Stocks Rally After Talk of Reopening Economy

Stocks recovered this past Friday from talk about reopening the economy. Investors seem undeterred by the economic damage caused by the COVID-19 pandemic. President Trump said he hopes to have businesses back open by May 1st. This will be the first attempt at a large-scale resumption since we have gone into quarantine. As a result from this news, the S&P 500 rose 2.7 percent, and Boeing led the Dow Jones industrial average with a 3 percent rise. This leaves the S&P 500 28 percent above this year's low, but still 18 percent below its high. Additionally, China has reported that their economy has shrank for the first time in decades. The jump in stocks is believed to be a result of recent medical news.

In a recent clinical trial by Gilead Sciences, the antiviral drug, remdesivir, was reported to have helped patients recover quickly from severe coronavirus symptoms at a Chicago Hospital. As a result, Gilead's stocks have increased by nearly 10 percent. This gives some security and hope to citizens.

Do you think it is a wise move for the economy to begin to reopen? Should we have fears of a second wave? Do you believe the medical field is ready if we end up having a second wave?

https://www.nytimes.com/2020/04/17/business/stock-market-live-coronavirus.html

Bridging Divides, Most Agree on Economic Outlook: It’s Bleak

https://www.nytimes.com/2020/04/18/business/economy/coronavirus-economy-survey.html

Six in ten Americans are expecting a five-year depression after the coronavirus, but it is also bringing people together. Those who have lost their low-income jobs don't have hopes they will be employed anytime soon. Even if people are employed they are worried about losing their jobs quickly. On the other hand, some people believe the economy will return back to its normal success soon. People have less confidence in our economy and will be spending less, which doesn't help our economy. Do you think our economy will continue on its success soon, or do you think there is more to worry about a possible depression?

Coronavirus could cause more countries to default on their debt, economist say

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• An increasing number of countries could default on their debt in the coming 12-18 months as governments globally increase spending to limit the economic damage from the coronavirus pandemic, said Simon Baptist, global chief economist at The Economist Intelligence Unit. The International Monetary Fund on Tuesday downgraded its economic forecasts, saying that it now expects the global economy to shrink by 3% this year – compared to its previous projection for growth of 3.3%.  
• Many governments have announced large amounts of stimulus to support their respective economies, with some taking up more debt to fund those expenditure. The U.S. has raised its issuance of Treasury securities, while the usually fiscally conservative Germany said it plans to increase borrowing by as much as 150 billion euros ($164.4 billion).  But Baptist said not all governments could get the funding that they seek. In particular, he said those in emerging economies would face “a big challenge” in convincing international investors to lend them more money at a time when investors are seeking safer places to park their funds.“A lot of emerging markets are reliant on international investors, international financial flows to get the funding to run a budget deficit, they find it harder to borrow in local currency — although there are a few exceptions,” said the economist. “At the moment, with this big turn to risk aversion in international markets, even though there may be some emerging world governments that would like to spend more, they’re not going to be able to get funding.”  
• https://www.cnbc.com/2020/04/15/coronavirus-more-countries-could-default-on-debt-economist-says.html
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The coronavirus crisis could pave the way to universal basic income

The coronavirus crisis has revitalized calls for a universal basic income, with even the Pope suggesting that now may be the time to consider giving everyone free money.

The Covid-19 outbreak has meant countries across the globe have effectively had to shut down, with many governments imposing draconian measures on the lives of billions of people.To be sure, the International Monetary Fund now expects the global economy in 2020 to suffer its worst financial crisis since the Great Depression. Universal basic income is not a new idea. But it has gained more traction of late, more recently through the likes of U.S. presidential candidate Andrew Yang, who based his platform on the policy.

The IMF describes universal basic income as an income support mechanism, in which regular cash payments are intended to reach all (or a very large) portion of the population with no (or minimal) conditions. 

Guy Standing, a research professor in development studies at SOAS, University of London, told CNBC via telephone that there was no prospect of a global economic revival without a universal basic income. Standing, who has been an advocate for a universal basic income for more than three decades, said he believed the coronavirus crisis would be “the trigger” for a basic wage. Standing urged world leaders and policymakers to avoid repeating the same mistakes that were made in the aftermath of the 2008 global financial crisis, saying another “toxic combination” of austerity and quantitative easing would simply stoke up another crisis.

Some governments, including the U.K., Austria and Denmark, have introduced wage subsidies in an effort to protect households from an expected economic downturn. They are intended to help protect jobs and cover the salaries of millions of people.

Standing dismissed such an approach as “regressive” and “inefficient,” arguing wage subsidies of this nature would only ever result in a large number of vulnerable people being excluded from the system. “It’s atrocious economics.”

“So, for me, all of the arguments are tilting us toward saying: ‘We’ve got to protect everybody. We are all vulnerable.’” 

