Baltic Dry Index. 535 +06 Brent Crude 51.23 Spot Gold 1601
Covid-19 Pandemic
underway, but not according to the WHO.
Coronavirus Cases 02/3/20
China 89,074 Deaths 3,050
(Maybe.)
I was
borrowing money from 30 leading banks. How could they all be so wrong? I’m only
a simple businessman.
Sir
Freddie Laker. Laker Airways.
It is March, some
of the quarantines are ending. In the markets, was Friday the blowoff end of
margin call selling. Though the indexes closed down they were well off the
lows. While last week saw heavy tracker fund selling, stability this week
should bring in tracker fund buying.
I think that
overpriced stocks still have much further to fall and that it will be wise to
use rallies to sell out and get back to cash, but the indexes and stocks more
usually decline in back and forth action, rather than in a continuous non-stop
crash.
One of two
outcomes appears likely for March and early April.
The Fairy Tale
ending.
China’s workers
come out of hibernation, production resumes, ships resume unloading imports and
start loading exports. New coronavirus
cases and deaths continue falling. Partly warmer weather, partly existing antivirals,
mostly improved public hygiene.
Stability returns, aided by the PBOC and government relief programs.
Outside of China,
Japan, South Korea, Italy and possibly Iran, increasingly get on top of their
individual epidemics. In the rest of Europe, the USA, and the rest of the
world, news cases just continue to trickle along but in manageable fashion.
By mid-April, the
worst seems to have passed, the Olympics seem safe, tourism’s decline has
bottomed out.
And
they all lived happily ever after.
The Horror Show
Ending.
China’s workers
come out of hibernation, production resumes, ships resume unloading imports and
start loading exports. New coronavirus
cases and deaths start exploding again. The quarantines come back. Production only slowly rises, stressing
global supply lines further. Tourism crashes.
Outside of China,
Japan, South Korea, Italy and Iran, struggle to get control of their
epidemics. In the rest of Europe, the
USA, and the rest of the world, news cases continue picking up pace. More
events get cancelled globally, tourism and retailing join manufacturing in a
global recession. Moves by the central banks and government stimulus programs
largely fail. Stocks continue moving from correction to bear market.
By mid-April, the
worst still seems to lie ahead, the Olympics might have to be cancelled. The global economy is heading for the first
slump since the 1930s
And
they all lived unhappily ever after.
Which one it will
be we will shortly find out, but I doubt if today’s bounce will last for long.
Asian markets come charging back despite growing fallout from coronavirus
By Associated Press
Published: Mar 1, 2020 11:55 p.m. ET
Asian shares came charging back Monday from last week’s
retreat, with mainland Chinese benchmarks gaining 3% as data showed progress in
restoring factory output after weeks of disruptions from the viral outbreak. Stocks have been swooning as investors fret the coronavirus outbreak will derail the global economy. But in those declines, some see opportunities to buy.
Japan’s Nikkei 225 index NIK, +0.98% recovered from early losses, gaining 1.4%, while the Shanghai Composite index SHCOMP, +3.11% rose 2.9%. The benchmark for the smaller exchange, in Shenzhen 399106, +3.74% , jumped 3.4%. South Korea’s Kospi 180721, +0.96% climbed 1% and the Hang Seng HSI, +0.82% in Hong Kong jumped 0.9%.
But shares fell in Australia, where the S&P ASX/200 XJO, -0.77% lost 0.8% and in Taiwan Y9999, -1.08% , which fell 0.6%. Stocks were mostly higher in Southeast Asia.
U.S. futures saw a moderate recovery, with the contract for the Dow Jones Industrial Average YM00, +0.82% rising 0.8% while the future for the S&P 500 ES00, +0.62% added 0.6%.
“It may well be a case of news being not as bad as it could have been,” Jeffrey Halley of Oanda said in a commentary. “Today’s rallies across Asia have a definite relief rally look to them. Measured against the scale of last week’s sell-offs, the bounces this morning are small.”
---In a sign of the severity of the concern about the possible economic blow, the price of oil sank 16%.
The market’s losses moderated Friday after the Federal Reserve released a statement saying it stood ready to help the economy if needed. Investors increasingly expect the Fed to cut rates at its next policy meeting in mid-March.
More
Goldman economists expect Fed to cut rates soon to head off impact of outbreak
By Mike
Murphy Published: Mar 1, 2020 11:05
p.m. ET
There is growing consensus that the world’s central banks,
including the U.S. Federal Reserve, will soon take policy action to avert a
financial meltdown due to the coronavirus outbreak.Goldman Sachs Group Inc. GS, -1.80% economists on Sunday predicted the Fed would cut rates, possibly before its next meeting, scheduled for March 16-17. In a note, Goldman economists Jan Hatzius and Daan Struyven said they expect a 50-basis-point cut at, or before, the meeting, and an additional 50-basis-point cut in the second quarter.
Fed Chairman Jerome Powell said Friday that the central bank is “closely monitoring” the outbreak. “We will use our tools and act as appropriate to support the economy,” he said.
The Goldman economists said they also expect rate cuts from the central banks of Canada, the U.K., Australia, New Zealand, Norway, India, South Korea and Switzerland, as well as the European Central Bank.
“Specifically, we see a high risk that the easing we expect over the next several weeks occurs in coordinated fashion, perhaps as early as the coming week,” the Goldman economists said. “Chair Powell’s statement on Friday suggests to us that global central bankers are intensely focused on the downside risks from the virus. We suspect that they view the impact of a coordinated move on confidence as greater than the sum of the impacts of each individual move.”
More
The situation in China is even worse than you think, says this analyst with a history of accurate calls
By Andrea
Riquier Published: Feb 29, 2020 9:43
a.m. ET
Global stock markets are seeing their worst week since the
2008 financial crisis as the reality of the unprecedented COVID-19 epidemic
finally kicks in for investors, but one analyst thinks markets may still not be
adequately prepared for the worst. Leland Miller is CEO of the China Beige Book, a research firm that collects data from surveys of thousands of Chinese companies and industry participants to construct a report on the economy that’s more granular — and possibly more candid — than the notoriously opaque Chinese government data.
China Beige Book just released to clients a “flash,” or preliminary, set of data for the first quarter this year, documenting the first effects of the COVID-19 epidemic, and Miller spoke with MarketWatch about what they’ve learned.
“The situation on the ground is materially worse than what has come out in the media,” he said in an interview.
For some sense of whether China Beige Book data is a more reliable source than “what has come out in the media,” here’s an earlier MarketWatch profile of Miller. Throughout the winter of 2017-2018, his firm’s data told a very clear story: contrary to what the government was telling the media about transitioning its economy to a services focus, steel production was ramping into high gear. Some months later, the Trump administration made steel production a hot-button political issue and suddenly the world took note of what Miller had been saying for months.
Those insights are worth keeping in mind as
the first official Chinese government data to reflect the COVID-19 epidemic,
the purchasing manager surveys for the manufacturing and service
sectors, are due for release overnight Saturday. “I expect those to be worse
than in 2008,” Miller said, “or else they’re lying.”
----MarketWatch: How bad is the situation in China?
Leland Miller: Since 2012, when we started collecting data, we have never seen our
headline index turn negative. This month it did. Our flash data shows nearly
every major measurement is in contraction. I do always stress that this is
early data.
(Only about half of the roughly 3,500 firms that report in the
full-month version contribute to the flash report.)
MarketWatch: Which is the single data point that’s most telling to you?
Miller: The numbers in the property sector are remarkable. It confirms this sector is at the bottom of the food chain in China right now, the last priority for Beijing in a long list of priorities. Property is extremely important because it’s the sector in which most Chinese have large portions of their wealth. Chinese people can’t get money out of the country so they’re stuck with only a few opportunities to diversify. The bond market is scary. The stock market is scary. Property has always been the least scary thing and the Chinese government has always known how important it is as a store of household wealth. It shows they’re more afraid of the bankruptcies of small and medium-sized enterprises. At least there may finally be a culling of the herd in terms of (real estate) developers and overleveraged firms allowed to die.
----MarketWatch: What does China’s economic situation mean for the rest of the world – markets, economic growth, supply chains, and so on?
Miller: I would expect the data to get better if only because in March you’ll
see firms back to work and the outbreak will hopefully be less terrible.
Conditions — and data — should improve. But the implications of data anywhere
near this bad is: China is an important cog in the supply and demand chains of
the world. Globalization runs through China. Car factories around the world
can’t build their cars because they can’t get their inputs from China. China
buys a lot of commodities — oil and so on. Even if the outbreak can be contained,
which doesn’t look like it, the economic impact can’t be.
More
Coronavirus weighs on South Korea February trade; ministry says worse to come
March 1, 2020 /
12:58 AM
SEOUL (Reuters) -
South Korean exports snapped a 14-month losing streak in February thanks to
more working days this year compared to last, although evidence of disruptions
from the coronavirus were reflected outside the headline figures.
South Korea’s monthly trade data, the first to be released among major
exporting economies, provides an early guide to the health of global trade
already taking a hit from the epidemic.
Overall shipments in February rose 4.5% year-on-year, trade ministry
data showed on Sunday, beating a median forecast of a 3.4% rise, given 3.5 more
working days from a year earlier. This compares with a 6.3% decline in January
due to the Lunar New Year, a holiday which fell in February last year.
Average exports per working day, however, tumbled 11.7%, the steepest
decline in three months, and a big swing from a 4.6% increase in January.
Exports to China dropped 6.6% from a year earlier, after falling 3.7%
for the Feb. 1-20 period, but average exports to China per working day plunged
21.1%, the ministry said.
This follows data on Saturday that showed factory activity in China
contracted at its fastest ever in February, even worse than during the global
financial crisis of 2008.
“Per-day exports were seen subdued especially in the second half of
February,” said Lee Sang-jae, chief economist at Eugene Investment &
Securities, noting that it’s not over.
“If the decline in February was mainly driven by sapping Chinese demand,
exports would fall even worse in March and April as negative perceptions over
Made-in-Korea products spread,” he said.
More
Coronavirus: Indonesia confirms first cases, says they are linked to Japanese citizen in Malaysia
·
The two patients are a 64-year-old woman and her
31-year-old daughter who came into contact with a Japanese national who works
in Malaysia
·
The Japanese national was a family friend who
visited their home in Indonesia
Published: 1:49pm, 2 Mar, 2020
South Korea reports 476 new coronavirus cases, raising total to 4,212
March 2, 2020 /
2:11 AM
SEOUL (Reuters) - South Korea reported on Monday
476 new coronavirus cases, taking its national tally to 4,212, as the
government of Seoul sought a murder investigation into a controversial church
at the centre of the country’s outbreak.
The new cases followed the country’s biggest daily jump on Saturday of
813 confirmed infections. There were 586 more on Sunday, broadening the largest
virus outbreak outside China.
The death toll rose to 22, up from 20, according to the Korea Centers
for Disease Control and Prevention (KCDC).
Of the new cases, 377 were from the southeastern city of Daegu, home to
a branch of the Shincheonji Church of Jesus, to which most of South Korea’s
cases have been traced. Sixty-eight were from the nearby province of North
Gyeongsang, KCDC said.
More
Japan cruise operator files for bankruptcy as coronavirus hits demand
March 2, 2020 /
4:32 AM
TOKYO (Reuters) - A Japanese cruise operator filed for bankruptcy on
Monday after its restaurant ship Luminous Kobe 2, which offered buffets and night
views of the western port city of Kobe, was hit by cancellations amid concerns
about the coronavirus outbreak.
Luminous Cruise said it had already been struggling with rising fuel
costs and setbacks from recent typhoons before the coronavirus outbreak on the
Diamond Princess, an unrelated cruise ship now docked at Yokohama.
“Since February 1, we have had many cancellations which appear connected
to the coronavirus. Continuing would have resulted in large losses for our
creditors,” it said on its website, announcing its bankruptcy filing and cruise
suspension.
Luminous Cruise’s bankruptcy is among the
first stemming from the outbreak, with economists warning of more to come as
tourist numbers drop. A hotel in Aichi recently filed for bankruptcy after cancellations
by Chinese tourists, Tokyo Shoko Research said last week.
More
Macau Gaming Revenue Suffers Record Plunge From Virus Blow
By Jinshan Hong and Manuel Baigorri
March 1, 2020, 5:14 AM GMT Updated on March 1, 2020,
6:02 AM GMT
Casinos in Macau, the Chinese territory that’s the world’s
biggest gambling hub, reported a record drop in gaming revenue, as they
grappled with the cost of closing
down their businesses for 15 days to help contain the deadly coronavirus
outbreak.Gross gaming revenue was 3.1 billion patacas ($386.5 million) in February, down 87.8% from a year earlier, according to data from the Gaming Inspection & Coordination Bureau. In a survey, analysts had predicted a median 90% slide.
The
slump follows a decision by Macau’s government to suspend casino operations
from Feb. 5 for just over two weeks, dealing another blow to the gambling mecca
that’s already struggling to recover from a revenue decline in
2019. The closure was the longest on record and only the second such instance,
after a typhoon in 2018 forced a 33-hour shutdown.
Even
after the partial resumption of business around Feb. 20, gaming floors have
seen few footfalls as China continued to halt individual and group visas to
Macau and restrict transportation in a prolonged fight against the spread of
the virus.
More
Emirates Offers Leave to Staff as Virus Saps Demand for Travel
By Layan Odeh March 1, 2020, 7:59 AM GMT
Emirates Group, which runs the world’s biggest airline by international
traffic, is encouraging staff to take leave as the coronavirus outbreak slows
demand for travel.
“We’ve seen a measurable slow-down in business across our brands, and a
need for flexibility in the way we work,” according to an internal email seen
by Bloomberg and confirmed by the Dubai-based airline.
Emirates halted most flights to China and suspended operations to Iran, the epicenters of the coronavirus. It stopped flying tourists from more than 20 countries to Saudi Arabia, the carrier’s biggest market in the Middle East.
https://www.bloomberg.com/news/articles/2020-03-01/emirates-offers-leave-to-staff-as-virus-saps-demand-for-travel Finally, if this is even halfway true China owes the world and almost 3,000 families of the dead an explanation and compensation.
China officials knew of coronavirus in December, ordered cover-up, report says
By Sara Dorn February 29, 2020
Chinese scientists knew about the coronavirus and its
deadly effects as early as December — but were ordered by government officials
to suppress the evidence, according to a report.In late December, several genomics companies tested samples from sick patients in Wuhan — the center of the coronavirus outbreak — and noticed alarming similarities between their illnesses and the 2002 SARS virus, the Sunday Times of London reported, citing Chinese business news site Caixin Global.
The researchers alerted Beijing of their findings — and on Jan. 3, received a gag order from China’s National Health Commission, with instructions to destroy the samples.
Rather than hunkering down to contain the virus, Wuhan officials went ahead with their annual potluck dinner for 40,000 families.
The alleged cover-up continued when representatives from the US Centers for Disease Control and Prevention visited Wuhan Jan. 8, where officials intentionally withheld information that hospital workers had been infected by patients — a telltale sign of contagion.
News of the virus’ highly contagious nature didn’t surface publicly until Jan. 20. Wuhan was locked down and a mass quarantine ordered three days later.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, a global supply shock even central banksters can’t fix? Well they
could if President Trump orders the Fed by presidential order, to start buying
up stocks in unlimited quantities. But does nationalising the US economy really
work in a coronavirus crisis?
And what
would it do to the dollar reserve standard?
Below, our world on the edge of a 1930s style slump.
Wall Street is wondering if the Fed can heal a coronavirus-stricken stock market that just saw $4.3 trillion in value vanish over the past 7 sessions
By Mark
DeCambre Published: Feb 29, 2020
11:14 p.m. ET
A historic week for the stock market ended with a big, fat question:
What will the government and the Federal Reserve do about the coronavirus
outbreak that threatens to decimate the longest-running bull market on record?
The infectious disease, COVID-19, which reportedly originated in Wuhan,
China, late last year, reached viral proportions this week on Wall Street — and
literally throughout the world.
Cases of the illness have stabilized in China, but its spread outside the
country, to nearly 60 countries in total, is what may have truly injected
uneasiness into markets — see FactSet chart:
----Approximately 84,000 cases have emerged, and almost 2,900 people have died, with several countries reporting their first incidences of COVID-19, including Brazil, Georgia, New Zealand and Norway. The U.S. on Saturday reported its first death, in Washington state.
In an opinion piece in the New England Journal of Medicine on Friday, Microsoft co-founder Bill Gates said the outbreak could be a once-in-a-century pandemic. “The data so far suggest that the virus has a case fatality risk around 1%; this rate would make it many times more severe than typical seasonal influenza, putting it somewhere between the 1957 influenza pandemic (0.6%) and the 1918 influenza pandemic (2%),” he wrote, adding that the Bill and Melinda Gates Foundation has committed substantial resources to prevent such diseases.
Those factors have, perhaps, sent risk assets into virtual free fall this week after mostly shaking off developments related to the virus since at the start of the year.
The structural damage to Wall Street’s bullish patina is undeniable, as the Dow Jones Industrial Average DJIA, -1.39%, the S&P 500 SPX, -0.82% and the Nasdaq Composite COMP, +0.01% booked their worst weekly declines since the 2008 financial crisis. All three stock gauges fell into correction territory with drops of at least 10% from recent peaks.
Those statistics don’t necessarily capture the severity and velocity of the move in stocks, which had only days before been putting in all-time highs. Indeed, the deterioration from the peak has been nothing short of breathtaking, highlighted by the S&P 500’s fastest slide from a record close to correction in history.
All totaled, global equity markets have wiped out $7 trillion from the levels of Feb. 19, when the S&P 500 notched its record, and the U.S. market alone has lost $4.3 trillion, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
More than 70% of the S&P 500 is now in correction territory or worse.
----President Trump, who CNBC reported has leaned this week on the Federal Reserve to intervene to help address the possible the fallout from the spread of coronavirus, did so more explicitly in a Saturday press conference, saying the Fed should be a leader rather than a follower in slashing target lending rates in response to the disease outbreak.
Trump, has frequently cited the stock markets as a proxy for the fiscal success of his administration and for the economy, opined that the markets “will all come back.”
Fed Chairman Jerome Powell at midday Friday delivered a rare unscheduled statement, saying that the virus posed an “evolving risk,” and reiterated that he was closely monitoring the outbreak, which market participants took as implying that the central bank might be ready to cut rates further from the current 1.50%-to-1.75% range. Markets are pricing in two Fed rates cuts for this year, with the 10-year Treasury TMUBMUSD10Y, +0.00% yield, which moves opposite to price, ending Friday at a record-low 1.127%.
One former Fed governor, Kevin Warsh, argued in an op-ed in the Wall Street Journal that the central bank should take “immediate action” and jointly cut interest rates.
Warsh was a candidate for the Fed chairmanship when Trump opted not to renew the term of Janet Yellen and selected Powell as her replacement. Warsh, Trump said subsequently, should have lobbied harder for the position.
Reuters also reported on Friday that global central banks may be inclined to kick off efforts, if not coordinated moves, to help stem the expected problems from the spread of the illness.
‘But at this stage, how much help can
additional rate cuts really offer?’ Seema Shah, Principal Global Investors
What makes the epidemic unique for financial markets is that it has resulted in a rout driven by an event that is nonfinancial in nature and hard to incorporate into financial models.
How do you solve a problem like a virus?
----“No matter how much the Fed cuts rates and stimulates consumer demand, it cannot eradicate the need for quarantine and travel barriers to arrest the spread of infection,” wrote Seema Shah, chief strategist at Principal Global Investors, in a Friday blog post.
It isn’t clear that the central bank can deliver the stimulus necessary to inoculate financial markets against fears of an infectious disease that could hinder growth and that has already dented China, the second largest economy in the world.
Reports out of Beijing on Saturday local time indicated that the country’s manufacturing activity for February fell to a record low. The official manufacturing purchasing managers index tumbled to 35.7 from 50 last month. Any reading below 50 signals contracting conditions. A separate reading on services also fell to record low, hitting 29.6 compared with 54.1 in January.
----“Movement and activity is restricted in China, and China is at the center of many critical global supply chains,” wrote Katie Nixon, chief investment officer at Northern Trust Wealth Management, in a Friday research note before the data were released.
Read: Coronavirus will deliver a ‘supply shock’ that central bankers can’t fix
“Research suggests that even today about two-thirds of factories in China are still not operating properly, lacking supplies and labor,” she said.
Ultimately, the “most immediate impact of the growing spread of the coronavirus is on sentiment: People are fearful,” she said.
But it is the economic impact that investors are struggling to calculate. However, it is difficult to forecast for an epidemic that may hamstring developed economies for an undefined period. Morgan Stanley analysts on Friday speculated that three scenarios could play out for the epidemic and markets:
More
https://www.marketwatch.com/story/what-in-the-world-can-the-fed-do-to-cure-a-coronavirus-stricken-stock-market-that-erased-43-trillion-in-7-sessions-2020-02-29?mod=mw_latestnews
Democrats are good for wars, Republicans are good for depressions.
Old Wall Street saying, before the Greenspan bubbles/bailout era.
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 due
to the length of the other sections. More tomorrow.
“It
is difficult not to marvel at the imagination which was implicit in this
gargantuan insanity. If there must be madness something may be said for having
it on a heroic scale."John Kenneth Galbraith. The Great Crash: 1929.
The monthly Coppock Indicators finished February
DJIA: 25,409 +75 Down. NASDAQ: 8,567 +171 Up.
SP500: 2,954 +133 Up.
In current circumstances,
this is no time to be blindly following technical signals.
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