Industry Analysts Miss Key Planted Acres by Wide Margin in 'Shocking' USDA Report

Posted on 07/01/2020 7:32 AM

USMCA takes effect today and U.S. dairy group already warns on Canada dairy policy


In Today’s Updates


* 'Shocking' USDA Acreage report gets initial market pop for some commodities
* USDA includes table on 'left to be planted'
* U.S. stocks had a very good second quarter
* USMCA trade deal replaces NAFTA today; U.S. dairy group issues warnings
* Gold's rally continues

* House climate plan includes renewable fuels provisions
* Grassley supports Iowa colleague on blocking EPA nomination
* Grassley takes on Senate Ag Chairman Roberts over cattle pricing issue
* Sen. Wyden wants answers from Navarro on Trump and China
* Protests in Hong Kong

* No quick timeline for next Covid-19 aid package
* Sen. Thune pushing a more robust conservation set-aside program
* Senate extends PPP until Aug. 8
* U.S. food supply update
* Conagra Brands investing in more manufacturing capacity
* Packaged food companies preparing for continuing strains on inventories
* Beyond Meat entering grocery stores in mainland China via partnership with Alibaba
* Update on reopening America... and around the world
* FedEx said Christmas-like levels of online shopping boosted its business
* Microsoft unveils initiative to retrain 25 million people in digital skills
* Airbus announces 15,000 job cuts from 90,000-strong workforce
* Coronavirus update
* New York adds eight states to quarantine list
* Americans will remain barred from entering the EU for nonessential travel
* One of the biggest legal fights in the history of insurance has begun
* Perspective on Dr. Anthony Fauci

* Amy McGrath defeated Charles Booker in Kentucky Democratic Senate primary
* Did Russia covertly offer bounties for killing coalition troops in Afghanistan?
* Germany takes over the European Union’s rotating six-month presidency today
* USDA leaves most interest rates steady for July
* Trump threatened to veto defense bill if strips names of Confederate generals




Equities today: U.S. futures were little changed. Shares in Europe pared gains. Trading in German stocks was disrupted by a technical glitch on Deutsche Boerse's T7 system. It's also affecting a number of Eastern European equity markets. Equities in Asia were steady.


     U.S. equities yesterday: The Dow gained 217.08 points, 0.85%, at 25,812.88. The Nasdaq rose 184.61 points, at 10,058.77. The S&P 500 moved up 47.05 points, 1.54%, at 3,100.29. Equities got a lift from data showing U.S. consumer confidence jumped in June by the most since 2011, exceeding consensus economist forecasts.


     The Dow capped off its best quarter since 1987 as strong economic data drove gains on Tuesday after initially showing losses. The Dow average's 17.77% gain, 3,895.2 points, in the three-month period from April through June, marked the index's best quarterly return since 1987. Meanwhile, the S&P 500 saw its best gain since 1998 during the period, up 515.70 points, or 19.95%, while the Nasdaq capped off its best quarter since 2001, up 30.63%.


     More perspective: The S&P 500 index is still down about 4% on the year. The last time there was a bigger quarter-to-quarter swing was back in 1932, according to S&P.


     Quarterly performance

     Performance 2

The stock market rally stands in sharp contrast to U.S. economic output. The second quarter is expected to be the worst post-World War II period on record. There are signs that April was the worst month for the economy and a recovery is already under way. But a resurgence of coronavirus cases could threaten the pace of growth, leaving output and employment well below prepandemic levels for an extended period.


     GDP plunge


Record amount of U.S. unemployment benefits. The U.S. Treasury paid $108.5 billion in unemployment benefits in June, the highest amount for a single month since the Covid-19 pandemic started. For the government's fiscal YTD, it has paid out $267.2 billion. The average weekly claim amounts to a little less than $1,000, which includes a temporary $600 pandemic benefit that is set to expire on July 31. If the benefit is extended, payouts could continue to climb into August and beyond.


