Coronavirus cases in the U.S. rose 1.8% from a day earlier to 2.96 million, according to data collected by Johns Hopkins University and Bloomberg News. That matched the average daily increase over the past week and marked a fourth day in which new cases topped 50,000. Deaths rose 0.6% to 130,813.
- Florida had 213,794 cases, up 3.6% from a day earlier, compared with an average increase of 5% in the previous seven days, according to state health officials. Deaths reached 3,841, an increase of 1.7%
- California reported a 3.4% daily jump in virus hospitalizations, to a record 5,989 patients. San Francisco will delay plans to open indoor dining and outdoor bars as planned July 13
- Arizona health officials reported 3,653 new cases, bringing that total to 105,094, a 3.6% increase. Deaths rose by a record 117 to 1,927
- New Jersey’s virus transmission rate rose to 1.05, the highest in about 10 weeks, according to Governor Phil Murphy’s office. Weeks ago, the rate was 0.64
- Montana cases rose 6.2% to a total 1,327, according to data compiled by Johns Hopkins and Bloomberg News
Coronavirus deaths are ticking up in the new hotspots of Florida, Texas and Arizona, even as they continue to trend down nationally, Axios’ Caitlin Owens writes.
- Arizona reported a record 117 deaths yesterday, and hospitalizations are skyrocketing there and in other hotspots.
- Texas reported a record 60 new deaths and 10,000 new cases.
- Florida reported 63 new deaths.
PANDENOMICS
Yesterday, I summed up Markit’s Services PMIs with
My take is that in spite of the normal snap back in demand from re-openings, with the exception of China, we are still not seeing indications of a sustained solid turn in new orders (business demand) that would then solidly lift employment (consumer demand) that would fuel more new orders and create the typical post-recession self-feeding recovery.
Later in the day, Markit posted this chart on global employment, orders and backlogs which are, in my view, the critical series to watch currently.
The current situation is also very different from prior global downturns. Although global PMI indicators of new business showed record gains in both manufacturing and services in June, a rebound from enforced closures of non-essential business and household lockdowns was only to be expected as operations restart. Companies have also reported that lockdowns have led to pent-up demand for certain goods and services which is now supporting business activity.
Quite how long this pent-up demand effect will last remain uncertain. Even with the rebound, the latest global new business indicators remain below 50, reflecting a situation where more companies reported a drop in new work than saw an improvement, hinting strongly at subdued underlying demand. Broader indicators of global trade from the manufacturing PMI surveys also showed exports continuing to act as a particular drag on the global economy, leaving many economies reliant on domestic demand to drive growth.
Furthermore, the current demand environment also reflects emergency stimulus measures, both from central banks and government, the latter notably via fiscal support and employment retention schemes, which have helped provide temporary platforms to support demand and consumption.
The big question is therefore whether the demand indicators will continue to improve beyond the initial rebound from the lockdowns, and in particular how employment will hold up when support measures are removed. Encouragingly, the rate of global job losses eased for a second successive month in June. Business expectations for the year ahead have almost recovered to levels seen earlier in the year. Whether these positive trends continue will ultimately depend on central bank and government policy support, and also of course on the absence of a renewed upward trend in COVID-19 infections. Any renewed faltering of the PMIs in coming months will flash warning signs of a W- rather than V-shaped recovery.
Weekly Economic Index The WEI is an index of ten daily and weekly indicators of real economic activity, scaled to align with the four-quarter GDP growth rate.
Recession Forces Spending Cuts on States, Cities Hit by Coronavirus State and local governments from Georgia to California are cutting money for schools, universities and other services as the coronavirus-induced recession wreaks havoc on their finances.
(…) Widespread job losses and closed businesses have reduced revenue from sales and income taxes, forcing officials to make agonizing choices in budgets for the new fiscal year, which started July 1 in much of the country.
Governments have cut 1.5 million jobs since March, mostly in education, and more reductions are likely barring a quick economic recovery. In Washington state, some state workers will take unpaid furloughs. In Idaho, Boise State University cut its baseball and swim teams in an effort to save $3 million.
Dayton, Ohio, Mayor Nan Whaley says the city may have to cut up to 8% of its general fund budget, which pays for fire, police, roads, water and trash collection. (…)
The National Governors Association says states need another $500 billion in federal aid to make up for lost revenue. The U.S. Conference of Mayors says cities need $250 billion. (…)
Almost all states and local governments require balanced budgets. For now, they have largely avoided raising taxes to plug budget holes, opting instead to cut spending or dip into reserves. (…)
The median state went into the crisis with reserves totaling a record 7.8% of its general fund budget, according to the National Association of State Budget Officers.
