Economic News From Last Week

May 20 – Reuters (Deena Beasley): 

“A top U.S. scientist said… governments should not count on a successful vaccine against COVID-19 being developed anytime soon when deciding whether to ease restrictions imposed to curb the pandemic. William Haseltine, a groundbreaking researcher of cancer, HIV/AIDS and human genome projects, said the better approach now is to manage the disease through careful tracing of infections and strict isolation measures whenever it starts spreading.

While a COVID-19 vaccine could be developed, he said, ‘I wouldn’t count on it.’ Vaccines developed previously for other types of coronavirus had failed to protect mucous membranes in the nose where the virus typically enters the body, he said.”

May 22 – CNBC (Weizhen Tan): 

“U.S. President Donald Trump also threatened tariffs on China again this month. In the latest move, the U.S. Senate passed legislation on Wednesday that could restrict Chinese companies from listing on American exchanges or raise money from U.S. investors, unless they abide by Washington’s regulatory and audit standards.”

May 19 – Bloomberg (Todd White): 

“American financial conditions have loosened at the fastest pace since at least 1990, belying mounting investor skepticism that a V-shaped economic recovery will follow the pandemic-induced crash. A Bloomberg measure of market health across bond, stock and liquidity indexes has staged a revival like never before -- bouncing back to early March levels, when recorded coronavirus cases globally were around 90,000 versus more than 4.8 million today. All told, this gauge of animal spirits has improved from the nadir by 5.4 standard deviations in just 37 trading days, a feat that took 50 days back in 2008.”

May 20 – Bloomberg (Tom Orlik and Scott Johnson): 

“Collapsing tax revenue and soaring stimulus costs mean the Covid-19 recession is set to result in a historic increase in government debt. Taken together, by year-end 2021 G-20 economies are set to add $13.1 trillion to their debt stock. For advanced economies that will be a burden for years to come.”

May 19 – Reuters (Richard Cowan and Susan Cornwell): 

“Republican leaders in the U.S. Congress said… they were in no hurry to work on another coronavirus relief package, despite the House of Representatives’ passage last week of a $3 trillion measure. ‘We need to assess what we’ve already done, take a look at what worked and what didn’t work, and we’ll discuss the way forward in the next couple of weeks,’ Senate Majority Leader Mitch McConnell told reporters after President Donald Trump spoke to a Senate Republican luncheon.”

May 19 – Bloomberg (Josh Wingrove): 

“President Donald Trump’s economic adviser Larry Kudlow said nobody can invest confidently in Chinese companies and that the U.S. needs to protect investors from the country’s lack of transparency and accountability. ‘We have learned that Chinese companies are not transparent,’ Kudlow said… on Fox Business Network. ‘They do not meet the norms, the regulations.’ Kudlow pointed to potential lawsuits related to the coronavirus, saying ‘until that stuff is sorted out, nobody really can invest with confidence in China.’”

May 17 – CNBC (Jeff Cox): 

“The U.S. economy could shrink by upwards of 30% in the second quarter but will avoid a Depression-like economic plunge over the longer term, Federal Reserve Chairman Jerome Powell told ‘60 Minutes’… The central bank chief also conceded that jobless numbers will look a lot like they did during the 1930s, when the rate peaked out at close to 25%. However, he said the nature of the current distress coupled with the dynamism of the U.S. and the strength of its financial system should pave the way for a significant rebound.”

May 21 – CNBC (Jeff Cox): 

“First-time filings for unemployment insurance totaled 2.44 million last week as the tail effects of the coronavirus shutdown continued to impact the U.S. jobs market… In the nine weeks since the coronavirus-induced lockdown has closed large parts of the U.S. economy, some 38.6 million workers have filed claims.”

May 20 – CNBC (Jeff Cox):

 “Heavily indebted ‘zombie’ companies happen to control nearly 2.2 million jobs at a time when the U.S. is in a deep employment crisis. The companies occupy a large swath of American industry, from big conglomerates to the restaurants and bars that have suffered so much during the coronavirus pandemic and the associated social distancing measures that have torn a hole through the U.S. economy. They’re generally designated as companies that continue to operate even without the revenue stream to pay off their debts. At the sector level, they range from the 233,000 jobs in industrial to conglomerates to 738 in the insurance business, according to… Arbor Data Science.”

May 18 – Wall Street Journal (Gerald F. Seib): 

“ Political power in the country’s states today is almost evenly split between the two parties: 26 have Republican governors, 24 have Democratic governors. Yet the coronavirus’s effects aren’t even close to falling evenly between red and blue states. Two-thirds of confirmed coronavirus cases are in states with Democratic governors. When states are measured by the sheer number of coronavirus cases, six of the top seven have Democratic governors. Together, those six blue states have about half of the nation’s cases, though only about a third of its population.”

May 21 – Bloomberg (John Gittelsohn): 

“Delinquencies on U.S. home loans surged by 1.6 million in April, the biggest one-month gain ever, as soaring job losses fueled a jump in missed payments and government programs offered penalty-free delays. Mortgages at least 30 days in arrears almost doubled to 6.45%, the highest rate since January 2015, according to… Black Knight Inc. About 3.4 million loans were more than 30 days late and an additional 211,000 properties were in foreclosure or on track for repossession by lenders. A federal relief program allows borrowers impacted by the virus an initial six-month payment deferral without penalty. About 4.7 million borrowers were in forbearance as of May 12…”

May 18 – Reuters (Lindsay Dunsmuir): 

“Roughly 4.1 million U.S. mortgage borrowers have had their payments paused or reduced as the novel coronavirus outbreak hits household finances, but the increase in the number of people needing such help is slowing, the latest weekly survey from the Mortgage Bankers Association showed… The share of mortgages in forbearance rose to 8.16% from 7.91% in the May 4-10 period…”

May 20 – Wall Street Journal (AnnaMaria Andriotis): 

“Lenders in April had nearly 15 million credit cards in ‘financial hardship’ programs, such as deferral programs that let borrowers temporarily stop making payments, according to estimates by credit-reporting firm TransUnion. That accounts for about 3% of the credit-card accounts the company tracks, TransUnion said… Nearly three million auto loans were in these hardship programs, accounting for about 3.5% of those tracked. The numbers have surged from a year ago, when 0.03% of credit cards and about 0.5% of auto loans were in financial-hardship programs.”

