, the NYSE Composite Index, which remained the laggard among US equity indices.

Beyond the obvious love for all things tech, the bulk of the market was rather soft. Stocks are being led by a mere handful of companies, but it's been more than enough to almost fully erase the losses from earlier in the year and in the case of the NASDAQ itself, the erasure has been a clean sweep to record highs.

If there was a bit of edginess, it was hardly noticeable, and likely due to the oncoming rush of earnings reports from what figures to be a dismal second quarter, irreparably harmed by the coronavirus and government shutdowns across the nation and around the world. The condition is going to be frenetic come next week, as all of the major banking interests open their books to reveal the carnage from what is likely to be the worst quarter in American history.

Pepsico (PEP) will get things off to an effervescent start before the opening bell Monday, but financials take center stage after that. JP Morgan Chase (JPM), Wells Fargo (WFC) and Citi (C) all report prior to the open on Tuesday which should provide plenty of grist for the stock-churning mill. Wednesday morning has Goldman Sachs (GS), BNY Mellon (BK), and PNC Financial (PNC) reporting. Bank of America (BAC) and Morgan Stanley (MS) join the party Thursday morning and the week closes out with Blackrock (BLK), Citizens (CFG), First Horizon (FHN), Ally (ALLY) and Regions Financial (RF) all due to report prior to Friday's opening bell.

The shorthand approach is to see just how large are the loan loss reserves of the majors (JPM, BAC, WF, C, GS). They should be mammoth, considering the amounts of mortgages, credit cards, auto loans, personal loans and student loans went into forbearance during the quarter. If the set-asides are not shockingly large, the banks are either lying or overly optimistic about a quick recovery, but that too is unlikely, so expectations are set for some truly horrific numbers.

No matter what they bring to the table, individual bank stocks may get an initial whack, but the general market is very likely to continue higher, as has been the case since the March bottoms, defying the laws of commerce, physics, gravity, and common sense all at the same time. At this point, while a serious downdraft would be the primary expectation, a bouncy week ending positive could happen. Nothing would surprise anybody.

The story for oil is pretty simple. With benchmark WTI crude stuck at $40 a barrel, everybody is happy. Sheiks, Russians, shale drillers (maybe not so much, but an improvement over recent weeks), company executives, pipeline workers, and even car drivers are sated with gas at the pump bouncing around $2.00 a gallon ($2.19 according to AAA), highest in the West, cheapest in the South.

Treasuries rallied through the week, especially on the long end where the 30-year yield dropped 10 basis points, to 1.33% on Friday. The ten-year was as high as 0.69% and as low as 0.62%, finding the sweet spot Friday at 0.65%. Shorter maturities, through to 3-years are all yielding less than 0.20%, the one-month dropping down to 0.10% by week's end, the lowest since the end of May.

Precious metals had a banner week, with gold cresting over $1800 an ounce and silver smashing through $19. Premiums persist despite shortages easing on most products.

The US Mint is charging $27.65 for random date silver Eagles while some 2020 varieties are much higher and back ordered for three weeks.

For physical, eBay remains the most vibrant market and trustworthy price indicator. Here are the most recent prices on selected items (shipping included):

Item: Low / High / Average / Median
1 oz silver coin: 24.50 / 43.98 / 33.05 / 32.48
1 oz silver bar: 23.50 / 42.95 / 30.56 / 29.90
1 oz gold coin: 1,892.54 / 1,995.95 / 1,917.91 / 1,914.41
1 oz gold bar: 1,800.00 / 1,917.20 / 1,878.18 / 1,881.80

Stay liquid and hydrated. Most of the US is going to be under an oppressive heat dome all week with record-breaking temperatures predicted for the Southwest and East coast.

At the Close, Friday, June 10, 2020:
Dow: 26,075.30, +369.21 (+1.44%)
NASDAQ: 10,617.44, +69.69 (+0.66%)
S&P 500: 3,185.04, +32.99 (+1.05%)
NYSE: 12,075.58, +146.95 (+1.23%)

For the Week:
Dow: +247.94 (+0.96%)
NASDAQ: +409.81 (+4.01%)
S&P 500: +55.03 (+1.76%)
NYSE: +84.06 (+0.70%)