Baltic Dry Index. 726 +20 Brent Crude 28.37 Spot
Gold 1709
Coronavirus Cases 17/4/20
World 2,179,293 Deaths 146,749
“The economy is in
a downward spiral where job losses beget job losses and the federal government
emergency relief checks will not be enough to turn the tide,” said Chris
Rupkey, chief economist at MUFG in New York. “The recovery is looking less
V-shaped by the day as the deeper we fall, the harder it will be for the nation
to climb back out of this deep hole the pandemic has dug for the economy. The
worst is yet to come.”
Tourism dead, the
Caribbean sunk, airlines dead, cruise lines sunk and getting class action law
suits galore, 22 million newly unemployed in the USA in a month, global GDP
crashing, China’s GDP crashing, real estate crashing, (how’s WeWork doing,) but
according to Wall Street this is the perfect time to buy stocks.
And I have a bridge
in Brooklyn to sell you too.
Below, yesterday’s
dismal news. That’ll be 22 million not out looking for a new car, house or cruise.
Millions unemployed, homebuilding collapses as coronavirus ravages U.S. economy
April 16, 2020 /
1:38 PM
WASHINGTON (Reuters) - A record 22 million
Americans have sought unemployment benefits over the past month, with millions
more filing claims last week, almost wiping out all the job gains since the
Great Recession and underscoring the toll on the economy from extraordinary
measures to control the novel coronavirus outbreak.
The deepening economic slump was also amplified by other data on
Thursday showing manufacturing activity in the mid-Atlantic region plunged to
levels last seen in 1980 and homebuilding tumbling by the most in 36 years in
March.
The reports followed dismal reports on Wednesday of a record drop in
retail sales in March and the biggest decline in factory output since 1946.
Economists are predicting the economy, which they believe is already in
recession, contracted in the first quarter at its sharpest pace since World War
Two.
“The scale of job losses we have had in the past four weeks is
remarkable, nearly all the jobs gained since Great Financial Crisis are now
lost,” said James Knightley, chief international economist at ING in New York.
Initial claims for state unemployment benefits dropped 1.370 million to
a seasonally adjusted 5.245 million for the week ended April 11, the government
said. Data for the prior week was revised to show 9,000 more applications
received than previously reported, taking the tally for that period to 6.615
million.
A total of 22.034 million people have filed claims for jobless benefits
since March 21, representing about 13.5% of the labor force. Employment
bottomed at around 138 million in December 2010 and peaked at 158.8 million in
February. At face value, the staggering claims numbers set the economy on
course for job losses of more than 1 million in April.
--- “Still, the labor market has imploded,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “Claims have totaled 22 million, and claims will be in the millions again next week.”
States and local governments have issued “stay-at-home” or
“shelter-in-place” orders affecting more than 90% of Americans to control the
spread of COVID-19, the respiratory illness caused by the virus, and abruptly
halting economic activity.
The Labor Department said “the COVID-19 virus continues to impact the
number of initial claims.”
Economists are divided on whether the second straight weekly decline in
claims suggests filings peaked at a record 6.867 million in the week ended
March 28, or that overwhelmed state employment offices were unable to process
the flood of applications.
---- The Philadelphia Federal Reserve also reported that its measure of business conditions in the mid-Atlantic region dropped to a reading of -56.6 in April, the lowest reading since July 1980, from -12.7 in March.
Economists are estimating the economy contracted as much as 10.8% in the
first quarter, which would be the steepest drop in gross domestic product since
1947. They say the massive fiscal package will likely provide little cushion
for the economy.
“The economy is in a downward spiral where job losses beget job losses
and the federal government emergency relief checks will not be enough to turn
the tide,” said Chris Rupkey, chief economist at MUFG in New York. “The
recovery is looking less V-shaped by the day as the deeper we fall, the harder
it will be for the nation to climb back out of this deep hole the pandemic has
dug for the economy. The worst is yet to come.”
