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Coronavirus – weekly update – 11 May 2020

Coronavirus – weekly update – 11 May 2020



Worldwide COVID-19 cases crossed the 4.3 million mark and the death toll is closing in on 300,000 as of 13 May.  The focus is now increasingly shifting to monitoring new cases and fatalities in a second wave that might follow hot on the heels of exit from lockdown.

  • Cautious exits from lockdown now underway  
  • Stock markets trading sideways
  • Major central banks prepared, if required, to do more

Those countries leading the way out of lockdown in Europe – Austria, Demark, and the Czech Republic – are yet to show any noticeable spikes in new infections (see Exhibit 1 below). As a result, their exit process continues. The data in these countries remain a key signpost and the market will no doubt be monitoring closely Germany, Italy, Spain, and France for any signs of a second wave.

Exhibit 1: COVID-19, daily new infections in countries among the first to exit lockdown

Source: ECDC, as of 11 May 2020

The situation is more concerning in the Americas. There is a glacial decline in the number of new infections in the United States. Testifying before the US Senate health committee, Doctor Fauci, head of the US National Institute of Allergy and Infectious Diseases (NIAID), warned that reopening “could even set you back on the road to economic recovery”.  Meanwhile, Brazil leads the cumulative death toll statistics for developing nations with over 12,000 deaths (over three times more than Mexico with the second highest death toll). A recent editorial in the medical journal ‘The Lancet’ warned President Jair Bolsonaro that he “needs to drastically change course”.

R0 – the basic reproduction number – a key market signpost

With the focus now shifting to government’s capacity to manage the virus outside lockdown, we anticipate that R0 – or the basic reproduction number – will become a key market signpost. R0 describes the average number of secondary cases caused by a single infection in a population with zero acquired immunity (not to be confused with the effective reproduction number, R, which adjusts for the extent of immunity within the population). 

The Robert Koch Institute now publishes a daily estimate of R0 for Germany. The latest estimate, based on electronically notified cases as of 12/05/2020, placed the reproduction number in a 95% prediction interval between 0.79 – 1.10, with a central estimate just below one.

Economic news

Hard data on the impact the lockdowns have had on economic activity are starting to arrive. We already have preliminary estimates of GDP in a number of countries for the first quarter of 2020. However, these preliminary estimates generally contain little information about economic activity in the final month of the quarter, which is precisely when the lockdowns began.  

Data on industrial production and output in the manufacturing sector providing more detail are now available for March (see Exhibit 2 below). The numbers vividly illustrate the variation in the extent of the economic contraction across countries. This of course results from the differing severity of lockdown measures across countries.  Manufacturing output was essentially unchanged between February and March in Sweden, down around 5% in the UK and the USA, with falls of around 10% in Germany, almost 20% in France and around 30% in Italy.  It may well be that the level of manufacturing output falls further in the UK – closing the gap on continental Europe – in the April release when the lockdown was in full force throughout the period.  

Exhibit 2: Changes in level of manufacturing output among developed nations

Source: Haver, as of 13 May 2020

Policy measures – discussions continue in Europe

Developments in Europe remain centre stage after last week’s ructions at the German Constitutional Court. In terms of a common fiscal response there is at least now clarity over the Pandemic Crisis Support tool that will be available to the sovereigns via the European Stability Mechanism. Discussions on the all-important recovery fund continue but without conclusion.

We will remain concerned about the long-term consequences of the pandemic for Europe unless and until the eurozone’s finance ministers and leaders are able to reach a consensus around a sufficiently substantial solidarity package that can create the space for all countries to do whatever it takes to support their economies.

Looking further ahead we suspect that investors will increasingly come to share the concerns of Ángel Gurría, secretary-general of the OECD, who has warned that the cost of fighting the pandemic will “come back to haunt us” given the starting position of many economies – or as he put it:

“We are going to be heavy on the wing because we are trying to fly and we were already carrying a lot of debt and now we are adding more.”