USDA’s June Acreage and Grain Stocks Reports have a history of shocking the market into some major price moves... and this year did not disappoint. Corn and soybean futures rocketed to their highest levels since late-March/early April, with wheat and cotton futures notching solid, but less dramatic gains.


     The major surprises came in USDA’s Acreage Report, with the department estimating total acres planted to the 19 principal crops at just 311.9 million, a 7.2 million-acre plunge from March intentions and 8.8 million acres under the 2011-2018 average.


     Most striking, corn planted acres dived nearly 5 million acres from March intentions to 92 million acres; analysts had expected a 1.8 million-acre slide. Reuters noted that the drop in corn seedings was the biggest between the March intentions and actual plantings since 1983 (Payment-in-Kind program), when farmers seeded 9.362 million acres less than they had planned.


     Soybeans didn’t increase as many acres as expected. USDA estimated bean plantings at 83.825 million acres, a 325,000-acre uptick from March intentions vs. expectations for a 1.2-million-acre jump.

     Spring wheat plantings declined 390,000 acres vs. March intentions.


     Cotton acres were the other major surprise, with producers indicating they seeded just 12.185 million acres to the crop, which compares with March intentions of 13.7 million acres. Just a 500,000-acre slide was expected.


     Perspective: The big acreage decline is akin to a pseudo “set-aside” program and now makes weather and final yields more important in the months ahead.

     Acres left to be planted


     Soybean Acres

On tap today:


     • ADP employment report for June is expected to show a monthly gain of 2.5 million jobs. (8:15 a.m. ET)
     • IHS Markit's U.S. manufacturing index for June is expected to tick up to 49.7 from a preliminary reading of 49.6. (9:45 a.m. ET)
     • Institute for Supply Management's manufacturing index for June is expected to rise to 49.5 from 43.1 a month earlier. (10 a.m. ET)
     • U.S. construction spending for May is expected to rise 0.6% from a month earlier. (10 a.m. ET)
     • Chicago Fed President Charles Evans speaks at a Chicago community forum at 10 a.m. ET.
     • Federal Reserve releases minutes from its June 9-10 meeting at 2 p.m. ET.
     • EIA weekly U.S. oil inventory report
     • U.S. weekly ethanol inventories


Market perspectives:


     • Crude oil prices have reversed earlier losses in Asian trading and are now solidly higher, with US crude up 2% to trade just above $40 per barrel with Brent crude up 1.8%, trading around $42 per barrel.

     • Gold prices extended a recent rally with uncertainty about the economic recovery and ultra-low interest rates lifting demand for the haven metal. Prices ended the second quarter up 13%, their biggest quarterly advance since early in 2016. Tuesday’s close marked gold’s first close above $1,800 since September 2011, and prices are within about 5% of their all-time high of $1,891.90 from August of that year. Demand appears to be driven by fresh coronavirus outbreaks, as well as a need for inflation hedges due to expansionary monetary policy.

        Gold rally




USMCA takes effect today and complaints were already filed by U.S. dairy groups and others. Today the North American Free Trade Agreement gets an update via implementation of the U.S.-Mexico-Canada Agreement (USMCA... the Canadian and Mexican names each put their own country first). The trade accord includes tighter North American content rules for autos, new intellectual property protections, prohibitions against currency manipulation and new laws for digital commerce. American companies can also launch disputes with Canada and Mexico over access to dairy, energy and the biotech market and that is exactly what is already happening in some areas.


     For some, the update is a downgrade. Car companies are having to reorganize their supply chains to meet its new conditions for tariff-free access into the American market, a task that would have been tricky enough without a pandemic. The agreement raised the regional content requirement for cars to trade duty-free to 66% from 62.5%, eventually climbing to 75% in three years. The increase is a pillar of U.S. Trade Representative Bob Lighthizer’s plan to bring production, and jobs, back to the United States. Companies that can’t yet meet the new threshold can request a temporary waiver. In a joint statement Wednesday, the U.S. Chamber of Commerce, the Canadian Chamber of Commerce and Mexico’s Business Coordinating Council praised USMCA but acknowledged that auto makers “will have to comply with hundreds of pages of new regulations implementing strict content requirements” and other new rules that will present compliance difficulties. “The Covid-19 pandemic and economic downturn may make adapting to these new rules even more challenging,” the three groups said in a joint statement.