More
China posts first GDP decline on record as coronavirus cripples economy
April 17, 2020 /
3:31 AM
BEIJING (Reuters) - China’s economy shrank
for the first time since at least 1992 in the first quarter, as the coronavirus
outbreak paralysed production and spending, raising pressure on authorities to
do more to stop mounting job losses.
Gross domestic product (GDP) fell 6.8% in January-March year-on-year,
official data showed on Friday, larger than the 6.5% decline forecast by
analysts in a Reuters poll and reversing a 6% expansion in the fourth quarter
of last year.
The contraction is also the first in the world’s second-largest economy
since at least 1992 when official quarterly GDP records started.
While China has managed to get large parts of its economy up and running
from a standstill in February, analysts say policymakers face an uphill battle
to revive growth as the coronavirus pandemic ravages global demand.
Nomura expects Beijing to deliver a stimulus package in the near-term,
which could be financed by the central bank through various channels.
“However, unlike previous easing cycles, when most of the new credit
went to finance spending on infrastructure, property and consumer durable
goods, this time we expect most of the new credit to be used on financial
relief to help enterprises, banks and households survive the COVID-19 crisis,”
they said in a note.
On a quarter-on-quarter basis, GDP fell 9.8% in the first three months
of the year, the National Bureau of Statistics said, just off expectations for
a 9.9% contraction, and compared with 1.5% growth in the previous quarter.
More
But in USA bailout
madness, bailout madness Wall Street style. A bailout for everything underwater
on Wall Street. A bailout for rich oilmen not to produce oil. How long before
the Fed buys up all of Las Vegas?
Wall Street feasts on federal coronavirus aid while Main Street starves
By Charles Gasparino April 14, 2020 |
5:30pm
Judging by the performance of the stock market, the
economic recovery from the pandemic lockdown should be swift and dramatic, a
so-called V-shaped recovery.If only it were true.
The stock market’s recent gains don’t tell the full story of the absolute mess the US economy finds itself in, even as the worst of the coronavirus is behind us. Rather, the gains in equity prices are more of an indication of the uneven stimulus methods employed by the feds. These measures will almost certainly benefit Wall Street and market speculation — even as their impact on Main Street will be slow to come.
Wall Street executives and analysts predict a tale of two economies: Wall Street traders will make money, while Main Street businesses face economic conditions not seen since the Great Depression.
I hope my Wall Street sources are wrong. I hope the money earmarked for small businesses and individuals as part of the $2 trillion rescue package will prevent the economy from falling off a cliff. I hope the money made on Wall Street trades will trickle down to small businesses when the economy opens up.
But there is good reason to believe the trickle-down will be pretty thin. Wall Street may recover fast as the economy founders.
The Federal Reserve is pumping an estimated $10 trillion in liquidity into the financial system. That’s essentially earmarked for Wall Street. These trillions flowed into just about every corner of high finance; the Fed’s new programs even allowed it to buy up mortgage-backed securities pegged to strip malls that were teetering before the pandemic hit.
You read that right: The Fed is now bailing out Wall Streeters who bet on strip malls.
More
The Fed fuels fallen angels: Forecasting credit spreads on ING’s Covid-19 scenarios
14 April 2020
Late last week the US Fed went where no
central bank has gone before, indicating that fallen angels (downgraded from
investment grade to high yield) would be part of their purchasing plans and no
less significantly indicating it will also buy High Yield ETFs
---- Late last week the Fed announced that non-financial corporates rated investment grade on 22 March 2020 will be included in their primary purchasing programme (PMCCF) and secondary market facility (Facility), as long as the rating (from at least two agencies) remains BB- or higher.
Subsequently, they also indicated that they will expand their exchange-traded funds (ETF) purchasing to include not just Investment-grade corporate bond funds but also US high-yield corporate funds.
