Archives of “March 2020” month

rss

Italy says that virus outbreak still has not reached its peak in the country

  
  Analysis
#  #  #  #  #  #

Comments by Italian prime minister, Giuseppe Conte

Italy
  • Weeks ahead are the most risky
  • Maximum precaution is needed but there is no need for new bans
  • Says Italians need to respect the existing ones
  • Approved measures are not sufficient to support businesses
Much like China, it will be many more weeks before Italy can actually start to phase out the current lockdown. Over the weekend, France and Spain are among those starting to take similar actions and this will further dampen euro area economic conditions.

Nikkei 225 closes lower by 2.46% at 17,002.04

  
Analysis, Global Indices

The Nikkei closes near the lows for the day after the BOJ policy decision

Nikkei 16-03

Japanese stocks held on to hope for the longest of time today, awaiting the BOJ decision but ultimately those hopes were overwhelmed by fear as the central bank appears to have disappointed the market with no change to rates or JGB yields target.

ETF purchases were very much expected but the BOJ appears to be catching a falling knife with their latest ploy and the market is not convinced as the Nikkei spiked higher initially before erasing those gains to fall by over 2% today.
The Hang Seng and Chinese equities are also down at their lows for the day now, with the former down by over 3.6% while the Shanghai Composite is down by 2.4%.

Amidst the gloom – Italian hospital saves Covid-19 patients lives by 3D printing valves

  
  Analysis
#  #  #  #  #  #  #

No, not forex, but some human ingenuity, creativity and hard work in application:

  • massive number of people who require intensive care and oxygenation in order to live through the infection long enough for their antibodies to fight it. This means that the only way to save lives at this point – beyond prevention – is to have as many working reanimation machines as possible.
  • a Northern Italian hospital needed a replacement valve for a reanimation device and the supplier had run out with no way to get more in a short time.
  • a company in the area, Isinnova, brought a 3D printer directly to the hospital and, in just a few hours, redesigned and then produced the missing piece
  • On the evening of Saturday 14th (the next day) Massimo reported that “the system works”
  •  At the time of writing, 10 patients are accompanied in breathing by a machine that uses a 3D printed valve. 
What great news amidst the crisis.
No, not forex, but some human ingenuity, creativity and hard work in application:

China data – huge collapse in industrial production, retail sales, jump in unemployment

  
Analysis, Economy

January-February combined industrial output down 13.5% y/y (vs. expected -3%)

  • Jan-Feb combined retails sales down 20.5% y/y (expected -4%)
  • Fixed investment down 24.5% y/y for the combined two months, expected -2%
A heads up of what is to come around the globe? Hubei, the epicentre of the cov1 COVID-19 outbreak is a critical manufacturing centre in China. Perhaps other countries will not take so hard a hit, but those that have been slow in response are going to get it the worst.

WSJ report that Facebook, Google, Amazon, and others form coronavirus task force

  
  Analysis

This is a good move – these tech behemoths can act as a positive assistance to help combat the impact of the COVID-19 outbreak.

Facebook is a hotbed of fake news and false information about the COVID-19 outbreak. This is not helpful. A lot of the disinformation and misinformation is being spread innocently but a lot is also being spread by more malignant actors.

The Federal Reserve (and coordinated global actions) at a glance – what it means

  
  Analysis
  Tags
In brief here’s what has happened, the Fed has
  • cut rates to zero
  • increased the length of loans for banks to 90 days
  • has lowered bank reserve requirements (the amount of cash they need to keep on hand, in brief) which will (this is the plan) free up funds for banks to keep customers afloat with lending and easier standard through the crisis
  • launched USD700 bn in new QE
  • all this in coordination with other central banks
A bit more detail:
  • the cut to rates to zero eases credit market conditions, lending was drying up
  • longer, extended time period  loans help eliminate panic in short-term lending market, in effect this will assist banks to keep lending. If this assists firms in avoiding mass layoffs (such as occurred in the GFC 2008 crisis), at the margin, it’ll help the economy.
  • Lower bank reserve requirements encourages bank lending as a complement to the Community Reinvestment Act (CRA) emergency measures the Federal Reserve put into place with their first pre-emptive cut back in early March (this involved steps to waive late fees, easing credit, for firms and consumers)
  • $700 b in new QE will (this is the plan) ease the recession ahead
  • coordination with other central banks on Sunday night pre much of Asia opening is a big step, meant to ease panic
  • CBs have committed to do more and for as long as needed
The FOMC and other central banks around the planet have made an emergency Sunday evening move. 
ps. If your immediate response to this news is its not good as its not a vaccine/cure for the virus you are missing the point – the Fed can’t do this. They do what they can with the tools available to them.
If your immediate response is its no good because we need fiscal efforts, again the Fed can’t do this.
If your immediate response is its not enough, well you may be correct. The Fed says it’ll do more if necessary and as long as necessary.

Federal Reserve acts on a Sunday evening to slash rates to near zero

  
  Analysis
#  #  #  #  #  #  #  #  #  #  #

Federal Open Market Committee

  • cut interest rates for the second time in less than two weeks
  • emergency move
  • “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range
  • The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals”
Headlines via Reuters:
  • fed cuts interest rates to near zero in response to coronavirus crisis, risks to economic outlook
  • says expects target interest rate will remain in range of 0 and 0.25% until economy has “weathered recent events” and is on track to meet inflation and employment goals
  • says crisis has “harmed communities and disrupted economic activity” in u.s. and other countries, will weigh on activity in the near term
  • says will use “full range of tools” to support economy, will expand holdings of treasury securities by $500 bln and mortgage backed securities by $200 bln in coming months
  • vote on policy action was 9 to 1, with Cleveland fed president Loretta Mester preferring a smaller interest rate cut
  • Fed announces coordinated action with bank of Canada, bank of England, bank of Japan, European central bank and Wwiss national bank
  • Fed says six global central banks have agreed to lower pricing on u.s. dollar liquidity swap arrangements by 25 bps
  • says changes to central bank swap lines will take effect week of march 16
  • Fed and other global central banks will begin offering u.s. dollar liquidity in each jurisdiction with 84-day maturity
  • Fed says it will lower the primary credit rate by 150 basis points to 0.25 percent, effective march 16
  • Fed says it supports firms that choose to use their capital and liquidity buffers to lend and undertake other supportive actions in a safe and sound manner
  • says that depository institutions may borrow from the discount window for periods as long as 90 days, prepayable and renewable by the borrower on a daily basis
  • says reducing reserve requirement ratios to zero percent effective on march 26
  • says encourages depository institutions to utilize intraday credit extended by reserve banks, on both a collateralized and uncollateralized basis
Go to top