Major problems up ahead, I fear.
“Hopes the coronavirus would be contained to China vanished on Friday as infections spread rapidly around the world, countries started stockpiling medical equipment and investors took flight in expectation of a global recession.
“Share prices were on track for the worst week since the global financial crisis in 2008 as virus-related disruptions to international travel and supply chains fueled fears of recession in the United States and the Euro zone.”
“Mr Carney [of the Bank of England] added that, given this “fast-developing situation”, the Bank is constantly monitoring UK banks to ensure they remain in good health so there is no risk of COVID-19 triggering a financial crisis.
“He said: “It’s too early to tell what it means for the UK, or its magnitude.”
“The market clamor grew louder Friday for the Federal Reserve to step in with interest rate cuts to stem the damage from the coronavirus outbreak.
“As Wall Street saw yet another aggressive stock selloff that took the market into correction territory, traders priced in an even greater chance for an interest rate cut, with expectations now for the Fed to act as soon as next month.”
“A market meltdown. Surging recession fears. And a sudden spotlight on America’s health care system. Goldman Sachs is warning Wall Street that the coronavirus could cost President Donald Trump the election.
“The potential political fallout from the coronavirus adds yet more uncertainty for investors trying to assess the impact of the fast-moving epidemic.”
https://edition.cnn.com/2020/02/27/business/goldman-sachs-trump-election-coronavirus/index.html
“Chinese banks are taking extraordinary measures to avoid recognizing bad loans, seeking to shield themselves and cash-strapped borrowers from the economic fallout of the coronavirus outbreak.
“Some of the measures, which include rolling over loans to companies at risk of missing payment deadlines and relaxing guidelines on how to categorize overdue debt, have the explicit approval of regulators in Beijing.”
“Activity in China’s vast manufacturing sector likely shrank at the fastest pace since the global financial crisis in February as the coronavirus suspended large movements of goods and people in most parts of the country.”
“…if you want to start grappling with these [coronavirus] costs now – in real-time – look to any of China’s main airports. They are normally among the busiest in the world: by itself, Beijing Capital International Airport receives about 100 million passengers a year, dispatching them to almost 150 international destinations and just as many domestic ones.
“But now they are places of terrible inactivity. In the month to February 13, the number of departures from Chinese airports fell by 87%, from about 14,250 to 1,900.”
“Tanker charter rates have torpedoed more than 80 percent as the coronavirus outbreak continues to slam the brakes on large economies, costing the shipping sector hundreds of millions in lost business, an industry official told Reuters news agency.”
“Over the past three weeks, some 30% to 60% of weekly outbound [shipping] capacity has been withdrawn from the Asia-Europe and transpacific trade, as well as from intra-regional routes.”
“…According to the shipping analyst, the inactive container fleet reached a massive 2.04 million TEU on 17 February, 8.8% of the global containership fleet.”
“Stock futures showed European indexes set to track the rout in their Asian counterparts on Friday, which comes after another massive selloff on Wall Street overnight.
“Hopes that the epidemic that started in China would be over in a few months and economic activity would return to normal have been shattered…”
“Central banks can do little to offset economic shocks that affect the ability of businesses to meet customer demand, Bank of England Deputy Governor Jon Cunliffe said when asked how to respond to the effect of the coronavirus.
““If it’s a pure adverse supply shock, there is not much monetary policy can do,” he said on Thursday.”
“Central banks have met their match. They cannot counter the economic havoc caused to global supply chains from the coronavirus.
“Nor can tax cuts or a blast of government spending plug the gap when crumbling confidence and emergency anti-virus measures are blocking the transmission channels. We are in an unprecedented global situation more akin to the outbreak of war than any episode in collective economic memory.”
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