New U.S. Coronavirus Cases Tick Up Again
(…) While the data suggests only about a fifth of states are seeing an increase in cases, some are seeing declines in testing. In 16 states, the seven-day moving average of tests per 1,000 people was down from a week ago, according to Johns Hopkins. (…)
At a White House event Wednesday with teachers and parents, President Trump reiterated his push for schools to resume in-person learning. He called the hybrid model of holding some classes in-person and others online “ridiculous” and “very strange.” (…)
- This comes as schools that reopened fully and early are already seeing hundreds of students and staff put into quarantine. Some are closing buildings opened just days ago, while others are desperately looking for workarounds. (Bloomberg)
Data: The COVID Tracking Project, state health departments. Map: Andrew Witherspoon, Danielle Alberti, Sara Wise/Axios
- The U.S. is doing a lot less testing
Data: The COVID Tracking Project. Chart: Andrew Witherspoon/Axios
- The US virus situation has begun to improve, with a decline in confirmed case growth from very high levels. Our interpretation of this improvement is that the low-cost policy changes of the past two months—an increase in the share of the US population operating under a face mask mandate from 40% to 80% and selective closing of bars and indoor dining—are beginning to bear fruit. More is still needed, but we don’t think the situation calls for another hard lockdown, as the virus reproduction rate already seems to be below 1 and trending lower. The biggest near-term risk is how the reopening of schools in many parts of the country will affect infection rates in coming weeks. The experience from other countries is generally encouraging, but none had the levels of community transmission still visible in the United States. (Goldman Sachs)
China’s health authorities Thursday reported eight new locally transmitted cases, all in the northwestern region of Xinjiang. Authorities in the southern city of Shenzhen said they detected the coronavirus on packages of chicken imported from Brazil, while the eastern city of Wuhu found the virus on packages of shrimp imported from Ecuador. Imported food has been a recent source of alarm in China, leading to partial bans on imports from some countries.- Authorities investigating New Zealand’s latest outbreak are also examining whether the virus could have survived in a refrigerated environment on freight being transported from abroad.
- Germany recorded the highest number of new coronavirus cases in more than three months, with daily infections staying above 1,000 for three straight days. There were 1,319 new cases in the 24 hours through Thursday morning, the most since May 1 and bringing the country’s case total to 220,859, according to data from Johns Hopkins University. The number of new infections reached almost 7,000 at the peak of the pandemic at the end of March and in early April.
- India added 942 deaths from the novel coronavirus in the past 24 hours, topping the U.K. with a total of 47,033 fatalities. Now India is only behind the U.S., Brazil and Mexico in the overall number of deaths. Its total number of confirmed cases, almost 2.4 million, is the third largest in the world.
- Two patients in China that recovered from Covid-19 months ago tested positive again, raising concern about the virus’s ability to linger and reappear in people who it previously infected. A 68-year-old woman in the central Chinese province of Hubei, where the virus first surfaced in December, tested positive on Sunday, six months after she was diagnosed with Covid-19 and recovered. Another man found to have contracted the disease in April after returning from abroad tested positive in Shanghai on Monday. The two cases are the latest addition to a growing number of “virus reactivation” anecdotes found among patients believed to have recovered from the viral infection. While it is rare, the phenomenon raises questions over why some patients suffer from long-term symptoms, and whether any immunity to the disease might be too ephemeral to protect against re-infection.
- UK considers adding France to Covid-19 quarantine list
- “The innovations in therapeutics will start to cut the death rate, but the true end will come from the spread of natural infections and the vaccine giving us herd immunity. For rich countries, that will be sometime next year, ideally in the first half. We’ll get out of this by the end of 2021.” (Bill Gates)
Coronavirus and US Job Postings Through August 7
Most U.S. Cities Expect Next Fiscal Year to Get Worse Most U.S. cities say economic damage from the coronavirus pandemic will leave them in worse financial shape in the coming year, raising the odds of deeper municipal layoffs and service reductions, according to a new survey.
Nearly 90% of the 485 cities polled by the advocacy group National League of Cities said they will have a harder time meeting the needs of their communities in fiscal 2021 than in the prior fiscal year, the highest share since the depths of the 2007-09 recession. In 2019, just 24% of finance officers reported that their city was less able to meet fiscal needs, compared with the previous year.
For many cities, the 2021 fiscal year began in July, though some cities start the fiscal year in January or October.
