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Status Check: No Good News for Virus, GDP, Jobs; Trump Distracts

The following is Thursday’s status check of developments in the US that can influence economic, health and political outcomes:

  • Thursday’s welter of policy countercurrents, paralysis and confusion about ominous suggestions from the president was in contrast to the stark facts about the virus that stood out in sharp relief, that there were 1,400 US deaths, the most in any one day. Ohio’s highest daily toll added to the total, as did that from Mississippi, Florida and Arizona. Some early signs of improvement elsewhere, like Texas, remained tentative with more data needed to determine whether there is a decline in new cases or just an extended plateau. NIH’s Fauci participated in an event promoting convalescent plasma donations with Trump. The NYT reported a medRxiv study not yet peer reviewed buttressing the view the virus is spread by aerosol dispersion in addition to droplets.
  • On policy, there was no progress reported in negotiations between White House representatives and Democrats. Trump said in his evening briefing his side would be putting something unspecified “on the table” and both sides were set to talk at 8pm ET. The Senate voted 47-42 for a modified extension of reduced benefits House Democrats had already rejected, failing in the attempt. Friday is the last day for the extra $600 in unemployment benefit transfers. Although Democrats refused to consider a “skinny” bill focused on the benefits and the soon-to-expire moratorium on evictions from federally backed properties, in reality the delivery of the money does not come to a halt abruptly. Likewise evictions are not expected to suddenly skyrocket. Nevertheless both sides know something will have to be passed in the days ahead. There was no clear evidence in the markets or on the streets of any elevated concern given low expectations to begin with.
  • The day’s economic data was as bad as expected, but the GDP second quarter decline of 32.9% annualised or 9.5% on a quarterly basis was based on old data from April through June, doing nothing to resolve the heightened uncertainty about whether a slowdown now is deepening. The report did illustrate the mighty boost to income from government aid. More current was the tally of weekly new applications for unemployment benefits. The bad news was the 1.434 million new initial claims was a worse total than the week before – just as the week before that had been. Nineteen weeks of layoffs of more than a million and getting worse seemed to be a trajectory toward worse times ahead. But the White House put forward its newest economist subbing for Kudlow, Joe LaVorgna, who in Kudlow’s vein said “the numbers look great” looking forward.
  • The Ebenezer Baptist Church funeral of legendary activist for civil, gay and gender rights John Lewis brought solemn and often uplifting in-person eulogies from former presidents Bush, Clinton with Carter sending condolences and with Obama the main event. The outpouring was both bipartisan and highly partisan, as Obama drew a parallel between civil rights struggles with current Black Lives Matter protestors clashing with militarised
    federal police. “Bull Connor may be gone … but we can witness our federal government sending agents to use tear gas and batons.”
  • Economic data, the Lewis funeral and even the relentless toll of the virus had to share the news spotlight with a presidential tweet that usurped the attention of anchor persons and talking heads through the day. “Delay the Election until people can properly, securely and safely vote???” President Trump kept up the drumbeat of distraction in his evening briefing, suggesting Republicans are litigating their complaints against alleged voting irregularities and mail-in voting in state courts and will do more. “I don’t want to see a crooked election,” he said. Senate Republican Leader McConnell made clear he’s not allowing the Senate to help delay the election under any circumstance, but Trump seemed happy with the firestorm, saying his tweet “had an interest impact”. The balance of his briefing contained no new information about the virus itself and repeated some of the misinformation, like young people “are almost immune to the disease”. He expressed condolences for supporter and Godfather’s Pizza magnate Herman Cain, who was diagnosed with his fatal case of Covid-19 after attending the Trump MAGA rally in Tulsa without a mask.
  • Upcoming economic data includes the US report on personal income and spending, June data already incorporated in the day’s GDP report. Also at 8:30am ET, the employment cost index.
  • Qualcomm’s 15%+ climb helped lift the day’s Nasdaq session into winning territory, finishing +0.49%. The DJIA dropped 0.84% and the S&P was down 0.37%%. After triple-digit gains on successive days that accumulated to a 1600% rise, Kodak dropped a little more than 10%. The CEO’s shares are ahead more than $200 million for the week so far.
  • Lost in the news cycle, NASA’s successful launch of the rocket carrying its latest model rover to Mars, equipped with a tiny helicopter drone. China launched its rover to Mars a week ago. It’s a seven-month trip.

Julie Ros

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