After two months of frantic response to the coronavirus, the White House is planning to shift U.S. President Donald Trump’s public focus to the burgeoning efforts aimed at easing the economic devastation caused by the pandemic.
Days after he publicly mused that scientists should explore the injection of toxic disinfectants as a potential virus cure, Trump has now rejected the utility of his daily task force briefings, where he has time and again clashed with scientific experts. Trump’s aides are aiming to move the president onto more familiar — and safer, they hope — ground: talking up the economy, in tighter controlled settings.
It’s a political imperative as allies have seen an erosion in support for the president. What had been his greatest asset in the reelection campaign, his ability to blanket news headlines with freewheeling performances, has become a daily liability. At the same time, new Republican Party polling shows Trump’s path to a second term depends on the public’s perception of how quickly the economic rebounds from the state-by-state shutdowns meant to slow the spread of the virus.
Some states have started to ease closure orders, and Trump is expected to begin to highlight his administration’s work in helping businesses and employees. Aides said the president would hold more frequent roundtables with CEOs, business owners and beneficiaries of the trillions of dollars in federal aid already approved by Congress, and begin to outline what he hopes to see in a future recovery package.
Trump last left the White House grounds a month ago, and plans are being drawn up for a limited schedule of travel within the next few weeks, aide said. It would be a symbolic show that the nation is beginning to reopen.
The shift comes in conjunction with what the White House sees as encouraging signs across the country, with the pace of new infections stabilizing and deaths declining.
Still, medical experts warn that the virus will remain until at least a vaccine is developed and that the risk of a severe second wave is high if social distancing is relaxed too quickly or if testing and contact tracing schemes aren’t developed before people return to normal behaviours.
The White House is deliberating whether to continue to hold news briefings in a modified form without Trump, potentially at a different location. Before Trump said in a tweet Saturday that they were “Not worth the time & effort,” aides had been eager to use the briefings to highlight positive trends and to overwhelm Americans with statistics. It was an effort to restore confidence in the response so that the public would be comfortable resuming more normal activities.
“We know that’s important,” Dr. Deborah Birx, the White House coronavirus task force co-ordinator, told Fox News Channel’s “Sunday Morning Futures.” “We understand those messages of science and policy need to be brought forward to the American people in a nonpolitical way.”
Few Americans regularly look to or trust Trump as a source of information on the pandemic, according to a survey from The Associated Press-NORC Center for Public Affairs Research released last week.
On Monday, the White House was expected to release a recap of what the federal government has done so far to improve the availability of COVID-19 testing, personal protective equipment and ventilators.
Still, governors in both parties say much more is needed, particularly in testing, in the coming months, as they deliberate how and when to reopen their states.
“I want to get our economy back opened just as soon as we can, but I want to do so in a safe way so we don’t have a spike, we don’t cause more deaths, or an overloading of our health care system,” Gov. Larry Hogan, R-Md., told ABC’s “This Week.”
Birx expressed frustration that Trump’s injection comments were still in the headlines, illustrating the tensions that have emerged between the president and his medical advisers.
“As a scientist and a public health official and a researcher, sometimes, I worry that we don’t get the information to the American people that they need, when we continue to bring up something that was from Thursday night,” she said on CNN’s “State of the Union.”
As the White House hopes it has turned a corner, it is also beginning to assess responsibility for critical missteps. Two senior administration officials said Trump has begun discussions about replacing Health and Human Services Secretary Alex Azar, who led the coronavirus task force during its initial weeks and has been blamed for a culture of bureaucratic infighting during that period. Azar has been largely sidelined since Vice-President Mike Pence took charge of the task force in late February.
'No-deal' Brexit threat looms over pandemic-ravaged UK economy – BNNBloomberg.ca
The threat of a no-deal Brexit is back — and with it the risk that the U.K. economy’s shaky recovery from the coronavirus pandemic will be hobbled.
As British and European Union negotiators head into the last round of talks scheduled before a key summit this month, chances are growing that the U.K. will end the post-Brexit transition period on Dec. 31 without a free trade agreement in place — spelling turmoil for businesses.
Instead of postponing its final parting with the bloc because of the coronavirus, the U.K. government has so far ruled out any delay. That may be, critics say, because Brexiters calculate the cost of leaving without a deal will be obscured by the far more extensive damage wreaked by the virus.
To Sanjay Raja, an economist at Deutsche Bank AG, a no-deal Brexit would halve the pace of growth next year to 1.5 per cent. The U.K. in a Changing Europe, a research group, estimates gross domestic product could be crimped by eight per cent over 10 years as trade barriers and a reduction in productivity hit output.
