Global Market News

Global equities improve
Global equities were much improved this week in part thanks to promising news of a vaccine and a much-improved US labor report. The yield on the 10-year US Treasury note increased just slightly, hitting 0.67%. The price of a barrel of West Texas Intermediate crude oil rose over 4.5% and ended the week at $40.23. Volatility, as measured by the Cboe Volatility Index (VIX), declined from 35 to 27. 

4.8 million jobs added in June
The labor department released June data this week, revealing that the US economy added 4.8 million jobs last month. The U-3 unemployment rate fell to 11.1 percent while the U-6 unemployment rate fell to approximately 18%. Though this is a step in the right direction, but levels remain far below pre-pandemic levels. There were nearly 15 million jobs fewer in June than in February, before businesses began closing. In other related news, the House of Representatives passed a bill extending the Paycheck Protection Program through August 8th. 

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 10,900,000 Global Covid-19 deaths: 521,000
US Confirmed Covid-19 cases: 2,800,000 US Covid-19 deaths: 131,000
*As of Friday evening

Record increase in US daily cases…again
Around the world, the number of daily reported Covid-19 cases is rising. The US saw more than 50,000 new cases in one day for two days in a row, forcing governors to consider if re-opening happened too quickly. Many states have paused or even reeled back re-opening measures as cases rise especially in the South and West of the country. Some attribute the rise in cases to an increase in testing, while others blame a lack of compliance and/or enforcement of social distancing measures. In response to uptick, national and state leaders are encouraging people to stay home this holiday weekend. 

Geopolitics Spotlight

USMCA takes effect
The New North American trade deal called the USMCA, took effect this week, finally replacing the previous North American Free Trade Agreement (NAFTA). The agreement governs more than $1 trillion in annual trade between the US, Mexico, and Canada. New rules under this agreement include stricter enforcement of labor standards, and the requirement to manufacture cars with more North American-made parts. Despite the trade deal between the three countries, tensions are emerging. The US is reportedly considering reimposing tariffs on Canadian steel and concerns over labor rights in Mexico have emerged. 

Khashoggi trial begins
Yesterday, a Turkish court opened the trial of 20 Saudi nationals who have been indicted over the killing of Saudi journalist Jamal Khashoggi. The Washington Post columnist was killed at the Saudi consulate in Istanbul on October 2, 2018 after he arrived to obtain paperwork for his planned marriage. Since then the mystery of his death has dominated the news. The event prompted worldwide backlash against Saudi Arabia, as many people believe the crown prince and his cronies are responsible for the murder. Many hope this trial, which is being held in addition to a United Nations-led international investigation, will bring justice for Khashoggi. 

Corporate/Sector News

Pizza Hut and Wendy’s franchisee files for bankruptcy NPC International, which runs more than 1,225 Pizza Huts and over 385 Wendy’s restaurants has filed for bankruptcy. The company was already in trouble before the pandemic, so restaurant shutdowns put them over the edge. A perfect storm of rising labor and food costs combined with a debt burden of nearly $1 billion had been causing the company problems for the last few years. NPC International is the largest franchisee in the US and employs close to 40,000 people. 

Tesla becomes most valuable automaker On Wednesday, Tesla became the most valuable automaker in the world as it soared past Toyota. Tesla’s stock rose almost 8% over the week, hitting an all-time high of $1,228 per share. 

Recommended Reads

A phoney referendum shows Putin’s legitimacy is fading Pandemic takes the shine off China’s Belt and Road Initiative as African partners struggle with coronavirus Merkel Throws Her Support Behind Radical European Recovery Plan European economy faces ‘long and bumpy’ recovery Kai-Fu Lee on how covid spurs China’s great robotic leap forward Johnson warned by business on ‘hugely damaging’ no-deal Brexit The safe-asset shortage after Covid-19

This Week from BlackSummit

Market Developments and Wildcards – John Charalambakis
Crossroads: At the Intersection of Geoeconomics and Geopolitics – Rachel Poole
Covid-19 and the Day After – Rachel Poole and Tyler Thompson

Image of the Week

An 18-Month View of a Post-COVID World

Video of the Week

Coronavirus: the global race for a vaccine
Source: Financial Times