Baltic Dry Index. 616 -08 Brent Crude 34.11 Spot
Gold 1621
Covid-19 cases 21/3/20 World 276,462 Deaths 11,417
The man who is a pessimist
before 48 knows too much; if he is an optimist after it he knows too little.
Mark Twain.
Tired
of the usual coronavirus disaster updates, plus news of the arriving Great Depression?
Scroll down to the last section for Boccherini showing off on the piano, and a
little history on who invented the piano and why. For an Italian cellist composer
hiding in rural Spain from the Spanish King’s wrath, Boccherini’s piano music
is surprisingly good.
Now
back to doom and gloom, and yet more gloom, and doom!
Will
stocks “round trip?” Unlikely, but you never know. We are putting the national
economies through a succession of massive wealth destruction processes, unseen
since the fall of the great western Roman Empire. And no, dinosaur Graeme
wasn’t around then to witness that, in case anyone’s rude enough to wonder. Like
everyone else living on planet Earth, even Graeme has never seen a Great Depression.
In
case anyone hasn’t yet noticed, two weeks ago, Covid-19 cases reached 276,000.
Two weeks before that, just 104,000. On February first, just about 14,500 world
cases. In two more weeks, 4 million?
While
hopefully, not, in a global pandemic, most stocks still have much further to
fall. Time to keep our buying powder dry. There is still so much more distress
to come. Stay safe and well.
Jobs Destroyed Worldwide as Coronavirus Sparks Recession
By Simon Kennedy March 44 202
·
Unprecedented since Great Depression, Deutsche’s
Hooper says
As the International Labour Organization warns of almost 25 million layoffs if the virus isn’t controlled, the cuts from Austria to the U.S. reflect the deepest peacetime recession since the 1930s as economies are frozen to beat the pandemic.
“We see unemployment rates in the U.S. and Europe getting up well up into the teens,” Peter Hooper, global head of economic research at Deutsche Bank AG, told Bloomberg Television. “Given the pain that we see near-term in the U.S. and Europe, this is unprecedented since the Great Depression, in terms of magnitudes.”
Rising unemployment will intensify pressure on governments and central banks to speed delivery of programs to either compensate workers who are made redundant, or try to persuade employers to hoard staff until the virus fades.
Failure would risk an even deeper recession or weak recovery that would require policy makers to consider yet more stimulus on top of that already deployed.
At JPMorgan Chase & Co., economists predict their measure of unemployment in developed markets will jump by 2.7 percentage points by the middle of this year, having started this year around its lowest in four decades. While there will be some healing as economies recover, they still predict elevated unemployment of 4.6% in the U.S. and 8.3% in the euro area by the end of 2021.
The shock to labor markets also marks a stress test for different social models. The U.S.’s more flexible culture means more will lose their jobs than in the euro area or Japan, where there is a greater onus on retaining staff during a shock.
A first glimpse of the U.S. devastation was apparent in its monthly labor report on Friday, showing employment fell last month for the first time in a decade. Payrolls slumped by more than 700,000, seven times as much as economists had forecast. Those figures are all the more worrying because they cover only the start of the labor-market damage in early March, prior to the biggest rounds of layoffs and closures.
A greater hit is coming therefore, not least since the number of Americans applying for unemployment benefits soared to a record 6.65 million last week, more than twice the record set in the prior week. The 9.96 million combined claims of those two weeks is equivalent to the total in the first 6 1/2 months of the 2007-2009 recession.
More
https://www.bloomberg.com/news/articles/2020-04-03/jobs-destroyed-worldwide-as-coronavirus-sparks-recession?srnd=premium-europe
Morgan Stanley releases new forecast showing U.S. economy may drop as much as 38%
Published: April 3, 2020 at 6:41 a.m. ET
Already
pessimistic, Morgan Stanley’s team of economists has an even grimmer forecast.
Morgan
Stanley lowered its U.S. economic forecasts, saying social distancing measures
and closures of nonessential businesses have spread to an increasing number of
states.
The Wall
Street firm lowered its first-quarter gross domestic product forecast to -3.4%
from -2.4% and its second-quarter GDP forecast to -38% from -30%.
Its third-quarter GDP estimate of 20.7% growth implies that the level of real GDP in the third quarter will recover back only 35% of the lost output in the first half of the year.
On an annual average basis, Morgan Stanley expects real GDP contracting 5.5% in 2020, the steepest annual drop in growth since 1946.
Morgan Stanley’s isn’t the only bleak forecast. The Congressional Budget Office said on Thursday that the economy will contract by at least 28% in the second quarter — and “those declines could be much larger.”
