OPEC+ confab | Trump signs HK sanctions bill, China reacts | Ginsburg hospitalized
In Today’s Updates
* Trump signs Hong Kong sanctions bill, China reacts
* U.K. to ban Huawei from 5G networks, China reacts
* Sanctions not 'off the table' in South China Sea dispute
* Fed's Brainard: U.S. economy still faces substantial risks
* OPEC+ holds a key online meeting
* Copper, silver prices surge
* Study: Global population could peak sooner than anticipated
* Whistle-blower gets $3.8 million from SEC
* Trump to scale back NEPA reviews
* Pelosi says she would delay August recess to pass coronavirus relief bill
* McConnell: Stimulus measure will include liability shield
* U.S. food & beverage industry update
* Coronavirus has Americans hooked on canned tuna, producers playing catch up
* Update on reopening America... and around the world
* Delta sees Covid surge stalling rebound
* Coronavirus update
* Moderna’s Covid-19 vaccine shows promise in a clinical trial
* Bernanke, Yellen to testify on virus recovery
* Hospitals stockpiling coronavirus-treatment drugs against feared shortages
* EWG: Only 8 U.S. states have imposed mandatory protections for farmworkers
* Politics & Elections
* Tuberville beats Sessions in Alabama Senate GOP primary
* Maine's Sara Gideon defeats two other Democrats to take on Sen. Collins
* MJ Hegar to take on tthree-term Republican Sen. John Cornyn this fall
* Ronny Jackson wins Texas race against cattle industry official Josh Winegarner
* Other Items of Note
* White House rescinds rules on foreign students studying online
* Iran amendment clears House panel
* Ruth Bader Ginsburg hospitalized again
* Apple wins major tax battle against the EU
* WTO starts election process for a new director general
Equities today: Shares fell in China and Hong Kong after President Trump signed into law a sanctions bill to punish Chinese officials over Beijing’s crackdown on Hong Kong (see China updates for details). European equities rose. U.S. stock futures rose on promising results from the study of an experimental coronavirus vaccine (Dow futures rose more than 300 points).
U.S. equities yesterday: The Dow rose 556.79 points, 2.1%, to 26,642.59, its best day since June 29. The S&P 500 gained 42.30 points, 1.3%, to 3,197.52. The Nasdaq advanced 97.73 points, 0.9% to 10,488.58.
On tap today:
• U.S. import prices for June come out at 8:30 a.m. ET.
• U.S. industrial production and capacity utilization is out at 9:15 a.m. ET. Industrial production is expected to rise 4% in June.
• Bank of Canada releases a rate decision at 10 a.m. ET.
• Philadelphia Fed President Patrick Harker speaks at 11:45 a.m. ET.
• Federal Reserve releases Beige Book book at 2 p.m. ET.
Fed's Brainard: U.S. economy still faces substantial risks from the shock caused by the coronavirus pandemic as well as a long, slow recovery. Fed governor Lael Brainard said in remarks delivered online that the broad recovery seen in recent months was due largely to “rapid and sizable fiscal support,” such as one-time relief payments and extra unemployment insurance benefits that are set to expire in the coming weeks. “Fiscal support will remain vital,” she said.
“The recent resurgence in Covid cases is a sober reminder that the pandemic remains the key driver of the economy’s course,” she said. “A thick fog of uncertainty still surrounds us, and downside risks predominate.” Brainard cited several risks that could result in worse-than-expected economic growth, and she said she expected the recovery to face headwinds even if those downside risks don’t materialize. A second wave of infections, she added, would only “magnify that challenge.”
On the economy, Brainard said there were signs that some sectors, such as manufacturing and construction, had weathered the onset of the pandemic better than others, including consumer services, which she said “are more likely to remain hostage to social distancing.” Other areas of the economy likely to suffer from the inability to suppress the virus include commercial real estate and equipment investment, she said.
Long-term issues could develop, she said, especially regarding the economy’s capacity to produce goods and services due to depressed investment, the loss of employer-employee relationships and the destruction of businesses. “A wave of insolvencies is possible,” she said.
Citigroup, JPMorgan Chase and Wells Fargo set aside $28 billion for loan-loss provisions, on top of $19 billion earlier this year. That pummeled second-quarter profits, which were collectively down more than 80% versus the same time last year.
• Technical indicators point to additional upside for copper (golden cross).
• Silver prices have surged, up 68% since mid-March, fueled by industrial demand and investors' appetite for alternatives to gold and government bonds.
