Murky is the current outlook. We went from yesterday afternoon’s slide on the president’s decision to hold off any new pandemic aid until after the election to a new idea that a piecemeal solution — by Executive Order from President Trump, who continues to recover from Covid-19 with which he was diagnosed last week — could solve the immediate issues affecting the economy. How this is expected to manifest in U.S. economic policy is not readily apparent. Murky.
Whether Trump or former Vice President Joe Biden wins the election early next month, the end result will bear some resemblance as far as economic bailouts from Capitol Hill goes: between $5 trillion and $5.6 trillion in stimulus will be the price tag over the next decade; obviously, either way this will put our country’s debt and deficit levels even further into the red. We saw only yesterday how the Trade Deficit for August has already reached the second-lowest level in history.
There is plenty to address in the coming weeks and months, though not much will be moving the needle this morning. Unlike last week, we do not have big jobs numbers to report (aside from tomorrow morning’s Initial and Continuing Jobless Claims). Later today, we’ll get the minutes of the latest FOMC meeting from last month — which seems like almost an eternity ago now. Q3 earnings season heats up next week when the big banks bring their results to bear, and at that point we’ll have a better idea how companies have held up during this extended pandemic period.
The banks, with historically low rates keeping their profit margins relatively elusive, are not expected to impress investors in Q3. Yet the bounceback is indeed expected — from 20-30% on quarterly GDP alone. But we may not see much concrete evidence of this until later in the earnings season cycle, particularly when big-box discount retailers like
Walmart
WMT
report results. Until then, much of the corporate success we’ll see (or not see) will likely have to do with product and service offerings, regional impact and tariff/regulatory challenges.
Eli Lilly
LLY
is now attempting to get “emergency use” status for its Covid-19 treatment fast-tracked to the market, similar to the way the president was able to access his remdesivir drug Veklury, courtesy of
Gilead
GILD
. This is in the very early stages historically of a new drug yet to be approved via phase 3 testing. Reportedly, Lilly’s candidate reduced viral load and helped alleviate symptoms of patients infected with Covid-19. But safety as well as efficacy are what phase 3 testing is used for. Will we push out new Covid drugs before they are proven safe to the public?
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