- US President Trump mused on Twitter about delaying the November elections. Markets have not reacted—the decision belongs to Congress. More extreme scenarios around a disputed election are unlikely to be priced into markets—investors rarely price extreme tail risks (e.g., North Korean scenarios).
- US second quarter data was published. The numbers are wrong, and the annualization process is silly—the economy fell about 8% q/q (not annualized). The pattern of growth is consumers consuming as soon as lockdowns ease, and producers producing with a lag. That narrative was supported by the details, with inventories falling. This all signals that the third quarter is when GDP will rebound.
- French second quarter GDP (not annualized) was reported –13.8% q/q. France's lockdown of production lasted longer than the US and an extraordinarily high proportion of workers were on furlough, so France was expected to underperform the US. The third quarter bounce back could be more impressive if people do not indulge in grande vacances in August.
- Spain, Portugal and the Euro area release GDP later today. The third quarter bounce back story will not change. US personal income and spending data should show improvement—but the additional unemployment benefits that helped consumption end today.