What’s happening: The United States Office of Economic Analysis will release its first GDP estimate for the April-June quarter on Thursday.
Economists predict that GDP will increase sharply in the current quarter. The Federal Reserve Bank of New York expects an annualized increase of 13.3% between July and September.
But that rebound largely depends on the health of the American buyer, whose spending represents about two-thirds of the country’s economic output.
It is not clear that the rebound in consumption will continue as coronavirus infections increase in much of the country, triggering a series of new restrictions. High-frequency data already shows signs of weakness.
See here: Initial claims for unemployment benefits are expected to increase for the second consecutive week. Economists surveyed by Refintiv predict that another 1.45 million claims were made for the week ending July 25, compared to almost 1.42 million the previous week.
The German economy contracted 10.1% between April and June compared to the previous quarter due to the historical decline in investment, consumption and exports.
That is worse than expected. But economists think it still indicates the strength of the recovery from May.
“The solid data available points to maximum contractions of around 29% for industrial production and 15% for the service sector in April,” Goldman Sachs economist Sören Radde said in a note to clients. “The quarterly growth rate of -10.1% is therefore consistent with a relatively rapid rebound in both sectors.”
Big Tech to report earnings after questioning Congress
How did the world’s most powerful technology companies fare during what were probably the worst three months for the United States economy?
That’s the investors’ question, as Apple, Amazon, Facebook and Google owner Alphabet report earnings on Thursday.
What these four companies have to say will carry a lot of weight.
“The Thursday after the bell will be a seminal night for the street to digest how these techies are doing during the dark Covid storm,” Wedbush Securities analyst Daniel Ives said in a research note. “Will these results / guidance be enough to sustain the technology recovery or cause a red light for investors?”
But there are key questions about prospects. Facebook and Google will need to answer questions about the health of advertising sales, while Amazon is expected to demonstrate that it can sustain substantial growth in its cloud services division while controlling shipping costs. Apple’s iPhone 5G release schedule has also been questioned.
Look at this space: Amazon CEO Jeff Bezos acknowledged that there is a policy that prohibits the use of data from third-party sellers to support Amazon’s own private label business. But, he admitted, “I cannot guarantee that this policy has never been violated.”
Kodak reinvents itself and investors are obsessed
Kodak, the former photography giant, is reinventing itself as a drug maker, and investors are ecstatic.
After a jump of more than 200% in trading on Tuesday, shares were up 318% on Wednesday. At one point, they were up more than 650%.
The bottom story: Kodak was renamed a producer of materials and chemicals after its bankruptcy in 2012. It is now switching to pharmaceutical ingredients with the help of a $ 765 million government loan from the Trump administration, part of an effort to reduce dependence on foreign drug manufacturers.
The company already makes key materials for some pharmaceuticals, easing the transition, Kodak CEO Jim Continenza told CNN Business’ Julia Chatterley on Wednesday.
The loan is the first of its kind under the Defense Production Act, and will allow Kodak to remodel and expand facilities in Rochester, New York and St. Paul, Minnesota over the next three years. The company aims to produce 25% of the active ingredients used in Americans’ generic drugs.
Until next time
Initial claims of unemployment in the US And the first calculation of the GDP of the second quarter published at 8:30 am ET.
Coming soon: the first reading of GDP for the second quarter arrives for the 19 countries that use the euro.
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