Good morning, Bull Sheeters. It’s the final day of a crisis-rocked first half of 2020. And it’s a tumultuous one. Beijing swiftly and quietly passed a landmark national security law on Tuesday, a move opposed by foreign business leaders and many of its biggest trading partners. Elsewhere, the WHO has warned the worst of the coronavirus pandemic has yet to come, and the Fed’s Jerome Powell frets over “new challenges” ahead for the U.S. economy.

Let’s check in on the action.

Markets update

Asia

• The major Asia indexes are in the green in afternoon trade. Hong Kong was up 0.2% with Shanghai 0.6% higher.
• As of press time, the full details of China‘s new national security law were unknown, but one thing’s for sure: the global geopolitical stakes are high. Beijing vowed to slap visa restrictions on American critics of the law as the Trump Administration drew up plans to impose restrictions on U.S. exports of defense and high-tech products to Hong Kong.
• China has another geopolitical rift to deal with. On Monday, India banned more than 50 popular apps, including ByteDance’s TikTok, and Tencent’s WeChat. It follows deadly skirmishes at the India-China border.

Europe

• The European bourses opened a tick higher, with the Stoxx Europe 600 up 0.4%. But two hours into the session, all major indexes were negative, and falling.
• Royal Dutch Shell issued a gusher of a write-down this morning. The coronavirus pandemic and the ensuing destruction in energy demand forced the Anglo-Dutch energy giant to cut the value of its assets by $22 billion.
• Angela Merkel threw her support behind the EU’s €750 billion bailout fund, still a tough sell for the bloc’s fiscal hawks.

U.S.

• The major averages bounced back impressively on Monday, with the Dow jumping 585 points, its best day since June 5. Futures point to a negative start to the trading session.
• Yesterday’s gains came despite the Fed’s Jerome Powell warning that the recovery could be thrown off track if states cannot figure out how “to keep the virus in check.”
• How are states faring? Not well. A number, including Arizona, have reimposed strict new shutdown rules—bars, gyms, public pools and beaches, restaurants will be closed to the public this Independence Day weekend (and beyond). Here are four maps that show the shifting pandemic moving from from the Northeast to the South and West.

Elsewhere

• Gold is up.
• As is the dollar.
• Crude is down. Brent has been trading in a range of between $40- and $42/barrel for the past three days.

Forget the polls

Coronavirus has nearly booted the presidential campaign off the front pages.

We’re just a little over four months to Election Day, and the markets are still barely factoring in the odds of a Trump re-election or a Biden presidency. Coronavirus infection rates, reopenings (and re-closings), monetary and fiscal bailout plans—that’s what’s triggering the big moves. That will begin to change in the coming weeks, no doubt, as the race tightens.

As my colleague Rey Mashayekhi writes, the pollsters and oddsmakers believe a change in the cards is the safer bet at the moment. But there may be a better indicator than the polls (imagine that!) and the bookie sites. It’s the markets—the S&P, in particular.

According to LPL Financial, there is no better political forecaster than the benchmark index. Going back to 1928, the performance of the S&P 500 in the three months preceding Election Day has pointed to the winner 87% of the time—and every single election since Ronald Reagan trumped Walter Mondale in 1984.

Here’s how it works, according to LPL. When the S&P 500 is trending higher in that three-month window prior to the election, the incumbent party usually wins; when the index is moving lower, the incumbent usually loses. That’s it. Plain and simple. Here’s their chart, showing the cut-off for victory for the incumbent party at a greater than 2% gain on the S&P in that 3-month span:

In 2016, the Dow fell nine straight days in the run-up to Election Day, enough of a fall to prove the model once again. Those dynamics hinted at “the change in party leadership in the White House” to come, Mashayekhi writes, and may do so again in 2020.

There’s a lot to quibble with in LPL’s theory. For starters, you always have to be careful with past-performance as a forward-looking indicator. But the markets are as good a measure as any for economic sentiment. And, it’s the economy, stupid, that wins elections.

If this model is to be believed, Trump needs more days like yesterday. The S&P gained 1.5%. And, he needs fewer months like this past one. The benchmark has been flat since Memorial Day.

At this rate, Trump’s best hope may come down to Jerome Powell.

***

Have a nice day, everyone. I’ll see you here tomorrow.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

A note from my Fortune colleagues on a timely new initiative:

Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack

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Today's reads

Furloughed by the man. Nearly six in ten CEOs polled implemented hiring freezes or deferred hiring during the pandemic, a new Fortune poll reveals. Furloughs were also a fairly popular option by the boss to trim payroll costs.

Going silent on Facebook. The list of advertisers who've put a pause on their Facebook ad spend seems to be growing by the day, and that's rattling investors. The latest are Adidas and Clorox. But Facebook's biggest advertisers include Disney, Procter & Gamble, the U.S. Census Bureau, Home Depot and CBS. Here's why they're keeping quiet for now.

Forty under 40. Okay, the deadline is today. This year we're asking readers to nominate a worthy candidate to Fortune's annual Forty under 40 list. If you have somebody in mind, we want to hear from you. Submit a name here. 

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Market candy

That's one expensive nasal swab

To just about all of us who live in a world without co-pays and silver/gold/platinum plans, almost everything about the U.S. healthcare system seems capricious, crazy and cruel. The latest evidence: two friends in Texas go to get tested for coronavirus. One gets charged $199. The other? $6,408. Identical care. Different prices. Same old frustrations.