Friday 28 February 2020

The Slump – Reality Arrives.


Baltic Dry Index. 529 +12   Brent Crude 50.50 Spot Gold 1628

Covid-19 Pandemic underway.

Coronavirus Cases 28/2/20 China 83,733 Deaths 2,859 (Maybe.)


With a serious global coronavirus pandemic underway, an era of central bankster fuelled stock market bubbles just burst.  Global trade, tourism, retailing, dinning out, sports, conventions, just entered a new era of contraction.

Until the coronavirus crisis is defeated, much of the lifestyle we took for granted is simply unsustainable and unwise.

In the rich west, we still have the ability to manage the coronavirus crisis. But if it gets loose in the less fortunate nations of the all too connected global economy, the arriving era of contraction will be severe and prolonged.

Forget past experience, we haven’t seen a slump like this since the 30s, we haven’t seen a pandemic like this since 1918-1919, when the world was very different, less connected, more agrarian, very much slower, less dependent on unrepayable debt.

What follows next is a rising wave of bankruptcies. Counter party risk at the extreme.

But is the world really prepared for a highly contagious pandemic? One way or another we are about to find out.

How bad is the coronavirus-sparked stock-market selloff? — the Dow’s weekly skid would rank within the top 15 worst in its 124-year history

By Mark DeCambre  Published: Feb 27, 2020 8:51 p.m. ET
It has been an ugly week for bulls on Wall Street, that much is certain. 

However, the depth of the slide for stocks this week can perhaps best be illustrated by the severity of the weekly skid for the 124-year-old Dow Jones Industrial Average. DJIA, -4.42%, with stock markets relinquishing gains from earlier in the year on the back of uncertainty over the spread of the COVID-19 outbreak.

Fears sparked by the outbreak of the infectious disease that originated in Wuhan, China late last year, is putting one of the oldest stock-market gauges on pace for its worst weekly skids on record.

Check out: Stocks keep getting slammed because investors fear a ‘supply shock’ that central bankers can’t fix

At last check, the decline would rank within the top 15 for the Dow’s steepest weekly selloffs, with a drop of 11.13%, according to FactSet data. The worst week for the Dow was the 18.15% drop during the period ended Oct. 10, 2008, according to Dow Jones Market Data and data from FactSet.

Thursday’s slide represents the Dow’s quickest decline into correction from a record close, since the nine trading sessions ended Feb. 8, 2018.

It also would rank as one of the worst weeks for the other benchmarks too. With the S&P 500 SPX, -4.42%  and the Nasdaq Composite Index COMP, -4.61%  headed for their worst weeks since the 2008 financial crisis, when markets were rocked by the creation of complex mortgage securities that spread across the globe.

This time the spread of the new coronavirus, a family of viruses similar to SARS, or severe acute respiratory syndrome, has injected a level of complexity into markets that is unsettling what had been predominantly bullish sentiment on Wall Street.

The S&P 500 index’s 10.8% weekly decline also puts it at among the 20 worst weekly slumps for the index thus far.

The decline from its record high also ranks as its fastest such reversal on record for the S&P 500, Deutsche Bank analysts point out.

Meanwhile, the Nasdaq Composite is on pace for a weekly decline off 10.55%, which would rank this week’s drop as the 7th worst of its nearly 50-year history, with a decline of 25.3% ended April 13, 2000, representing its worst weekly skid.

The viral outbreak has analysts at Goldman Sachs slashing their outlook for S&P 500 corporate earnings in 2020, with the investment bank now forecasting “no earnings growth” this year, as fears over the potential negative impacts of the coronavirus outbreak intensifies.
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U.S. spy agencies monitor coronavirus spread, concerns about India -sources

February 27, 2020 / 11:14 PM
WASHINGTON (Reuters) - U.S. intelligence agencies are monitoring the global spread of coronavirus and the ability of governments to respond, sources familiar with the matter said on Thursday, warning that there were concerns about how India would cope with a widespread outbreak.

While there are only a few known cases in India, one source said the country’s available countermeasures and the potential for the virus to spread given India’s dense population was a focus of serious concern. 

U.S. intelligence agencies are also focusing on Iran, where the country’s deputy health minister has fallen ill during a worsening outbreak. U.S. Secretary of State Mike Pompeo said on Tuesday the United States was “deeply concerned” Tehran may have covered up details about the spread of coronavirus.

A U.S. government source said Iran’s response was considered ineffective because the government only has minimal capabilities to respond to the outbreak.

Another source said U.S. agencies were also concerned about the weak ability of governments in some developing countries to respond to an outbreak.

---- The role of U.S. intelligence agencies in responding to the coronavirus epidemic at this point principally involves monitoring the spread of the illness around the world and assessing the responses of governments.

