The World In A Week – Interim Update28th May 2020
News flow is beginning to contain something other than easing of lockdowns and vaccines.
Economies around the world are beginning to re-open, ahead of the schedules that were first announced back in the middle of March, and infection rates look to have largely been contained. The worst-case scenarios that made the headlines three months ago, now have a much lower probability of actually occurring.
Let us not forgot that any signs of market weakness have been met with additional support from central banks and governments. Japan’s announcement yesterday of an additional $1.1 trillion fiscal stimulus package continues that theory.
Whilst all of this is generally good news, the world’s media needs to find the next dramatic headline and as we wrote on Tuesday, the souring relations between the US and China are taking a more serious step. Last night, US Secretary of State, Pompeo, stated that the US could not consider Hong Kong as being autonomous from China, which does have significant consequences, as it may affect Hong Kong’s special trading status with the US.
The political leverage that Donald Trump seeks to gain from managing the US/China relationship is becoming a key element in his re-election campaign. As we wrote last year, when the Phase 1 deal was penned, this New Cold War is not something that will dissipate anytime soon.
Finally, Brexit has once again hit the headlines. The EU have told Westminster that Brussels remains open to extending the transition period by up to two years. Talks on what the trade deal will look like remain unresolved, with the original target date of 30th June 2020 looking less likely to be met.