CNBC noted that over the past seven days, US has averaged 68,767 new coronavirus cases, the highest seven-day average recorded during the pandemic. Pointed out that seven-day average is up more than 22% compared with a week ago.
Today is the International Day against Climate Change. Schroders analyzes how the Covid-19 crisis has influenced this phenomenon. The conclusion is that, despite the fact that confinements have reduced greenhouse gas emissions, the forecasts for global warming are still far above the commitment made in Paris in 2015. In particular, the latest update of the Schroders Climate Progress Dashboard suggests that the current speed of climate action will increase temperatures by 3.9°C, almost twice the Paris Agreement target of 2°C.
S&P has warned of the possibility of a second wave of sovereign credit rating downgrades around the world. So far in 2020, the firm has downgraded ratings or outlook for 60 countries. The problem lies in the effects of COVID-19 that be will dragged on over the next few years. In fact, some countries will add 15-20 GDP points to their public debt, which otherwise would have taken four or five years to accumulate. In addition, public spending will continue to be above normal for a period that can extend 3-5 years.
Unemployment in China, which rose to 6.2% in February, is down to 5.4% in September – only marginally higher than 5.2% in December 2019. Industrial production increased 6.9% year on year in September – the highest increase since December 2019. This data point has vindicated the strong recovery in Purchasing Managers Indices (PMIs) – which are important, but only show month on month change in activity. Retail sales – an important barometer of consumer wellbeing – have also bounced back and risen by 3.3% year on year in September after being negative between January and July this year.
Indonesia is the fourth most populous country in the world with 273-million people, which is expected to expand by 21% by the year 2050 to 331-million Indonesians. The challenge of how to provide jobs for the increase of 28 million working age people by 2050 on top of an already excess capacity 185 million people in 2020 is a pressing concern… After being informed by the World Bank that few firms consider Indonesia in the diversification push out of China, President Jokowi asked his ministers to come up with a reform agenda. Covid-19 forced the government to focus on short-term challenges in H1 2020, but on 5 October 2020, the government passed the Omnibus Bill that overhauled Indonesia’s investment and labor laws.
William Horncastle via The Conversation | The amount of money spent on US elections eclipses the annual total economic output of some small countries. The total spending by candidates, political parties and independent campaign groups in the 2016 race was US$6.5 billion – comparable to the GDP that year of Monaco, Kosovo or Liechtenstein. The 2020 election cycle is forecast to smash previous spending records, with the Center for Responsive Politics estimating it will cost US$11 billion. That would be comparable to the 2019 GDP of Equatorial Guinea or Chad.
Covid-19’s first victim continues to recover, with structural measures increasing the economy’s robustness and boosting its currency. That is not without risks, however. Lately, the People’s Bank of China (PBoC) has been valiantly trying to slow down the appreciation of its currency, the renminbi, vs. the U.S. dollar. In part by trying to encourage capital outflows. “That will not be easy,” argues Elke Speidel-Walz, our Chief Economist for Emerging Markets.
The world public deficit in 2020 stands at 12.7% of GDP, compared to its forecast of 3.9% in April, and gross public debt could increase to 100% of global GDP, says the IMF. Thus, it supports more spending and outlines scenarios in which some countries will be able to stabilize their debt, by the middle of this decade, without tax increases or budget cuts. Specifically, its estimates suggest that a public infrastructure investment of 1% of GDP could boost production by 2.7%, creating between 20 and 33 M jobs.
The islands — two north of Venezuela, one east of Puerto Rico — are on the brink of financial ruin. Without tourists, their economies have shrunk 20 percent. One in five families rely on food aid. Aruba and Curaçao cut salaries in the public sector by 12.5 percent and required a 20-percent contribution from firms to wage subsidies in order to qualify for a previous round of financial support, but it hasn’t been enough. For another cash injection, the Dutch are demanding that the islands cut red tape, liberalize labor laws and reduce the cost of doing business. The goal, Knops said, is to make their economies more resilient in the long term…
Sean Markowicz (Schroeders) | The largest US technology stocks – Apple, Microsoft, Amazon, Facebook and Google (Alphabet) – known as the “FAMAGs”, have largely benefitted from the economic fallout of the crisis, as more people rely on their technology to work and shop from home. However, their increasing dominance is raising concerns about the top-heavy composition of the US equity market and the sustainability of the tech rally.