When Work Is Punished: Did The ‘Generous’ CARES Act Just Guarantee High Unemployment Is Here To Stay?
A number of years ago, we first introduced the topic of a ‘welfare cliff’ at which more work was punished – i.e. the ‘generosity’ of the package of welfare benefits creates a perverse incentive not to work any harder…
As we wrote at the time, one of the tragedies of America today is that so many adults of sound mind and body do not support themselves and their families. It’s a tragedy not because they suffer material want; indeed, relatively few suffer so, because government assistance satisfies many of their material needs.
It’s tragic because one of the keys to human happiness is earned self-respect, which requires, as Charles Murray has written, making one’s own way in the world. The vast majority of poor people don’t want welfare; they don’t want handouts; they want a good job with which they can support themselves and their families comfortably.
The tragedy of the American welfare system is that it traps so many people in dependency on government, by hindering them from getting on and climbing up the job ladder, and thereby earning self-respect and happiness.
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Our fear now, confirmed by excellent research from Kathy Morris & Chris Kolmar at Zippia.com, is that the ‘generosity’ of the CARES Act (and the fact that politicians are loathed to remove any policy that could possibly make their voters upset) has the potential to create an entire new generation of welfare serfs, subsisting on significant welfare benefits with no incentive to ‘get back to work’, even after the lockdowns are lifted.
So, detailed below from Morris and Kolmar, is the maximum, annualized salary you can expect under the new Coronavirus unemployment benefit in each state.
The past month has seen a record breaking surge in unemployment. Millions of American workers have unexpectedly lost their jobs in an uncertain job market where many businesses are shut down.
Understandably, the newly unemployed masses have turned to unemployment to help scrape by. Fortunately, the new coronavirus stimulus package has provisions to help the unemployed during this difficult time.
Under the CARES Act, Americans laid off due to the coronavirus receive an additional $600 a week for the next four months, ending July 31st or upon employment. In addition, the unemployment window has been increased in each state by 13 weeks.
No doubt, the passage of the stimulus has many laid off workers breathing a sigh of relief.
However, many still working may be frustrated to realize their weekly paycheck is less than they would receive in unemployment.
We hit the data to determine how much unemployed workers can expect to receive under the stimulus — and the amount in each state where you would make more money not working at all.
HOW WE DETERMINED UNEMPLOYMENT UNDER THE STIMULUS
Each state has its own complex, intricate (sometimes unnecessarily so) unemployment laws. Typically, they amount to around .09-1.1% a week of your annual salary, up to the weekly maximum.
Some states have special clauses for dependents we included in the calculator. Often this additional cash is pretty low. If you have one kid in Michigan, for example, you receive an extra $6 a week.
In addition to slogging through each state’s unemployment policies to determine each state’s unemployment pay outs, we added the $600 a week included in the new stimulus package.
Depending on the distribution of your quarterly pay, the results may vary from your actual unemployment. However, this number is a good indicator of what you can expect.
To determine the salary threshold in each state where workers would make more on unemployment we simply took the state’s weekly max and added the new $600 stipend to find the annual salary that exceeds the unemployment pay out.
THE SALARY IN EACH STATE WHERE YOU’D MAKE MORE ON UNEMPLOYMENT
While many have speculated on the number of minimum wage workers who would be better off financially working for minimum wage, the number of skilled workers has been underestimated. For example, Massachusetts generous unemployment policies combined with the stimulus means all workers making under $73,996 would receive more a week unemployed than they do from working.
Many of these salaries outstrip the state’s median income, meaning the majority of workers would receive more from an unemployment check than a paycheck.
Of course, no one will be receiving unemployment benefits for a year (no state’s unemployment duration goes past 39 weeks) and many displaced workers are no doubt eager to secure a new job. It is also important to point out that the extra $600 a month only lasts until July 31st. After these four months, the unemployed will be back to receiving only what the state provides — about 50% of their previous pay- and be faced with trying to find employment in a rough job market.
These numbers do also not take into account benefits, including health insurance which is usually procured through your employer at a much cheaper rate than employees can get on the market. I think we can all agree a pandemic is a pretty bad time to be uninsured.
UNEMPLOYMENT DURATION CHANGES
Another side effect of the coronavirus stimulus bill is the increase in the period of time people are able to draw unemployment benefits.
Similar to unemployment benefits, each state sets their own cap on how long the unemployed can draw checks. Prior to the stimulus bill, generous states had a cap of 26 weeks, or 6.5 months. Less generous states such as Florida or North Carolina only allotted 12 weeks.
The stimulus bill increased the unemployment period by adding 13 weeks to each state’s unemployment period. Florida and North Carolina more than doubled their period of time people could draw unemployment.
Even states with the more generous 26 weeks saw an increase to 39 weeks.
SUMMARY ON UNEMPLOYMENT BENEFITS AFTER THE STIMULUS
The stimulus package made significant changes to state unemployment. For the next four months, the unemployed will receive an additional $2,400 a month. Similarly, the added 13 weeks provides people longer to find a job in a new hostile job market.
The new package does mean a good chunk of the workforce are now receiving paychecks smaller than they would on unemployment. This includes workers in essential businesses, including hospitals and super markets, who are putting themselves in harm’s way to keep society running.
For minimum wage and low wage workers the difference between what they are being paid to work and would receive on unemployment is no doubt the most crushing. Many struggle to pay their bills as is and receive no benefits to complicate the equation. While they are dodging coughs and bringing in masks from home for $10 an hour, others who made the same money are now being paid to sit safely at home.
While the situation might create a temporary imbalance, it is important to remember the unemployment boost will end July 31st. Unemployment checks will be back down to the state level, an amount many struggle to exist on. We do not know how long many of these unemployed workers will struggle to find jobs or what shape the economy will be in August.
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Welfare cliffs are of course not the only reason so many capable Americans languish in partial dependency on government assistance. Dreadful government schools in poor areas and systematic obstacles to getting a job, such as minimum wage laws and occupational licensing laws, are also to blame. But the perverse incentives of America’s welfare system really hurt, and the CARES Act may have been a serious tipping point.
The FRA-OIS spread had been blowing out, signaling dollar tightness… well that’s eased now…
And the dollar is losing ground fast…
And as the extreme policies of The Fed ripple through markets, so gold is soaring, reflecting the abuse of fiat that is occurring in real time…
And the paper-physical gold markets are decoupling once again…
As Egon von Greyerz recently reminded, remember you are not holding gold to measure the gains in debased paper money. Instead you are holding physical gold as insurance against a broken financial system that is unlikely to be repaired for a very long time.
Free Markets Are Dead: Fed To Start Buying Junk Bonds, Junk ETFs
Back on March 23, when the Fed unveiled it would start buying investment grade corporate bonds, we said “now that the Fed is effectively all in, it will buy stocks and junk bonds next.”
Two weeks later, we were right and this morning the Fed announced it would, as expected, start buying junk bonds (we have to wait for the next crash before the Fed goes literally all in and starts buying stocks and pretty much anything else).
But let’s back up. A few days ago, we pointed out that the day so many credit bears had been waiting for had arrived, when a record $150BN in investment grade bonds were downgraded to junk, becoming so-called fallen angels, and sparking concerns about what will happen to the $1.3 trillion junk bond market as hundreds of billions of formerly investment grade debt is downgraded to junk and violently reprices the entire high yield space.
Those concerns were answered this morning when as part of the Fed’s expanded $2.3 trillion loan/bailout program, the Fed announced the expansion of its Primary and Secondary Market Corporate Credit Facilities, which will now purchase – drumroll – junk bonds.
In the term sheet of the revised term sheet of the Secondary Market Corporate Credit Facility, the Fed now writes that “to qualify as an eligible issuer, the issuer must satisfy the following conditions”
The issuer was rated at least BBB-/Baa3 as of March 22, 2020, by a major nationally recognized statistical rating organization (“NRSRO”). If rated by multiple major NRSROs, the issuer must be rated at least BBB-/Baa3 by two or more NRSROs as of March 22, 2020.
An issuer that was rated at least BBB-/Baa3 as of March 22, 2020, but was subsequently downgraded, must be rated at least BB-/Ba3 as of the date on which the Facility makes a purchase. If rated by multiple major NRSROs, such an issuer must be rated at least BB-/Ba3 by two or more NRSROs at the time the Facility makes a purchase.
The section in question:
The same logic applies to Fed purchases in the Primary Market: going forward the Fed’s Primary Market Corporate Credit Facility, where a Fed SPV will purchase qualifying bonds as the sole investor in a bond issuance; and purchase portions of syndicated loans or bonds at issuance, it will also include junk bonds and junk loans:
But wait there’s more: in addition to buying the IG ETF LQD as we noted two weeks ago, going forward the Fed will also be buying junk ETFs such as JNK:
The Facility also may purchase U.S.-listed ETFs whose investment objective is to provide broad exposure to the market for U.S. corporate bonds. The preponderance of ETF holdings will be of ETFs whose primary investment objective is exposure to U.S. investment-grade corporate bonds, and the remainder will be in ETFs whose primary investment objective is exposure to U.S. high-yield corporate bonds
Translation: buy JNK with leverage as market prices are now terminally disconnected from underlying fundamentals.
Finally, the Fed also laid out the type of leverage it will apply using the Treasury’s equity “investment” as a capital base, noting that the facility “will leverage the Treasury equity at 10 to 1 when acquiring corporate bonds from issuers that are investment grade at the time of purchase and when acquiring ETFs whose primary investment objective is exposure to U.S. investment-grade corporate bonds.” Additionally, “the Facility will leverage its equity at 7 to 1 when acquiring corporate bonds from issuers that are rated below investment grade at the time of purchase and in a range between 3 to 1 and 7 to 1, depending on risk, when acquiring any other type of eligible asset.”
In short, the only asset that the Fed is now not directly buying is stocks, and here too it’s just a matter of time before the Fed unveils it will start buying the SPY.
UK Unleashes Helicopter Money: In Historic Move, BOE Becomes First Central Bank To Openly Monetize Deficit
In a historical move, the Bank of England announced this morning that it will begin to finance the short-term needs of the Treasury, in other words it will directly monetize the UK deficit, something central banks had – for the past decade – denied they do or would do.
The BOE move will allow the government to bypass the bond market entirely until the Covid-19 pandemic subsides, financing unexpected costs such as the job retention scheme where bills will fall due at the end of April. Ironically, as the FT notes, although BoE governor Andrew Bailey opposed monetary financing earlier this week, Treasury officials felt it was best to have the insurance of the central bank willing to finance its operations in the short term.
In a statement on Thursday, the government announced it would extend the size of the government’s bank account at the central bank, known historically as the “Ways and Means Facility”, which normally stands at just £370m. This will rise to an effectively unlimited amount, allowing ministers to spend more in the short term without having to tap the gilts market. In 2008, a similar move saw the facility rise briefly to only £20bn.
And so helicopter money has arrived, with the UK Treasury now taking de facto control of the central bank.
The Ways and Means facility had long been used as a financing means of government for day-to-day spending before the BoE would sell government bonds to the market, but by 2006, it had become an emergency fund with the financing of government undertaken by the Debt Management Office on a scheduled basis. Less than a month ago, the Bank of England said there was little chance there would be any need to use the facility, demonstrating just how much stress government finances have come under in the past few weeks.
In a call with journalists on March 18, Mr Bailey said the facility was just a “historical feature”.
“I don’t think at the moment we’re facing an inability of the government to fund itself, so, yes, it’s there, but it’s not a frontline tool,” Bailey said just weeks ago.
Then, just a few days ago, the governor pledged not to slip into permanent monetary financing of the government in a Financial Times op-ed. Well so much for central bankers having any insight into what will happen in the future… or even in just a few days.
The move highlights the extraordinary demands on cash the government has experienced in recent weeks, which it feels it cannot finance immediately in the gilts market.
The scale is likely to be large. The government has already tripled the amount of debt it wanted to raise in financial markets in April from £15bn announced in the March 11 Budget to £45bn by the start of this month.
Although the gilts market showed severe stress in the middle of March as the coronavirus crisis deepened, the government has so far had little difficulty raising finance, especially as the BoE had already committed to printing £200bn to pump into the government bond market to ensure there was sufficient demand for gilts and improve market functioning.
This direct monetary financing of government would be “temporary and short-term”, the Treasury said in its statement.
“As well as temporarily smoothing government cash flows, the W & M Facility supports market function by minimising the immediate impact of raising additional funding in gilt and sterling money markets.”
