Trump's plan, rising unemployment, and statistics from China

17 de abr. de 2020

The main event of yesterday, traditionally since the start of the lockdown in the USA, was the publication on Thursday of the jobless claims data. And traditionally, the indicator justified the most pessimistic forecasts: 5.2 million. So now, in just 4 weeks, the labor market has officially lost over 20 million jobs (this is what US labor market has created during last 10 years(!)). Of course this upsets Trump.

As a result, the President unveiled a plan to re-open the United States, which includes 3 phases.

The first phase: employers should telework where possible, return to work in phases, minimize non-essential travel and make accommodations for the vulnerable populations within the workforce.

The second phase: non-essential travel for employers can resume. Schools and organized youth activity can reopen. Bars can operate with diminished standing room occupancy.

The third phase: all these venues -- bars, gyms and large venues -- can reopen with “limited” social distancing and “standard” sanitation. Employers can resume “unrestricted staffing of worksites,” so employees can physically return to work.

Note that the transition to the implementation of this plan is possible only if criteria such as "downward trajectory" of reported "influenza-like illnesses," "covid-like syndromic cases" and "documented cases" or "positive tests as a percent of total tests" within a 14-day period, as well as the ability for hospitals to "treat all patients without crisis care" and have a "robust testing program in place for at-risk healthcare workers, including emerging antibody testing"are satisfied.

On the one hand, Trump’s plan can mitigate the economic blow from the pandemic and accelerate the economy, but on the other hand, it can bring pandemic to a brand new level. In general, rather mixed news.

Our position on the US stock market is unchanged: only sell.

The situation in Germany is somewhat similar. Against the background of information about the maximum number of new cases of the COVID-19 over the past 5 days, the country's authorities are planning to open small shops and all car dealers from next week. Schools will be partially open from May 3rd. Mass events are still banned.

At the same time, other countries, although they talk about the need to remove the lockdowns, nevertheless, extend them. For example, the UK extended the lockdown in the country for another 3 weeks. Japan has expanded the state of emergency throughout the country.

The main event of today has already become: the publication of statistics from China. It was a rather comprehensive block of data, which included the first quarter GDP, industrial production and retail sales. The data came out pretty mixed. On the one hand, GDP for the first quarter collapsed by 6.8% (the forecast was a decrease of 6.5%), and retail sales fell by 15.8% (against the forecast of -10%), on the other hand, industrial production in March fell only 1.1% (analysts expected a drop of 7.3%).

In addition, inflationary data from Europe is waiting for us today, but by and large, now everyone is not up to them - there are more important problems.

As for our positions, these are medium-term sales in the stock markets, medium-term oil purchases (this week were added to the purchase from $ 20 in the WTI mark) and gold purchases, sales of the Russian ruble and other emerging (for example, the Turkish liras, Indian rupees, Mexican pesos), as well as the purchase of EURGBP.