Mexican President Andrés Manuel López Obrador visits White House today
In Today’s Updates
* EIA lowers 2020 global oil supply outlook, lifts demand estimate
* EIA downbeat on ethanol outlook
* Mexican President Andrés Manuel López Obrador visits White House today
* Clarida: Fed can do more and ‘will do’ more if needed s
* U.S. imposing visa restrictions on Chinese officials involved in Tibet policy
* FBI accuses China of stealing Americans’ data
* China customs officials boost inspections of frozen food imports at ports
* China to auction another 20,000 tonnes pork
* China’s criticism of the U.S. dollar’s monopoly is gaining momentum
* Why China wants Trump to win: The Atlantic
* Price of gold in India has reached an all-time high
* Shipping companies face worse-than-expected earnings pressure
* Reps. Hartzler, O'Halleran push aid to rural electric co-ops
* White House pushes stimulus plan by August recess with $1 trillion cap
* Grassley to push for RELIEF Act in next aid package
* Reuters: USDA food box program short of goals
* U.S. food supply update
* CDC releases report on Covid-19 infections, deaths at meat and poultry plants
* Update on reopening America... and around the world
* Trump pressures schools to reopen
* State & local govts cutting money for schools, universities and other services
* Governments have cut 1.5 million jobs since March
* Coronavirus update
* New coronavirus cases hit daily record in U.S., at 60,000
* Brazil President Jair Bolsonaro tests positive for coronavirus
* Fauci warns against 'false complacency' on Covid-19
* Navarro: Federal officials have sufficient supplies to respond to spikes in states
* Politics & Elections Update
* DMC payment triggered for May, but June-forward payments unlikely
* U.S. notifies UN of withdrawal from World Health Organization
* Chief Justice John Roberts was hospitalized last month after a fall
* U.K. Prime Minister Boris Johnson: ready to leave EU without trade deal in place
* General: No Americans known to have died in bounty scheme
* Metals group urges Trump to keep tariffs
Equities today: Global stocks were mostly lower amid a surge in U.S. coronavirus cases that could undermine a recovery in the world’s biggest economy. But mainland Chinese shares extended a winning streak for a seventh consecutive day — pushing the Shanghai Composite Index up 1.7%. The index has advanced 8% this week as small investors bet that a recovering economy will boost profits. The streak has revived memories of an earlier rally in Chinese stocks in 2015, which ended in a crash. Traders in Asia said fund managers were seeking to take some risk off the table ahead of the corporate earnings season and an expected summer lull. In Europe, equities fell for a second day. Futures tied to the S&P 500 inched higher.
U.S. equities yesterday: The Dow declined 396.85 points, 1.51%, at 25,890.18. The Nasdaq fell 89.76 points, 0.86%, at 10,343.89. The S&P 500 lost 34.40 points, 1.08%, at 3,145.32.
On tap today:
• Mexican President Andrés Manuel López Obrador visits the White House today for his first foreign trip since winning the presidency in 2018. Canadian Prime Minister Justin Trudeau spurned an invite to today’s meeting as the U.S. government threatens to place tariffs on Canadian aluminum. Joint press statement at 6:35 p.m. ET.
• WTO deadline. Today is the deadline to nominate the next Director-General of the World Trade Organization.
• Atlanta Fed President Raphael Bostic speaks to the Rotary Club of Columbus at 12:45 p.m. ET.
• U.S. consumer credit for May is out at 3 p.m. ET.
• Japan machinery orders for May are out at 7:50 p.m. ET.
• China's consumer- and producer-price indexes for June are out at 9:30 p.m. ET.
Clarida: Fed can do more and ‘will do’ more if needed. Federal Reserve Vice Chairman Richard Clarida said the central bank would likely turn to additional forward guidance and asset purchases if it needed to do more to support the U.S. economic recovery. In terms of extra tools, he cited “additional forms of forward guidance that the Fed has used in the past and we would consider using in the future” as well as noting current Fed purchases of Treasuries and mortgages to support market functioning, while adding “there’s more that we could do in terms of our balance sheet as needed.”
