Economic and Financial News from last week

 COVID-19  NEWS:

(1)
September 17
– Forbes
(Tommy Beer):
“Nearly half of all Americans, including a majority of Republicans, say they definitely or probably would not get the COVID;;-19 vaccine if it were available today, according to a new poll, the latest sign of fear and uncertainty as President Trump promises a fast vaccine and his own health officials warn it could take many more months for one to be ready… The new national survey by Pew Research Center, conducted Sept. 8-13 among 10,093 U.S. adults…, finds Americans’ intent to get a coronavirus vaccine has diminished significantly across all major political and demographic groups.”


(2)
September 15
– Reuters
(Lisa Shumaker):
“The World Health Organization reported a record one-day increase in global coronavirus cases on Sunday, with the total rising by 307,930 in 24 hours. The biggest increases were from India, the United States and Brazil…”



OTHER  NEWS:
(3)
September 15
– Bloomberg
(Ksenia Galouchko):
“U.S. technology stocks are the world’s most crowded trade, say fund managers overseeing $601 billion, fueling fears about a bubble that could burst the market rally. Investors surveyed by Bank of America Corp. have never been so unanimous in their conviction on the most popular asset class, with 80% of participants citing long U.S. tech, up from 59% in August. Among the market’s biggest tail risks, concerns about a tech bubble jumped to be ranked behind only a resurgence in Covid-19.”


(4)
September 13
– Financial Times
(Joe Rennison):
“The onset of coronavirus — and the drastic policy response from central banks — has produced an army of companies limping along in the twilight between the living and the dead. A decade of low interest rates had already sustained a rising number of companies that were able to borrow cheaply and amble on with operating profits that fell short of the interest needed to pay their lenders. Now, the bond binge that followed the depths of the Covid-19 crisis in March has accelerated that trend, giving rise to a new generation of these so-called corporate zombies. At the end of last year, 13% of companies in the Leuthold 3000 Universe index — akin to the Russell 3000 index of US companies — had staggered along for at least three years with a repayments shortfall, up from 8% at the end of 2008.”



(5)
September 15
– Reuters
(Florence Tan,
Roslan Khasawneh,
Noah Browning and
Laila Kearney):
“Major oil industry producers and traders are forecasting a bleak future for worldwide fuel demand, due to the coronavirus pandemic’s ongoing assault on the global economy… ‘The outlook appears even more fragile ... the path ahead is treacherous amid surging COVID-19 cases in many parts of the world,’ the International Energy Agency warned in its monthly report…”



(6)
September 15
– Bloomberg
(Bryce Baschuk):
“The World Trade Organization’s ruling that the U.S. violated international regulations by imposing tariffs on more than $234 billion of Chinese exports failed to dissuade Washington of its ‘America First’ trade policy and will do little to alter the current trade environment. U.S. Trade Representative Robert Lighthizer said the WTO report… ‘confirmed’ President Donald Trump’s aggressive foreign policy that has sought to dismantle multilateral organizations like the Geneva-based trade body.”



(7)
September 17
 – Bloomberg
(Editorial Board):
“With interest rates close to zero, there’s only so much the Fed can do, and only so much the chairman can do to pretend otherwise. The new strategy aims, in effect, to convince investors that the central bank will hold interest rates at zero for longer than it would have under the old approach, allowing inflation to rise above its long-term 2% target, even with the economy at full employment and following years of steady expansion.”



(8)
September 16 – Reuters (David Randall):
“One key investor takeaway from Federal Reserve Chair Jerome Powell ... said the decade-long U.S. economic expansion, which ran prior to the pandemic hitting growth, had included both quantitative easing and low interest rates but was ‘notable for the lack of the emergence of some sort of a financial bubble.’ ‘I don’t know that the connection between asset purchases and financial stability is a particular tight one,’ Powell said…”



(9)
September 16
– Financial Times
(James Politi and
Colby Smith):
“The US central bank said interest rates would not rise in the world’s largest economy until it reaches full employment and inflation hits 2% and remains on track to ‘moderately exceed’ that target ‘for some time’. The guidance reflected the Fed’s announcement last month of a new long-term monetary policy that abandoned pre-emptive rate rises to stymie inflation ...’”



(10)
September 17
 – Reuters
(Lucia Mutikani):
“The number of Americans filing new claims for unemployment benefits fell less than expected last week and applications for the prior period were revised up, suggesting the labor market recovery had shifted into low gear amid fading fiscal stimulus. The weekly jobless claims report… also showed nearly 30 million people were on unemployment benefits at the end of August.”