May 19 – Wall Street Journal (Konrad Putzier): 

“A rising number of office- and apartment-building owners are falling behind on their mortgages, a sign the economic shutdown is harming stabler property types and raising the prospect of widespread industry damage. Office leasing has mostly dried up in recent weeks and companies increasingly say they want to use less office space in the future… At the same time, the economic and business collapse is leaving many people unable or unwilling to pay rent for their apartments. Owners of hotels and retail properties were the first to run out of money and start to default back in March… Hotels are the most economically sensitive because of their short-term stays and easy cancellation policies. Shopping centers were already under assault from e-commerce before malls started to shut down under government orders.”

May 22 – Bloomberg (Lauren Coleman-Lochner, Jordyn Holman and Natalie Wong): 

“Retail landlords are sending out thousands of default notices to tenants, a situation that could tip already-ailing retailers into bankruptcy or total collapse. Department stores, restaurants, apparel merchants and specialty chains have been getting the notices as property owners who’ve gone unpaid for as long as three months lose patience… ‘The default letters from landlords are flying out the door,’ said Andy Graiser, co-president of A&G Real Estate Partners, whose firm works with retailers and other commercial tenants. ‘It’s creating a real fear in the marketplace,’ Graiser said.”

May 19 – Reuters:

 “U.S. homebuilding dropped to a five-year low in April… Housing starts tumbled 30.2% to a seasonally adjusted annual rate of 891,000 units last month, the lowest level since early 2015 ... Housing starts dropped 29.7% on a year-on-year basis in April.”

May 21 – CNBC (Diana Olick): 

“April sales of existing homes fell 17.8% month to month, and were 17.2% lower than April 2019, seasonally adjusted… That puts the annualized pace at 4.33 million units, the slowest sales rate since September 2011. These numbers are based on closed sales…, so they represent contracts signed in late February and March.”

May 17 – Bloomberg (Brendan Murray): 

“Some 40% of Americans said they won’t buy products from China, according to a survey of 1,012 adults conducted May 12-14 by Washington-based FTI Consulting…”

May 16 – Bloomberg (David McLaughlin): 

“The U.S. Justice Department is drafting a lawsuit against Alphabet Inc.’s Google, accusing the internet giant of violating antitrust laws, according to a person familiar with the matter. … A draft complaint doesn’t necessarily mean the government will ultimately sue Google, but it signals investigators working on the case believe there is enough evidence to start preparing for litigation…”

May 19 – CNBC (Huileng Tan): 

“China has been building up its food and energy stockpile this year, taking advantage of slumping crude oil prices even before the coronavirus pandemic disrupted supplies. The world’s second largest economy, which has limited arable land, is facing pressure to shore up its food supplies as prices for food started ticking higher last year, prior to the virus outbreak… ‘People there (in China) are panicked that coronavirus will eventually shut down the world’s ports, making it impossible for them to import,’ said Arlan Suderman, chief commodities economist for INTL FCStone… ‘As such, they are hoarding supplies now while they are cheap and available.’”

May 21 – Reuters (Pedro Fonseca): 

“Brazil registered a record of 1,188 daily coronavirus deaths on Thursday, with more than 20,000 total fatalities from the coronavirus outbreak… Brazil now has 310,087 confirmed cases, the ministry said, just a few thousand fewer than world No. 2 hot spot Russia, which trails the United States.”

May 19 – Reuters (Marcela Ayres): 

“Brazil will finance emergency crisis-fighting spending by selling debt of up to three years maturity, beyond which borrowing costs start to get very high, Treasury Secretary Mansueto Almeida said… Almeida said the economy could shrink this year by more than 5%, and that the budget deficit could exceed 9% of gross domestic product.”

May 19 – Bloomberg (Anna Andrianova): 

“Russia’s overall output shrunk by a quarter last month as the pandemic lockdown limited economic activity and slashed incomes, according to Bloomberg Economics… ‘With lockdown effects lingering through May, the decline in GDP in the second quarter is likely to be deeper than during the global financial crisis,’ said Scott Johnson, an analyst at Bloomberg Economics.”

May 20 – Reuters (Tetsushi Kajimoto): 

“Japan’s exports fell the most since the 2009 global financial crisis in April as the coronavirus pandemic slammed world demand for cars, industrial materials and other goods, likely pushing the world’s third-largest economy deeper into recession. …Japan’s exports fell 21.9% in April year-on-year as U.S.-bound shipments slumped 37.8%, the fastest decline since 2009, with car exports there plunging 65.8%.”

May 21 – CNN (Ryan Browne): 

“The Trump administration announced… it had approved a potential $180 million arms sale to Taiwan, a move that is bound to anger Beijing amid increasing tensions. The State Department authorized a possible sale of eighteen MK-48 Mod6 Advanced Technology Heavy Weight Torpedoes and related equipment for an estimated cost of $180 million… ‘The proposed sale will improve the recipient’s capability in current and future defensive efforts. The recipient will use the enhanced capability as a deterrent to regional threats and to strengthen homeland defense,’ the announcement said.”