THE DAILY EDGE: 29 JULY 2020

Coronavirus cases in the U.S. climbed 1% as compared with the same time Monday to 4.31 million, according to data collected by Johns Hopkins University and Bloomberg News. The increase was below the average 1.7% daily gain over the past week. Deaths rose 0.7% to 148,298.

• Arizona reported 2,107 new cases Tuesday, an increase of 1.3% that brings the total to 165,934, still below the 1.7% prior seven-day average.
• Florida reported 441,977 cases, up 2.1% from a day earlier, compared with an average increase of 2.6% in the previous seven days.
• California reported 6,000 new virus cases, fewer than the 14-day average of 9,159 and the lowest daily tally since July 5, according to the state health department and data compiled by Bloomberg.
• Alaska cases rose 3.9% to 2,623, according to the data from Johns Hopkins and Bloomberg.
• New Jersey’s transmission rate rose to 1.14, the highest in at least 13 weeks. The virus is spreading in a state that was hit hard and early and has maintained bans on indoor dining and gym workouts while imposing crowd limits on outdoor gatherings.
• New York state added three states plus the District of Columbia and Puerto Rico to its mandatory quarantine list. The state added Illinois, Kentucky, and Minnesota for a total of 34 states as well as the nation’s capital and the territory on Tuesday, Governor Andrew Cuomo said Tuesday on a conference call with reporters.
• Fauci also said he was “cautiously optimistic that when we get into the late fall we will have an answer” about a vaccine. He agreed with the Food and Drug Administration’s guidance that hydroxychloroquine isn’t effective against the virus.

Cases have been rising at a higher rate in the Netherlands. The number increased by 1,329 between July 22 and July 28, according to the RIVM Dutch National Institute for Public Health and the Environment. That’s up from 987 added in the previous week. The reproduction number rose to 1.40 from 1.29 the week before.

China this week reported the most domestic infections in more than four months and a new case emerged in Beijing, the first in 21 days. Tokyo, Hong Kong and Melbourne have seen record infections and even Vietnam, which went almost 100 days without a new local patient, is fighting an outbreak.

Over half of Mumbai slum dwellers have had Covid-19, study claims Findings suggest spread of coronavirus in India could be much worse than thought

This GS chart looks rather scary…

…but scales are important. In fact, not much is happening apart from the USA, emerging Asia and Latin America. The U.S. trend seems to be rolling over.

USA

Russia May Register World’s First Covid-19 Vaccine by Aug. 10

The drug developed by Moscow’s Gamaleya Institute and the Russian Direct Investment Fund may be approved for civilian use within three to seven days of registration by regulators, according to a person familiar with the process, who asked not to be identified because the information isn’t public.

No data has been published about the vaccine, which has been touted by its developers as safe and potentially the first to reach the public. It is scheduled to begin Phase 3 trials next week in Russia, Saudi Arabia and the United Arab Emirates. (…)

The Russian vaccine will be provided to health professionals before clinical trials are complete, Health Minister Mikhail Murashko said in an interview with state television on Saturday. He and other officials have said the vaccine won’t be widely available before late in the year.

Scores of Russia’s business and political elite were given access to the experimental vaccine as early as April, according to people familiar with the effort. Military volunteers completed Phase 2 trials of the drug last week

Russia this week approved clinical trials for a second vaccine, developed by the Vector laboratory in Novosibirsk.

PANDENOMICS

U.S. Consumer Confidence Backpedals in July

(…) The index of expected business conditions in six months fell 13.8%, following an 8.7% rise in June. A greatly lessened 31.6% of respondents felt that business conditions would improve, down from 42.5% in May. Thirty-one percent of respondents felt that there would be more jobs in six months, down from 41.2% in April. Only a steady 15.1% thought that income would increase. (…)

U.S. Durable Goods Orders Surge Again in June

There is a new definition for “surge”.

