The workshop of the world is closed. China is on a total-war footing. The Communist Party has evoked the ‘spirit of 1937’ and mobilized all the instruments of its totalitarian surveillance system to fight both the Coronavirus, and the truth. Make GDP forecasts if you dare.“
“As of this week two-thirds of the Chinese economy remains shut. Over 80pc of its manufacturing industry is closed, rising to 90pc for exporters.
“The Chinese economy is 17pc of the world economy and deeply-integrated into international supply chains. It was just 4.5pc of world GDP during the SARS epidemic 2003, which some like to use as a reassuring template. You cannot shut down China for long these days without shutting down the world…”
“The Norwegian krone has fallen to its lowest level in three decades. … Tuesday’s exchange rates showed the krone at 10.20 to the euro. 9.23 to the US dollar and 12.01 to the pound, NRK reported.”
: QE4 continues
“Temporary liquidity provided by the Federal Reserve Bank of New York to money markets dropped Wednesday.
“The bank said it executed a $47.50 billion overnight-repurchase agreement operation, or repo.
“But due to the expiration of $64.45 billion in older operations, the overall outstanding amount of repo operations fell by $17 billion to $170.3 billion.”
The probability of the U.S. Federal Reserve issuing another rate interest rate cut is increasing, economists say, and the spread of the coronavirus may speed up that decision… “
“Fed chair Jerome Powell said in a press conference following the central bank’s January meeting that he was “very carefully monitoring the situation…””
Southeast Asian central banks signaled strong policy action this week to counter a hit to their economies from the new coronavirus. “
“The Bank of Thailand cut its benchmark interest rate Wednesday to a record-low 1%, while Singapore policy makers indicated there was room for further easing in the currency. The Philippines underscored its willingness to ease…”
Talks between officials from OPEC and its allies spilled into an unprecedented third day as Saudi Arabia and Russia remained split over their response to China’s coronavirus. “
“Delegates gathered again in Vienna on Thursday after two days of meetings weren’t enough to shift Russian resistance to deeper production cuts…”
“China plans to halve tariffs on 1,717 goods it imports from the US as the country faces the fresh challenge of the coronavirus. Chinese officials said tariffs on some goods would be cut from to 5% from 10%, and on others from 5% to 2.5%.”
China’s banking and insurance regulator (CBIRC) asked lenders last week in some cities to assess the impact of the coronavirus outbreak on their borrowers, said two people with direct knowledge of the matter… the CBIRC has urged banks to lower the interest rates and extend loans to targeted companies that have been affected by the outbreak…“
” A central bank sample stress test said 7.7% of lenders were at extreme risk and unable to withstand a light shock, while 13.6% were at high risk if a financial crisis hit.”
Hong Kong’s Cathay Pacific Airways asked its 27,000 employees to take three weeks of unpaid leave, saying preserving cash was key for the carrier and that conditions were as grave as during the 2009 financial crisis due to the virus outbreak.“
“Cathay is also asking suppliers for price reductions, putting in place hiring freezes, postponing major projects and stopping all non-critical spending…”
“Toyota has warned that it expects a dent on car sales in China as the coronavirus outbreak hurts consumer sentiment in a market that was already slowing before the epidemic spread.”
Car manufacturers and airlines really do not need this virus.
“Last year brought the steepest decline in demand for air freight since 2009, newly released IATA data shows. Freight tonne-kilometres fell 3.3%. “This was the first year of declining freight volumes since 2012, and the weakest performance since the global financial crisis in 2009…”
Central bankers in Africa are joining a chorus of voices, which includes the International Monetary Fund, who are worried about surging public debt levels on the continent… “
“About 40% of governments on the continent face difficulties honoring their obligations, according to the IMF.”
Financial markets remain confident the [coronavirus] crisis will soon blow over… The breezy confidence of the markets is based on three assumptions, all of them questionable:“
“First, that the authorities in China – who are regularly accused by financial market analysts of massaging the country’s growth figures – are telling the truth about the scale of the problem…
“Second, that coronavirus is going to be a rerun of the Sars (severe acute respiratory syndrome) outbreak in 2002-03, when there was a brief downturn lasting one quarter before the Chinese economy snapped back.
But China accounted for only 4% of global output in 2003 and is now four times as big. It matters both as a source of global demand – for German machine tools and Land Rovers – and as the hub of global supply chains responsible for everything from TV sets to mobile phones. Even if coronavirus is contained as quickly as Sars, there will be a more marked impact.“
“Third, if coronavirus does prove to be more serious than Sars, central banks will do whatever it takes to prevent a global stock market meltdown. Yet of all the world’s major central banks, only the US Federal Reserve has much scope for cutting the cost of borrowing. Interest rates elsewhere – in the eurozone, Japan, and the UK – are at, or close to, rock bottom.”