Economic and financial news from last week

                      Coronavirus:

July 29 – Reuters (Kate Kelland and Julie Steenhuysen): 

“It’s dog eat dog
 in the world of 
COVID-19 vaccines.

 ... some wealthier countries have decided to go it alone, striking deals with drugmakers to secure millions of doses of promising candidates for their citizens. The deals - including those agreed by the United States, Britain and the European Union with the likes of Pfizer, BioNtech, AstraZeneca and Moderna - are undermining the global drive, experts say.”

July 30 – Financial Times (Edward Luce): 

“A recent poll found that only half of Americans definitely plan to take a coronavirus vaccine. Other polls said that between a quarter and a third of the nation would never get inoculated. Whatever the true number, anti-vaccine campaigners are having a great pandemic — as indeed is Covid-19. At least three-quarters of the population would need to be vaccinated to reach herd immunity.”

                   Financial  Markets:

July 25 – Wall Street Journal (Michael Wursthorn, Mischa Frankl-Duval and Gregory Zuckerman): 

“Stuck at home in lockdown, millions of Americans are trading the markets like never before. At E*Trade Financial Corp., investors opened roughly 260,500 retail accounts just in March, more than any full year on record. Newer rival Robinhood Markets… logged a record three million new accounts in the first quarter. Individual investors’ last big binge was for dot-com stocks in the late 1990s. That era saw money-losing technology companies vaulted into the stratosphere and spawned a culture of day traders who played the markets as a full-time job. It appears even bigger—and broader—this time around, amplified by digital communities on Twitter and Discord… Investors have transformed those social-media platforms into virtual trading desks, a place to swap tips, hype stocks and talk trash as they attempt to trade their way to a quick fortune.”

July 29 – Bloomberg (Sarah Ponczek and Lu Wang):

 “Robinhood day traders swarmed to Eastman Kodak Co. shares as the stock rallied 1,600% this week. As of 11 a.m. in New York on Wednesday, 43,000 users of the investing app had added Kodak to their accounts in some form over the past 24 hours, according to website Robintrack.net… Roughly 27,000 of the additions came over a four-hour span earlier Wednesday. The growing presence of retail investors has become a popular markets narrative this year with zero commission fees and the potential for entertainment in a world largely without sports or gambling luring a new crop of traders.”

July 28 – Reuters (Laurence Frost, Tim Hepher and Jamie Freed): 

“Global airlines cut their coronavirus recovery forecast…, saying it would take until 2024 - a year longer than previously expected - for passenger traffic to return to pre-crisis levels… ‘The second half of this year will see a slower recovery than we’d hoped,’ IATA Chief Economist Brian Pearce said. June passenger numbers were down 86.5% year-on-year… after a 91% contraction in May.”

July 31 – Bloomberg (Jacqueline Poh): 

“The automotive industry has borrowed $132 billion since March as the spread of the coronavirus curbed demand for cars and closed factories. The sector is the largest user of funds put in place to ease the impact of the pandemic. The amount consists of $79 billion in new loans and $53 billion in drawdowns from existing credit lines. Facilities linked to the pandemic account for almost 80% of overall loan borrowings by the sector in the year to date.”

July 28 – Wall Street Journal (Laura Kreutzer and Laura Cooper):

 “Privately held companies, particularly smaller operations, are starting to feel more pain from the coronavirus pandemic as loan default rates rise while their lenders and private-equity backers seek ways to steer them safely to the end of the year. ‘You would probably be shocked at how little restructuring activity went on in the second quarter,’ said Brian Williams, a partner at Carl Marks Advisors. ‘A lot of people were deferring payments, [and] lenders were offering forbearances.’ ‘That’s now beginning to change,’ he said. ‘The big theme now is, who is going to fund the next three to six months?’ The default rate on private debt rose to 8.1% in the second quarter, according to the Proskauer Private Credit Default Index…”

                Trump   Administration:

July 29 – Associated Press (Lisa Mascaro): 

“President Donald Trump… dismissed Democratic demands for aid to cash-strapped cities in a new coronavirus relief package and lashed out at Republican allies as talks stalemated over assistance for millions of Americans… Stark differences remain between the $3 trillion proposal from Democrats and $1 trillion counter from Republicans putting aid for millions of communities at risk. Money for states and cites is a crucial dividing line as local governments plead for help to shore up budgets and prevent deeper municipal layoffs… Trump complained about sending ‘big bailout money’ to the nation’s cities, whose mayors he often criticizes.”

July 28 – CNBC (Jacob Pramuk): 

“Senate Majority Leader Mitch McConnell said… he will not pass a coronavirus relief bill in the Senate which does not include liability shields. ‘We’re not negotiating over liability protection,’ he told CNBC’s Kayla Tausche as Congress looks to craft a pandemic rescue agreement.”