The move to some comes as no surprise given the market's discomfort in
the BBB universe at large along with the higher level of leverage in the US
credit markets, where the weight of the potential fallen angel universe made
the issue particularly acute. The downgrade by S&P on Ford on 25 March
might well have been the catalyst, as the name now benefits from the Fed’s
Primary Market Corporate Credit Facility and secondary facility.
More
Coronavirus stimulus law has a tax loophole just for millionaires, report says
April 15, 2020 03:03 PM, Updated April 15,
2020 03:03 PM
The new coronavirus stimulus passed by Congress includes a temporary tax loophole for people who make at least $1
million a year, according to an analysis from the Joint Committee on Taxation. The analysis of the change shows 43,000 taxpayers in the highest income bracket, making more than $1 million a year, could save a combined $70 billion in taxes. Almost all benefits from the tax break go to people making more than $100,000 a year.
Rhode Island Sen. Sheldon Whitehouse and Texas Rep. Lloyd Doggett, both Democrats, requested the analysis from the congressional committee.
The change in tax law suspends limits on how much money individuals can deduct against how much they owe based on lost income or business revenue, according to the committee.
“Based on to the JCT analysis, millionaire tax filers benefiting from one of the Republican provisions will see an average windfall of $1.6 million this year alone. That windfall dwarfs the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s $1,200 benefit for working families,” according to the statement from the Democratic senators.
The analysis of the short-term tax loophole found that is could cost taxpayers $86 million over the rest of this year. It suspends limits on excess business losses for individual taxpayers for 2018, 2019 and 2020, meaning people can deduct more from their income taxes.
more
U.S. Weighs Paying Drillers to Leave Oil in Ground Amid Glut
Jennifer A. Dlouhy and Sheela Tobben
BloombergApril 15, 2020
(Bloomberg) -- The Trump administration
is considering paying U.S. oil producers to leave crude in the ground to help
alleviate a glut that has caused prices to plummet and pushed some drillers
into bankruptcy.
The Energy Department has drafted a plan
to compensate companies for sitting on as much as 365 million barrels worth of
oil reserves by effectively making that untapped crude part of the U.S.
government’s emergency stockpile, said senior administration officials, who
asked not to be identified describing deliberations prior to a decision and
announcement.
West Texas Intermediate crude oil futures
for May rose about 20 cents to $20.42 a barrel on the news. Earlier Wednesday,
crude futures settled below $20 a barrel for the first time in 18 years.
Federal law already gives the Energy
Department authority to set aside as much as 1 billion barrels of oil for
emergencies -- without dictating where they should go. That creates a legal
opening for storing crude outside the government’s existing reserve and even
blocking its extraction in the first place. In this case, the government would
essentially buy the oil locked underground but ask producers to hold off on extracting
or delivering it.
The keep-it-in-the-ground plan would
require billions of dollars in appropriations from Congress -- and the
administration just recently lost a bid in Congress to spend $3 billion buying
oil for the government’s strategic reserve. A deal like this could be
unprecedented and reflects a Trump administration push to help domestic
drillers battered by a surge of oil production and a collapse of demand tied to
the coronavirus.
Analysts, including experts at Wood
Mackenzie and IHS Markit, expect storage tanks to fill by summer, if not
sooner. Whenever that happens, oil producers with no place to put their crude
would be forced to halt production and lay off workers.
Some are already idling drilling rigs and
stowing excess supplies in rail cars, while pipeline operators are reversing
flows to transport crude to underused storage sites.
President Donald Trump on April 3 asked
his energy secretary to “check out other areas where you can store oil,” and
look for places “bigger than what we have now.”
The Energy Department is discussing other
ideas, including stashing oil in floating tankers, unused refinery storage
tanks and underground salt caverns, the officials said. But those approaches
might take too long to help as U.S. crude inventories build toward a crisis
point.
The quicker solution would be to
effectively reward drillers for taking a timeout. Under the approach being
developed by the Energy Department, the agency would contract with companies to
buy proven oil reserves but delay production of them for several years, if not
indefinitely. When that crude is finally extracted and sold, the proceeds would
go to the Treasury. Companies would be selected through an auction, with the
government picking the lowest-price bidders.
