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India’s growth outlook worsens amid fears of extended lockdown

Growth forecasts for India’s economy, which before the Covid-19 global pandemic was projected to post a mild recovery, are getting bleaker as the government weighs whether to extend the 21-day nationwide lockdown.

Now, UK research consultancy Capital Economics projects India’s growth will slow to just 1 per cent in this fiscal year, the lowest pace in 41 years. “Coronavirus and measures to contain it will ravage the economy over the coming months,” said Capital Economics economist Shilan Shah. Fitch ratings agency, meanwhile, has slashed its 1920-21 growth projection to 2 per cent, a 30-year low.

On the domestic front, household spending and investment “is likely to collapse, with only a ramping up of government spending providing any support” while external demand will “weaken drastically too,” Shah said. The central bank’s responded with aggressive monetary loosening, but large-scale fiscal stimulus is also needed to prevent the drastic slowdown from “morphing into a contraction in annual output,” Shah said.

Capital Economics expects the lockdown, slated to end April 14, to be extended for up to three months and if so, “large parts of the manufacturing, construction, transport, retail, leisure and recreation sectors will grind to a halt.” US consultancy Boston Consulting Group also forecasts a protracted shutdown which it says India will only start lifting between end-June and second week of September.

The lockdown’s aimed at averting a catastrophic explosion of coronavirus cases — an Indian Council of Medical Research study suggests one unquarantined Covid-19 patient can infect 406 people in 30 days. But the shutdown’s also caused unprecedented disruption to India’s consumption-driven economy which even before the coronavirus shock was growing at six-year lows. Growth projections for 2019-20 range from around 4.5 per cent to 5.0 per cent. Gross Domestic Product growth for the 2019-20 third quarter, set for publication Friday, will be around 4.5 per cent, slightly ahead of the 4.3 per cent logged in the year-ago period, helped by a healthy crop output, economists say.

“The challenge for India versus its peers is starker if infections spread rapidly considering the higher density of population per capita and weaker health infrastructure,” UBS economist Tanvee Gupta Jain said. India looks to be a long way from the goal of “flattening the coronavirus curve” and preventing a surge that swamps the nation’s weak healthcare system. It took 59 days to reach the first 1,000 confirmed cases. But in just two days, the number of cases rose from 3,000 to 4,000 — and deaths from 75 to 100. The death toll in India stood at 111 Tuesday and coronavirus cases at 4,281, a 704 jump in 24 hours. Union Minister Prakash Javadekar said a decision on whether to extend the shutdown “will be declared at the right time.”

States favour shutdown extension

Many states are urging the government to extend the shutdown with Telangana’s chief minister K Chandrashekar Rao saying, “Economic recovery can come later. In the given situation, with India’s poor health infrastructure and big workforce, we have no other weapon.” India could face 100,000 to 1.3 million confirmed coronavirus cases by mid-May if the trend continues, according to a March 25 report by the COV-IND-19 Study Group. Already, tens of thousands of urban migrant workers have returned to their villages, potentially spreading the virus deep in India’s hinterland. (more…)

Major indices close higher led by the Dow and S&P

Dow and S&P rise by 3.4%

the major indices are closing higher with the Dow and S&P leading the way. Each rose by around 3.4%. The NASDAQ index lagged behind with a 2.6% gain.
A look at the close is showing:
  • S&P index, rose by 89.86 points or 3.38% to 2749.27.
  • NASDAQ index, rose by 203.64 points or 2.58% to 8090.90
  • Dow industrial average, rose by 772.57 points or 3.41% to 23426.43

Some of the leading stocks include:

  • Wynnresort, +13.39%
  • Square, +13.29%
  • Marriott, +11.87%
  • United Airlines, +12.3%
  • General Motors, +8.6%
  • Unitedhealth +8.10%
  • Raytheon, +8.96%
  • Twitter, +8.82%
  • FedEx, +8.13%
  • Citigroup, +7.27%
  • Ford Motor’s, +6.69%
  • Morgan Stanley, +6.58%
  • Exxon Mobil +6.35%
  • Goldman Sachs +6.47%
  • Chevron +6.34%
  • American Express, +5.14%
Some laggards today included;
  • Deutsche Bank, -1.58%
  • General Mills, -1.24%
  • Alibaba, -1.10%
  • ATT, -0.70%
  • Netflix, -0.33%
  • Disney, -0.23%
  • Walmart, -0.12%

 