They are working closely with health agencies, such as the U.S. Center for Disease Control, in sharing information they collect and targeting further intelligence gathering.
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World prepares for coronavirus pandemic; global recession forecast

February 28, 2020 / 1:55 AM
GENEVA/BEIJING (Reuters) - Hopes the coronavirus would be contained to China vanished on Friday as infections spread rapidly around the world, countries started stockpiling medical equipment and investors took flight in expectation of a global recession.

Share prices were on track for the worst week since the global financial crisis in 2008 as virus-related disruptions to international travel and supply chains fueled fears of recession in the United States and the Euro zone. 

The U.S. stock market fell into correction territory with the benchmark S&P 500 index down more than 4% on Thursday, extending a market rout that has now sliced more than 10% off of its closing peak on Feb. 19.

“Markets are voting and saying they think the U.S. is on its way to recession,” said Chris Rupkey, chief economist at MUFG in New York.

“And frankly at this stage after the coronavirus-related slowdown in travel plans that has busted the global supply chain apart, it will be a miracle if we avoid a recession.”

Mainland China - where the virus originated late last year - reported 327 new cases on Friday, the lowest since Jan. 23.

But with new infections reported around the world now surpassing those in China, World Health Organization (WHO) Director General Tedros Adhanom Ghebreyesus said even rich nations should prepare.

“No country should assume it won’t get cases, that would be a fatal mistake, quite literally,” Tedros said, pointing to Italy, where 17 people have died in Europe’s worst outbreak.

A Reuters tally showed almost 10 countries reported their first virus cases in past 24 hours.

---- The number of people who tested positive for the illness in Italy increased by more than 200 to 650. Germany has about 27 cases, France around 18 and Spain 15.

Tedros told reporters in Geneva that Iran, Italy and South Korea were at a “decisive point” in their efforts to prevent a wider outbreak.

U.S. investment bank BofA cut its world growth forecast to the lowest level since the peak of the financial crisis, and ratings agency Moody’s said a coronavirus pandemic would trigger global and U.S. recessions in the first half of the year.
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China reports rise in new coronavirus cases, warns of risk of rebound

February 27, 2020 / 1:56 AM
SHANGHAI/BEIJING (Reuters) - China reported 433 new cases of coronavirus infections on Feb. 26, the National Health Commission said on Thursday, up from 406 a day earlier, with a cluster of new cases in Beijing raising concerns about the management of employees returning to work. 

The total number of confirmed cases on mainland China has now reached 78,497, the Commission said, though the number of new deaths on Wednesday stood at 29, the lowest daily rate since Jan. 28.
The outbreak has now killed a total of 2,744 people in China.

Hubei, the central Chinese province at the epicentre of the outbreak, reported 409 new cases and 26 deaths on Wednesday. Beijing and the provinces of Heilongjiang and Henan were the locations of the other three fatalities.

The number of new cases outside Hubei stood at 24, up from 5 on the previous day and reversing five days of declines. Ten of those were in Beijing.

A statement published by the Comission on Thursday, citing a meeting held the previous day, said that the situation in Hubei province and Wuhan is “still complex and serious”, and added that the risk of a rebound in infection in other regions should not be overlooked.

Also, some coronavirus patients discharged from hospitals after recovery have been readmitted after testing positive again, health authorities said recently.

A health official in southern Guangdong province told state media on Wednesday that 14% of patients discharged from hospital experienced a resurgence of the virus, although they had not infected any others they had been in close contact with.
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Governments ramp up preparations for coronavirus pandemic

February 27, 2020 / 2:58 AM
SYDNEY/SEOUL (Reuters) - Governments ramped up measures on Thursday to battle a looming global pandemic of the coronavirus as the number of infections outside China, the source of the outbreak, for the first time surpassed those appearing inside the country.

Australia initiated emergency measures and Taiwan raised its epidemic response level to its highest, a day after U.S. President Donald Trump put his vice president, Mike Pence, in charge of the U.S. response to the looming global health crisis. 

The United States and South Korea postponed joint military drills to limit the spread of the virus, which has emerged far beyond China, where it originated late last year, apparently in a market selling wildlife in the city of Wuhan.

Australian Prime Minister Scott Morrison said his country, which has 23 cases of the virus, was operating on the basis of a pandemic and hospitals were under orders to ensure enough medical supplies, personal protective equipment and staff.

“There is every indication that the world will soon enter a pandemic phase of the coronavirus,” Morrison told a news conference in Canberra.

---- French President Emmanuel Macron called the outbreak a “crisis, an epidemic that is on the way”.

Stocks sunk deeper into the red, oil prices fell and U.S. Treasuries rallied into record territory as more signs of the global spread of the virus heightened fears of a pandemic.

Global markets have dropped for six straight days, wiping out more than $3.6 trillion in value.