Economic data flashing warning signs. The New York Fed’s Weekly Economic Index (link) — a measure of ten daily and weekly indicators — deteriorated for the first time since the economy showed signs of bottoming out in April.
• EIA raises 2020 U.S. crude output forecast to 11.63m b/d compared with 11.56m b/d projected in June, according to monthly Short-Term Energy Outlook (link).
— 2020 demand forecast raised to 18.34m b/d vs 18.06m b/d
— 2021 output estimate at 11.01m b/d, compared with previous estimate of 10.84m b/d
• 2021 demand forecast raised to 19.94m b/d from 19.46m b/d
— 2020 WTI seen at $37.55/bbl vs $35.14 previously
• 2021 WTI estimate $45.70/bbl vs $43.88
— 2020 avg. retail price for U.S. regular-grade gasoline $2.11/gal vs $2.07/gal.
Link to detailed table of forecast changes.
• EIA downbeat on ethanol. EIA forecasts that persistent reductions in domestic gasoline demand and limited higher-blend ethanol growth potential will result in ethanol production remaining lower than 2019 levels throughout the STEO forecast. EIA expects ethanol production to average 0.90 million b/d in 2020, 12% less than in 2019, and to average 1.00 million b/d in 2021, which would still be 2% lower than the 2019 level.
U.S. ethanol consumption averaged 948,000 b/d in 2019, and EIA forecasts significant decreases to average 836,000 b/d in 2020 and 919,000 b/d in 2021, driven by persistent Covid-19 related demand impacts. This level of consumption results in the ethanol share of total gasoline, which was an estimated 10.1% in 2018 and 10.2% in 2019, to be 10.1% on average during 2020 and 2021. This stable ethanol share assumes that growth in higher-level ethanol blends is limited by a combination of lower gasoline prices reducing incentives for increased ethanol blending and limited consumer demand for higher levels of ethanol blending beyond 10% of gasoline (E10).
• Crude oil futures are under mild pressure as traders mull the COVID-19 situation and await U.S. gov't inventory data due later this morning. U.S. crude is trading around 0.3% lower near $40.45 per barrel while Brent crude is down 0.2%, trading around $43 per barrel.
• The dollar inched higher amid concerns about the rise in new Covid-19 infections in parts of the United States. The Wall Street Journal Dollar Index, which measures the dollar against a basket of other currencies, ticked up 0.2% to close at 91.23 Tuesday. The gauge, which jumped sharply in mid-March as stock markets tanked, has been hovering between 90 and 95 since.
* Homebuyer mortgage demand spikes 33% as rates set another record low. Home prices gains continue to accelerate, so low mortgage rates are giving buyers much-needed help. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 dropped to 3.26% from 3.29%. Points, including the origination fee, for loans with a 20% down payment decreased to 0.35 from 0.36.
• Copper prices on the London Metal Exchange erased their losses since the beginning of the year. After China's coronavirus outbreak slammed demand and sent the commodity into a nosedive, outbreaks across major copper-producing countries are now boosting copper prices as a virus surge in Chile adds to disruptions in Mexico, Peru and Zambia.
• The price of gold in India has reached an all-time high, according to Quartz, who says this means a big upside for companies that take gold as collateral for loans.
• Shipping companies face worse-than-expected earnings pressure from the economic downturn caused by coronavirus, says Moody's. The credit-rating agency says the global sector's outlook in the next 12-18 months remains negative due to expectations that the world economy will shrink in 2020 and any recovery will be long and tough. "We now expect the aggregate EBITDA of rated shipping companies to fall by around 16%-18% in 2020, nearly doubling from our previous projection of a drop of around 6%-10%," says senior analyst Maria Maslovsky. The outlook for dry bulk and container shipping remains negative, with supply likely to exceed demand significantly, Moody's says. However, tanker prospects are stable due to high demand for floating oil & gas storage.
