[Market Madness] Edition 0048
Hanging in the Balance
Where we are now
Well folks, late yesterday, the U.S. surpassed 100,000 deaths due to COVID 19. Jobless claims have declined in comparison to prior weeks, but still remain very high. Donnie is seeking action against social media companies, and Hong Kong is losing their fight for autonomy against China. As the title today states, a lot is hanging in the balance. Today’s edition is a quick read, getting us up to speed on what moved the markets today, and what some of the prime concerns are moving forward.
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Fundamentals
Thursday Close:
· Dow Jones Industrial Avg: -0.41%
· S&P 500: -0.08%
· NASDAQ: -0.46%
· US 10 YR: 0.701% | 99 3/32
· Crude OIL: $33.60
· COVID 19 Global Cases: 5,864,341
International Edge:
· FTSE 100: +1.18%
· Nikkei: +2.32%
Market update
Last week, we saw a reduction in the total number of new jobless claims (2.1 million new claims this week), although that weekly number is still much higher than what we had seen prior to the onset of COVID 19 closures. Tensions between the U.S. and China over Hong Kong (see next article) are keeping investors cautious, slowing the rally we’ve seen this week. Twitter is notably down on the day, mainly due to Donnie’s upcoming executive order after getting into it with Twitter CEO, Jack Dorsey, over fact-checking some of his tweets. Zooming out, if the order is to impact social media companies at large, we could see a pullback in the tech sector as a whole, since many of the leading players in that sector are social media firms.
Overseas, we saw the major indices close in the green (excluding the Hang Seng Index in Hong Kong), suggesting that overseas investors are willing to ride the wave on rising optimism. Elsewhere, analysts see the rise of remote work keeping a low ceiling on oil prices. While we have seen prices of crude oil gradually rise as economies globally are re-opening, the price today is still nearly half of January 2020’s price of just over $60/barrel.
Read more here: https://www.wsj.com/articles/global-markets-0528-11590641107 and here: https://www.cnbc.com/2020/05/28/rise-of-remote-working-is-biggest-threat-to-oil-demand-says-analyst.html
Cold-war confusion
Same cold-shoulder attitude, new shoulder. The U.S. and China have had a shaky relationship for a while now. The trade war was a kick to the bee’s nest, and now it looks like Hong Kong is the last straw. China’s national security law recently passed further puts a chokehold on Hong Kong’s hopes for autonomy from China. As a major financial hub in Asia, this is becomes a global issue. Naturally as well, this becomes a direct issue for the U.S., as foreign policy dictates strict oversight of any and all direct threats to democracy anywhere in the world.
“Hong Kong is now the main battleground in an escalating cold war between China and what is left of the US-led liberal world order. Beijing’s decision to ignore the damage to its global reputation and defy its international treaty obligations under the Sino-British Joint Declaration on Hong Kong shows the Chinese Communist party already believes this.” (excerpted from article)
As we saw last year, there have been many riots and disputes in Hong Kong as it seeks to separate itself from the Chinese authority. This new law appears to stamp out hopes of that coming true. The article suggests that because the new law aims to punish peaceful dissent, we will only see a further rise in riots and upheaval in Hong Kong.
From a financial lens, banks are trying to understand what happens to an analyst in Hong Kong if they write a piece or report that provides dissenting commentary about China. The extent and power of China’s internet security “great firewall” is unknown by many and is a great fear for Hong Kong.
“By shutting off all avenues for peaceful displays of dissent, Beijing is radicalising the Hong Kong protest movement further. Acts of violence and attacks on the authorities are on the increase. Beijing and the Hong Kong police claim the protests have already morphed into a dangerous terrorist movement.” (excerpted from article)
Although this issue remains a political and social justice one for now, the financial world is awaiting on the edge of their seat to see how this new challenge to Hong Kong will affect such a pivotal finance hub. Investors today are approaching investments with caution, capping the rally we’ve seen on the Street so far this week.
Read more here: https://www.ft.com/content/442b1131-d08f-45a6-8dc7-d9c635e5d206
Quick takes
· The SpaceX Demo-2 launch yesterday was delayed until Saturday, May 30. (via CNBC)
· Twitter CEO, Jack Dorsey, stands by fact-checking on Donnie’s tweets as he prepares executive order to retaliate. (via CNBC)
· China expected to reveal coal import restrictions. (via FT)
· Aluminum prices see two-month high on reignited demand in China. (via Reuters)
· NY Governor gives green light for businesses to turn away customers not wearing masks. (via Reuters)
· Disney is preparing to open its Orlando, Florida parks (Magic Kingdom and Animal Kingdom) on July 11, with Epcot and Hollywood Studios set to open a few days later. (via CNBC)
· Social Security’s trust funds could run out in 2032, instead of the originally-planned 2036 depletion. (via CNBC)
· English Premier League soccer to restart on June 17. (via BBC)
Reader’s Corner
The reader is dismayed by the statistics surrounding COVID 19 infections and deaths across the globe. Looking at the U.S. numbers, its scary, and, in some respects, we saw this coming. At just under 1.75 million total cases and just over 100,000 deaths, the U.S. leads both these categories. I recognize my place here as the editor of these newsletters is not a political one, but look at what is going on. I’m not looking to point blame either, that is not my place. However, we need to look at and remember those who died in part because of the decisions made at the highest level.
The WSJ suggests many countries are understating their death tolls as well, read about that here: https://www.wsj.com/articles/most-countries-fail-to-capture-extent-of-covid-19-deaths-11590658200?mod=hp_lead_pos5
The reader is begging you to do your best to do your part and stay safe and socially distant.
Behind the Madness
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