1)The virus count continues to slow in China and in most of the rest of Asia.
2)More and more places are shutting down in order to contain the spread which hopefully leads to a quicker reopening.
3)The Fed takes steps to backstop the commercial paper market and prime money market funds. Swap lines are tapped and cross currency basis swap prices ease.
4)Targeted steps on the part of other central banks to ease liquidity constraints and helping banks are more effective than just cutting rates from already low levels.
5)The US government passes paid sick leave and family leave for employees of companies with less than 500 employees. Testing will also be made free. Checks to families will come soon as will another bill that loans money directly to small and medium sized businesses that retain employees.
6)While this is very old news because it captures contract signings in late 2019, February existing home sales totaled 5.77mm, about 220k more than expected, the most since December 2006 and up from 5.42mm in January. Months’ supply held at 3.1 and 1st time buyers made up 32% of purchases, the same pace as the month prior.
7)Also old but less so, February housing starts totaled 1.599mm vs the estimate of 1.50mm. Permits though missed expectations but because of a drop in multi family. Single family got back above 1mm.
8)While this will continue to worsen in March, Japan said its February exports were down by 1% y/o/y which actually was better than the estimate of down 4.2% as maybe some countries who couldn’t get product out of China turned to Japan instead. Imports were very weak, falling by 14% but as expected. Imports from China fell by a dramatic 47% while exports were little changed.
9)A little humor after a tough week, //www.youtube.com/watch?v=ncc77oxnx5A
1)The virus count increase continues in Europe, the US and other places.
2)As more and more places shut down, the economic pain intensifies.
3)The Fed cutting rates to zero and initiating a massive QE program was fine for 2008 but it’s 2020 and the challenges are quite different. And what’s left, nationalizing more corporate debt as the answer? More Fed intervention in the Treasury market doesn’t ease liquidity frozen up by current regulations and the Volcker rule, it further damages it.
4)Many other central banks cut rates but it’s shooting blanks at this point.
5)Initial jobless claims totaled 281k for the week ended March 14th, up 70k on the week. This is just the beginning of what will be a large and unfortunate rush for unemployment benefits.
6)The March Philly manufacturing index fell to -12.7 from +36.7 with new orders going to -15.5 from +33.6, new orders down 14.8 to -7.4, shipments went to .2 from 25.2, inventories went back to almost zero and delivery times went deeply negative at 9.1 showing the deteriorating supply chains. Employment fell to the lowest since the month of the election and the workweek fell as well. Prices paid and received fell sharply. There is still hope that things will stabilize over the next 6 months as this virus passes as the outlook fell ‘only’ 10.2 pts to 35.2, still above where it was in December. On the flip side, there was a sharp decline in capital spending to 12 from 29.8.
7)The NY manufacturing index fell to -21.5 from +12.9. The estimate was +3 but I have no idea why it was that high. New orders, shipments, employment and hours worked all fell below zero. Backlogs are close at 1.4. Prices paid were little changed but those received fell by 6.6 pts from February. Not surprisingly, the 6 month business outlook also deteriorated significantly, falling to 1.2 from 22.9. Capital spending and technology spending plans both fell too m/o/m.
8)After mortgage rates bounced higher over the past week coincident with the rise in Treasury yields, refi’s fell 10.4% w/o/w after quite a spike in the two prior weeks. They are still up though an incredible 402% y/o/y. Purchases were little changed, down by .9% but are also up by 10.7% y/o/y.
9)The March NAHB home builder sentiment hung in real well falling just 2 pts m/o/m to 72. The estimate was 73. But, about half were collected before March 4th and thus doesn’t reflect what has happened since. Some worry though creeped in as the Expectations component fell 4 pts m/o/m to the lowest since September 2019. About 20% of builders did express that they are seeing supply disruptions related to the lack of exports from China.
10)Core February retail sales were unchanged m/o/m vs the forecast of up .4% but January was revised up by 4 tenths. Old news of course.
11)The German IFO fell to 87.7 from 96 with expectations down by 11.2 pts and the current assessment lower by 5.2 pts. The IFO said “Companies’ expectations in particular have darkened as never before. Assessments of the current situation have also worsened considerably. The German economy is speeding into recession.”
12)The German ZEW March index measuring investor expectations of the German economy plunged to -49.5 from 8.7. The estimate was -30 with both components down sharply. ZEW said “The slump of the ZEW Indicator of Economic Sentiment was to be expected. The economy is on red alert…For the whole of 2020, the majority of experts currently expect a decline in real GDP growth of approximately one percentage point as a result of the corona pandemic.”
13)Hong Kong’s unemployment rate in February rose to 3.7%, the highest since 2011.
14)Reflecting the obvious stress in the Chinese economy, retail sales in January/February fell 20.5% y/o/y vs the estimate of -4% (which was a shot in the dark). IP was lower by 13.5% y/o/y ytd vs the forecast of down 3% and Fixed asset investment was weaker by 24.5% y/o/y ytd vs the expectation of only a modest decline.