China and Japan Closed for Holiday
Risk Off In Markets Everything for sell in Europe bunds, Stoxx50 euro, Brent ,all lower Spoos – 22 handles -.7% Nasdaq -.6% Auto Stocks leading Europe lower as Germany says in “no hurry for a cash for clunkers deal, no rush to help auto makers” Auto Sector -5.5%,Daimler -7% Dax -3.1%. Warrant Buffett selling all of his airlines holdings is not what the industry needs at this time, American, United and Hawaiian Airlines all down >12% Delta jet blue -11% Boeing -5% as Buffett says a changes in aviation industry will affect Boeing and GE(BBG). All European 10 year yields higher France announcing an Increase in Size of Upcoming auctions as well as A new 7-year auction in Germany is just a reminder that plenty of Debt needs to be sold to pay for the Virus response.
The new catalyst for Risk Off is the growing tension between U.S. and China as U.S. trying to blame China for the cause of the Virus and president Trump saying “Trump says he will kill Phase 1 trade deal if China $200 billion spending promise falls short… President Donald Trump threatened to terminate the Phase 1 trade deal if China fails to fulfill its promise to buy $200 billion more in American goods and services. During a virtual town hall from the Lincoln Memorial in Washington on Sunday, Trump said China’s President Xi Jinping had only agreed to the deal because of the Washington-imposed tariffs which “at a minimum are the greatest negotiating tool that we have ever devised that we never use.” Some observers note that China’s ability to make the purchases has been significantly damaged by the coronavirus pandemic, which led to the country’s first economic contraction since 1987, after months of lockdown to contain its spread.” (pro Farmer today)
Secretary of State of Pompeo applying pressure as well “Pompeo told ABC’s This Week that the Communist Party of China engaged in a “classic Communist disinformation effort” by silencing medical professionals and removing reporters to limit the spread of information on the virus. He said these moves “created enormous risk” and harmed hundreds of thousands of people worldwide. “We can confirm that the Chinese Communist Party did all that it could to make sure that the world didn’t learn in a timely fashion about what was taking place,” he said. Further “There’ll be ample time to evaluate how it is we hold accountable those responsible for the loss of what is now tens of thousands of American lives and an enormous amount of wealth, not only American wealth but the global economy’s devastation, as a result of this virus,”(Pro Farmer)
Major Oil Funds and managers continue to shy away from Front Month Crude oil First it was June and Now July .S&P Global says it will roll out of July Oil contract during the normal June roll period and a manger of $500 Million Hong Kong Fund telling clients no increase in holdings(BBG) Crude Oil Clawing back all of its losses to trade unchanged on Day Gold +1% Silver +1.5% Copper steady
Still trending Better more optimistic as USA total number of deaths keeps its downward trend, Did USA open too quickly? Too late? These questions will be answered in weeks not days so plenty of speculation on which it is.
- 30 million Job Losses are expected for Fridays Number
- Livestock Industry continue to struggle to get back on feet Ag aid package still has not been sent to the OMB
- Nearly half of the U.S. will reopen in some manner beginning this week
- North Korea’s state media reported that Kim Jong Un, 36, made a public appearance
- Shuttered meat processors reopening with reduced capacity… Smithfield Foods Inc. is reopening a hog-processing plant in Sioux Falls, South Dakota on Monday that had been closed since April 12, according to Kooper Caraway, president of Sioux Falls AFL-CIO, which represents workers at the facility. The company was asking 250 employees to return, according to the union. That is down from 3,700 workers normally, with 853 of its workers either sick with the virus or in quarantine. The company asked that employees who are sick or who might be more susceptible to severe illness and death from the virus — those over age 60 or who have existing health problems — to stay home, according to the union. Meanwhile, Tyson Foods says it will reopen a plant in Logansport, Indiana with limited production after a 14-day closure where nearly 900 employees tested positive for Covid-19. (Pro farmer)