(11)
September 16
– CNBC
(Anjali Sundaram):
“Yelp… released its latest Economic Impact Report, ... As of Aug, 31, 163,735 businesses have indicated on Yelp that they have closed. That’s down from the 180,000 that closed at the very beginning of the pandemic. However, it actually shows a 23% increase in the number of closures since mid-July. In addition to monitoring closed businesses, Yelp also takes into account the businesses whose closures have become permanent. That number has steadily increased throughout the past six months, now reaching 97,966, representing 60% of closed businesses that won’t be reopening.”



(12)
September 16
– Reuters
(Lucia Mutikani):
“U.S. consumer spending slowed in August, with a key retail sales gauge unexpectedly declining, as extended unemployment benefits were cut for millions of Americans, offering more evidence that the economic recovery from the COVID-19 recession was faltering… Retail sales excluding automobiles, gasoline, building materials and food services dipped 0.1% last month after a downwardly revised 0.9% increase in July.”



(13)
September 15
– Bloomberg
(Katia Dmitrieva):
“The top 5% of households -- those making $451,122 on average last year -- have seen their inflation-adjusted incomes jump 28% since 2009, according to… the Census Bureau… The gain -- which helped push inequality to the widest in decades -- compares with a mere 11% rise for the bottom 20%, whose income rose to about $15,290 from roughly $13,800 a decade ago. Those in the middle groups -- who made between $40,600 and $111,100 last year -- saw their incomes rise between 16% to 18%...”



(14)
September 17
– New York Times
(Stacy Cowley):
 “In March, when the Boston restaurateur Garrett Harker and his partners shut down their seven restaurants after Massachusetts issued lockdown orders, Mr. Harker assumed the closures would be painful but temporary. Six months later, three of Mr. Harker’s restaurants… remain shuttered. Mr. Harker and his landlord for those three restaurants are in a standoff: He can’t afford to pay the six-figure arrears he has accrued while his restaurants remain shut, and the landlord, he said, has refused to grant a deferral or discount. We’re probably going to lose money for another year to a year and a half,’ Mr. Harker said. ‘It doesn’t work financially to reopen without a new lease.’ Similar sagas are playing out nationwide, as Main Street businesses — especially music clubs, gyms, restaurants, bars and others that were forced to close by the coronavirus pandemic — try to figure out how, or if, they can dig out of debt.”



(15)
September 17
– Wall Street Journal
(Katherine Riley):
“Six months after coronavirus lockdown orders closed workplaces across the country, most offices in the U.S. are still quiet. Data from Brivo, a company that provides access-control systems for workplaces, shows that ‘unlocks’ at offices—when someone uses their credentials to enter an office—in late August were down 51% from the end of February. By comparison, visits to manufacturing and warehouse locations, where fewer jobs can be done remotely, remained down by a third.”



(16)
September 15
– Financial Times
(Derek Brower):
“North American shale producers far outspent their revenue in the second quarter despite making deep spending cuts to survive the worst oil price crash in decades. Operators idled rigs, sacked workers and even stopped producing oil as the coronavirus pandemic hit global energy demand and sent US crude prices below zero in April — but it was all ‘too little, too late’, analysts at the Institute for Energy Economics and Financial Analysis said.. The 34 shale oil and gas producers in the IEEFA study spent $3.3bn more on drilling and other projects during the second quarter than they earned by selling oil and gas, the sector’s worst performance in years…”



(17)
September 16
– Wall Street Journal
(Orla McCaffrey):
“People are taking out lots of mortgages. The Fed is gobbling them up. Low mortgage rates have spurred a boom in home refinancing, which in turn has spurred a boom in the issuance of mortgage-backed securities. The value of single-family mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac totaled almost $322 billion in August, a new monthly record, according to… Inside Mortgage Finance."



(18)
September 15
 – Bloomberg
(Danielle Moran): “
State and local governments haven’t sold this many taxable bonds in a decade. The sellers have issued $92 billion in debt subject to federal income taxes so far this year… That’s almost a third of all the long-term municipal bonds sold in 2020 and is the most since 2010, when the Build America Bond program sunset at the end of that year. ‘I’m astonished at the pace of taxable municipal bond sales,’ said Kathleen McNamara, a senior municipal strategist at UBS’s wealth management arm.”



(19)
September 15
– Bloomberg
 (Christopher Maloney):
“Almost twice the percentage of Ginnie Mae borrowers have demanded forbearance compared to conventional ones, according to a Mortgage Bankers Association report… Mortgages in forbearance have dropped to just over 7% of the overall universe, the lowest since April. However, Ginnie Mae has a higher share of those - 9.1% versus 4.6% for conventional mortgages backed by Fannie Mae and Freddie Mac…”



(20)
September 14
– Bloomberg
(Martin Z Braun):
“Even as America’s states and cities brace for hundreds of billions of dollars tax collections to disappear, the two biggest credit-rating companies have been slow to downgrade municipal debt amid increasing risk for the $3.9 trillion market. Since the pandemic raced through the U.S., S&P Global Ratings Inc. and Moody’s… have downgraded about 1% of the municipal borrowers they rate, even as sports stadiums close, college towns and dormitories are emptied after some campuses canceled in-person classes, and the steep drop in travel batters airports and tourism-driven cities.”