Market reaction was muted. Sterling was trading 0.1 per cent higher against the US dollar at just below $1.24 shortly after the announcement, while the yield on the benchmark 10-year UK gilt was flat at 0.37 per cent.
However, While the BoE stated that the debt monetization would be “temporary and short-term”, it will be no such thing. Richard Barwell, head of macro research at BNP Asset management and a former BoE official, said temporary moves such as this often became more permanent as time passed.
“Persistent monetary financing feels inevitable. Central banks just need to figure out a plan for how to best get into it and how they might eventually want to get out of it,” he said.
Tuomas Malinen of GnS economics however put it best:
It would result in the complete socialization of the capital allocation process. The last time this happened on a systemic scale was in the former Soviet Union, a socialist controlled-economy experiment and global superpower which existed from 1917 till 1990. The thing to remember with socialist experiments is that they always concentrate power—economic and political—in the elite.
Dr. Fauci Says US COVID-19 US Deaths Could Be As Low As 60K After Warning “Millions Could Die”
A few weeks ago, Dr. Anthony Fauci sat down in front of Congress and warned that millions of Americans could die if the federal government didn’t take the outbreak seriously.
And now, after the Trump Administration scrambled to ramp up testing capacity and the states worked with the Feds, private entities, and others (including in some cases foreign nations) to distribute ventilators as Gov. Andrew Cuomo painted a horrifying portrait of sickened New Yorkers suffocating to death in hospital hallways because there were no ventilators available.
Well, yesterday, NYC Mayor de Blasio said that, after a few days of near capacity numbers, hospitalizations have dropped by such a steep degree that the city believes it has enough ventilators on hand, and won’t need any more.
Now on Thursday, Dr. Fauci is taking to cable news to spread the message of optimism that has lifted US stocks over the past few days: Instead of the 240k figure used by President Trump as recently as two weeks ago, Dr. Fauci told NBC News that if the public continued to stick to the “mitigation efforts”, that the death toll might be as low as 60k.
To be sure, while lockdown conditions are in place around the world, there are still a dozen or so states who don’t have mandatory closure or curfew orders in place.
Watch @savannahguthrie’s full interview with Dr. Anthony Fauci, who talks about efforts to control the spread of coronavirus, and how much longer social distancing will last. pic.twitter.com/GLZAy5Ox39
Dr. Fauci, director of the National Institute of Allergy and Infectious Diseases, said he’s “cautiously optimistic” that the US might soon see cases reach the back-side of the curve as the “turnaround and that curve not only flatten, but are coming down.” He made clear, however, that the virus is never going to disappear, and things will still be different even after we’ve finished going “back to normal”.
“When we attempt to get back to normal, we have to have in place the ability, when it starts to try and rear its ugly head, we can absolutely suppress it by identification, isolation, contact tracing,” he said.
He also warned that this outbreak is a “wake up call”, warning that more serious outbreaks might occur in the future.
“When you’re talking about getting back to normal, we know now that we can get hit by a catastrophic outbreak like this,” he said. “It can happen again, so we really need to be prepared to respond in a much more vigorous way.”
Additionally, during an interview with CBS News (the good doctor routinely makes at least 2-3 appearances on cable news a day, an extremely rigorous media schedule in light of his many responsibilities), Dr. Fauci warned that Americans might be able to take their summer vacations if we continue sticking to the “mitigation strategies”, and prevent a full-one “resurgence” of the virus, he said on “CBS This Morning”.
“It can be in the cards,” he said.
But, Dr. Fauci warned, “and I say that with some caution, because as I said, when we do that, when we pull back and try to open up the country, as we often use that terminology, we have to be prepared that when the infections start to rear their heads again that we have it in place a very aggressive and effective way to identify, isolate, contract trace and make sure we don’t have those spikes we have now. So the answer to your question is yes, if we do the things that we need to do to prevent the resurgence.”
Getting back to normal is not like a light switch that you turn on and off, Fauci said, adding it’ll be gradual and depend on where in the country you live.
“The bottom line of it all is, that what we see looking forward, it is very likely that we will progress towards the steps towards normalization as we get to the end of this thirty days. And I think that’s going to be a good time to look and see how quickly can we make that move to try and normalize. But hopefully, and hopefully, by the time we get to the summer we will have taken many steps in that direction,” he added.
Asked if he would be taking a vacation, Fauci smiled and laughed: “I don’t take vacations,” he replied.
US Fighter Jets Intercept Two Russian Aircraft Over Bering Sea
US F-22 fighter jets intercepted two Russian IL-38 patrol aircraft entering the Alaskan Air Defense Identification Zone on Wednesday, according to a Thursday report by the North American Aerospace Defense Command. The US jets were accompanied by a KC-135 Stratotanker and an E-3 AWACS aircraft.
via Jetphotos.com
The aircraft were intercepted in the Bering Sea, north of the Aleutian Islands – and did not enter US or Canadian airspace.
F22 LYNX01 (blue track) joined up with KC-135R BITE63 from Eielson AFB, Alaska and proceeded southwest for refueling over Cold Bay. pic.twitter.com/ClSnZ7VJJX
“This is the latest of several occasions in the past month in which we have intercepted Russian aircraft operating near the approaches to our nations. We continue to execute our no-fail homeland defense missions with the same capability and capacity we always bring to the fight,” said NORAD in a statement.
“This is the latest of several occasions in the past month in which we have intercepted Russian aircraft operating near the approaches to our nations. We continue to execute our no-fail homeland defense missions with the same capability and capacity we always bring to the fight.”
— North American Aerospace Defense Command (@NORADCommand) April 9, 2020
Fed Unveils New Bailout Program, Will Provide Up To $2.3 Trillion In Loans To “Support Economy”
In our report from last night that JPM has halted all non-government guaranteed small business loans on what we surmised was fears of a default tsunami set to hit America’s companies, we asked “just how bad is it going to get” and implicitly, if not commercial banks, then who will fund America’s “main street” businesses?
We got the answer this morning when the Federal Reserve announced its latest series of sweeping steps to provide as much as $2.3 trillion in additional aid during the coronavirus pandemic, including starting programs to aid small and mid-sized businesses as well as state and local governments.
According to the Fed, the “funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.”
Among the various initiatives are:
The Main Street Lending Program will “ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans.” This means that the Paycheck Protection Program will likely be expanded by an additional $250BN to reach a total of $600BN.
Expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities and the Term Asset-Backed Securities Loan Facility to support as much as $850 billion in credit
A Municipal Liquidity Facility which will offer as much as $500 billion in lending to states and municipalities, by directly purchasing that amount of short-term notes from states as well as large counties and cities
Starting the Paycheck Protection Program Liquidity Facility, “supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses”
“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Chair Jerome Powell. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
As we explained previously, this is part of the Fed’s “Multitrillion Dollar Helicopter Credit Drop“, whereby the Treasury provides the Fed with $454 billion set aside in the passed $2.2 trillion aid package for Treasury to backstop lending by the Fed. The Treasury’s contribution, can be thought of as “equity” — that is, Treasury will stand in a “first loss” position on every loan made to corporate America.
The Fed then contributes the “leverage” — the money that will help make loans using the Treasury’s equity and be levered 10-to-1. Such leverage assumes no more than 10% capital losses (on “AAA-rated” paper), as the Fed is not allowed to be impaired. Of course, in a real crash the losses will be far greater but we’ll cross that particular bailout of the bailout when we get to it. The loan fund, now levered up ten-fold thanks to the Fed’s own $4.1 trillion, will then make loans to businesses.
“Effectively one dollar of loss absorption of backstop from Treasury is enough to support $10 worth of loans.” Fed Chair Powell said in in a rare nationally-televised interview two weeks ago. “When it comes to this lending we’re not going to run out of ammunition” and he is right – the Fed can apply any leverage it wants; after all the value of the collateral it lends against is whatever the Fed decides!
Visually, the magic of the Fed’s 10x leverage looks as follows:
The overall size of the Fed-Treasury loan fund depends on how much Fed money will be supplied for every dollar of “equity” the Treasury contributes.
In theory, the answer is a function of what is called the “credit box.” If the loan program makes loans only to investment grade companies (those rated BBB or higher), the Fed will contribute more capital than if the loan program makes loans to companies with lower credit ratings or no ratings at all. In other existing Fed loan programs, the Fed supplies about $9 for every $1 of Treasury capital, but in those programs the loans are secured by extremely high-quality collateral (often AAA).
In practice, the Fed – which can “print” an infinite amount of dollars in exchange for any “collateral” including baseball cards, donkey turds, used condoms or oxygen – can lever up 20x, 50x, even 100x or more with zero regard for the underlying collateral.
Fast forward to today when we are now seeing this “credit paradrop” in action.
Commenting on the new Main Street Lending Program, the Fed said that it “will enhance support for small and mid-sized businesses that were in good financial standing before the crisis by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. Principal and interest payments will be deferred for one year. Eligible banks may originate new Main Street loans or use Main Street loans to increase the size of existing loans to businesses. Banks will retain a 5 percent share, selling the remaining 95 percent to the Main Street facility, which will purchase up to $600 billion of loans. Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers. Borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act. Firms that have taken advantage of the PPP may also take out Main Street loans.”
Separately, to support further credit flow to households and businesses, the Federal Reserve will broaden the range of assets that are eligible collateral for TALF. As detailed in an updated term sheet, TALF-eligible collateral will now include the triple-A rated tranches of both outstanding commercial mortgage-backed securities and newly issued collateralized loan obligations. The size of the facility will remain $100 billion, and TALF will continue to support the issuance of asset-backed securities that fund a wide range of lending, including student loans, auto loans, and credit card loans.
The Municipal Liquidity Facility will help state and local governments better manage cash flow pressures in order to continue to serve households and businesses in their communities. The facility will purchase up to $500 billion of short term notes directly from U.S. states (including the District of Columbia), U.S. counties with a population of at least two million residents, and U.S. cities with a population of at least one million residents. Eligible state-level issuers may use the proceeds to support additional counties and cities. In addition to the actions described above, the Federal Reserve will continue to closely monitor conditions in the primary and secondary markets for municipal securities and will evaluate whether additional measures are needed to support the flow of credit and liquidity to state and local governments.
This may not be the end of it: the Fed explained that it and the Treasury “recognize that businesses vary widely in their financing needs, particularly at this time, and, as the program is being finalized, will continue to seek input from lenders, borrowers, and other stakeholders to make sure the program supports the economy as effectively and efficiently as possible while also safeguarding taxpayer funds. Comments may be sent to the feedback form until April 16.”
Powell is scheduled to speak at 10 a.m. New York time in a webinar hosted by the Brookings Institution.
That is a shocking 16.78 million people who have applied for unemployment benefits in the last three weeks.
Source: Bloomberg
And of course, last week’s “initial” claims and this week’s “continuing” claims… the highest level of continuing claims ever
Source: Bloomberg
Put another way, we have lost 1132 jobs for every confirmed US death from COVID-19 (14,817).
This is simply stunning.
“The U.S. labor market is in free-fall,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York.
“The prospect of more stringent lockdown measures and the fact that many states have not yet been able to process the full amount of jobless claim applications suggest the worst is still to come.”
And another important note is that weekly jobless claims data are based on “hard facts”, UBS points out, unlike survey data
which is subject to quirks around:
a) some of the treatment of supply chains, which has flattered data,
b) the fact that many respondents will not be replying to surveys during the virus disruption period, and
c) survey data will give more accurate assessments during ‘normal’ times, perhaps not as much in unusual times.
Of course, the government is coming to the rescue. As a result of the freshly-passed ‘relief’ bill, self-employed and gig-workers who previously were unable to claim unemployment benefits are now eligible. In addition, the unemployed will get up to $600 per week for up to four months, which is equivalent to $15 per hour for a 40-hour workweek. By comparison, the government-mandated minimum wage is about $7.25 per hour and the average jobless benefits payment was roughly $385 per person per month at the start of this year.
“Why work when one is better off not working financially and health wise?” said a Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles.
With more than 80% of Americans under some form of lockdown, up from less than 50% a couple of weeks ago, this is far from over.
Picking up on our analysis from last week, BofA notes that data from Google Trends reveals further pickup in searches for “unemployment benefits” and “filing for unemployment,” which could argue for even more upside from here.
Worse still, the final numbers will likely be worsened due to the bailout itself: as a reminder, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, could contribute to new records being reached in coming weeks as it increases eligibility for jobless claims to self-employed and gig workers, extends the maximum number of weeks that one can receive benefits, and provides an additional $600 per week until July 31. A recent WSJ article noted that this has created incentives for some businesses to temporarily furlough their employees, knowing that they will be covered financially as the economy is shutdown. Meanwhile, those making below $50k will generally be made whole and possibly be better off on unemployment benefits.
