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Weekend news – record number of US coronavirus cases and hospitalisations continue

  
  Analysis
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Fears of wave after wave (is the US even out of the first wave?) of COVID-19 in the US continue as cases, hospitalisation and deaths mount.

While case counts can be (and are) rationalised away citing increased testing, hospitalisation and the death toll cannot be swept under the carpet in the same way.
Via Reuters:
  • Arkansas, North Carolina, Texas and Utah all had a record number of patients enter the hospital on Saturday
From the same report at Reuters:
  • most states are not considering a second shutdown as they face budget shortfalls and double-digit unemployment. Many went ahead with reopenings before meeting government infection rate guidelines for doing so.
Health concerns are likely to keeping ‘risk’ in check.
Fears of wave after wave (is the US even out of the first wave?) of COVID-19 in the US continue as cases, hospitalisation and deaths mount.

White House says Trump remains open to another virus relief package

  
  Analysis
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The money is coming

Trump wouldn’t be saying that if Senate leaders weren’t on board. I don’t think Democrats are going to discover some fiscal discipline so it certainly looks likely.
The contours of it are another story and that could be a problem. Trump continues to talk about a payroll tax cut but I think that’s unrealistic. He might just be saying it as election fodder.

Trump: China raided our factories and gutted our industries

  
  Analysis
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Trump says he will take action against China

Trump says he will take action against China
Strong comments to start, more to come. He brought Pompeo and Mnuchin, which is a hint of something big coming.
  • Chinese government has continually violated its promises to us
  • China unlawfully claimed territory in Pacific ocean
  • China’s coverup of the Wuhan virus allowed it to spread all over the world
We’re still in the preamble but the tough talk has the market worried.
  • We will be terminating our relationship with the WHO, redirect elsewhere
That’s not a factor for markets.
  • Will issue proclamation on US university research
  • Will ask for study to protect US investors (presumably from investing in Chinese stocks)
This was all rumored and isn’t a big deal.
  • Have started the process of eliminated policy exemptions that give Hong Kong special treatment
  • Directing his administration to “begin the process of eliminating policy exemptions that give Hong Kong different and special treatment” under a “full range” of agreements, from extradition to trade to technology. (Congress has much of this power)
  • Will sanction directly or indirectly individuals involved in suppressing Hong Kong
All this was rumored or reported.
Stocks go positive.

US administration is suspicious of China nuclear weapon tests – may do so too

  
Analysis, Politics
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A US media report that the Trump administration has discussed conducting a US nuclear test.

Citing a senior administration official and two former officials familiar with the deliberations for the info:
  • The matter came up at a meeting of senior officials representing the top national security agencies May 15, following accusations from administration officials that Russia and China are conducting low-yield nuclear tests – an assertion that has not been substantiated by publicly available evidence and that both countries have denied.
  • US has not decided to conduct a test, but a senior administration official said the proposal is “very much an ongoing conversation”
More at the link here.
Another hint to issues between the US and China. Add this to the list of trade tensions, HK tensions, coronavirus blame game.
A US media report that the Trump administration has discussed conducting a US nuclear test.

Unpublished US data from the White House shows coronavirus infections spiking across the US

  
  Analysis
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US media (NBC news) reporting on data undisclosed by the Trump administration

  • Coronavirus infection rates are spiking to new highs in several metropolitan areas and smaller communities
  • data in a May 7 coronavirus task force report, undisclosed by the adminstration
  • The 10 top areas recorded surges of 72.4 percent or greater over a seven-day period compared to the previous week, according to a set of tables produced for the task force by its data and analytics unit. They include Nashville, Tennessee; Des Moines, Iowa; Amarillo, Texas; and – atop the list, with a 650 percent increase – Central City, Kentucky.
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Trump’s said on Monday that “all throughout the country, the numbers are coming down rapidly.” Even without this disclosure of the secret data hoard that claim is obvious bullshit.
WH death toll projections are rapidly moving toward realisation:
US media (NBC news) reporting on data undisclosed by the Trump administration

US-China trade war. War of words heating up – a reminder of where tariffs are

  
  Analysis
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US President Trump and others in his administration have once again been ramping up anti-China rhetoric.

Which has brought the trade war back into focus. Currently we are at a ‘phase 1’ agreement (of many more to come potentially, phase 1 barely scratched the surface). With Trump’s blaming China, for pretty much anything and everything it seems, it raises the prospect of little progress ahead on trade issues. And with the US election to come in November its likely Trump will continue to aim belligerence at China.
Via the Peterson Institute for International Economics (PIIE) a representation of where tariffs are, in summary:
US President Trump and others in his administration have once again been ramping up anti-China rhetoric.
Keep on eye out for progress, though I do not expect any. Escalation of the trade war is a negative for ‘risk’ (we saw this last week with a drop in, for example, the AUD) as Trump’s bellicose comments gained market attention once again.

Trump says that if China does not buy US goods the US will end the trade deal

  
  Analysis
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Trump referring to phase 1 of the US-China deal

On the face of it this sort of comment makes sense – if one side does not uphold it then the deal is in danger yes. The more applicable interpretation though is that tensions between the US and China are increasing, not only placing the existing deal in peril but making progress on further phases unlikely, or at least slower.
Oh, here we go, more on another source of tension being stoked by the US administration:
  • Strong report coming on how the virus developed in China

US President Trump interview: Trade deal with China has been upset very badly

  
Analysis, Politics
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Trump interview with Reuters

  • says China “will do anything they can to have me lose” 2020 election
  • says looking at different options in terms of consequences for China for its handling of coronavirus crisis, says I can do a lot
  • says trade deal with China has been “upset very badly” by the coronavirus
  • says South Korea has agreed to pay united states a lot of money for defense cooperation
  • says he does not see 2020 election as a referendum on his handling of virus
  • says does not believe polls showing Biden ahead
Main points summary via Reuters.
The comments on possible retaliation against China do not read as encouraging for further trade talks. AUD down a few tics.
Trump interview with Reuters 

US President Trump halts funding to the WHO

  
  Analysis
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US funding to the World Health Organisation has been stopped by Trump

  • while US reviews virus warnings regarding China
  • says WHO was late to examine outbreak in China.
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The US contributes around 400m USD to WHO each year, more than any other country.
  • The WHO yearly budget is around 4.8 b USD.
  • WHO uses the money for vaccine trials, distributing test kits, advising governments around the world and such.

Trump says he plans a call with Putin today to discuss oil

  
  Analysis
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Trump in Fox News interview

  • Trump says he will the Russian President Putin on Monday to discuss oil and other matters
  • Russia and Saudi Arabia “both went crazy” on oil issue
The US lambasted OPEC and Saudi Arabia for generations for keeping oil prices artificially high and operating a cartel. Now that OPEC has blown up, the same pearl clutchers don’t want anything to do with the free market. The reality is that the US has flooded the world with uneconomic oil for years because of Federal Reserve largess.
In any case, the oil market likes what the President is saying. Russia will certainly listen if the US offers to reduce sanctions. WTI has pared its decline and is back to $20.60 from $20.10 minutes ago.
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