Baltic Dry Index. 679 +44 Brent Crude 29.77 Spot
Gold 1725
Coronavirus Cases 15/4/20
World 2,004,613 Deaths 130,714
"If you bet on a horse
that's gambling.
If you bet you can make three spades, that's entertainment.
If you bet cotton will go up three points, that's business.
See the difference."
If you bet you can make three spades, that's entertainment.
If you bet cotton will go up three points, that's business.
See the difference."
Blackie Sherrord, gambler.
Theoretically, we are
at, or have passed the coronavirus peak of new cases, though not the peak of
Covid-19 attributed deaths. The statistics, of course, aren’t 100 percent
accurate, probably not even close, for a whole variety of reasons, including
human error, but they are a good approximation of where we stand in the
coronavirus crisis.
Assuming the best,
the majority of the world will start to come out of lockdowns next month. Assuming no resurgence of Covid-19 cases, at
least in the northern hemisphere summer, then comes the financial reckoning.
Who still has a job?
What businesses reopen and how many don’t? What damage to supply chains is
permanent? What level of demand suppression is permanent? Just how big was the hit to the global
economy, and to global employment? How big will the mess be in real estate?
Assuming the worst
doesn’t bear thinking about. The models are wrong and we are not passing the
peak. Or Covid-19 surges again as we get the release from lockdown all wrong.
Everything starts to close down once again!
In sophisticated stock
market financial terms, do we bet on red or black at the casino roulette wheel?
Asia shares consolidate, China cuts another interest rate
April 15, 2020 /
1:08 AM
SYDNEY/NEW YORK
(Reuters) - Asian share markets took a breather on Wednesday as warnings of the
worst global recession since the 1930s underlined the economic damage already
done even as some countries tried to re-open for business.
China moved again to cushion its economy, cutting a key medium-term
interest rate to record lows and paving the way for a similar reduction in
benchmark loan rates.
While not unexpected, it did help MSCI’s broadest index of Asia-Pacific
shares outside Japan edge up 0.3% to a fresh one-month top.
Shanghai blue chips, however, eased 0.2%.
Japan’s Nikkei was still off 0.5%, though that followed a 3% jump the
previous session. E-Mini futures for the S&P 500 dipped 0.5%, following a
3% rise in New York.
“Flattening infection curves and the thoughts of more stimulus have
lifted all boats,” said Stephen Innes, chief global market strategist at
AxiCorp.
“However, appearances can be deceiving as behind the headlines lie the
most gnarly storm clouds building, suggesting there is still much to be worried
about.”
Even as some U.S. states considered relaxing restrictions, the country’s
death toll rose by at least 2,228, a single-day record, according to a Reuters
tally.
---- Much economic damage has already been done, with the International Monetary Fund predicting the world this year would suffer its steepest downturn since the Great Depression of the 1930s.
Bruce Kasman, chief economist at JPMorgan, warned such a slowdown would
take a heavy toll on corporate earnings.
“We project global profits to experience a roughly 70% peak-to-trough
decline in 2020,” he wrote in a note.
More
IMF slashes growth forecasts, says world will ‘very likely’ experience worst recession since the 1930s
Published Tue, Apr 14 20208:30 AM EDT
The global economy will this year likely suffer the worst
financial crisis since the Great Depression, the International Monetary Fund said
Tuesday, as governments worldwide grapple with the Covid-19
pandemic.The Washington-based organization now expects the global economy to contract by 3% in 2020. By contrast, in January it had forecast a global GDP (gross domestic product) expansion of 3.3% for this year.
“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,” Gita Gopinath, the IMF’s chief economist, said in the latest World Economic Outlook report.
In January, the IMF had estimated 3.4% growth for global GDP in 2021;
this has now been revised up to 5.8% (although growth is expected to be coming
from a lower base following 2020′s projected contraction).
“A partial recovery is projected for 2021, with above trend growth
rates, but the level of GDP will remain below the pre-virus trend, with
considerable uncertainty about the strength of the rebound,” Gopinath said.
The dramatic downgrade in this year’s growth expectations comes as other institutions also warn that the coronavirus outbreak is bringing massive economic challenges. The World Trade Organization said last week that global trade will contract by between 13% and 32% this year. The Organization for Economic Coordination and Development has also warned the economic hit from the virus will be felt “for a long time to come.”
To contain the spread of the virus, many governments have implemented lockdown measures, only allowing people to leave their houses to purchase groceries, medicines and, in some cases, to exercise. As a result, business activity has stalled in many countries.
----The IMF said it had received “an unprecedented number of calls for
emergency funding.” Out of its 189 members, more than 90 of them have asked for
financial support.
Morehttps://www.cnbc.com/2020/04/14/imf-global-economy-to-contract-by-3percent-due-to-coronavirus.html
French economy to contract 8% this year as lockdown extended: minister
April 14, 2020 /
8:12 AM
PARIS (Reuters) -
The French government on Tuesday scrapped its days-old economic outlook after
President Emmanuel Macron extended a national lockdown, shutting down swathes
of the euro zone’s second-biggest economy.
After Macron extended the lockdown until at least May 11, Finance
Minister Bruno Le Maire said the economy was now expected to contract 8% this
year instead of the 6% flagged as recently as Thursday.
Since March 17, France’s 67 million people have been ordered to stay at
home except to buy food, go to work, seek medical care or get some exercise on
their own. The lockdown was originally scheduled to end on Tuesday.
The extension would put additional strain on public finances, blowing
the public sector budget deficit out to a post-war record of 9% of GDP, up from
7.6% last week, budget minister Gerald Darmanin told France Info.
The government last week more than doubled a package of measures to pull
the economy back from the precipice to at least 100 billion euros ($109.32
billion) - over 4% of economic output.
“If we need to do more, then we will do more. We will be there,” Le
Maire told BFM TV.
The package allows companies to defer billions of euros of tax and
payroll charges to cope with the collapse in business and creates a 7 billion
euro solidarity fund for the most fragile small companies, which has already
been tapped by 900,000 firms,
With eight million workers on state-subsidised furloughs, the government
has increased to budget for that programme to 24 billion euros from 20 billion
euros before the extension, Le Maire said.
The government has also pledged to guarantee up to 300 billion euros of
business loans from commercial loans to help see companies through the crisis.
More
Opinion: States are facing a fiscal crisis that will be as brutal as that of the Great Recession
Published: April
14, 2020 at 6:05 a.m. ET
----Today, as governors continue to provide leadership on the coronavirus crisis they are about to
confront a second crisis, as their state’s fiscal positions will rapidly
deteriorate. In my view, it will be as bad as the Great Recession of 2008 to
2009 and its aftermath.I might call that lecture now “Governor, why did you want that job anyway?”
The magnitude of the fiscal crisis that governors and their states will have to face is just starting to emerge. And that crisis will affect states’ abilities to do everything from paying teachers to paving roads to providing social services.
Total state spending in 2019 was about $2.1 trillion. In national summary figures, the largest state program is Medicaid, which is about 28.9% of total spending, substantially above the 19.5% for elementary and secondary education and the 10.1% for higher education. The other major spending is for transportation, which is about 8.1%.
The remaining 33.4% is for a catch-all category of smaller programs like the environment and economic development.
On the revenue side of the equation, which is also about $2.1 trillion, the three major taxes on sales, personal income and corporate income make up 40.8% of the total. Special fees and other taxes represent 28.5%. The federal government, through grants and contracts, contributes 30.7%.
There are five key components in understanding the seriousness of the challenge to states and their governors. They reflect the complex interplay between the federal and state levels of government, commercial activity and a state’s need for money to operate and provide services:
1. Rainy day funds will quickly evaporate
Before the pandemic hit, states collectively had built-up rainy day and other surpluses of $113.2 billion — an all-time high — amounting to 13% of their general fund spending in 2019. Governors thought they were prepared for the next economic downturn.Unfortunately, these pots of money will likely be empty by the end of June. This is because sales tax revenues began crashing as early as March.
That crash is continuing through the second quarter of the year, as people stop purchasing goods because restaurants, stores and bars are closed and as individuals practice social distancing. Once the revenue from sales taxes dives, states will be forced to turn to — and ultimately deplete — their rainy day funds.
2. Revenues will collapse
The Congressional Budget Office recently released its forecast that included the impact of the coronavirus pandemic. It indicated that economic activity will drop at least 7% in the second quarter and unemployment will exceed 10%.Others are far more pessimistic. James Bullard, the president of the Federal Reserve Bank of St. Louis, said unemployment could reach 30% in the second quarter.
Masses of people no longer getting paychecks means a big drop in income tax
More
COVID-19 Economic Update: “No Question” US Is in a Recession
March numbers paint a grim picture of the economy, and economists look at the depth of the downturn and what a recovery could look like.
April 13, 2020
---- Stay at home has come at a dear cost to the economy,” says Richard Branch, chief economist at Dodge Data & Analytics, further saying the usual data sources have yet to capture the full extent of the economy’s stoppage.But March data paints a grim picture that caused several industry economists to declare the U.S. is in a recession. “We are in recession, full-stop, no question about it,” Branch says, predicting it will be “short U” shape. “Now we need to figure out the depth of the recession and what a potential recovery looks like.”
“I can quite confidently say February 2020 will be the official start of the recession,” says Ali Wolf, chief economist of Meyers Research, in an economic update webinar on April 8. She also revised her prediction from a V-shaped to a longer 16-18 month U-shaped recovery, using February as the starting point for future recession analysis. “The bad numbers are just beginning,” she warns.
The unemployment
picture is worse than many economists projected. In a three-week timeframe,
initial jobless claims tallied 16.8 million, which Wolf describes as
“depression-like” levels. Nonfarm payroll employment, which measures net job
loss by month, fell by 701,000 in March. Construction accounted for 29,000 of
those jobs and manufacturing for 18,000. (Leisure and hospitality were the
hardest hit, with a 459,000 drop.) Wolf contrasts this number to the Great
Recession, when it took 10 months of net job losses to reach that 700,000
figure.
More
"Blessed
are the young, for they shall inherit the national debt."
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.
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