Coronavirus delivers record blow to US retail sales in March

WASHINGTON - US retail sales suffered a record drop in March as mandatory business closures to control the spread of the novel coronavirus outbreak depressed demand for a range of goods, setting up consumer spending for its worst decline in decades.

The Commerce Department on Wednesday said retail sales plunged 8.7 percent in March, the biggest decline since the government started tracking the series in 1992, after falling by a revised 0.4 percent in February.

According to a Reuters survey of economists, retail sales were forecast to have fallen 8.0 percent last month.

The report came as millions of Americans are thrown out of work, and strengthen economists' conviction that the economy is in deep recession. States and local governments have issued "stay-at-home" or "shelter-in-place" orders affecting more than 90 percent of Americans to curb the spread of COVID-19, the respiratory illness caused by the virus, and abruptly stopping the country.

"The economy is almost in free fall," said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles. "We will see the bottom when the coronavirus infection rates stabilize. It's going to be a pretty deep bottom from which to come up."

The drag on sales in most retail categories from social restrictions far outweighed a surge in receipts at online retailers like Amazon, and grocery stores and pharmacies as consumers stocked up on household essentials such as food, toilet paper, cleaning supplies and medication.

Consumer spending accounts for more than two-thirds of US economic activity. It grew at a 1.8 percent pace in the fourth quarter, with the overall economy expanding at a 2.1 percent rate over that period. Economists see no respite for consumer spending in the second quarter, with estimates as low as a 41 percent rate of decline, despite a historic $2.3 trillion fiscal package, which made provisions for cash payments to some families and boosted unemployment benefit checks.

"In general consumer spending is going to look about as bad as it has ever been, although there will be some categories of resilience," Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. 

"The panic buying at grocery stores cannot offset the retrenchment in spending that we will see in other categories."

Economists believe the economy entered recession in March. The National Bureau of Economic Research, the private research institute regarded as the arbiter of US recessions, does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months. 

(Reporting by Lucia Mutikani Editing by Chizu Nomiyama)

-reuters-

Davos paper attacks Trump's views on trade

GENEVA—US President Donald Trump's view of world trade will be challenged next week when he visits the World Economic Forum (WEF) at Davos, judging by a paper seen by Reuters on Wednesday that is aimed squarely at his "America First" stance.

The "Strategic Brief on Misconceptions around Trade Balances" issued by the WEF's network of trade experts did not mention Trump by name. But it took issue with his administration's understanding of international commerce.

"A widely held view is that a country's trade balance is a key measure of its international commercial success," said co-authors Harvard professor Robert Lawrence and Princeton fellow Yeling Tan in the paper, which is due to be presented and debated at Davos.

"Currently, invoking this reasoning, the administration is seeking to reduce the trade deficit by renegotiating U.S. trade agreements and adopting more protectionist U.S. policies."

Trump has railed against the U.S. trade deficit with China, hobbled the World Trade Organization by blocking judicial appointments, pulled out of the Trans-Pacific Partnership trade talks and antagonized Canada and Mexico by demanding a revamp of the North American Free Trade Agreement.

The Davos paper said Trump's administration believed "unfair" trade had led to large trade deficits and job losses, but policies based on such thinking could end up harming the people they aimed to help.

The authors said similar narratives had also emerged in other countries and regions but did not name them.

They set out seven examples of sloppy thinking on trade, illustrated by graphs showing that the relationship between imports and U.S. domestic employment had been "overwhelmingly positive" and that larger U.S. trade deficits had been associated with faster jobs growth.

The first example was that "trade deficits are bad, trade surpluses are good". Both deficits and surpluses may be bad or good, and the trade balance was a function of national saving and investment, not trade policies.

Other examples were "imports are the cause of the decline in manufacturing jobs" and "trade agreements will increase the deficit".

Trump's Jan. 26 speech at Davos comes as his administration prepares for a penultimate round of NAFTA talks and as he considers imposing broad restrictions on steel and aluminum imports, a policy which is aimed at China but risks rebounding on the European Union.