     Lighthizer promised lawmakers tough enforcement of the agreement’s new labor rules. Automakers will need to get their workers’ wages scrutinized by the U.S. Labor Department under a new rule published on June 29 to ensure that 40% of the work is coming from employees making an average $16 an hour to trade duty-free. More broadly, exporters need to get new certification from U.S. Customs and Border Protection to confirm that products that they ship to America trade duty-free, even if they had certificates of origin under NAFTA that were supposed to last through the end of this year, Bloomberg noted.


     An additional challenge may come from complaints brought against Mexican factories. Tougher labor laws were a key demand of U.S. congressional Democrats. Some business groups had asked for a delay in implementing the new rules, given the chaos of the pandemic.


     Dairy producers are already warning on Canada dairy changes called for under USMCA. The International Dairy Foods Association (IDFA) penned a June 30 letter (link) which contends that already there are issues on dairy policy relative to Canada’s implementation of dairy product tariff rate quotas (TRQs). “…we believe that Canada is limiting certain U.S. dairy exports by maintaining restrictive TRQs and not moving quickly enough to implement a tariff rate quota (TRQ) administration system that is consistent with USMCA’s Agriculture Chapter (the Agreement) as well as the annex on TRQs in the Canadian Schedule,” IDFA said in the letter to Gregg Doud, the ag trade negotiator at the Office of the U.S. Trade Representative. They note that under USMCA, Canada is not to put in place any new conditions or eligibility requirements on TRQs “beyond those set forth in the Canadian schedule.”


     However, IDFA noted that the eligibility and allocation calculations on proposed TRQs for many dairy products “impose eligibility and allocation calculation conditions that clearly fall outside of those set forth in the Canada schedule.” They specifically pointed to limiting access on the TRQ for Cheese of All Types to 15% for distributors and 85% for processors. “There is no such restriction in the Canada schedule,” IDFA said. They further noted there are new restrictions in place that “eliminate the opportunities for distributors to import bulk and retail-ready butter across the entire quote year,” based on a recent announcement by Global Affairs Canada (GAC). “I formally am registering our organization’s deep concerns regarding Canada’s non-compliance with the clear terms of the Agriculture Chapter of the Agreement,” IDFA President and CEO Michael Dykes said.


     Lighthizer told the House Ways & Means Committee the administration would be closely monitoring Canada and dairy and other provisions in USMCA, warning, “If there's any shading of the benefits to American farmers, we're going to bring a case against them.”


     House Ag Chairman Collin Peterson (D-Minn.) said USMCA implementation is “a positive” at a time when the country needs positives, but noted there are already problems because Canada is refusing to allow his constituents to drive through Canadian territory to get to a tiny piece of Minnesota that lies north of the 49th parallel. On a Zoom event to celebrate USMCA organized by Farmers for Free Trade Peterson said, “We need to be vigilant” because “there are signs out there” of Mexico and Canada using Covid-19 to avoid some of its rules. Peterson said there is already “monkey business going on in Mexico” and that Canada has to be monitored closely on dairy issues. Peterson detailed there had been a previous dispute in which Canada would not allow Americans to keep fish from a lake if they did not stay at a Canadian resort, and that was ruled a violation of the North American Free Trade Agreement and that he “is sure” Canada’s unwillingness to allow the Americans to cross Canada to get to their summer homes is a violation of USMCA.


