Economic News From Last Week

June 18 – Politico (Carla Marinucci and Victoria Colliver): 

“California Gov. Gavin Newsom announced Thursday he will require masks in most public settings statewide in an effort to slow the spread of Covid-19 as the state is still setting daily records for new infections.”

June 14 – CNBC (Saheli Roy Choudhury): 

“India’s coronavirus cases have spiked in recent days, fueling concerns the situation could spiral out of control even as the country starts to reopen after weeks of stringent lockdown. India is the fourth worst-hit nation in the world, with cumulative infection numbers over 320,000 — behind only the United States, Brazil and Russia… Daily reported cases in South Asia’s most populous nation hovered near, and sometimes exceeded, 10,000 per day over the last several days.”

June 18 – CNBC (Berkeley Lovelace Jr.): 

“Coronavirus antibodies may last only two to three months after a person becomes infected with Covid-19, according to a new study published… in Nature Medicine. Researchers examined 37 asymptomatic people, those who never developed symptoms, in the Wanzhou District of China. They compared their antibody response to that of 37 people with symptoms. The researchers found people without symptoms had a weaker antibody response than those with symptoms. Within eight weeks, 81% of the asymptomatic people saw a reduction in neutralizing antibodies, compared with 62% of symptomatic patients. Additionally, antibodies fell to undetectable levels in 40% of asymptomatic people, compared with 12.9% of symptomatic people…”

June 19 – Wall Street Journal (Anna Hirtenstein): 

“Irish glassmaker Ardagh Group was looking to raise $600 million from selling bonds last month. Instead, it got $1 billion. Two days later, it decided to tap the market for another $400 million. This time, it collected $715 million. Droves of foreign companies like Ardagh are raising U.S. dollars to capitalize on low borrowing costs and roaring investor demand for corporate debt. The sale of dollar bonds by overseas firms in April and May reached the highest level in seven years, according to Dealogic… This has created a frenzy of supply in the U.S. credit market. Companies have issued over $1 trillion of bonds in 2020, with March, April and May being the three busiest months ever for U.S. debt capital markets, according to Bank of America.”

June 14 – Financial Times (Robert Armstrong): 

“Unprecedented government interventions to offset the economic impact of Covid-19 have driven the level of global debt close to the peaks seen in the second world war, according to Goldman Sachs. Economists say this raises big questions about how the burden of servicing the debt mountain will be shared; how the related surge in bond issuance will affect markets; and what the long-term impact on growth will be. Some of those knock-on effects have already been seen. In April, credit rating agency Fitch docked Italy on concerns over the sustainability of its debts, tipped to rise this year to more than 150% of gross domestic product.”

June 16 – Reuters (Anshuman Daga): 

“Business sentiment of Asian companies sank to an 11-year low in the second quarter, a Thomson Reuters/INSEAD survey found, with some two-thirds of the firms polled flagging a worsening COVID-19 pandemic as the biggest risk over the next six months.”

June 15 – Reuters (Jeff Mason and David Shepardson):

 “The Trump administration is preparing an up to $1 trillion infrastructure package focused on transportation projects as part of its push to spur the world’s largest economy back to life, a source familiar with the situation said… The White House, which has made similar proposals in recent years, is aiming to unveil its latest effort in July…”

June 15 – Reuters (Jonnelle Marte, Ann Saphir and Lindsay Dunsmuir): 

“The Federal Reserve on Monday launched its Main Street Lending Program, the most complex program undertaken yet by the U.S. central bank to help keep the backbone of the economy from buckling under the strains of the coronavirus pandemic. The program, targeted at companies that were in good shape before the pandemic but may now need financing to retain workers and fund operations, will offer up to $600 billion in loans through participating financial institutions to U.S. businesses with up to 15,000 employees or with revenues up to $5 billion.”

