Economic News from the week ending May 15, 2020

May 14 – Bloomberg (Julia Leite):

 “Brazil reported the 

biggest daily jump in 

coronavirus cases yet 

as the pandemic shows 

no signs of slowing 

in Latin America’s 

largest economy. 

The Health Ministry reported 13,944 new cases on Thursday, solidifying the country as the new global hot spot for the disease. The number of infections has more than doubled in the past two weeks, pushing the total to 202,918 -- figures health officials say likely don’t fully reflect the situation amid a widespread lack of testing in the nation home to 210 million people.”

May 15 – Associated Press (Lolita C. Baldor): 

“Five sailors on the 

aircraft carrier sidelined 

in Guam due to a COVID-19 

outbreak have tested positive 

for the virus for the second time 

and have been taken off the ship, according to the Navy. All five sailors had previously tested positive and had gone through at least two weeks of isolation. As part of the process, they all had to test negative twice in a row, with the tests separated by at least a day or two before they were allowed to go back to the ship.”

May 14 – Bloomberg: 

“Hong Kong, South Korea and China

 -- are now facing resurgences 

that underscore how it may be 

nearly impossible to eradicate it. 

It’s a painful reminder that as countries open up again and people resume normal life, untraceable flare-ups even after an extended lull in cases are likely. Scientists have warned that the disease may never go away, because it lurks in some people without causing any outward signs of sickness.”

May 12 – Reuters (Richard Cowan, Makini Brice, Doina Chiacu, Tim Ahmann, Steve Gorman, Sharon Bernstein and Dan Whitcomb;): 

“California’s state 

university system, 

the largest 

in the United States, 

canceled classes

for the fall semester 

because of the coronavirus, 

while Los Angeles County said its stay-at-home order was likely to be extended by three months… In one of the first indications the pandemic will continue to have a significant impact into autumn, the chancellor of California State University said classes at its 23 campuses would be canceled for the semester that begins in September, with instruction moved online.”

May 13 – Financial Times (Richard Milne and David Crow): 

“When the swine flu pandemic 

struck in 2009, some of the 

world’s richest countries 

scrambled to get their hands 

on vaccines however they could. 

Poorer countries — among the worst affected — were pushed to the back of the queue, as western nations signed deals with drug makers to guarantee access to vaccines. Australia even stopped a domestic drug maker from exporting doses to the US until it had immunized its entire population.”

May 13 – Bloomberg (Jason Gale): 

“A detailed analysis 

from Bergamo, 

the epicenter of the 

Italian COVID-19 outbreak, 

found 10 cases of 

a Kawasaki disease

-like illness in children, 

adding to reports of about 90 similar cases from New York and England.”

May 11 – Financial Times (Colby Smith and Tommy Stubbington): 

"Over the past two months, 

the Fed has snapped up 

roughly $1.5tn of Treasuries 

and another $600bn or so 

of agency mortgage-backed 

securities 

as part of its pledge to buy an unlimited quantity of government debt. According to JPMorgan, the total of the Fed’s bond-buying in just a handful of weeks is in line with what the Fed purchased during the nearly three-year period covering its second and third rounds of quantitative easing after the financial crisis.”

May 11 – Reuters (Tommy Wilkes and Ritvik Carvalho): 

“Central banks and governments 

have unveiled an estimated 

$15 trillion of stimulus already 

to shield their economies

from the coronavirus pandemic 

- record sums that will swell balance sheets and deficits to peacetime highs. The sum equates to about 17% of an $87 trillion global economy last year.”

May 12 – Associated Press (Deb Riechmann): 

“The Trump administration 

has directed the U.S. 

federal employee retirement 

fund to scrap its plan to place 

more than $4 billion into 

Chinese investments, 

a move that comes as the president blames Beijing almost daily for not doing more to stop COVID-19 from spreading around the world. The administration has given the board overseeing the Thrift Savings Plan until Wednesday to comply with the president’s directive. The more than $4 billion, however, is a small slice of the hundreds of billions in the tax-deferred retirement savings and investment plan that works like a 401(k) plan offered by private corporations.”