Visualizing The Pandemiconomy: What Are Shoppers Buying Online During COVID-19?
The COVID-19 pandemic is having a significant impact on every aspect of life, including how people shop for their necessities, and their not-so-necessities.
With online retail sales estimated to reach an eye-watering $6.5 trillion by 2023, the ecommerce sector was already booming. But, as Visual Capitalist’s Katie Jones details below, since the outbreak, online shopping has been catapulted into complete overdrive. Even the largest retailers on the planet are struggling to keep up with the unprecedented consumer demand – but what exactly are people buying?
To answer this question, retail intelligence firm Stackline analyzed ecommerce sales across the U.S. and compiled a list of the fastest growing and declining ecommerce categories (March 2020 vs. March 2019) with surprising results.
The Frenzy of Buyer Behavior
As people come to terms with their new living situations, their buying behavior has adapted to suit their needs. While panic buying may have slowed in some countries, consumers continue to stock up on supplies, or “pandemic pantry products”.
Many consumers are also using their newfound time to focus on their health, with 85% of consumers taking up some kind of exercise while in social isolation, and 40% of them saying they intend to keep it up when restrictions are lifted.
These changing behaviors have resulted in a number of product categories experiencing a surge in demand — and although a lot of them are practical, others are wonderfully weird.
The Fastest Growing Categories
While the below list features several shelf-stable items, it seems as though consumers are taking matters into their own hands, with bread making machines sitting in second place and retailers selling out of their top models.
It’s clear from the list that consumers are considering positive changes to their lifestyle while in isolation, as fitness, smoking cessation, and respiratory categories are all experiencing growth.
Explore the 10 fastest growing product categories below:
Interestingly, toilet paper has seen more growth than baby care products, and cured meats have seen more growth than water. But while some categories are experiencing a drastic increase in demand, others are slumping in the pandemic economy.
The Fastest Declining Categories
An unprecedented wave of event and vacation cancellations is having a huge impact on the products people consume. For instance, luggage and suitcases, cameras, and men’s swimwear have all seen a dip in sales.
See the full list of 10 fastest declining categories below:
Regardless of which list a product falls under, it is clear that the pandemic has impacted retailers of every kind in both positive and negative ways.
The New Normal?
Officially the world’s largest retailer, Amazon has announced it can no longer keep up with consumer demand. As a result, it will be delaying the delivery of non-essential items, or in some cases not taking orders for non-essentials at all.
This presents a double-edged sword, as the new dynamic that is bringing some retailers unprecedented demand could also bring about an untimely end for others.
Meanwhile, the question remains: will this drastic change in consumer behavior stabilize once we flatten the curve, or is this our new normal?
Futures Reverse Rally As Oil Slides Ahead Of Surge In Unemployment Claims
U.S. stock index futures dipped on Thursday, reversing a 3-day rally as investors braced for another staggering weekly jobless claims number, while European stocks clung to modest gains on the last trading day before the Easter holiday. Oil initially rose in the wake of Russia signaling readiness to cut output although US resistance to join the conversation has sparked concerns today’s OPEC+ meeting could end up a major disappointment.
Early in the overnight session, futures continued their multi-day ramp on early signs the coronavirus outbreak in U.S. hot spots was close to peaking, with the S&P 500 ending more than 3.4% higher after President Trump suggested the government could reopen the country in phases and maybe ahead of schedule. However, sentiment has warned as the session continued ahead of today’s plethora of risk events.
First and foremost, traders will eye the number of initial jobless claims which are expected to have surged by 5.5 million this week, and to 15 million in the past three weeks. Estimates in the survey were as high as 9.295 million, and the final report from the Labor Department is expected at 8:30 a.m. ET.
Then again, the worse the initial claims number, the better it will likely for stocks. As DB’s Jim Reid writes, “brace yourself ahead of what will likely be the strangest Easter weekend in your lifetime as today we have another weekly jobless claim report to look forward to in the US. Having said that the S&P 500 has rallied on the day of the staggeringly bad numbers over the last two weeks (+6.24% and +2.28% respectively) so it may be as much a curiosity of how bad unemployment is going to be in the short term as much as it is about markets.”
A major event today will be the OPEC+ virtual meeting, where the Kuwait Oil Minister said the intention is moving towards reaching an agreement to lower output by a large amount between 10mln-15mln bpd, even though the Kremlin declined to comment on reports their maximum cut would be 2mln BPD. Russia and Saudi Arabia still need to settle differences regarding plans for a global oil production cut according to sources, regarding baseline and quantity with Vladimir PUtin saying he has no plans to talk to Trump or the Saudis. Meanwhile, yesterday we learned that consumption in India, the world’s third-biggest user, has collapsed by as much as 70% with the country in lockdown which is why Goldman said that even a 10mmb/d oil cut would have no impact on its $20 oil price target.
In Europe, the Stoxx Europe 600 Index trimmed an advance amid reports that Italy and the U.K. may extend lockdowns to combat the coronavirus outbreak, though it stayed higher overall. The impact of the outbreak continued to surface in corporate results with Switzerland’s largest banks bowed to pressure to delay dividends even as UBS Group AG reported a surprise jump in first-quarter profit.
Earlier in the session, most Asian stocks rose, led by energy and finance, after rising in the last session. Australia’s S&P/ASX 200 gained 3.5% and India’s S&P BSE Sensex Index rose 3.1%, while Japan’s Topix Index dropped 0.6% as did the Topix with Hiramatsu and Bic Camera falling the most. The Shanghai Composite Index rose 0.4%, with Jiangsu Jiangnan High Polymer Fiber and Lifan Industry Group posting the biggest advances.
Investors have been trying to figure out how and when the $90 trillion global economy can begin to reboot in the wake of the coronavirus. While the White House’s top health advisers develop criteria to reopen the U.S. in the coming weeks if trends hold steady, the pandemic continues to exact a heavy toll. Italy’s new cases crept up after several days of declines, raising questions about whether plans will be delayed for relaxing the stringent restrictions on public life. The coronavirus may be “reactivating” in people who have been cured of the illness, according to Korea’s Centers for Disease Control and Prevention.
“It’s all a question of when the economy reopens and how quickly that happens,” said Nancy Davis, chief investment officer of Quadratic Capital Management LLC. “We aren’t out of the woods.”