It was wrong to think that imposing a tax on imports would create manufacturing jobs, the Davos paper said.

"New barriers to trade could disrupt production and reduce rather than increase domestic employment in both the protected industries and those that use their outputs." (Reporting by Tom Miles, editing by Larry King)

source: news.abs-cbn.com

Asia stocks extend gains, Tokyo lifted by weak yen

HONG KONG, China - Asian markets advanced on Monday, with Tokyo boosted by a weaker yen after the US Federal Reserve chief stuck to her plan to raise interest rates by year-end.

The euro suffered further losses as Greece warned it did not have enough money to service its debts next month without the rest of its bailout cash.

Tokyo closed 0.74 percent higher, adding 149.36 points to reach a 15-year high of 20,413.77, while Sydney jumped 1.00 percent, or 56.8 points, to 5,721.5.

Shanghai was up 2.58 percent in late trade as traders moved into undervalued stocks.

Hong Kong and Seoul were closed for public holidays.

Fed chief Janet Yellen said on Friday she expects to raise rates from historic lows "at some point this year", warning that a delay could risk overheating the economy. However, she also said there were still weaknesses, including slackness in the job market despite unemployment at 5.4 percent.

Her comments came two days after minutes of the Fed's April policy board meeting made it clear that slow growth in recent months meant it was not expecting a rise before late July.

Adding to the dollar's strength was news from the US Department of Commerce that core consumer prices -- which exclude food and energy -- jumped 0.3 percent in April from March, the largest one-month rise in more than two years.

The dollar was at 121.59 yen Monday, against 121.52 yen in New York and sharply up from 120.71 in Tokyo earlier Friday.

"Inflation is speeding up a little in the US, and we can see the intention to raise rates sometime this year," said Shoji Hirakawa, chief equity strategist at Okasan Securities Co in Tokyo.

"When we consider the US versus Japan, rates will be higher in the States. Japan’s rate hikes and tapering will be further into the future."

Greece 'out of cash'

Japan has for the past two years been embarking on a bond-buying programme that pumps cash into the financial markets -- which hits demand for the yen -- in a bid to defeat deflation.

The euro fell to $1.0990 and 133.73 yen from $1.1016 and 133.86 yen in US trade as investors become worried about Greece's ongoing bailout overhaul talks.

Interior Minister Nikos Voutsis told Mega TV that Athens has nothing with which to pay the International Monetary Fund ahead of a June 5 deadline.

"The instalments for the IMF in June are 1.6 billion euros. This money will not be given. There isn't any to be given. This is a known fact," he said.

Nevertheless, the minister said he believes that negotiations between Athens and its creditors were taking place "on the basis of cautious optimism that there will be a strong agreement".

Athens has been locked in months-long discussions with the IMF and European Union over restructuring its bailout terms in order to release the last tranche of rescue money to pay its bills.

However, with both sides unable to agree a deal there are fears the country will default, which could see it tumble out of the eurozone.

On Wall Street Friday the Dow fell 0.29 percent, the S&P 500 lost 0.22 percent and the Nasdaq eased 0.03 percent.

Oil prices were higher. US benchmark West Texas Intermediate for July delivery rose five cents to $59.77 a barrel and Brent crude for July eased two cents to $65.35.

Gold fetched $1,205.18 compared with $1,212.40 late Friday.

In other markets:

Taipei was slightly higher, adding 6.37 points to 9,645.17.

Taiwan Semiconductor Manufacturing Co rose 1.37 percent to Tw$147.5 while leading smartphone camera lens maker Largan Precision Co was up 0.14 percent at Tw$3,465.0.

Wellington advanced 0.33 percent, or 18.96 points, to 5,794.98.