May 11 – Reuters (Andrea Shalal and Ryan Woo): 

“U.S. President Donald Trump said

… he opposed renegotiating 

the U.S.-China ‘Phase 1’ trade deal 

after a Chinese state-run newspaper reported some government advisers in Beijing were urging fresh talks and possibly invalidating the agreement… ‘No, not at all. Not even a little bit,’ Trump said when asked if he would entertain the idea of reworking Phase 1. ‘I’m not interested. We signed a deal. I had heard that too, they’d like to reopen the trade talk, to make it a better deal for them.’”

May 14 – Bloomberg (Mario Parker): 

“President Donald Trump 

said he’s ‘looking at’ 

Chinese companies 

that trade on the NYSE 

and Nasdaq exchanges

but do not follow U.S. 

accounting rules. ‘

We are looking at that very strongly,’ Trump told Fox Business… Trump followed up by saying that getting tough on Chinese companies on the exchanges could backfire. ‘Let’s say we do that, right,’ Trump said. ‘So what are they going to do? They’re going to move their listing to London or someplace else.’”

May 13 – New York Times (Jeanna Smialek, Jim Tankersley and Emily Cochrane): 

“Federal Reserve chairman, 

Jerome H. Powell, delivered 

a stark warning on … 

that the United States 

was experiencing 

an economic hit 

‘without modern 

precedent,’ 

one that could permanently damage the economy if Congress and the White House did not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness. Mr. Powell’s blunt diagnosis was the latest indication that the trillions of dollars that policymakers have already funneled into the economy may not be enough to forestall lasting damage from a virus that has already shuttered businesses and thrown more than 20 million people out of work.”

May 14 – Associated Press (Christopher Rugaber): 

“Roughly 36 million people have now filed for jobless aid in the two months since the coronavirus first forced millions of businesses to close their doors and shrink their workforces… An additional 842,000 people applied for aid last week through a separate federal program set up for the self-employed and gig workers.”

May 13 – CNS News (Terence P. Jeffrey): 

“In the first 

seven months 

of the fiscal year, 

the federal 

government 

spent a record 

$3.3 trillion, 

while bringing in 

only $1.8 trillion 

in total receipts

—thus running 

a record deficit 

of approximately 

$1.5 trillion.”

The budget deficit 

soared to a record 

$1.935 trillion 

in the 12 months 

ending April 2020,

almost double the 

$1.037 trillion deficit

for the 12 months  

ending March 2020. 

May 14 – Reuters (Elizabeth Dilts Marshall): 

“Credit card spending 

among some of JP Morgan 

Chase & Co’s U.S. customers

 fell 40% during March 

and early April 

compared to last year, 

as Americans stayed home to protect against the novel coronavirus…”

May 14 – Bloomberg (Ed Ludlow): 

“One in every four U.S.

restaurants will go 

out of business due to the 

coronavirus quarantines 

that have battered the food-service industry, according to a forecast by OpenTable… Total reservations and walk-in customers from OpenTable’s network were down 95% on May 13 from the same day a year ago…”

May 12 – Bloomberg (Prashant Gopal): 

“The median price 

for a previously owned 

single-family house 

was $274,600, up 7.7% 

rom a year earlier, 

he US National Association of Realtors said in a report Tuesday. Prices rose in 96% of the 181 metropolitan areas measured.”

May 13 – Bloomberg (Elise Young): 

“New Jersey Governor 

Phil Murphy announced 

the first steps for reopening 

the state as it saw 

April revenue plummet 

60% from a year ago, 

evidence of the financial toll exacted by the coronavirus pandemic… New Jersey lost an unprecedented $3.5 billion of revenue in April.”

May 10 – Reuters (Tom Polansek): 

“U.S. President Donald Trump 

ordered meat processing plants 

to stay open to protect 

the nation’s food supply 

even as workers got sick 

and died. 

Yet the plants have increasingly been exporting to China while U.S. consumers face shortages, a Reuters analysis of government data showed… Meat buyers in China ramped up imports from around the world as a pig disease decimated its herd, the world’s largest, and pushed Chinese pork prices to record highs.”

May 14 – Bloomberg (Amanda Albright and Danielle Moran): 

“To the analysts at UBS 

Global Wealth Management, 

the $3.9 trillion municipal-bond 

market is heading into

the biggest financial storm 

anyone has ever seen.  