The survey found that all major sources of local tax revenue slowed in fiscal 2020, including an 11% year-over-year decline in sales tax receipts and a 3.4% drop in income tax revenue.
Municipal budget officials on average anticipate that general fund revenues for fiscal year 2021 will come in 13% below 2020 levels, the survey said. General funds typically account for more than half of all city spending and are fueled largely by property and sales taxes, along with income taxes in some cases. (…)
Personnel costs account for a large share of city expenses, so additional budget cuts will likely mean laying off more government workers, she said.
“If the workforce is cut,” she said, “it will have negative consequences on services as well.” Those could include trash pickup, code enforcement, public safety, and parks and recreation, she said.
Ms. McFarland said the survey findings likely understate the seriousness of the concerns, because city officials responded in June, when there was greater hope for a speedier recovery from the pandemic and for substantial federal aid to local governments. “Now, those clearly are either stalled or looking pretty grim for the fall,” she said.
Efforts in Congress to craft a fresh economic relief package have hit a wall, and aid for state and local governments is a key sticking point. Democrats are seeking $950 billion, while Republicans have offered $150 billion. (…)
Axios cites Pittsburgh as an example:
Pittsburgh Mayor Bill Peduto on Wednesday said the city has spent its entire reserve fund to pay the bills and currently faces a $100 million budget deficit. Massive cuts and layoffs are coming across every department, he said.
Manhattan Apartment Rents Plunge 10% in Pandemic-Fueled Exodus
(…) July’s vacancy rate climbed to a record of 4.33%, according to a report Thursday by appraiser Miller Samuel Inc. and Douglas Elliman Real Estate. (…)
New Yorkers have been fleeing Manhattan since March, when the Covid-19 lockdown began. They went in search of a break from dense urban living and room to stretch as they worked and schooled children from home. Now, those with the flexibility to stay remote are making their departure more permanent. (…)
Brooklyn fared better. Rents in that borough slipped only 0.5% last month from a year earlier to a median of $2,902. In Northwest Queens, a waterfront market of high-rises that benefited from its proximity to midtown Manhattan, new leases fell 60%. The median rent tumbled 15% to $2,424.
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Goldman Sachs’ Inflation Tracker Has Declined by 1pp Over Q2 to 2.1% Year-on-Year in June
- Bloomberg Economics’ GDP tracker suggests global growth picked up further in July, hitting 5.4%, up from 4.4% in the previous month. Yet a ‘V’ shaped recovery in growth is not the same as a ‘V’ shaped recovery in output — a rapid bounce back from an extremely low base still leaves the level of output considerably below the pre-crisis normal. Additionally, as BE’s daily activity indicators show, the recovery appears to be running out of steam. An unconstrained outbreak and stalled stimulus in the U.S., as well as continued caution putting a ceiling on activity elsewhere, mean the initial rapid rebound will be tough to sustain.
Coronavirus Projected to Sap More Oil Demand Than Expected High coronavirus case numbers in several major economies will blunt the recovery of an oil market already beleaguered by low demand, the International Energy Agency said Thursday.
In its monthly oil market report, the IEA forecast a sharper contraction in global demand for 2020 for the first time in several months. The agency expects global demand to contract by 8.1 million barrels this year, 140,000 barrels more than in last month’s report.
That increase follows a similar move Wednesday by the Organization of the Petroleum Exporting Countries. (…)
The agency said that global demand in June exceeded supply and that will remain the case for the rest of 2020.
Still, the recovery appears to be at risk of stalling given increases in supply.
Global supply increased by 2.5 million barrels a day in July, with Saudi Arabia ending its voluntary additional cuts. In addition, U.S. and Canadian production are starting to rise again, the report said. At the same time, the nations of the OPEC+ alliance agreed last month to soften production cuts starting Aug. 1, putting an extra two million barrels a day into the market. (…)
The IEA forecasts a 5.2 million-barrel-a-day rebound in demand next year, trimmed slightly from last month’s estimate. Stocks being held in expensive floating storage—a last resort when immediate selling became unprofitable in March and April—fell 19% in July from an all-time high of 184.8 million barrels in June. (…)
EQUITY MARKETS
The pain of losing $10 trillion in U.S. GDP and 53 million people who have filed initial jobless claims has been “numbed” by $21 trillion in policy stimulus — $2 billion per hour in central bank asset purchases, says Bank of America chief investment strategist Michael Hartnett. “Nothing matters but liquidity.” Yet, “So far this year, FAAMG stocks (Facebook, Amazon, Apple, Microsoft and Alphabet) are up 35% while the other 495 stocks have risen less than 5%.”
