Daily Update: August 13, 2020

After roughly three months of searching for a running mate and approximately the same amount of time until the U.S. presidential election, candidate Joe Biden named Kamala Harris, the first-term Democratic Senator from California and his previous rival for the party’s nomination, as his vice-presidential pick.

“She’s smart, she's tough, she's experienced, she's a proven fighter for the backbone of this country, the middle class, for all those who are struggling to get into the middle class. Kamala knows how to govern. She knows how to make the hard calls. She's ready to do this job on day one," Mr. Biden said Aug. 12 at the pair’s first public campaign appearance in his hometown of Wilmington, Delaware.

“The case against Donald Trump and Mike Pence is open and shut,” Senator Harris said at the event, during which she attributed the current record unemployment rates and loss of life prompted by the pandemic to the current president. “He inherited the longest economic expansion in history ... and then, like everything else he inherited, he ran it straight into the ground. Because of Trump’s failures of leadership, our economy has taken one of the biggest hits out of all the major industrialized nations, with an unemployment rate that has tripled as of today.”

President Trump said that Senator Harris “did very poorly” in the Democratic primary presidential contest and described her as “nasty,” “extraordinarily nasty,” “nasty to a level that was just a horrible thing,” “very, very nasty,” and “the meanest, most horrible, most disrespectful of anybody in the U.S. Senate” to reporters on Aug. 11.

Senator Harris was the first Black and South Asian woman to serve as San Francisco’s district attorney, from 2004 to 2011, prior to her successful run for attorney general of the U.S.’s largest state, a position she held until her Congressional win in 2016. She became the first Black woman in over a decade to join the Senate. Her prosecutorial performances on the Senate Intelligence and Judiciary Committees have earned her praise from the political left and sharp critiques from the right, especially in response to her interrogation of the now-Supreme Court Judge Brett Kavanaugh during his nomination hearing. As the daughter of an Indian mother and Jamaican father, she is the first Black and South Asian woman ever nominated for the U.S. vice presidency. Senator Harris is the third woman in history to be nominated for the vice presidency, following Sarah Palin’s 2008 Republican run alongside John McCain and Geraldine Ferraro’s bid in 1984 as the running mate of Democratic candidate Walter Mondale.

Senator Harris’ record as a self-proclaimed “progressive prosecutor” has been a source of criticism from the Democratic party’s leftwing, who question her credibility on police brutality in the aftermath of George Floyd’s killing. As California’s attorney general, she rarely took action against police officers who killed civilians. Her criminal justice plan, presented during her presidential run late last year, outlined policies that were farther left on the political spectrum than actions she supported prior to entering Congress.

Wall Street largely signaled support for the announcement. Environmental groups expressed excitement over Senator Harris’ attitude toward environmental justice.

“I think it’s great,” Marc Lasry, the CEO of the investment firm Avenue Capital Group who also owns the Milwaukee Bucks NBA basketball team, told CNBC of Mr. Biden’s announcement. “She’s going to help Joe immensely. He picked the perfect partner.”

“Democratic Presidential candidate Joe Biden’s announcement that he has picked Senator Kamala Harris as his running mate ends months of speculation, and while certain to generate excitement and to invite additional scrutiny of Harris’ record, we see this choice as a net positive for the Biden ticket,” Charles Meyers, the chairman of the financial advisory firm Signum Global, wrote in an Aug. 11 note to clients. “Harris, who generally could be called a centrist, will not push Biden to the left or the right on major policy issues. She will be supportive of Biden and the Democratic Party’s policy platform.”

"As far as energy is concerned, we would start and end with this: Harris was an original Senate co-sponsor of the 2019 Green New Deal resolution," an expansive plan to curb greenhouse gas emissions and reduce economic inequalities, the research firm Clearview Energy Partners said in an Aug. 11 note, according to S&P Global Market Intelligence.

The official Trump campaign, in a statement from the communications director Tim Murtaugh, argued that “Kamala Harris was rated the most liberal U.S. Senator in 2019 and completes the radical, leftist takeover of Joe Biden and the entire Democrat Party. She pushes Biden even further to the left than he had already moved. Biden and Harris together make up the most extreme liberal ticket in American major party history.”

Vice President Mike Pence told Fox News on Aug. 12 that he "think[s] she is a skilled debater” and, praising the Trump administration, said he is looking forward to challenging her at the Oct. 17 vice presidential debate “on the stage—whether to compare Joe Biden's nearly 50 years in public life, the agenda of the radical left, the agenda that she's embraced throughout her political career—with the results of this president and this administration.”

The Democratic fundraising platform Act Blue reported raising $10.8 million in the four hours after Mr. Biden’s announcement.

Prior to the announcement, Mr. Biden and his joint fundraising committees brought in big-money donors. According to Federal Election Commission filings, the campaign’s committee Biden Victory raised nearly $86 million in the second quarter, followed by the Biden Action Fund, a committee set up by the campaign to collect Wall Street contributions, which raised $11.5 million in the second quarter. Bain Capital co-chairman Josh Bekenstein and his wife Anita contributed $710,000. James Murdoch, the former CEO of 21st Century Fox and son of the conservative media scion Rupert Murdoch, gave $615,000. Meg Whitman, CEO of the technology media app Quibi, donated $500,000. Ken Frazier, the CEO of Merck who formerly worked on President Trump’s advisory council, contributed $50,000.

