Prosperity and pizza

Posted by: Paul Donovan

09 Jul 2020

Daily update

  • Fear of the virus has increased in the US recently. Slowing lockdown easing shows some fear amongst policy-makers. Fear of the virus prompted objections to the Republican convention being held. However, people have adapted – markets always forget how well people adapt to adversity. The increase in fear is proportionately less than earlier this year. Initial jobless claims data today gives some hint as to whether recent fear has had a significant economic impact.
  • The UK government unveiled a GBP 30bn fiscal package. Not only will there be roof insulation, the government will pay for part of your pizza (but not on weekends. On Saturday, you have to buy your own pizza). It is not a game-changing fiscal package, and the savings and pent up demand of the past three months will likely have a larger economic boost.
  • Japanese core machinery orders rose in May (the consensus forecast range was nearly 18%, practically needle-like precision). This is not surprising. While the virus is devastating for some sectors, other sectors can carry on and invest.
  • German trade data showed exports and imports growing. Services have been hit more than manufacturing by the virus, so trade should outperform the economy for now.

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