by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA
[Posted: 9:30 AM EDT]
Market sentiment continues to get a boost from the fact that many foreign governments and various U.S. states are easing their coronavirus restrictions. As always, we review all the latest virus news below. We also provide an update on the continued mystery of North Korean leader Kim Jong Un’s whereabouts.
COVID-19: Official data show confirmed cases have risen to 3,060,152 worldwide, with 212,056 deaths and 905,662 recoveries. In the United States, confirmed cases rose to 988,469, with 56,253 deaths and 111,583 recoveries. Here is the chart of infections now being published by the Financial Times:
- A placebo-controlled study of the arthritis drug Kevzara was stopped early when it became clear that it wasn’t likely to help patients with a severe form of COVID-19.
- Highlighting the importance of using placebo controls to avoid wrongly judging a drug as being effective, patients taking the placebo and those taking the drug both did better than expected, but those taking the placebo did best.
- A separate placebo-controlled study of Kevzara on patients with an even more severe form of the disease is continuing.
- Studies are also continuing on dozens of other drugs, but the fast-developing science and changing dynamics of the pandemic are posing challenges for scientists.
- The Trump administration said it is prepared to send all 50 states enough tests to screen at least 2% of their residents for COVID-19, asserting that is the minimum level needed to help control the pandemic.
- The CDC announced it will start serum antibody testing in parts of Georgia where community spread of the disease is accelerating.
- The State of New York announced just 337 new deaths from the virus yesterday, marking its lowest daily tally since March 31.
- New analysis shows more than 30 million workers in Europe’s five biggest economies have applied to participate in short-term leave plans because of the crisis.
- That beats the 26 million or so U.S. workers who have applied for unemployment benefits in the crisis to date.
- Designed to limit outright unemployment, the European plans provide funds to companies to cover part of participating workers’ wages on condition that they be kept officially on the payroll.
- Because of the huge contribution that tourism makes to the overall European economy, observers are becoming increasingly worried about the impact if the virus extends or prevents traveling during the summer holiday.
- Though investors are focused on plunging crude oil prices as the world starts running out of places to store it, there is also a developing shortage of places to store refined product.
- As companies scramble to preserve cash as the pandemic saps revenue, data from S&P shows more companies have suspended or canceled their dividends so far this year than in the previous 10 years combined.
U.S. Policy Responses
- Expanding support to states remains politically contentious. For example, President Trump said he was skeptical about providing any state funding in the next fiscal support bill. Senate Majority leader McConnell will likely end up supporting an aid package, but with restrictions on how and where the money will be spent.
- The SBA yesterday reopened its electronic portal for Payroll Protection Program loan applications, known as E-Tran. However, the overwhelmed system was plagued by instability, crashes, and long wait times, severely limiting the number of loans processed.
- New analysis shows roughly half of all U.S. workers stand to earn more in unemployment benefits than they did at their jobs before the coronavirus pandemic shut down the U.S. economy.
- Adding the federal government’s emergency weekly payment of $600 to the average state payment of about $378 will give workers a total income of $978, compared with the median weekly wage of $957 in the first quarter.
- Until the federal payment expires at the end of July, the high level of unemployment aid could make it harder to entice some workers back to their jobs, especially if they are skittish about being exposed to the virus.
- State governments from California to South Carolina continue to gradually ease lockdown restrictions.
International Policy Responses
- The European Commission has proposed a temporary easing of bank capital standards in order to boost lending. If approved by the European Parliament and national governments, the relief aims to increase lending by as much as €450 billion this year.
- New Zealand and Australia are the latest major developed countries to start easing social distancing restrictions, with both nations reporting dramatic decreases in new infections over recent weeks.
- In the U.K., the government is expected to approve and announce a plan to ease its lockdown measures later this week.
- As China continues to lift its restrictions, heavy equipment makers are boosting prices to take advantage of a sharp rebound in construction and infrastructure investment.
United States: The FOMC begins its latest policy meeting today. The policymakers are widely expected to leave the interest-rate policy unchanged when they announce their decision tomorrow. However, given the wide range of support programs the Fed has undertaken to help cushion the economy from the COVID-19 crisis, all eyes will be on any potential new moves that might be announced in the accompanying statement.
North Korea: Paramount leader Kim Jong Un remains out of sight, leaving foreign governments unsure about whether he is still alive and in control of the country. South Korean officials insist Kim is well, but South Korea and the U.S. scrambled six reconnaissance planes to spy on North Korea yesterday amid rumors he is dangerously ill. The North Korean government uses a highly refined system of secrecy and diversion to keep the outside world from knowing what’s going on with its leader.