June 17 – Reuters (Lindsay Dunsmuir and Ann Saphir): 

“The U.S. economy is beginning to recover from the worst of the coronavirus crisis, but with some 25 million Americans displaced from work and the pandemic ongoing, it will need more help, 

Federal Reserve Chair Jerome Powell told lawmakers… ‘We at the Fed need to keep our foot on the gas until we are really sure we are through this, and that’s our intention, and I think you may find that there’s more for you to do as well,’ Powell said…”

June 18 – Associated Press (Christopher Rugaber): 

“The number of laid-off workers seeking unemployment benefits barely fell last week to 1.5 million… That was down from a peak of nearly 7 million in March, and it marked an 11th straight weekly drop. But the number is still more than twice the record high that existed before the pandemic. And the total number of people receiving jobless aid remains a lofty 20.5 million.”

June 18 – Wall Street Journal (AnnaMaria Andriotis): 

“Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the U.S… The number of accounts that enrolled in deferment, forbearance or some other type of relief since March 1 and remain in such a state rose to 106 million at the end of May, triple the number at the end of April, according to… TransUnion. The largest increase occurred for student loans, with 79 million accounts in deferment or other relief status, up from 18 million a month earlier. Auto loans in some type of deferment doubled to 7.3 million accounts. Personal loans in deferment doubled to 1.3 million accounts.”

June 16 – Associated Press (Tamara Lush): 

“It’s been a rough year for the American psyche. Folks in the U.S. are more unhappy today than they’ve been in nearly 50 years. This bold — yet unsurprising — conclusion comes from the COVID Response Tracking Study, conducted by NORC at the University of Chicago. It finds that just 14% of American adults say they’re very happy, down from 31% who said the same in 2018. That year, 23% said they’d often or sometimes felt isolated in recent weeks. Now, 50% say that.”

June 18 – Wall Street Journal (Will Parker): 

“Rents in San Francisco, the most expensive apartment market in the U.S., are tumbling as the city’s vaunted tech sector sheds jobs and more tenants leave the city. The apartment vacancy rate in San Francisco rose to 6.2% in May… That’s up from 3.9% only three months ago, after stay-at-home orders went into effect and more people in the city decided not to renew their leases. San Francisco’s median rent in May for a one-bedroom apartment was also down 9.2% compared with a year ago at $3,360 a month, according to… Zumper.”

June 17 – Bloomberg (Oshrat Carmiel):

 “ Contracts to buy Manhattan co-ops fell 80% from a year earlier, while condo deals plunged 83%. In Brooklyn, signed co-op agreements tumbled 76%. Condos there fared better, with a 44% decline.”

June 16 – CNBC (Diana Olick): 

“Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index.”

June 17 – MarketWatch (Jeffry Bartash): 

“Construction of new houses rose 4.3% in May as a reopening U.S. economy and ultra-low mortgage rates drew more buyers and encouraged builders to start to speed up work. Housing starts climbed to an annual rate of 974,000 last month from a five-year low of 934,000 in April… It was the first increase since January. Economists polled by MarketWatch has forecast starts to rise to a 1.13 million rate.”

June 16 – Associated Press (Josh Boak and Anne D’Innocenzio): 

“American shoppers ramped up their spending on store purchases by a record 17.7% from April to May, delivering a dose of energy for retailers that have been reeling… Consumers’ retail purchases have retraced some of the record-setting month-to-month plunges of March (8.3%) and April (14.7%) as businesses have increasingly reopened. Still, the pandemic’s damage to retailers remains severe, with purchases still down 6.1% from a year ago.”

June 18 – New York Times (Mary Williams Walsh): 

“Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies… And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis. Even a meaningful rebound in economic activity over the coming months won’t stop it, said Mr. Altman… ‘The really hurting companies are too far gone to be saved,’ he said.”

