Here we go again!
Fed to Debate Dimming Outlook as Virus Surges,
Fiscal Help Hangs
New outbreak has taken hold since policy committee last met
Central bank to debate strategy shift as Congress works on aid
The first is whether the economy would gradually recover throughout the rest of 2020 from the sharp contraction in the second quarter, or whether a second wave of coronavirus outbreaks later in the year would put that rebound on ice. Fed staff economists had been advising policy makers that, given the extraordinary degree of uncertainty, both scenarios were equally plausible. . .
. . . More important for the economy at this juncture is the decision lawmakers in Congress will make about another fiscal relief package for households and businesses -- on top of the roughly $3 trillion in aid that’s been authorized so far -- which is currently being debated and expected to be finalized in early August. . . "
READ THE SOURCE > Bloomberg 07.26.2020
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Summers Warns Economy in Grave Danger If Stimulus Lapses
Updated on
Ex-Treasury secretary has never seen more uncertain recovery
Echoes former NY Fed chief Dudley on risks from benefits cliff
"Former U.S. Treasury Secretary Larry Summers said he’s never seen a more uncertain recovery, especially if Congress doesn’t act “strongly and quickly” to continue economic stimulus to offset the coronavirus pandemic.
More important than the size of the next relief package is how long the emergency measures last, given the vast number of Americans now unemployed, the former Obama and Clinton administration official said in an interview on “Bloomberg Wall Street Week.”
". . . A growing body of evidence indicates America’s rebound is stalling, days before hundreds of billions of dollars’ worth of federal aid is set to expire. It could be weeks before the next round of stimulus is completed given wrangling between the White House and Congress; talks are expected to continue this weekend. . .
Summers, a former Harvard University president who headed the National Economic Council under President Barack Obama, warned that the U.S. risks the biggest falloff in stimulus in the country’s history as Congress drags its heels.
His comments echoed those of former New York Fed President William Dudley, who said on Thursday that the U.S. economy will be weaker if the Congress doesn’t replace expiring unemployment insurance assistance.
“We’re basically right at the edge of a huge fiscal cliff . . ."
His comments echoed those of former New York Fed President William Dudley, who said on Thursday that the U.S. economy will be weaker if the Congress doesn’t replace expiring unemployment insurance assistance.
“We’re basically right at the edge of a huge fiscal cliff . . ."
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Europe’s Economy to Outpace U.S. in Upending of Past Roles
El-Erian Says U.S. Recovery Slowing, Not 'Moving Backwards'
The euro area economy is for once set for a sprightlier recovery from crisis than the U.S., thanks to starkly different responses to the coronavirus.
America’s failure to get a grip on the pandemic is putting the brakes on its rebound compared with Europe, where many former virus hot spots managed to resume economic activity without causing a similar surge in infections.
Crucial for a sustainable recovery is confidence that the virus is no longer out of control, and Europe’s relative success may help encourage shoppers to spend and businesses to invest, further propelling demand and growth. The region has also done a better job of protecting jobs and incomes, at least for now, with furlough programs keeping millions of workers on payrolls.
Daily Activity Indices
In the race to recover, Europe extends its lead over the U.S. and U.K.
According to JPMorgan Chase & Co., Europe will do better because it has “broken the chain” that links mobility and the virus. Goldman Sachs Group Inc. has cited effective virus control as one reason it expects a “steeper and smoother rebound in the euro area than elsewhere.”
“It’s very clear that the euro area turned down more sharply but we also expect it to bounce back more sharply,” said Jari Stehn, chief European economist at Goldman Sachs.
“It’s pretty rare that the euro area would outgrow the U.S. over a horizon of one to two years.”
Sources: Bloomberg Economics, Google, Moovitapp.com, German Statistical Office, BloombergNEF, Indeed.com, Shoppertrak.com, Opportunity Insights
> Just because Europe is in a relatively better position to come out of this in the second half of the year, “doesn’t mean the U.S. can’t catch up,” said Michael Gapen, chief U.S. economist at Barclays Plc.
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ONE MORE >
Intel Corp.’s decision to consider outsourcing manufacturing heralds the end of an era in which the company, and the U.S., dominated the semiconductor industry.
The move could reverberate well beyond Silicon Valley, influencing global trade and geopolitics
- World’s largest chipmaker considers outsourcing manufacturing
- Crucial technology expertise is shifting overseas, to TSM
Most other U.S. chip companies shut or sold domestic plants years ago, and had other firms make the components, mostly in Asia. Intel held out, arguing that doing both improved each side of its operation and created better semiconductors. That strategy is in tatters now, with the company’s factories struggling to keep up with the latest 7-nanometer production process.
After Chief Executive Officer Bob Swan said Intel is considering outsourcing, the company’s shares slumped 16% on Friday, the most since March, when the stock market plummeted in the early days of the Covid-19 pandemic.
“We view the roadmap missteps to be a stunning failure for a company once known for flawless execution, and could well represent the end of Intel’s computing dominance,” Chris Caso, an analyst at Raymond James, wrote in a research note on Friday.
If Intel outsources this work, it would likely be done by Taiwan Semiconductor Manufacturing Co., which focuses on production and is currently the world leader. It’s based in Hsinchu, one of the closest Taiwanese cities to China, which considers the Asian island a rogue province rather than an independent country.
“With the latest push out of process technology, we believe that Intel has zero-to-no chance of catching or surpassing TSMC at least for the next half decade, if not ever,” Susquehanna analyst Chris Rolland wrote in a research note. He thinks Intel should sell its plants to TSMC, although he says that’s unlikely.
After Chief Executive Officer Bob Swan said Intel is considering outsourcing, the company’s shares slumped 16% on Friday, the most since March, when the stock market plummeted in the early days of the Covid-19 pandemic.
“We view the roadmap missteps to be a stunning failure for a company once known for flawless execution, and could well represent the end of Intel’s computing dominance,” Chris Caso, an analyst at Raymond James, wrote in a research note on Friday.
. . . Intel’s Xeon chips run computers and data centers that support the design of nuclear power stations, spacecraft and jets, while helping governments quickly understand intelligence and other crucial information.
Many of these processors are made at facilities in Oregon, Arizona and New Mexico. If Intel outsources this work, it would likely be done by Taiwan Semiconductor Manufacturing Co., which focuses on production and is currently the world leader. It’s based in Hsinchu, one of the closest Taiwanese cities to China, which considers the Asian island a rogue province rather than an independent country.
“With the latest push out of process technology, we believe that Intel has zero-to-no chance of catching or surpassing TSMC at least for the next half decade, if not ever,” Susquehanna analyst Chris Rolland wrote in a research note. He thinks Intel should sell its plants to TSMC, although he says that’s unlikely.