Seems like liquidity has clear targets.
We’ve seen how a few stocks have been taking over the market which has masked some underlying weakness in indexes. While the Advance/Decline Line has broken out to a new high, that doesn’t mean the gains are evenly spread, not even remotely. The stocks-only A/D Line still remains below its prior high.
These quirks have allowed the S&P 500’s Total Return index to close at a new all-time high. This is the version of the index that takes dividends into account, which is what a “real” investor would receive. Yet the Equal Weight version of the index, which puts all 500+ stocks on equal footing, is still more than 7% below its own high, even though its relative performance has picked up in recent days.
Over the past 30 years, there have only been four other days when this kind of quirk triggered. Even when relaxing the parameters to look for a 5% divergence, only a handful more days showed up, mostly around the same time frames. Stocks did not do well after those days, especially the capitalization-weighted version of the S&P 500.
PANDEMONIUM
The U.S. hit Germany and France with extra tariffs on some goods to squeeze the EU into settling a dispute over illegal subsidies to Airbus. The USTR’s office removed from the tariff list some products from Greece and the U.K. but added an equivalent amount of trade from France and Germany, including their jams. Bloomberg)
Corporate America Worries WeChat Ban Could Hit Business More than a dozen major U.S. multinational companies raised concerns in a call with White House officials Tuesday about the potentially broad scope and impact of Mr. Trump’s executive order targeting WeChat.
Apple Inc., Ford Motor Co., Walmart Inc. and Walt Disney Co. were among those participating in the call, according to people familiar with the situation.
“For those who don’t live in China, they don’t understand how vast the implications are if American companies aren’t allowed to use it,” said Craig Allen, president of the U.S.-China Business Council. “They are going to be held at a severe disadvantage to every competitor,” he added.
Other participants in the call Tuesday included Procter & Gamble Co., Intel Corp., MetLife Inc., Goldman Sachs Group Inc., Morgan Stanley, United Parcel Service Inc., Merck & Co. Inc. and Cargill Inc., according to the people. (…)
For anyone doing business in China, including U.S. companies, it is also a vital marketing hub to connect with consumers. (…)
Companies are hoping the administration will narrow the order as it is implemented over the coming weeks, according to the people familiar.
Asked about Tuesday’s conference call, a White House spokesman issued a statement saying the administration “is committed to protecting the American people from all cyber-related threats to critical infrastructure, public health and safety, and our economic and national security.”
In announcing the action against Tencent, the Trump administration said that WeChat captures “vast swaths of information from its users,” potentially exposing the personal information of Americans and Chinese nationals living in the U.S. to exploitation by China’s ruling Communist Party. (…)
Even so, U.S. companies are concerned the administration’s action could effectively cut them off from access to the lucrative China market, for example by ending their ability to accept payments or advertise on WeChat.
Apple is among the U.S. companies with the most at stake. Being forced to remove the app from its devices could be devastating. Analyst Ming-Chi Kuo at TF International Securities projected that global iPhone shipments could fall by as much as 30%, if such a ban goes into effect.
Some U.S. entertainment and sports concerns, meanwhile, are worried they could be cut off from Tencent’s other digital services. The National Basketball Association, for example, has a deal with Tencent to stream its games in China. (…)
As tensions between the two world powers intensify, many more companies also find themselves caught up in the firefight. According to a survey released Tuesday by the U.S.-China Business Council, 86% of more than 100 member companies report that the bilateral tensions have caused lost sales or otherwise impacted their businesses in China. “We have been cut out of some bids because we are a U.S. company,” the report quotes one company as saying.
(…) and 87% said they have no plans to shift production out of the country. (…)
Which is at complete odds with what the Trump administration has been seeking. As noted yesterday, “a March survey by UBS Group of Japanese, Korean and Taiwanese companies that produce in China and sell to the rest of the world found that 85% had already relocated or intended to shift some capacity out of China.” 
The U.S. Energy Department proposed easing water efficiency requirements for shower heads Wednesday following multiple complaints from President Donald Trump about how low water flow is impeding his ability to properly wash his hair. (…) “You turn on the shower — if you’re like me, you can’t wash your beautiful hair properly,” Trump said this month during a visit to a Whirlpool Corp. manufacturing plant in Ohio. “You waste 20 minutes longer. Please come out. The water — it drips, right?” (Bloomberg)