Daily Comment (March 6, 2020)

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

[Posted: 9:30 AM EST]

It’s Friday employment day, although the data is mostly irrelevant.  This report covers February, before COVID-19 hit the U.S. economy.  We detail the data below, but the quick read is that the data was very strong.  As has been our practice, we update COVID-19 news.  Risk markets are under pressure globally as the virus spreads and policymakers appear to be caught off guard.  Russia and Turkey declare a ceasefire.  Here are the details:

COVID-19:  The number of reported cases is now 100,278, breaking the 100k level for the first time; fatalities are 3,406 and recoveries are 55,694.

Turkey and Russia:  The two have set a ceasefire.  The refugee threat to Europe remains.  We will be watching to see if the agreement holds but clearly neither Ankara nor Moscow want a broader war.

Odds and ends:  There was an OPEC agreement but it doesn’t appear Russia will participate.  The remaining members offered to cut production by 1.0 mbpd, but without a 0.5 mbpd cut from Russia oil prices have plunged this morning.  On Thursday night, the Reserve Bank of India (RBI) seized control of its fourth largest lender, Yes Bank (YESBANK, 16.60).  The takeover was to prevent a loss in confidence of the Indian financial system due to Yes Bank’s inability to raise capital to improve its financials.  The president’s national security team has advised that he block Infineon Technologies’ (IFNNY, 20.20) proposed acquisition of the American chipmaker Cypress Semiconductor Corp. (CY, 19.18) due to its links to China.  In order to stimulate the U.K. economy, Prime Minister Boris Johnson appears to be looking into eliminating tax breaks that benefit the “staggeringly rich.”  In Tunisia, two militants on a motorbike blew themselves up outside the U.S. Embassy.

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