• Uneven car industry recovery. Car sales in China have begun to rise but they continue to fall in the U.S., and Europe is becoming the world’s weakest-performing auto market. Analysts say it could take Europe several years to get back to pre-Covid-19 volumes of new-car sales.
— Reps. Hartzler, O'Halleran push aid to rural electric co-ops. A House measure was introduced last Thursday that would allow electric cooperatives and small, rural telecommunications providers to refinance Rural Utilities Service debt at current market rates without penalty, assisting them in recovering from the pandemic. An identical bill was also introduced in the Senate. The House measure is pushed by Reps. Vicky Hartzler (R-Mo.) and Tom O'Halleran (D-Ariz.).
Key factors behind the measure:
(1) Rural electric co-ops expect revenues to decline by $7.4 billion due to Covid-19 impacts.
(2) The co-ops also expect higher unpaid bills, estimated around $2.6 billion.
(3) Total Covid-19 impacts then are $10 billion.
(4) Rural electric interest rates for many co-ops are far above current market rates.
(5) The Hartzler/O’Halleran bill would lower rates to current market rates, without penalty.
Hartzler and O’Halleran are Ag Committee members and are teamed up with several in the Senate in introducing the legislation.
— Update on China:
- U.S. is imposing visa restrictions on Chinese officials involved in Tibet policy, as U.S./China tensions mount. Secretary of State Mike Pompeo said the U.S. was introducing another set of visa restrictions on Chinese officials because Beijing was obstructing the ability of American tourists, journalists and diplomats to visit Tibet.
- FBI accuses China of stealing Americans’ data. The agency’s director Christopher Wray said in a speech that, “If you are an American adult, it is more likely than not that China has stolen your personal data.” He also said the country steals U.S. military and trade secrets and outlined how it goes after China-born critics living abroad.
- China converted the former Metropark Hotel in Hong Kong into a new national-security office, tasked with enforcing the draconian security legislation the Communist Party imposed on the territory on June 30. The office is located near Victoria Park, which had long been a gathering place for pro-democracy activists in Hong Kong.
- China’s forex reserves rose to $3.112 trillion in June. China’s foreign exchange reserves rose less than expected in June as the yuan strengthened and global asset prices rebounded amid a recovery in economic sentiment.
- China’s criticism of the U.S. dollar’s monopoly is gaining momentum in the face of Washington’s multitrillion-dollar coronavirus stimulus and threats of financial sanctions. Zhou Li, a former deputy director of the Communist Party’s International Liaison Department, recently issued a strong warning on the US dollar’s international monopoly. Zhou outlined the potential risk posed by the U.S. Federal Reserve’s unlimited quantitative easing program to China’s U.S. dollar-denominated assets and urged leaders to prepare for decoupling, because the U.S. dollar “has us by the throat.” The U.S. stimulus aid has seen the Federal Reserve’s balance sheet surge to a record $7.1 trillion in May from $4.2 trillion in March.
Meanwhile, some senior aides to President Trump want to undermine the Hong Kong dollar's peg to the U.S. dollar as an option to punish China for moves to chip away at Hong Kong's political freedoms. The idea has been met with skepticism from traders and analysts who think it would be difficult to implement and would probably risk hurting U.S. interests at least as much as China's. There was little reaction in the currency market with the Hong Kong dollar remaining at the strong end of its range.
At stake is the huge amounts of U.S. dollar-denominated assets held by China’s government and overseas citizens. Over half of the Chinese central bank’s $3.1 trillion worth of foreign exchange reserves, the world’s largest holding, is believed to be in U.S. dollars. China also holds over $2 trillion of outbound investment stock, the vast majority of which is located in developed countries and denominated in U.S. dollars.
China’s push to internationalize the yuan has not gained much traction over the past decade, despite its growing economic clout. The most recent figures from the SWIFT system showed that the Chinese currency accounted for just 1.66% of international payment transactions in April versus 43% for the U.S. dollar.
