• MTS Economic News 20200401

    1 Apr 2020 | Economic News



· CORONAVIRUS CRISIS UPDATES:

- Total confirmed cases: More than 784,440

- Total deaths: At least 37,781

- The coronavirus COVID-19 is affecting 202 countries and territories around the world and 2 international conveyances: the Diamond Princess cruise ship harbored in Yokohama, Japan, and the Holland America's MS Zaandam cruise ship.

- US cases: At least 187,729 (+23,971), and deaths: 3,867 (+726)

- Italy cases: At least 105,792 (+4,053), and deaths: 12,428 (+837)

- Thailand cases: At least 1,651 (+127), and deaths: 10 (+1)


- White House predicts 100,000 to 240,000 will die in US from coronavirus

President Donald Trump prepared Americans for a coming surge in coronavirus cases, calling COVID-19 a plague and saying the U.S. is facing a “very, very painful two weeks.”

“This could be a hell of a bad two weeks. This is going to be a very bad two, and maybe three weeks. This is going to be three weeks like we’ve never seen before,” Trump said at a White House press conference Tuesday. White House officials are projecting between 100,000 and 240,000 deaths in the U.S. with coronavirus fatalities peaking over the next two weeks. “When you look at night, the kind of death that has been caused by this invisible enemy, it’s incredible.”

The U.S. has more coronavirus cases than any other country in the world with 184,000 confirmed infections, according to data compiled by Johns Hopkins University. New York has now become the new epicenter of the outbreak in the world with 75,795 confirmed cases as of Tuesday morning, more reported infections than China’s Hubei province where the coronavirus emerged in December.


- Trump will approve 90-day delay for some tariff payments as coronavirus wallops economy

President Donald Trump will allow certain businesses to defer some tariff payments by three months, three sources told CNBC on Tuesday.

The president could announce the 90-day delay in tariff payments later Tuesday, one source said.

The tariff deferral will come amid the coronavirus pandemic, which has upended global trade and ground the U.S. economy to a halt.


- Senators push Mnuchin to guarantee oversight of $500 billion bailout fund

Leading Democratic senators called on Treasury Secretary Steven Mnuchin to ensure proper oversight of a $500 billion fund aimed at helping companies hit by the coronavirus’ economic fallout.

The fund, which was established as part of a more than $2 trillion stimulus bill President Donald Trump signed into law last week, became a point of contention for Democrats who worried that earlier versions of the bill gave Mnuchin too much discretion over how the funds are dispersed. After tense negotiations, Republicans and Mnuchin agreed to add an inspector general to oversee that fund, as well as a congressional committee.

But Trump on Friday questioned the authority of the inspector general. According to a signing statement he released alongside the bill, he declared his belief that the inspector general needs his permission before letting Congress know whether Mnuchin or Treasury block efforts to glean information


- The Fed’s Loretta Mester says to expect ‘some really bad economic numbers’ before things get better

The coronavirus crisis is going to push unemployment past 10%, but it may not be as bad as some forecasts, Cleveland Federal Reserve President Loretta Mester said in a CNBC interview.

Recent outlooks have seen the St. Louis Fed estimate the jobless rate to as bad as 32%, while Goldman Sachs this week upped its prediction to 15%.

Mester said the final number is likely to fall somewhere above 10% though likely not as bad as the upper range.

“Those numbers are not out of the range of possibilities, according to our own forecasts at the Cleveland Fed,” Mester said on “Closing Bell.” “How things play out really is going to depend on the course of the virus.”


- Fed will do 'whatever it takes' to help U.S. economy likely in recession, Daly says

The Federal Reserve is ready to do more to help a U.S. economy ground to a sudden halt as businesses shutter and people stay home to slow the coronavirus pandemic, San Francisco Fed President Mary Daly said on Tuesday.

“The Federal Reserve is prepared to do whatever it takes within our powers to ensure that we are part of the solution of shoring up people over the virus, shoring up the American economy and putting us in the best position to grow again once the virus recedes,” Daly said in an interview with Yahoo Finance. “If we do the right thing and shelter in place and curb the spread of the virus, the economy will be in the best position to bounce back.”

With the coronavirus infecting tens of thousands of Americans and killing hundreds each day, three-quarters of the U.S. population are under orders to stay home except for essential trips to slow the spread of the virus.

With businesses laying off millions of workers as demand dries up and states ordering non-essential businesses to close, the economy is likely already in recession, Daly said.


- U.S. debt to surge by $1.4 trillion next quarter: Wells Fargo

The U.S. government is likely to increase its debt by $1.4 trillion in the second quarter, as it raises cash to finance stimulus that is meant to blunt the economic impact of the coronavirus pandemic, analysts at Wells Fargo said on Tuesday.

President Donald Trump on Friday signed into law a $2.2 trillion aid package, the largest ever, to help offset the downturn caused by sweeping shutdowns aimed at containing the outbreak.

This includes sending checks to Americans and rushing billions of dollars to medical providers on the front lines of the pandemic.

The government has also delayed the deadline for filing income taxes to July 15, from April 15, which increases its debt needs.

The federal budget deficit is likely to increase to $2.4 trillion for fiscal year 2020, or 11.2% of gross domestic product, which would be the largest deficit as a share of the economy since World War Two when it reached 25%-30% of GDP, Wells Fargo said.

For the 2020 calendar year, the bank expects U.S. government debt to rise by $2.8 trillion on net.

