Baltic Dry Index. 643 -12 Brent Crude 24.66
Spot Gold 1712
Coronavirus Cases 30/4/20
World 3,208,871
Deaths 227,883
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
On day two of the Federal
Reserve virtual meeting in Washington yesterday, Chairman Powell’s press conference was distinctly
underwhelming.
With the US GDP
number for the first quarter coming in much worse at minus 4.8 percent than the
consensus expected minus 4 percent, Chairman Powell needed to pull a white rabbit
out of the top hat yesterday. The second quarter figures are guaranteed to be
much worse.
To rescue the
stock market and President Trump’s re-election campaign, Chairman Powell needed
to be talking up a fast “V” shaped recovery directly ahead, however unlikely. Has
he already switched across to the Biden campaign?
At least there was
some better news on Gilead’s “miracle” drug remdesivir. Shame about the coming
tea shortage though. As soon as Aldi opens I’ll rush out and buy a year’s
supply. I wonder if they take back toilette rolls?
Below, yesterday’s
news and Wall Street spin. Another dress up month-end coming up.
U.S. economy shrinks by 4.8% in 1st quarter; Fed keeps interest rate near zero
April 29, 2020 /
10:34 AM
April 29 (UPI) -- After a full decade of steady and record growth, the
U.S. economy abruptly shrank by almost 5 percent during the first three months
of 2020 -- due almost entirely to the coronavirus crisis, the Commerce
Department said in its quarterly report Wednesday.
The department said the U.S. gross domestic product contracted by 4.8
percent for the first quarter, the first contraction since 2014 and the largest
since the Great Recession.
The figures show the domestic economy grew over the first two and a half months of the year before coronavirus-related closures brought it to a sudden halt in mid-March.
The contraction is the largest since an 8.4 percent drop in the final quarter of 2008. The U.S. economy grew by 2.1 percent in the previous quarter, Q4 of 2019.
"The decrease in real GDP in the first quarter reflected negative contributions ... that were partly offset by positive contributions," the report said.
The department acknowledged that the global health crisis led to rapid declines in demand and affected a wide swath of the economy -- and cautioned that the second quarter, April through June, will probably show greater losses.
On Wednesday, the Federal Reserve announced it would keep the federal interest rate at zero to 0.25 percent while committing to using its "full range of tools" to support the economy amid the pandemic.
"The forceful measures that we as a country are taking to control the spread of the virus have brought much of the economy to an abrupt halt," said Federal Reserve Chairman Jerome Powell. "Many businesses have closed, people have been asked to stay home and basic social interactions are greatly curtailed. People are putting their livelihoods on hold, at significant economic and personal cost."
More
Why the Economy Was Even Worse Than the GDP Report
First-quarter gross domestic product likely fell even more than 4.8%—and the second quarter will be worse
The government has reported that in the first quarter the economy experienced its sharpest contraction since 2008. The reality was likely even worse.
On Wednesday the Commerce Department
said that gross domestic product fell an
annualized 4.8% in the first quarter, marking the largest drop since
the fourth quarter of 2008, when the financial crisis hit. This number shows
how much the economy would shrink if the first-quarter’s pace of contraction
lasted all year, so an annualized drop of 4.8% number translates to an actual
decline of 1.2% in the quarter.
The sharp drop is all the more
remarkable considering it was only in the final weeks of the quarter that the
coronavirus crisis really began to take hold. Consider: Earlier Commerce
Department data showed that through February consumer spending was up an
annualized 1.1% from its fourth-quarter levels. But the GDP report showed
spending declined at a 7.6% rate in the first quarter. That implies that
spending fell 6.7% in March alone.
That the hit came late in the
quarter is one reason the GDP report may be understating how much the economy
shrank in the quarter. When the Commerce Department first compiles the report,
it lacks a lot of data on what was happening late in the quarter, and so has to
make a lot of assumptions. When recessions hit, these assumptions often turn
out to be, with hindsight, optimistic. Goldman
Sachs economists point out that in the fourth quarter of 2008 the
initial GDP report showed the economy contracted at an annualized 3.8% rate.
That was eventually revised to show an 8.4% decline.
That collecting data on the economy
has become more onerous when so many businesses are shut down compounds the
problem. Last week’s report on March durable goods shipments and orders, which
the Commerce Department uses for making GDP estimates, didn’t show the slowdown
in underlying activity implied by either factory surveys or weekly
jobless claims, UBS
economists noted. That may be because the Commerce Department was lacking
information from the hardest-hit firms. While the Commerce Department said that
its “quality metrics fell within normal ranges for this survey,” it may have
underestimated the severity of what occurred.
No matter how bad the first quarter was, the current quarter will be far worse, reflecting the full extent of shutdowns, business closings and job losses. After Wednesday’s report, Morgan Stanley economists said they expect second-quarter GDP will contract at a 38% annual rate. That would be equivalent to the worst quarterly contraction of the 1930s as measured by gross national product.
Millions of Americans likely applied for jobless benefits last week though wave is stabilizing
April 30, 2020 /
5:11 AM
WASHINGTON (Reuters) - Millions more Americans likely filed claims for
unemployment benefits last week, but the tide appears to be slowing, offering
cautious hope of a peak in job losses from business closures and disruptions
because of the novel coronavirus.
The Labor Department’s weekly jobless claims report on Thursday will
follow news on Wednesday that the economy in the first quarter suffered its sharpest
contraction since the Great Recession. This ended the longest expansion in the
United States’ history as the economy reels from nationwide lockdowns to slow
the spread of COVID-19, the respiratory illness caused by the virus.
Jobless benefit applications, since hitting a record 6.867 million in
the week ended March 28, have been trending lower as overwhelmed state
employment offices cleared backlogs.
But the numbers are still at high levels unimaginable just months ago.
Initial claims for state unemployment benefits likely totaled a seasonally
adjusted 3.50 million for the week ended April 25, according to a Reuters
survey of economists. That would be down from 4.427 million in the prior week
and mark the fourth straight weekly decrease in applications.
“As these claims are processed, there could even be a sharp drop in
initial filings,” said Andrew Hollenhorst, an economist at Citigroup in New
York. “Still, job separations will likely remain high for a while, as softer
demand spills over into industries not initially directly affected by
shutdowns.”
Last week’s filings would lift the number of people who sought
unemployment benefits to around 30 million since March 21, roughly 18.4% of the
working age population.
With initial claims for jobless benefits starting to stabilize,
attention is shifting to the number of people remaining on unemployment rolls
to get a better sense of the depth of the labor market downturn.
This so-called continuing claims data is reported with a one-week lag.
Thursday’s report is expected to show continuing claims surged to a record
19.238 million in the week ending April 18 from 15.976 million in the prior
week. The continuing claims data will cover the period during which the
government surveyed households for April’s unemployment rate.
More
Markets for corn evaporate during coronavirus pandemic
April 29, 2020 /
3:00 AM
EVANSVILLE, Ind., April 29 (UPI) -- The market for corn has evaporated
during the coronavirus pandemic, and farmers worry they'll be unable to sell
this year's harvest.
More than two-thirds of the corn grown in the United States goes either
to feed livestock or make ethanol, according to the U.S. Department of
Agriculture. Both those industries are taking severe hits during the pandemic.
"The first thing that knocked the corn market down was the collapse
of ethanol," said Blake Hurst, a corn grower who is the president of the
Missouri Farm Bureau.
"People just aren't driving as much," he said. "Now,
we're seeing concerns in the market because we're losing packing plants. Farmers
are euthanizing their animals, so livestock herds are shrinking."
Ethanol production has been cut nearly in half since
February, according to data released by the Renewable Fuels Association.Meanwhile, ethanol stocks have hit a record high, climbing to 27.7 million barrels by April 17, up from 24.1 million barrels a month earlier, according to the U.S. Energy Information Administration.
It's unclear to what extent meat packing plant closures will impact demand for livestock feed -- especially after President Donald Trump said Tuesday he would sign an executive order to make meat processing plants stay open amid the pandemic.
More than a dozen slaughterhouses have closed due to workers becoming sick since the start of the pandemic. Livestock producers who are unable to sell their animals already are killing them.
"I know there are farmers who have had to kill their pigs," Howard AV Roth, president of the National Pork Producers Council, who raises and weans pigs in Wisconsin, told UPI on Thursday. "Farmers are aborting sows. It's really awful."
In addition, corn exports have ground nearly to a halt as port workers around the world stay home to avoid contracting the virus.
"It is a struggle to ship anything right now," said Floyd Gaibler, the director of trade policy and biotechnology for the U.S. Grains Council, a Washington, D.C.-based trade organization that represents the corn, sorghum and barley industries.
Around 20 percent of America's corn is exported, according to the USDA.
The combined market disruptions are pushing corn prices down rapidly. Corn was trading at close to $3 per bushel Tuesday, down from close to $4 in January, according to the Chicago Mercantile Exchange.
But despite plummeting price and disappearing markets, farmers this year
intend to plant a large corn crop, according to USDA surveys. This is in part
because planting decisions are made -- and supplies purchased -- around the
start of the year.
Farmers may make some last-minute changes to their planting plans, but
probably not a lot, the farm bureau's Hurst said.
More
Elsewhere, gloomy news still prevailed, just don’t let on to
the stock markets, where we have another dress up the month end figures
underway.
Auto supplier Bosch sees global car production down 20% in 2020
April 29, 2020 /
9:50 AM
FRANKFURT
(Reuters) - German auto supplier and technology company Robert Bosch [ROBG.UL]
on Wednesday said it expected automotive production to fall by at least 20%
this year, as the coronavirus pandemic slams the brakes on factory production
lines and saps demand.
“We are bracing ourselves for a global recession that will also have a
considerable impact on our own performance in 2020,” Bosch Chief Financial
Officer Stefan Asenkerschbaumer said in a statement.
“Given the many imponderables, we feel unable to make a reasonable
forecast for the Bosch Group for the year as a whole. It will take a supreme
effort to achieve at least a balanced result.”
To cut costs, Bosch has pushed out timeframes for making investments,
reduced working hours for half of its staff in Germany and imposed salary
reductions. Managers and executives are taking a 20% pay cut in April and May.
“Even if production has been ramped up again in China, and European
industry is preparing for a ramp-up of its own, we have to steel ourselves for
a severe global recession over 2020 as a whole,” the company said.
In
January, before the coronacrisis had become a global pandemic, Bosch warned
that global car production may have already reached its peak and released
preliminary full-year earnings which showed weaker demand in Asia.
More
Coronavirus brews trouble for tea, disrupts supply as demand spikes
April 29, 2020 /
4:56 AM
MUMBAI/MOSCOW
(Reuters) - The coronavirus outbreak is causing a rare stir in the usually
staid global tea market, with labour lockdowns stifling supplies just as
millions in lockdown drive up demand for the beverage known for its
immunity-boosting properties.
Five countries - China, India, Kenya, Sri Lanka and Vietnam - account
for 82% of global tea exports, but strict restrictions on movement to contain
the coronavirus pandemic have already disrupted the key leaf-picking season,
delayed some shipments by about a month and triggered a spike in prices.
Fewer pickers combined with colder-than-normal temperatures last month are
expected to trim output in top producer China this year, while production in
No.2 grower India and Sri Lanka have also been impacted by labour and weather
issues.
India’s output is likely to drop by 120 million kgs or 9% in 2020 as the
lockdown initially forced plantations to suspend plucking during the opening
harvest - the prized first flush - and then operate with about half the
workforce, said Prabhat Bezboruah, chairman of India’s Tea Board.
The International Tea Committee (ITC) estimates India’s 2020 exports
will fall 7%.
In March, exports from India slumped 34% and nearly halved from Sri
Lanka, India’s Commerce Ministry and tea brokers say.
The bright spot is Kenya, the world’s top exporter, which has seen
minimal interruption to harvest since March and, according to ITC, may see
domestic output rise by 15% this year.
Vietnam’s output is also expected to be largely unaffected, but it is a
relatively smaller player.
Still, importers have already started feeling the pinch amid dwindling
supplies from South Asia.
“Shipments from India have been delayed by an average of one month, and
we have also experienced delays in the supply of tea from other countries, in
particular Sri Lanka,” said Orimi trade, Russia’s leading tea manufacturer.
More
Planes Are Still Flying, but Covid-19 Recovery Will Be Tough
Air travel is down more than 90 percent
from last year, and analysts say the rebound will be slower than following 9/11
or the financial crisis.
04.29.2020 07:00
AM
Finally,
belatedly, the SEC has woken up at the wheel.
U.S. SEC investigates Luckin Coffee over accounting scandal - WSJ
April 29, 2020 /
11:29 AM
(Reuters) - The U.S. Securities and Exchange Commission is
investigating Luckin Coffee Inc (LK.O)
for fabricating millions of dollars worth of sales deals last year, the Wall
Street Journal reported on.wsj.com/3eYO4Kx
on Wednesday citing people familiar with the matter. Earlier this month, Luckin Coffee said an internal investigation revealed that its chief operating officer and other employees were suspended for fabricated sales deals worth about 2.2 billion yuan ($310.77 million).
Shares in Luckin, which aggressively pitched itself as a challenger to Starbucks (SBUX.O) in China, have plunged by more than 90% from their January high following the news.
China’s State Administration for Market Regulation has also launched an inspection into Luckin, joining the country’s securities watchdog.
Luckin and the U.S. SEC were not immediately available for a comment.
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
John Kenneth Galbraith
Covid-19 Corner
Though
hopefully, we are passing the peak of new cases, at least of the first
SARS-CoV-2 outbreak, this section will continue until it becomes unneeded.
Florida moves to ease coronavirus lockdown as promising treatment emerges
April 29, 2020 /
5:39 PM
MIAMI (Reuters) -
The governor of Florida, among the last to lock down his state against the U.S.
coronavirus outbreak, announced on Wednesday he would permit a limited economic
reopening next week while leaving restraints intact for the dense greater-Miami
area.
Florida became the latest, and one of the two largest, of about a dozen
states forging ahead to ease crippling restrictions on business activity
without vastly expanded virus testing and other safeguards that medical experts
recommend should be in place first.
“There is a light at the end of the tunnel,” Governor Ron DeSantis said
as he unveiled his “phase-one” plan for relaxing mandatory workplace closures
and stay-at-home orders imposed four weeks ago.
Earlier in the week his counterpart in Texas, Greg Abbott, another governor closely aligned with fellow Republican President Donald Trump, announced a similar economic reopening strategy due to go into effect on Friday.
As questions lingered over when and how to loosen social-distancing rules employed as the chief weapon against a highly contagious virus with no vaccine, word emerged from Washington on Wednesday of a promising new treatment for the disease.
The U.S. government’s top infectious-disease official, Dr. Anthony Fauci, said the experimental antiviral drug remdesivir, from pharmaceutical maker Gilead Sciences Inc (GILD.O), had proven effective in a key clinical trial.
With preliminary results showing patients recovering 31% faster with the drug than with a placebo, remdesivir will become the standard of care for treating COVID-19, the potentially deadly lung disease caused by the novel coronavirus, Fauci told reporters at the White House.
He called the development “highly significant.” The U.S. Food and Drug Administration said it was in talks with Gilead about making the drug available to patients as quickly as possible.
More
Finding The Kink In COVID-19's Armor - Preventing ARDS
Apr. 28, 2020 3:42 AM ET
Summary
A treatment is needed for ARDS.Remdesivir was touted by STAT.
Antiviral efficacy and side effects are under scrutiny.
CytoDyn is closest to a trial readout.
The top pharmaceutical companies are trying every
approach they can imagine to find the weakness in COVID-19’s armor. Pharma
companies that were arch enemies are working together. Drugs that are approved
for other diseases are being tested as treatments. The front runner is Gilead
Sciences (GILD) with its
lead candidate remdesivir. Gilead expects initial trial results in April. On
speculative evidence from a phone call cited by STAT
report that remdesivir patients were responding to treatment the stock shot
up 9.73%, or $10.5 billion, on hopes of a decent trial report. Soon to join it
was Regeneron (REGN) with a
rheumatoid arthritis (RA) drug called Kevzara. There are other drugs with some promising
results like anti-malaria drug hydroxychloroquine and FujiFilm’s
(OTCPK:FUJIY) antiviral
generic influenza drug called Avagin (favipiravir). The primary issue is that
none of these drugs has finished its controlled trials and none of these drugs
prevents Acute Respiratory Distress Syndrome (ARDS), a complication of
pneumonia and COVID-19. This is the most critical part of the disease because
few recover from it. Data from China indicate that only about 15-20%
of patients that go on a respirator recover.
CytoDyn Inc. (OTCQB:CYDY) has a novel way to
treat ARDS that could tame the feared COVID-19 infection for serious patients.
CYDY trial results are likely to come before heralded GILD
presents results, so investors need to be cautious ahead of the
announcements. No trials have been completed yet. Many drug companies
like Moderna (MRNA) and
others are rushing to create a vaccine, but a vaccine is not a cure but a
prophylactic, which activates your immune system by producing antibodies for
the virus. So, for the first time, we are starting to see hope that something
can prevent the COVID-19, but the actual vaccine availability is 12
to 18 months away. Too far away to affect this outbreak and maybe the
expected echo surge coming back in the fall. So a therapy for those with
serious symptoms is needed as early as possible. There are only a few
candidates. CYDY’s drug leronlimab is designed to stop the trafficking of
macrophages to the lungs using the same mechanism of action that it uses to
stop the trafficking of macrophages in metastatic cancer to the tumor
microenvironment (TME). Imbalance in the immune response is ultimately what
leads to a cytokine storm in the lungs where a patient's own immune response
causes damage to the lung tissue which results in fluid accumulation in the
lungs that, when bad enough, results in ARDS.
More, much, much more.
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,
normal service tomorrow.
If
economists could manage to get themselves thought of as humble, competent
people on a level with dentists, that would be splendid.
John
Maynard Keynes
The Monthly Coppock Indicators finished March
DJIA: 21,917 +45 Down. NASDAQ: 7,700 +149 Down.
SP500: 2,585 +38 Down.
The NASDAQ and S&P have
joined the DJIA in down. All three monthly slow indexes have collapsed.
