China makes a bullish call on the markets, and stocks take off

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Good morning, Bull Sheeters. It’s a risk-on Monday with Asia, Europe and U.S. futures all soaring. China is very bullish on its second-half recovery, and in the capital markets—for investors, that’s enough to drown out weak data elsewhere, plus bearish forecasts and new global records in coronavirus cases.

Let’s see where investors are putting their money.

Markets update


  • The major Asia indexes are soaring in afternoon trade, with Shanghai up more than 5% .
  • Investors in mainland China and Hong Kong are seeing their best day in over a year as the influential state-run China Securities Journal turned bullish on “the wealth effect of the capital markets.” That enthusiasm is lifting global markets.
  • Alas, the coronavirus crisis is worsening, as the WHO this weekend reported a new record daily tally (212,000) led by Brazil, India and the United States.


  • The European bourses jumped out of the gates, with the benchmark Stoxx Europe 600 up 1.7%.
  • The U.K. is now expected to phase Huawei out of its 5G buildout plans as soon as this year, a remarkable about-face by Boris Johnson’s government.
  • The closely watched German factory order numbers came in below estimates this morning, suggesting the rebound could be a bit more protracted than first hoped.


  • The major U.S. indexes appear set to extend last week’s impressive gains as futures all point more than 1% higher. That’s despite Goldman Sachs again lowering its U.S. GDP forecast, now seeing a full-year 4.6% contraction (vs. -4.2%, previously.)
  • M&A is back on… Uber Technologies is expected to announce today its purchase of Postmates in a $2.65 billion all-stock takeover, setting up a food fight with privately-held Door Dash in the U.S. meals-delivery market.
  • Warren Buffett’s Berkshire Hathaway Inc. is finally putting its mammoth cash pile to work, buying Dominion Energy Inc.’s natural gas pipeline and storage assets for $10 billion. Dominion had just bailed out of a pipeline deal as it seeks to reach net-zero emissions by 2050.


  • Gold is down.
  • As is the dollar.
  • Crude is up, tracking in line with equities.

The view from the C-suite

Today’s markets surge is yet another indicator that investors will run with the good news (in this case, from Chinese state media on a China 2H bounce) and shrug off the bad (Goldman’s U.S. downgrade from over the weekend).

So let’s dig into the “good news” this morning. Last week, Deloitte published its latest COVID-themed CFO survey, and the chief finance suite sees reason for optimism as the economy reopens. (A note: the poll, involving 118 large North American companies, is from mid-June, before the latest record daily surges in the U.S. South and West, but it’s still worth parsing the numbers.)

Nearly 20% of CFOs polled by Deloitte say they are already at or above pre-crisis operating levels, and another 12% expect to reach this milestone by the end of this year. That would mean roughly one-third of companies back to normal (or just about) by year-end. As the Deloitte chart below shows, at this stage, companies have bounced back faster than they thought would be the case back in April. That’s encouraging.


The less encouraging news is that this is an extremely uneven recovery. In sectors such as retail, financial services and manufacturing, the majority of CFOs don’t expect to be at or near pre-crisis levels before next year. And, 17% of all CFOs polled said they won’t reach that level before Q1 2022.

CFOs are a conservative lot. Still, these surveys are a helpful indicator to gauge sentiment inside Corporate America. And while it’s not great news, it is showing an improvement in sentiment.

But does that improved sentiment warrant such a rally in equities?

CFOs aren’t convinced, as the next Deloitte chart shows:


Nearly seven out of ten CFOs say equity markets are either “overvalued” or “very overvalued.”

The S&P has climbed a further 2% since this poll was conducted.



Not all Italians go to mass on Sunday. For a hearty few, it’s the bicycle that brings them closer to a state of grace.

Here, in little Amandola, every Sunday morning cyclists fill the town square at 8 a.m., just outside Bar Belli’s red brick facade. The cyclists then split up. The mountain bikers head up into the mountains. The road bikers descend into the valleys. It’s a remarkable scene of young and old, men and women, guys and girls. There’s also a lot of brightly colored bikes, and skin-tight attire.

The region where Amandola can be found, Le Marche, decided this year to promote cicloturismocycling tourism (do yourself a favor: at some point, click this link and escape for 2-minute-48-seconds)—a green, low-impact, pedal-from-medieval-hilltown-to-hilltown message to attract tourists. It was a genius idea: there’s so much history, beauty and good food around every bend, that they figured the best way to discover most of these gems was to tell people: take it slow, and discover it at your own pace—preferably, on two wheels.

What they conveniently left out was: some of these hills will knock you out.

A few years ago, I went for a short spin in the valley below my house. I wasn’t in tip-top shape, and when I finally peddled back into the garden I nearly fell over with exhaustion. I grabbed my water bottle and chugged what little was left.

“Where’d you go?,” a voice asked from the shade. It was Fiore, my elderly neighbor. I caught my breath. “Around here,” I replied. I was knackered, but the details of my ride energized him. Fiore just turned 97. In his teens, he was an avid cyclist. He knows every back road and navigable track around here like he knows his pockets.

Under that shady oak, he recounted a story I don’t think I’ll ever forget.

He was a teenager just as Italy was entering World War II. At the height of the war years, Mussolini wanted every fit male in the land to go and fight for the glory of some destructive vision. Fiore wanted none of it. He wasn’t a fighter. Cycling was his thing, not guns. Whenever he had the chance, he’d get on his bike and ride for hours—all day, rain or shine. As the recruitment drive was picking up, Fiore’s dad devised a plan to foil Mussolini. It all came down to, he told me, a girdle.

“A girdle?!,” I jumped in. “Did you say….?”… Si, he nodded. He’d draw tight (with some help) the girdle around his mid-section, and then hop on his bike. He’d go uphill and downhill. And uphill again. For hours on end. Every day he’d do this. The plan was to ride so many kilometers with that tight-fitting girdle it would transform his appearance, creating an hourglass physique that would force the recruitment office to reject him for military service. 

War recruiters are funny about the upper body, apparently.

Fiore so wanted to stay off the battleground that he’d cycle distances on his pre-war bike that I can’t even fathom. He’d make it a good half-way to the sea, or climb straight up into the mountains. He became obsessed. It was hard to know what was his real aim: to achieve some new personal best, or to pull one over on Mussolini.

“Did it work?,” I asked. “Did they make you go to war?”

“They wouldn’t take me,” he said with a grin.

He was done talking. “Tell me about your ride.”


Have a nice day, everyone. I’ll see you here tomorrow.

Bernhard Warner

If you were to assemble the people who could help you truly understand health care and how it’s affected businesses today, who would you pick? Here’s a few on Fortune’s list:

  • The CEOs and presidents of healthcare giants Johnson & Johnson, Moderna, Novartis, Aetna
  • co-discoverer of CRISPR-Cas9 Dr. Jennifer Doudna
  • Dean of Stanford Medicine Dr. Lloyd Minor
  • chief medical officers from IBM, Verily, Google Health
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  • Thrive Global CEO Arianna Huffington
  • CEO of REFORM Alliance Van Jones
  • NBA Commissioner Adam Silver

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