More
David Rosenberg: There’s only a 20% chance stocks have hit bottom — if the past 10 recession bear markets are any guide
April 2, 2020 1:25 PM EDT
What I love about our business is the eternal optimism.
There will be growth in the spring, as Chauncey Gardiner would say. Google
“Picking a Market Bottom” and you get 309 million results. Oh, but google
“Picking a Market Peak” and all you get is 138 million.In any event, if picking bottoms is your thing, I have news for you: In the markets, as in life, the higher you are, the harder the fall. It’s also never about historical per cent changes cycle by cycle, but the reversal from the prior market condition.
In this case, establishing a range of scenarios is most helpful and involves assessing how much of the previous bull market is unwound in the next bear phase. We looked at prior recession-era bear markets back to the Great Depression. On average, 83 per cent of the prior bull market is reversed in the bear market and the median retracement is 69 per cent.
What that
means is that if this current downturn is an average cycle, the low on the
S&P 500 would be 1,135. The median performance would peg the low at 1,515.
Of the past
10 recession-era bear markets, two were nearly 30-per-cent retracements, four
were between 50 per cent and 80 per cent, and another four were complete round
trips (and then some).
If we luck
into the two more modest retracements, the S&P 500’s low will have been
turned in already (2,613 would be that magical level). But history suggests
this has a 20-per-cent chance of occurring.
Using the
eight cycles of the post-Second World War era, the average reversal in the bear
market is 71 per cent and the median is 54 per cent. This would imply a final
trough of 1,455 (average) or 1,798 (median). Take your pick.
The
historical pattern of recessionary bear markets would suggest we have a
20-per-cent chance that the lows are already in, but it’s more likely that the
S&P 500’s bottom is somewhere between 1,500 and 1,800.
More
This recession will finally end the private-sector ‘debt supercycle,’ says firm that invented the term
Published: April 3, 2020 at 6:10 a.m. ET
----BCA Research introduced the concept of the debt supercycle in the 1970s, describing how policy makers wouldn’t let financial imbalances be fully unwound during downturns. The firm declared the debt supercycle dead at the end of 2014, and said it was partly vindicated by household borrowing, relative to income, retreating and the lack of corporate capital spending, though companies did splash out on stock buybacks and mergers and acquisitions.
Now the firm
is declaring the final nail in the coffin. “The shock of the recession and
destruction of wealth will leave a legacy of increased financial caution with
households wanting to build precautionary savings and companies striving to
repair damaged balance sheets,” writes Martin Barnes, chief economist at BCA,
who also says it wouldn’t be surprising to see personal savings rise to the
double-digit levels of the 1980s.
The flip
side of that private-sector retrenching is that there is “the start of an
extraordinary surge in public sector deficits and debt from already high
levels.” The Federal Reserve, in turn, will remain a massive buyer of Treasury
bonds, even “as the economy recovers because it will not want to risk higher yields
undermining growth.” As globalization retreats, this will set the stage for
inflation to return down the line. “We have long argued that a sustained upturn
in inflation would be preceded by a final bout of deflation. The revival of
inflation may be gradual but its insidious nature ultimately will make it more
dangerous,” he writes.
As for the
market implications, he says stocks look far more compelling in the medium term
than bonds, since yields are so low already and because monetary policy will be
supportive. But the short-term outlook is cloudier since no one knows how long
the recession will last.
More
Ford says Europe manufacturing ops to remain suspended at least until May 4
April 3, 2020 / 12:22 PM
(Reuters) - Ford Motor Co (F.N) on
Friday extended the temporary suspension of vehicle and engine production at
most of its European manufacturing sites to May 4. The automaker said last month that the suspension would last for a "number of weeks" depending on the intensity of the COVID-19 pandemic.
“Ford’s
production restart plans depend heavily on the pandemic situation in the weeks
ahead, national restrictions in operation at the time, supplier constraints and
the ability of our dealer network to operate,” the company said in a statement.
The No. 2
U.S. automaker on Thursday posted a 12.5% fall in U.S. auto sales for the first
quarter.
The
company’s U.S. sales chief has said that once the crisis eases, some level of
government stimulus will be needed to support car buyers in the face of an
unprecedented decline in sales and rising claims for unemployment benefits.
Euro-Area Economy Shrinking 10% With Worse Still to Come
By Fergal O'Brien
April 3 2020
The
euro-area economy is in a slump of unprecedented scale, and the contraction may
deepen even further as lockdowns to contain the coronavirus are extended.