California lawmakers used $9 billion of their $16 billion rainy-day fund to help balance the $202 billion budget that Gov. Gavin Newsom, a Democrat, signed June 29. Even so, state employees will have to take up to two unpaid furlough days a month, and public colleges and universities face about $602 million in reductions. (…)
With an uncertain outlook, officials are trying to maintain reserves in anticipation of more lean years.
“You may need to use it in 2022 and beyond,” said Brian Sigritz, director of state fiscal studies at the budget officers’ association. “They’re not expecting this decline to be a one-year or two-year thing.” (…)
States and cities’ aggregate expenditures are 60% larger than the federal government’s. They employ 18.4 million people (13% of the U.S. total employment) compared to 2.9 million for the federal government. So far, employment in states and cities has declined 7.5% from February while total employment dropped 10.2% and federal employment is up 0.6%.
- United Airlines Holdings Inc. warned employees that a jump in coronavirus infections in parts of the South and West is jeopardizing a nascent recovery for U.S. travel. The shares plunged. The airline has seen a sharp drop in bookings, particularly at its Newark, New Jersey hub, as states in the New York City metro area add new quarantine rules for travelers, United executives told employees Monday in a town hall meeting. Bookings at United’s Newark hub were 16% of 2019 levels as of July 1, or about half of what they were several weeks earlier when travel began reviving, according to the presentation. United is watching for signs of a similar drop at its Chicago hub given restrictions the city imposed last week on travelers arriving from more than a dozen states, said a person familiar with the matter, who asked not to be named because the employee discussions were private.
- Covid Still Poses Challenges for Financial System, Fed’s Quarles Says Global policy makers responded decisively to the coronavirus outbreak earlier this year but the financial system isn’t out of the woods yet, a top Federal Reserve official said Tuesday.
- American consumers may not be prepared to return to pre-pandemic spending levels. More than 40% of people who spent money on movies, event tickets or at bars before the pandemic now plan to spend less on those activities, according to a new survey for CreditCards.com. Meanwhile, more than 60% of small businesses say they need spending to return to normal by the end of the year to stay open, according to American Express data.
- Ascena Retail Group Inc., the owner of mall brands that occupy almost 3,000 stores in the U.S., is preparing to file for bankruptcy and shutter at least 1,200 of those locations, according to people with knowledge of the plan. The company, which owns brands such as Ann Taylor and Lane Bryant, could enter Chapter 11 as soon as this week with a creditor agreement in place that eliminates around $700 million of its $1.1 billion debt load.
- The Johnson Redbook index of same-store sales is yet to see a meaningful rebound. (The Daily Shot)
- Chinese retail sales have been recovering but remain well below previous trend growth.
Source: Gavekal
- A growing number of Japanese businesses are failing amid the coronavirus pandemic. Some 780 Japanese firms filed for bankruptcy in June, 148% more than the prior month and the most this year, according to Tokyo Shoko Research Ltd. There were 94 pandemic-driven cases last month, bringing the total to 240 in the first half of the year, with sectors such as hotels and restaurants badly hit. Growing distress among businesses is in line with the record jump in bank loans and deposits in June, as companies continued to tap emergency credit facilities and hoard cash.
- European Union leaders will probably fail to agree at a summit next week on a massive spending plan aimed at reviving their economies, according to Hungarian Prime Minister Viktor Orban. Negotiations will be “very tough” and will likely need to continue throughout the summer, Orban said on Wednesday in an online panel discussion with Slovenian Prime Minister Janez Jansa and Serbian President Aleksandar Vucic.
Also posted today: DON’T FIGHT THE FED: Facts and Fiction
Below is the forward P/E ratio for the S&P 500 Consumer Discretionary sector.
Source: @LizAnnSonders, @business
With four months to go, how US equities are trading the 2020 elections. Three different markets suggest three different 2020 election perspectives: (1) Prediction markets suggest a Democratic sweep. Market pricing currently implies the Democrats will control the White House, Senate, and House of Representatives. The current probabilities equal 62%, 61%, and 85%, respectively, compared with 43%, 30% and 61% in late February. (Goldman Sachs)
FYI:
