- Coronavirus cases in the U.S. rose by 29,182 as compared to the same time Sunday to 2.56 million, according to data collected by Johns Hopkins University and Bloomberg News. The 1.2% increase was below the average daily increase of 1.6% over the past week.
- Montana cases rose by 6.5% to 919, according to the data from Johns Hopkins and Bloomberg News.
- Florida reported 146,341 cases, up 3.7% from a day earlier, compared with an average increase of 5.5% in the previous seven days. Seen on a rolling seven-day basis, Florida’s new cases reached 46,124, the highest level ever. The new rate of people testing positive for the first time climbed to 13.7% for Sunday, from 12.2% on Saturday.
- California cases rose 2.5%, less than the seven-day average of 2.8%, for a total of 216,550.
- Houston-area intensive-care unit wards were 95% full as of Sunday night, up from 93% on Saturday, according to data from the Texas Medical Center. Covid-19 patients occupied 34% of the beds, compared with 31% a day earlier. (…) the cohort of Covid-19 patients in ICUs below the age of 40 is about 15%, David Persse, the city’s director of emergency medical services, said during a media briefing on Monday. “They are extremely ill,†Persse said. “If they’re thinking, ‘I’ll get sick and then I’ll get over it,’ recognize that 15% of the people in ICUs now are in their 20s and 30s.â€
- Planet Fitness slumped following a news report that a patron tested positive, possibly leading to more than 200 people having been exposed to Covid-19 at a West Virginia location of the gym chain.
- European Union governments are poised to extend a travel ban for U.S. residents for at least two weeks, according to a draft of a decision due to be formally adopted on Tuesday. The wording of the decision, seen by Bloomberg, signals that the ban disrupting both business and leisure travel across the Atlantic won’t be lifted until U.S. authorities control the spread of the coronavirus pandemic.
Regional Coronavirus Surges Force Changes in Plans Elsewhere in the U.S. A surge in new coronavirus cases and rising hospitalization rates in states such as California and Texas are jeopardizing reopening plans elsewhere, while other countries are struggling to stop clusters of infections from spreading.
More than 41,000 new coronavirus cases were recorded nationwide Monday, according to data from Johns Hopkins University. That was an increase from Sunday, but lower than Friday’s record of 45,255. World-wide, confirmed Covid-19 infections exceeded 10.3 million, with more than 505,000 deaths. The U.S. accounts for about a quarter of each figure.
Cases have risen sharply in parts of California recently. Los Angeles County reported a daily record of 2,903 new cases Monday, bringing the total number there to 100,772, with 3,326 deaths. Officials estimate one in 140 county residents is infected with Covid-19; a week ago, the estimate was one in 400. (…)
In Texas, coronavirus patients have filled about 10% of the state’s hospital beds, and 80% of all available beds are occupied, according to data from the state health department. “It’s going to become unsustainable to have this number of admissions if this trend continues,†said Federico Vallejo, a pulmonary critical-care doctor from South Texas. (…)
India’s government said schools would stay shut for a further month and restrictions would be extended until the end of July on nonessential services and movement of persons in containment zones—coronavirus hot spots where lockdowns are still in effect. A nighttime curfew will also be kept in place across the country. (…)
Health authorities in South Korea said that while the current level of infections is manageable, restrictions could be tightened if transmissions at small gatherings continue across the country. (…)
In Australia, the premier of Victoria state on Tuesday reimposed stay-at-home orders for four weeks in 10 areas of Melbourne suffering outbreaks. Businesses in those areas that have been able to reopen recently will again face restrictions, and restaurants will be allowed to offer only takeout and delivery services. The premier also said he had asked the country’s prime minister to divert all flights away from Melbourne to other cities for the next two weeks.
Virus Surges Faster Than Expected in South Africa’s Economic Hub
Swine Flu Infecting Humans Raises Fears of Pandemic Potential
A strain of flu virus spreading in Chinese pigs has shown it can also infect humans, suggesting that another pathogen with pandemic potential waits in the wings behind the coronavirus.
The flu strain that jumped to humans has become predominant among pigs across China since 2016, according to a team of researchers that includes George Gao Fu, head of China’s Center for Disease Control and Prevention. The researchers based their findings on surveillance studies conducted in 10 provinces from 2011 through 2018.
