Pandemic Eroding Resilience

July 28, 2020

The Covid-19 pandemic keeps racking up victories against mankind’s efforts to return to a state of normalcy. U.S. deaths from the disease climbed above the 150,000 level, and the global case count advanced 4.4k in the past 24 hours to 1-2/3rds million people. A $1 trillion fiscal stimulus proposed by U.S. Senate Republicans has badly divided President Trump’s political party and faces a precarious minefield as lawmakers scramble to avert an economic disaster in August. The introduction of disguised and unwanted federal riot control troops to Portland and other cities has fanned urban unrest, rather than restoring calm. Many governments around the world are being forced to retreat from business reopening plans.

Share prices in Asia took a cue from Monday’s rise in the United States, but the rally fizzled once European markets opened today. Equities climbed 1.8% in South Korea, 1.5% in India, and 0.7% in China and Hong Kong but have fallen 1.2% in Italy, 0.8% in France, 0.4% in Germany, 0.3% in the U.K. and 0.2% in Spain. The Japanese Nikkei lost 0.3%.

West Texas Intermediate crude oil sank 0.6%. Gold ticked 0.2% lower but remains comfortably above the nine-year record high that was exceeded on Monday.

At best, the dollar‘s overnight performance can be characterized as a pause. While rising 0.5% against the kiwi, 0.4% versus the peso, 0.2% relative to the loonie and 0.1% against the euro, the U.S. currency slid further by 0.2% vis-a-vis the yen, Swiss franc and Australian dollar and is unchanged versus sterling.

Retail sales figures were reported in Sweden, Ireland, and Norway. Swedish retail sales went up for a third straight month in June and were 3.5% higher than in mid-2019. After tumbling 12.5% in March, 35.8% in April, and 32.5% in May, Irish retail sales rebounded by a record 38.4% in June but were also only 3.5% greater than a year earlier. Norwegian retail sales advanced 5.7% on month and posted a record year-on-year increase of 13.7%.

Spain’s jobless rate rose a percentage point last quarter to a two-year high of 15.35%. The number of employed workers fell by more than 1 million compared to the 1Q level.

The CBI monthly survey of British distributive trades activity improved much more significantly than anticipated in July, printing at a 15-month high of +4 after -37 in June and a low of -55 in April. But even July’s result implies a weak pulse.

Sweden experienced a SEK 41. 8 billion trade surplus in the first half of 2020, 2.25 times wider than a year earlier. Imports fell more sharply than exports.

The rate of improvement in Taiwanese consumer confidence was slower in July than in June and at 69.43 still compared poorly with January’s levelĀ  of 81.93.

U.S. data releases today will included consumer sentiment, the Case Shiller house price index for major cities, and the Richmond Fed manufacturing index.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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