Daily Comment (June 23, 2020)

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

[Posted: 9:30 AM EDT]

Good morning!  The 13th episode of the Confluence of Ideas podcast is available; the topic is the first in a series of episodes on the November elections.  U.S. equity futures are higher again this morning, with the rest of the world rising as well.  In other markets, gold is at a seven-month high, WTI is over $40 per barrel and the dollar is lower.  We did see some volatility overnight after Peter Navarro seemed to indicate that the trade agreement with China is “over.”  S&P futures quickly dropped about 50 points.  The White House moved in short order to clarify Navarro’s comments, confirming that the Phase One arrangement is still intact.  We update China and economic news.  We also cover domestic policy and foreign news.  Our usual commentary on COVID-19 is available.  Here are the details:

China news: 

Economic news:

  • The WSJ notes that there has been a surge in household savings in the U.S. Much of this jump was due to the influx of fiscal support coupled with the lockdown that reduced spending.  If the savings persists, it will have an impact on economic growth.  However, it is quite possible that as the lockdowns ease, spending will accelerate, and the level of savings will decline.  What is unknown is if there will be higher levels of savings in the aftermath of the pandemic.  If there is, government dissaving, business dissaving or a smaller trade deficit will result.  Our expectation, if the change is permanent, is that the fiscal deficit will absorb most of the savings.

Policy news:

Foreign news:

COVID-19:  The number of reported cases is 9,115,878 with 472,541 deaths and 4,544,196 recoveries.  In the U.S., there are 2,312,302 confirmed cases with 120,402 deaths and 640,198 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.  We are seeing a surge in the R0 data, suggesting a rising pace of infections in the U.S.  Here is the state-by-state data.


Finally, some good news—honeybee populations saw a lower than normal winter die-off this year, after suffering a larger loss last year.  Honeybees are critical to numerous U.S. crops, so the recovery is positive.

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