• Oil prices rose ahead of a committee meeting at the Organization of the Petroleum Exporting Countries. Producers led by Saudi Arabia are expected to recommend that the cartel and its allies taper output curbs that have boosted crude prices over the past three months. West Texas Intermediate crude gained 1% to $40.83 a barrel. Brent crude increased 0.7% to $43.42 a barrel. Meanwhile, the American Petroleum Institute reported that inventories fell by 8.32 million barrels last week — the biggest drawdown since December if confirmed by official figures today.
An OPEC+ technical committee detailed plans for countries including Iraq, Nigeria and Kazakhstan to make an additional 842,000 barrels a day of compensatory cuts in August and September, according to delegates. The proposal will be discussed by a ministerial monitoring committee today led by Saudi Arabia and Russia and comes after the nations missed their production targets again in June. Following the meeting, OPEC+ is still expected to announce that overall group cuts of 9.6 million barrels a day —about 10% of global supplies — will be relaxed in August as global fuel demand recovers from the Covid-19 pandemic.
Global population could peak sooner than anticipated. A new study (link), published in the medical journal the Lancet, has challenged United Nations estimates of when peak human population will occur. The Lancet study asserts that global population will peak at 9.7 billion in 2064, and decline to 8.8 billion in 2100. U.N. estimates had previously put peak population at 10.9 billion around the year 2100. The study also warns that China’s aging population could become burdensome in the latter stages of the 21st century, allowing the United States to reassert itself as the world’s largest economy — but only if it retains its status as an immigration magnet.
Whistle-blower gets $3.8 million from SEC. The Securities & Exchange Commission (SEC) awarded $3.8 million to a whistle-blower credited with providing “significant information” to help the agency disrupt a fraudulent scheme and return millions of dollars to harmed investors. The SEC, which announced the award in a statement yesterday, didn’t provide information on the person’s identity or the company involved, citing federal law that protects confidentiality. The agency has paid out roughly $505 million to 87 individuals since issuing its first award in 2012.
— Trump to scale back NEPA reviews. President Trump is expected to announce the first-in-decades rewrite of the rules governing how agencies scrutinize projects under the National Environmental Policy Act (NEPA) during an event in Atlanta today. The move will scale back requirements that agencies consider environmental consequences when approving new oil wells, pipelines, highways and other projects. The changes will limit the scope of agency reviews as well as what projects warrant the scrutiny. The White House Council on Environmental Quality had proposed the new procedures in January.
— Update on China:
- President Trump ends preferential treatment for Hong Kong, which “will now be treated the same as mainland China. No special privileges, no special economic treatments, and no export of sensitive technologies.,” Trump said.
President Trump also signed the Hong Kong Autonomy Act, which enables sanctions on individuals and businesses that contribute to the erosion of Hong Kong’s autonomy.
- China promises sanctions for U.S. ending of Hong Kong preferential status. China has said it will sanction U.S. institutions and individuals after President Trump signed an executive order and a new law requiring punitive measures over Beijing’s handling of Hong Kong. A statement by the Chinese foreign ministry said Trump’s move to sign the Hong Kong Autonomy Act into law was a violation of international relations norms, and a serious interference in China’s internal affairs. “The Chinese government resolutely opposes it and condemns it,” the statement said. “To protect its legitimate interests, China will take necessary action to impose sanctions against related U.S. institutions and individuals.”
- Sanctions not 'off the table; in South China Sea dispute. David Stilwell, the assistant secretary of state for East Asia, has said that the U.S. could impose sanctions on China as part of its new stance on Chinese maritime claims in the South China Sea. When asked about the possibility of sanctions, Stilwell replied: “Nothing is off the table... there is room for that. This is a language the Chinese understand — demonstrative and tangible action.”
- Secretary of State Mike Pompeo praised the United Kingdom's decision to ban the Chinese company Huawei from its 5G wireless networks, saying the country joins nations that are "standing up for their national security by prohibiting the use of untrusted, high-risk vendors." Beijing called Britain's ban “disappointing and wrong.”
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Update on next aid package:
- House Speaker Nancy Pelosi says she would delay August recess to pass coronavirus relief bill. “We absolutely have to. We also have to come to an agreement,” Pelosi (D-Calif.) told CNN when asked if she would forgo or postpone representatives’ monthlong return to their districts. Pelosi also brought up the need to pass aid to help people stay in their homes as moratoriums on evictions and foreclosures expire in parts of the country.