Could we see such an approach being followed by governments across the world in the near future? 

https://www.cnbc.com/2020/04/16/coronavirus-crisis-could-pave-the-way-to-a-universal-basic-income.html

Coronavirus: Ohio workers waiting for expanded unemployment benefits

Congress just recently passed a $2.2 trillion stimulus plan that has expanded unemployment benefits to those that under normal circumstances, would not have been eligible to file a claim for unemployment benefits such as part-time workers that would not have met the wage a week minimum requirement which in Ohio is $269-a-week, self-contractors or “gig” workers. But even though the stimulus plan expanded the group of people now eligible for unemployment benefits, the state of Ohio is not in a position where it can process the surge in claims and hand out the money to those desperately in need of the aid. The Ohio Department of Job and Family Services is essentially overwhelmed as claims and unemployment rate continue to rise. This is a problem in that people need the money to make car payments, rent, utilities, food, etc. that need to be paid regardless unless they find alternatives to help survive this time of unemployment. The only reason why the system is so inadequate is due to the fact that the Department of Jobs and Family Services never experienced a time where there was a massive layoff of people at the same time.
https://www.dispatch.com/business/20200412/coronavirus-ohio-workers-waiting-for-expanded-unemployment-benefits

Can we compare the COVID-19 and 2008 crises?

Can we compare the COVID-19 and 2008 crises?

Corona Virus is not one of its kind since similar events of worldwide epidemics have occurred. The relation between Covid-19 and the 2008 global depression is quite identical. The latter occurred abruptly and spread to affect many nations of the world. The factors that influenced it were known to very few individuals. The daily collapse of big institutions that were financially secure caught the world by surprise. This event is the same case with Covid-19. There’s so much uncertainty of the damage it will cause to the economy and other sectors, and the time it will take to curb it. As scientists and economists estimate the impact it will have in the ordinary lives of people, the masses are left to guess and hope. 

https://atlanticcouncil.org/blogs/new-atlanticist/can-we-compare-the-covid-19-and-2008-crises/

Economic impact of COVID-19 on tourism and remittance

Economic impact of COVID-19 on tourism and remittance

The lockdown experienced in many nations of the world as an attempt to curb Covid-19 has impacted the tourism sector considerably. Restrictions on movement have reduced revenue in the industry significantly. Countries that rely primarily on tourism have witnessed a reduction in their Gross Domestic Product. These countries will have to look for alternative options that will enhance and sustain the health and wealth of the nation. Otherwise, relying on the unpredictable effect of the Covid-19 is an unwise decision.

https://www.ifpri.org/blog/economic-impact-covid-19-tourism-and-remittances-insights-egypt

U.S. Food Supply Chain is Strained as Virus Spreads

As COVID-19 continues to spread throughout the United States, pressure is being placed on the nation's food supply industry. There has been an increasing number of positive COVID-19 cases in meat processing plants, warehouses, and grocery store workers. Many meat processing plants are being forced to temporarily close their doors due to the spike in sick workers. Smithfield Foods in Sioux Falls, South Dakota has been ordered to close down for at least the next two weeks after 230 workers became ill with the virus. This plant alone produces 5% of our nations pork. Workers in the food and grocery industry are considered essential workers as they are responsible for feeding the country. However, many workers are becoming sick and some are choosing not to come to work in fear of the disease. Consumers have been reassured that we will not run out of food. There will just be less options to pick from. We might not get our first choice at the grocery store, but we will get fed. What do you think could be a long term impact on the food and grocery industry if there continues to be a shortage of labor?

https://www.nytimes.com/2020/04/13/business/coronavirus-food-supply.html

G-20 Backs Temporary Debt Relief for World’s Poorest Nations

https://www.bloomberg.com/news/articles/2020-04-15/g-20-supports-time-bound-suspension-of-debt-for-poor-nations

G20 Finance ministers and Central Bank Governors, endorsed the G20 Action Plan in response to the COVID19 pandemic. According to the plan, G20 members will back the IMF's support relief to economically vulnerable countries, temporary suspend the debt servicing payments from the poorest countries, and work closely to implement the emergency relief packages by the World Bank and Development Banks. G20 members will work closely together to promote and sustain a successful global economic recovery. For a short term period, G20 members have committed to help contain the spread of the COVID19, and provide assistance to minimise the social and economic damage in the emerging markets and developing countries.

How Covid-19 is changing America's Spending Patterns

Nielsen believes that once the pandemic is finally over, consumers will return to their spending habits with a "new normal". This implies that they will return to their regular lives, but with a new precautionary attitude.  Supply-chain changes along with an evolved relationship with e-commerce are a predicted outcome, as before the virus, many were skeptical about e-commerce, but now their preferences might have changed. This shift in preferences could impact a lot of businesses in the future, and some might need to change their models in order to adapt.  Flexible models could include more online services, more pick up and delivery options and less human contact in the long run. With changing consumer behavior, preferences and attitudes, where do you think purchasing patterns in the country might end up after the virus is over? Do you think this "new normal" could be better for the future to avoid a possible second wave of the virus?


https://news4sanantonio.com/features/digital-discoveries/consumer-behavior-will-change-forever-post-covid-19-will-your-business-be-ready

Billionaire Mark Cuban says "Banks are leaving small businesses out in the cold."