Contact Energy surged 11.35 percent to N$6.18 after announcing a special dividend payment, while Fletcher Building gained 0.35 percent to close at NZ$8.56.

source: www.abs-cbnnews.com

US, Cuba restore ties after 50 years

HAVANA/WASHINGTON - The United States and Cuba agreed on Wednesday to restore diplomatic ties that Washington severed more than 50 years ago, and President Barack Obama called for an end to the long economic embargo against its old Cold War enemy.

After 18 months of secret talks, Obama and Cuban President Raul Castro agreed in a phone call on Tuesday on a breakthrough prisoner exchange, the opening of embassies in each other's countries, and an easing of some restrictions on commerce.

The two leaders made the announcement in simultaneous televised speeches. The Vatican and Canada facilitated the deal.

Obama's call for an end to the economic embargo drew resistance from Republicans who will control both houses of Congress from January and who oppose normal relations with the communist-run island.

Obama said he was ending what he called a rigid and outdated policy of isolating Cuba that had failed to achieve change on the island.

His administration's policy shift includes an opening to more commerce in some areas, allowing use of U.S. credit and debit cards, increasing the amount of money that can be sent to Cubans and allowing export of telecommunications devices and services.

RESTRICTIONS REMAIN

Travel restrictions that make it hard for most Americans to visit will be eased, but the door will not yet be open for broad U.S. tourism on the Caribbean island.

His announcement also will not end the U.S. trade embargo that has been in force for more than 50 years. That is codified in legislation and needs congressional approval. Obama said he would seek that approval but will likely face a struggle.

Obama said the opening was made possible by Havana's release of American Alan Gross, 65, who had been imprisoned in Cuba for five years. Gross' case had been a major obstacle to improving relations.

Cuba is also releasing an intelligence agent who spied for the United States and was held for nearly 20 years, and the United States in return freed three Cuban intelligence agents held in the United States.

Cuba and the United States have been ideological foes since soon after the 1959 revolution that brought Raul Castro's older brother, Fidel Castro, to power. Washington broke diplomatic relations with Havana in 1961 as Cuba steered a leftist course that turned it into a close ally of the former Soviet Union on the island, which lies just 90 miles (140 km) south of Florida.

The hostilities were punctuated by crises over spies, refugees and the Cuban missile crisis of October 1962 that brought the world to the brink of nuclear war. After the demise of the Soviet Union and the end of the Cold War, Washington was increasingly alone in its efforts to squeeze Cuba. Raul Castro, who took over from Fidel Castro when his brother retired in 2008, has maintained a one-party political system.

CRITICS CHALLENGE OBAMA

Obama said Cuba still needed to enact economic reforms and uphold human rights among other changes, but he said it was time for a new approach.

Americans are largely open to establishing diplomatic relations with Cuba, according to a Reuters/Ipsos poll of more than 31,000 adults conducted between July and October. Around one-fifth of those surveyed said they opposed such a move, while 43 percent said the United States should restore relations with Cuba and around 37 percent said they were unsure.

Critics said Cuba should not be rewarded, having yet to change, and the path to completely normal ties is strewn with obstacles, in particular lifting the embargo that the White House said Obama would like to see dismantled by the time he leaves office in 2017.

Although a growing number of U.S. lawmakers favor more normal ties, those lawmakers are still mostly Democrats, and after big midterm election gains in November, Republicans will control both houses of Congress in the new year.

Senator Marco Rubio, a Cuban American Republican, will be incoming chair of a key Senate Foreign Relations panel and said he was committed to doing all he could to "unravel" the plan. Senators John McCain and Lindsey Graham, both set to hold senior foreign policy positions, said the policy shift reflected "America and the values it stands for in retreat and decline."

Whatever the criticism at home, Obama's move was made with the political liberty of a president who, midway through his second term, no longer faces an electorate.

CUBAN AMERICANS SPLIT

News of the changes rippled fast through the 1.5 million-strong Cuban American community in the United States, hailed by some who are keen to see closer ties with the island and condemned by others.

