Daily Comment (March 18, 2020)

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

[Posted: 9:30 AM EST]

Well, it’s Wednesday, and we face another day right out of a post-apocalyptic zombie movie.  While there is still no sign of zombie armies marching on Washington, there is a more worrying sign that global financial markets are seizing up in a desperate scramble for liquidity.  Policymakers around the world are pledging in unison to do “whatever it takes” to rescue the global economy, which is a good thing, but markets will remain volatile until real results are visible.  Below we review all the key news from the crisis and beyond.

COVID-19:  Official data show confirmed cases have risen to 203,529 worldwide, with 8,205 deaths and 82,107 recoveries.  In the United States, confirmed cases rose to 6,496, with 114 deaths and 17 recoveries.  Most disconcerting, the slowdown in the real economy is exposing or exacerbating financial weaknesses.  There are increasing worries about businesses and individuals not only having trouble paying their everyday bills, but also covering the high levels of debt they took on during the boom of the last decade.

United States:  In yesterday’s Democratic Party primary elections, former Vice President Biden won all three key races.  With his wins in Florida, Illinois and Arizona, it appears he would only have to win 42.8% of the remaining delegates to the party’s summer convention in order to win outright in the first ballot.  The wins heap even more pressure on Vermont Sen. Bernie Sanders to drop out of the race.

Argentina:  President Alberto Fernández has proposed a further hike in the country’s soybean export tax to 33%, just months after he increased the tax to 30% from the previous 25%.  However, the powerful farmers’ lobby is now starting to push back by launching protests.  Along with the global coronavirus panic, the tension is negative for Argentine stocks and bonds.

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