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CNF Focus | Trump diagnosed COVID-19 and its impact

Trump diagnosed COVID-19 and its impact


On October 2, US President Trump tweeted that he and his wife Melania tested positive for the COVID-19 and began isolation. [1] The Daily Mail reported that Trump had experienced heart palpitations, his temperature had reached 39.4 degrees, and his blood oxygen level had dropped to 93% (requiring oxygen). [2]

After the revelation of Trump's infection with the COVID-19, the three major U.S. stock indices were down 2%, Brent crude oil and NYMEX crude oil were down more than 3%, while gold rose. Trump's diagnosis made the US election more full of uncertainty.

On October 3, White House doctor Sean Conley announced a list of drugs for Trump’s treatment, including vitamins, aspirin, remdesivir and regeneron’s neutralizing antibody therapy. It did not include "disinfectant and hydroxychloroquine" previously touted by Trump. White House doctors said that Trump can get the best treatment resources at the Walter Reed National Military Medical Center. [3]

On the afternoon of October 5, Trump left the Walter Reed Medical Center and returned to the White House. Trump has now resumed his campaign, announcing that he will participate in the second presidential election debate to be held on the 15th. On the news of Trump's discharged from hospital, the three major indices opened higher on the day, closing up more than 1%.

How is Trump's health condition?

White House physician Sean Conley said at the briefing that Trump is still not fully recovered, but that the president's temperature, oxygen levels and other indicators have improved dramatically. He emphasized that the president is able to receive 24-hour world-class medical support at the White House, so working at the White House will not affect Trump's continued medical treatment. [4]

Before Trump was infected, British Prime Minister Boris Johnson and Brazilian President Bolsonaro had been diagnosed. As politicians of major powers, they were quickly treated and recovered soon. There are also many senior officials over the age of 70 who have been diagnosed in the United States. Although some have died, most of them survived. [1]

Despite still not fully recovered, with the advanced medical conditions and the vast experience accumulated in treating COVID-19, it is unlikely that Trump’s condition will turn serious.

What will happen in case Trump becomes seriously ill?

The United States has a well-established system of presidential succession. When the President is unable to perform his duties, the Vice-President, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, the Secretary of State and other officials take over in accordance with the law. There have been a number of presidents in U.S. history who have been assassinated or impeached, none of which caused great political volatility. If Trump is unable to perform his duties due to illness, his replacement would be Vice President Pence, followed by House Speaker Nancy Pelosi.

Therefore, even if Trump has a life crisis, there will be no presidential power vacuum in the United States. What is more worrying is the impact on the presidential election one month later.

Is it possible to postpone the US election?

As president, Trump does not have the power to postpone elections. The only body that has the power to make changes is Congress. Only with the support of the majority of members of Congress can it be possible to postpone the presidential election. [5] House Leader Kevin McCarthy, on the Republican side, has made it clear that the election should be held on time. Many senators from the Republican Party have also voiced that "postponing the election is not a good idea." It is unlikely that members in Congress will jointly support the postponement of the election.

In the more than 200-year history of the United States, presidential elections have been interfered by major events[5]:

l During the Civil War, a Republican member suggested to postpone the presidential election, but it was rejected, and Lincoln was re-elected.

l The 1918 US presidential election was experiencing the Spanish flu, which is somewhat similar to today, but people still wear masks to vote.

l Neither the Great Depression in the 1930s nor the Second World War in the 1940s stopped people from voting.

For more than two hundred years, the U.S. presidential election has never been postponed, whether by war, natural disaster, terrorist attack or pandemic. The possibility of postponing the 2020 presidential election probably remains only theoretical.

Future implications

If Trump shows an image of bravely fighting the disease and recovers in time, it may have a positive impact on his approval rate. British Prime Minister Boris Johnson's approval rate soared after his diagnosis, reaching an unprecedented 72%. [6] For Trump, whose approval rating has been lagging behind, this event may be a turning point.

