Daily Comment (May 6, 2020)

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

[Posted: 9:30 AM EDT]

Today’s positive market action comes as state governments and countries around the globe continue to ease their coronavirus restrictions.  Besides that, it’s also VE Day, and the beginning of National Nurses Week!  We review all the virus news below, along with a discussion of new developments in U.S.-U.K. trade, Brazilian politics, and last week’s attack on Venezuela.

COVID-19:  Official data show confirmed cases have risen to 3,685,129 worldwide, with 258,051 deaths and 1,208,139 recoveries.  In the United States, confirmed cases rose to 1,204,175, with 71,078 deaths and 189,791 recoveries.  Here is the chart of infections from the Financial Times:


Real Economy

Political Fallout

United States-United Kingdom:  To accelerate a comprehensive U.S.-U.K. trade deal, U.S. Trade Representative Lighthizer and British International Trade Secretary Truss announced that almost 30 bilateral working groups will hold virtual discussions on key trade issues over the next two weeks.  It’s positive that the administration is now able to shift its attention to other issues beyond the coronavirus, but, as we’ve said before, it will be difficult to quickly reach a deal, and when push comes to shove, the Brits may not find U.S. demands to be very palatable.

Brazil:  Testimony made public yesterday indicates President Bolsonaro is being investigated for trying to control Rio de Janeiro police who are investigating his sons there for corruption.  The testimony from former Justice Minister Moro suggests the scandal could “have legs.”  If so, it would likely be an ongoing drag on Brazilian stocks.

Venezuela:  New details have emerged about last week’s mysterious paramilitary attack in Venezuela.  Reports say a group of about two dozen soldiers, consisting of Venezuelan military defectors and foreign mercenaries (including two U.S. veterans), planned a sea attack to arrest the country’s authoritarian government and free political prisoners.  However, the group was apparently infiltrated by Cuban or Venezuelan operatives, and the attackers were intercepted by Venezuelan forces before they could land.  Reports say eight attackers were killed and 13 were captured.  Both President Trump and Venezuelan opposition leader Guaidó claim they had no knowledge of the operation.  Nevertheless, the Bay of Pigs-like fiasco probably gives President Maduro a bit of help as he continues to resist efforts to topple him.

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