Daily Briefing – June 2, 2020

Published on
June 2nd, 2020
28 minutes

Daily Briefing – June 2, 2020

Daily Briefing ·
Featuring Nick Correa, Ash Bennington, and Ed Harrison

Published on: June 2nd, 2020 • Duration: 28 minutes

Senior editor Ash Bennington hosts managing editor Ed Harrison to delve into whether the pandemonium in the U.S. will ever spread into capital markets. They analyze the historical performance of markets during times of civil unrest and explore whether U.S. equities have "priced in" the possibility that the ongoing mass protests in the U.S. could accelerate the spread of COVID-19. Ed and Ash also discuss the yield curve and retracement levels for the S&P. In the intro, Real Vision's Nick Correa talks about the 1957 pandemic, the Eisenhower recession, and how they may intersect.



  • JD
    John D.
    3 June 2020 @ 07:36
    Every recession manifests into social issues amongst the disgruntled. Investors know that this is all pointless - a brief moment of noise that will be forgotten quickly by markets, just like the 2011 London Riots, or the 1989 Tiananmen Square massacre. It's a waste of RV time to even talk about it.
    • TM
      The-First-James M.
      3 June 2020 @ 23:49
      The 2011 London Riots were a local and very isolated issue in the UK. What is going on in the US right now is of a completely different scale.
    • MR
      Matthew R.
      12 June 2020 @ 00:01
      They weren't local. I remember them happening where I lived which was in the north of England.
  • SS
    Shanthi S.
    3 June 2020 @ 11:35
    Ash on fire today! But why so optimistic on the future of American Capitalism? Its last vestiges seem to be smouldering in every city, across the country. Fiscal placation, combined with the further restriction of civil liberties will follow. Nothing about this looks good for Free Market Capitalism to me. We’re plunging headlong into AOC’s dystopia.
    • DB
      Douglas B.
      3 June 2020 @ 17:31
      A very shallow view imho
  • RM
    Rohin M.
    3 June 2020 @ 11:15
    Love these RVDB's! Is Raoul planning to come on and provide an update on his thesis/narrative soon?
    • EH
      Edward H. | Real Vision
      3 June 2020 @ 11:39
      Ed Harrison here. Raoul should be back on in his Friday slot this week after taking the day off last week. I will flag your comment for him and Ash. Cheers.
    • RM
      Rohin M.
      3 June 2020 @ 12:40
      Thank you Ed.
  • IP
    IDA P.
    3 June 2020 @ 05:39
    I am a fan of both Ed and Ash and the whole group, etc., but I have the impression that you were all bearish even in April, after the announcements of Fed and State stimulus, and now you all seem bullish, I'm not criticizing but please comment why you were bearish before and why you have changed your mind now, or have I wrongly interpreted?
    • GH
      Galen H.
      3 June 2020 @ 06:48
      Ya. There's been a bit of a quiet PM type shuffle, which many, including myself do. (I commented a while ago I thought is happening), and that is in the BoAML survey PMs say they're bearish (65% I think it was), but each day the market goes up they buy a bit more, just in case they're wrong. And that is how a rally quite easily sustains itself. Only the ETFs have the "nuts" to go all in at the bottom. ... Hey... got to stay in the game and if you can't change your mind or opinion in this game you dead meat.
    • EH
      Edward H. | Real Vision
      3 June 2020 @ 11:56
      Hey Ida. I think that my view, like Roger, is that the liquidity buoying markets has more short-term oomph than we would have expected. The retracement almost to the 76% level is impressive. But, on a fundamental level, it’s clearer to me more than ever that we have tremendous headwinds economically. I do not believe in the thesis that liquidity trumps fundamentals over the long term. So, to the degree, I am right that we are just hitting a major solvency crisis in the private sector, then we should expect equities to re-rate lower. The question is the trigger, just as it was in February. When does the market move to risk-off because of the recognition of a diminished earnings outlook? In February, it happened all at once, resulting in a liquidity crisis. I have been saying that the re-opening would be bullish for shares. Initially, I thought that would be great for Europe since they were likely to reopen first. But the US is re-opening more quickly than expected too. That gives equities support, particularly the US because of liquidity - despite the longer term consequences, because we have such poor forward visibility. But after the reopening boost is past us, I think people will re-focus on the fundamentals. And that’s when the volatility and downside risk will come.