China authorities are aware of their vulnerability caused by their reliance on the US dollar, noting how the U.S. has already used access to the international US dollar payments system to punish Russia and Iran. “Such things have already happened to many Russian businesses and financial institutions. We have to make preparations early – real preparations, not just psychological preparations,” Fang Xinghai, a vice-chairman at the China Securities Regulatory Commission, said in a recent speech.
China’s central bank has led global peers in development of digital legal tender, with research efforts started in at least 2014. The digital currency is intended to eventually replace coins and banknotes and could offer an alternative to the dollar-based international payments systems.
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
- China customs officials step up inspections of frozen food imports at ports, leading to backlogs of up to two weeks and a shortage in storage space, delaying the supply of food to Chinese cities. The moves came after virus outbreaks in slaughterhouses around the world intensified worries in China that imported food could carry the disease. China recently scaled back meat imports over virus concerns.
World Health Organization and several governments insist there is no evidence of coronavirus transmission via food or food packaging, but Chinese customs officials from several cities said there was a “good chance” that the virus could stay alive in a frozen container. “We are concerned about the transmission of [the] virus in the production process,” said a customs official at Zhanjiang port in southern China, who added it was “better to overreact than not act” given the seriousness of the disease. (Some label it a version of the EU's precautionary principle at play.) Inspections have not turned up any trace of the virus on imported products, and governments and executives in exporting countries whose plants have been suspended have criticized China’s move as unscientific.
Since mid-June, Beijing has suspended imports from 14 pork, poultry and beef plants in countries including the U.S., Brazil, the Netherlands, Germany and Canada, while another seven plants, including those in Argentina, UK and Italy, have voluntarily stopped shipments to China, according to the Financial Times. As a result, Chinese pork prices have rebounded by almost 50% since this year's low in May.
- China to auction another 20,000 tonnes pork. China will auction 20,000 tonnes of frozen pork from state-owned reserves July 10, according to a notice from the China Merchandise Reserve Management Center. The country has sold at least 370,000 tonnes of its frozen pork reserves this year as it seeks to increase pork supplies that have been reduced by African swine fever.
- The Atlantic: Why China wants Trump to win. “From Beijing’s perspective, while a Democratic presidency may restore a more predictable form of American diplomacy, that may not best serve Chinese interests. In fact, four more years of Trump—though likely packed with annoyances and disputes—might present tantalizing opportunities for China to expand its influence around East Asia and the world.” Link for more.
— Update on next aid package:
- White House wants Congress to pass another stimulus package by the first week in August, before lawmakers head home for their annual summer recess, and to keep the cost at $1 trillion or less, according to Vice President Mike Pence’s top aide. “I think we want to make sure that people that are still unemployed or hurting are protected but at the same time, we want to take into consideration the fact the economy is bouncing back and want to try to contain the amount of spending,” Marc Short, Pence’s chief of staff, said Tuesday in an interview with Bloomberg Radio. “There’s obviously been a lot of stimulus put in the system over the last couple bills, and so the price tag for us would be that.”
The House is scheduled to begin its recess by Aug. 3, with the Senate following a week later. Senate Majority Leader Mitch McConnell (R-Ky.) has said he wants Congress to complete work on the next phase of stimulus by then.
- Sen. Grassley to push for RELIEF Act in next aid package. Senate Finance Committee Chairman Chuck Grassley (R-Iowa) earlier this week said he will push for the next coronavirus aid package to include the Responding to Epidemic Losses and Investing in the Economic Future (RELIEF) for Producers Act of 2020.
Key provisions of the legislation:
Emergency assistance for livestock and poultry loss
— Aid to producers who had to euthanize livestock due to lack of access to processing facilities.
— Livestock value calculated based on the national average market value between March 1 and the date of enactment.
— Reimbursements calculated for a 30-day period beginning with the date of initial depopulation; producers to get 85% of the value of losses.
— Each 30 day period after that, value of losses reduced by 10%.
Animal disease prevention and preparedness
— Provide $300 million to support improved animal health surveillance and laboratories as they supplement testing capabilities of public health laboratories during the current public health emergency.