July 30 – CNBC (Fred Imbert):

 “The number of Americans who filed 
new claims for unemployment benefits last week totaled 1.434 million…, roughly in line with expectations, as the coronavirus pandemic continues to ravage the U.S. economy. It was the 19th straight week in which initial claims totaled at least 1 million and the second consecutive week in which initial claims rose after declining for 15 straight weeks.”

July 29 – Bloomberg (Maeve Sheehey): 

“In the Census Bureau’s weekly Household Pulse Survey, roughly 23.9 million of 249 million respondents indicated they had ‘sometimes not enough to eat’ for the week ended July 21, while about 5.42 million indicated they had ‘often not enough to eat.’”

July 29 – Wall Street Journal (Doug Cameron and Andrew Tangel): 

“Boeing… outlined plans to slash more production and jobs and look for other ways to conserve cash as the coronavirus pandemic deepens its toll on the global aviation industry. The U.S. plane maker lost $2.4 billion in the second quarter and said it may consolidate some jet assembly among its three main factories to save money and prepare for a multiyear slowdown in aircraft deliveries. Boeing’s plans to become smaller will leave the Chicago-based aerospace giant increasingly reliant on its defense business for cash and likely ripple through its vast supplier network, their workforces and the broader U.S. economy.”

                    China:

July 26 – Reuters (Martin Quin Pollard and Thomas Peter): 

“China took over the premises of the U.S. consulate in the southwestern city of Chengdu on Monday, after ordering the facility to be vacated in retaliation for China’s ouster last week from its consulate in Houston, Texas. The seizure capped a dramatic escalation in tensions between the world’s two biggest economies that began when employees at China’s Houston consulate were seen burning documents in a courtyard last Tuesday, hours before Beijing announced that it had been ordered to leave the facility.”

July 31 – Bloomberg (Rebecca Choong Wilkins and Molly Dai): 

“More and more Chinese firms are struggling to juggle their debt loads. 
That’s likely to get tougher as President Xi Jinping calls for increasingly targeted monetary policy. At least 77 companies with a total of $44.7 billion of bonds outstanding are facing pressure repaying their debt, according to Bloomberg compiled data… It’s the highest weekly number of firms since Bloomberg began collecting data in January last year, up 28% from the end of March…”

July 26 – Bloomberg: 

“Office vacancies in China’s biggest cities are at the highest in more than a decade even as the nation’s economy has largely swung back into action after the coronavirus outbreak. Vacancy rates for prime office buildings in Shanghai climbed to 20% in the second quarter and 21% in the tech hub of Shenzhen, both the highest since at least the financial crisis in 2008… Beijing’s 15.5% rate was the most since 2009… ‘Tenants have generally become more conservative and the majority are choosing to put their expansion or relocation plans on hold,’ said Michael Wu, an executive director of office services at Colliers International Group Inc. ‘We’re starting to see fierce competition on rent among landlords.’”

July 29 – Reuters (Clare Jim): 

“Commercial lenders in Hong Kong ... are concerned about a 30% drop in building values over the past 12 months and will consider calling in or restructuring loans if values fall much further. If lenders demand repayment of loans or try to tighten terms, it could set off a wave of property sales that might depress prices even further in the Chinese-run territory… ‘The market is not going to get better in the next half to one year,’ said a real estate investor who provides financing in the city. ‘If you’re in the Hong Kong market, I’d say de-risk if you can. Get your money back.’”

                    Europe:

July 25 – Reuters (Michael Nienaber):

 “European Union leaders… clinched an historic deal on a massive stimulus plan for their coronavirus-throttled economies following a fractious summit lasting almost five days. The agreement paves the way for the European Commission… to raise up to 750 billions euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of integration. ‘It’s important that the EU has proven its capability to act in the crisis,’ Weidmann told Funke media group… But Weidmann added the agreed debt mechanism should remain an exemption and that strict conditions had to be attached to the financial aid.”

July 30 – Reuters (Michelle Martin and Nick Tattersall):

“The German gross domestic output in Europe’s largest economy shrank by 10.1% quarter-on-quarter from April to June after a revised 2.0% contraction in the first three months of the year. The plunge was the steepest since the office began collecting quarterly growth data in 1970 and was worse than the 9% contraction predicted…”

July 31 – Bloomberg (William Horobin): 

“The French economy declined 13.8%..., 

with huge declines in consumer spending, trade and investment.”

July 31 – Reuters (Belen Carreno): 

“Spain’s economy declined 18.5% 

in the second quarter, 

a drop so harsh it wiped out 

all the recovery achieved 

since the 2008 global 

financial crisis…”

July 31 – Reuters (Sergio Goncalves 

and Catarina Demonydit): 

“Portugal’s gross

domestic product 

shrank 14.1% 

in the second quarter 

of 2020