Updated forecasts from CapitalSpectator.com regarding the coronavirus (Covid-19), based on an 8-model combination, indicate that global reported cases are likely to continue increasing in the near future, as reflected by the median point forecast.
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By Nelson D. Schwartz
Review via Vox
This is the opening scene of Nelson D. Schwartz’s intriguing book, The Velvet Rope Economy: How Inequality Became Big Business. The book discusses how the experiences related to travel, leisure, education, and healthcare in the United States have significantly improved for the affluent while deteriorating for the majority.
Since the 1970s, income disparity has escalated, and companies have increasingly focused on serving the wealthier demographic whose outlook is brightening. Examples include luxurious sports stadiums featuring exclusive access for box seat holders, VIP airport terminals, Uber Copters, and the privatization of various services, from school sports to firefighting. Schwartz refers to this trend as the “velvet rope economy.”
While the coronavirus poses significant risks, the vulnerability of the US economy is not evidently reflected in February’s payroll report. According to the Labor Department, hiring by American firms remained robust, with private payrolls climbing by 228,000 last month. This increase is among the best in recent history and marks a 13-month high in the yearly trend.
The relatively high and positive yields seen in US government bonds stand out in global markets. However, the fallout from the coronavirus may soon eliminate that advantage or significantly diminish it. Although rates remain positive across the Treasury curve as of early trading on March 6, persistent downward momentum is evident. The likelihood of below-zero yields in the US is increasingly plausible as market uncertainty continues to grow.
The global count of coronavirus cases is approaching 100,000: NY Times
A cruise ship remains stranded off the California coast while waiting for coronavirus test results: CNN
Russia and Turkey have reached an agreement to halt attacks in Syria: NY Times
OPEC is advocating for a significant reduction in oil production due to the coronavirus impact: Reuters
Bonds and gold are gaining traction as stocks plummet amid a risk-off trading environment: WSJ
Announced job cuts in the US declined by 16% in February compared to the previous month: CG&C
US jobless claims remain low, with no indication yet of the coronavirus effects: MW
US factory orders fell more than anticipated in January: Reuters
10-year Treasury yield drops below 0.8% in early trading on Friday—setting a record low:
The coronavirus has created turmoil in global markets and raised important questions about the economic outlook, resulting in increased stock market volatility. This can lead investors to wonder whether they should adjust their asset allocation, rebalance their portfolio, or alter their risk management approaches. The answer varies, as individual investors differ widely in terms of risk tolerance, investment goals, and time horizons. While personalized guidance might not be applicable here, reviewing fundamental aspects of volatility as a risk metric can be beneficial.
Examining reasons why the Fed may opt for another rate cut: WSJ
California has declared a state of emergency due to the coronavirus outbreak: Reuters
OPEC is expected to request significant reductions in oil production to address falling prices: CNBC
Survey data indicates that the global economy contracted in February: IHS Markit
The Fed’s Beige Book report reveals the initial negative impacts of the coronavirus on the US economy: MW
Growth in the US services sector accelerated in February, as per the ISM Non-Manufacturing Index: ISM
The US Services PMI indicates a slight contraction in February: IHS Markit
Private sector hiring in the US slowed in February but continued to grow at a healthy rate: ADP
It remains uncertain whether the recent emergency 50-basis-point interest rate cut by the Federal Reserve will be sufficient to shield the US economy from the effects of the coronavirus outbreak. Meanwhile, an increase in global reported cases of Covid-19 remains a key aspect of the baseline forecast, according to the latest update from CapitalSpectator.com’s modeling (refer to today’s revised outlook below).
Joe Biden has made a remarkable comeback in the Super Tuesday voting: CNN
The Federal Reserve has reduced the target interest rate by half a point in response to the coronavirus: CNBC
China’s services economy nearly came to a halt in February: IHS Markit
Japan has entered a recession as per February’s PMI survey data: IHS Markit
The Eurozone has shown some resilience with modest growth in February: IHS Markit
The 10-year Treasury yield has dipped below 1.0%—setting a new record low: CNBC
The Global Market Index (GMI) is anticipated to yield an annualized risk premium of 4.5% over the long-term in the latest projections (excluding considerations for a “risk-free” rate). This new estimate reflects a downgrade from the previous month’s forecast of 5.0%, while remaining unchanged from the estimate a year ago: previous projections.
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