There’s been a “notable loss of momentum” in the U.S, said JPMorgan Chase & Co. economist Michael Hanson. Former U.S. Treasury Secretary Lawrence Summers and a paid contributor to Bloomberg said in a July 25 interview on “Bloomberg Wall Street Week” that he “can’t remember a moment when a recovery has been more uncertain.” (Bloomberg)

Funding, credit market backstops had been set to expire at end of September

In a statement, the Fed said that the extension of the programs, through Dec. 31, would “facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover.” (…)

Europe’s Banks Reveal Fuller Picture of Coronavirus Impact Some of Europe’s biggest lenders are revealing the extent of the coronavirus pandemic’s impact on their businesses. Germany’s Deutsche Bank, the U.K.’s Barclays and Spain’s Santander all reported a big jump in loan-loss charges in the second quarter.

Covid’s Next Economic Crisis: Developing-Nation Debt

(…) The world is gearing up for a battle over developing-country debt like few it has seen before. Rich and poor countries are at loggerheads with private investors that, over the past decade, replaced governments as the biggest creditors to emerging markets. (…)

Of the 24 low-income countries that have issued foreign-currency bonds since the turn of the millennium, raising a total $135 billion, at least half —including Ghana and Zambia—are now at high risk of debt distress or already in distress, according to the IMF. (…)

Different groups of creditors blame each other. Asset managers and hedge funds—a fragmented group that can be slow to reach consensus—point fingers at China, which has also lent heavily to many poor countries. Western governments, which wrote off debt in previous crises, have said they don’t want to bail out Beijing or private investors. Because much of Chinese debt came from state companies and banks, bondholders say it is unclear whether they would participate in relief measures provided by governments.

Failure to resolve this accelerating crisis, United Nations Secretary-General António Guterres warned this month, could result in “a situation in which a series of countries in insolvency might trigger a global depression.”

The number of countries looking to multilateral agencies for support and running into legal disputes with creditors could make this the worst emerging-market debt crisis since the 1930s at least, said Kenneth Rogoff, chief economist of the IMF from 2001 to 2003 and now a Harvard University professor. “They can’t handle that—the New York and London courts can’t, the IMF can’t,” he said. “It is a case of too many patients coming to the hospital at once.” (…)

The financial crisis is exacerbating humanitarian disasters in many nations, threatening to set back decades of gains in health care, nutrition and education, aid agencies say. (…)

By the third quarter of last year, debt levels in sub-Saharan Africa’s poorest countries had jumped to over 60% of GDP on average, from 38% a decade earlier, according to the Institute of International Finance, or IIF, a financial-industry lobbying group.

Beijing keeps the terms of its programs under wraps. But estimates from the Johns Hopkins School of Advanced International Studies suggest African governments and their state-owned enterprises accumulated around $143 billion in loans from China between 2000 and 2017. (…)

World Bank Group President David Malpass said the scale of government borrowing from new sources, like China and commercial creditors, places poor countries in new territory, adding: “It’s vitally important that all creditors participate and don’t create excuses to free ride on the others.”

Without a plan in sight, investors and governments are looking to what happens with Zambia, whose 2012 bond falls due in 2022, to chart a way for countries squeezed by debt held by private creditors and China.

“Zambia might end up being a template,” said Hans Humes, founder of New York-based Greylock Capital Management, which owns Zambian bonds.

Big Tech firms to testify Wednesday before U.S. Congress on antitrust

Speaking of market power, how about that?

Product manufacturers, food suppliers and packaged goods companies are concerned that a wave of fee increases from retailers could be on the way after Walmart Canada announced new fees last week to help offset $3.5-billion in planned investments in its stores and e-commerce network over the next five years.

Walmart sent notices to its suppliers last Friday outlining a new “Vendor Investment Program” that takes effect Sept. 14. The retailer is planning to tack a 1.25-per-cent “infrastructure development fee” on the cost of goods it purchases and a 5-per-cent “e-commerce development fee” for products sold through its website. Those will be over and above existing fees – typically charged for things such as in-store promotions or shelf placement – in the retailer’s contracts with suppliers. (…)

“The purpose of these fees is to partially offset the necessary investments recently made and soon to be made by Walmart that provide mutual benefits and growth opportunities,” the company said in its letter. (…)

Smaller retailers that compete with Walmart are concerned they do not have the leverage to demand similar fees, even as they also face pressure to invest in e-commerce services.

“They are significant costs,” said Gary Sands, the CFIG’s senior vice-president of public policy. “When Walmart can make those investments and offload those costs to suppliers, that puts the small business at a competitive disadvantage.”