- McConnell: Stimulus measure will include liability shield. Senate Majority Leader Mitch McConnell (R-Ky.) said the new recovery package that he plans to unveil soon will be “guaranteed” to emerge from the Senate with a plan he’s written to protect everything from small businesses to schools from a new rash of lawsuits. McConnell said 1,100 lawsuits now have been filed seeking to “take advantage” of the crisis, which would prevent recovery except in extreme cases. “Unless you were grossly negligent, or intentionally engaged in harmful activity, you should not be subjected to successive litigation,” McConnell said yesterday. McConnell said he doesn’t support another round of bonus payments in the next stimulus but he does back extending unemployment insurance for those who need it. He also told hospital officials in Kentucky he expects there to be another infusion of funds to help health care providers but offered no details.
— Food and beverage supply/industry update:
- Coronavirus has Americans hooked on canned tuna, and producers are playing catch up. People have been buying more canned tuna during the economic downturn, in part because it’s a cheap protein. Link to WSJ article.
— Update on reopening America... and around the world:
- Delta sees Covid surge stalling rebound. Delta Air Lines said the resurgence of the pandemic and related travel restrictions have stalled a fledgling recovery in U.S. travel demand and prompted it to slash the number of flights it had hoped to return to its schedule next month. The airline will add back no more than 500 flights in August instead of the originally planned 1,000. It doesn’t expect to add much more through the end of this year. “Demand growth has largely stalled,” CEO Ed Bastian said.
— Coronavirus update:
— 13,323,530: Confirmed cases world-wide, and 578,628 deaths
— 67,417: New U.S. cases recorded yesterday
— 3,431,574: Total confirmed cases in the U.S.
— 900: Deaths in the U.S. recorded yesterday
— 136,466: Total U.S. deaths
— 41,764,557: Tests conducted in the U.S.
Florida suffered its deadliest day since the pandemic began and coronavirus-related hospitalizations reached new highs in Mississippi and North Carolina — Oklahoma recorded almost 1,000 new cases.
Travel from New York City seeded outbreaks all over the United States before city officials instituted social distancing guidelines, new research shows.
Link to Covid Case Tracker
Link to Our World in Data
- Moderna’s Covid-19 vaccine showed promise in a clinical trial. Details were released late Tuesday about the first human study of Moderna’s vaccine. The results showed that the vaccine induced the desired immune response for all 45 people evaluated. Researchers said the study reinforced their decision to take the shot into a large, decisive clinical trial scheduled to start in late July. Dr. Anthony Fauci, the government’s top infectious-disease expert, said the large study could yield an answer by year-end about whether the vaccine induced immune responses sufficient to protect people safely from Covid-19. A positive answer would clear the way for wider use and potentially help curb the pandemic. Public-health officials say it is likely that several vaccines would be needed to help bring the deadly global pandemic under control.
- Bernanke, Yellen to testify on virus recovery. Former Federal Reserve Chairs Ben Bernanke and Janet Yellen will testify before the House Select Subcommittee on the Coronavirus Crisis on Friday.
- Hospitals across the U.S. are stockpiling coronavirus-treatment drugs against feared shortages as infections soar across more parts of the U.S. Many painkillers and sedatives used this spring in hard-hit areas like New York and New Jersey remain in short supply, the Wall Street Journal reports (link), and some hospitals now are scrambling for alternatives and for other promising pharmaceuticals as Covid-19 cases surge in places including Florida, Texas and California. The rush to refill medicine stockpiles is part of a growing push to shore up supply chains of a range of healthcare supplies that were in high demand in the earlier wave of the pandemic. “They’re restocking without a good window on how much supply they’ll need, part of the broader uncertainty that has challenged planners throughout the pandemic. Drugmakers have ramped up production in the meantime, and wholesalers are capping how much hospitals may order,” the article details.
- Only eight U.S. states have imposed mandatory protections specifically for farmworkers from coronavirus amid a series of agricultural outbreaks across the country and a national rise in new infections, according to a survey of state regulations by an advocacy group. A little more than a dozen states have safety recommendations, but they aren’t enforceable, while the rest of the country hasn’t issued any protocols, according to the Environmental Working Group (EWG), which released its findings on Tuesday (link). Colorado, Michigan, New Mexico, New York, Oregon, Pennsylvania, Washington and Wisconsin are the only states to require produce growers and other farm operations to provide personal protective equipment to farmworkers and to require physical distancing, according to EWG, which favors farmworker protections.
POLITICS & ELECTIONS
— 2020 Presidential Election Interactive Map
— The Green Papers
— 5 weeks to the Democratic National Convention.
— 6 weeks to the Republican National Convention.
— 11 weeks to the first presidential debate.
— 16 weeks to Election Day, Nov. 3, 2020.