IHS Markit
said its monthly measure of services and manufacturing points to an annualized
economic contraction of about 10%. With new business, confidence and employment
all down, there is “worse inevitably to come in the near future,” it said.
More
Finally,
commodities. Covid-19 sickens most commodities. Let’s hope it doesn’t also
sicken the people who produce and harvest our foodstuffs.
Coronavirus pandemic crashes commodity prices
April 3, 2020 / 3:00 AM
EVANSVILLE,
Ind., April 3 (UPI) -- The coronavirus has sent the prices for commodities
plummeting, and analysts don't expect them to climb again substantially until
the pandemic ends and life begins to return to normal.
"When
the coronavirus scare hit, speculators liquidated all the commodities that were
at risk," said Arlan Suderman, chief commodities economist at the New York
City-based INTL FCStone, which provides market analysis. "It was initially
just a collapse of the whole market."
The impact
was not felt evenly -- but it was felt everywhere.
Individual
agricultural industries are just beginning to work out how their products might
fare amid massive, worldwide quarantines.
Corn, for
example, has been hit particularly hard. People under quarantine are driving
less, and this has dramatically reduced the demand for ethanol, which is made
from corn and added to gasoline.
Ethanol
plants across the country are suspending activity, Suderman said.
"The
rumor is that one-third of the ethanol industry will go offline," said
Grant Kimberley, director of market development for the Iowa Soybean
Association. "If you have one-third of the ethanol industry not taking
corn, that's going to seriously impact corn demand."
Farmers are
feeling the impact. Corn futures opened Thursday at $3.33 per bushel, down from
a high of $3.85 in early March, according to the Chicago Mercantile Exchange.
"Our
local plant for corn is an ethanol plant," said Aimee Bissell, a corn and
soy grower in Bedford, Iowa. "They've stopped buying corn. So, even if we
wanted to sell grain, we couldn't to our local plant right now."
If the
market continues like this, Bissell said, she won't be able to sell all her
corn this fall. That presents a big problem because she does not have enough
grain bins to store it all.
---- The meat industry is feeling the impact.
Meat prices initially soared at the start of the the coronavirus pandemic, when consumers flooded grocery stores to stock up on essential items like toilet paper, pork, chicken and potatoes, said Russ Whitman, senior vice president at Urner Barry, a commodities market reporting firm in Toms River, N.J.
"There was a surge in demand," Whitman said. "Everybody at once all across the country ran to retail. But the crisis is over. You and I filled up our freezers. Now, we're not going out. We're not stopping at the drive-throughs on the way to work. We're not going to the restaurants."
Meat prices are falling fast, he said.
Lean hog prices, for example, rose by about 8 cents -- from about 66 cents a pound to 74 cents -- between March 16 and 25, according to the Chicago Mercantile Exchange. They's since fallen sharply to about 57 cents a pound.
More
This weekend’s musical diversion. Cellist Boccherini again. This time showing off on the piano.
Luigi Boccherini - Piano Concerto in E-flat major, G.487 (c.1768)
The origins of the Piano
The Story of the Piano's Invention
----Cristofori, Creator of the First Piano
The piano was invented by Bartolomeo
Cristofori (1655-1731) of Italy.
Cristofori was unsatisfied by the lack of
control that musicians had over the volume level of the harpsichord. He is
credited for switching out the plucking mechanism with a hammer to create the
modern piano in around the year 1700.
The instrument was actually first named
"clavicembalo col piano e forte" (literally, a harpsichord that can
play soft and loud noises). This was shortened to the now common name,
"piano."
More
Bartolomeo Cristofori
https://en.wikipedia.org/wiki/Bartolomeo_Cristofori
Someone needs to record this, (perhaps on a more modern slightly louder piano,) and release it as a fundraiser for all the Children's Hospitals of the World. It encapsulates, the end result, why we must try, and the difficulties before success.
Why not Covid-19? Because we're pouring billions, if not trillions into fighting that. Time to help children and their parents.
Over to China, Canada, GB, Europe, Russia, and American musicians, (albeit they have an immediate out of control coronavirus crisis to overcome.) We're all in it together.
Someone needs to record this, (perhaps on a more modern slightly louder piano,) and release it as a fundraiser for all the Children's Hospitals of the World. It encapsulates, the end result, why we must try, and the difficulties before success.
Why not Covid-19? Because we're pouring billions, if not trillions into fighting that. Time to help children and their parents.
Over to China, Canada, GB, Europe, Russia, and American musicians, (albeit they have an immediate out of control coronavirus crisis to overcome.) We're all in it together.
All is change; all yields
its place and goes.
Euripides.
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.
No comments:
Post a Comment