US major indices close lower but off the low levels for the day

Prices recover in the last hour of trading

The major indices are closing lower but off the low levels for the day. The last hour of trading saw prices move higher. The major indices have moved lower in 3 last 4 trading days
The final numbers are showing:
  • The S&P index fell -38.34 points or -1.52% at 2488.56. The high for the day reached 2538.18 . The low extended to 2459.96
  • the NASDAQ index fell -114.225 points or -1.53% to 7373.08. The high price reached 7518.71.The low extended to 7288.11
  • The Dow fell -357.99 points or -1.67% to 21055.49. The high price reached to 21 447.81. The low extended to 20863.09
For the week, the major indices all declined with the Dow industrial average falling the most. The changes for the week are showing:
  • Dow -2.7%
  • S&P -2.08%
  • Nasdaq -1.72%

YTD, the Dow al  so is leading the declines:

  • Dow -26.23%
  • S&P, -22.97%
  • Nasdaq, -17.83%.

US Indices run higher into the close. Major indices close near session highs

Major indice rise by 1.6% to 2.2%

The US stocks ran higher into the close with the major indices rising about 0.9% more in the last hour of trading.
The final numbers are showing:
  • The S&P index rose 56.09 points or 2.28% at 2526.90
  • The NASDAQ index rose 126.73 points or 1.72% at 2487.31
  • The Dow Industrial Average rose 1 and 69.93 points or 2.24% at 21413.44
Going into the last hour of trading, the major indices were trading at:
  • S&P index up 32.81 points or 1.33% at 2503.31. The final hour added 0.95%
  • Nasdaq index up 54.859 points or 0.75% 7415.44.  The final hour added 0.97%
  • Dow up 275.64 points or 1.32% at 21219.15. The final hour added 0.92%
Some winners today included:
  • Chevron, +11.06%
  • Exxon Mobile, +7.62%
  • Morgan Stanley, +7.18%
  • Gilead, +6.09%
  • Broadcom, +5.77%
  • Nvidia, +5.16%
  • Intel, +4.80%
  • Caterpillar, +4.8%
  • IBM, +4.77%
  • Procter & Gamble, +4.62%
  • Lockheed Martin, +4.46%
  • Mastercard, +4.46%
Some losers today included:
  • Beyond Meat, -9.58%
  • United Airlines, -8.72%
  • Walgreens Boots, -6.14%
  • Slack, -5.94%
  • United Technologies, -5.92%
  • Boeing, -5.82%
  • Tesla, -5.63%
  • Delta Airlines, -4.78%

6 companies working on vaccines against COVID-19

A closer look at the companies developing vaccines to combat COVID-19

RB1
According to many experts in the healthcare sphere, the spreading of COVID-19 over the world has not reached its peak, and we do not have a vaccine against this disease yet.

Currently, the first place in terms of the number of diseased among countries is taken by the USA. China, though it was the source of the infection, has managed to stop its spreading, so now it occupies the third place in terms of the number of the sick.

Note that stopping the spreading of the virus is not the same as learning to cure people of it. There is no vaccine yet, and now it is very important to mark time until we get the vaccine. Hence, quarantine is the only way of fighting the virus.

Pharmaceutical companies have long started inventing a vaccine against the enemy; however, before it gets to the market, it has to pass all the stages of trials. As long as the WHO has announced a pandemics, the number of the stages is decreased.

For example, in normal conditions, pre-clinical testing (when the drug is tested on animals) takes 1 to 2 years, but in the present circumstances, this stage takes 1-2 months. The permission to sell the drug usually takes 4 years to receive, but this time the company may only need 4 months to get it.

In this article, we will discuss what companies are closer to the final stage of testing than others. The stocks of such companies will attract the most vivid attention of investors because the demand for the vaccine will exceed its production power, which means the company will make a maximum profit selling it.

Testing drugs (more…)

Indonesia central bank says in discussion with Fed for possibility of swap, repo lines

The dollar squeeze in emerging markets is where the problem is at

Indonesia is one of the EM countries where they have higher dollar-denominated debt than they do FX reserves. That is not a good spot to be in during this kind of market environment.

The swap lines offered by the Fed is good to address the needs by local banks on the receiving end as they start to run empty on dollars.
However, the true value of the Fed’s liquidity measures relies on how banks can also help get these dollars to corporates for their working capital requirements or cash buffers.

How effective is all of this remains to be seen but at least there is no reoccurrence of the dollar panic that we saw a few weeks back so that is something I guess.