Influenza is one of the most frequent causes of pandemics, which occur when a new infectious disease that no one has immunity to sweeps around the world. Pigs are known to harbor flu viruses that can occasionally infect workers they come into contact with, creating a risk of wider outbreaks.
Called G4 EA H1N1, the swine flu strain bears genes similar to those in the virus that caused the 2009 flu pandemic, according to the study published in the Proceedings of the National Academy of Sciences, a research journal. Tests found the virus in about 10% of 338 swine workers whose serum samples were collected between 2016 and 2018.The human infections indicate that the flu strain “possesses all of the essential hallmarks of a candidate pandemic virus†and that it poses “a serious threat to human health,†the researchers concluded.
Zoonoses, diseases that jump from animals to humans, are one of the most common sources of dangerous new infections. Ebola, HIV, and the coronavirus itself are all examples of deadly pathogens that originated in animals. SARS-CoV-2, the cause of the Covid-19 pandemic that’s infected more than 10 million people and killed more than 500,000 of them, is widely considered by scientists to have come from bats, a natural reservoir of such pathogens.
PANDENOMICS
Powell Warns of Extraordinary Uncertainty, Urgency to Curb Virus
(…) â€We have entered an important new phase and have done so sooner than expected,†Powell said in remarks prepared for testimony before the House Financial Services Committee on Tuesday with U.S. Treasury Secretary Steven Mnuchin. “While this bounceback in economic activity is welcome, it also presents new challenges — notably, the need to keep the virus in check.†(…)
The Fed chair in his remarks struck an optimistic note on what he is seeing as economic activity resumes. Hiring is picking up, he noted, and spending is increasing, though he cautioned that 20 million Americans have lost their jobs.
“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,†he said. “A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities.â€
As he has in recent appearances, Powell also warned against pulling back on any form of stimulus too soon.
“The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed,†he said.
Some high-frequency indicators from CalculatedRisk:
U.S. Pending Home Sales Recover in May
The National Association of Realtors (NAR) reported that pending home sales surged 44.3% during May to the highest level since February. Nevertheless, sales remained down 5.1% y/y.
Pending home sales improved across the country led by a 56.2% jump in the West (-2.5% y/y). In the Northeast, sales recovered 44.4% but remained one-third lower y/y. In the South, sales improved 43.3% (1.9% y/y) and they gained 37.2% (-1.4% y/y) in the Midwest.
- Household delinquencies are expected to rise further, especially without additional government assistance. (The Daily Shot)
From Goldman Sachs:
- 27% of the population is now in a state that has begun to reimpose stricter policies. Today, the governor of New Jersey announced the state would not move forward with its plans to reopen in-person restaurant dining, specifically citing the worsening virus situation in other states as justification. Recent trends could be pressuring other state governors to slow down the pace of their state’s reopening even if they have not announced a change in policy. The Centers for Disease Control (CDC) recommends that states see declines in the prevalence of Covid-like symptoms and in new reported cases before moving forward with reopening. Less than 20% of the population is in a state meeting these criteria, even less than a week ago.
- We find that face masks are associated with significantly better coronavirus outcomes. (…) Our baseline estimate is that a national mandate could raise the percentage of people who wear masks by 15pp and cut the daily growth rate of confirmed cases by 1.0pp to 0.6%. Finally, we translate our results into GDP terms by asking how much our Effective Lockdown Index (ELI) would need to increase in order to cut infections by as much as a national mask mandate, and then converting the ELI impact into a GDP impact using the estimated cross-country relationship between the two. These calculations imply that a face mask mandate could potentially substitute for lockdowns that would otherwise subtract nearly 5% from GDP.
When Will Consumers Feel Safe Again? Comfort levels have typically ticked up with time, but as of late June, 22 percent of U.S. adults on average say they feel safe engaging in a range of leisure activities — a drop for nearly every activity polled and across multiple demographics for the first time since March.
Here’s an amazing stat from the same survey: “While the share of Republicans and independents who said they feel safe dining outside of their homes has dropped to 50 percent and 37 percent, respectively, even fewer Democrats (26 percent) said they felt comfortable eating at a restaurant.â€
Americans seem to be sharing Powell’s extraordinary uncertainty:
“V†shape?
