Please find today’s edition of Weekly Digest attached.
Market & Coronavirus Update
Weighing more on markets are fears of a second wave of COVID. In China, a new outbreak was reported in Beijing following 55 days with no new infections. Most of the 78 new cases in Beijing (as of June 14th) were linked to the Xinfadi grocery market, which is the largest in China, covers more than 80% of Beijing’s grocery sales and is located right beside Beijing’s high speed railway station. Over the weekend, the authorities shut down six food markets and returned c. ten residential areas in Beijing to lockdown with schools closed again after only a few weeks back. Subway usage in Beijing was down by 19% on Saturday versus the previous week.
The virus continues to be more widespread across the globe, with early signs of a second wave in the US. While the number of countries with averaging more than 100 infections/day has dipped slightly, the number of countries averaging more than 500 infections/day has drifted up. There are now twenty countries averaging more than 1,000 infections/day and ten averaging more than 3,000/day. Nine of the ten are emerging markets (the US is the one developed market exception).
Global activity is slowly heading back to normal. Google tracking data shows that activity across the world at retailers, transit and places of work is still 25% down (but +4% week-on-week).
A Few Graphs
1) Unemployment, using the US as an important example, is high but not getting worse (graphs highlight initial then continuing jobless claims):
2) The US/China trade dispute is likely to continue – in May, imports into China were down 16.7% against a year ago, which will no doubt annoy Mr Trump:
3) An updated graph I sent last week, the betting market is pricing a 5% higher chance of Biden being the favourite to win November’s US election:
4) Investment grade (high quality) bond yields – after a big spike in March – are back at record lows. This means companies can borrow cheaply and they are doing so. US companies took on $754 billion of debt last month, a record high: