Economic and Financial News From Last Week

Coronavirus:

August 19 – Wall Street Journal
(Matthew Dalton, Ruth Bender and Margherita Stancati):
“Coronavirus infections are surging again across much of Europe and governments are racing to prevent a full-fledged second wave of the pandemic —without resorting to the kind of broad lockdowns that devastated their economies in the spring.
The seven-day moving average of reported new daily cases has more than doubled since the end of July in the five largest European countries, nearing 11,000. That is the biggest sustained rise on the continent since it beat back the virus’s initial spike in March and April. Outbreaks are multiplying around vacation hot spots, shopping centers, parties and some workplaces. Authorities are also reporting that many cases have no known origin…”



Economics  and  Finance:

August 18 – Reuters  (Gertrude Chavez-Dreyfuss):
“The S&P 500 closed at a record high
 on Tuesday, rebounding from huge losses triggered by the coronavirus pandemic and crowning one of the most dramatic recoveries in the index’s history.
Trillions of dollars in fiscal and monetary stimulus have made Wall Street flush with cash, pushing yield-seeking investors into equities. Amazon and other high growth technology-related stocks have been viewed as the most reliable to ride out the crisis."



August 18 – Bloomberg
(Lu Wang):
“Unanimity has become one of the biggest risk factors in markets right now, with positions getting crowded as everyone is forced to buy. A custom gauge of sentiment compiled by Citigroup Inc. showed ‘euphoria’ just hit the highest level since the dot-com era.”



August 21 – Bloomberg
(Paula Seligson): “
After tapping the bond market at a record-shattering pace in recent months, Corporate America is more indebted today than ever before.
And while much of that fresh cash -- more than $1.6 trillion in total -- helped scores of companies stay afloat during the pandemic lockdown, it now threatens to curb an economic recovery that was already showing signs of sputtering. Many companies will have to divert even more cash to repaying these obligations at the same time that their profits sink, leaving them with less to spend on expanding payrolls or upgrading facilities in months ahead.”



August 21 – Wall Street Journal
(Paul Hannon):
“Europe’s economic recovery slowed in August while Japan saw another drop in activity, an indication that the return to pre-pandemic levels of global output is likely to be slow and uneven for as long as fresh outbreaks of the novel coronavirus continue to threaten. Economies around the world saw record contractions in the three months through June as governments imposed lockdowns… Surveys of purchasing managers at businesses in Europe and Japan released Friday suggest that the rebound may be smaller than hoped for…”



August 17 – Bloomberg
(Prashant Gopal):
“Federal Housing Administration mortgages… now have the highest delinquency rate in at least four decades. The share of late FHA loans rose to almost 16% in the second quarter, up from about 9.7% in the previous three months and the highest level in records dating back to 1979… The delinquency rate for conventional loans, by comparison, was 6.7%. Millions of Americans stopped paying their mortgages after losing jobs in the coronavirus crisis.  ... As of Aug. 9, about 3.6 million homeowners were in forbearance, representing 7.2% of loans…”



August 20 – CNBC
(Fred Imbert):
“The number of people filing for unemployment benefits last week was greater than expected, raising concern about the state of the economy as lawmakers struggle to move forward on a new pandemic stimulus package. …Initial jobless claims for the week ended Aug. 15 came in at 1.106 million. Initial claims for the previous week were also revised higher by 8,000 to 971,000. Last week marked the first time in 21 weeks that initial claims came in below 1 million.”



August 18 – Bloomberg
 (Reade Pickert):
“U.S. home construction starts increased in July by more than forecast and applications to build surged by the most in three decades, indicating builders are responding to robust housing demand fueled by record-low interest rates. Residential starts jumped by 22.6%, the most since October 2016, to a 1.5 million annualized rate from a month earlier… Applications to build, a proxy for future construction, increased 18.8%, the most since January 1990.”



August 19 – New York Times
(Jennifer Valentino-DeVries, Ella Koeze and Sapna Maheshwari):
“Strict lockdowns ended weeks ago, but many people across the country are still avoiding malls, restaurants and other businesses. The shift in behavior points to a reshaping of American commerce, fueling questions about the strength and speed of the economic recovery as the coronavirus continues to spread. Through the end of last week, daily visits to businesses were down 20% from last year, according to a New York Times analysis of foot traffic data from the smart phones of more than 15 million people.”



August 19 – Reuters (Samuel Shen and Andrew Galbraith):
“China reported the largest number of new stock investors in five years in July, as millions of individuals rushed into a buoyant share market, boosting trading turnover and brokerage earnings. The number of new investors in mainland Chinese shares totaled 2.4 million in July, the most since June 2015, the peak of China’s massive stock bubble that later burst…”



August 18 – Reuters (Inti Landauro and Jose Rodriguez):
“Spanish public debt rose to a new record of 1.29 trillion euros ($1.53 trillion) in June, mainly lifted by spending linked to the impact of the coronavirus pandemic… The total debt rose by 32 billion euros from the preceding month, pushing the debt-to-GDP ratio to 110%... The government revised the 2020 budget deficit forecast to 10.34% of GDP in May and said it expected the debt ratio to rise to 115.5% of GDP at the end of 2020.”



August 16 – Reuters (Leika Kihara and Tetsushi Kajimoto):
“Japan was hit by its biggest economic slump on record in the second quarter 
as the coronavirus pandemic emptied shopping malls and crushed demand for cars and other exports… The third straight quarter of declines knocked the size of real gross domestic product (GDP) to decade-low levels, wiping out the benefits brought by Prime Minister Shinzo Abe’s ‘Abenomics’ stimulus policies deployed in late 2012… The world’s third-largest economy shrank an annualized 27.8% in April-June…”



August 18 – Reuters (Leika Kihara and Tetsushi Kajimoto):
“Japan’s exports extended their double-digit slump into a fifth month in July as the coronavirus pandemic took a heavy toll on auto shipments to the United States… Total exports fell 19.2% in July from a year earlier, roughly in line with market expectations for a 21.0% decrease… It was, however, smaller than a 26.2% drop in June… Shipments to the United States plunged 19.5% in the year to July as demand for engines and automobile remained weak…”