The economic and financial turmoil triggered by the global coronavirus pandemic has significantly altered the risk landscape for markets, with both predictable and surprising consequences. One notable change that aligns with historical market trends is the recent increase in return correlations, which have reached dramatic levels in some instances.
WHO official: the coronavirus may never go away: MW
GOP isn’t ready to OK more coronavirus aid: AP
Will a second wave of coronavirus prompt the Fed to consider negative interest rates? CNBC
Economists project US unemployment rate will surge to 17% in June: WSJ
Today’s jobless claims report: another substantial increase anticipated: MW
Fed’s Powell dismisses negative rates as a viable tool: CNBC
Lloyd’s of London anticipates that coronavirus-related claims will surpass those from 9/11: BBC
Wholesale inflation trend turns negative in April: MW
Although the market rallies have diminished, the long Treasuries segment has maintained substantial gains, outpacing the rest of the US bond market significantly this year, as demonstrated by a collection of exchange-traded funds leading up to May 12.
House Democrats introduce a new $3 trillion relief bill for coronavirus: ABC
High stakes for reopening the US economy: Politico
New tax incentives are beginning to reach US businesses: WSJ
Fauci cautions Congress about overestimating vaccine expectations: CNBC
US-Taliban peace deal faces renewed challenges after attacks: CNN
Grocery prices in the US experience their highest monthly rise since 1974: Miami Herald
UK economy shrinks nearly 6% in March: Bloomberg
US job losses may be stabilizing: NY Times
US consumer inflation experiences significant slowdown in April: MW
While everyone is eager for a swift economic recovery, such urgency can cloud rational decision-making for the future. For example, some commentators argue that a swift V-shaped recovery is likely based on historical patterns of gross domestic product (GDP) resurgence following economic downturns. This optimistic perspective on macroeconomic history, while appealing, overestimates the role of GDP as the definitive measure of economic recovery.
Fauci today will caution the Senate about the risks associated with an early economic reopening: NY Times
The largest US mall operator plans to reopen 50% of its properties by the weekend: CNBC
US auto industry workers are returning to work amid concerns about a potential second wave of infections: Reuters
The Fed is set to start purchasing corporate bond ETFs: Bloomberg
US consumer inflation is expected to decline for a second consecutive month: WSJ
Data suggests a V-shaped recovery for China is unlikely: WSJ
China’s manufacturing deflation deepened in April: Reuters
S&P 500 volatility (VIX Index) reached an 11-week low yesterday (May 11):
Last week, a broad range of commodities saw increased demand. For the second week running, commodities rallied, achieving substantial gains among major asset classes, as derived from a selection of exchange-traded funds by Friday, May 8.
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The White House is discussing new coronavirus relief legislation with Congress: Reuters
Recent infections in Wuhan are raising concerns about a potential resurgence in the area: Reuters
Minneapolis Fed President warns of further job losses ahead: BBG
Signs of lasting economic damage from the coronavirus are emerging in the US: WSJ
How fast will the US economy recover from the Covid-19 crisis? NY Times
US Covid-19 daily death changes fell to a six-week low on Sunday (May 10): JHU
A study indicates a promising Covid-19 treatment that may accelerate recovery: NY Times
US job losses in April represent the fastest decline recorded: ECRI
Howard Steven Friedman
Summary via publisher (U. of California Press)
How much is a human life really worth? Society, individuals, businesses, and governments constantly assign values to human life. These calculations, often obscured by complex terminology, significantly affect our economy, laws, behaviors, policies, health, and safety. Unfortunately, these valuations often reflect biases tied to gender, race, nationality, and culture, leading to the perception that younger lives, the wealthy, and certain racial groups are worth more than others. This is crucial as undervalued lives receive less protection and are more vulnerable to risk.
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The US economy is currently experiencing its most severe downturn since the Great Depression, with certain indicators suggesting it is the deepest recession on record. The pressing question remains: When will this crisis conclude? Unfortunately, no definite answers are available due to the high level of uncertainty surrounding the unfolding of this unprecedented situation. However, a hopeful indication came from yesterday’s update of the Philadelphia Fed’s ADS Index—a real-time business cycle indicator for the US economy—suggesting that the intensity of the recession may have peaked. [Note: subsequently revised data have significantly altered the previous optimistic outlook of the ADS Index, as discussed below.]
