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Investors shake off brutal U.S. jobs data to nudge markets higher

May 15, 2020, 9:21 AM UTC

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Happy Friday, everyone. It looks as if we could end the week on a positive note. European investors are particularly bullish today after Germany GDP numbers came in roughly in line with estimates. Meanwhile, in the U.S., there are fresh warnings the recovery could be a slow one.

Let’s see what’s moving markets.

Markets update


  • The major indices are mixed this morning with Japan’s Nikkei leading the way higher, up 0.6% in afternoon trade. Hong Kong and Shanghai were flat.
  • The choppy performance is in line with new data showing China’s industrial production jumped well above consensus estimates, but retail sales were down last month.
  • Meanwhile, there’s fresh concerns of a second wave of COVID-19 infections in Hong Kong, mainland China and South Korea.


  • The European bourses jumped out of the gates. The bluechip Stoxx Europe 600 was up 0.9% at the open.
  • German GDP fell 2.2%, roughly in line with estimates. The Dax was up 1.5%.
  • Germany’s Lufthansa plans to quadruple its flight schedule beginning next month. International destinations include Mumbai, Toronto and Los Angeles.
  • Sanofi’s COVID-19 vaccine is still in development, but it’s already causing an international spat between the French, the U.S., and the rest of the EU over who would get it first.


  • The Dow, S&P 500 and Nasdaq futures are trading higher, looking to extend yesterday’s gains.
  • Yesterday’s late-day rally was led by financial stocks as the prospect of negative rates is looking more remote. A reminder: negative rates is a tax on savers, pensioners and banks themselves. The lessons from basket-case Europe and Japan is a stark one: once you go negative, it’s extremely difficulty to climb out of that hole.
  • “I think a V–shaped recovery is off the table.” For the second time this week, Minneapolis Fed President Neel Kashkari is warning that should Congress not act, the American recovery will be a slow, painful grind.


  • Gold is up, as is the dollar.
  • Crude too is finishing the week strongly with Brent back above $32/gallon.

By the Numbers

36.5 million. Yes, we lead with jobless numbers again. That’s how many workers in the United States have now filed for unemployment benefits over the past eight weeks. Yesterday’s tally of roughly 2.98 million jobless claims was another week-on-week improvement, but still came in well above analysts’ consensus. The real unemployment rate could be as high as 21.1%, well above the lagging official rate (14.7%) announced last Friday.

40 and 63. Fed Chairman Jerome Powell’s address earlier this week spotlighted just how uneven the economic fallout of the pandemic is hitting Americans. Here are two data points, best told in Tweets.

-0.32%. After yesterday’s late-afternoon run, the Nasdaq closed at 8,943.72. The tech-laden index is down for the week, bringing it back into the red for 2020. But not by much. It’s trading a mere 0.32% below its New Year’s Eve close.


Italy is having a very uneven pandemic. Up north, in and around hard-hit Milan, the health crisis continues to smolder and flare up. Meanwhile, most points due south of there are doing just fine. In Lazio, the region that includes us here in Rome, the “R” reproduction rate stood at roughly 0.3 yesterday. Anything below 1.0 is where you want to be to flatten the curve.

The contagion is an even lower risk in Umbria, home to such medieval gems as Orvieto, Perugia and Assisi. I know this primarily because my in-laws, hailing from Umbria, are quick to point out on FaceTime calls and in WhatsApp messages all the ways they are winning la pandemia. Yesterday, they proudly sent me a Daily Telegraph article with the catchy headline touting why Umbria “should be your first holiday after lockdown.”

No place in the world (outside of Antartica) is Covid-free, but Umbria is about as close to zero-risk as you can get. And the region is already angling to capitalize on its epidemiological advantage over other sunny destinations. The region’s development agency on Wednesday put out the message (in English and Italian): Umbria is ready for tourism.

Never mind that it’s near impossible for international tourists to get in and out of land-locked Umbria these days. Airlines continue to cut summer flights as the European Union struggles to find a cohesive plan to save its $2 trillion tourism industry. It’s even off-limits for us here in Rome at the moment (that could be relaxed on Monday, however).

From the Azores to the Greek Islands, this is a dilemma facing all vacation hot spots. It’s looking like the summer of stay-cations, and that will really put the crimp on the many regional economies, like the Umbrian economy, dependent upon tourism.

But let’s imagine a day in the near future when it’s safe to travel again. If an Italian getaway is still on your bucket list, you could do worse than choosing an Umbria vacation. It’s a land rich in history, art, fabulous food and wine. And, in the summer it’s full of sagre, local festivals in hilltop towns. The whole idea is to feast on the local dish in the company of townsfolk, eating sumptuous meals on plastic plates, washed down by jugs of local wine. They’re humble affairs, but they always draw a crowd.

I can almost taste le pappardelle and the cinghiale in umido.


Have a nice weekend, everyone. I’ll see you here on Monday.

Bernhard Warner

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Lord of the flies, revisited

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