---- The rapid spread of the virus in different places - notably Italy, Iran and South Korea - in recent days has met the definition for a pandemic, and raised alarm.

There is no cure for the virus that can lead to pneumonia, and a vaccine may take up to 18 months to develop.

In Japan, a woman has tested positive for the virus for a second time, the first known person in the country to do so, raising new concern about it.

Japan has more than 190 cases and is facing questions about the Olympic Games, due to begin in Tokyo on July 24. The government will ask schools to close from March 2 until around the end of the month, Prime Minister Shinzo Abe said.

---- There have been 3,246 cases outside China, including 51 deaths, according to a Reuters tally.

A rash of countries have reported their first cases in the past couple of days with the latest being Denmark, in a man who returned from a ski holiday in Italy, and Estonia, in a man returning from Iran, media reported.

Brazil confirmed Latin America’s first infection on Wednesday.

China reported 433 new cases on Thursday, against 406 a day earlier.

South Korea reported another 334 cases, pushing its total to 1,595, the most in any country other than China.
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Israel turns back travellers from Italy over virus fears

Issued on: 27/02/2020
Israel denied entry to dozens of foreign nationals who landed on flights from Italy on Thursday, as the Jewish state discouraged travel as part of efforts to contain the spread of the new coronavirus.

The interior ministry had announced travellers from Italy would not be granted entry, adding it to a list of barred countries including Japan, South Korea, Thailand and Singapore as well as Macau and Hong Kong.

Three flights originating from Italy then landed at Tel Aviv's Ben Gurion airport.

Twenty-five foreign nationals, including 19 Italians, who landed on the flight from Bergamo were denied entry and will be flown back, the interior ministry said.

Another 23 foreigners on an Easy Jet flight from Italy were also blocked from entering, a ministry spokeswoman said.

The Jewish state has also taken the rare step of discouraging its citizens from travelling abroad.

"Travel to conferences and other international congregations should be avoided, including trips to religious events where people from many countries gather," the health ministry said.

Israel has recorded three confirmed cases of the COVID-19 virus, including two from the Diamond Princess cruise ship and an Israeli who had been in northern Italy.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Below, the new reality sets in. Our modern financialised, debt driven world has never experienced a crisis like the one now unfolding rapidly each day. Worse, it’s not a crisis that can be solved by central banksters rigging global stock markets.

As global trade, and global tourism, and retailing and dinning out collapses, unemployment will surge, government deficits soar to unprecedented levels.

Until there are unmistakable signs that the coronavirus crisis is abating, the global economy will be shrinking not expanding, with all the bad consequences that follow.

Yellen Says Coronavirus Could Throw U.S. Economy Into Recession

Sarah McGregor February 26, 2020
(Bloomberg) -- Former Federal Reserve Chair Janet Yellen said depending on how widely the coronavirus spreads, the economic impact could have a significant impact on Europe and veer the U.S. toward a recession.

“We could see a significant impact on Europe, which has been weak to start with, and it’s just conceivable that it could throw the United States into a recession,” Yellen said Wednesday at an event in Michigan. “If it doesn’t hit in a substantial way in the United States, that’s less likely. We had a pretty solid outlook before this happened -- and there is some risk, but basically I think the U.S. outlook looks pretty good.”

The global economy was weak but starting to recover before the virus hit, Yellen said. The shutdown of factories due to the outbreak in China will impact supply chains and cause a drop in consumer spending as people have been quarantined or cease traveling.

Yellen, who spoke about the economy at an event held by the Brookings Institution in Clinton Township, Michigan, also commented on the decline in the 10-year Treasury yield this week to historic lows. Yields have plunged as fears about the spreading coronavirus have rocked global financial markets.

“Market participants will look to the Fed to provide some support,” Yellen said. “In most developed countries, interest rates are really low -- and they are very low in the United States, but higher than they are in most other developed economies. And the Fed does have some scope -- it’s not a cure-all. But it will provide a little bit of support to consumer spending and to the U.S. economy and for financial markets. And, of course, if it becomes very serious, fiscal policy could play a more active role too.”

StanChart posts strong results but coronavirus, economic headwinds to hamper profit growth

February 27, 2020 / 4:38 AM
HONG KONG/LONDON (Reuters) - Standard Chartered (STAN.L) booked a robust 46% jump in annual profit but warned a key earnings target would take longer to meet as the coronavirus epidemic adds to headwinds in its main markets of China and Hong Kong.

The epidemic could lead to a rise in bad loans, it said but did not provide specific guidance on the potential impact. Rival HSBC Holdings (HSBA.L) said last week it could face loan losses of up to $600 million if the virus outbreak persists into the second half of the year.

“The outbreak of the novel coronavirus comes with unpredictable human and economic consequences,” Chief Executive Bill Winters said in a statement.