“It may be less politically costly for the U.K. to do no deal in the midst of a pandemic, but economically I’m not sure about that at all,” said Jonathan Springford, deputy director of the Centre for European Reform. “It might be that they’re able to get away with it — but I don’t think it changes the view that no deal would impose quite sizable economic costs.”
Citigroup Inc. says the size of the shock could even force the Bank of England to take the controversial move of cutting interest rates below zero because fiscal policy and other tools may not be enough.
Companies now have to think of how to prepare for Brexit while dealing with the fallout from coronavirus. Many are shuttered, indebted and struggling to pull through the lockdown.
The additional debt firms are carrying will make adjusting to Brexit more difficult, according to Alan Winters, director of the U.K. Trade Policy Observatory at the University of Sussex.
The re-introduction of trade barriers with the EU and changes to trading relationships with other countries will require a major re-orientation of exports, he wrote late in May. Heavily indebted firms are less likely to invest in developing new export markets.
“It’s a tense conversation at the moment,” said Allie Renison, head of Europe and trade policy at the Institute of Directors. “Companies are struggling with their survival, and there’s not a narrative yet from government saying to prepare, but they are saying the transition is ending.”
While both the U.K. and the EU insist a deal is still their preferred outcome, the deadlocked talks and the limited time left available mean risk no agreement will be reached is rising: analysts at Eurasia Group now put the odds of that outcome at 55%. EU Trade Commissioner Phil Hogan told RTE last month that the U.K. “can effectively blame Covid for everything.”
If the sides can’t strike a deal by the year-end, the U.K. will default to trading with the bloc on terms set by the World Trade Organization. That means British manufacturers of goods such as cars, pharmaceuticals, plastics, and precision tools could face new costs and significant disruptions to their just-in-time supply chains in Europe.
For Patrick Minford, chair of the pro-Brexit group Economists for Free Trade, leaving on anything but WTO terms would mean Britain would “lose the gains of free trade with the rest of the world.” It’s also better that the U.K. stays out of the EU’s expensive coronavirus recovery plan, he said. “When you add them both up, it’s pretty serious, really, and we’re much better off leaving.”
The fracturing of supply chains due to the coronavirus is one wake-up call to the upheaval that could be on the way. More than 80% of small and medium-sized manufacturers say the pandemic has affected their supply chains, and while some say contingency plans for Brexit have proved useful in preparing for the situation, others are facing shortages.
The pandemic has also led to discussion of bringing supply chains closer to home, particularly as the U.K. struggled to fly in emergency supplies while factories were closed and most workers stayed away.
U.K. Cabinet Office minister Michael Gove last week touted the “phenomenon of re-shoring” and said “we’re seeing how countries can increase resilience.”
But moves to shorten supply chains further could likely lead to goods becoming more expensive, according to Springford of Centre for European Reform. What is more, the U.K.’s geographical proximity to the EU means it’s likely to stay an important trade partner.
Philip Hammond, a former U.K. finance minister who campaigned to stay in the bloc, said last week that the government should at least seek a temporary trade deal to protect jobs.
Since the U.K. is such an open economy, “we will be more exposed than most developed economies to any headwinds in international trade during the recovery,” he said. “We really can’t afford to layer on top of that, during a very difficult recovery period, a sort of self-inflicted shock.”
Global shares gain on hopes for regional economies reopening – CTV News
Global shares are higher Tuesday on optimism about moves to reopen economies from shutdowns to contain the coronavirus pandemic.
France’s CAC 40 jumped 1.9% in early trading to 4,851.37, while Germany’s DAX surged 3.2% to 11,961.53. Britain’s FTSE 100 added 0.9% to 6,219.95. U.S. shares were set to climb with Dow futures gaining 0.4% to 25,576.00. The S&P 500 future contract added 0.4% to 3,064.88.
Investors have been balancing cautious optimism about the reopening of businesses against worries that widespread protests in the U.S. over police brutality could disrupt the economic recovery and widen the virus outbreak.
Japan’s benchmark Nikkei 225 rose 1.2% to finish at 22,325.61, and Hong Kong’s Hang Seng gained 0.8% to 23,912.07. South Korea’s Kospi added 1.1% to 2,087.42. Australia’s S&P/ASX 200 rose nearly 0.3% to 5,835.10, while the Shanghai Composite edged up 0.1% to 2,918.94.
In Southeast Asia, where shutdowns are beginning to ease, Indonesia’s benchmark jumped nearly 2.0% and Singapore’s surged 2.3%.
Despite the bright mood across the region, fears persist about a possible resurgence in coronavirus outbreaks.
There were 34 new confirmed cases in Tokyo on Tuesday, seeming to reaffirm growing risks as people begin to mingle more in crowded commuter trains with the reopenings of more offices, schools, restaurants and stores. The daily numbers had dropped below 20 recently.