  • FS
    Franco S.
    3 June 2020 @ 05:24
    Bullish about the future of US capitalism? Ash, are you expecting the end of bailout-nation and the return of Schumpeter?
    • SS
      Shanthi S.
      3 June 2020 @ 11:38
      If he is, I hope he’s right!
  • JC
    John C.
    3 June 2020 @ 03:58
    It would be interesting to look at the French "gilets jaune" protests all throughout 2019 and how they affected the French (or Parisian) economy. Given the organized nature of a lot of these protests in the US one would think the economic impact on cities like NYC and Chicago will be significant, particulalry in the wake of coronavirus. Am just wondering what the 2019 impact of the protests ended up for Paris in particular. Thanks.
    • DB
      Daniel B.
      3 June 2020 @ 11:27
      This is a GREAT point
  • IH
    Ian H.
    3 June 2020 @ 11:21
    September/October will be closer to the election in November. I wonder if the markets will get re-rated if there is a thought that Trump won't be elected. If the protests keep going until then, or the second wave hits worse than the first, then he could be in trouble. He will be walking a very fine line.
  • sm
    sam m.
    3 June 2020 @ 10:12
    When did RV start deleting comments?
    • sm
      sam m.
      3 June 2020 @ 10:36
      ignore my comment
  • PC
    Peter C.
    3 June 2020 @ 10:36
    Focussing on the NDQ and SP500 might skew our view on what is really going in the market due to the impact of just a few tech stocks that are recently seen as 'safe havens' and this combined with the impact of the indexing mantra as extra fuel. Looking at the Russell 2000 may be more relevant in comparison to past recessions. At the moment it is hitting its 61,8% retracement for about a week now and is still well below its 200 daily MA. The rally is probably higher than on average during recession but this may not be supprising because the 42% drop in just 4 weeks was huge. Anyway, the oversold condition due to the March drop is completely gone now. The daily RSI is chopping around in the 60-70 range, above its february level, and the weekly RSI is back above 50. It looks to me that it is topping out. With NDQ currently also at ATH I do question where additional fuel for a market rally will come from? We may chop in a range for some time until Sept-Oct as Ed discussed or any spark may move the market suddenly lower in the coming weeks.
  • SL
    Stephen L.
    3 June 2020 @ 07:21
    Nick's intro is very interesting. A fuller segment on that would be great.
  • RT
    3 June 2020 @ 02:00
    There was alot of talk in the past by RV/Raoul about the Euro drop and Dollar rise in the past and that has not happened so far. I would like to see Raoul come on the show and explain his narrative with the possibility those predictions are falling by the wayside as the charts change.
    • RD
      Ruediger D.
      3 June 2020 @ 02:41
      Looks to me like the milkshake is kind of infected by the corona virus and might even pass away.
    • DS
      David S.
      3 June 2020 @ 04:40
      Way too early. DLS
    • AW
      Angela W.
      3 June 2020 @ 04:41
      Yes, agree. I have been waiting for the guys to discuss this in the DB for the last two days. With the $ at 97.4 - would love to know that Ed and Ash think of this in the context of the strong dollar thesis.
    • IP
      IDA P.
      3 June 2020 @ 05:27
      I think what a lot of us need to know is if and at what point Raoul would change his mind about the dollar, I have the impression that he will not change his mind but I think we would all love to hear from him on this of course to understand if yes or no and why
    • GH
      Galen H.
      3 June 2020 @ 07:02
      If the Euro zone has the next greatest chance of going down the way of Japan (demographics, GDP, austerity), does the EUR not get much stronger? They have no way of depreciating their currency on a wholesale basis soon (coordinated plan) and actually have very little incentive to, since what they should be striving for is GDP / capita increase not GDP. Anyway, I've had that view for a while and been utterly wrong.
  • BE
    Brent E.
    3 June 2020 @ 00:18
    From the outside the US looks like a banana republic / military dictatorship. I am grateful to be on the outside.
    • mB
      marc B.
      3 June 2020 @ 03:01
      We are uniting during the day peaceful protests. The night is a different crowd.