     Rep. Ron Kind (D-Wis.) said that domestic surpluses are showing the significance of opening foreign markets. But he warned that conflicts with Canada over sanitary and phytosanitary standards have been “an irritant” and that the House Ways and Means Trade Subcommittee on which he sits will monitor the situation. The USMCA “is not a cure-all” for U.S. trade problems, Kind said, adding that he wants to find a way for the U.S. to get back into the Trans Pacific Partnership (now CPTPP) because so much of the growth in the world is in the Pacific. “The idea we are on the outside of that tent looking in is unacceptable,” Kind said.


House climate plan includes renewable fuels provisions. The House Select Committee on the Climate Crisis released a sweeping climate-change plan (link) that covers the waterfront relative to efforts to address the issue. Renewable fuels are a component, with the plan recommending the development of a Low Carbon Fuel Standard (LCFS). “Congress should consider opportunities to use low-carbon fuels, with appropriate guardrails to prevent conversion of non-agricultural lands into cropland, to shrink the carbon footprint of internal

combustion engine vehicles,” the committee report stated.


     Specifically, the plan calls on using the 2022 Renewable Fuel Standard (RFS) reset as a “building block” by transitioning the program to one that “encourages the development and production of liquid fuels that meet certain carbon emissions standards.” A new standard would include assessing fuels “based on a lifecycle carbon intensity benchmark” and incentivizing those, like renewables, with lower carbon intensity through a system of carbon credits.”


     The Renewable Fuels Association (RFA) spoke favorably of the plan’s recommendations for transitioning to a LCFS. “RFA continues to analyze the report, but at first blush we are highly encouraged by the Select Committee’s acknowledgement that renewable fuels like ethanol can play an important role in reducing the carbon impacts of our nation’s transportation sector in the future,” said RFA President and CEO Geoff Cooper. “RFA agrees with the Committee that widespread use of liquid fuels and internal combustion engines will continue for decades to come, and we welcome the recommendation to create a nationwide technology — and feedstock — neutral Low Carbon Fuel Standard,” Cooper remarked. “RFA looks forward to continuing its engagement and interaction with the Select Committee and other committees as the next steps are taken toward addressing carbon emissions and climate change.”


Grassley supports Iowa colleague on blocking EPA nomination. The effort by Sen. Joni Ernst (R-Iowa) to prevent a vote on the nomination of Doug Benevento to be deputy EPA administrator is being backed by Sen. Chuck Grassley (R-Iowa). Grassley told reporters that he and Ernst spoke to EPA Administrator Andrew Wheeler last week on the issue of the 52 retroactive small refinery exemptions (SREs) that have been received by the agency. The requests are being viewed as an attempt by refiners to qualify for SREs down the road after the 10th Circuit Court invalidated three SREs for the 2016 compliance year as they did not constitute an extension of previously granted waivers.


     Grassley said he also broached the issue with Department of Energy officials recently. “I didn't feel from either one of the two people I talked to that they were very enthused about dealing with them (the retroactive waivers),” Grassley said. The retroactive waivers, Grassley concluded, do not reflect “common sense.”


Grassley takes on Senate Ag Chairman Roberts over cattle pricing issue. Sen. Chuck Grassley (R-Iowa) criticized Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) for blocking his bill that would require a percentage of cattle sales to be for cash rather than pre-negotiated. Grassley during a briefing yesterday said Roberts told him he was “considering” his bill, but when other members of the Committee wanted to have breakfast with Roberts to discuss it, he declined. “Here is the sad thing about the chairman of the committee,” Grassley said. “This is badly needed... I think of the money beef producers are losing.” Grassley detailed that 80% of the cattle sales are pre-negotiated contracts. “Four producers that have 80% of slaughter capacity, they are powerful forces in this town. You would think the chairman of the Ag committee would see the needs of the family farmer.”


Update on China:

  • Sen. Wyden wants answers from Navarro on Trump and China. Sen. Ron Wyden (D-Ore.) wants White House trade advisor Peter Navarro to reveal what he knows about allegations that President Donald Trump solicited Chinese imports of U.S. ag commodities as a personal political favor. Wyden, ranking member of the Senate Finance Committee, writes in a letter to Navarro (link) that key details of the Phase 1 trade deal have never been disclosed. “In order to assure the public that the agreement did not prioritize agricultural products from electorally important states for the benefit of President Trump, please describe how each subcategory purchase obligations was determined,” Widen wrote. Link to Wyden press release on the topic.
  • Police in Hong Kong fired water-cannon and pepper spray at pro-democracy protesters and made 30 arrests, the first under a new national-security law. Adopted by the territory’s government last night, it gives the government in Beijing and its security agencies the right to designate and prosecute political crimes in Hong Kong. Activists may face life imprisonment. One of the first people to be arrested under the new law had unfurled a banner proclaiming “Hong Kong Independence.” July 1 is the day in 1997 when Hong Kong reverted from British to Chinese sovereignty and is usually marked by both official celebrations and pro-democracy protests. This year those protests are also directed at a new national-security law imposed on the territory.

    The new law stipulates that a person who "undermines national unification" of Hong Kong with the mainland will face punishment of up to life in prison, depending on the severity of the offense. The development is likely to add to the recent tensions seen between the U.S. and China. Overnight, the FCC officially designated Huawei and ZTE as national security threats to "America's communications networks — and to our 5G future."

    The business community has largely embraced a new security law tightening Beijing’s control of Hong Kong — thanks in part to a huge inflow of Chinese money into the territory, according to a New York Times article (link).

Update on next aid package:

  • No quick timeline for next Covid-19 aid package. There will be no formal negotiations between Senate and House leaders on a new Covid-19 aid package until July 20, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said Tuesday. The Senate is scheduled to remain in session from July 20 through Aug. 6, and Grassley said he expects the Senate to finish the aid package by Aug. 6 and send it to President Donald Trump for his signature.

    The calendar shows the Senate leaving Thursday for a recess until Monday, July 20. The House will hold pro forma floor sessions the first two weeks of July, while House appropriations subcommittees and the full House Appropriations Committee meet and prepare bills for floor votes between July 20 and 31.

    Meanwhile, Senate Republicans are beginning to put together their own Covid-19 aid package, but with no apparent Democratic involvement it's unlikely to receive enough support to pass both chambers.

    "What I can tell you without fear of contradiction is the focus will be kids, jobs and health care," Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday following a closed-door lunch with GOP senators. "Any bill that passes the Senate will have liability protections in it,” he added.

    “We are going to try to get things in for ethanol and biofuels and help for agriculture,” Grassley said in his regular Tuesday conference call with reporters. Grassley said that his other priorities are aid for livestock producers who have had to kill their animals because there has not been slaughterhouse capacity. He stressed he would “count on” crop insurance and regular farm subsidy programs “that would have kicked in regardless of the pandemic.”

    Labor-HHS-Education Appropriations Subcommittee Chairman Roy Blunt (R-Mo.) told reporters that he's directed the panel to begin working on legislation that would provide funding for more testing, additional work on therapeutics and vaccine research. "A month from now we should be in the final stages of getting that bill together," Blunt said. Blunt's panel is also planning to look at how the government can ensure once a vaccine is approved that it's distributed "quickly and fairly in a way that people will think the whole country is adequately and appropriately served by it."

    Tests for schools. Blunt said his staff will be looking at how to ensure schools throughout the country can get access to the large volume of tests they'll need to allow students and teachers back into the classroom as early as August. "The most important thing we do to resume normalcy is to get people back to school. You’re not going to do that, particularly in a residential setting, without millions of tests that people can take dozens of times," he said. "That’s very practical, it's very possible."

    Getting a measure through Congress before the August recess is unlikely without the support of Democrats, who passed their own $3.5 trillion-plus bill in the House in May and have urged McConnell to start bipartisan negotiations. The Democratic package would provide nearly $1 trillion in additional aid to state and local governments and extend the added $600 unemployment insurance benefit through the end of January.