Energy Department officials developed the
plan after affirming they had legal authority for the move and studying
alternatives.
Senior administration officials said the
effort would benefit independent oil companies across the U.S., and it would be
focused on sites that are either producing today or those with infrastructure
in place so they could quickly yield oil.
More
Money Is Losing Its Meaning
Jared Dillian Bloomberg April 15, 2020
(Bloomberg Opinion) -- Doing “whatever it takes” to save the global
economy from the coronavirus pandemic is going to cost a lot of money. The U.S.
government alone is spending a few trillion dollars, and the Federal Reserve is
creating another few trillion dollars to keep the financial system from
collapsing. A custom Bloomberg index measuring M2 figures for 12 major
economies including the U.S., China, euro zone and Japan shows their aggregate
money supply had already more than doubled to $80 trillion from before the
2008-2009 financial crisis.
These numbers are so large that they no longer have any meaning; they
are simply abstractions. It’s been some time since people thought about the
concept of money and its purpose. The broad idea is that money has value, but
that value is not arbitrary. Former Fed Chairman Paul Volcker once said in an
interview that “it is a governmental responsibility to maintain the value of
the currency they issue. And when they fail to do that, it is something that
undermines an essential trust in government.”
The dollar has no real intrinsic value, backed only by the full faith
and credit of the U.S. government. Under a fiat currency system, the government
says that a dollar is a dollar. Its value relative to things such as other
currencies and gold is determined on global markets. Gold is considered to be
an objective store of value, and the metal’s rise in dollar terms can be
expressed another way, which is that the dollar fell in gold terms. That
implies the market has rendered a decision on the value, or rather, the
purchasing power of the dollar.
The three main functions of a currency are as a unit of account, a
medium of exchange and a store of value. It is that last function that is most
important. Ideally, a central bank would want its currency to retain its value
over time. The era of flexible monetary standards, however, allow central banks
to manipulate a currency’s value to help fight recessions as well as smooth out
and lengthen business cycles at the expense of inflation. But even low
inflation, say on the order of 2%, will greatly erode the purchasing
power of a currency over time.
And if there are too many dollars in circulation, the monetarists would
say that the value of those dollars has diminished, eventually leading to
higher prices for things. That theory hasn’t worked too well in the last
decade, because inflation has been low and stable, but it is too soon to
declare it discredited. The transmission mechanism that results in inflation is
not well understood, even 45 years after the last great period of inflation.
It took a while, but it seems as though the U.S. government has decided
that it has no constraints on its spending, as long as the Fed continues to
monetize government borrowing by purchasing the debt issued to finance
expenditures. It’s not crazy to think government spending may reach $10
trillion – for just one year! And the numbers will go up from there.
Nobody really knows how this is going to turn out. In smaller economies,
runaway government spending has resulted in hyperinflation and social unrest,
such as well-documented cases in Venezuela and Zimbabwe. Many think that
wouldn’t be possible in the U.S. given the dollar’s role as the world’s primary
reserve currency. Perhaps, but it’s not one of those questions we’d really want
to experiment with.
More
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.
Record 4,591 reported U.S. coronavirus deaths in 24 hours
April 16, 2020 /
10:32 AM
LONDON (Reuters) - Deaths from the novel coronavirus in England and
Wales in March were highest among the old, those with underlying health
conditions and men, according to official data published on Thursday.
England and Wales have so far recorded more than 12,000 deaths in
hospital from the coronavirus, but official data has shown the true death toll
is far higher when deaths in the community, such as nursing homes, are
included.
Office for National Statistics (ONS) analysis of all deaths registered
so far in March found that 8% involved coronavirus, making it the third most
frequent underlying cause of death after Dementia and Alzheimer disease and
coronary heart disease.
