Record Daily U.S. Covid Cases, and Rise in Europe Cases Have Market Attention

Posted on 10/26/2020 7:21 AM

Covid aid punted until after elections | Pelosi to serve one more Congress as speaker if Dems retain House

 


In Today’s Updates


 

Market Focus:
* Rapid rise in Covid cases in U.S., Europe has market focus
* Concerns over Covid demand impacts keep crude under pressure
* More than a third of the S&P 500 reports earnings this week
* Funds boost net bullish corn bets to two-year high
* New Canada oil giant
* PG&E is pre-emptively cutting power again in northern California
* South American rains should prompt aggressive planting
* Needed precip to central & southwest Plains, but stressing livestock
* Another tropical storm/hurricane could threaten U.S. cotton crop
* Ukraine’s milling wheat prices rising
* Russian wheat exports slow in October

 

Policy Focus:
* USDA authorizes $500 million for Farmers to Families Food Box Program
* Each side in the U.S. stimulus debate accuses other of ‘moving the goalposts’

 

U.S./China update:
* China to sanction U.S. weapons makers over Taiwan sales
* China trade war didn’t boost U.S. manufacturing: WSJ
* Report: China had purchased $23.6 billion in American farm products this year
* Brazil supplied nearly 74% of China’s September soybean imports


U.S. food & beverage industry update:
* Dunkin' may sell and go private


Coronavirus update:
* More than 85,000 new coronavirus cases were reported across U.S. on Friday
* Mark Meadows: America “not going to control” spread of the coronavirus
* France set record for coronavirus infections
* Spain and Italy announced new restrictions
* Italy recorded new daily record number of cases on Sunday
* Spain’s gov't declared a six-month state of emergency
* Members of VP Pence’s inner circle tested positive for virus.
* Harvest time and return of college students spread the coronavirus to rural America
* Dr. Fauci suggested the country consider national mandate requiring masks
* Updates on vaccine being developed by University of Oxford and AstraZeneca

 

Politics & Elections:
* Pelosi committed to running for leadership position again if Dems retain House
* AOC balks on supporting Pelosi for speaker
* Trump tells donors it will be "very tough" to hold Senate
* Ernst/Greenfield race remains very close
* Wasserman: Biden’s lead (52%-43%) larger & more stable than Clinton’s in ’16
* Facebook prepares for election-related unrest in the U.S.


Other Items of Note:
* A late-season Colorado wildfire had expanded sixfold
* U.S. and India expected to sign military pact
* Mnuchin will likely delay currency report until after Nov. 3 elections
* Cruz, Cornyn among senators alleging Mexico undermining USMCA
* Trump bid to kill solar-tariff loophole blocked
* Bayer to buy gene-therapy firm for up to $4 billion
* USDA top economist Johansson reportedly will leave for position at sugar group

 


MARKET FOCUS


 

Equities today: U.S. stock futures signal a lower opening as coronavirus cases surged in the U.S. and Europe, adding to worries about the economic outlook after Congress and the White House failed to agree on a fiscal stimulus deal. The U.S. reported 60,789 new Covid-19 cases on Sunday, down from recent record-setting levels, but up from a week earlier. In Asia, most major equity benchmarks closed lower. The Financial Times reported AstraZeneca’s shot has produced a robust immune response in elderly people. China’s Shanghai Composite Index fell 0.8%. Markets in Hong Kong were closed for a public holiday.

     More than a third of the S&P 500 reports earnings this week. Companies have soundly beat lowered expectations thus far.

 

     U.S. equities Friday: The Dow ended down 28.09 points, 0.10%, at 28,335.57. The Nasdaq gained 42.28 points, 0.37%, at 11,548.28. The S&P 500 was up 11.90 points, 0.34%, at 3,465.39.

 

On tap today:

 

     • U.S. new-home sales for September, due at 10 a.m. ET, are expected to rise to an annual pace of 1.02 million from 1.01 million a month earlier.
     • Dallas Fed's manufacturing survey for October is out at 10:30 a.m. ET.
     * USDA Grain Export Inspections, 11 a.m. ET
     • USDA Crop Progress report, 4 p.m. ET.

