Source:
My edited version of a column by Doug Noland:
March 4 – Financial Times (Naomi Rovnick, Neil Hume, Joshua Oliver, Aziza Kasumov and Colby Smith): “Government bond prices sustained a further blow on Thursday, prompting benchmark stocks to wipe out close to all gains for the year, after comments from Federal Reserve chairman Jay Powell failed to reassure investors … ‘ ... The Fed will not be responding to what it views as a transient uptick in inflation ... the Fed is lax on inflation in an extraordinary environment that beckons for vigilance.
The five-year Treasury inflation “breakeven rate” rose another six bps this week, surpassing 2.5% Thursday for the first time since July 2008
Inflationary pressures are now mounting.
This week saw double-digit losses for
Moderna (14.6%),
Twitter (13.1%),
Peloton (12.7%),
Tesla (11.5%) and
Zoom (9.7%).
Coronavirus Watch:
March 3 – Reuters (Julie Steenhuysen and Kate Kelland): “ ... in the last month, data from a vaccine trial in South Africa showed not only that a rapidly-spreading coronavirus variant could dampen the effect of the vaccine, it could also evade natural immunity in people who had been previously infected. ... A new consensus is emerging among scientists, according to Reuters interviews with 18 specialists who closely track the pandemic or are working to curb its impact. Many described how the breakthrough late last year of two vaccines… But, they say, data in recent weeks on new variants from South Africa and Brazil has undercut that optimism. They now believe that SARS-CoV-2 will not only remain with us as an endemic virus… but will likely cause a significant burden of illness and death for years to come.”
March 3 – Financial Times (Anna Gross and Michael Pooler):
“Covid-19 variants may be less dangerous to vaccinated people and recovered patients than previously thought, according to researchers who found that the human body produces a strong cellular immune response to some of the most worrying new strains. The US study, conducted by researchers at the La Jolla Institute for Immunology and the University of California, identified that T-cell responses in patients who had been vaccinated or previously infected were just as robust when faced with new variants of Covid-19 — including those first identified in Kent, Brazil, South Africa and California. T-cells, which can ‘remember’ past infections and kill pathogens if they reappear, are thought to have a big influence on how long people remain resistant to infection and disease.”
March 1 – Financial Times (Anna Gross and Clive Cookson):
“The P.1 Covid-19 variant that was identified in Brazil is about twice as transmissible as some other virus strains and is more likely to evade the natural immunity usually conferred by prior infection, according to an international study. The research, conducted by a UK-Brazilian team of researchers from institutions including Oxford university, Imperial College London the University of São Paulo, found that the P.1 variant was between 1.4 and 2.2 times more transmissible than other variants circulating in Brazil. It was also ‘able to evade 25-61% of protective immunity elicited by previous infection’ with another variant, the researchers found, a sign that current vaccines could also be less effective against it.”
March 2 – Wall Street Journal (Samantha Pearson and Ryan Dube):
“Researchers and doctors are sounding the alarm over a new, more aggressive coronavirus strain from the Amazon area of Brazil, which they believe is responsible for a recent rise in deaths, as well as infections in younger people, in parts of South America. Brazil’s daily death toll from the disease rose to its highest level yet this week, pushing the country’s total number of Covid-19 fatalities past a quarter of a million. On Tuesday, Brazil reported a record 1,641 Covid fatalities. Neighbor Peru is struggling to curb a second wave of infections.”
ALL OTHER NEWS:
March 1 – Financial Times (Ortenca Aliaj, James Fontanella-Khan and Aziza Kasumov):
“Blank-cheque companies signed a record $109bn of transactions globally last month, as their founders rushed to take advantage of investor enthusiasm to bring privately held companies to the public markets. Special purpose acquisition companies, known as Spacs, struck 50 deals in February, according to Refinitiv. The data demonstrates the intensifying race to snap up promising young companies, often with little in the way of revenue, at ever-increasing valuations. ‘Historically, [Spac] had been a kind of dirty four-letter word,’ said Jackson Garton, managing director… at Makena Capital Management. ‘It wasn’t necessarily viewed as the most attractive way to go public. But I think what has shifted in the last few years . . . the stigma around Spacs has subsided to a certain degree.’”