Attention also is turning to oil where Bloomberg reports that Saudi Arabia and Russia are still disagreeing over the baseline for OPEC+ oil-production cuts, with the kingdom insisting that reductions should be measured against a baseline of April output (i.e. the 12mmb/d) not the February baseline of 9mmb/d, which is what Russia demands. The group is debating supply cut in the range of 15-17%, said one delegate, while Russia is ready to cut its production by 1.6m b/d, or about 14%, according to the Energy Ministry. All OPEC+ members expect voluntary cuts from the US, even as Trump says organic decline in US production will meet the production cut quota, while OPEC insists these would come too late. Last minute jitters hit the price of Brent which tumbled by $2, erasing all the session’s gains.
In FX, the USD was initially weaker, with the Bloomberg Dollar Spot Index edging lower and most Group-of-10 currencies were range-bound. EUR/USD gained modestly. Norway’s krone climbed against all G-10 peers after Algeria’s energy minister was reported as saying an OPEC+ meeting on Thursday will discuss an output cut of up to 10 million barrels a day. The yen was steady while Japanese government bonds climbed after a sale of five-year notes drew the strongest demand in a year
In rates, 10Y yields dropped by 5bps from 0.78% to 0.73% last, while bunds were little changed while Italian government bond curve bear-flattened.
To the day ahead now, and there are a number of highlights to look forward to. From central banks, Fed Chair Powell will be giving an online webinar hosted by the Brookings Institution, where he’ll give an economic update. We’ll also hear from San Francisco Fed President Daly. In terms of data releases, in addition to the aforementioned weekly initial jobless claims and also the University of Michigan’s number, we’ll get March data including US PPI and Canada’s net change in employment. Looking back into February, there’ll also be the UK’s monthly GDP reading, the German trade balance, Italian industrial production and the final wholesale inventories reading from the US.
Market Snapshot
S&P 500 futures up 0.2% to 2,740.50
STOXX Europe 600 up 1.2% to 330.66
MXAP up 0.7% to 140.61
MXAPJ up 1.5% to 454.19
Nikkei down 0.04% to 19,345.77
Topix down 0.6% to 1,416.98
Hang Seng Index up 1.4% to 24,300.33
Shanghai Composite up 0.4% to 2,825.90
Sensex up 3.5% to 30,928.06
Australia S&P/ASX 200 up 3.5% to 5,387.32
Kospi up 1.6% to 1,836.21
German 10Y yield fell 0.7 bps to -0.313%
Euro up 0.2% to $1.0874
Italian 10Y yield rose 3.6 bps to 1.479%
Spanish 10Y yield rose 0.8 bps to 0.849%
Brent futures up 3.2% to $33.90/bbl
Gold spot up 0.6% to $1,655.84
U.S. Dollar Index little changed at 100.06
Top Overnight News from Bloomberg
ECB President Christine Lagarde renewed her plea for a strong fiscal response to the impact of the coronavirus, urging governments to get over their differences as they go into a second round of talks on Thursday
A rise in new coronavirus infections in Germany, Italy and Spain is raising questions about the speed with which Europe can begin to relax its stringent restrictions on public life
The coronavirus may be “reactivating” in people who have been cured, according to Korea’s Centers for Disease Control and Prevention
U.K. Prime Minister Boris Johnson spent a third night in the critical care unit where his condition was improving, as British officials draw up plans to extend the lockdown in an bid to control the coronavirus crisis
U.K. Chancellor of the Exchequer Rishi Sunak is poised to increase emergency borrowing from an overdraft at the Bank of England to keep injecting fiscal aid to the economy while staving off immediate pressure to sell more gilts The U.K. economy unexpectedly contracted 0.1% in February from the previous month, with the downturn driven by a huge drop in construction. In the three months through February, growth stood at 0.1%
Asian equity markets were mostly higher as the region marginally benefitted from the tailwinds from Wall St where major indices were underpinned by hopes of a coronavirus peak nearing and amid a surge in energy prices on optimism for a potential output cut deal at today’s OPEC+ meeting. ASX 200 (+3.4%) was buoyed after parliament approved the record AUD 130bln stimulus bill to support jobs and with upside led by notable strength in financials and tech, while energy names were lifted by the surge in oil prices after reports suggested potential cuts of 10mln-15mln bpd were being touted and that Russia was ready to join in on an OPEC+ deal. Nikkei 225 (U/C) lagged amid a choppy currency and after source reports noted the BoJ is to project an economic contraction but added there was no consensus yet within the central bank whether this would warrant additional easing. Hang Seng (+1.4%) and Shanghai Comp. (+0.4%) also traded positive but with gains capped as the former heads into the extended Easter weekend, while upside in the mainland was also limited after the PBoC refrained from liquidity injections and the Politburo reiterated the view that China was facing increasing difficulties for economic development. Finally, 10yr JGBs nursed the prior day’s losses and reclaimed the 152.00 level amid the underperformance in Japanese stocks and following stronger demand at the 5yr JGB auction.
Top Asian News
Turkey to Temporarily Ban Layoffs, Offers Help Seen as Pittance
Bank Indonesia Sees Further Gains in Rupiah as Currency Rallies
Taiwan Rejects WHO Claim of Racist Campaign Against Tedros
Bank of Japan Sees All Parts of Country Hurting From Virus
European stocks initially followed suit from the mostly positive APAC handover but drifted off highs as the session got underway (Euro Stoxx 50 -0.3%). Sentiment was originally supported as hopes lingered of a coronavirus peak nearing and amid firmer energy prices heading into the “make or break” OPEC+ and G20 energy meetings. However, tail risks remain that the Eurogroup may reencounter a roadblock in talks later today. Bourses overall see a mixed performance, Switzerland’s SMI (-0.6%) underperformance as heavyweights Nestle (-2.0%), Roche (-1.6%) and Novartis (-0.9%), which together account for over 50% of the index’s weight, extend on losses. Germany’s DAX (+0.4%) remains somewhat resilient, potentially aided by cautiously upbeat comments from the German Health Minister, who stated that recent infection numbers indicate a positive trend and lockdown measures could soon start to be eased gradually if the trend continues. UK’s FTSE (+1.7%) outperforms as energy names see large-cap tailwinds from the energy complex. Sectors have also lost steam after opening firmer across the board – now mixed, albeit no clear risk tone can be derived. The breakdown also offers no real signal of the sentiment, although hopes of a slowing virus outbreak see Travel & Leisure outperforming. In terms of individual movers, Credit Suisse (+0.4%) and UBS (-0.4%) waned off opening highs – the Swiss banks decided to split their dividends in half, as advised by the Swiss Regulator FINMA. SAP (+2.0%) rises despite guidance cuts for total revenue and operating profit – the Co. raised its predictable revenue guidance.
