The market is in a bit of a holding pattern at the moment, waiting for the US to get a deal done. Lawmakers aren’t really any closer to meeting in the middle, but both sides have said they’ll have a real push to get something agreed by the end of this week. One thing that may speed it up is speculation that Trump is looking at whether or not he can sign some executive orders and sideline the Democrats in the entire process, to get things done. Being Trump, these wouldn’t be without controversy and one part of what he is looking at is cutting payroll taxes, which would immediately reduce the funding that goes towards medicare and social security. Additionally he’s looking at raiding existing funds that have been allocated under the CARES Act that hasn’t yet been spent, diverting them to individual states that can then use them to make weekly payments to laid off workers. Hopefully a deal can get done before the need for an executive order, but the gulf between the two sides is at least a trillion dollars wide.
Another meeting of two sides that we’re looking forward to is that of proposed talks between China and the US, scheduled for 15th August. They’re said to be a review of phase one of the trade deal, which looks to be well off track, so we’re not sure if there’s much to be gained from sitting down and formally acknowledging the failings, particularly as last week Trump said that the deal isn’t as important to him now as it was previously.
Staying in the US: This is where Virgin Atlantic has chosen to file for bankruptcy. The airline has chosen the US because it will allow them to shelter their assets from administrators – particularly useful as those aircraft assets are practically worthless given how full the boneyards in the Arizona deserts are getting – whilst they go through a restructure that they hope to get concluded by the end of the summer. The Guardian has some details.
In the UK: Rishi Sunak is looking at increasing business rates as a way of raising some much needed financing. There’ll now be a consultation as to whether there should be a higher multiplier to calculate rates on more valuable properties. Unsurprisingly, it hasn’t taken long for news of the consultation to be condemned by many, who feel that this would be the worst possible news for many of those that could potentially be hit by hikes, such as cinemas, hotels and large retail shops, who are already close to collapse. The Telegraph has more.
Some ‘good’ news out of the car industry overnight, where we’ve seen registrations in July up 11% year on year. We’re cautious to celebrate the numbers, as this is the first month in five where we’ve actually seen a rise and the industry is still set to see numbers down by about 30% for the year as a whole. Car showrooms were some of the first businesses allowed to re-open, back at the beginning of June.
There’s a great Reuters story this morning that talks about the UK’s TV viewing habits over lockdown. The headline of which says we spent 40% of our waking hours watching TV during April! That’s six hours and 25 minutes a day (or long enough to watch The Godfather parts one and two in a single sitting – no need to watch part three). The streaming services were major beneficiaries of this enforced RnR time as we’ve seen in their results, but the Beeb and ITV managed to get their highest combined audience share for more than six years.
Not so much in the way of news out of Europe this morning, though Ireland has placed another three week delay on re-opening bars and nightclubs fully as virus levels there have doubled. France has also reported more than three thousand new cases in the last three days.
We get some market data out of the region today, in the form of service sector PMI readings that could prove interesting. Other data of note will be the US ADP employment number, the first of the week’s jobs numbers that leads us to the non-farm payrolls on Friday – ostensibly an important number, though with the current state of play, what happened last month seems irrelevant if the US can’t get that deal in place.
The Beirut blast has had little impact on the markets as yet and though the UK have said it’s too early to say what has happened (and The Donald has said it was an ‘bomb of some kind’) it’s looking like a tragic accident and incredibly poor management of the storage of thousands of tons of ammonium nitrate. CNN has a live page on the situation.