Protests in US, Hong Kong Becomes a Powder Keg, and EU Fires Fiscal Bazooka

Demography Unplugged with Neil Howe

In this latest issue of my weekly podcast, we talk about the nationwide protests over the death of George Floyd. In American history, eras of declining youth violence typically give rise to calls for a higher standard of justice from law enforcement officers. That's happening today. Since the mid-1990s, the crime rate in America has fallen dramatically, making the current mood ripe for reform--from the First Step Act, to #cut50, to more humane policing. Thank the Millennial Generation for this improvement. As for the November elections, the ongoing protests could pose a possible threat to both Dems and Reps. While progressives could be accused of being soft on authority, conservatives could be accused of lacking any sense of community. On balance, Joe Biden is better positioned to come out of this in a stronger position.

Economic indicators continue to hit record lows. The Chicago Fed National Activity Index came in at -16.74 for April, its lowest reading on record. Markit services and composite PMI flashes were in the mid-30s for May, while the final manufacturing PMI was confirmed at 39.8. In China, the NBS Manufacturing PMI came in at 50.6 for May, showing little improvement.

Brexit talks are nearing a deadline. The UK and the EU have until the end of June to decide if negotiations will continue past 2020. While talks have come to a stand still, Boris Johnson is determined to make a deal as fast as possible. With the EU economically struggling from its shutdown, Johnson thinks he has the upper hand.

Investors pull back from Brazil. As COVID worsens and Bolsonaro plunges into embroiled in scandal, investors are leaving Brazil--almost as fast as Jair's advisors are fleeing his cabinet. A recent IIF report estimates that from February to May, investors have pulled $11.8 Bn from Brazil's stock market. Similarly, $18.7 Bn has been pulled from Brazil's bond market. While other emerging markets have seen money flowing back since April, Brazil ain't seeing anything flow back yet.

Salvini dodges investigation. Last August, Matteo Salvini, then serving as Italy's interior minister, blocked a rescue boat full of immigrants from docking on Italy's coast. Under Italian law, Salvini's actions count as kidnapping. Yet, being a government official, he is granted immunity unless parliament votes to revoke his protection. In a vote last week, a subcommittee voted 13-7 to keep Salvini's immunity intact. This may actually be a win for the Democrats and their prime minister, Giuseppe Conte, if it actually prevents "Il Capitano" from becoming a martyr.
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