Market outlook

  • Valuations of risky asset prices remain supported by the central bank interventions and by the modest improvement in sentiment. Equities have continued to recover, albeit at a slower pace over the past few days. Credit spreads have ground slowly tighter and volatility has fallen back to levels last seen in mid-February. We see this backdrop continuing for now, with lower volatility and markets drifting sideways. This cautious positive tone is supported by the perception that any further downturn will be met by more central bank intervention or fiscal stimulus.
  • There are risks going forward, especially if the high unemployment rates consolidate at high levels with temporary layoffs becoming permanent. This, combined with current lending standards, that have tightened considerably, may hinder a sustainable rebound in asset prices. So far, financial markets have decoupled from the real economy due to central bank support. Should the economic rebound remain weak, financial markets could increasingly reflect the state of the real economy via corrections in valuations.
  • A key question is the pace of recovery in global demand. Long dated oil futures point to a recovery that may be slower than expected by equity analysts. However, China is slowly turning the corner where significant credit easing is helping the rebound. This could point the way forward for those economies that are starting to lift restrictions. One key headwind to the rebound are the current tensions between the US and China, fuelled by the upcoming US elections. There is risk of a breakdown in the existing US-China trade deal.
  • It is likely that the current stimulus programmes will have to be increased going forward as some industries (airlines, tourism, retail, etc) will require more support. This uneven recovery is pushing earnings and credit dispersion up, with entire sectors or even countries coming under significant pressure. Asset selection and risk allocation are likely to be more important than outright market calls in such an environment.
  • Emerging market assets have been hit hard by the combination of lower global trade, a stronger US dollar and increased volatility. This has created a massive rise in dispersion among emerging market credits. However, with outflows stabilising and the prospect of a weaker US dollar, some carry trades have started to look attractive, especially in Asia where the COVID-19 crisis has been better managed.

Asset allocation view

Our set of signposts remain critical orientation points as developed economies cautiously reopen.

In terms of asset allocation, we remain long market risk strategically. We overweight European and US investment-grade credit (financed by government bonds) and are long emerging market and UK equities; long commodities and long EM hard currency debt.

Having lowered our risk exposure tactically with short positions in the S&P 500 and eurozone equities, we await a market corrections to further increase our risk exposure.

Denis Panel, Chief Investment Officer Multi Assets & Quantitative Solutions, and Marina Chernyak, senior economist and coordinator of COVID-19 research

Writen by Marina Chernyak. The post Coronavirus – weekly update – 11 May 2020 appeared first on Investors' Corner - The official blog of BNP Paribas Asset Management.

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Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Via Middle East Eye,

Saudi Arabia has sentenced a secondary schoolgirl…



Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Via Middle East Eye,

Saudi Arabia has sentenced a secondary schoolgirl to 18 years in jail and a travel ban for posting tweets in support of political prisoners, according to a rights group.

On Friday, ALQST rights group, which documents human rights abuses in Saudi Arabia, revealed that the Saudi Specialised Criminal Court handed out the sentence in August to 18-year-old Manal al-Gafiri, who was only 17 at the time of her arrest.

Via Reuters

The Saudi judiciary, under the de facto rule of Crown Prince Mohammed bin Salman, has issued several extreme prison sentences over cyber activism and the use of social media for criticising the government.

They include the recent death penalty against Mohammed al-Ghamdi, a retired teacher, for comments made on Twitter and YouTube, and the 34-year sentence of Leeds University doctoral candidate Salma al-Shehab over tweets last year.

The crown prince confirmed Ghamdi's sentence during a wide-ranging interview with Fox News on Wednesday. He blamed it on "bad laws" that he cannot change

"We are not happy with that. We are ashamed of that. But [under] the jury system, you have to follow the laws, and I cannot tell a judge [to] do that and ignore the law, because... that's against the rule of law," he said.

Saudi human rights defenders and lawyers, however, disputed Mohammed bin Salman's allegations and said the crackdown on social media users is correlated with his ascent to power and the introduction of new judicial bodies that have since overseen a crackdown on his critics. 

"He is able, with one word or the stroke of a pen, in seconds, to change the laws if he wants," Taha al-Hajji, a Saudi lawyer and legal consultant with the European Saudi Organisation for Human Rights, told Middle East Eye this week.

According to Joey Shea, Saudi Arabia researcher at Human Rights Watch, Ghamdi was sentenced under a counterterrorism law passed in 2017, shortly after Mohammed bin Salman became crown prince. The law has been criticised for its broad definition of terrorism.

