Businesses other than financial institutions owe about $13.5 trillion in bonded debt, according to the Organization for Economic Cooperation and Development. As the virus-induced panic stymies commerce, many of those debtors are at greater risk of not being able to repay what they owe. Much of that debt was incurred to fund expansions while interest...
Author: support
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BANKS ON THE BRINK
Banks face a triple threat: excruciatingly low interest rates; recently stiffened regulations about lending criteria and cash reserves; and the virus epidemic that is slashing business borrowers’ cash flow and threatens their ability to make loan payments. U.S. banks gain about two-thirds of their revenue from charging interest on loans and securities. Those interest rates...
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LEBANON DEFAULTS
After seeing its foreign currency reserve plunge to an all-time low, Lebanon failed to repay a $1.2-billion Eurobond that was due on 9 March. It was the first time Lebanon has defaulted on a foreign debt. The Banque du Liban, Lebanon’s central bank, reports it has about $29 billion in foreign currency. Ratings agency Fitch...
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CHINA DOWN
China’s exports to the U.S. dropped by 28 percent in dollar value and 17.2 percent worldwide in January and February. China imported 4 percent less overall during those two months, although imports from the U.S. rose 2.5 percent. As China’s industrial output plunged at the sharpest pace in 30 years, down 13.5 percent in the...
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NATION ON LOCKDOWN, MARKETS ON MELTDOWN
Spain’s stock market lost 14 percent of its value on Friday, capping a record one-month fall of more than 30 percent. The government has seized the authority to regulate the prices of medical products, is making 2.8 billion available to regional health authorities to fight the coronavirus outbreak, and is taking €1 billion from its...
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CORONAVIRUS “WINNERS” AND LOSERS
“Survival Mode” Lifts Sales, Share Prices Consumers hunkering down at home to wait out the COVID-19 scare are boosting sales and share prices for companies making and selling canned food, toilet paper, survival gear, and video games. Clorox, which makes disinfectant wipes, has seen its share price gain 7 percent. Video game maker Electronic Arts’...
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PANDEMIC HIGHLIGHTS U.S. PHARMA’S CHINA DEPENDENCE
China supplies more than 90 percent of the hydrocortisone, antibiotics, and antibiotic ingredients consumed in the U.S. as well as 70 percent of the ibuprofen and large proportions of other drugs and nutritional supplements, according to the Council on Foreign Relations. The COVID-19 pandemic has stirred concerns about the U.S.’s ability to sustain its pharmaceutical...
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MNUCHIN WRONG: WORSE THAN ’08 PANIC
On 13 March, U.S. Treasury Secretary Steve Mnuchin said, “There is a lot of liquidity” in the markets and that the current financial panic “isn’t like the financial crisis” of 2008. Perhaps he was referring to the current panic’s cause as being sparked by a virus rather than financial, as it was 12 years ago....
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USA LOCKDOWN, GOING DOWN
Last Thursday, the Dow dove 2,350 points, triggering an automatic, 15-minute shut down. On Friday the 13th, following President Trump declaring a Covid-19 State of Emergency, the Dow Jones Industrial Average snapped back with its greatest point gain since 2008, up 2,710 points. However, the market closed down almost 9 percent on the week. Despite...
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BEAR VANQUISHES BULL
Major sectors of the U.S. and world economies are now in a bear market, defined as a 20-percent drop from recent highs. As of 13 March, financial, industrial, materials, and information tech stocks were, in order, down 27 percent, 23 percent, 21 percent, and 20 percent from the top of their recent runs. The Dow...