In this latest issue of my weekly podcast, we discuss the good, the bad, and the ugly surrounding the markets. On the bad news front, COVID-19 cases are rising. Emerging markets continue to see surging rates of infection. And in the US, all of the west, sunbelt, south, and mountain states are now seeing a rise in cases. Another point of concern is 2nd quarter earnings reports. These will be released in the next few weeks and have the potential to spook markets. On the good news front, the Fed is here to save the day. The Fed is filling the seven seas with liquidity. The Fed's next probable announcement: Putting caps on the yield curve, as the BOJ started to do in September of 2016..
Indicators continue to show contractions. In the last week, we received June Flash PMI numbers for the US, Eurozone, and Japan. All three areas had readings under 50, meaning contraction. In the US, manufacturing came in at 49.6, services at 46.7, and composite at 46.8. Eurozone readings were all in the mid-40s, and Japan readings were in the mid-30s with services at 42.4.
COVID-19 changes how candidates campaign. Over the weekend, Trump's rally in Tulsa, Oklahoma drew a crowd of only 6,200 people, while the stadium could seat 19,000. In the pandemic age people are nervous to attend large events, making political rallies a less effective tool. Candidates will have to rely more than ever on social media to get their message across, a skill the Trump campaign was particularly savvy at in 2016.
Brazil's government is in chaos. Last week a series of arrests and search warrants were served to many of President Jair Bolsonaro's political allies. They are accused of paying reporters to write false stories about Bolsonaro's political enemies. The raids led to the Education Minister, Abraham Weintraub, resigning and fleeing the country.
Americans report record levels of unhappiness. The NORC released a report on American happiness, using GSS data going back to 1972. Here's the topline summary. The pandemic has triggered an unprecedented drop in the share of Americans feeling "very happy" and an unprecedented climb in the share feeling "not too happy." But interestingly, Americans feel relatively little pain financially--something you wouldn't expect in a recession.
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