(Bloomberg) — Carmen Reinhart — the World Bank’s incoming chief economist — just declared that globalization is probably dead, and flaring trade tensions between the world’s two biggest economies is supporting that theory.
At the National People’s Congress, the pinnacle of its political calendar, China on Friday reiterated its commitment to implementing the phase-one trade deal signed with the U.S. The agreement, signed in January, compels it to buy goods in goals that seemed lofty even before the Covid-19 pandemic hit demand and battered supply chains.
Yet within hours, White House economic aide Kevin Hassett told CNN the U.S. is closely studying economic penalties for China related to the nation’s plan to enact sweeping national security legislation in Hong Kong.
That’s not all: President Donald Trump escalated his rhetoric against China over the pandemic, the Senate approved legislation that could lead to Chinese companies being barred from trading on U.S. stock exchanges, and a retirement-savings plan for federal workers deferred a plan to include Chinese stocks in its investments.
Beijing’s fight isn’t just with Washington: Last week, it slapped anti-dumping duties on Australian barley for five years and suspended meat imports from four processing plants in the nation after the government in Canberra called for an independent investigation into the origins of the coronavirus.
With China’s NPC continuing this week, and Trump never far away from a microphone, investors will be on the lookout for more comments to help decipher the situation.
What Bloomberg’s Economists Say…
“With the global economy in a historic slump, and growing fears of slide back into U.S.-China trade war, the echoes of the Great Depression are getting harder to ignore. A rapid bounce back from the lockdown recession already looks tough to achieve, add in fresh barriers to trade and capital flows, and it will get even harder.”
–Tom Orlik, chief economist
Elsewhere in the world economy, Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde address the public, and South Korea and Kenya are predicted to cut interest rates.
Click here [ADD LINK] for what happened last week and below is our wrap of what’s coming up in the world economy.
U.S. and Canada
The weekly jobless claims report will indicate if U.S. workers are getting any relief from the pandemic, while other data will show the depth of damage to incomes and consumer spending in April. Revised figures will show whether the economy suffered a deeper hit in the first quarter than originally reported, and there will also be reports on consumer sentiment, housing and trade.
Investors will also be all ears for any insights on the economy from Fed Chairman Powell, who speaks in a virtual event Friday.
Bank of Canada Governor Stephen Poloz gives the final speech of his term on Monday, delivering the annual Hanson lecture via webinar.
For more, read Bloomberg Economics’ full Week Ahead for the U.S.
Europe, Middle East and Africa
Britain’s finance minister, Rishi Sunak, is expected to spell out how he’ll taper his much-heralded job retention plan. It’s the toughest decision he’s had to make in his short — yet eventful — career. If he gets it wrong, he risks cratering businesses and triggering a wave of unemployment.
In the euro area, confidence figures may show sentiment is stabilizing after dramatic drops in April, but won’t shift the view that there’s a very uneven recovery ahead.
ECB speakers, including President Lagarde, will likely emphasize how getting the euro area out of the worst recession on record will require more action, especially from governments. That view will be backed up by inflation data, which is forecast to show a reading of just 0.1% for May.
Elsewhere in the region, the central banks of Israel, Hungary, Poland and Nigeria are predicted to keep rates unchanged, while Kenya may lower borrowing costs yet again.
For more, read Bloomberg Economics’ full Week Ahead for EMEA
On Tuesday, Singapore’s government is set to present a fourth set of stimulus measures to boost an economy that started the year with its worst performance since the global financial crisis and is expected to struggle even more this quarter. On Thursday, the Bank of Korea meets, with economists expecting a rate cut to 0.5%, according to an early tally of those surveyed.
For more, read Bloomberg Economics’ full Week Ahead for Asia
On Tuesday, Mexico’s statistics agency publishes its final reading on first-quarter output, confirming that the economy suffered its deepest contraction in over a decade. Later in the week, the central bank updates economic forecasts and scenarios in its quarterly inflation report, before posting the minutes from its May meeting where policy makers cut the key rate for the eighth time in 10 months.
On Friday in Brazil, first-quarter data should capture the onset of what economists expect to be the deepest recession in at least four decades. Reports from Brazil’s central bank during the week will likely show a sharp deterioration in both the current account and primary budget balance, giving investors added cause to sell their Brazilian assets and currency.
Central banks in Colombia, Guatemala and the Dominican Republic hold interest-rate decisions.
For more, read Bloomberg Economics’ full Week Ahead for Latin America
Edited By Harry Miller
Doug Ford rejects regional approach to reopening Ontario's economy – Toronto Star
One size fits all.
That will be Ontario’s mantra for reopening the economy in the wake of the COVID-19 pandemic, insists Premier Doug Ford.
Even though the Greater Toronto Area accounts for 65.6 per cent of Ontario’s cases, leaving huge swaths of the province relatively unscathed, Ford is rejecting the regional approach of opening up as is being done in neighbouring Quebec, Manitoba and New York state.
“I have to follow science and the medical advice. I always have, I always will,” the premier said Thursday, emphasizing that provincial chief medical officer of health Dr. David Williams and other public health officials will make the call.
“I’ll take their advice and if Dr. Williams doesn’t think it’s the right thing to do, then I’m following his advice. I have from the beginning. I’ll continue to follow it,” he said.
Ford admitted he is under a lot of pressure to expedite the opening of the economy in regions beyond the GTA.