Emergency authorities for USDA's Commodity Credit Corporation (CCC)
— Amend the CCC Charter Act to add authority for the Ag secretary to deal with removal and disposal of livestock and poultry due to supply chain interruption during a public health emergency.
— Add authority to provide assistance to agricultural processing plants in the event of a public health emergency to assure continuation of markets for ag commodities.
— Update on implementation of CARES 1, including CFAP:
- Reuters: USDA food box program short of goals. USDA data provided to Reuters indicated the agency provided 27.5 million food boxes as of July 1 during the first round of its program to provide food to consumers from farms in an effort to make up for lost sales to restaurants and other outlets. The news service said their calculations were that level of food boxes delivered equaled $755.5 million, short of the $1.2 billion goal for the first round. However, USDA said that invoices were still be tabulated and that as of July 7, 32 million boxes had been verified as being delivered. USDA committed $3 billion to the Food Box program.
— Food and beverage supply/industry update:
- CDC releases report on Covid-19 infections, deaths at meat and poultry plants. Confirmed cases of Covid-19 at 239 meat and poultry plants in 23 states in April and May were put at 16,233 with 86 related deaths, according to a report (link) issued by the Centers for Disease Control and Prevention (CDC). Where demographic details were available, CDC said 87% of the cases were among racial and ethnic minority workers. CDC said that 12% of the cases were asymptomatic or presymptomatic, but the CDC cautioned that not all facilities performed widespread testing. Of the 239 plants reporting cases, intervention and prevention efforts were reported by 111 of them, with 89 (80%) facilities reported screening workers on entry, 86 (77%) required all workers to wear face coverings, 72 (65%) increased the availability of hand hygiene stations, 70 (63%) educated workers on community spread, and 69 (62%) installed physical barriers between workers. The report said animal slaughtering and processing industry employs an estimated 525,000 workers in approximately 3,500 facilities nationwide.
The CDC cautioned that the report findings have limitations, including that not all states responded with information and that the source of exposure and infection could not be identified as coming from the workplace or the community.
— Update on reopening America... and around the world:
- Trump pressures schools to reopen. President Trump called on governors and mayors to bring students back to classrooms full time in the fall and abandon plans for remote learning. “The moms want it. The dads want it. The kids want it,” Trump said. “It’s time to do it.”
- State and local governments are cutting money for schools, universities and other services as the coronavirus-induced recession wreaks havoc on their finances. Widespread job losses and shuttered businesses have reduced revenue from sales and income taxes, forcing officials to make agonizing choices in budgets for the fiscal year, which started July 1 in much of the country. The task has been complicated by uncertainty over the economic outlook, which depends largely on unknowns such as the course of the virus and how fast a vaccine can be developed, the Wall Street Journal reports (link).
- Governments have cut 1.5 million jobs since March, mostly in education, and more reductions are likely barring a quick economic recovery. It is unclear whether states will get more help from Congress.
- More potential trouble for working parents. The Trump administration’s temporary ban on work visas includes au pairs. Approximately 20,000 young people, primarily women, come to the U.S. each year to do nanny and household work in exchange for room, board and a modest weekly stipend, the Wall Street Journal reports (link).
— Coronavirus update:
- Summary: Global Covid-19 cases are at 11,839,095 with deaths at 544,415, according to data from the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). The U.S. reported 60,000 new coronavirus cases, a single-day record, with infections continuing to rise rapidly in states such as Florida and Texas.
The total number in the U.S. neared three million today, according to data compiled by Johns Hopkins University (currently at 2,996,098 with 131,480 deaths). Daily case numbers had fallen below 50,000 for several days before Tuesday, but public-health experts had cautioned that fewer tests take place on weekends and that coronavirus infections that are detected might not be reported until the following week. The number of cases often picks up after a holiday weekend, when people travel to see family and friends who aren’t part of their normal routines. The U.S. death toll stands at more than 131,000, according to Johns Hopkins.
Florida reported 7,361 cases on Tuesday. The seven-day average for cases there is higher than the 14-day average, an indication that the spread is intensifying, according to a Wall Street Journal analysis of data from Johns Hopkins.