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index is higher. Nymex crude oil prices are lower and trading around $39.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.81% today.

 

    • Concerns over Covid demand impacts have kept crude under pressure. U.S. crude is trading under $39 per barrel with Brent under $40.90 per barrel. Prices were lower in Asian action with US crude down 69 cents at $39.16 per barrel while Brent crude was down 68 cents at $41.09 per barrel.

 

     • CFTC ag perspective from Bloomberg:
        * Funds boost net bullish corn bets to two-year high

        * Net bearish orange juice bets cut to 4-week low

        * Net bullish NYC cocoa bets cut to 11-week low

        * Net bullish arabica coffee bets cut to 11-week low

        * Net bullish cotton bets boosted to 2-year high

        * Net bullish live cattle bets cut to 12-week low

        * Net bullish soy meal bets boosted to 2-year high

        * Hedge fund managers cut net bullish soy oil bets

        * Net bullish Chicago wheat bets boosted to 8-month high

        * Hedge funds boost net bullish corn bets to 2-year high

        * Hedge funds boost net bullish hog bets to 4-week high

        * Hedge fund managers boost net bullish soybeans bets

        * Net bearish feeder cattle bets boosted to record high

        * Net bullish raw sugar bets boosted to 4-year high

 

     • New Canada oil giant. Cenovus Energy has agreed to buy Husky Energy in a C$3.8 billion ($2.9 billion) all-stock deal that will combine two of the largest players in Canada's struggling oil-sands industry. The combined company will have about 750,000 boe/d production, making it the third-largest Canadian oil and natural gas producer. it would also be the second-largest Canadian-based refiner and upgrader with total North American upgrading and refining capacity of ~660,000 boe/d.

 

Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):

     • South American rains should prompt aggressive planting. Brazil received notable rains in Minas Gerais and Goias over the weekend.
     • Winter storm bringing needed precip to the central & southwest Plains, but also stressing livestock.
     • Another tropical storm/hurricane could threaten the U.S. cotton crop.
     • Ukraine’s milling wheat prices on the rise.
     • Russian wheat exports slow in October.

 

A late-season Colorado wildfire had expanded sixfold to about 170,000 acres by Friday, burning through Grand County and jumping the continental divide into Rocky Mountain National Park, prompting evacuation orders across the region. The fire is now the second-largest in the state's history and exemplifies the traits of climate change, burning during a severe drought at an elevation of 9,000 feet in a season when snow would typically be falling, while the largest fire in the state's history is still burning as well, west of Fort Collins.

 

PG&E is pre-emptively cutting power again in northern California, affecting 386,000 homes and businesses in 38 counties, or nearly 1 million people. It's the fourth times this year the state’s largest utility had to shut off electricity due to high winds and extreme wildfire danger, which could spark blazes if live wires topple into dry brush. Utilities in Southern California, like Southern California Edison, are also warning of potential blackouts.

 


POLICY FOCUS


 

USDA authorizes $500 million for a fourth round of purchases for the USDA Farmers to Families Food Box Program. The focus is on those who need food during the Covid-19 pandemic. USDA expects to award contracts by Friday for deliveries of food boxes from November 1 through December 31. The announcement helped fuel milk futures.

 

    The program will continue the purchase of combination boxes to include fresh produce, dairy products, fluid milk and meat products.

 

     Perdue comments. “We recently surpassed 110 million boxes delivered, and millions more are headed to Americans in need,” USDA Secretary Sonny Perdue said. “I’m very pleased that we are able to extend this program and continue our relief efforts for American farmers and families.”

 

Update on China:

  • China to sanction U.S. weapons makers over Taiwan sales. China said it will sanction three American defense contractors over proposed arms sales to Taiwan, retaliating against U.S. efforts to deepen security ties with the island democracy that Beijing claims as its territory. Chinese Foreign Ministry spokesman Zhao Lijian said today that Beijing has decided to impose unspecified sanctions on Lockheed Martin Corp. , Boeing Co. ’s defense division and Raytheon Technologies Corp., as well as other U.S. entities and involved in the planned $1.8 billion weapons package. The U.S. State Department last week approved proposals to sell missiles, rocket artillery, aerial reconnaissance sensors and related gear to Taiwan — the Trump administration’s latest effort to put pressure on China through closer defense ties with Taipei.
     
