Trump and Covid-19, the jobs report and the stimulus bill

Today it was reported that both President Trump and the first lady have contracted the coronavirus. Obviously when the individual holding the highest office in the United States tests positive for Covid-19 it raises serious questions not only about the president’s health, but also the course of November’s presidential election as well as national security. The president is 74 years old which puts him at a higher statistical risk that could lead to further complications.

Concurrently the U.S. Labor Department released its jobs report for the month of September. Economists and analyst had predicted that the data would suggest an additional 800,000 to 850,000 new jobs were added last month, and that the unemployment rate would fall from 8.4% to 8.2 %.

It seems that the analyst over projected the number of new jobs and under projected the unemployment rate. The actual data showed that nonfarm payrolls increased only by 661,000, with the unemployment rate dropping to 7.9%. The weaker than expected numbers released today suggests that the hope for a sharp or “V” recovery in the economy have diminished.

According to a report by CNBC “Taken together, the report is a potential early flare from the business community that a rebound during which 11 million jobs were refilled in four months could be petering out.”

The article cited a quote from Kathy Jones, head of fixed income for Charles Schwab saying, “You would think that [the report] would put some incentive into the talks to get something done for more fiscal relief for people who are unemployed, particularly in some of the hard-hit sectors like airlines, transportation, hotels, etc. This seems to be confirmation that the pace of recovery is headed into a new phase. Most of us anticipated that we’d get a little more help from the fiscal side to get us into next year.”

This data suggests that there will be more pressure for the Senate to approve the $2.2 trillion democratic coronavirus stimulus bill passed by Congress Thursday evening.

Today House Speaker Nancy Pelosi said that President Trump’s coronavirus diagnosis could change the shape of talks toward an evasive stimulus deal. MSNBC quoted Speaker Pelosi saying “This kind of changes the dynamic because here [Republicans] see the reality of what we have been saying all along. This is a vicious virus, and I will pray for him.”

Collectively the events of the day pressured not only U.S. equities but both gold and silver pricing. As of 4:10 EST Gold futures basis the most active December contract is fixed at $1904.10 after factoring in today’s decline of $12.20. December silver futures lost a total of 1.62% ($0.394) and is currently fixed at $23.86.

Wishing you as always good trading and good health,