June 16 – Financial Times (Billy Nauman and Colby Smith):

 “New Jersey, which has one of the biggest gaps between its pension assets and what it is projected to pay retirees, at $62bn, announced in May that it would defer a $950m top-up payment by one month as it tries to fill a hole in its budget opened up by Covid-19. Meanwhile, Illinois is in danger of falling further behind on efforts to close its own $140bn pension funding deficit, according to… Fitch. The state was the first to tap into a special Federal Reserve facility designed to alleviate effects of the economic shutdown.”

June 17 – Bloomberg: 

“China is leaning on its massive banks like never before to help bolster an economy facing its worst slump in four decades. The government will push the financial industry to sacrifice 1.5 trillion yuan ($211bn) in profit this year by offering lower lending rates, cutting fees, deferring loan repayments, and granting more unsecured loans to small businesses, the State Council said… after a meeting led by Premier Li Keqiang… The rare moves underscore concerns about how quickly China can recover from the coronavirus outbreak. While Chinese banks were already expecting weaker performances this year, the direct requirements on limiting their profits still come as a surprise…”

June 18 – Bloomberg: 

“China plans to accelerate purchases of American farm goods to comply with the phase one trade deal with the U.S. following talks in Hawaii this week. 

The world’s top soybean importer intends to increase buying everything from soybeans to corn and ethanol after purchases fell behind due to the coronavirus, said two people familiar with the matter, who asked not to be named because the information is private. A separate person said China’s government has asked state-owned buyers to make efforts to meet the phase one pact.”

June 14 – Reuters (Huizhong Wu, Gabriel Crossley and Kevin Yao): 

“China’s industrial output rose for a second straight month in May but the gain was smaller than expected, suggesting the economy is still struggling to get back on track after the coronavirus crisis. 

Retail sales and investment continued to contract, pointing to an uneven and possibly more drawn-out rebound in other sectors… Industrial output growth quickened to 4.4% in May from a year earlier, the highest reading since December… But a collapse in export orders amid global lockdowns has left factories more reliant on domestic demand, which is recovering at a more sluggish pace.”

June 15 – Bloomberg (Marcus Ashworth and Elisa Martinuzzi): 

“The European Union has been relaxing its rule book for banks — painstakingly built up in the decade or so since the financial crisis — as it tries to manage the impact of coronavirus. Unfortunately, the move might create big problems if economic activity fails to recover. That’s because the regulations are being eased just as the European Central Bank is about to inject a huge amount of liquidity into the euro-zone monetary system. This will lead almost certainly to commercial lenders acquiring more sovereign debt through what are known as ‘carry trades’ — where they borrow cheaply from the ECB and seek to make a safe profit by buying investment-grade bonds that yield more than their borrowing cost.”

June 16 – Reuters (Pedro Fonseca): 

“Brazil reported a record 34,918 new coronavirus cases on Tuesday,

 the same day that one of the senior officials leading the country’s widely criticized response to the crisis said the outbreak was under control. Brazil, the world’s No. 2 coronavirus hotspot after the United States, is fast approaching 1 million cases, although experts say the true number is likely higher due to patchy testing.”

June 16 – Reuters (Tetsushi Kajimoto and Naomi Tajitsu): 

“Japan’s exports fell in May at the fastest pace since the global financial crisis as U.S.-bound car shipments plunged…

Weak global appetite for cars and slowing business spending could drag on Japan’s export-led economy, as China-bound trade remains weak… Official data… showed Japan’s exports fell 28.3% in the year to May, the largest slump since September 2009. The result was worse than a 26.1% decrease expected…”

June 19 – CNBC (Keris Lahiff): 

“Tensions flared between India and China this week after conflict escalated along the Sino-India border. At least 20 Indian soldiers were killed in a clash between Chinese troops, raising fears of more conflict to come. The skirmish could propel change to the Indian economy and geopolitics in the region, according to Akhil Bery, Eurasia Group’s Southeast Asia analyst. ‘This is really unprecedented, what we’re seeing right now. Typically, around this time of year we do see these kind of skirmishes but what makes this skirmish much different, is the fact that there are deaths involved,’ Bery told CNBC…”