Your Monday Market Blip 6/1/20

Your Monday Market Blip 6/1/20

Stocks started in the red but overcame “social unrest” and US China tensions to finish in the black. It was a wild weekend! The Dow gained 91 points to close at 25,475 on lighter trading volume. There is concern of new virus outbreaks following the mayhem these past few days but similar concerns were voiced after Memorial Day. So far new daily covid-19 cases have held below the April 24th peak.
Banks are awash in cash. Bloomberg News reported on the status of bank liquidity in light of the savings rate shooting up to 33%. The article noted that US banks saw almost $2 trillion in new deposits roll in over the past couple of months boosting total deposits to a whopping $15.3 trillion. Brian “Swiss” Klock, a bank guru at Keefe, Bruyette & Woods noted that excess liquidity in the banking system means banks are in good shape and do not need help from the Federal Reserve to fund the PPP loans they made. Under the PPP program banks lent $511 billion but only had to tap $49 billion from the liquidity facility set up to back the loans.
Tesla shares were higher after the Saturday Falcon 9 launch and successful docking of the SpaceX capsule with the international space station. This is the first US rocket to deliver astronauts into space since 2011 and the first private rocket in history to do it. On top of that, Tesla’s Model Y delivery schedule has been moved up from 12 weeks to 8 weeks. Adding a cherry on top of all that was a report from Cairn Energy Research Advisors predicting that EV sales will jump 36% in 2021. Cairn noted that there is pent up demand for electric vehicles globally.
As the sign at the local Blanchet High School billboard reads “Be Kind, Be True, Be Brave”.

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