    • rw
      richard w.
      3 June 2020 @ 06:41
      Brent to me I look through what the media wants you to think. USA 330 million who are mainly decent folks.
  • PP
    Patrick P.
    3 June 2020 @ 01:17
    Ed... the reckoning will be what happens in the election. Right now the status quo is priced in... If that changes.... buckle up..... it's going to be a rough ride.
    • DS
      David S.
      3 June 2020 @ 06:28
      The reckoning may happen with the realization of 2Q2020 earnings. The Fed does not let all the angels fly unless it is Armageddon. DLS
  • DH
    Dabangg H.
    2 June 2020 @ 21:57
    Unrelated but imp: Why does RV show me videos on frontpage that I dont have access to? For example the Laxman interview. It is locked for my tier but this info is not visible on the homepage. Its only when I click can I see the lock button. Kind of annoying and not a subtle way of telling me what I dont have access to!
    • JO
      JOHN O.
      2 June 2020 @ 23:49
      Because they are very good marketers 😉
    • DH
      Dabangg H.
      3 June 2020 @ 06:23
      There is a fine line between being smart and being annoying. youtube and RV are threading that not so carefully these days.
  • EM
    Elizabeth M.
    3 June 2020 @ 00:14
    Ash...thanks for your great commentary. I didn't know you were a specialist in bitcoin! I would like to add some bitcoin to my portfolio, but I don't know how to do it through TD Ameritrade...any advice for me? Thanks in advance. I love the Daily Briefing and watch all the time.
    • RR
      Ramon R.
      3 June 2020 @ 01:08
      You can create an account on coinbase if you want to purchase it directly or use GBTC
    • rm
      ryan m.
      3 June 2020 @ 02:01
      Or QBTC on the Cad Market
    • HT
      Hans T.
      3 June 2020 @ 05:42
      You can trade Bitcoin futures on the CME
  • LJ
    Lisa J.
    3 June 2020 @ 05:31
    I feel like we've had the frugality narrative kicking around for a while now, some arrive at it from a sustainability/environmental perspective, others like the FIRE crowd, are doing it for different reasons. Both are reacting against an over-reach in consumption and spending.
  • AB
    Alastair B.
    3 June 2020 @ 03:50
    Barbershops aren’t just for cutting hair. They are basically the only male-only space left apart from locker rooms
  • SN
    Shmuel N.
    3 June 2020 @ 00:20
    Hint: when the data is so bad it can only get better. Or in other words, the market is going UP. I do not understand why real vision keeps holding the narrative of catastrophe that soon going to happen. We already had the catastrophe, the market recover now.
    • LA
      Lawrence A.
      3 June 2020 @ 01:10
      The problem with this outlook is you think the market is reacting to anything besides pure emotion and speculation. There is no "data" to justify anything we are seeing. I respect RV for putting their necks out on the line and forecasting stuff when they know there is a high probability they may be wrong. All I know from bitcoin trading experience is typically when everyone thinks the bottom is in, it isn't. And when everyone thinks we topped, we keep going higher.
    • RD
      Ruediger D.
      3 June 2020 @ 01:16
      To me it looks like there is second catatrophe happening due to the one you think being over right before your eyes.
    • mB
      marc B.
      3 June 2020 @ 02:59
      2008-9 had 3 20% or so declines. I’m still invested just way more cautious with msft trading at 34x earnings during an earnings recession.
  • RD
    Ruediger D.
    3 June 2020 @ 01:33
    From the outside it looks to me like the USA are standing with their back against the wall with no idea left but printing funny money. It might not sound empathical therefor I apologize towards all the peacefull American people as I#m sharing their pain when I say: Not being American I prefer the USA being engaged in kind of a civil war instead of starting a war with a foreign country to distract from their homemade problems as the last card to play for the Princes of the Dollar..
    • DS
      David S.