Older Cubans who left the island soon after the revolution have remained opposed to ties with either Castro brother in power. Younger Cubans, who left more recently or were born in the United States, have shown more interest in warmer relations.

"It's amazing," said Hugo Cancio, who arrived in Miami in the 1980 Mariel boatlift and runs a magazine with offices in Miami and Havana. "This is a new beginning, a dream come true for the 11.2 million Cubans in Cuba, and I think it will provoke a change of mentality here too in this community."

In Havana, stunned Cubans celebrated the news, although some were skeptical that the long years of animosity really would end. In one student demonstration on a busy Havana street corner, about 100 people shut off traffic while motorists honked their horns. Neighbors peered out from their balconies, joining in the cheers.

"I have waited for this day since I can remember," said taxi driver Jorge Reymond, wiping away tears.

GROSS CASE

Obama said the Gross case had stalled his ambitions to try to reset relations with Havana, calling it a "major obstacle." Pope Francis, the first Latin American pontiff, played an active role in pressing for his release from Cuba, where a sizable part of the population is Roman Catholic.

Cuba arrested Gross on Dec. 3, 2009, and sentenced him to 15 years in prison for importing banned technology and trying to establish clandestine Internet service for Cuban Jews. Gross had been working as a subcontractor for the U.S. Agency for International Development (USAID).

Gross's lawyer and family have described him as mentally vanquished, gaunt, hobbling and missing five teeth. Speaking to reporters after arriving in the United States, Gross thanked Obama for all he had done to secure his release and said he did not blame the Cuban people for his ordeal.

His case raised alarm about USAID's practice of hiring private citizens to carry out secretive assignments in hostile places. Cuba considers USAID another instrument of continual U.S. harassment dating back to 1959.

The three Cuban intelligence agents, jailed since 1998, are Gerardo Hernandez, 49, Antonio Guerrero, 56, and Ramon Labañino, 51. Two others had been released before on completing their sentences - Rene Gonzalez, 58, and Fernando Gonzalez, 51. The three arrived in Cuba on Wednesday, Castro said.

Despite their decades of animosity, the two countries have long been engaged on a host of issues such as immigration, drug interdiction and oil-spill mitigation.

source: www.abs-cbnnews.com

How to trade overseas

If you are keen to expand your business by dealing outside of the UK, then there is absolutely no reason why you should not do so.

Sometimes you may need to invest in funding certain aspects of your expansion, with the good news being that organisations like wongaforbusiness and others might be able to help at relatively short notice.



In terms of the basic principles, here are a few things you will need to think about:

   * currency.  The pound Sterling is likely to be your base business currency but if you are dealing overseas, it won’t be that of your customer.  That means you will need to think about possible currency fluctuations when you are setting prices and you may need advice on something called forward currency contracts.  You may be able to get help from your bank or some of the many excellent online currency trading organisations;



   * language.  It might be unrealistic to expect you to deal exclusively in the language of overseas customers, irrespective of where they are in the world.  Some languages may be minority tongues and online translations are typically extremely limited or comically bad.  Much business globally is conducted in English but even so, when making sales propositions, it might be an excellent tactic to initially get your quotations and other documentation professionally translated into your customer’s language;



   * customs and conventions.  It would be possible to write a book on this subject but suffice it to say it is advisable to do a little research on the business customs applicable in the country you are looking to sell to.  These may be complicated and possibly even politically incorrect by your values but remember that you are not the customer;



   * humour.  One of the great distinguishers between peoples is humour.  Therefore, use it with extreme caution because it is easy to be completely misunderstood and for your new potential customer to take offence;



   * time zones.  Depending on where your new target market is, you may have to accept that you are going to need to adjust your working hours.  Your clients may not tolerate a constant 24-hour delay in obtaining updates and information from you during their business day.



   * credit control.  Be particularly careful about extending credit to companies overseas.  You may have difficulty in enforcing recovery actions.



There is a great tradition of global trading in the United Kingdom.  Why not join in!

source: everythingfinanceblog.com