“The process of intelligently building a portfolio consists of buying the best investments, making room for them by selling lesser ones, and staying clear of the worst.” – Howard Marks

1. U.S. economy shrank at 5% annual rate in the first quarter — The Commerce Department reported Thursday that the gross domestic product, the broadest measure of economic health, fell at an annual rate of 5% in the first quarter, a bigger decline than the 4.8% drop first estimated a month ago. Economists believe the lockdowns that shut wide swaths of the economy and triggered the layoffs of millions of workers will send the GDP sinking at an annual rate of 40% in the current quarter. That would be the biggest quarterly decline on records that go back to 1947. It would be four times the size of the previous decline set back in 1958.
2. U.S. Announced Hong Kong’s No Longer Autonomous — the Trump administration said it could no longer certify Hong Kong’s political autonomy from China, a move that could trigger sanctions and have far-reaching consequences on the former British colony’s special trading status with the U.S. The move comes as tensions between the world’s two largest economies continue to escalate, fueled by accusations from President Donald Trump that China was slow to disclose the peril of coronavirus.
3. Americans on Jobless Benefits Post First Drop of Pandemic — Labor Department figures reported continuing claims, which tally Americans’ ongoing benefit claims in state programs, fell to 21.1 million for the week ended May 16. Initial jobless claims for regular state programs totaled 2.12 million in the week ended May 23, to bring the 2 1/2-month total above 40 million.
4. Protests Hammer U.S. Cities Still Recovering From Lockdown — Violence erupted in dozens of places following the death of George Floyd, a black Minneapolis man who died after a white police officer pressed a knee into his neck for more than eight minutes. Demonstrators rampaged through shopping districts including Rodeo Drive in Beverly Hills, California, and Chicago’s Michigan Avenue, and set fire to police cars and municipal buildings. Meanwhile, Donald Trump demanded governors crack down, saying “most of you are weak” and urging them to “dominate” rioters. “You have to put them in jail for 10 years and you’ll never see this stuff again,” the president said during a conference call with governors and law enforcement.

The week ahead — Economic data from Econoday.com:

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