Of the 3,912 deaths involving the coronavirus, it was determined to be
the underlying cause of death in 86% of cases.
Just over 90% of those who died had at least one pre-existing health
condition, with coronary heart disease the most common. The death rate among
males from the coronavirus was double that of females, the ONS said.
The data also showed the rate of death increasing significantly in each
age group from 55 upwards in males and 65 upwards in females. One in five
deaths were in the 80 to 84 years age group, and there no deaths among those
aged under 14.
April 17, 2020 /
2:24 AM
BEIJING (Reuters) - Mainland China reported
on Friday that new confirmed cases of the coronavirus fell to a two-week low,
as infections involving travellers arriving from abroad sharply fell.
China recorded 26 new cases of the coronavirus in the mainland on
Thursday, down from 46 cases a day earlier, according to the National Health
Commission.
That was the lowest daily total since April 3.
Of the new cases on Thursday, 15 were imported infections, the lowest
since March 17.
The remaining 11 confirmed cases were locally transmitted infections,
down from 12 a day earlier.
The new local cases were in the provinces of Guangdong, Heilongjiang,
Shandong and Liaoning.
That brings the total number of confirmed cases to 82,367 as of
Thursday.
The number of new asymptomatic cases increased to 66 from 64 a day
earlier.
China does not include patients with no clinical symptoms such as a
cough or a fever in its tally of confirmed cases.
No new deaths were reported.
April 17, 2020 /
4:27 AM
SHANGHAI (Reuters) - China’s Wuhan city, the epicentre of the
coronavirus outbreak, said on Friday it had revised up its total coronavirus
death toll by 1,290, according to state-run CCTV.
Wuhan also revised up confirmed cases by 325.
China’s latest coronavirus
figures are no more believable than their cover story on how this virus
arrived.
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.
April 15, 2020 /
6:05 PM
April 15 (UPI) -- Scientists have developed a new algorithm that can predict how a
protein could evolve to become highly effective or totally unproductive.The machine learning model -- detailed this week in the journal Nature Communications -- works by analyzing how different combinations of genetic mutations trigger changes in the functionality of a protein.
In the lab, scientists studied the effects of mutations among the genes responsible for the production of a protein called streptococcal GB1. Because the GB1 protein is so complex, it can be influenced by a near infinite number of mutation combinations.
Scientists built the algorithm with the idea that all mutations matter, because different combinations of mutations produce unique interactions -- what scientists call epistasis.
"Having two mutations that cancel each others' effects is one possible example of epistasis," study author David McCandlish, an assistant professor at Cold Spring Harbor Laboratories, told UPI in an email. "But there are many other possibilities, such as two mutations that amplify each others' effects, or more complex interactions among three or more mutations. The multitude of ways that mutations can interact is part of what makes this area so fascinating."
In other words, a single gene mutation is unlikely to evolve a functional protein on its own. Evolutionary adaptations require a multitude of gene mutations.
"It is often observed that an adaptive mutation only has its beneficial effects in the presence of a specific 'permissive' or 'potentiating' mutation that precedes it," McCandlish said.
So how do a group of genes mutate to yield an effective protein, and what does it look like? The new model offers clues -- clues that can be visualized.
First, scientists were able to use what they already know about genes to simulate their potential behavior.
"Under some simplifying assumption, our first-principles understanding of how selection, mutation and genetic drift interact allows us to write down equations that give the probability of any specific evolutionary path," McCandlish said.
Unfortunately, studying the behavioral patterns of genes doesn't reveal whether the changes they necessitate will prove advantageous or not.
In the future, scientists could use the algorithm to predict the evolutionary pathway of a potentially dangerous virus. The algorithm could also identify the best way to intercept an evolving virus before it mutates into a more dangerous form.
"Because at present the SARS-CoV-2 genome does not appear to be undergoing positive natural selection for increased functionality in human hosts, this work likely isn't particularly relevant to the current phase of the COVID-19 pandemic," McCandlish said.
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.
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