Trump’s diagnosis means that the COVID-19 has invaded the core political circle of the United States. Compared with 74-year-old Trump, 77-year-old Biden will face greater health threats after infection. If Biden is diagnosed before the election, it may bring much greater uncertainty to the U.S. election and cause drastic fluctuations in the capital market.

The two presidential candidates differ in many policies, which will greatly affect the market.

In terms of energy, Biden and the Democrats have announced a $2 trillion green energy plan that will further accelerate the development of green industries such as solar energy and electric vehicles. But this is even worse for crude oil, which has been hit by the COVID-19 this year. Trump and the Republicans have pulled out of the Paris agreement and have no plans to develop green energy, which will be supportive for crude prices in the future. [7]

In terms of corporate tax, Biden and the Democrats plan to increase the corporate tax rate from 21% to 28%, while promising to increase spending on health care, social welfare and significantly increase the minimum wage. These policies are extremely unfriendly to companies and investors. It is estimated that this will reduce the profits of S&P 500 companies by 9.2%. The S&P 500 index may fall by more than 300 points at the same valuation and the US dollar may also reach new lows. Trump, who has always valued the performance of the stock market, believes that the current 21% tax rate is appropriate and there is no plan to change it. [8]

In terms of attitudes towards large technology companies, Democratic lawmakers have a more aggressive attitude. Some lawmakers have suggested splitting the four major technology companies (Apple, Amazon, Google, and Facebook). If a formal proposal is formed, it will have a serious impact on the tech-dominated Nasdaq index. While Republicans also believe that large technology companies have monopolies, they are more concerned with punishing unfair competition that takes advantage of their monopoly position, rather than splitting companies. [9]

On the issue of the next round of fiscal stimulus bills, Biden’s proposal is about $2.2 trillion, while Trump insists that it should not exceed $1.6 trillion. [10] If Biden wins the election, a larger stimulus bill will speed up economic recovery and push up inflation, and gold may benefit from it.

In terms of the monetary policy framework, Trump's re-election is more conducive to the continuation of the ultra-low interest rate environment in the United States. US stocks will benefit and may further bubble in the next two years.

References

[1] 陈肖,格隆汇《关于特朗普确诊“感染”的几种猜测》

https://m.gelonghui.com/p/413663

[2] 环球时报,《特朗普入院前后发生了什么?外媒披露三大细节》

https://mp.weixin.qq.com/s/2Nb4GR8zNYmoRmtFFXfIrQ

[3] 潘凌飞,华尔街见闻《这两天大出风头的新冠神药:再生元的抗体疗法究竟是什么?》

https://vip.jianshiapp.com/articles/3606642

[4] 雪球《住院三天后,特朗普出院了!还计划参加第二场总统大选辩论!》

https://mp.weixin.qq.com/s/_wYfduY2mt0iXT2L6NnWbQ

[5] 富途资讯《历史上的美国大选从未推迟过!这次会不一样吗?》

https://news.futunn.com/market/135123?src=1&user_id=12155378&auth_token=332378&clienttype=12&clientver=10.17.874&clientlang=0&showTrans=false&transType=0&utm_medium=futu_niuniu_share&utm_content=web_share&utm_campaign=news&utm_term=135123

[6] 沽民,格隆汇《川普确诊,股市不用太担心》

https://m.gelonghui.com/p/413728

[7] 富途资讯《拜登如果获胜,这些清洁能源股将比特斯拉更有看头!》

https://news.futunn.com/market/132577?src=4&lang=zh-cn

[8] 叶亭均,经济日报《拜登喊增公司税 冲击科技股》

https://money.udn.com/money/story/5599/4912815

[9] 机器之能,格隆汇《美国四大科技巨头反垄断调查报告披露,众议院委员会呼吁分拆科技巨头》

https://m.gelonghui.com/p/414631

[10] 刘忠勇,经济日报《美国刺激措施谈判仍陷焦灼 川普病中敦促加快协商》

https://udn.com/news/story/6813/4913205?from=udn-ch1_breaknews-1-cate5-news

2020/10/09
CN First International Futures Limited