    GOP lawmakers at this time have been reluctant to support more funding to help state and local governments address budget shortfalls they are experiencing due to a drop off in tax revenue from stay-at-home orders. McConnell said it's unlikely Republicans agree to extend the $600 plus in unemployment insurance benefits lawmakers approved in a sweeping aid package in March, saying the additional money is making it harder to entice some people to go back to work. Without an extension, those additional funds will expire at the end of July.

    McConnell also reiterated his calls for liability protections, an issue Democrats have been skeptical about. "Unless you're grossly negligent or intentionally engaged in misconduct, we're going to see to it that you don't get sued," he said.

  • Senate GOP Whip John Thune (R-S.D.) likes conservation acreage set-aside programs and is pushing to get a smore robust version of his new Soil Health and Income Protection Program include in the next coronavirus aid package. The pilot program allows farmers to get payments on land taken out of production for up to five years. It was authorized at just 50,000 acres and limited to the upper Midwest under the 2018 farm program. But the coronavirus relief bill that passed the House in May (HEROES Act) would authorize an emergency version of the program at 5 million acres and a payment rate of $70 per acre. The impact of any such set-aside program would depend on the quality of the land eligible for the program.

Update on implementation of CARES 1, including CFAP:

  • The Senate on Tuesday evening passed a bill that would extend the Paycheck Protection Program until Aug. 8, just hours before the window to approve small business loans closed at midnight. The legislation also needs to be passed by the House and signed by President Trump.
  • Have the federal government’s enormous coronavirus aid programs helped stave off a wave of corporate bankruptcies? Link to WSJ article on the topic.


Food and beverage supply/industry update:

  • Conagra Brands said it is investing in more manufacturing capacity as demand for its packaged foods remains strong this summer. The maker of Hunt’s tomatoes, Healthy Choice meals and Birds Eye frozen vegetables said its comparable sales jumped 22% in the quarter that ended May 31 and have continued to increase since then. Retailers and food makers want to be prepared for a surge in grocery shopping, which is likely if a second wave of Covid-19 cases occurs as forecast.

    Retail sales perspective

  • Packaged food companies are preparing for continuing strains on inventories in a tumultuous consumer landscape. Conagra Brands Inc. says it is adding more manufacturing capacity to meet what it sees as continuing strong demand at grocery stores, the Wall Street Journal reports (link), even as the maker of Hunt’s tomatoes, Healthy Choice meals and Birds Eye frozen vegetables tries to build up stockpiles for a potential second wave of Covid-19 cases. Packaged-food companies have seen unprecedented sales since the spring, when government officials closed restaurant dining rooms, and consumers cleaned out supermarkets as they stocked up on food and household products. For food companies, the crisis “has created a chance to win back shoppers who had defected to niche, trendy brands in recent years. It has also highlighted the strength of their extensive supply chains as they have ramped up manufacturing and distribution to match the consumer surge,” according to the WSJ article.
  • Beyond Meat is entering grocery stores in mainland China via a partnership with Alibaba, which will begin selling the meatless burger patties at its innovation-driven Freshippo chain. The company already entered the mainland via a restaurant deal with Starbucks back in April and has expanded its products to Yum China's KFC, Taco Bell and Pizza Hut. The news may go some way in helping shares of Beyond Meat, which have slipped about 10% over the past week after McDonald's ended a trial of its meatless burger in Canada.
  • Rebranding... "Mrs. Butterworth's was really architected to resemble a loving grandmother, but we can understand how some people may view it differently, may find it offensive," Conagra Brands CEO Sean Connolly told CNBC, explaining the company's brand review. "The horrific violence, the racial justice, we and other companies have to up our game when it comes to diversity and inclusion, and that starts with listening and it starts with being more aware and sensitive." Aunt Jemima, Uncle Ben's and Cream of Wheat have also revealed plans to rebrand in recent weeks, while several companies have either pulled or said they will alter the names of their skin-lightening creams.