- Goldman’s current activity indicator (CAI) rebounded from the April lows but continues to show persistent weakness. (The Daily Shot)
One in Four U.S. CEOs See Full Recovery Delayed Until After 2021
Confidence among U.S. chief executives plummeted to the lowest level since the financial crisis and more than a quarter don’t see conditions at their companies recovering until after 2021 as the coronavirus reverberates through the economy.
The Business Roundtable’s second-quarter economic outlook index, which measures hiring and capital spending plans as well as sales expectations, slumped by 38.4 points to 34.3 from the previous quarter, the Washington-based lobbying group said Monday. Readings below 50 are consistent with a recession, which the National Bureau of Economic Research said the economy entered in February.
Some 27% see business conditions fully recovering at their firms after next year, underscoring the toll of the pandemic and state lockdowns of businesses that have started to lift. The CEOs project the economy will shrink 3.8% this year after hiring and capital investment plans declined along with sales expectations.
In the survey of 136 CEOs conducted June 1-22, all executives said they have already adopted, or plan to adopt, physical distancing measures at their facilities, while 95% have expanded flexible work arrangements. In light of recent increases in Covid-19 cases in several states, the group urged officials to take more steps to mitigate the spread of the disease. (…)
China’s Economic Recovery Picks Up More Momentum A string of recent signs of improvement points to the world’s second-largest economy recording positive growth for the second quarter.
(…) China’s official manufacturing purchasing managers index climbed to a three-month high of 50.9 in June from 50.6 in May, the National Bureau of Statistics said Tuesday. The separate nonmanufacturing PMI, a gauge of services and construction activity, jumped to a seven-month high of 54.4, from 53.6 in May.
June’s readings came in better than economists’ forecasts and suggested a durable and broad-based improvement in China’s economy. Both indexes have now logged four consecutive months of readings above 50, indicating expansion. (…)
Even so, despite an improvement in the headline reading and the subindex for total new orders—to 51.4 in June, from 50.9 the previous month—the recovery in demand still lags behind production, leaving some questions about the sustainability of the rebound, Mr. Zhang said in a statement accompanying the data release.
Measures of exports and imports both remained in contractionary territory, though they improved further off their post-pandemic lows. The new export orders subindex, a gauge of external demand, improved to 42.6 in June from 35.3 in May, while the subindex measuring imports also increased, to 47.0 from 45.3 in May.
(…) the employment subindex of the manufacturing PMI edged down to 49.1 in June from 49.3 in May, an indication of lingering pressures in the labor market. (…)
Euro-Area Inflation Edges Up With Economies Starting to Reopen Inflation in the 19-nation currency region came in at 0.3%, higher than economists’ median estimate.
Shell warns of up to $22bn hit on assets from oil and gas slump Anglo-Dutch group is latest to slash forecast for energy prices
Wave of Corporate Failures Stays at Bay—For Now Some on Wall Street are starting to wonder if the anticipated crush of corporate failures will ever arrive
(…) The central bank’s unprecedented actions allowed companies including Boeing Co., General Motors Co. and Royal Caribbean Cruises Ltd., all hard-hit by the pandemic, to raise significant amounts of capital and stave off possible default—at least for now.
Investor appetite for yield amid record-low interest rates also has helped spur a swift recovery in the market for riskier debt. Companies such as AMC Entertainment Holdings Inc. and SeaWorld Entertainment Inc. raised billions of dollars through high-yield bond offerings in April. (…)
The default rate among U.S. speculative-grade borrowers—a measure of distress that is widely tracked among debt investors—rose to 4.7% over the 12-month period ended May 31 from 2.3% in the year-ago period, according to S&P Global Ratings. But that is still a far cry from the November 2009 postcrisis peak of 12.1%. (…)
The new debt companies are taking on could come back to bite them if their businesses don’t recover quickly enough or fail to regain prepandemic levels. And a broad swath of midsize companies—many of them private-equity backed and highly indebted—lack access to public debt markets and remain at risk of falling victim to the slowdown.