Senator Harris raised $40 million and captured the attention of film, finance, and other industries during her presidential candidacy, which she ended in December of last year.

During the first Democratic presidential debate in June last year, she attacked Mr. Biden’s opposition toward the government’s mandatory busing of minority students into predominantly white neighborhoods to integrate schools in the 1970s. Senator Harris, who was a young student at that time, was part of the second class of students to integrate California public schools. Mr. Biden said he did not oppose busing, but instead opposed busing required by the Department of Education. While he has been a strong supporter of civil rights during his political career and presided over the renewal of the 1982 Voting Rights Act for 25 years, Mr. Biden was in fact active and outspoken against busing as a desegregation tool from 1975 through 1982.

Mr. Biden and Senator Harris will both speak at the Democratic National Convention starting on Aug. 17, during which they will accept the party’s nomination.

Today is Thursday, August 13, 2020, and here is today’s essential intelligence.

Uncertainty in the Global Economy

'No place to go': US coal employment, production nosedive in wake of pandemic

U.S. coal production and employment took a nosedive in the second quarter as the COVID-19 pandemic delivered a significant blow to demand. Average quarterly coal mine employment fell 13.3% from the prior quarter and 23.1% from the year-ago period to a new low in the second quarter of 2020, according to an S&P Global Market Intelligence analysis. At the same time, coal production declined to 112.3 million tons in the quarter, down 24.7% compared to the prior quarter and down 37.6% compared to the second quarter of 2019.

—Read the full article from S&P Global Market Intelligence

Gold price slide steepest in 7 years: analysts

The gold spot price dropped nearly 6% day on day, its fifth sharpest one-day drop over the past two decades and its largest daily fall since the sell-off in 2013, analysts said Aug. 12. Analysts at precious metal refiner MKS PAMP said gold traded to a high of $1926/oz in early Asian hours before falling $50 to $1872/oz, with gold rebounding toward $1900/oz and then falling again to $1862/oz. "The $115/oz (5.7%) drop is the worst in over seven years," Canaccord Genuity analysts said in a research note.

—Read the full article from S&P Global Platts

Gold Breaks Out to a New All-Time High as the U.S. Dollar Drops

Despite the drop in volatility in many asset classes over the summer, some broke through key support and resistance levels. The S&P GSCI Gold (TR) was one of them, reaching a new all-time high of USD 1,056.83 on Aug. 6, 2020, eclipsing the previous high from the summer of 2011. The underlying gold futures had reached new highs in several different major currencies over the past year, and they finally broke through in U.S. dollar terms. Gold’s unprecedented rise is driven to a great extent by the bearish sentiment surrounding the U.S. dollar. Lower real rates and widespread fiscal and monetary stimulus measures have boosted demand for bullion, which is seen as a hedge against inflation and currency debasement. With many government bonds paying investors a negative return, the fact that gold is a financial asset that offers no income has become increasingly irrelevant.

—Read the full article from S&P Dow Jones Indices

From Bad To Worse: Global Air Traffic To Drop 60%-70% In 2020

S&P Global Ratings has updated their global air passenger traffic forecasts and now expects traffic to fall by as much as 60%-70% in 2020 versus 2019. This is weaker than the 50%-55% drop S&P Global Ratings forecasted at the end of May. S&P Global Ratings now expects 2021 air passenger traffic to decline 30%-40% compared with the 2019 base, and foresee a more gradual recovery to pre-COVID-19 levels by 2024.

—Read the full report from S&P Global Ratings

Banking Sector Under Pressure

After blast, Lebanon's 'uninvestable' banks face sector rebuild, depositor pain

Fallout from the Aug. 4 explosion at Beirut's port will put further strain on Lebanon's troubled financial system, with a large-scale sector restructuring appearing likely and depositors set to lose billions of dollars. The blast has claimed at least 200 lives, according to BBC News, and caused widespread property damage. Public anger led the government to resign Aug. 10 as outgoing Prime Minister Hassan Diab, who was appointed in December 2019, said the blast was the result of endemic corruption.

—Read the full article from S&P Global Market Intelligence

Despite oil burden, Nordic banks outperform European peers in loan loss battle

Oil-related exposures have been causing problems for Nordic banks since the coronavirus crisis broke out, but second-quarter financial results indicate that the region's lenders have otherwise avoided the worst impact of the pandemic. Analysts also point to Nordic banks as the best placed to resume a normalized dividend policy. The coronavirus crisis has prompted five of the six largest Nordic financial institutions — Nordea Bank Abp, Danske Bank A/S, DNB ASA, Skandinaviska Enskilda Banken AB and Swedbank AB (publ) — to increase their loan loss provisions significantly in the first half from the same period in 2019.