There are far fewer coronavirus cases in Kenora, Algoma, North Bay, Parry Sound, Sudbury, Kingston, Renfrew, Huron-Perth, Prince Edward County, and most of southwestern Ontario outside the Windsor city limits.
“I hear it at cabinet, I hear it at caucus. I hear it all the time from our own members,” the premier said.
Indeed, Progressive Conservative MPPs from outside the Golden Horseshoe privately confide that they are feeling heat from their constituents.
“How am I supposed to keep telling businesses in my area to remain closed for what’s essentially a Toronto problem?” said one rural Tory MPP, speaking on condition of anonymity in order to freely discuss internal caucus discussions.
“At a certain point, we’ve got to reopen,” added the MPP, who personally lobbied Ford against the universal reopening approach.
But the premier, who began the first phase of reopening the economy last week when stores with street-front entrances were allowed to welcome customers, said “we just have to be cautious” to curb the spread of a virus that has killed 2,248 people in Ontario.
“On a long weekend in the summer, there’ll be half a million cottagers going up to the Muskokas, the Haliburtons, up to the cottage area — and they’re coming, primarily, they’re coming from the 905 and 416 area,” he said.
In Quebec, where 4,228 people have died from COVID-19, Premier François Legault has pushed a phased regional approach to opening.
Outside of Montreal, the epicentre of the pandemic in that province, much of the economy will be up and running next week, including indoor shopping malls.
“We have to continue to be careful because we cannot afford to have large increases in the next few days or weeks in the number of people in our hospitals in Montreal,” Legault said earlier this week.
In Manitoba, where only seven people have died of COVID-19, Premier Brian Pallister announced Tuesday that most businesses — including restaurants, bars, and gyms — will be open next week.
Pallister stressed “slow and careful movement in the direction of easing our restrictions is the right approach.”
New York state has suffered 23,282 deaths — more than 10 times as many as Ontario despite a population of 19.5 million compared to the province’s 14.5 million — but is pushing forward with phased regional reopening.
In New York, a region must meet seven different metrics before being allowed to move a broader stage of reopening, including a sustained decline in total hospitalizations over a three-day rolling average and a decline in deaths.
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Each region must have at least 30 per cent of its intensive care unit beds and 30 per cent of all hospital beds open and must meet diagnostic testing and contact tracing capacity.
Western New York, across the Niagara River from Ontario, currently meets all seven requirements for reopening selected businesses and services.
Earlier this month, Gov. Andrew Cuomo defended his plan.
“Close down everything, close down the economy, lock yourself in the home — you can do it for a short period of time, but you can’t do it forever.”
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What do you think of the “one size fits all” strategy for reopening Ontario’s economy?
Province's decision to reopen economy still lacks some clarity: CFIB – HalifaxToday.ca
The Atlantic Vice President of the Canadian Federation of Independent Business says he’s pleased with the province’s decision to reopen the economy, but adds it still lacks some clarity.
On Wednesday, Premier Stephen McNeil announced the province’s next steps to reopening the economy, saying businesses that were required to shut down due to the COVID-19 pandemic will be able to restart operations on June 5.
Jordi Morgan told NEWS 95.7 he’s happy to hear this, but adds there are still some questions that need to be answered.
“It remains to be seen how well this happens because we’re still not entirely clear on what all the requirements are for these individual businesses,” said Morgan.
Morgan is also pleased with the province’s new small business reopening and support grant, a $25 million fund that will help businesses welcome back customers safely.
“Very happy to see that because there are a number of businesses that are going to require some bridging to reopen, invest in personal protective equipment and other things that are necessary in order to operate the business,” said Morgan.
He says once they get all the guidelines in place, they’ll have a better idea of how to operate and keep both the public and employees safe.
Nearly 40% of the economy may vanish in Q2 because of COVID-19, but then do something surprising – Yahoo Canada Finance
The S&P 500 has crossed the 3,000 level again and investors are clearly riding high on hope for a second half economic recovery post the worst of COVID-19.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.” data-reactid=”17″>But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.” data-reactid=”18″>“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.
Gapen believes the U.S. economy may contract a whopping 40% annualized in the second quarter, then surprisingly grow by 25% in the third quarter and 8% in the fourth quarter.
Part of Gapen’s cautiousness on the economy in the second quarter stems from his outlook on the consumer, which comprises two-thirds of the U.S. economy as is often cited.
“I think when we move into the third quarter, the savings rate will start coming down. All else equal, we are expecting the consumer to remain cautious. I think you will see a blend. Some return to normalcy, but it will take time,” Gapen explains. “Negative wealth is still at play. Equity markets are doing well, but the average household may not feel that. And I think that there will be caution and a preference for saving.”
To be sure, recent economic data warrants the markets taking a short-term breather.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Another 2.123 million Americans filed for unemployment benefits in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.” data-reactid=”34″>Another 2.123 million Americans filed for unemployment benefits in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.
Pending home sales in April fell 33.8% year over year, the National Association of Realtors said Thursday. That marked the biggest decline since January 2001.
“I think the market has priced in that April is probably the worst of the economic data,” explained Sevens Report Research founder Tom Essaye. “While it looks like the worst is behind us — which is great — we need to start to see more improvement.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”37″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read the latest financial and business news from Yahoo Finance” data-reactid=”38″>Read the latest financial and business news from Yahoo Finance
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.” data-reactid=”50″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.
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