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Uncertainty over Trump’s condition, outbreak weakens re-election campaign, and more virus restrictions.
Better?
President Donald Trump remains at the Walter Reed National Military Medical this morning, with some confusion remaining over his condition and when he will be able to return to work and his re-election campaign. Yesterday he made a brief surprise outing from the facility to wave to supporters after saying in a posting on Twitter that he’s “learned a lot” about the coronavirus. The president’s doctor admitted to giving a misleading statement about Trump receiving oxygen. Currently, the president is being treated with a mix of experimental pharmaceuticals, some of which are only usually given to the most sick patients.
Collateral damage
It is bad enough for Trump’s re-election chances that he is in hospital, but the fact is both his campaign manger and the Republican party chairwoman have also been laid low by the virus. The list of members of the president’s inner-circle who have tested positive also extends to his personal advisor, his attendant, and former New Jersey governor Chris Christie. Democratic presidential nominee, Joe Biden who tested negative for a second time yesterday, still holds the 6-7 percentage point lead he has maintained for months, with a Wall Street Journal/NBC poll conducted after the first debate putting him in a 14 point lead.
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Tightening restrictions
New York City Mayor Bill de Blasio said he will close schools and businesses in nine neighborhoods in Brooklyn and Queens to combat a surge in infections. The French government will shut bars and impose other restrictions in the Paris region from tomorrow as authorities struggle to contain a spike there. New curbs are also expected to be announced in Ireland and Italy. U.K. Prime Minister Boris Johnson warned of a “tough winter” as the country’s test-and-trace system came under fire again after it failed to capture 15,000 positive tests last week. Globally, infections have passed 35 million.
Markets rise
Investor fears over the Trump’s health are easing while optimism over a fresh U.S. fiscal stimulus plan is growing as analysts see increased urgency from both sides. Overnight, the MSCI Asia Pacific Index climbed 1.3% while Japan’s Topix index closed 1.7% higher. In Europe, the Stoxx 600 Index had gained 0.6% by 5:50 a.m. Eastern Time with investors in the region favoring cyclical stocks. S&P 500 futures pointed to plenty of green at the open, the 10-year Treasury yield was at 0.715% and gold held at $1,900 an ounce.
Coming up…
The final reading of U.S. services and composite PMIs for September is at 9:45 a.m. with ISM services for the month at 10:00 a.m. Chicago Fed President Charles Evans and Atlanta Fed President Raphael Bostic are today’s monetary policy speakers. EU chief negotiator, Michel Barnier discusses Brexit with German Chancellor Angela Merkel ahead of resumption of negotiations in London later this week. Joe Biden will be on the campaign trail in Miami.
What we’ve been reading
This is what’s caught our eye over the weekend.
- Odd Lots: An IMF economist on the challenge of finding the neutral rate of interest.
- Exxon’s plans for emissions surge revealed in leaked documents.
- Cineworld shuts theaters on film delays, risking 45,000 jobs.
- Two-speed Europe sees Germany thriving as rest of the region suffers.
- A 32-year old trader is driving 21,000 amateur stock investors.
- Discoverers of Hepatitis C vaccine win Nobel Prize.
- Some planets may be better for life than Earth.
And finally, here’s what Joe’s interested in this morning
On Friday, amid all the confusion about the president’s health, and everything else going on in the world, the major U.S. stock market indexes fell across the board. But not every sector was in the red. Financial stocks had a strong day, with the popular XLF ETF having gained 0.83%. In fact, relative to the QQQ ETF, which measures the tech-dominated NASDAQ-100, XLF had its best day since the end of May. You can see it in the chart here, which tracks the relative performance of the two ETFs for every day this year.
Of course, just one day’s action really doesn’t say very much. The move is consistent, however, with a bet on re-accelerating economic growth. In the current scenario, where growth is scarce, investors have paid up aggressively for story tech stocks whose fortunes aren’t tied to the pace of nominal GDP on the one hand. Banks, on the other hand, largely track the current state of the economy.
There are two likely ways for growth to get a jolt in the short term. The first is for there to be a stimulus deal right now. The second is for a huge Democratic sweep to happen, and a mega stimulus early next year. Right now, investors may be seeing both as more likely, with some momentum happening towards a near-term stimulus and Biden maintaining a commanding lead in the polls. Again it’s just one day of action really, and there are tons of confounding scenarios besides the two laid out. But if these narratives take hold, it’s worth watching to see if the market continues to shift towards bets on faster growth.
Joe Weisenthal is an editor at Bloomberg.