(21)
September 14
– Reuters
(Gabriel Crossley and
Kevin Yao):
“China’s industrial output accelerated the most in eight months in August, while retail sales grew for the first time this year ... Retail sales also beat analysts’ forecast with a 0.5% rise on-year, snapping a seven-month downturn and bettering expectations for zero growth… Auto sales rose 11.8% in August year-on-year while sales of telecoms products jumped 25.1%...”



(22)
September 16
– Reuters
(Alun John):
“Investment between the United States and China tumbled to a nine-year low in the first half of 2020, hit by bilateral tensions that could see more Chinese companies come under pressure to divest U.S. operations, a research report said. Investment, both direct investment by companies and venture capital flows, between the two countries fell 16.2% to $10.9 billion in January-June from the same period a year earlier - also hurt by the coronavirus pandemic, according to… Rhodium Group. That’s a far cry from half-yearly totals of nearly $40 billion seen in 2016 and 2017.”



(23)
September 15 – Bloomberg (Kartik Goyal, Hooyeon Kim and Livia Yap):
“In India, dwindling appetite for sovereign bonds drove yields to their biggest increase in more than two years last month while Indonesia’s latest bond auction drew the fewest bids since April. Rates in South Korea have surged to the highest level in five months. As governments globally sell sovereign bonds faster than central banks can buy them, the warning signs from Mumbai to Seoul underscore the challenge to markets everywhere from ever-increasing debt.”



(24)
September 14 – Reuters (Karen Lema):
“The coronavirus pandemic will cause economic output in ‘developing Asia’ to shrink for the first time in nearly six decades in 2020 before it bounces back next year, the Asian Development Bank said… ‘Developing Asia’, which groups 45 countries in Asia-Pacific, is expected to contract 0.7% this year…, forecasting the first negative quarterly figure since 1962. The ADB’s previous forecast in June had reckoned on 0.1% growth. For 2021, the region is forecast to recover and grow 6.8%, still below pre-COVID-19 predictions, the ADB said…”



(25)
September 15
– Bloomberg
(Archana Chaudhary and
Siddhartha Singh):
“India plans to introduce a new law banning trade in cryptocurrencies, placing it out of step with other Asian economies which have chosen to regulate the fledgling market. The bill is expected to be discussed shortly by the federal cabinet before it is sent to parliament… The federal government will encourage blockchain, the technology underlying cryptocurrencies, but is not keen on cryptocurrency trading…”



(26)
September 16
– Reuters
 (Riham Alkousaa):
“European car registrations dropped in July and August but not as steeply as in previous months…, pointing to a slow recovery in Europe’s auto sector that was hit hard by the coronavirus crisis. In July, new car registrations dropped by 3.7% year-on-year to 1,281,740 vehicles in the European Union, Britain and the European Free Trade Association (EFTA) countries…”



(27)
September 15
– Reuters
(Daniel Leussink):
“Japan’s manufacturers remained pessimistic for the 14th straight month in September, and though the gloom eased somewhat the broad results of the Reuters Tankan survey pointed to a painfully slow recovery for the coronavirus-stricken economy… The Reuters Tankan sentiment index for manufacturers inched up to minus 29 in September from minus 33 in the previous month, still deeply pessimistic even though it marked the least gloomiest level in six months.”



(28)
September 18
– Financial Times
(Kathrin Hille and
Christian Shepherd):
“China sharply escalated tensions in the Taiwan Strait on Friday, approaching Taiwan with multiple jets at three different locations just as the country’s president was about to receive a senior US government official. The incursions raise further concern that Taiwan has become a flashpoint for intensifying US-China rivalry. Taiwan’s ministry of defence said the People’s Liberation Army Air Force crossed the Taiwan Strait median line and entered the country’s air defence buffer zone with two H-6 bombers and 16 fighters. Taiwan’s air force ‘scrambled fighters and deployed [its] air defence missile system to monitor the activities’, the ministry said.”



(29)
September 16
– Financial Times
(Demetri Sevastopulo and
Kathrin Hille):
“The Trump administration plans to sell billions of dollars of weapons to Taiwan to help the country defend itself amid concerns that China could use military force against it. The deal would be worth $7bn… That would make it the second biggest package of weapons provided to Taiwan by the US following an $8bn arms deal agreed last year. Donald Trump has taken an increasingly tough stance against China, from its human rights abuses in Xinjiang and a clamp down on pro-democracy protests in Hong Kong to military activity in the South China Sea.”