Noting that lower interest rates were also putting pressure on net interest income, StanChart said it would take longer to achieve its goal of a 10% return on tangible equity (RoTE) previously targeted for 2021.

The bank, which makes the bulk of its revenue in Asia, posted a pretax profit of $3.7 billion for 2019. Although that was slightly below an average forecast of $3.9 billion, it marked the steepest profit growth since 2017 when the bank posted a six-fold rise.

---- The bank said its provisions for expected losses from Hong Kong bad loans rose by $46 million in the second half of last year.

Analysts and bankers have warned that lenders which derive a large part of their earnings from Hong Kong face at least two quarters of worsening asset quality and slowing loan growth as the virus outbreak hits trade and consumer banking.
More
https://uk.reuters.com/article/us-stanchart-results/stanchart-posts-strong-results-but-coronavirus-economic-headwinds-to-hamper-profit-growth-idUKKCN20L0FG

Coronavirus: Top firms pull out of MIPIM due to fears over deadly outbreak

Top firms have pulled out of the MIPIM property conference set to take place next month due to fears over the deadly Coronavirus outbreak.

Real estate services firm Cushman and Wakefield announced on Wednesday they would no longer be sending a team to the event in Cannes, and more firms, including Knight Frank, PGIM Real Estate and Landsec, have also said they will withdraw from the event.

A spokeswoman from Knight Frank told BusinessLive on Thursday: The evolving nature of COVID-19 in Europe has forced us to reconsider our presence at large multi-national events.

"To that end we will no longer be attending MIPIM. The health and security of our people and clients are of utmost importance and have to be prioritised over all else.”

A statement from Cushman and Wakefield issued to Estates Gazette said: “The health and safety of our employees and our clients is our priority. With the rapidly increasing number of cases of coronavirus in Europe and the elevated industry-wide concern around attendance at large multinational events, we have decided to withdraw from MIPIM.”

When contacted for a comment, a spokesman for MIPIM said it was "monitoring developments" in the "rapidly-evolving environment".

The full statement said: “We understand and respect the concerns of clients who have decided to cancel their attendance at MIPIM.

"The event will open for business on March 10. In the rapidly-evolving environment we are monitoring developments closely. The health and safety of our clients and staff is our priority.”

Almost 27,000 delegates are expected at MIPIM 2020, set to take place from March 10-13. The festival sees officials from all sectors of the international property industry come together for networking, events, conferences and more.

The news comes after two further people in England tested positive for coronavirus (COVID-19), bringing the total number of UK cases to 15.

The virus was passed on in Italy and Tenerife and the patients have been transferred to specialist NHS infection centres in the Royal Liverpool Hospital and the Royal Free Hospital, London.
More
https://www.business-live.co.uk/economic-development/coronavirus-top-firms-pull-out-17824080?utm_source=businesslive_newsletter&utm_medium=email&utm_content=imageLink35&utm_campaign=north_west_newsletter

Geneva car show attendance dwindles as Corona virus woes spread

February 27, 2020 / 1:00 PM
FRANKFURT (Reuters) - Carmakers are reducing staff attending Geneva’s car show next week as Switzerland confirmed three new cases of the coronavirus, including one in Geneva. 

Toyota on Thursday said it is paring back its attendance to include “business critical” staff. Only senior executives and public relations staff with pan-European responsibilities will attend, while staff who represent only national markets will stay behind, it said.

Palexpo, the organiser of the international exhibition, insisted that the car show will go ahead even as the Geneva watch fair was cancelled and as Swiss authorities reported the virus had spread to Geneva.

Travel restrictions and fears over the spread of the virus have already caused postponement or cancellation of other trade fairs, including the Mobile World Congress in Barcelona, Frankfurt’s Light + Building fair and the Beijing Auto Show.

Shanghai-based AIWAYS late on Wednesday said it had been unable to ship its electric U6ion coupe from China to Switzerland, citing “circumstances beyond our control” related to the coronavirus.

On Wednesday it emerged that the chief executives of Ferrari (RACE.MI) and brake manufacturer Brembo (BRBI.MI) had cancelled their attendance at the Swiss car show, owing to travel restrictions imposed by Italian authorities.
     

Technology Update.
With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards?   
 No update today given all else going on. More on Monday.
Another weekend and how many more cases of Covid-19 will surface and where? How many more deaths, and where? How low will stocks fall in the weeks ahead as the first global slump since the 1930s picks up speed? Have a great weekend everyone.

The monthly Coppock Indicators finished January

DJIA: 24,999 +76 Down. NASDAQ: 7,282 +124 Down. SP500: 2,704 +71 Down. 

All higher again, but it’s not a buy signal I would take. The rally is all down to the Fed monetizing at a rate of about 100 billion a month. I continue to look on the Fed’s latest stock bubble as an exit rally, made all the more urgent by the rising economic threat from the coronavirus crisis.

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