Similarly, two new bodies - the Presidency of State Security and the Public Prosecution Office - were established by royal decrees in the same year.

Rights groups have said that the 2017 overhaul of the kingdom's security apparatus has significantly enabled the repression of Saudi opposition voices, including those of women rights defenders and opposition activists. 

"These violations are new under MBS, and it's ridiculous that he is blaming this on the prosecution when he and senior Saudi authorities wield so much power over the prosecution services and the political apparatus more broadly," Shea said, using a common term for the prince.

Tyler Durden Sun, 09/24/2023 - 11:30

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Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Authored by Mike Shedlock via,

In a symbolic, photo-op…



Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Authored by Mike Shedlock via,

In a symbolic, photo-op gesture to win union votes, Biden will head to Michigan for a token visit.

Biden to Walk the Picket Line

Taking Sides

CNN had some Interesting comments on Biden Talking Sides.

Jeremi Suri, a presidential historian and professor at University of Texas at Austin, said he doesn’t believe any president has ever visited a picket line during a strike.

Presidents, including Biden, have previously declined to wade into union disputes to avoid the perception of taking sides on issues where the negotiating parties are often engaged in litigation.

On September 15, the day the strike started, Biden said that the automakers “should go further to ensure record corporate profits mean record contracts for the UAW.”

Some Democratic politicians have been urging Biden to do more. California Rep. Ro Khanna on Monday told CNN’s Vanessa Yurkevich that Biden and other Democrats should join him on the picket line.

“I’d love to see the president out here,” he said, arguing the Democratic Party needs to demonstrate it’s “the party of the working class.”

UAW Announces New Strike Locations

As the strike enters a second week, UAW Announces New Strike Locations

UAW President Shawn Fain called for union members to strike at noon ET Friday at 38 General Motors and Stellantis facilities across 20 states. He said the strike call covers all of GM and Stellantis’ parts distribution facilities.

The strike call notably excludes Ford, the third member of Detroit’s Big Three, suggesting the UAW is more satisfied with the progress it has made on a new contract with that company.

General Motors plants being told to strike are in Pontiac, Belleville, Ypsilanti, Burton, Swartz Creek and Lansing, Michigan; West Chester, Ohio; Aurora, Colorado; Hudson, Wisconsin; Bolingbrook, Illinois; Reno, Nevada; Rancho Cucamonga, California; Roanoke, Texas; Martinsburg, West Virginia; Brandon, Mississippi; Charlotte, North Carolina; Memphis, Tennessee; and Lang Horne, Pennsylvania.

The Stellantis facilities going on strike are in Marysville, Center Line, Warren, Auburn Hills, Romulus and Streetsboro, Michigan; Milwaukee, Wisconsin; Plymouth, Minnesota; Commerce City, Colorado; Naperville, Illinois; Ontario, California; Beaverton, Oregon; Morrow, Georgia; Winchester, Virginia; Carrollton, Texas; Tappan, New York; and Mansfield, Massachusetts.

Contract Negotiations Are Not Close

Good Luck Getting Repairs

Party of the Working Cass, Really?

Let’s discuss the nonsensical notion that Democrats are the party of the “working class”.

Unnecessary stimulus, reckless expansion of social services, student debt cancellation, eviction moratoriums, earned income credits, immigration policy, and forcing higher prices for all, to benefit the few, are geared towards the “unworking class”.

On top of it, Biden wants to take away your gas stove, end charter schools to protect incompetent union teachers, and force you into an EV that you do not want and for which infrastructure is not in place.

All of this increases inflation across the board as do sanctions and clean energy madness.

Exploring the Working Class Idea

If you don’t work and have no income, Biden may make your healthcare cheaper. If you do work, he seeks to take your healthcare options away.

If you want to pay higher prices for cars, give up your gas stove, be forced into an EV, subsidize wind energy then pay more for electricity on top of it, you have a clear choice. If you support those efforts, by all means, please join him on the picket line for a token photo-op (not that you will be able to get within miles for the staged charade).

But if you can think at all, you understand Biden does not support the working class, he supports the unworking class.