Top European News
U.K. Economy Unexpectedly Shrank Before Virus Restrictions Hit
Sunak Taps BOE Overdraft to Keep Crisis Stimulus Cash Flowing
Polish Anti-Crisis Shield Comes With Risk for Private Owners
Czech Stocks Are Set to Exit Bear Market; Patria Says Buy CEZ
In FX, the Greenback is relatively mixed and rangebound vs G10 counterparts awaiting the latest weekly US jobless claims release for further evidence of COVID-19 collateral damage to the labour market. However, the next big directional and sentiment drivers could well come from external sources such as the OPEC+ meeting and Eurogroup response to the coronavirus if global oil producers and Finance Ministers can overcome differences to set a deeper output cut pact and deliver coordinated fiscal stimulus. In the meantime, little motivation for the DXY to deviate outside recent ranges that have been tethered to the 100.000 anchor as the index rotates from 100.300 to 99.899.
GBP/NZD/EUR/CHF/AUD – Major outperformers to varying degrees as the Pound rebounds firmly from post-UK (trade in the main) data lows after another update on PM Johnson indicating further improvement, with Cable finally breaching multiple tops around 1.2420 and Eur/Gbp retesting the 0.8750 mark that sits just above key chart support in the form of the 200 DMA (0.8748) and a Fib retracement (0.8747). Meanwhile, the Kiwi is consolidating above 0.6000 and Euro remains capped circa 1.0900 awaiting news from the delayed Eurogroup and any extra insight from ECB minutes in the interim – preview of the release available in the Research Suite. Elsewhere, the Franc is still straddling 0.9700, but rooted to 1.0550 against the single currency and Aussie has lost some altitude from a 0.6250 peak.
JPY/CAD – Even tighter confines for the Yen either side of 1.0900 and some decent option expiry interest also keeping the headline pair in check (1.2 bn at 108.40 and 1.3 bn from 108.95 to 109.00). However, the Loonie continues to unwind gains and may even extend its retreat towards a 1 bn expiry at the 1.4100 strike depending on how bad looming Canadian jobs are – Usd/Cad currently nudging 1.4050 for reference.
SCANDI/EM – Back to winning ways for the Nok and Sek, as the former forges more momentum on firm pre-OPEC oil prices alongside the Rub and Mxn, while the latter gleans some encouragement from signs of peaks in daily nCoV case and mortality rates elsewhere. Similarly, the Zar is making more headway ahead of an expected briefing from the SA Finance Ministers to outline anti-global pandemic measures.
RBA Financial Stability Review said regulatory authorities have been working together to minimise economic harm from pandemic but noted financial market uncertainty is elevated and that the heightened uncertainty related to pandemic is compounding usual volatility in financial markets. RBA added that capital levels are high and banks’ liquidity positions improved over recent times, while banks also entered the downturn with high profitability and very good asset performance. Furthermore, it stated that many households in the period ahead will find finances under strain due to efforts to contain the virus. (Newswires)
In commodities, WTI and Brent front month futures continue trade firmer amid hopes of a coordinated OPEC+ output cut at today’s historical call among producers, and with scope for further action at tomorrow’s G20 energy webinar. Prices were bolstered late-doors State-side after the Algerian and Kuwaiti Energy Ministers expressed optimism towards a joint cut towards the upper end of the expected range, with the latter floating a cut between 10-15mln BPD. The complex received another boost in EU trade after sources stated that Russia is reportedly willing to curtail output by a maximum of 2mln, more than the 1.6mln BPD (equivalent to 15% of Russian oil output) reported yesterday. That being said, separate sources note that sticking points remain between Saudi and Russia regarding volumes and baselines – with Riyadh opting for current production levels to be used as a benchmark whilst Moscow prefers an average of Q1 output levels. Nonetheless, WTI extends gains above its 21 DMA (USD 24.69/bbl) and remains near session highs. Brent futures meanwhile breached resistance at the psychological USD 34/bbl, whilst the difference between the benchmark widened to above USD 7.50/bbl from around USD 5/bbl this time last week. Elsewhere, spot gold prices remain perky above USD 1650/oz after rebounding from recent support at USD 1640/oz ahead of the Eurogroup meeting later today, whilst a modestly softer Buck offers some tailwind. Copper meanwhile remains on the back foot after failing to convincingly breach resistance just above USD 2.3/lb, with prices hovering around USD 2.275/lb at the time of writing.
US Event Calendar
8:30am: Initial Jobless Claims, est. 5.5m, prior 6.65m; Continuing Claims, est. 8.24m, prior 3.03m
8:30am: PPI Final Demand MoM, est. -0.4%, prior -0.6%; PPI Final Demand YoY, est. 0.5%, prior 1.3%
PPI Ex Food, Energy, Trade MoM, est. 0.0%, prior -0.1%; PPI Ex Food, Energy, Trade YoY, est. 1.28%, prior 1.4%
PPI Ex Food and Energy MoM, est. 0.0%, prior -0.3%
10am: U. of Mich. Sentiment, est. 75, prior 89.1; Current Conditions, est. 84.1, prior 103.7; Expectations, est. 60.7, prior 79.7
DB’s Jim Reid concludes the overnight wrap
Brace yourself ahead of what will likely be the strangest Easter weekend in your lifetime as today we have another weekly jobless claim report to look forward to in the US. Having said that the S&P 500 has rallied on the day of the staggeringly bad numbers over the last two weeks (+6.24% and +2.28% respectively) so it may be as much a curiosity of how bad unemployment is going to be in the short term as much as it is about markets.
These last two weeks have come in sequentially at 3.283m and 6.648m. DB is forecasting a further 4.5m claims today. As a reminder the worst in 53 years of data previously was 695k in 1982. Ahead of this the US closed in so-called “bull market” territory after seeing this landmark hit intra-day on Tuesday. The S&P 500 closed up +3.41% with the surge in oil (more below), as another round of stimulus (in the $250-500 billion range) continues to be discussed for small businesses and also on reports that Dr. Brix and Dr Fauci, the immunologist and infectious disease experts that have been coordinating the virus task force are working with the White House to construct plans to reopen the economy. In practise this will be very challenging but the markets love the idea of it. As risk continued to rally, the VIX fell 3.4 points to the index’s lowest levels in over a month at 43.35 last night.