Nursing homes that have sold tax-exempt debt are being ravaged by the outbreak. College dormitory operators are facing vacancies, while small private schools that were already competing for students face uncertain prospects. Airlines whose lease payments back some bonds are seeing losses pile up. Stadiums and museums are empty.”

May 12 – CNBC (Lauren Hirsch): 

“J.C. Penney is in talks 

with key lenders 

to secure $450 million 

in financing 

for a possible 

bankruptcy filing

… The funds, known as a ‘debtor in possession’ loan, would be smaller than the $1 billion in DIP the retailer was initially seeking… The company is planning to file for bankruptcy as soon as Friday, though that timing could still be delayed…”

May 10 – Reuters (Yew Lun Tian): 

“China has issued 

a lengthy rebuttal 

of what it said were 24 

‘preposterous allegations’ 

by some leading 

U.S. politicians 

over its handling of 

the new coronavirus 

outbreak. 

The Chinese foreign ministry has dedicated most of its press briefings over the past week to rejecting accusations by U.S. politicians, especially Secretary of State Mike Pompeo, that China had withheld information about the new coronavirus and that it had originated in a laboratory in the city of Wuhan. A 30-page, 11,000-word article posted on the ministry website on Saturday night repeated and expanded on the refutations made during the press briefings, and began by invoking Abraham Lincoln, the 19th century U.S. president.”

May 15 – Reuters (Shubham Kalia): 

“China is ready to put 

U.S. companies in an 

‘unreliable entity list,’ 

as part of 

countermeasures 

against Washington’s

move to block shipments 

of semiconductors 

to Huawei Technologies,

 the Global Times reported… 

The measures include launching investigations and imposing restrictions on U.S. companies such as Apple Inc, Cisco Systems Inc, Qualcomm Inc as well as suspending purchase of Boeing Co airplanes, the report said here citing a source.”

May 10 – Associated Press (Paul Wiseman): 

“China’s direct investment 

in the United States fell last year

 to its lowest level since 

the Great Recession… 

The decline in Beijing’s investment in the United States reflected tensions between the world’s two biggest economies and Chinese government restrictions on overseas investment. A report… from the National Committee on U.S.-China Relations and the Rhodium Group consultancy found that China’s direct investment in the U.S. dropped from $5.4 billion in 2018 to $5 billion last year, the lowest level since the recession year of 2009.”

May 12 – Reuters (Jamie McGeever): 

“Services activity in Brazil 

shrank 6.9% in March

…, the biggest monthly 

fall on record

and a stark indication 

of the economic damage 

wrought by the 

coronavirus crisis.”

May 13 – Wall Street Journal (Mike Bird): 

“The Indian government 

promised a blockbuster 

economic stimulus… 

that lifted the 

country’s stocks. 

But the country’s economic 

circumstances looked bleak

even before the pandemic

began, and it is unclear 

who the buyers 

for all this debt will be. 

…Unemployment rose to 27.1% in the week to May 3, and many low-income workers have or are at risk of running out of money for basic necessities. The government touts the total size of the new rescue package at 10% of gross domestic product…”

May 12 – Bloomberg (Anurag Joshi): 

“Indian companies are 

getting downgraded 

at the worst pace ever, 

adding to challenges 

for policy makers 

trying to keep credit markets 

from seizing up amid the 

Covid-19 pandemic. 

For every upgrade of rupee debt of Indian firms since April 1 there have been about 11 downgrades, leaving this quarter set to be the worst on record… Ratings have been cut for 847 domestic firms in the period. That’s pushing up refinancing costs, with spreads on top-rated three-year rupee company notes over similar-maturity Indian sovereign bonds rising to the highest since 2013.”

May 12 – Bloomberg (Katherine Burton and Melissa Karsh): 

“Stan Druckenmiller said 

the risk-reward calculation 

for equities is the worst 

he’s seen in his career, 

and that the government stimulus programs won’t be enough to overcome real world economic problems. ‘The consensus out there seems to be: ‘Don’t worry, the Fed has your back,’ said Druckenmiller… ‘There’s only one problem with that: our analysis says it’s not true.’ While traders think there is ‘massive’ liquidity and that the stimulus programs are big enough to solve the problems facing the U.S., the economic effects of the coronavirus are likely to be long lasting and will lead to a slew of bankruptcies, he said.”