S&P still estimates the default rate for speculative-grade U.S. companies will reach 12.5% in the 12-month period ending March 2021, topping the 2009 peak. The total base of U.S. speculative-grade debt has swelled to almost $3 trillion from just over $2 trillion in 2009, so even a smaller percentage could mean more defaults in dollar terms.
But the ratings agency acknowledges the potential for a range of outcomes due to the unprecedented and unpredictable nature of the crisis. In the most optimistic scenario, the default rate would reach only 6% by next March, while S&P’s downside case is for a 15.5% rate. (…)
“The greatest bargains that we get are when we buy things that nobody else will buy at a time when there’s no money around,†Howard Marks, co-founder of distressed-investment giant Oaktree Capital Group LLC, said in an interview with The Wall Street Journal at a virtual conference in June. “That’s not a very good description of today.â€
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The Pandemic Could Become a Debt Crisis, Too Financial regulators must prepare for the fallout.
(…) At some point, though, the question will be not whether borrowers can keep borrowing, but whether they can afford the obligations they’ve taken on. Many entered the crisis more indebted than ever. As of March 31, nonfinancial corporate debt in the U.S. stood at $10.5 trillion, or 48.7% of gross domestic product — the highest level on records going back to 1950. An unusually large share of that consists of bonds issued by companies with the lowest investment-grade ratings, or of so-called leveraged loans to even riskier enterprises. Household debt stands at more than 75% of GDP. (…)
More than $1 trillion in mortgage debt — including an estimated $361 billion on the balance sheets of private lenders — is in forbearance programs. The share of auto loans and credit cards in hardship stood at an estimated 7.0% and 3.7% in May, up about 18 and 180 times, respectively, from a year earlier. Defaults on the estimated $1.2 trillion in leveraged loans are up more than threefold. (…)
New York City’s Broadway will remain closed for at least the rest of this year, according to a report in the New York Times.
Why Biden’s Polling Lead Is Different From Clinton’s In 2016
(…) Biden’s lead has clearly widened in the past month. He now leads by more than 9 points, but on May 25, Biden led by an average of only 5.8 points (48.9 percent to 43.1 percent). (…)
But some people have dismissed Biden’s lead by pointing out that Hillary Clinton also led in most polls of the 2016 election (Clinton, obviously, ended up losing to Trump). While this is true, Clinton’s lead was much smaller. Applying our current polling-average methodology to 2016 polls, Clinton led national polls by an average of about 4.0 points four months before the 2016 election, and 3.8 points on Election Day itself. So while a normal-sized polling error was enough to throw the 2016 election to Trump, it would take a much bigger — and much unlikelier — polling error for Trump to be ahead right now.
Of course, Trump became president because he won the Electoral College despite losing the national popular vote. But if Biden wins the popular vote by 9.6 points, his current lead, Trump would be extremely unlikely to pull off the same trick. In our state-by-state polling averages, Biden currently leads in states worth 368 electoral votes, far more than the 270 needed to win.
However, the Electoral College looks like it could still give Trump an advantage, just like it did four years ago. (…) if the overall race tightens, those [swing] states could slide into Trump’s column, allowing him to once again win a majority of electoral votes even if Biden wins the national popular vote. (…)
Joe Biden said during a fundraiser that, if elected, he planned to “get rid of the bulk of Trump’s $2 trillion tax cut,†and raise the corporate tax rate to 28% in order to raise an estimated $1.3 trillion over the next decade. (CNBC)
China Strikes Back at U.S. Move to Restrict Visas for Party Officials Over Hong Kong In tit for tat, Beijing says it will target Americans trying its patience on matters related to city’s status
(…) Speaking at a regular press briefing, spokesman Zhao Lijian didn’t say what kind of U.S. personnel the measure would apply to, saying only that “on who it applies to specifically, the relevant personnel should clearly know.†(…) The State Department also said family members of party officials could be affected. (…)
How far Beijing will go to retaliate against U.S. sanctions has become a looming question as China increasingly objects to being pushed by Washington on noneconomic issues—including the status of Taiwan and China’s treatment of Uighur Muslims in its far west Xinjiang region.
On Monday, Mr. Pompeo said the U.S. will bar defense exports to Hong Kong, saying, “We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China.†(…)
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From Barron’s
“MAKE NOISE!!!†