6-18

Okay Time to start to pricing in greater chance of A Biden Win or even Democrats taking the Senate? Sectors to monitor healthcare, Military hardware companies, Energy vis a vi More regulation. We would likely see higher Govt spending instead of tax cuts and Less spending on Defense. just something to Ponder…. China said that “peak of Beijing virus has passed, and further infections should be Sporadic” BBG.  okay actions speak louder the words 

…From trump In Fox Interview  Hesays won’t be closing the country again with the new coronavirus outbreaks Trump also speaking about the tell all book from former official Bolton – says Bolton broke the law  (Trump referring to Bolton writing about classified subjects, Trump has direct the Dept of Justice to seek an injunction to prevent publication of the book)

Markets:

Risk heavy sagging here over last 2 hours, Dollar +.25% always a worry when it rises… Spoos -.8%,Stoxx 50 -1.2% Dax -1.2% all European bourse down  Led lower by basic resources -2% ,banks -2%( maybe banks thought a Higher number of ECB loans) ,Oil and gas -1.7%   so  it appears some Economic worries weighing on sentiment. Bonds higher +1 handle, Bunds +22 handles all European Yields a touch lower Gold down .25% trading near lows Copper giving back all daily gains and Silver  -.9%platinum -1.8% Oil steady… I don’t expect much action from jobless claims at 7:30 lets watch for U.S. virus updates and Any news from China.>Carnival Cruise line saw Q2 revenue drop 86% a net loss of $2.4B…ETFs increase gold holding for 6 consecutive days

 -Bank Of England added 100B GBP to stimulus total as expected, But positive comments regarding rebound in Economy has caused  “MONEY MARKETS ERASE BETS ON NEGATIVE BOE RATES UNTIL END 2021”@marketsneil  and BOE slowed the pace of Purchase, GBP choppy  but Gilts dropped 100 ticks on the release as BOE not as Dovish as priced.

  -The People’s Bank of China (PBoC) lowered its 14-day reverse repo rate to 2.35 percent from 2.55 percent on June 18th, 2020. The 7-day reverse repo was left steady at 2.2 percent. The move was made through a CNY 70 billion injection into the country’s money market, after resuming operations on the liquidity tool for first time since February. The bank also injected CNY 50 billion through seven-day reverse repos at 2.2 percent

-More stimulus measures “The ECB’s June TLTRO3 operation has seen allocations of €1,308bn with 742 bids received. This is the largest TLTRO operation conducted by the ECB and given that €760bn was rolled from TLTRO2/bridge LTROs the net liquidity add is €548bn. What is interesting is that the ECB has joined in the ECB is tweeting its analysis in real time with a tweet from Isabel Schnabel. The ECB board member highlights the gross take up (€1.3bn), the number of bidders (742) and the net liquidity add (€548.5bn) and points out that this is “crucial to support lending to real economy”

Always interesting comments from Mizuho

◘    Awaiting “clearer signals” certainly seems like a reasonable approach given how far we’ve come. But never forget Keynes when trying to apply reasonable to markets. Second-wave virus and geopolitical worries balanced out by aggressive global central bank policy, resulting in tight credit spreads. In his 60 Minutes interview a few weeks ago, Fed Chairman Jerome Powell told us he has a “digital” printing press and it has essentially unlimited ability.

    Average investment-grade bond yields for top-rated U.S. companies have dropped to an all-time low of 2.17% – Bloomberg. Yields on euro investment-grade company bonds have tumbled more than 120 basis points from the peak of the coronavirus upheavals in March – Bloomberg. Meanwhile in Europe the ECB is paying lenders to lend. This morning European banks took €1.31tn in TLTRO III from the ECB at an interest rate of -100bps. Around €750 billion was roll-over, so amounts to about €550 billion in fresh liquidity.

◘    Quote of the day: Jeremy Grantham says this may be the fourth major market bubble of his career. Asked what level of exposure investors should have to U.S. equities, Grantham offered an unflinching view that may leave some bulls gobsmacked.

“I think a good number now is zero and less than zero might not be a bad idea
if you can stand that.”

U.S. Virus update (pantheon Economics”)

• Confirmed U.S. cases rose 1.20% yesterday, up from 1.05% on the same day last week.  The number of new cases rose by 22.7%, to 25.6K from 20.8K a week ago.  The number of confirmed new U.S. cases per day is now clearly trending higher.  Almost all the increase is in the South, though cases are rising in California, Oregon, and Utah too.

• Tests rose by 15.6% yesterday compared to the same day last week, not enough to explain the increase in cases.  The proportion of positive tests dipped slightly to 4.9%, but the trend in positive tests might be rising again, after falling over the previous two months.

 • National hospitalizations rose yesterday for the second straight day, marking the first back-to-back increases since mid-April.  We have to expect hospitalizations to climb further, given the continued rise in states where new cases are rising.

• The number of hospitalizations per capita in the South remains far lower than at the peak in New York, in mid-April, we’re guessing that hospitalizations in the South won’t reach the NY peak, given much lower population density.  •

news:

  • As expected SNB and Norway kept Policy Rates Unchanged
  • As expected, Indonesia Cut rates .25%
  • The Australian jobless rate climbed to 7.1% from a revised 6.4% in April, Employment plunged by 227,700 last month, while April’s fall was upwardly revised to 607,400. The print was almost three times the consensus for a 78,800 drop, and worse than the forecast of every economist but one. (Mizuho)
  • Foreign demand for U.S. Corporate debt rose more than 75% in April from March (BBG)
  • Top U.S, China diplomats hold ‘constructive’ meeting amid strains – Reuters. US calls for China to accelerate purchases in agreed Phase One trade deal
  • China urges U.S. to “immediately correct its mistakes, stop using Xinjiang law to harm China’s interests and interfere with China’s international affairs  ,threatens a resolute response if US moves forward with the Uyghur rights bill, and that US must bear the consequence( Forex live)

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