Oil resumed its strong rally with Brent crude up +3.04% and WTI up +6.18% on initial reports out of Algeria that OPEC+ could cut as much as 10million barrels a day, which was hoped for as a best case scenario. Then reports came out of Russia that they were ready to cut their production by 1.6million barrels per day. This gave the original price move some credence. According to our colleague Michael Hsueh, this would be many times larger than cuts Russia has made in recent history, and they had only been entertaining cuts of 1million barrels previously. While this news came out too late to affect energy companies in Europe, the S&P 500 energy sector finished +6.74% higher. After the US closing bell the Kuwaiti oil minister upped the ante by suggesting talks were moving in the direction of the 10-15 million barrels a day cut.
Both Brent (+1.40%) and WTI (+3.19%) have pushed on further this morning which is helping markets in Asia advance. The Hang Seng (+0.70%), Shanghai Comp (+0.28%), ASX (+2.10%) and Kospi (+0.90%) are all up however the exception is the Nikkei which is down -0.32% as we go to print. In FX, the Norwegian Krone (+0.71%) is the notable mover this morning following the oil move. Elsewhere, futures on the S&P 500 are flat while yields on 10y USTs are down -2.4bps to 0.749%.
In terms of the virus, yesterday was the day we passed 1.5 million confirmed cases worldwide, with fatalities above 88,000. NY State now has roughly 10% of worldwide cases, and yesterday announced the most deaths (779) in a single day yet, with the only consolation being that it was the lowest day-over-day change in fatalities. The UK also announced a new high for deaths in a day (938), even as new case rates and hospital admissions improve. We have seen this in many regions, where fatalities may be more of a lagging indicator as they can continue to rise when people who have been hospitalised for long periods sadly pass away even after case curves flatten. Elsewhere Spain and Italy continue to improve though not as fast as we saw in China which complicates the exit strategy timings even if markets are getting more confident on this. For all the tables, graphs and bullets please see our sister daily – The Corona Crisis Daily – in an inbox near you very soon.
Back to markets and European equities underperformed, though they managed to pare back gains into the close with the STOXX 600 ending +0.02%. Continental markets struggled a bit as shortly after we went to press yesterday, we got the news that EU finance ministers had failed to reach an agreement on an economic rescue package and would instead be resuming their discussions again today. Eurogroup President Mário Centeno tweeted afterwards that “After 16h of discussions we came close to a deal but we are not there yet.” It seemed that once again, the traditional dividing lines between north and south that dominated in the European sovereign debt crisis were at the forefront, with reports suggesting that the Netherlands and Italy clashed over the conditionality that would be associated with a credit line from the ESM.
After the meeting, the Dutch finance minister, Wopke Hoekstra, tweeted that “Because of the current crisis we have to make an exception and the ESM can be used unconditionally to cover medical costs. For the long term economic support we think it’s sensible to combine the use of the ESM with certain economic conditions.” So an offer of no conditionality in the case of medical costs, but not if this is about “long term economic support”. Italy was resistant however, with Reuters saying that while they were willing to accept a reference on sticking to the bloc’s budget rules, they were not ready to commit to anything more specific. It’s also worth noting that the Italian government are under political pressure domestically, with League leader Matteo Salvini saying that “I hope the government won’t accept ESM, it would be illegal and senseless”. So all eyes on whether they can reach an agreement today and meet the two-week deadline to present proposals that was set by the European Council summit of leaders back on March 26th.
The effect of the failure to reach agreement was evident in sovereign bond markets, where peripheral spreads in Europe widened noticeably at the open yesterday (Italy 10yr +18bps), though they went on to narrow through the day. By the close, the spread of Italian and Spanish yields over bunds (broadly unchanged) were up by +3.3bps and +2.1bps respectively. Elsewhere credit marginally benefited from the risk on move in the US, with US HY cash spreads tightening -7bps, while IG tightened -9bps. In Europe HY spreads tightened -11bps and IG -5bps.
After a series of quite savage downgrades of economic forecasts in recent weeks, the most interesting yesterday was on global trade, with the World Trade Organization’s latest forecasts projecting that the volume of global merchandise trade will fall by between 13% (in their optimistic scenario) and 32% (in their pessimistic one). Their economists think that the declines will “likely exceed” the declines in trade as a result of the global financial crisis. The falls come on the backdrop of an already weak performance for global trade, with world merchandise trade actually falling by -0.1% in 2019 as the major economic blocs ratcheted up trade tensions. This leans towards our view that domestic economies will open up quicker than international travel will. See our “The exit strategy” link here for thoughts on the sequencing.
Staying with the economy, another area seeing deterioration is the US housing market, where data is continuing to show that the impact of the coronavirus and the subsequent rises in unemployment have begun to filter through. The weekly MBA mortgage applications from the US saw a further -17.9% decline in the week to April 3rd, while the Purchase index is now down by 33% compared with a year ago.
Fed minutes from the March 15th meeting were released yesterday, revealing very little new information. Nevertheless, there was a scenario analysis laid out by the committee around the thought process regarding the surprise cuts, “In one scenario, economic activity started to rebound in the second half of this year. In a more adverse scenario, the economy entered recession this year, with a recovery much slower to take hold and not materially under way until next year. In both scenarios, inflation was projected to weaken, reflecting both the deterioration in resource utilization and sizable expected declines in consumer energy prices”. While too early to judge which of those scenarios we are currently on, the longer the restrictions are necessary, the more likely the second becomes reality.
To the day ahead now, and there are a number of highlights to look forward to. From central banks, Fed Chair Powell will be giving an online webinar hosted by the Brookings Institution, where he’ll give an economic update. We’ll also hear from San Francisco Fed President Daly while the Bank of Korea will be deciding on interest rates. In terms of data releases, in addition to the aforementioned weekly initial jobless claims and also the University of Michigan’s number, we’ll get March data including US PPI and Canada’s net change in employment. Looking back into February, there’ll also be the UK’s monthly GDP reading, the German trade balance, Italian industrial production and the final wholesale inventories reading from the US.
