The Day at a Glance | May 29 2020

Trump signs executive order targeting Twitter; announces conference on China

Yesterday, United States President Donald Trump signed an executive order that allows suing social media companies over the editing or censorship of posts made by their users, after Twitter tagged a message written by the president as violating the rules to avoid the “glorification of violence”. The executive order eliminates legal protection granted to social media platforms in a law made in 1996, which does not hold social media operators accountable for its users posts and protects them from any law suit for blocking any content that they consider inappropriate. Twitter tagged two different tweets made by the President this week with a fact-checking warning, and considered one of them as a glorification of violence. The latter made a reference to the social unrest seen in Minneapolis this week, after an African American citizen died in police custody. Trump threated with sending the National Guard in order to exercise control over the population, after looting and fires were set as protests turned violent, demanding justice for what transpired. Trump has repeatedly accused Twitter and Facebook of being conservative media that have censored his messages. It`s expected that the order will undergo an assessment of its legality. Besides that, the President has announced that a press conference will be held today in which new policies regarding China are expected to be presented. “We are not happy with China. We are not happy with what`s happened”, declared Trump yesterday, referring to Beijing`s approval of a national security proposal for Hong Kong. The political issues between both countries have one again turned into one of the main risks that could affect the economy and markets.

Consumer confidence records its greatest drop in history

Data on an INEGI survey recorded a dramatic fall in consumer confidence during April in Mexico, which reached its second lowest historical level. The indicator set at 32.2 points (vs 42.1 prev.), its lowest level since 2017, when the liberalization of the Mexican fuel market was approved. The pandemic`s effects on consumers explain the lower levels in confidence as the most important deteriorations have occurred in the components that measure the feeling regarding the current economic situation (-14) and the current possibilities of purchasing durable goods (-10.1). Notwithstanding, households remain optimistic about the situation in the next 12 months, even though levels are substantially lower than those seen the month prior (44.1 vs 54 prev.). The indicator stayed above 40 since July 2018 and reached 47.8 in February 2019, which coincided with the arrival of the new government. These figures don`t promise a bright future regarding consumption in Mexico and it`s estimated that confidence could stay at low levels for a longer period of time.

Consumption and inflation in disarray in the US

At an annual rate, the rise in prices in the US moderated significantly in April, as measured by the PCE. The indicator recorded an annual 0.5% acceleration in prices and a (-) 0.5% monthly contraction, in line with what has been seen in the Consumer Price Index. The fall in prices coincided with a strong fall in household consumption expenditure, the largest recorded in history (-13.6% monthly vs -12.8% e.). This April data reflects the virus`s impacts on consumption, as purchases made by households decreased to a minimum for a month when the strictest confinement measures were carried out. What is surprising is the fact that, even though consumption fell, people`s income increased 10.5%, which could be explained by the distribution made by the government through deposits. It`s believed that, in many cases, US citizens are receiving more money from the government than what they used to earn as salaries at their jobs, which increases income. What is concerning about this situation is the fact that it could incentivize people to not go back to work immediately once the economy recovers.