The federal government has responded by ramping up testing in Louisiana, Texas and Florida as health officials try to get a firmer grasp on how the pandemic is evolving.
This chart from the New York Times ranks the countries with the most confirmed new cases over the past week, adjusted for population size, and treats each U.S. state as if it were a country. (Many states are larger in both landmass and population than some countries.) The only countries with outbreaks as severe as those across the Sunbelt are Bahrain, Oman and Qatar — three Middle Eastern countries with large numbers of low-wage migrant workers who are not citizens. These workers often live in cramped quarters, with subpar social services, and many have contracted the virus.
Link to Covid Case Tracker
- Brazil President Jair Bolsonaro tests positive for coronavirus. The 65-year-old said on Monday he came down with symptoms of the Covid-19 disease, including a high temperature, but said that he was in good spirits. “It worsened on Monday, with malaise, tiredness, muscle pain and a fever of 38 degrees. If I hadn’t done the tests and hadn’t been taking chloroquine, I could be contaminating people. Now I have to avoid infecting others,” Bolsonaro said on Tuesday after his diagnosis.
More than 65,000 Brazilians have died from Covid-19 and more than 1.5 million have been infected. Both numbers are the world's second-highest totals, and are considered to be undercounts due to the lack of widespread testing.
- U.S. will pay the vaccine maker Novavax $1.6 billion to develop 100 million doses of a coronavirus vaccine by early 2021, the company said. Novavax, which is based in Maryland, has never brought a product to market.
- Fauci warns against 'false complacency' on Covid-19. Dr. Anthony Fauci, the nation’s top infectious disease expert, warned on Tuesday the U.S. should not fall into “false complacency” because Covid-19 death rates have dropped, noting the virus can cause other severe health outcomes. “It’s a false narrative to take comfort in a lower rate of death,” Fauci said Tuesday during a live-streamed press conference hosted by Sen. Doug Jones (D-Ala.). “There's so many other things that are very dangerous and bad about this virus, don't get yourself into a false complacency.”
- Navarro: Federal officials have sufficient supplies to respond to spikes in states. Appearing on CNN Tuesday morning, White House trade adviser Peter Navarro said, “We have a virus from China that exhibits highly asymptomatic spread, and the assumption, I think, among most people in the medical community was going to be that heat and humidity was going to make this subside this summer. But we haven’t seen that because this China virus is very dangerous. I can tell you what my role is. Yesterday, for example, this is again some good news for you. I was at the weekly strategic national stockpile meeting over at Health and Human Services, and the good news is that the stockpiles are rapidly being replenished. And that at least at this point as these cases rise, we have not seen any demands from hospitals that we have not been able to meet. So that’s good news for the American people.”
- The WHO conceded that airborne transmission of the coronavirus “cannot be ruled out,” in response to a letter signed by 239 scientists citing evidence that exhaled aerosols spread the infection. The embattled organization had maintained that the virus is spread predominantly via larger droplets, which sink to the ground. Changing that view will have implications for social-distancing guidelines.
Politics & Elections
— 2020 Presidential Election Interactive Map
— The Green Papers
- 2020 Countdown:
— 6 weeks to the Democratic National Convention.
— 7 weeks to the Republican National Convention.
— 12 weeks to the first presidential debate.
— 17 weeks to Election Day, Nov. 3, 2020.
- Joe Biden’s campaign team raised $141 million in June, $10 million more than President Trump’s — the second month in a row that the Democrat out-raised his opponent.
- Unemployment has soared across the country under pandemic lockdowns, but some of the hardest-hit states are presidential battlegrounds. That includes Michigan, Florida, Pennsylvania, North Carolina and Wisconsin. All voted for President Trump in 2016, but in some cases by narrow margins. This summer, Joe Biden is ahead in the polls in those states, but not as substantially as he is nationally. A similar pattern is playing out in other key states: In Ohio, which Trump won by about 447,000 votes, some 1.4 million people have filed jobless claims and Biden is ahead by 2.7 percentage points, notes Chris Krueger, a policy analyst with Cowen Washington Research Group. Trump is tied with Biden in the polls in Iowa, which the president won by about 147,000 votes; the state has had about 357,500 jobless claims.