The Treasury Department this week has announced $145 billion in cash management bills, which are short-term securities issued by the Treasury to help it manage its cash needs.


- Germany faces big growth hit in first half, second-half recovery possible: minister

The German economy faces a major setback in the March-May period but there is still a chance it could make up some of that lost ground in the second half of the year, Economy Minister Peter Altmaier told the Rheinische Post newspaper.

“The impact will be very noticeable in the months of March, April and May,” Altmaier told the paper. “In the second half of the year, we still have the chance for recovery and catch-up effects.”

But the outlook was clouded by uncertainty.


- Keep global food supply chains intact, WTO, U.N. agencies urge

Food supply chains must be protected from any trade-related measures taken during the COVID-19 pandemic, the heads of the World Trade Organization (WTO) and U.N. food and health agencies said on Tuesday, warning of possible shortages and price spikes.

They voiced concern that disruptions to the movement of agricultural and food industry workers or food containers could result in the spoilage of perishables and increasing food waste and said protectionism was also a risk.


- Global banking systems may need recapitalization, restructuring: IMF

Some countries’ banking systems might have to be recapitalized or even restructured if their economies are severely damaged by prolonged disruption from the coronavirus outbreak, officials at the International Monetary Fund said on Tuesday.

“Pressure on the banking system is growing and higher defaults on debt are imminent. And many now expect a shock to the financial sector similar in magnitude to the 2008 crisis,” Tobias Adrian, the director of the IMF’s monetary and capital markets department, and Aditya Narain, the deputy director of the department, wrote in a blog post on Tuesday.

While the IMF did not specify which country’s banking systems are most vulnerable, the warning from the world’s top multilateral rescue fund marks a striking departure in tone from other leading regulators and bank chief executives, particularly in the United States, who have said lenders are robust enough to withstand the unfolding economic crisis.


· U.S. dollar weakens as Fed measure weighs

The dollar fell against a basket of major currencies on Tuesday modestly pressured by the weight of Federal Reserve measures meant to ensure there was enough liquidity in the global financial system.

The dollar earlier in the session benefited from quarterly and fiscal year-end demand from portfolio managers and Japanese firms, but trading was choppy, with the dollar alternating between gains and losses.

For the quarter, the dollar =USD was the biggest gainer, rising 2.8%. The Norwegian crown was the biggest loser NOK=D3, falling 18% against the dollar.

Analysts said the steep fall in U.S. equity markets during March led to increased buying of dollars for asset managers seeking to rebalance their portfolios at the end of the month.

In afternoon trading, the dollar index =USD was down 0.2% on the day at 99.042.

It reached 102.99, its highest in more than three years, earlier this month as a global market sell-off fueled a rush for dollars.

Dollar demand has ebbed, but analysts are still forecasting more dollar gains.

Against the yen, the dollar slipped 0.2% to 107.57 yen JPY=EBS. For the quarter, the dollar was down 1.1%.

The euro, meanwhile, was down 0.2% against the dollar at $1.1007 EUR=, falling 1.8% in the first quarter.

Some analysts believed that the dollar is likely to remain supported as investors brace for a sharp economic downturn in the coming quarters.


· U.S. consumer confidence approaches three-year low

U.S. consumer confidence dropped to a near three-year low in March as households worried about the economy’s near-term outlook amid the coronavirus pandemic, which has upended life for Americans.

The survey from the Conference Board on Tuesday came in the wake of reports last week showing the number of Americans filing for unemployment benefits racing to a record 3.28 million in the week ending March 21, and business activity hitting an all-time low in March. The country has ground to a sudden stop as authorities enforce strict measures to control the spread of the coronavirus, which causes a respiratory illness called COVID-19.

The Conference Board said its consumer confidence index decreased to a reading of 120.0 this month, the lowest since July 2017, from an upwardly revised 132.6 in February.

The Conference Board said it expected further declines as the fallout from the coronavirus intensifies and viewed March’s drop in confidence as being “more in line with a severe contraction, rather than a temporary shock.”


· Oil ends March with biggest monthly and quarterly losses ever

Crude oil benchmarks ended a volatile quarter with their biggest losses in history, as both U.S. and Brent futures were hammered throughout March on the global economic freeze due to the coronavirus pandemic and the eruption of a price war between Russia and Saudi Arabia.

U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks aimed at stabilizing energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

Both benchmarks lost roughly two-thirds of their value in the quarter, with March’s declines of about 55% accounting for the lion’s share of the losses.

U.S. West Texas Intermediate crude salvaged the end of the month with a modest 2% gain on Tuesday, while Brent ended slightly lower.

Global fuel demand has been destroyed by travel restrictions due to the coronavirus pandemic. Forecasters at major merchants and banks see demand slumping by 20% to 30% in April, and for weak consumption to linger as economic activity is severely curtailed for the next several months.

WTI CLc1 settled 39 cents higher at $20.48 per barrel. The U.S. benchmark plunged 54% during March and 66% for the first quarter, the worst declines since the contract’s inception in 1983.

May Brent crude futures LCOc1 ended the session 2 cents lower at $22.74 a barrel ahead of expiration. The international benchmark fell 66% in the first quarter and 55% in March, the worst quarterly and monthly percentage declines on record.

The more-active June contract LCOM0 settled 7 cents lower at $26.35 a barrel.


Reference: Reuters, CNBC, Worldometers


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