  • China trade war didn’t boost U.S. manufacturing: WSJ. President Trump’s trade war against China didn’t achieve the central objective of reversing a U.S. decline in manufacturing, economic data show, despite tariffs on hundreds of billions of dollars of Chinese goods to discourage imports. The Wall Street Journal (link) said the tariffs did reduce the trade deficit with China in 2019, but the overall U.S. trade imbalance was bigger than ever that year and has continued climbing. “Reshoring of U.S. factory production hasn’t happened either. Job growth in manufacturing started to slow in July 2018, and manufacturing production peaked in December 2018.”
    Mfg China
  • The U.S. government said Friday that China had purchased $23.6 billion in American farm products this year, but that amount includes both goods that have been shipped and also those sold but not yet exported. Some observers note the figure is an “overly optimistic” gauge as some of the sales may only ship after the Dec. 31 deadline and the contracts may still be canceled or postponed. Link to our special report.
    Trade deficit China
  • Brazil supplied nearly 74% of China’s September soybean imports. China imported 7.25 MMT of soybeans from Brazil in September, a 51.5% jump from the 4.79 MMT of the oilseed the country imported from Brazil in September 2019, data from China’s customs administration showed. Brazil accounted for the bulk of China’s 9.8 MMT in total imports during September, with the net total up 19% from year-ago. The U.S. accounted for 1.17 MMT of those shipments, a 32.4% decline from year-ago. But the U.S. is expected to dominate fourth quarter shipments.
     
  • U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.

Update on next aid package:

  • Each side in the U.S. stimulus debate accuses the other of "moving the goalposts." That's all you need to know to predict what many had forecast weeks ago: This issue never had great odds of concluding before Nov. 3 elections, especially after election polls continue to signal a trifecta Democratic win of the White House, House and Senate.

    House Speaker Nancy Pelosi (D-Calif.) and White House Chief of Staff Mark Meadows accused each other of “moving the goalposts” on stimulus legislation in back-to-back Sunday interviews on CNN. If no coronavirus relief bill is passed before the election, Pelosi said House Democrats would keep pressing for an agreement in the lame-duck session after the election. She said they would not wait until January.

Food and beverage industry update:

  • Dunkin' may sell and go private. Dunkin' Donuts and Baskin Robbins chains owner Dunkin' Brands has held preliminary talks to be acquired by Inspire Brands after the New York Times reported on the negotiations. Inspire would take Dunkin' private at $106.5 per share, valuing the company at $8.8 billion, or a 20% premium over Dunkin' Brands's closing price of $88.79 on Friday. While Dunkin' said "there is no certainty that any agreement will be reached," if successful, Inspire would add the new assets to the Buffalo Wild Wings, Arby's Sonic, and Jimmy John's chains that it already owns.

Coronavirus update:

  • Summary: Source: Johns Hopkins University as of 6:30 a.m. ET.

    — 43,043,686: Confirmed cases world-wide, and 1,154,532 deaths
    — 60,789: New U.S. cases recorded yesterday
    — 8,636,169: Total confirmed cases in the U.S.
    — 340: Deaths in the U.S. recorded yesterday
    — 225,230: Total U.S. deaths
    — 132,568,375: Tests conducted in the U.S.

    Link to Covid Case Tracker

    Link to Our World in Data

     
  • More than 85,000 new coronavirus cases were reported across the U.S. on Friday, breaking the single-day record set on July 16 by about 10,000 cases. As of Friday, 15 states have added more cases in the past week than in any other seven-day stretch of the pandemic. New U.S. infections for Saturday came in barely below the daily record set the previous day, with at least seven states recording their highest one-day totals since the pandemic began. Hospitalizations are also on the rise.