March 3 – Bloomberg (Vivien Lou Chen, Daniela Sirtori-Cortina and Edward Bolingbroke):
“ ... a market proxy for the anticipated annual inflation rate for the next half-decade exceeded 2.5% for the first time since 2008 -- aided by climbing oil prices.”
March 1 – Reuters (Marc Jones):
“The swift rise of borrowing costs on global bond markets over the last month could completely alter the outlook for financial markets, according to the central bank for the world’s central banks, the Bank for International Settlements. In its latest quarterly report, the Swiss-based BIS also noted how wild retail trading-driven swings in stocks such as GameStop recently had helped whip up volatility. The big shift however has been in the U.S. Treasury markets that tend to propel global borrowing costs on the sense that unprecedented stimulus will ignite inflation if COVID-19 vaccines allow economies to fully reopen this year.”
March 4 – Bloomberg (Megan Durisin and Agnieszka de Sousa):
“The surge in food prices that’s eating into consumer budgets and hitting some of the poorest nations shows few signs of abating. A United Nations gauge of global costs rose for a ninth straight month in February, the longest run since 2008… Prices of everything from sugar to vegetable oils rose last month, sending the overall measure to a fresh six-year high. Food prices have jumped as China buys huge amounts of crops, adverse weather threatens harvests and supplies of products like dairy tighten. Costlier staples are trickling through to supermarket shelves, with emerging markets particularly exposed.”
March 3 – Associated Press (Hope Yen):
“America’s infrastructure has scored near-failing grades for its deteriorating roads, public transit and storm water systems due to years of inaction from the federal government, the American Society of Civil Engineers reports. Its overall grade: a mediocre C-. In its ‘Infrastructure Report Card’…, the group called for ‘big and bold’ relief, estimating it would cost $5.9 trillion over the next decade to bring roads, bridges and airports to a safe and sustainable level. That’s about $2.6 trillion more than what government and the private sector already spend.”
March 1 – CNBC (Greg Iacurci):
“A slew of Democrats on Capitol Hill — including progressives Sen. Elizabeth Warren… and Sen. Bernie Sanders… proposed a 3% total annual tax on wealth exceeding $1 billion. They also called for a lesser, 2% annual wealth tax on the net worth of households and trusts ranging from $50 million to $1 billion. The Ultra-Millionaire Tax Act aims at reining in a widening U.S. wealth gap, which has been exacerbated by the Covid pandemic. ‘The ultra-rich and powerful have rigged the rules in their favor so much that the top 0.1% pay a lower effective tax rate than the bottom 99%, and billionaire wealth is 40% higher than before the Covid crisis began,’ Warren said…”
March 4 – Reuters (David Lawder):
“The U.S. federal debt burden will double over the next 30 years, reaching 202% of economic output in 2051, as deficits grow and interest rates eventually rise, the Congressional Budget Office said… The non-partisan CBO projected that federal debt will reach 102% of gross domestic product in 2021 due to massive spending associated with the coronavirus pandemic. This spending is expected to fade over the next decade, shrinking annual deficits to an average of 4.4% of GDP in the 2022-2031 period, from 10.3% in 2021. But deficits are forecast to then grow to average 7.9% of GDP in the 2032-2041 period and 11.5% of GDP in the 2042-2051 period…”
March 5 – Reuters:
“The United States’ trade deficit increased in January as goods imports jumped to a record high amid a sharp rebound in consumer spending, offsetting a continued recovery in exports. The… trade gap rose 1.9% to $68.2 billion in January. Economists… had forecast a $67.5 billion deficit in January. Goods imports advanced 1.6% to $221.1 billion, the highest on record… Exports of goods gained 1.6% to $135.7 billion.”
March 5 – Bloomberg (Olivia Rockeman):
“U.S. employers added more jobs than forecast in February and the unemployment rate declined, suggesting the labor market is clawing its way forward again following several disappointing months. Payrolls increased 379,000 after an upwardly revised 166,000 January increase… Economists… projected a 200,000 February gain. The unemployment rate dropped to 6.2%.”
