Banks are preparing for the worst, Microsoft and Tik Tok

One of the most interesting moments in the current earnings season is the active reserving of funds by banks to cover possible losses from loan defaults. We are talking about tens of billions of dollars on a banking system-wide scale. What does this mean? In means that the fall in US GDP in the second quarter is far from the last bad news for the economy. The consequences of the pandemic are stretched out over time and banks are waiting for massive loan defaults to begin. In fact, the ongoing bankruptcy of large companies and entire networks in the United States speaks in favor of this.

Bank losses, in turn, mean more expensive loans with more stringent conditions for obtaining them. This is exactly what the business exsanguinated by the pandemic lacks to make a decision to end the struggle.

In this light, we cannot fail to note the growing gap between the US stock market, especially its technological sector, from reality: Nasdaq Index yesterday showed new all-time highs. But not even a week has passed since the data on US GDP were published. This was partly due to the news of Microsoft's desire to buy TikTok's operations in the U.S., Australia, Canada, and New Zealand. This potentially means the emergence of a serious competitor for other social networks like Snapchat and even Facebook.

Meanwhile, the dollar is recovering somewhat in the foreign exchange market. It is clearly too early to bet on its growth. But the very fact that the rampant decline has stopped suggests at least that the situation has stabilized somewhat. Perhaps this is an attempt by the markets to discount for a future stimulus package for the US, which Democrats and Republicans have not yet been able to agree on.