“As odds of a global recession rise, governments and central banks around the world are racing to fend off the economic damage from the spread of the coronavirus.
“The toll has already landed hard on jittery financial markets…. In countries where the virus is most lethal, such as China and northern Italy, business activity has all but ground to a halt, with entire cities under quarantine and whole industries forced to lay off workers.
“But in a global economy, even countries that have been relatively unscathed by the virus so far, such as the United States, face growing risks from the “still-evolving corrosive shock from the virus,” says Bob Schwartz, senior economist at Oxford Economics.”
https://www.npr.org/2020/03/05/812183483/coronavirus-spreads-recession-fears-around-the-world
“The coronavirus outbreak could push the global economy to grow at its slowest pace since the financial crisis a decade ago, according to a new report from a group of the largest financial institutions.
The Institute of International Finance said Thursday global growth in 2020 could conceivably approach 1% [sub 3% is really in recession territory for the global economy as a totality; I would guess we are headed for sub-zero] this year…”
“Bond King” Jeffrey Gundlach says he believes the Fed panicked in cutting interest rates earlier this week and that short-term U.S. rates are headed for zero.
““I’m in the camp that the Fed is going to cut rates again,” Gundlach said. “When I say panicked, it doesn’t mean it’s not justified. Sometimes panic is justified.””
“The costs for major U.S. banks to borrow short-term cash from the Federal Reserve have been climbing again, despite the central bank efforts to steady markets rattled by the U.S. spread of the coronavirus.”
https://www.marketwatch.com/story/why-repo-rates-are-climbing-again-2020-03-05
“The coronavirus epidemic is upending the carefully calibrated logistics of global shipping, as plunging exports from China disrupt the trade of American goods, especially farm products such as fruit and meat destined for Asia.”
“A significant fall in oil demand is bound to hit the tanker market in the months to come, wiping out the “buffer” that the market managed to build over the past few months, through a rally in freight rates.”
https://www.hellenicshippingnews.com/tanker-market-worst-is-yet-to-come/
“Australia’s retail apocalypse has worsened with department store trade plunging as coronavirus threatens to cause the first recession in three decades.
“Myer and its South African-owned rival David Jones have seen their profits dive as Australian consumers have also missed out on decent pay rises.”
“The coronavirus outbreak has ignited a diplomatic row between Japan and South Korea, after Tokyo said it would quarantine all passengers arriving from the country, which has the highest number of Covid-19 cases outside China.
“In response, the government in Seoul on Friday called the move “unreasonable, excessive and extremely regrettable”, threatening retaliatory measures and accusing Japan of not dealing with its own outbreak properly.”
“The coronavirus likely halved China’s economic growth in the current quarter compared with the previous three months, more severe than thought just three weeks ago and triggering expectations for earlier interest rate cuts, a Reuters poll found.
“The range of views was wide, from two banks saying no growth at all to one saying 5.0%.”
[Seriously? How can the Chinese economy not have been contracting?!]
“China’s weakest property developers risk defaulting on their US dollar bonds, as home sales suffer and access to cash dries up due to the coronavirus.”
https://www.ft.com/content/adce7b62-4f0b-11ea-95a0-43d18ec715f5
“Indonesia is considering expanding a fiscal stimulus to fight the impact of the coronavirus on the same scale as huge spending introduced after the 2008 global financial crisis, its finance minister said on Thursday.
“Southeast Asia’s largest economy has been preparing a second stimulus package.”
“Lebanon’s crippling financial crisis could pose a grave threat to managing a coronavirus outbreak…
“Lebanon faces a severe dollar shortage that has hit imports since October, when anti-government protests erupted and banks imposed stiff capital controls, leaving hospitals exposed to shortages in everything from dialysis equipment to syringes.”
https://www.egyptindependent.com/now-we-have-corona-cash-strapped-lebanon-navigates-new-crisis/
“Bad weather, trade war, changes to car-emissions testing, and low water levels in the Rhine: since 2017 Europe’s economy has been struck by a number of shocks, none of which hapless finance ministers or central bankers could control…
“Now covid-19 is spreading across the continent.“
https://www.economist.com/europe/2020/03/05/covid-19-risks-tipping-germany-and-italy-into-recession
“Mark Carney has said the Bank of England is coordinating with the Treasury and international partners to deliver a “powerful and timely” response to the coronavirus outbreak, as investment bank Goldman Sachs warned the disruption could push the UK to the brink of recession
[We were already *on* the brink of recession, lol. UK GDP in Q4 of 2019 was 0.1%].
“It’s official: the Coronavirus has hit global supply chains. This means that the risk it is posing to companies is even more profound than initially expected.
“It is certain at this point that on a global level, supply chains will experience disruption and that companies need to manage the ripple effect by knowing their supply risk.”
“Car sales are showing early symptoms of the coronavirus.
“They could get a whole lot worse if—as seems increasingly likely—more big economies go the way of China, Japan and Italy. China, where the epidemic originated, has seen by far the biggest impact. Vehicle sales were down an extraordinary 80% in February compared with the same month of 2019.”
“Airline executives are racing to cut costs as coronavirus spreads, raising concern about lower demand for travel that is sending shares to lows not seen in years. Airlines are waiving change fees for new bookings and in some cases cutting fares in an effort to entice travelers on board…
“U.S. airlines are facing their biggest demand shock since the financial crisis as the new coronavirus, or COVID-19, spreads around the world.”
“Chris Rupkey, managing director and chief financial economist at MUFG Union Bank, said interest rates are already low so further cuts may not be effective in nudging companies to increase spending and investments.
““I don’t think rate cuts at this stage are going to do a lot of good for companies. They’re building liquidity right now, they don’t want to go out to borrow and make investments for the future. They’re kind of running for the hill,” he said…”
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