Rising Cases and Crime, Reflation, and The Future of Hong Kong

Demography Unplugged with Neil Howe

In this latest issue of my weekly podcast, we discuss the possibility of re-inflation. Gold and industrial metals are all on the rise. And at the same time, the US dollar is declining. What does all this mean? Well for China, they might be able to salvage a positive GDP growth for 2020. But for the US, this could mean a return to inflation. Re-inflation would force the Fed's hand to take away the punch bowl and could threaten to cut the S&P boom.

Economic indicators remain largely negative. The MNI Chicago PMI for June came in at 36.6, considerably missing expectations of 45. Personal income MoM is down -4.2% for May, while personal spending is up +8.2% for the same month. The Kansas City Manufacturing Index had its first growth since February coming in at 2 for June, but still missed expectations of 8.

Cases and crime rates are on the rise. With 7-day average cases now shooting over 40K and positive test percentages rising, the C19 pandemic is officially back in surge mode. 35 states now report rising case numbers; only 3 report falling case numbers. The opening up of the economy has not only accelerated infections, it has also re-ignited violent crime--which is now rising steeply in major cities like NYC, Indianapolis, Milwaukee, and New York. In the last three weeks of June, there have been 75 shootings in Atlanta. During the same period the previous year, there were only 35.

Trump continues to sink in the polls. RCP puts Trump's approval rating at 41% with his disapproval rating at 56%. These are his worse numbers since his first year in office. John Bolton's new book and the new controversy over Trump ignoring intelligence that Putin was putting bounties on US soldiers don't promise to turn this trend around.

China passes Hong Kong security bill. China has officially passed the security bill that will allow state security agencies to police Hong Kong. While the bill's contents are still unknown, many see this as the end of Hong Kong's freedom. The US Senate has passed a bill to apply sanctions on Chinese individuals who help erode Hong Kong's autonomy. The bill also allows for sanctions on businesses that do transactions with these individuals. This has the potential to disrupt global trade--and geopolitics.

Who will be Biden's VP pick? In most elections, the VP rarely matters much. But given Biden's age and infirmities, the spot is suddenly getting a lot more attention. Futures markets have Senator Kamala Harris as his number one pick, but this combination could clash. IMO, two of the strongest contenders are Representative Val Demings from Florida and Senator Tammy Duckworth from Illinois. Both are moderates and should play well with independent voters.
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