The U.S. annual budget deficit totaled $625 billion during the first five months of the current federal fiscal year, a 15-percent rise compared to the same period in the previous year. Federal spending was up 9 percent during the period, while government revenue increased 7 percent. The rising deficit has resulted from increased spending on the military, health care, and...
STRANGERS NOT WELCOME
As of yesterday, 27 countries have either completely or mostly shut down their borders. The European Commission has announced plans to ban all non-essential travel for 30 days throughout the entire European market (the Schengen Area). Ursula von de Leven, the Commission President, stated she was asking leaders of all the European countries to impose the border restrictions as of...
SCHOOL’S OUT
Nations around the world are closing down schools, despite the fact that of those who have been infected by the virus so far, about 10 percent are in their 20s, 1.2 percent are in their teens, and less than 1 percent are ages nine or less. Yet, as of last weekend, schools were shut around the world. Despite the fact...
FANNING THE FEAR
In a world of 7.7 billion people, as we go to press, some 7,866 people have died from the coronavirus. In the United States, with a population of 327 million, so far 90 people have died from the virus. According to reports, almost everyone who comes down with virus experiences only mild symptoms such as fever and cough and recover...
EMERGING MARKETS
Since the virus outbreak, investment managers seeking to minimize risk have been dumping their holdings of stocks and bonds in emerging economies. Foreign investors have shed $47.1 billion of the instruments since 21 January, twice as much as immediately following the market crash that launched the Great Recession in 2008. TREND FORECAST: Violence and protests will escalate in Emerging Market...
EUROPE, CHINA BRACE FOR WAVE OF DEFAULTS
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 rates were at rock bottom....
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 are tied to benchmarks set...
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 estimates it owes almost twice...
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 first two months of the...