Update on reopening America... and around the world:

  • FedEx said Christmas-like levels of online shopping boosted its business, and it is seeing tentative signs that the global economy is recovering from the coronavirus pandemic. The company said that 72% of shipments in the U.S. went to residences in the latest quarter, compared with 56% a year ago.
  • Microsoft unveiled an initiative to retrain 25 million people in digital skills. As a first step, the tech giant — using resources from divisions like LinkedIn and GitHub — plans to help people identify new jobs.
  • Airbus announced 15,000 job cuts from the 90,000-strong workforce of its commercial-airliner arm. The planemaker plans to reduce production by 40% over two years due to low demand for air travel during the pandemic.
  • The EU’s 27 member states agreed on 14 “safe” countries from which non-essential travel will be permitted, including Australia, Canada and Japan. China will also be included, as long as travelers from the EU are allowed to go to China in return. America, Brazil and Russia, which are suffering big surges of infections, are not on the list.
  • Boris Johnson presented a “new deal” worth £5bn ($6 billion) to support Britain’s economy through the pandemic. The money will fund house-building and infrastructure projects, but critics accused the pledge of being too modest. Johnson’s announcement was marred by news that Leicester, a city in the East Midlands, would reintroduce strict lockdown measures after cases of covid-19 there multiplied.

Coronavirus update:

  • Summary: Covid-19 cases are at 10,498,090 with deaths at 511,851, according to data compiled by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). U.S. Covid-19 cases are at 2,636,538 with 127,425 deaths.

    Daily cases

  • New York adds eight states to quarantine list. "You must self-quarantine for 14 days," New York Governor Andrew Cuomo told prospective travelers to the Empire State. The list of those so-warned now includes California, Georgia, Iowa, Idaho, Louisiana, Mississippi, Nevada, and Tennessee.
  • President Trump's Surgeon General said "please, please, please wear a face covering when you go out in public." Goldman Sachs has calculated the economic effect of wearing masks to slow the spread of the virus. Economists at the bank figured that a national mask mandate, which could substitute for a second round of lockdowns, would avoid a 5% drop in America’s GDP “Our analysis suggests that the economic benefit from a face mask mandate and increased face mask usage could be sizable,” the economists wrote in a recent note.

    Masked men
    A sign of the times, featuring Jay Powell of the Fed, left, and Treasury Secretary Steven Mnuchin. Pool photo by Tasos Katopodis

  • One of the biggest legal fights in the history of insurance has begun. A cavalcade of restaurateurs, retailers and others hurt by pandemic shutdowns have sued to force their insurers to cover billions in business losses. Millions of businesses across the U.S. have “business interruption” insurance. The pandemic, no question, interrupted their businesses. But insurance companies have largely refused to pay claims under this coverage, citing a standard requirement for physical damage, according to an article in the Wall Street Journal (link). It says more than half of property policies in force specifically exclude viruses. The companies filing the lawsuits mostly hold policies without that exclusion. Their argument for getting around the physical-damage requirement is that the coronavirus sticks to surfaces and renders workplaces unsafe. Hundreds of lawsuits have been filed, and lawyers anticipate many more.
  • The Darth Vader of Covid-19, Dr. Anthony Fauci, stepped up his warning on virus cases ahead. The U.S. is “not in total control” of the country’s coronavirus outbreak and the nation might see daily new cases top 100,000 per day unless action is taken, White House health adviser Dr. Anthony Fauci said during a Tuesday hearing. “I can’t make an accurate prediction, but it’s going to be very disturbing,” Fauci told senators in a hearing held by the Senate Health, Education, Labor and Pensions Committee. “We are now having 40-plus-thousand new cases a day. I would not be surprised if we go up to 100,000 a day if this does not turn around, and so I am very concerned.”