- Sen. Chuck Grassley (R-Iowa) became the first congressional Republican to announce he'll skip the Republican National Convention because of the Covid-19 virus. Grassley, 86, is the second-oldest member of the Senate.
- Former schoolteacher Amy Kennedy won the Democratic primary for New Jersey’s second congressional district and will face Rep. Jeff Van Drew in November, who became a Republican to avoid losing his seat in a primary after opposing President Trump’s impeachment. He won Tuesday’s Republican primary against conservative Bob Patterson, according to the Associated Press.
- Massachusetts Gov. Charlie Baker (R) signed a vote-by-mail bill into law, making it the first time in state history that all eligible residents will have the opportunity to vote early and by mail in the primary and general election.
- A tell-all book by Trump’s niece Mary will be published two weeks earlier, on July 14, after a court allowed publisher Simon & Schuster to continue distributing copies. While the publisher last week was released from a temporary restraining order, Mary Trump is still under the order and is contesting it. A news release about the book says it deals with how Trump “acquired twisted behaviors and values” such as that “cheating is a way of life.” Trump’s niece calls the president a lying narcissist while the White House calls it “a book of falsehoods.” Trump's niece said she leaked critical family financial documents to the New York Times. She said she shared the documents because of her concerns regarding the policies of the president. Link to NYT article on how the book came to be.
OTHER ITEMS OF NOTE
- DMC payment triggered for May, but June-forward payments unlikely. USDA's Farm Service Agency (FSA) said the May 2020 dairy income-over-feed cost margin was $5.37 per hundredweight, triggering the third payment of 2020 for dairy producers who purchased the appropriate level of coverage under the Dairy Margin Coverage (DMC) program. To date, FSA has issued more than $176 million in program benefits to dairy producers who purchased DMC coverage for 2020. USDA projects the June margin will be at the maximum coverage level of $9.50, and monthly margins are projected to stay well above $9.50 into the fall.
- U.S. notifies UN of withdrawal from World Health Organization. The Trump administration has formally notified the United Nations of its withdrawal from the WHO, although the pullout won’t take effect until next year. The administration sent the letter to UN Secretary-General Antonio Guterres Monday, making the U.S. withdrawal official on July 6, 2021, under a requirement for a one-year notice. Democratic presidential candidate Joe Biden said he would reverse the decision on the first day of his presidency, should he beat Trump in November. The U.S. has been the WHO’s largest contributor, providing $400 million to $500 million in mandatory and voluntary contributions. Trump earlier announced the U.S. was suspending that funding. Writing in Foreign Policy on Tuesday (link), global health experts Matthew M. Kavanaugh and Mara Pillinger discuss why leaving the WHO will be “difficult, disruptive, and damaging.”
- Chief Justice John Roberts was hospitalized last month after a fall. Supreme Court Chief Justice John Roberts was hospitalized last month after falling at a Maryland country club, the court confirmed Tuesday. The court told the Washington Post in a statement that the 65-year-old justice fell on June 21 and suffered injuries that required stitches. He was observed at an area hospital overnight and was released the day after.
- U.K. Prime Minister Boris Johnson told German Chancellor Angela Merkel he is ready to leave the European Union without a trade deal in place if no compromise can be reached, increasing the risk of another economic shock for the country.
- General: No Americans known to have died in bounty scheme. A top U.S. military official confirmed that U.S. intelligence assessed that Russia offered to pay the Taliban to kill American soldiers but said there was no evidence the payment scheme resulted in any U.S. troop deaths.
- Metals group urges Trump to keep tariffs. The American Primary Aluminum Association, an industry group representing two U.S. producers, told the Trump administration in a letter that other groups are dominated by foreign producers trying to kill the Section 232 tariff program and asked his administration to reinstate a 10% tariff on Canadian imports.