March 3 – Reuters (Dan Burns):
“U.S. mortgage rates jumped by the most in nearly a year last week to their highest level since July on the heels of a surge in Treasury bond yields… The contract rate on a 30-year fixed-rate mortgage, the most popular U.S. home loan, rose by 0.15 percentage point to 3.23% in the week ended Feb. 26…”
March 3 – CNBC (Phil LeBeau):
“Don’t look now, but the average monthly loan payment for a new car is approaching $600 according to Experian, which analyzes millions of new and used vehicle loans. ‘We went up higher amounts year over year in 2020 than we ever really have before and hit record highs in loan amounts and record highs in payments,’ said Melinda Zabritski, senior director for Experian… Those taking out loans to buy a new vehicle borrowed an average of $35,228, an increase of almost $2,000 from a year earlier. As a result, monthly loan payments jumped $13 to a record high of $576... Loans for used vehicles also hit all-time highs, with consumers borrowing an average of $24,467, up almost $1,700 year over year.”
February 28 – Bloomberg (Gary McWilliams):
“The largest and oldest electric power cooperative in Texas filed for bankruptcy protection in Houston on Monday, citing a disputed $1.8 billion debt to the state’s grid operator. Brazos Electric Power Cooperative Inc, which supplies electricity to more than 660,000 consumers across the state, is one of dozens of providers facing enormous charges stemming from a severe cold snap last month. The fallout threatens utilities and power marketers, which collectively face billions of dollars in blackout-related charges, executives said.”
March 1 – Bloomberg (John Gittelsohn):
“U.S. mall values plunged an average 60% after appraisals in 2020, a sign of more pain to come for retail properties even as the economy emerges from pandemic-enforced lockdowns. About $4 billion in value was erased from 118 retail-anchored properties with commercial mortgage-backed securities debt after reappraisals triggered by payment delinquencies, defaults or foreclosures, according to data compiled by Bloomberg. Those new valuations may underestimate losses when the properties come up for sale because so much retail real estate is in distress. And few buyers are willing to take risks on aging shopping centers as e-commerce continues to grab market share.”
March 1 – Bloomberg (Molly Dai):
“China’s $18.2 trillion onshore debt market is seeing its largest amount of delinquencies through the first two months of the year on record. Missed repayment of principal and interest have reached 25.9 billion yuan ($4bn) so far this year, almost twice the amount during the same period last year.”
February 27 – Reuters (Jessie Pang and James Pomfret): “Forty-seven Hong Kong pro-democracy campaigners and activists were charged on Sunday with conspiracy to commit subversion in the largest single crackdown on the opposition under a China-imposed national security law.”
March 1 – Reuters (Joori Roh):
“South Korea’s factory activity expanded at its fastest pace in nearly 11 years in February…, as the strongest growth in over a decade in production and new orders drove the recovery in the manufacturing-heavy economy.”
March 1 – Bloomberg (Divya Patil):
“Borrowing costs for Indian companies spiked by the most in more than seven years last month, in a blow to firms struggling to recover from the pandemic. The average yield on top-rated three-year, five-year and 10-year corporate rupee bonds all climbed by their most since 2013 in February. A confluence of factors including higher global bond yields, and concerns that companies may be crowded out of local debt markets by the government’s near-record borrowings plans have pushed up borrowing costs up for Indian companies.”
March 2 – Reuters (Jamie McGeever):
“The monthly rate of producer price inflation in Brazil kicked off this year at its second highest since comparable records began more than six years ago…, with prices rising across all 24 activities surveyed. Factory gate prices rose 3.36% in January from the month before, almost touching the 3.4% increase registered last October, the highest since the IBGE series began in 2014.”
February 28 – Reuters (Daniel Leussink):
“Japan’s factory activity expanded at the fastest pace in over two years in February, a private-sector survey showed…, as strong orders led to the first output rise since the start of the coronavirus pandemic… It also showed, however, that producers are facing a jump in input prices, which rose at their fastest pace since February 2019, pressuring their profit margins.”
March 2 – CNN (Jennifer Hansler):
“The Biden administration imposed a raft of sanctions on Russian officials and entities… in response to the poisoning and imprisonment of opposition leader Alexey Navalny. The actions -- taken in coordination with the European Union… -- represent the first significant move against Moscow since Joe Biden became President. The Treasury Department sanctioned seven senior Russian government officials: two of President Vladimir Putin's deputy chiefs of staff, two Russian defense ministers, the Russian prosecutor general, the director of the Federal Penitentiary Service and the head of Russia's security services…”
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