—Read the full article from S&P Global Market Intelligence

Bank of America, Wells Fargo among US banks with high retail exposure

U.S. banks continued to disclose exposure to commercial retail borrowers as distress mounts in the space. Among reporting banks, Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp remain the three with the highest nominal value of loans in the segment as of the end of the second quarter, even after their respective lending totals in various retail categories mostly declined from the first quarter, according to filings.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

China Renewables: Delisting To Boost Deleveraging

Chinese state-owned power groups might potentially relist their renewable-energy arms on domestic markets after privatizing in Hong Kong, where the companies trade at low valuations. S&P Global Ratings believes the delistings could be part of a broader effort to widen the equity bases and lower the debt dependency of their parents, all of which are large independent power producers (IPPs). If successful, relistings would be credit positive for the heavily leveraged sector.

—Read the full report from S&P Global Ratings

The Greening Of Financial Services: Challenges For Bank And Insurance Green And Sustainability Hybrids

Issuing green or sustainability-linked hybrids helps banks and insurers spotlight their environmental, social, and governance (ESG) strategies, but investors are still exposed to the risks of the broader businesses. There is an inherent structural tension between using such hybrids to earmark funds for qualifying projects, and the role capital plays on a bank or insurance balance sheet (it is fungible in terms of backing all activities and used to leverage up the balance sheet). S&P Global Ratings believes this is why the green or sustainability promises incorporated in such hybrids have so far been light on specific commitments, and this report notes that such hybrids may not match the investment mandate of some green and sustainability investment portfolios.

—Read the full report from S&P Global Ratings

Biden's VP pick strong advocate of environmental justice, climate action

Just weeks after releasing an aggressive $2 trillion climate change and clean energy plan, former Vice President Joe Biden selected a running mate who has also advocated for aggressive climate change action, including supporting a ban on fracking and ending fossil fuel leasing on public lands. After months of deliberation, Biden on Aug. 11 selected U.S. Sen. Kamala Harris, D-Calif., to join him on the Democratic Party ticket, bringing her aggressive stance on energy and climate issues into the fold. His pick made history. Harris is the first African American woman and the first person of South Asian descent on a major political party's presidential ticket.

—Read the full article from S&P Global Market Intelligence

Dakota Access Pipeline proponents cite risk of famine, floods, fires and fatalities: Fuel for Thought

It’s not unusual for court arguments to engage in a bit of hyperbole to drive home their points, but myriad pipeline proponents clearly want to highlight worst-case scenarios to state their cases for maintaining the crude flow through the Dakota Access Pipeline while a broader environmental review is conducted. According to court filings, the potential shutdown of DAPL would not only hurt Bakken Shale’s crude oil production, but could lead to famine, floods, fires, fatalities and much more. The nation’s geopolitical security would be threatened and the elimination of a major crude artery would trigger greater environmental emissions, worse health outcomes, poor education funding, and even the potential for “incinerated” towns.

—Read the full article from S&P Global Platts

The Future of Energy & Commodities

Listen: Oil companies Q2 roundup: Takeaways from the peak lockdown season

April was the nadir of the global demand slump from COVID-19 lockdowns while swinging output cuts from OPEC+ and a slump in US drilling hit production volumes across the board. Oil and gas producers have also been grappling with more pessimism over long term oil demand, have written down asset values and some have stepped up their energy transition game. S&P Global Platts senior writer Robert Perkins is joined by colleagues Nick Coleman, Starr Spencer and S&P Global Market Intelligence's Peter Marrin to discuss the key themes of the latest earnings season.

—Listen and subscribe to Commodities Focus, a podcast from S&P Global Platts

US ELECTION: Drillers acting fast on federal wells ahead of potential Biden ban

While many US oil and gas producers have slowed drilling activity to a bare minimum in response to low prices, operators holding federal permits have boosted activity ahead of a potential ban expected if presumptive Democratic presidential nominee Joe Biden wins November's election. These drillers' efforts to beat the election clock can be seen in the latest data on drilled-but-uncompleted wells, which show a rising share of DUCs on federal versus private land. US oil wells drilled on federal lands surged to 22% of total wells drilled in June, from 12% in February, according to S&P Global Platts Analytics.

—Read the full article from S&P Global Platts

Norway COVID-19 travel restrictions likely to delay Yme oil field startup: Lotos

The redevelopment of Norway's Yme oil field, thought to hold 65 million barrels of crude, is being held up by COVID-19-related restrictions on hiring overseas workers, Polish oil and gas company Lotos said Aug. 12. In a results statement, Lotos, which holds a 20% stake in the project, signaled a further delay, saying the operator, Repsol, hoped to start production in Q3 2021, but Lotos, taking a more "conservative" view, expected startup in Q4 2021. Yme was originally producing from 1996-2001. An earlier plan to redevelop the field went awry as structural issues were discovered, with a production unit deployed for the project in 2012. Repsol acknowledged delays to the latest project in July.

—Read the full article from S&P Global Platts

Written and compiled by Molly Mintz.