- What are the odds? Oddschecker.com is factoring in a 57% likelihood of a win for Joe Biden, while Real Clear Politics puts a 62% likelihood on Democrats taking the Senate.
- Tuberville beats Sessions in Alabama Senate GOP primary. Former Auburn University football coach Tommy Tuberville won, beating former Attorney General Jeff Sessions in the Alabama Republican Senate runoff. With 99% of precincts reporting, Tuberville led Sessions 61% to 39%. Tuberville was backed by President Trump in Alabama, which he won by 28 percentage points in 2016. Tuberville will now battle Sen. Doug Jones, in a race Republicans consider their best pickup opportunity. Sessions had served in the Senate for two decades before Trump nominated him for the top job at the Justice Department in 2017. Sessions resigned in November 2018.
- In Maine’s Democratic Senate primary, State House Speaker Sara Gideon defeated two other Democrats, the Associated Press projected. She will face GOP Sen. Susan Collins in November. Gideon was the party establishment’s favorite in the race, which Democrats see as a critical one to win if they are going to take control of the Senate in November.
- Texas Democratic voters chose Purple Heart recipient and Air Force veteran MJ Hegar over state Sen. Royce West to take on the three-term Republican Sen. John Cornyn this fall, the Associated Press projected. The race is rated “likely Republican” by the nonpartisan Cook Political Report.
- In another Texas battle, Ronny Jackson, the former White House physician, won his race against cattle industry official Josh Winegarner for Texas's 13th Congressional District (Texas's panhandle and part of the state's north). Dr. Jackson was backed by President Trump, while Winegarner had the endorsement of the retiring incumbent, Rep. Mac Thornberry, and the Texas Farm Bureau and other ag groups. Jackson hit Winegarner for his record as an agriculture lobbyist in Washington, D.C., while Winegarner swung at Jackson for his time in the capital as well. Dr. Jackson will run against Gus Trujillo, who won the Democratic nomination on Tuesday. As of 9:45 p.m. CT, Jackson had received 55.6% of the vote to Winegarner's 44.4%, with 90% of precincts reporting. With a Cook Partisan Voting Index of Republican plus-33, the winner is likely the district's next representative in Congress.
OTHER ITEMS OF NOTE
- White House rescinds rules on foreign students studying online. The Trump administration agreed to rescind new rules on international students, settling a lawsuit filed by Harvard and MIT. The rule would have forced some international students to transfer schools or leave the U.S. if their classes were held completely online in the fall. Judge Allison Burroughs announced that the schools had reached an agreement with ICE and its parent agency, the Department of Homeland Security. She said the government will rescind this policy. "The Court was informed by the parties that they have come to a resolution to the combined temporary restraining order/preliminary injunction motions," read the court docket. "The Government has agreed to rescind the July 6, 2020 Policy Directive and the July 7, 2020 FAQ, and has also agreed to rescind their implementation." With the new directive rescinded "on a nationwide basis," schools will follow ICE guidance from March that allows flexibility regarding student visa eligibility.
- Iran amendment clears House panel. The House Appropriations Committee adopted, 30-22, an amendment to its fiscal 2021 Defense spending bill that would block offensive U.S. military use of force against Iran without explicit congressional authorization.
- Ruth Bader Ginsburg hospitalized again. Supreme Court Justice Ruth Bader Ginsburg is back in the hospital, this time to treat a possible infection. She spiked a fever Monday night, according to a press release from the Supreme Court, and on Tuesday underwent an endoscopic procedure to clean out a bile duct stent that was inserted in August. The procedure was done at Johns Hopkins Hospital in Baltimore after Ginsburg was first evaluated at Sibley Memorial Hospital in Washington, D.C. According to a release, the justice is "resting comfortably and will stay in the hospital for a few days to receive intravenous antibiotic treatment."
- Apple wins major tax battle against the EU, when the bloc’s second-highest court today sided with the U.S. company over a €13 billion ($14.8 billion) tax bill that EU antitrust officials had said the company owed to Ireland. The General Court said it annulled the commission’s decision because it had failed to meet the legal standards in showing that Apple was granted an illegal subsidy. Irish Prime Minister Leo Varadkar said that the court’s decision would likely be appealed either way.
- World Trade Organization today starts its selection process for a new director general, after the incumbent decided to quit a year early citing personal reasons. The eight candidates include former U.K. trade secretary and Conservative leadership hopeful Liam Fox, Korea’s trade minister Yoo Myung-hee and former Kenyan Foreign Minister Amina Mohamed. The selection is done by consensus rather than voting, and Bloomberg reports that betting odds favor Kenya’s Mohamed —who would be the first woman and the first African to lead the body.