Critics had said Japan’s relaxation of its pandemic precautions was premature, and Japanese media reported that Tokyo Gov. Yuriko Koike plans to announce a “Tokyo Alert” requesting residents of the capital to try harder at social distancing.
Despite such concerns and the widespread unrest erupting in many U.S. cities, hopes for a quick recovery from the worst global downturn since the 1930s have spurred recent rallies.
The protests that have rocked American cities for days have so far not had much impact on financial markets. But the violence and damage to property may hinder the re-opening of the economy. Crowds gathering to protest injustice and racism also could touch off more outbreaks.
But Robert Carnell, regional head of research for the Asia-Pacific region at ING, warned against too much optimism.
“How long can markets remain buoyant?” he asked. “The honest answer, and one that may save you five minutes is, `I don’t know.’ “
This week will provide market watchers more insight on the impact that the coronavirus is having on U.S. workers and employers. Payroll processor ADP issues its May survey of hiring by private U.S. companies on Wednesday. The next day, the government releases its weekly tally of applications for unemployment aid.
On Friday, the government reports its May labour market data. Analysts surveyed by FactSet expect the report will show the economy lost 9 million jobs last month.
In other trading, benchmark U.S. crude oil added 42 cents to US$35.86 a barrel in electronic trading on the New York Mercantile Exchange. It fell 5 cents to $35.44 a barrel on Monday. Brent crude oil, the international standard, gained 59 cents to $38.91 a barrel.
The U.S. dollar rose to 107.72 Japanese yen from 107.58 yen. The euro climbed to $1.1158 from $1.1136.
Australia central bank sees glimmer of hope as economy restarts after pandemic shutdown – The Guardian
By Swati Pandey
SYDNEY (Reuters) – Australia’s central bank held rates at all-time lows on Tuesday and sounded less gloomy as the economy gradually re-opens during what is likely to be the worst quarter since the Great Depression.
The Reserve Bank of Australia (RBA) left rates at 0.25% at its monthly policy meeting in a widely expected decision, and said the “accommodative approach will be maintained as long as it is required.”
In a short post-meeting statement Governor Philip Lowe said the RBA was prepared to scale up government bond purchases if needed to ensure three-year yields held around 25 basis points.
Australia’s A$2 trillion ($1.4 trillion) economy is experiencing its biggest contraction since the 1930s in the current quarter but “it is possible that the depth of the downturn will be less than earlier expected,” Lowe added.
A significant decline in new infections, earlier-than-expected easing of restrictions and signs that hours worked stabilised in early May auger well for a recovery.
“There has also been a pick-up in some forms of consumer spending,” Lowe added.
States and territories across Australia have been easing social distancing regulations at differing paces in recent weeks, slowly ending a partial lockdown ordered in March, having largely contained the COVID-19 pandemic.
Australia, which has about 7,200 coronavirus cases, has not reported a death from the disease for more than a week.
The country’s success in containing the virus has sent the Aussie dollar soaring to five-month highs. Yet, that is leaning against monetary stimulus and won’t be welcome by the RBA.
The central bank made no mention of the exchange rate in the statement.
Highlighting the depth of the pandemic-driven global economic downturn and the fallout on Australia, many economists expect interest rates to remain at record lows for at least two more years.
Some are even predicting negative interest rates, though Lowe has ruled it out.
“While we have also become more optimistic about the outlook for the economy in recent weeks, we still expect the unemployment rate to jump to nearly 9% by Q3,” said Capital Economics analyst Marcel Thieliant.
He expects the central bank to announce an expansion of its government bond buying programme at its August policy meeting.
“And we only expect the unemployment rate to fall below 7% by 2022. That would leave it far above the RBA’s estimate of the natural rate of 4.5%, underlining that the RBA will miss its full employment mandate for years to come.”
Q1 GDP MAY DODGE CONTRACTION
Official data out earlier showed Australia boasted a record current account surplus last quarter as firm export prices and a fall in imports provided a timely boost to growth.
Other data out on Tuesday showed government spending also added to growth in the March quarter, while companies reported better sales and profits than many expected.
The figures led analysts to upgrade their forecast for first-quarter gross domestic product due Wednesday with some saying the economy might not have shrunk in the quarter as previously feared.
GDP had been forecast to show output contracted 0.3%, the first fall since early 2011.
“A small positive print cannot be ruled out,” said Su-Lin Ong, chief economist at RBC Capital Markets.
“But the likely collapse in activity in the current quarter and accompanying impact on the labour market…is a sharp and deep shock through the whole economy with likely lasting ramifications.”
(Reporting by Swati Pandey; Editing by Shri Navaratnam)
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