Back to work!
Welcome to another blog update of the Weekly Overview Series.
In this week…
- Coronavirus cases top 24.6 million worldwide and 835,000 deaths with record daily cases in India, pushing it to become the second worst-hit country. Peru is now the world’s deadliest Covid hot spot. Meanwhile, more than 220,000 people out of a 7 million population in Hong Kong has registered for free coronavirus tests. In Germany, Berlin police officers were attacked during protests again coronavirus restrictions in that country.
- Gasoline demand is still low, inventories are high. Oil rose for a fourth week in a row although gains were capped as Hurricane Laura affected facilities in southeast Texas less than expected and consumption remained fragile. U.S gasoline stockpiles are at their highest seasonal level in decades.
- The FDA (U.S Food and Drug Administration) issued an Emergency Use Authorization for the use of Covid-19 plasma collected from individuals with SARS-CoV-2 antibodies for the treatment of hospitalized patients. The Trump administration is considering fast-tracking the UK vaccine (developed in a partnership between AstraZeneca and Oxford University) for the use in America ahead of the presidential election after the FDA move.
- In the second-longest nomination acceptance speech since 1984, Trump articulated its agenda if re-elected for his second term. Trump promised to cut taxes, create 10 million jobs in 10 months, make America the largest manufacturing power not to depend on China, and work on the idea of Law and Order. At this time, Trump is 7.1% behind Biden in the RealClearPolitics average of national polls.
- Shinzo Abe, Japan’s Prime Minister has decided to resign for his second time due to an ulcerative colitive disease. Contrary to what it should be expected in these cases, the Japanese Yen strengthen compared to the USD. Abenomics, a term that describes the set of policies that Mr Abe planned to implement when he came into power in 2012 did not meet the targets and the Japanese economy remains a deflationary and stagnant economy. Abenomics consists of three main policies: – Ultra-eased monetary policy: Japan imposed negative short-term interest rates to make it cheaper for companies and consumers to access credit. – Expansionary fiscal policy in the form of increased government spending and financial incentives. – Structural reforms such as labour liberalisation, corporate reform or eased restrictions on migrants entering the workforce.
Average Inflation Targeting
Last Friday, the Federal Reserve made a significant shift on their inflation strategy. Jerome Powell, the Fed Chairman, unveiled they will let inflation run higher than the 2% target, what will likely keep interest rates ultra-low for many years.
The Fed will continue seeking inflation that averages 2% over time, what implies allowing general prices to overshoot after depression periods. This change in strategy comes after many years of too-low inflation. The central bank will be more flexible and will let the labour market run hotter before taking any action.
“Maximum employment is a broad-based and inclusive goal. This change reflects our appreciation for the benefits of a strong labour market, particularly for many in low- and moderate-income communities” Powell said.
As usual, I leave here the S&P500 heat map, which is already in All Time Highs.
Have a great weekend!