    Mark Meadows, the White House chief of staff, said that America was “not going to control” the spread of the coronavirus, and should concentrate on speeding the development of a vaccine and treatments.

     
  • France set a record for coronavirus infections and Spain and Italy announced new restrictions, as Europe’s second wave threatened to spin out of control. France and the Netherlands chalked up record numbers of daily infections, around 52,000 and 10,000 respectively.

    Italy, the former global epicenter of the coronavirus pandemic, recorded a new daily record number of cases on Sunday, as Prime Minister Giuseppe Conte announced new restrictions designed to combat the surge. Italy recorded 21,273 new cases in total and 128 deaths.

    Over the weekend, the European Union countries represented roughly a third of new cases discovered worldwide.

    Spain’s government declared a six-month state of emergency, and introduced night-time curfews, as the country tries to rein in a second wave of covid-19 infections.

    EU cases

     
  • Members of Vice President Mike Pence’s inner circle, including his chief of staff, Marc Short, tested positive for the virus. Pence, who tested negative, will continue his busy campaign travel.
     
  • Harvest time and the return of college students spread the coronavirus to rural America. In recent weeks, the coronavirus pandemic has spread to rural America, particularly the Midwest. Nearly 70% of rural counties have infection rates of 100 per 100,000 population, a rate that the White House Coronavirus Task Force considers to mean that the virus is spreading out of control. Link for more from Washington Examiner.
     
  • Dr. Anthony Fauci, the nation’s top infectious disease expert, suggested the country consider putting in effect a first-ever national mandate requiring masks to help control the outbreak.
     
  • Covid-19 vaccine being developed by the University of Oxford and AstraZeneca produces a robust antibody and T-cell immune response in elderly people, the group at highest risk, the Financial Times reports (link/paywall). While details of the finding are expected to be published shortly in a clinical journal, sources cautioned that positive immunogenicity tests do not guarantee that the vaccine will ultimately prove safe and effective in older people. AstraZeneca resumed the U.S. trial of its experimental vaccine on Friday after a pause due to safety concerns, while Johnson & Johnson also restarted trials, saying the first batches of its shot could be available in January.

 


POLITICS & ELECTIONS


 

  • Links
    2020 Presidential Election Interactive Map
    The Green Papers
    Real Clear Politics
    2020 Political Atlas
    2020 Demographic Swingometer
    Days until election

     
  • Pelosi on Sunday committed to running for the leadership position again if Democrats retain their House majority in November's election. CNN’s Jake Tapper asked current House Speaker Nancy Pelosi (d-Calif.) on State of the Union if she is “going to run for another term as Speaker” if Democrats keep the House. “Yes, I am,” Pelosi answered. Democrats are expected to keep their hold on the House, with RealClearPolitics ranking 215 seats as at least leaning Democratic, 185 as at least leaning Republican and 35 as toss-ups. In late 2018, Pelosi committed to a self-imposed term limit of a maximum of four years, so the next Congress is expected to be her last as the House's top Democrat.
     
  • AOC balks on supporting Pelosi for speaker, says she'll support 'most progressive candidate.' During an interview with CNN host Jake Tapper Sunday morning, Rep. Alexandria Ocasio-Cortez, the freshman congresswoman from New York, made clear that she intends to support the "most progressive" option for House speaker, examining other Democratic candidates for the role other than Pelosi.
     
  • Trump tells donors it will be "very tough" to hold the Senate. President Trump privately told donors this past week that it will be “very tough” for Republicans to keep control of the Senate in the upcoming election because some of the party’s senators are candidates he cannot support. “I think the Senate is tough actually. The Senate is very tough,” Trump said at a fundraiser Thursday at the Nashville Marriott, according to an attendee. “There are a couple senators I can’t really get involved in. I just can’t do it. You lose your soul if you do. I can’t help some of them. I don’t want to help some of them.” Link to WaPo article.
     
  • Ernst/Greenfield race remains very close. A New York Times-Siena College survey showed Ernst up just one point over Greenfield, while several other polls have shown Greenfield up.
     
