Daily Comment (July 6, 2020)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT]

Good morning, and happy Monday!  U.S. equity futures and global equity markets are moving higher this morning led by China after comments in the state media suggested it’s good to buy stocks.  We update the pandemic news.  China has several news items of note.  Overseas, we have a new PM in France and elections in Croatia.  Here are the details:

COVID-19: The number of reported cases is 11,470,637 with 534,784 deaths and 6,193,538 recoveries.  In the U.S., there are 2,888,729 confirmed cases with 129,947 deaths and 906,763 recoveries.  For those who like to keep score at home, the FT has created a nifty interactive chart that allows one to compare cases across nations using similar scaling metrics.   The latest R0 data suggest the majority of states are seeing a rise in the pace of infections.  Additionally, this link gives a single source for the testing progress of treatments and vaccines.


  • Temperature checks are the most common way that companies screen customers or employees. However, smell checks, where the person is asked to determine a scent may be more effective.  The most common symptom of COVID-19 is a loss of the sense of smell.
  • Although studies are in the early stages, vitamin D may prove to offer at least some protection against COVID-19.
  • Hospital systems are approaching capacity in some southern and southwestern states.
  • One of the more frustrating elements in monitoring this pandemic has been a surfeit of research papers published, many of dubious value. The media tends to report on the most sensational headlines but almost never touches on the retractions.  China has been publishing a great deal of research; a recent analysis suggests that researchers there are reusing data, which allows for the fast publication of reports that probably don’t add much to the pool of knowledge.
  • Apple and cherry farms usually hire seasonal workers to pick their crops. Reports indicate these workers have been hit by the pandemic, putting the harvest at risk.

China news:

Policy news:

  • One of the issues we are watching carefully is state and local government spending. Unlike Federal government spending, which can be countercyclical, state and local governments are pro-cyclical.  When economic activity slows, state and local governments usually see a decline in revenue with leads to falling spending.  If the Federal government or the Fed refuse to take action to counter this issue, the impact of fiscal and monetary stimulus will be blunted due to a drop in state and local government spending.
  • Sen Hawley (R-MO) proposed a bill to force the U.S. to exit the WTO. Reports indicate that parliamentary maneuvering will prevent the bill from coming to a vote before the elections, sparing incumbents a potentially problematic vote.

Foreign news:

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