    Another Fauci concern: The nation’s top infectious disease expert, told lawmakers the new strain of flu carried by pigs in China has characteristics of the 2009 H1N1 virus and the 1918 pandemic flu. He told the Senate Health, Education, Labor and Pensions Committee that scientists are keeping an eye on the virus, which they call “G4 EA H1N1. He added, “It's something that still is in the stage of examination.” It’s not “an immediate threat where you’re seeing infections, but it’s something we need to keep our eye on, just the way we did in 2009 with the emergence of the swine flu.” Both H1N1 and the 1918 flu were both considered horrific viruses. Fauci has often compared to Covid-19 to the 1918 flu, which is estimated to have killed between 30 million to 50 million.

    According to PolitiFact (link), Fauci downplayed the urgency of the virus on several occasions earlier this year. According to PolitiFact, Fauci told the conservative outlet Newsmax in January that the virus was something Americans didn't need to worry about "right now" — but stressed that it still needed to be taken seriously and that the situation might change. "Obviously, you need to take it seriously and do the kind of things the Centers for Disease Control and Prevention and the Department of Homeland Security is doing," he told the outlet. "But this is not a major threat to the people of the United States and this is not something that the citizens of the United States right now should be worried about," he told Newsmax.

    On Feb. 29, Fauci gave an interview on NBC's Today show in which he said the risk of disease at the time was "still low" but stressed that the situation "could change" once cases of community spread were reported in the United States.


  • Amy McGrath defeated Charles Booker in Kentucky Democratic Senate primary. Former Marine fighter pilot Amy McGrath won a Democratic primary to become the nominee for the U.S. Senate from Kentucky, successfully coping with a strong late challenge from a state legislator. McGrath, backed by the Democratic establishment, defeated state House lawmaker Charles Booker, according to Associated Press projections. She will compete against Senate Majority Leader Mitch McConnell (R-Ky.) in November. With 99% of precincts reporting, McGrath had 45% of the vote, vs 43% for Booker and 5% for a third candidate, Mike Broihier. McGrath fared best in rural areas, while Booker won voters in Louisville and other cities. McGrath enters the general election having spent money both to attack McConnell and to defend herself against Booker, leaving her with $19.3 million in cash on hand, compared with $15.4 million for McConnell, federal election records show.

    Jessica Taylor, Senate and Governors Editor of the Cook Political Report, wrote: “In the end, the best thing McGrath's money is likely to do is force Republicans to spend in Kentucky at the expense of other states on the expanded Senate map, where the GOP is almost entirely playing defense. Ultimately, the Democrats' path to a Senate majority doesn't need to run through Kentucky. But they wouldn't mind if some Republican money has to.”

  • Assessments that Russia covertly offered bounties for killing coalition troops in Afghanistan were bolstered by financial transactions discovered by American intelligence services, according to the New York Times. President Donald Trump’s former national security adviser John Bolton joined Democrats in calling for sanctions against Russia, should the allegations turn out to be true. The president has dismissed the plot as a “hoax.” Today, the Gang of Eight congressional leaders get a White House briefing on intelligence reports relating to alleged Russian bounties.
  • Germany takes over the European Union’s rotating six-month presidency today, with the bloc reeling from the blow of coronavirus and the departure of the U.K.
  • USDA leaves most interest rates steady for July. The interest rate on commodity loans disbursed in July will be 1.125%, unchanged from June, according to USDA’s Farm Service Agency (FSA). The agency left rates steady on most Farm Storage Facility Loan (FSFL) approved in July, but did nudge the rates for those with 10-year loan terms up to 0.750%, those with 12-year loan terms up to 0.875% and 1.0% for Sugar Storage Facility Loans (SSFLs) with 15-year loan terms — all up 0.250% from the June levels.
  • President Trump threatened to veto the entire defense bill if it contains a provision that would strip the names of Confederate generals from U.S. military bases. The amendment, sponsored by Sen. Elizabeth Warren (D-Mass.), was included in the bill by the Republican-led Senate Armed Services Committee.


Add new comment