Tyler Durden Sun, 09/24/2023 - 10:30

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UK Quietly Passes “Online Safety Bill” Into Law

UK Quietly Passes "Online Safety Bill" Into Law

Authored by Kit Knightly via,

Buried behind the Brand-related headlines…



UK Quietly Passes "Online Safety Bill" Into Law

Authored by Kit Knightly via,

Buried behind the Brand-related headlines yesterday, the British House of Lords voted to pass the controversial “Online Safety Bill” into law. All that’s needed now is Royal assent, which Charles will obviously provide.

The bill’s (very catchy) long-form title is…

A Bill to make provision for and in connection with the regulation by OFCOM of certain internet services; for and in connection with communications offences; and for connected purposes.

…and that’s essentially it, it hands the duty of “regulating” certain online content to the UK’s Office of Communications (OfCom).

Ofcom Chief Executive Dame Melanie Dawes could barely contain her excitement in a statement to the press:

“Today is a major milestone in the mission to create a safer life online for children and adults in the UK. Everyone at Ofcom feels privileged to be entrusted with this important role, and we’re ready to start implementing these new laws.”

As always with these things, the bill’s text is a challenging and rather dull read, deliberately obscure in its language and difficult to navigate.

Of some note is the “information offenses” clause, which empowers OfCom to demand “information” from users, companies and employees, and makes it a crime to withhold it. The nature of this “information” is never specified, nor does it appear to be qualified. Meaning it could be anything, and will most likely be used to get private account information about users from social media platforms.

In one of the more worrying clauses, the Bill outlines what they call “communications offenses”. Section 10 details crimes of transmitting “Harmful, false and threatening communications”.

It should be noted that sending threats is already illegal in the UK, so the only new ground covered here is “harmful” and/or “false” information, and the fact they feel the need to differentiate between those two things should worry you.

After all, the truth can definitely be “harmful”…Especially to a power-hungry elite barely controlling an angry populace through dishonest propaganda.

Rather amusingly, the bill makes it a crime to “send a message” containing false information in clause 156…then immediately grants immunity to every newspaper, television channel and streaming service in clause 157.

Apparently it’s OK for the mainstream media to be harmful and dishonest.

But the primary purpose of the new law is a transfer of responsibility to enable and incentivize censorship.

Search engines (“regulated search services”, to quote the bill) and social media companies (“regulated user-to-user services”) will now be held accountable for how people use their platform.

For example: If I were to google “Is it safe to drink bleach?”, find some website that says yes, and then drink bleach, OfCom would not hold me responsible. They would hold Google responsible for letting me read that website. Likewise, if someone tweets @ me telling me to drink bleach, and I do so, Twitter would be held responsible for permitting that communication to take place.

This could result in hefty fines, or even potentially criminal charges, to companies and/or executives of those companies. It could even open them up to massively expensive civil suits (don’t be surprised if such a legal drama hits the headlines soon).

Unsurprisingly the mainstream coverage of the new laws barely mentions any of these concerns, instead opting to put child pornography front and centre. Because the Mrs Lovejoy argument always works.

That’s all window dressing, of course, what this is really about is “misinformation” and “hate speech”. Which is to say, fact-checking mainstream lies and calling out mainstream liars.

Section 7(135) is entirely dedicated to the creation of a new “Advisory committee on disinformation and misinformation”, which will be expected to submit regular reports to OfCom and the Secretary of State on how best to “counter misinformation on regulated services“.

This is clearly a response to Covid, or rather the failure of Covid.

Essentially, the pandemic narrative broke because the current mechanisms of censorship didn’t work well enough. In response, the government has just legalised and out-sourced their silencing of dissent.

See, the government isn’t going to actually censor anyone themselves, protecting it from pro-free speech criticism. Rather, huge financial pressure will be applied on tech giants to be “responsible” and “protect the vulnerable”. Meaning de-platforming and cancelling independent media via increasingly opaque “terms of service violations”

These companies will be cheered on by the vast crowd of jabbed-and-masked NPCs who have been so successfully brainwashed into believing the “they are a private company and can do that they want” argument.

This has been going on for years already, of course, but that was covert stuff. Now it’s legal in the UK, and is about to get a lot worse.

It won’t be just the UK either, considering the messaging on “misinformation” being seen at the UN in the last few days, we should expect something similar on a global scale.

You can read the full text of the Online Safety Bill here.

Tyler Durden Sun, 09/24/2023 - 08:10

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