Mark Cuban stated that the small business loan program (Paycheck Protection Loan) that was recently launched could have a terrible impact on small business long-term. Banks are making decisions about who gets loans based on an individual business' credit. With that being said, Cuban believes that a lot of small businesses will be "left out in the cold". He also stated that the economy is now at a turning point to get money into the system for all different types of businesses. Cuban is also a major investor on shark tank and expressed that a lot of the businesses he has invested in are struggling to acquire loans. Banks have put hurdles to make applying for the Paycheck Protection Loan extremely difficult. The government has set aside $350 billion dollars for the small business loan program in order to help prevent businesses from going under and helping them maintain paying their employees. However, banks have been making it extremely difficult for businesses to gain access to the fund. Until that friction between banks and businesses are resolved, many businesses are going to capsize.https://www.cnbc.com/2020/04/13/mark-cuban-banks-are-playing-leaving-small-businesses-out-in-the-cold.html?&qsearchterm=mark%20cuban

Amazon puts online grocery customers on the waitlist

Amazon has had a huge increase in demand for online groceries as the coronavirus outbreak continues to grow. There has been such a huge increase in demand that Amazon has decided to put new grocery delivery customers on a wait-list. They have also decided to restrict online store hours for some Whole Foods stores. Existing customers had already begun to experience a shortage in delivery slots which is what led this decision which was put in place today. Amazon acquired Whole Foods in 2017 for about $14 billion. Amazon's grocery delivery service includes Whole Foods, Amazon Prime, and Amazon Fresh, making the company a huge force to be reckoned with. The company's grocery order capacity has increased by over 60% during the virus outbreak. Amazon is now hiring more workers to help ease the large amount of traffic. They're even offering hire wages for grocery delivery versus the normal warehouse workers, hoping to incite a shift in the labor sector.https://www.cnbc.com/2020/04/13/amazon-stops-accepting-new-online-grocery-customers-amid-surging-demand.html

The Fed Reveals How It Plans to Fund the $2.3 Trillion in Stimulus Packages

As the article details, the government plans to fund the $2.3 trillion in stimulus packages by taking out $600 billion in loans and $85 billion that will be backed by the Federal Reserve. What future consequences could you see this causing the U.S. economy? Do you see a potential high rise in inflation or taxes? If so do you believe this is intentional?

Food Waste of the Pandemic

Due to the impact of Covid - 19 many farmers are wasting a large amount produces due to the closure of restaurants, hotel, and school. Farms have also been directly impacted due to the large amount of hording of non-fresh foods. Many farmers are having to get crafty with ideas on where to put the produce they are now unable to sell.

Farmers have made an effort to donate the access food but food banks are unable to keep large amounts of time sensitive food at once. Many farmers are finding themselves financially in a rut due to the lack of business and are not quite sure on how to move forward. Not only are they burdened with the lack of business, but they also have to spend in order to remove the unusable produce off of their land.

Link - https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html

JPMorgan now sees economy contracting by 40% in second quarter, and unemployment reaching 20%

Recently, economic advisors at J.P. Morgan released a dire economic forecast for the United States and its future economic situation. Specifically, their forecast is now foreseeing “a 40% decline in the nation’s gross domestic product for the second quarter and a surge in April’s unemployment rate to 20% with 25 million jobs lost” and this is primarily due to the increasing economic impact of the coronavirus. This Forecast has reached historic levels, with no modern precedent, and is a dramatic decline in America’s economic performance. This same forecast does predict a second-half recovery for the United States, with a third quarter growth rate of 23% and a fourth quarter growth rate of 13%, which will boost America’s economic performance. 

https://www.cnbc.com/2020/04/09/jpmorgan-now-sees-economy-contracting-by-40percent-and-unemployment-reaching-20percent.html 

We must start preparing for the next pandemic now

https://www.cnn.com/2020/04/11/opinions/prevent-pandemic-economically-opinion-ruger/index.html

The United States does not seem to have had a detailed, large-scale plan for pandemic response approaching 2020, or at least not one that was implemented in the face of COVID-19. There are numerous possible reasons for this, not least of which the fact that President Trump chose to dissolve the US pandemic response team, nested under the National Security Council, in 2018. However, this CNN article argues that preparing for a future pandemic (which, given the increasing prevalence of emerging diseases throughout the world, is likely a matter of when, rather than if) is not only crucial to prevent the crippling of our healthcare infrastructure that we are seeing now in places such as New York City, but would also yield significant economic benefits. The World Bank estimates that the development of a timely, holistic, empowered pandemic preparedness system would cost roughly 3.4 billion dollars annually, but reap an annual return of 37 billion dollars. The math is clear -- we must start preparing now for the next pandemic.