      3 June 2020 @ 02:53
      The grievances are real. The protest is exacerbated by the lockdown, the anxiety of loss of jobs, the fact that the riots are used as political tool, professional looter, on and on. The problem is poverty on the Left and poverty on the Right driving different agendas. Politicians recognize this and pit the poor on the Right against the poor of the Left for power. The poor are always the pawns of power brokers. The Left tells the poor that the rich are cheating them. That is the reason they are poor. The Right tells them they are poor because immigrants are taking their jobs. How do you know you are poor? Watch TV and see how the rich live. Is that how you live? Is the system rigged so they are rich, and you are poor? Until the poor realize the problem is poverty – Left and Right, we will not be able to address it. America desperately needs leadership that addresses all poverty, not just with money, but with real productive programs. The poor of the Left and the poor of the Right need to unite and recognizing poverty is their common problem. I do not expect this to happen as a politician’s power is based on the wealthy, Left or Right, not the poor. DLS
  • mB
    marc B.
    3 June 2020 @ 02:47
    Interesting opening on historical time frame. Haven’t heard much about that time frame. Like to summary of guest speakers. Ash on fire. Agree with Ed on carnage. Time will tell.
    • mB
      marc B.
      3 June 2020 @ 02:50
      Random question: how much do the top 10 cities in us contribute to us gdp. With covid and now protests effecting economy in these areas must have greater impact than smaller cities and rural towns. Thoughts?
  • TM
    The-First-James M.
    3 June 2020 @ 00:17
    My Girlfriend has assisted me with cutting my hair twice so far (got some DIY clippers). She's done a good job. However, we've both agreed that I'll feel safer with a professional Barber cutting my hair, as soon as they're properly open again. For a straight crue cut, it would be fine. However, I'm a 3 on top and 0.5 on the sides, and merging/fading those in takes some practice.
    • TM
      The-First-James M.
      3 June 2020 @ 00:19
      When it came to me trimming her hair though, never again (hopefully). She did not trust me as much as I trusted her. I suspect Hairdressers will still be in business, post-COVID; even if some people (with simple haircuts) change at the margin... ;)
  • HJ
    Harang J.
    3 June 2020 @ 00:16
    Great analysis. Thank you for your focus on the markets/macro, as always.
  • HC
    Hahns C.
    3 June 2020 @ 00:09
    I have been saying for months now that if the markets are recovering and unemployment remains at +20% the people are further disconnected from wealth building and the American dream. In addition to the added indebtedness of government. This disconnect is having negative HUGE social ramifications. This disconnect is all driven by the FED's pump. For Jay Powell to say that the FED "absolutely does not contribute to wealth disparity" is proven wrong and a disingenuous prevarication to the American public.
  • GC
    Gino C.
    3 June 2020 @ 00:04
    Thanks guys. This was one of the better daily briefings I think. Appreciate the forward guidance in terms of equities later this year. Keep up the great work!
  • JK
    Jim K.
    2 June 2020 @ 23:37
    Guys, as always very informative. Ash, unfortunately we have people in our own country who do not wish the US well.
  • OA
    Oliver A.
    2 June 2020 @ 23:34
    Ed- I agree these things take time to play out. As I think you're said on this before, March 2008 we saw massive action from the Fed to keep the housing market from going bust, but it wasn't until September that Lehman went bust and everything truly went sideways.
  • SP
    Saxon P.
    2 June 2020 @ 23:31
    I wonder what impact the November election would have on Ed's September, October timing.
  • TB
    Tobin B.
    2 June 2020 @ 22:51
    Ed - I like your view on the fall - it does seem that things could get dicey during that time - election, winter, virus, and likely extended negative PMI prints (great explanation Ash), but I am going to definitely keep an eye on the Fed liquidity during that time. Just because the economy looks rough, it doesn't mean the market will crater anymore. Consider that even in light of current economic conditions, there are so many.. ahem--buyers, in the market. --> 61.8% what happened to that?! Lotta Boomers voted for Trump and he knows that. Where would their votes lie should their 401ks look less rosy hmm? This all ties in Sentiment, Demographics, Liquidity. Always a pleasure gleaning insight from you guys.
  • KC
    Kamil C.
    2 June 2020 @ 22:45
    Really good update guys! Ed thanks for being specific on your future outlook.
  • RM
    Russell M.
    2 June 2020 @ 22:36
    Great perspective on effect of protests on markets. I was at the '68 march on Washington. Was not aware of the market in those days.
  • DS
    David S.
    2 June 2020 @ 22:31
    Is it possible that all the Algos did not write social unrest into their programs? DLS