Deficit discipline is dead

Debt is no longer a four-letter word

The legacy of the coronavirus crisis may be that it kills the idea that deficits matter.
The Tea Party derailed Obama’s legislative agenda, lamenting high deficits. At least 12 Senators and at least 50 members of the House were elected on Tea Party platforms. These were the most-hardcore deficit hawks in history.
Trump vaulted himself to the White House by tapping Tea Party sentiment. Here’s a sample:
For reference, the combined deficit in Obama’s final four years was $2.19 trillion.
Yesterday, Trump tweeted this:
tweet
The deficit in the US this year will be at least $3 trillion and probably $4 trillion.
I’m not here to point out they hypocrisy, you can get the anywhere.

(more…)

Dow leads the decline in stocks. Dow posts worst Q1 ever.

Dow & S&P worst month since 2008. S&P falls -20% for the quarter. All indices are in the red going back a year.

The US stocks are ending the day with declines across the board but by differing degrees.
For the month, the Dow and S&P had the worst month since 2008. The Dow posted the worst Q1 ever.  The S&P fell an even -20.00% for the quarter (which is a bit ironic).
The final numbers are showing:
  • S&P index fell -42.06 points ro -1.6% at 2584.59
  • Nasdaq index fell -74.05 points or -0.95% at 7700.10
  • Dow index fell -410.32 points or -1.84% at 21917.16
For the month, the major indices are showing:
  • S&P index fell -12.51%
  • NASDAQ index fell -10.12%
  • Dow fell -13.74%
For the quarter, the final numbers for the 1Q are showing:
  • S&P index fell -20.00%
  • NASDAQ index fell -14.18%
  • Dow fell -23.2%
Going back 1 year, all the major indices are now showing declines
  • S&P index, -8.81%
  • NASDAQ index, -0.38%
  • Dow industrial average, -15.47%

US Indicies plunge to end the week but not as bad as some recent days

When you have -10% days, a fall of -4.35% doesn’t sound that bad

The US stocks plunged once again today with the declines led by the Dow.  Although sharply lower, a fall of over 4% does not sound so bad when we’ve endured -10% moves of late.  What we know is the numbers are not pretty today/this week/YTD and over the last year.
A look at the final number for the day are showing:
  • S&P index fell -104.47 points or -4.34% to 2304.92
  • Nasdaq index fell -271.05 points or -3.79% to 6879.52
  • Dow fell -913.21 points or -4.55% to 9173.98
For the week, the numbers were horrible as well:
  • S&P index fell -14.98%
  • NASDAQ index fell -12.64%
  • Dow fell -17.3%
Year to date numbers for the major indices are showing:
  • S&P index, -28.66%
  • Nasdaq index, -23.33%
  • Dow -32.81%

Finally, going back 1 year:

  • S&P index, -18.39%
  • NASDAQ index, -10.99%
  • Dow, -25.53%
No matter how you slice it, the final numbers for the day, the week, the year to date and the year are not pretty….not pretty at all.

ECB announces a new coronavirus pandemic response, EUR750bn purchase program

European Central Bank announcement

  • €750 billion pandemic emergency purchase programme (PEPP)
  • a new temporary asset purchase programme of private and public sector securities to counter the serious risks to the monetary policy transmission mechanism
  • purchases will be conducted until the end of 2020 and will include all the asset categories eligible under the existing asset purchase programme
  • says for the purchases of public sector securities, the benchmark allocation across jurisdictions will continue to be the capital key of the national central banks.
  • says to the extent that some self-imposed limits might hamper action that the ECB is required to take in order to fulfil its mandate, the governing council will consider revising them to the extent necessary
  • says at the same time, purchases under the new PEPPwill be conducted in a flexible manner. this allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions.
  • says a waiver of the eligibility requirements for securities issued by the Greek government will be granted for purchases under PEPP.
  • says the governing council is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as longas needed
  • the governing council will terminate net asset purchases under PEPP once it judges that the coronavirus covid-19 crisis phase is over, but in any case not before the end of the year
  • says to expand the range of eligible assets under the corporate sector purchase programme (CSPP) to non-financial commercial paper, making all commercial papers of sufficient credit quality eligible for purchase under CSPP
  • says the governing council of the ECB is committed to playing its role in supporting all citizens of the euro area through this extremely challenging time

Summary Headlines via Reuters

ES futures have flipped around to positive on this supportive announcement after losing ground earlier on the reopening for evening trade.
There are plenty of responses to these sorts of actions along the lines that they will not ‘cure’ the coronavirus. Correct. Central banks are applying band-aids to mitigate (hopefully) the impacts upon econiomies, doing what they can do. Don’t expect Lagarde, Powell, et al find a miracle medical cure, K?