  • U.S. early vote of 58.6 million, exceeds 2016 with 9 days to election. That signals there are around 100 million people yet to vote.
     
  • David Wasserman (@redistrict) on Twitter on Sunday night: “A few days out, the picture of this race is pretty clear: 1) Biden’s lead (52%-43%) larger & more stable than Clinton’s in ’16; 2) Far fewer undecided/third party voters than ’16; 3) District-level polls (which showed big problems for Clinton in ’16) back up national/state polls … Btw, virtually none of this assessment has anything to do with early turnout data, which tells us next to nothing about the vote preferences of the final electorate. It’s based on a body of polling data that’s fundamentally different from 2016’s polls.”
     
  • Facebook prepares for election-related unrest in the U.S. The social network is considering restrictions that slow the spread of some posts and lower the threshold for blocking inflammatory content, the Wall Street Journal reports (link). Such measures are normally reserved for what the company calls at-risk countries, like Sri Lanka and Myanmar. The tools would only be used in the event of election-related violence or other serious circumstances, though some employees are concerned it could slow down viral content and unintentionally hide legitimate political discussions.

 


OTHER ITEMS OF NOTE


 

  • U.S. and India expected to sign military pact. The satellite-intelligence agreement will be completed during a visit by Secretary of State Mike Pompeo and Defense Secretary Mark Esper, Indian officials said. The move would bolster cooperation in the Pacific and Indian oceans to counter China.
     
  • Mnuchin will likely delay currency report until after Nov. 3 elections. Treasury Secretary Steven Mnuchin is unlikely to release a report on international currency manipulation that was due in April until after the Nov. 3 presidential election, according to reports. The semi-annual report to Congress has been largely written and ready for release since the spring. But Mnuchin’s focus on combating the economic collapse precipitated by the coronavirus pandemic was, at first, the reason it was delayed. The Treasury has been prepared to issue its report since about July, but decided not to for reasons that remain unclear. The document provides assessments on whether China, Vietnam or other major trade partners are artificially adjusting the values of their currencies.
     
  • Cruz, Cornyn among senators alleging Mexico is undermining USMCA. Senators including John Cornyn (R-Texas) and Ted Cruz (R-Texas) sent a letter (link) to President Trump arguing that Mexico’s energy policy undermines the spirit of the USMCA trade agreement. Six senators and 37 members of Congress signed the letter, whose authenticity was confirmed by Cornyn spokeswoman Natalie Yezbick. The signatories accuse Mexican President Andres Manuel Lopez Obrador of giving preferential treatment to protect state oil company Petroleos Mexicanos and state utility company Comision Federal de Electricidad.
     
  • Trump bid to kill solar-tariff loophole blocked. A U.S. trade court on Saturday temporarily blocked the Trump administration’s latest bid to end a loophole it had granted on two-sided solar panels. The order comes weeks after President Donald Trump moved to eliminate a tariff exemption for the two-sided, or bifacial, panels. Prior to that proclamation, the government tried for more than a year to revoke the exemption, only to get repeatedly thwarted by the trade court. Court of International Trade Judge Gary Katzmann issued a temporary restraining order that effectively prevents the tariff exemption from being removed for two weeks, unless the court takes other action during that time. In early 2018, Trump approved four years of tariffs on solar panel imports, starting at 30% and to be reduced by 5 percentage points in each subsequent year. The tariffs were part of a campaign promise to get tough on China, which dominates solar-panel manufacturing, and to boost the U.S. industry.
     
  • Bayer to buy gene-therapy firm for up to $4 billion. The purchase of U.S. biotech Asklepios would strengthen the German company's drugmaking arm, as Bayer continues to reel from its Monsanto acquisition and alleged cancer-related Roundup lawsuits. The latest deal, which includes upfront consideration of $2 billion and potential milestone payments of up to $2 billion, is a bet on cutting-edge gene therapy, which offers the potential to cure a wide range of often-rare diseases by editing errors in the body's instruction manual.
     
  • USDA top economist Rob Johansson reportedly will leave USDA for a position at a sugar group to fill a slot of a person retiring.

 

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