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Global markets power back as Big Tech drowns out the coronavirus and GDP gloom

July 31, 2020, 9:51 AM UTC

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Happy Friday, Bull Sheeters. The U.S. futures look set to pop, closing out the week (and the month) on a high note. That’s thanks to the heroics of Big Tech.

Let’s check in on the action.

Markets update


  • The major indexes are mostly lower, with Japan’s Nikkei down more than 2% in afternoon trade.
  • In Apple’s impressive earnings call yesterday it singled out stellar China results, with regional revenues topping $9.3 billion and record iPad sales.
  • Chinese electric vehicle start-up Li Auto made its Nasdaq debut yesterday and promptly soared 43%. Its biggest backers are TikTok owner Bytedance and ecommerce group Meituan Dianping.


  • The European bourses were in the green at the open—that’s despite a batch of rough GDP numbers.
  • The German economy, the engine of the euro zone, shrunk by 10.1% in Q2, the worst showing in half a century. That’s a quarter-over-quarter number, unlike the annualized measure preferred in the U.S.
  • In a surprise announcement, the U.K. government reimposed lockdown measures on Northern England, including the Greater Manchester area, as coronavirus cases there climb. It comes after new data shows England has had the highest COVID mortality rate in Europe.


  • The U.S. futures point to a positive close-out to the week. The Nasdaq in particular looks set for a big rally after the Fab Four of tech— Google parent AlphabetAmazonApple, and Facebook—posted knockout earnings in a quarter when much of the planet was confined to home.
  • If only the U.S. economy was doing so well. A record GDP collapse and more lousy unemployment figures show an economy in deep trouble. Overwhelmingly, CEOs of American companies fear a double-dip recession; you can forget talk of the V-shaped recovery.
  • The worst economic data in anybody’s memory failed to move Congress into action. There’s increasing concern lawmakers will not reach a deal on a new stimulus package, which would include extending the expiring 600-buck unemployment benefits supplement.


  • Gold is up. Again
  • The dollar is down. Again.
  • Crude is ticking higher, with Brent trading above $43.50/barrel.

By the Numbers

19 straight. For the nineteenth consecutive time, weekly jobless claims came in yesterday above 1 million. It’s an incomprehensible streak with huge social costs. What’s particularly worrying is the tally over the past two weeks. The data is getting worse, not better—we’re four months into this pandemic crisis and more and more Americans are losing their jobs. No economist predicted it would get this bad. Yesterday’s official number of jobless claims was 1.43 million, confirming the rebound will be a painfully protracted one. “We’re expecting a longer and slower climb from the bottom unfortunately, and here the virus will dictate the terms,” Beth Ann Bovino, U.S. chief economist at S&P Global Ratings, told the Wall Street Journal. That will have huge implications for Election Day, just around the corner.

250 billion. Shares in Alphabet, AmazonApple, and Facebook soared in after-market trading, adding a cool $250 billion to their market caps, following knockout earnings reports after the bell yesterday. It seems like just yesterday—okay, it was Wednesday—that these very companies were defending themselves in front of House antitrust inquisitors. In the last quarter, the Big Four posted a combined $206 billion in revenues, adding a cumulative $29 billion to their bottom lines. They’re not just dominating the business world, they’ve become a force in the markets, accounting for, by one measure, nearly 40% of the S&P. Here’s another data point for you: Goldman Sachs has upped its 12-month price target on Amazon to $4,200 a share.

40%. What’s bigger than Big Tech? The Fed, you could argue. Its balance sheet, according to Bank of America, is approaching 40% of U.S. GDP. By year-end, the balance sheet is supposed to climb to nearly 50%. That’s a lot of corporate debt.



In a few hours, I’ll be closing up Bull Sheet’s Licata news bureau and heading back up North—back to the Continent, as the Sicilians say.

This was the view this morning.

The view from Bull Sheet’s Licata news bureau. Original photo: Bernhard Warner.

I have to admit to writing parts of Bull Sheet this week in drippy swim trunks. I also read more than one analyst report on tech earnings and Fed policy under that left-leaning, shady tree there.

When we first got here two weeks ago, my first action was to step out onto the beach and take in the view. At which point a local sidled up to me and started to make small-talk. When he heard my accent, he inquired: “Americano?”

I nodded, and he proceeded to give me a history lesson. The stretch of beach we were admiring was the site of one of the most famous invasions of World War 2, he started. It’s true. Between the coast of Licata and Gela, just to the East of where we’ve been staying, is where the American Seventh Army came ashore in July, 1943.

All of you World War 2 buffs remember the rest: The Battle of Sicily went under the code name Operation Husky, one of the largest Allied invasions of the war. The Allied commanders chose this stretch of coastline as the topography would allow the Seventh Army, under the command of Lt. Gen. George S. Patton Jr., once it took command of the beach head, to drive quickly inland and roll towards Messina in the Northeast corner. The idea was the Brits, under Gen. Bernard “Monty” Montgomery, would come up from the South and also converge on Messina, squeezing the Germans and Italians into that corner.

The plan was going fairly smoothly until Patton pulled one of the most puzzling and controversial moves of the war. He ordered his troops instead to march on Palermo in the Northwest. It would be the equivalent of taking a major detour out of the way of your final destination. Here’s the military map to give you an idea. The objective is the upper right-hand corner: Messina. Patton went up, and then took a hard left. To Palermo.

It turns out, Patton’s battle instincts were largely correct. The Seventh Army quickly conquered Palermo with ease. Still, Allied commanders were furious. What’s that hot head doing way over in Palermo?!, they fumed. The conquest of Palermo set in motion a domino effect that knocked Mussolini from power, and the Italians out of the war.

Historians still debate the significance of Patton’s impetuous move. Those who study leadership dynamics also look closely at Patton’s Summer of ’43 in Sicily. Some times, hot heads get stuff done. Quickly. But if their actions go wrong…yikes.

We too will be heading to Messina. There will be detours. It’s Sicily.

Have a nice weekend, everyone.

Bernhard Warner


Correction: Yesterday’s Bull Sheet contained a small, but regrettable error. On second reference, I referred to Danielle DiMartino Booth as “he.” My sincere apologies.

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