‘This market is setting up to be one of the great short opportunities of all time. Trouble’s coming, I don’t know when, but it’s coming.’ — Jim Chanos

1. U.S. Orders China to Close Houston Consulate — the U.S. ordered China to shut its consulate in Houston, with officials accusing it and other Chinese diplomatic missions of economic espionage and visa fraud. FBI agents have interviewed Chinese researchers suspected of being undeclared members of the People’s Liberation Army in more than 25 cities, according to some U.S. officials. In some instances, staff at Chinese consulates helped instruct some researchers on security, reminding them to delete information from their electronic devices. The Chinese retaliates with Beijing set a 72-hour limit for the Chengdu Consulate to shut down, according to people briefed on the matter, the same amount of time Washington gave Chinese diplomats to vacate the Houston Consulate. U.S. diplomats at the Chengdu Consulate were given 30 days to leave China, the people said.
2. Weekly Unemployment Rises for First Time in Nearly Four Months — initial unemployment claims rose by a seasonally adjusted 109,000 to 1.4 million for the week ended July 18, the Labor Department reported, halting what had been a steady descent from a peak of 6.9 million in late March, when the pandemic and business closures shut down parts of the U.S. economy. Last week’s increase in applications came after several states imposed new restrictions on businesses such as bars and restaurants when coronavirus cases rose.
3. Pfizer, BioNTech Get $1.95 Billion Covid-19 Vaccine Order From U.S. Government — the U.S. has agreed to pay Pfizer Inc. PFE -2.47% and BioNTech SE nearly $2 billion to secure 100 million doses of their experimental Covid-19 vaccine to provide to Americans free of charge. No Covid-19 vaccine in development has proven to work safely yet, although dozens are being studied. The U.S. and other governments are spending billions of dollars to secure potential Covid-19 vaccines and treatments should they prove safe and effective.
4. Senate Republicans Prepare to Unveil Their Coronavirus Relief Package — Senate Republicans prepared to roll out their opening offer for a fifth coronavirus relief package after ironing out differences with the White House. The plan will include $16 billion in new funding for testing, a compromise between Senate Republicans who had sought more money and the White House, which had opposed any new funding. More than $100 billion will go toward schools, with some of that money only available to K-12 schools that plan to physically reopen. It wasn’t immediately known if a payroll-tax cut would be included in the GOP plan. Lawmakers are racing to reach an agreement before a $600 weekly supplement to the unemployment benefits expires on July 31. Republicans were looking at several options, including continuing the federal supplement at a lower flat rate until states can scale the benefit based on previous income.

The week ahead — Economic data from Econoday.com:

There will not be any re-cap for the week of July 18 2020. We are away for some needed R&R.
Have a good week.

The week ahead — Economic data from Econoday.com:

“There are three ingredients for success—aggressiveness, timing and skill—and if you have enough aggressiveness at the right time, you don’t need that much skill.”
― Howard Marks

1. Novavax, Regeneron are awarded $2 Billion for Covid-19 Vaccine, Drug Supplies — Novavax would receive $1.6 billion from the federal government’ to fund clinical studies of its experimental coronavirus vaccine and establish large-scale manufacturing of doses. With the funding, Novavax said it would deliver 100 million doses of its vaccine, possibly by the end of this year. Regeneron received a $450 million federal contract to manufacture thousands of doses of its experimental Covid-19 treatment that the government will distribute at no cost to the public if the drug is authorized for use by regulators.
2. Trump Moves to Pull U.S. Out of World Health Organization — the U.S. has formally notified the World Health Organization it will withdraw from the United Nations agency over President Trump’s criticism of its ties to China. The exit won’t take effect until next July, leaving it contingent on Mr. Trump’s re-election. His rival for the White House, presumptive Democratic presidential nominee Joe Biden, said Tuesday the U.S. would remain a member if he wins.
3. Recession Forces Spending Cuts on States, Cities Hit by Coronavirus — governments have cut 1.5 million jobs since March, mostly in education, and more reductions are likely barring a quick economic recovery. In addition, State and local governments from Georgia to California are cutting money for schools, universities and other services as the coronavirus-induced recession wreaks havoc on their finances. Almost all states and local governments require balanced budgets. For now, they have largely avoided raising taxes to plug budget holes, opting instead to cut spending or dip into reserves.
4. Supreme Court Paves the Way for N.Y. Prosecutor to View Trump Taxes — The Supreme Court paved the way for a New York prosecutor to enforce a subpoena for President Trump’s financial and tax records. The decision send the cases back to lower courts, where Mr. Trump can raise additional objections to the subpoenas. The rulings put off, likely until after the November election, any ability to see Mr. Trump’s financial records.

The week ahead — Economic data from Econoday.com:

“The desire for more, the fear of missing out (FOMO), the tendency to compare against others, the influence of the crowd and the dream of the sure thing—these factors are near universal. Thus they have a profound collective impact on most investors and most markets. The result is mistakes, and those mistakes are frequent, widespread and recurring.”
― Howard Marks
1. Covid-19 Drug Remdesivir to Cost $3,120 — Gilead disclosed its pricing plans as it prepares to begin charging for the drug in July. The U.S. has been distributing remdesivir donated by Gilead since the drug was authorized for emergency use in May. it will charge U.S. hospitals $3,120 for a typical patient. Remdesivir is the first antiviral drug shown to be effective at treating Covid-19 in a major clinical trial, reducing patients’ recovery times by four days compared with the placebo group in a large study funded by the National Institute of Allergy and Infectious Diseases.
2. U.S. Daily Coronavirus-Case Count Crosses 50,000 — new coronavirus cases in the U.S. passed 50,000 for the first time to reach a single-day record, as some cities and businesses reversed course on reopenings ahead of the July Fourth holiday weekend. Cases and hospitalizations have jumped in a number of areas. In Texas, 6,904 Covid-19 patients were in hospitals, according to the state’s Department of Health. For most of April and May, that number hovered between 1,100 and 1,800. It broke the 2,000 mark on June 8. The percentage of occupied intensive-care-unit beds in Arizona, another hot spot, remained at a high of 89% for a second day. On Thursday, the state reported nearly 3,300 new cases, for a total of 87,425. More than 10% of its daily tests were positive.
In California, where hospitalizations are up more than 40% from two weeks ago, Gov. Gavin Newsomannounced new restrictions, including the mandatory closure of bars, indoor restaurants, movie theaters, zoos and museums in 19 counties where 70% of the state’s population lives.
3. U.S. Stocks Finish Best Quarter in More Than 20 Years — The S&P 500 finished the second quarter up 515.70 points, or 20%, to 3100.29, its biggest percentage gain since the last three months of 1998. The Dow Jones Industrial Average added 3895.72 points, or 18%, to 25812.88, its best quarter since 1987. The rally has cut the indexes’ losses for the year to 4% and 9.6%, respectively. The Nasdaq Composite up 31% in the past three months and 12% for this year. The stock market’s performance in the months ahead of the election could have a big impact on the outcome of the race. Data going back to 1928 show the incumbent party has won the contest 87% of the time if the S&P 500 is positive over the three months ahead of the election and lost it when it is negative.
4. Uber in Talks to Buy Postmates for About $2.6 Billion — A combination would augment Uber’s food-delivery arm, Uber Eats, which already has an international footprint and the second-largest market share in the U.S. after DoorDash Inc. Its competitor includes Grubhub Inc. agreed this month to be bought by Just Eat Takeaway.com NV for more than $7 billion, besting a bid from Uber, which had been in talks to combine with Grubhub for months.

The week ahead — Economic data from Econoday.com: