The U.S. Bureau of Labor Statistics released its Employment Situation report for March 2020 early today, the first monthly report since the coronavirus recession began in mid-March. Here's how it describes the change in non-farm employment since the BLS' February 2020 report:

Total nonfarm payroll employment fell by 701,000 in March, and the unemployment rate rose to 4.4 percent, the U.S. Bureau of Labor Statistics reported today. The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in health care and social assistance, professional and business services, retail trade, and construction.

The data from this report was collected via the BLS' monthly survey of business establishments covering pay periods including 12 March 2020, and as such, represents a snapshot in time from just before President Trump declared a national emergency on 13 March 2020 and a week before state governors began ordering residents to stay-at-home and statewide business closures on 19 March 2020.

In the two weeks since then, the number of initial unemployment insurance claims has spiked sharply upward, breaking previous records, with 3.3 million filing new unemployment claims as of 26 March 2020 and another 6.6 million on 2 April 2020.

Those newly unemployed Americans will be showing up on the April 2020 employment situation report, but the bigger question begging to be answered is how high could U.S. unemployment rise in the coronavirus recession?

Back on 22 March 2020, St. Louis Federal Reserve Bank president Jim Bullard estimated the unemployment figure may hit 30% during the second quarter of 2020, but where does that number come from? After all, the unemployment rate in February 2020 was 3.5%, and that would be a huge change.

The St. Louis Fed's Miguel Faria-e-Castro worked through step-by-step how that back of the envelope estimate was calculated. In the following passage, we've added the links to the blog posts he references, other data he cites may be accessed via the Federal Reserve Economic Database (FRED):

1. Civilian labor force in February 2020 = 164.5 million (BLS via FRED)
2. Unemployment rate in February 2020 = 3.5% (BLS via FRED)
3. Unemployed persons in February 2020 = 5.76 million (#1 * #2)
4. Workers in occupations with high risk of layoff = 66.8 million (Gascon blog post)
5. Workers in high contact-intensive occupations = 27.3 million (Famiglietti/Leibovici/Santacreu blog post)
6. Estimated layoffs in second quarter 2020 = 47.05 million (Average of #4 and #5)
7. Unemployed persons in second quarter 2020 = 52.81 million (#3 + #6)
8. Unemployment rate in second quarter 2020 = 32.1% (#7 / #1)

That's useful back of the envelope math, so we've built the following tool to do it, where you may substitute the values to consider other scenarios, such as state level data or the data for other nations. If you're accessing this article on a site that republishes our RSS news feed, you may need to click through to our site to access a working version.

Running the tool with the default data, we can see where the St. Louis Fed gets its estimate of potential 32% unemployment. We should caution that this is a ballpark estimate of how high U.S. unemployment may grow, where the tool allows for more refined estimates of the impacted workforce as better information becomes available.

We've also generalized the descriptions for the affected workforce from Faria-e-Castro's description, which should make the tool more generally applicable than the specific scenario he considered.

Looking back at the employment situation in 2020-Q2, with roughly 10 million new unemployment claims filed in the last two weeks just as the quarter began, we are already nearly one fifth of the way to the St. Louis Fed's estimate of potential job losses from the coronavirus recession.

Image credit: James Yarema

Previously on Political Calculations

• How Fast Could China's Coronavirus Spread?
• Estimating Economic Impacts From A Disaster Shock
• Atmospheric CO2 and the Coronavirus
• What Is Your Risk Of Exposure To Coronavirus in A Public Outing?
• Will You Get A Tax Credit Rebate Under the CARES Act?
• Visualizing the Progression of COVID-19 in the United States
• Recapping Political Calculations' Coronavirus Coverage

The negative effects of the global coronavirus pandemic breaking out in China has begun to become visible in the trade data between the U.S. and China, with the combined value of all goods imported and exported between the two nations plunging in February 2020 by $12 billion below the level recorded a year earlier in February 2019.

That change bucks expectations of a rising volume of trade starting in February 2020 that should have resulted from the signing of the 'Phase 1' trade deal between the U.S. and China in January 2020. In the chart above, we've projected a counterfactual based on the recovery of trade between the U.S. and China following its bottom during the Great Recession as measured by its trailing twelve month average, which should provide a reasonable basis for assessing the impact of the coronavirus pandemic on U.S.-China trade.

Over time, the cumulative gap between the trailing year average of trade between the U.S. and China and the counterfactual will provide an indication of the full extent to which trade between the two nations has been affected because of the pandemic and its aftermath. In the first month, the cumulative gap is $16.9 billion, which may be expected to grow considerably in the months ahead.

References

Board of Governors of the Federal Reserve System. China / U.S. Foreign Exchange Rate. G.5 Foreign Exchange Rates. Accessed 2 April 2020.

U.S. Census Bureau. Trade in Goods with China. Accessed 2 April 2020.

Buckle up. Recounting dividends by the numbers for the U.S. stock market for March 2020 and 2020-Q1 is going to be a rough ride, so let's get straight to the dividend metadata.

• A total of 3,869 U.S. firms declared dividends in March 2020, an increase of 187 over the 3,682 recorded in February 2020. That figure is also 445 lower than what was recorded a year ago in March 2019.
• 24 U.S. firms announced they would pay a special (or extra) dividend to their shareholders in March 2020, a decrease of 23 from the number recorded in February 2020 and 7 lower than what was recorded a year ago in March 2019.
• 134 U.S. firms announced they would boost cash dividend payments to shareholders in March 2020, a decrease of 163 from the 297 recorded in February 2020, and a decrease of 17 from the 151 dividend rises declared back in March 2019.
• A total of 53 publicly traded companies cut their dividends in March 2020, an increase of 24 over the number recorded in February 2020 and also an increase of 8 over the 45 recorded in March 2019.
• 23 U.S. firms omitted paying their dividends in March 2020, an increase of 19 over the number recorded in February 2020. That figure is also an increase of 21 over the total recorded in March 2019.

Here's what Standard and Poor's monthly data for dividend increases and decreases looks like over its available history since January 2004, which combines both a decrease in the number of dividend rises and an increase in the number of cuts:

Now that we're on the cusp of what the NBER will almost certainly declare to be a national recession because of the coronavirus pandemic, where we think they will set February 2020 as its Month 0 (the month in which the previous period of economic expansion peaked), we would suggest that a threshold of 50 dividend cuts occurring within a single month is consistent with at least some degree of economic contraction occurring within the modern national U.S. economy.

That distinction differs from the above chart's indication of recessionary conditions being present in the economy mainly in terms of scope and scale, where instead of a single industry or region being affected, the larger value indicates that multiple industries and regions are experiencing negative economic conditions.

Back on point, here is the short summary of the dividend numbers for the entire quarter of 2020-Q1:

• 622 U.S. firms announced they would boost cash dividend payments to shareholders in 2020-Q1, an increase of 194 from the 428 recorded in 2019-Q4, and a decrease of 38 from the 660 dividend rises declared in the year ago quarter of 2019-Q1.
• 107 U.S. firms officially declared they would cut their dividends in 2020-Q1, an increase of 40 over the number recorded in the last quarter of 2019 and also an increase of 4 over the 103 that cut dividends back in the first quarter of 2019.
• 24 U.S. firms omitted or officially suspended paying their dividends in the first quarter of 2020, an increase of 22 over the previous quarter of 2019-Q4's total. That figure is also an increase of 10 over the number recorded in the first quarter of 2019.

We also track dividend cuts and suspensions in near real time, where our ongoing sampling helps pinpoint the timing for when the U.S. economy took a sharp turn toward economic contraction:

Here's the full list of dividend cut and suspension announcements we pulled from our near real time sampling for the entire quarter, where the total of 98 exceeds the combined number of dividend cuts and omissions reported by Standard and Poor for 2020-Q1 because we also flagged announcements of dividend cuts that haven't yet been officially declared, where the firms in question have only announced they are planning to suspend future dividend payments. Clicking the links for the company names will take you to our source for their respective announcements. Please note in the following list that several firms pay variable dividends on a monthly basis, particularly in the oil and gas industry, where these firms may appear more than once in the following listing which covers the three calendar months of 2020-Q1, which we're not differentiating because the distinction has become irrelevant in the current situation.

• MV Oil Trust (NYSE: MVO)
• Mesabi Trust (NYSE: MSB)
• VOC Energy Trust (NYSE: VOC)
• EnLink Midstream (NYSE: ENLC)
• PermRock Royalty Trust (NYSE: PRT)
• Dorchester Minerals (NASDAQ: DMLP)
• Kimbell Royalty Partners (NYSE: KRP)
• Alliance Resource Partners (NASDAQ: ARLP)
• Martin Midstream Partners (NYSE: MMLP)
• Tessco Technologies (NASDAQ: TESS)
• Summit Midstream Partners (NYSE: SMLP)
• U.S. Steel (NYSE: X)
• North European Oil Royalty Trust (NYSE: NRT)
• Black Stone Minerals (NYSE: BSM)
• Chesapeake Granite Wash Trust (NYSE: CHKR)
• Whiting USA Trust II (NYSE: WHZT)
• ECA Marcellus Trust I (NYSE: ECT)
• Sabine Royalty Trust (NYSE: SBR)
• Manhattan Bridge Capital (REIT) (NASDAQ: LOAN)
• Spirit AeroSystems (NYSE: SPR)
• Carlyle Group (NASDAQ: CG)
• Newtek Business Services (NASDAQ: NEWT)
• U.S. Silica Holdings (NYSE: SLCA)
• Viper Energy (NASDAQ: VNOM)
• Apollo Commercial Real Estate (REIT) (NYSE: ARI)
• Jernigan Capital (REIT) (NYSE: JCAP)
• Park Hotels&Resorts (NYSE: PK)
• AMC Entertainment (NYSE: AMC)
• Washington Prime Group (REIT) (NYSE: WPG)
• Uniti Group (REIT) (NYSE: UNIT)
• Pacific Coast Oil Trust (NYSE: ROYT)
• Amplify Energy (NYSE: AMPY)
• Vector Group (NYSE: VGR)
• Horizon Tech Finance (NYSE: HRZN)
• Occidental Petroleum (NYSE: OXY)
• AMEN Properties (OTCPK: AMEN)
• Canterbury Park Holding (NASDAQ: CPHC)
• Macerich (REIT) (NYSE: MAC)
• Pebblebrook Hotel Trust (NYSE: PEB)
• Citizens Financial Group (NYSE: CFG)
• Chatham Lodging Trust (REIT) (NYSE: CLDT)
• Designer Brands (NYSE: DBI)
• Ryman Hospitality Properties (REIT) (NYSE: RHP)
• Sabre (NASDAQ: SABR)
• Kosmos Energy (NYSE: KOS)
• DiamondRock Hospitality (REIT) (NYSE: DRH)
• RLJ Lodging Trust (REIT) (NYSE: RLJ)
• Sotherly Hotels (REIT) (NYSE: SOHO)
• Darden Restaurants (NYSE: DRI)
• Ford Motor Company (NYSE: F)
• Flexibile Solutions International (NYSE: FSI)
• Hersha Hospitality REIT (NYSE: HT)
• Targa Resources (NYSE: TRGP)
• Calvin B. Taylor Bancshares (OTC: TYCB)
• Emerald Holding (???: EEX)
• Apple Hospitality (REIT) (NYSE: APLE)
• Macy's (NYSE: M)
• Mesa Royalty Trust (NYSE: MTR)
• Permian Basin Royalty Trust (NYSE: PBT)
• San Juan Basin Royalty Trust (NYSE: SJT)
• Cross Timbers Royalty Trust (NYSE: CRT)
• PermRock Royalty Trust (NYSE: PRT)
• Boeing (NYSE: BA)
• Blooming' Brands (NASDAQ: BLMN)
• DCP Midstream (NYSE: DCP)
• Freeport McMoran (NYSE: FCX)
• Ashford Hospitality Trust (REIT) (NYSE: AHT)
• DCP Midstream (NYSE: DCP)
• Freeport McMoran (NYSE: FCX)
• Invesco Mortgage Capital (NYSE: IVR)
• Steelcase (NYSE: SCS)
• Two Harbors Investment (REIT) (NYSE: TWO)
• PennyMac Mortgage Investment Trust (REIT) (NYSE: PMT)
• City Office REIT (NYSE: CIO)
• Sabra Health Care REIT (NYSE: SBRA)
• Noble Midstream Partners (NASDAQ: NBLX)
• Summit Hotel Properties (NYSE: INN)
• Genesis Energy (NYSE: GEL)
• Movado Group (NYSE: MOV)
• Granite Point Mortgage Trust (REIT) (NYSE: GPMT)
• MFA Financial (REIT) (NYSE: MFA)
• Oxford Industries (NYSE: OXM)
• EQT Corporation (NYSE: EQT)
• Arlington Asset Investment (REIT) (NYSE: AI)
• BGC Partners (NASDAQ: BGCP)
• SL Green Realty (NYSE: SLG)
• Whitestone REIT (NYSE: WSR)
• AG Mortgage Investment Trust (REIT) (NYSE: MITT)
• Redwood Trust (REIT) (NYSE: RWT)
• La-Z-Boy (NYSE: LZB)
• American Finance Trust (REIT) (NASDAQ: AFIN)
• Steven Madden (NASDAQ: SHOO)
• Service Properties (REIT) (NASDAQ: SVC)
• New Residential (REIT) (NYSE: NRZ)
• Pennsylvania REIT (NYSE: PEI)
• Xenia Hotels & Resorts (REIT) (NYSE: XHR)
• Tremont Mortgage (REIT) (NASDAQ: TRMT)

Having identified the firms, we can identify the economic sectors that are bearing the brunt of conditions that lead to dividend cuts. The following chart reveals the most negatively impacted industries:

The sector encompassing financial industry firms and Real Estate Investment Trusts (REITs) has been the most negatively impacted by the coronavirus epidemic in the U.S. and its related economic shutdowns. Of the 38 firms in this sector announcing dividend cuts, 23 have acted since 19 March 2020 when California's governor implemented the first statewide order in the U.S. to close businesses and for residents to stay-at-home. These orders are disproportionately impacting mortgage, hotel, shopping center, and restaurant REITs, where this business structure has become popular within these industries in recent years.

The oil and gas sector is the second most-negatively affected industrial sector, with 29 cuts in total. Those cuts have come less in part because of reduced travel stemming from the business closures and stay-at-home orders, but more because of a price war that erupted between Saudi Arabia and Russia, which have both sharply increased production in bids to gain market share as demand plummeted, sending oil prices sharply downward.

The dividend cuts in the remaining industries show the breadth of affected sectors. In total, of the 97 dividend cut and suspension announcements we counted in the quarter's sampling, 45 have come since 19 March 2020.

Perhaps the most remarkable thing about the current economic situation is that 2020-Q1 had been on track to be a strong quarter compared to the year-ago quarter of 2019-Q1 until the coronavirus pandemic disrupted how people live and do business.

References

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. 31 March 2020.

Seeking Alpha Market Currents. Filtered for Dividends. [Online Database].

Wall Street Journal. Dividend Declarations. [Online Database when searched on the Internet Archive].

Political Calculations' estimate of median household income rose 0.3% February 2020, increasing from January 2020's initial estimate of $66,370 to $66,538.

The following chart shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through February 2020. The inflation-adjusted figures are presented in terms of constant January 2020 U.S. dollars.

Analyst's Notes

The U.S. Bureau of Economic Analysis released the personal income data used in our analysis on 27 March 2020, having compiled it earlier in the month, most likely before 13 March 2020, when President Trump declared a national emergency for the coronavirus epidemic and certainly before 19 March 2020, when California imposed the first state-wide stay-at-home orders for residents and the widespread closure of businesses, which marks the beginning of a national recession. Through the end of March 2020, three out of four Americans live in states or regions subject to similar orders.

Given that timing, the February 2020 estimate for median household income represents the last data point in the series that will not be affected by the coronavirus epidemic. We anticipate that future data will be subject to substantial revisions given the extent of the disruption to the U.S. economy, which will make our median household income estimates less accurate until the economic situation stabilizes.

Other Analyst's Notes

Sentier Research has suspended reporting its monthly Current Population Survey-based estimates of median household income, concluding their series with data for December 2019. We'll miss their monthly updates, while we continue to provide the estimates from our alternate methodology.

Statistically, over 240 months from January 2000 through December 2019, our estimates have fallen within 0.9% of Sentier Research's estimates in 70% of observations, within 1.8% in 95.8% of observations and within 2.7% in 99.6% of observations. The greatest deviations between our results and Sentier Research's estimates occurred in October 2000, where our estimate was 3.2% higher than Sentier Research's figure, and in February 2010, where our estimate was 3.1% lower than Sentier Research's figure.

In other words, we have a pretty good model for estimating median household income in the United States, which the coronavirus epidemic and the response to it is going to put to the test.

References

Sentier Research. Household Income Trends: January 2000 through December 2019. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 6 February 2020. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 13 February 2020. Accessed: 12 March 2020.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 27 March 2020. Accessed: 27 March 2020.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 27 March 2020. Accessed: 27 March 2020.

Through 31 March 2020, the United States has tested over 1.1 million Americans for COVID-19 infections in all 50 states and the territories of Puerto Rico and the District of Columbia. The known results of that testing, including the number of positive, negative and pending test results for the SARS-CoV-2 coronavirus, the number of deaths, and also the reported cases severe enough to require hospitalization, are visualized below in the tower chart showing the daily progression of COVID-19 infections in the U.S. since 10 March 2020.

In the following chart, we've combined the skyline tower charts illustrating the daily progression of positive COVID-19 infections, hospitalizations, and deaths for each of the 50 states and the territories of Puerto Rico and the District of Columbia, ranking each from worst to best as you read from left to right, top to bottom. All charts are presented covering the same period of time from 10 March 2020 through 31 March 2020 and use the same scale, with the width of the charts representing 0.5% of the state or territory's population, making is easy to quickly visualize in which states the coronavirus infections are concentrated and are spreading the fastest.

It appears from the available data that a number of states are not reporting their number of coronavirus-related hospitalizations, with New Jersey, Michigan, the District of Columbia, and Illinois standing out in that category among the top 10 states ranked by share of their population having been infected.

We're also well past the point where it is worthwhile to track the daily progression of COVID-19 in states whose governors have mandated business closures or stay-at-home orders for their residents. Also as of 31 March 2020, three out of four Americans are affected by these restrictions, which have spread far faster than the coronavirus.

Previously on Political Calculations

• Visualizing the Progression of COVID-19 in the United States (through 24 March 2020)
• COVID-19 Coronavirus Cases in the U.S. (state and territory-level data updated daily!)

Update 31 March 2020: Thank you for scrolling all the way down to the bottom of this article! If you're viewing the original version of this article, here's where we will periodically post updates to the national tower chart presented above, or will link to newer posts in the series where you can find updates for all the charts.

Update 3 April 2020: Here's the update to the national tower chart, which we're presenting in a landscape format for these updates:

The biggest changes in the daily numbers are coming from the Top 10 states. New York continues to have the fastest growth and the largest number of confirmed cases, accounting for nearly 38% of all confirmed cases in the U.S.

On Friday, 27 March 2020, following a week of mindlessly partisan political shenanigans and multiple needless delays in the U.S. Congress as Americans lost incomes because of government-mandated businesses closures and stay-at-home orders meant to slow the spread of the coronavirus epidemic, President Trump signed the CARES Act of 2020 into law, which may provide a tax credit/rebate to American households that qualify for it.

Will your household qualify to get a tax credit rebate check from the U.S. government? And if you do, how much money will you get?

Our latest tool can help you answer these two questions! Enter your information, or a hypothetical scenario, in the tool below, and we'll do the math! If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Under the CARES Act, the IRS will automatically provide what it is calling a stimulus payment check to eligible households that have filed their Form 1040 income tax returns for either the 2018 or 2019 tax years. If you didn't file an income tax return for 2018 and if you haven't yet filed a return for the 2019 tax year, you will not be eligible to receive a tax rebate check until you do. At this writing, the IRS has extended the deadline to file your 2019 income tax return from 15 April 2020 to 15 July 2020.

Even though the IRS will automatically send out tax credit rebate checks to eligible tax-filing households, it may take until 31 December 2020 to do so.

The amount of your coronavirus tax rebate check depends upon whether you have qualifying dependent children in your household and the amount of your household's adjusted gross income, where if that income exceeds $75,000 if your tax filing status is single, $112,500 if you file as head of household, or $150,000 if you file as married, the amount of your stimulus payment check will be reduced by 5% for every dollar your income exceeds those qualifying thresholds.

If you would like to find out more about the CARES Act of 2020, both the nonpartisan Tax Foundation and tax expert Tony Nitti have excellent articles describing how it may impact your personal income taxes.

Image Credit: Sharon McCutcheon

We've reached an interesting juncture for the S&P 500. Thanks to some monumental stimulus from the U.S. Federal Reserve and other global central banks, along with the promise of trillions in fiscal relief for U.S. businesses from the U.S. government, stock prices rebounded over where they closed in the previous week.

That's the good news. The bad news is both actions have come too late for U.S. firms to avoid having to cut their dividends, which saw continued deterioration over the past week. The following chart shows the level to which the expectations for future S&P 500 quarterly dividends per share deteriorated by the end of trading on Friday, 27 March 2020.

That makes the S&P 500's current level look quite a lot like a speculative bubble with respect to where the dividend futures-based model would set them based on the S&P 500's projected fundamentals.

As such, we see the S&P 500 as rising and falling based mostly on speculation, which suggests continued volatility coupled with downward momentum in the near future.

The flow of new information during the past week provides the context behind the market's various surges and retreats, where partisan politics emanating from the U.S. House of Representatives that needlessly delayed fiscal relief for American households and businesses negatively impacted by the numerous statewide economic shutdowns that were ordered during the past week to cope with the spreading coronavirus epidemic in the U.S.

Monday, 23 March 2020

• Crude extends fall as U.S. gasoline slumps 20% amid demand fears
• Democratic party leadership's partisan games derail $1 trillion fiscal relief bill:
• Emergency Economic Rescue Plan in Limbo as Democrats Block Action
• Mnuchin urges U.S. Congress to pass $2 trillion economic relief bill
• Bigger stimulus developing all over:
• World Bank could deploy $150 billion over 15 months in coronavirus battle
• Central banks deploy record sums to break financial logjam, but may need more
• Mnuchin says G20 set to coordinate globally as needed
• 'No limits' to euro zone's coronavirus response, Eurogroup chief says
• Fed aims 'bazooka' to backstop coronavirus-hit economy
• This is a big one - the Fed is now backing commercial paper and issuing loans to corporations for the first time in its history, which will contribute toward ending an underreported run on the bank....
• With latest moves, Fed becomes creditor in chief for U.S. business
• Fed, ECB minions confirm gloomy outlook for world economy:
• ECB's de Guindos says coronavirus will put Europe into a recession
• Fed's Bullard: Coronavirus shutdown not a recession but an investment in survival
• Historic Fed boost fails to stop Wall Street's coronavirus-driven sell-off

Tuesday, 24 March 2020

• Coronavirus impacts to major U.S. economic sectors:
• Oil little changed as falling demand offsets hopes of U.S. aid package
• U.S. new home sales fall in February, January revised up sharply
• Coronavirus crisis rocks airlines and planemakers
• Bigger trouble developing all over:
• Euro zone business activity collapses in March as coronavirus spreads: PMIs
• Shipping industry urges G20 to keep freight flowing as virus hits supply chains
• Bigger stimulus developing in Washington D.C., China, Eurozone:
• Mnuchin: Negotiators 'very close' to deal on coronavirus stimulus
• Factbox: What's in the nearly $2 trillion U.S. Senate coronavirus stimulus?
• Chinese consumer finance firms rush to raise money via ABS amid coronavirus
• Germany: 750 billion euro aid package is just first step in tackling coronavirus
• Central banks restoring liquidity to cash-starved corporate debt/money markets:
• Companies rush to debt market as Fed eases funding logjam
• Fed's 'bazooka' soothes dollar funding squeeze
• Clearing the global dollar shortage: How the U.S. could intervene to weaken its surging dollar
• ECB intends to be major buyer in commercial player market, Villeroy says
• ECB allots $4.12 billion in 7-day dollar swap
• German companies rush to banks for emergency coronavirus funds
• Positive speculation in absence of fiscal relief bill powers stock market upward:
• Dow soars over 11% in strongest one-day performance since 1933

Wednesday, 25 March 2020

• Good and bad for oil industry, consumers:
• Oil prices settle higher on stimulus package, fuel demand sinks
• Factbox: Global oil, gas producers cut spending after crude price crash
• Bigger trouble developing all over:
• German economy could shrink by 5-20% this year: Ifo economist
• Coronavirus lockdowns seen hitting Europe Inc earnings heavily
• Coronavirus sweeps across New York, California fears it could be next
• Bigger stimulus developing all over. Or not:
• Senators reach deal on $2 trillion stimulus bill aimed at coronavirus, bill will pass 'later today,' says McConnell
• Tempers rise as U.S. Senate awaits vote on $2 trillion coronavirus bill
• No action in House to consider bill
• Exclusive: ECB's Lagarde asked euro zone ministers to consider one-off 'coronabonds' issue - officials
• Fed, ECB minions
• Bullard: $2 trillion package working through Congress 'scaled about right' for crisis
• Bullard: 46 million workers could be jobless in short-term
• Absorb shock now or face permanent destruction, Draghi warns: FT
• Stock prices
• S&P 500 rallies for second day as investors await $2 trillion aid package
• Big Oil may have to break dividend taboo as debt spirals: investors

Thursday, 26 March 2020

• Coronavirus pandemic continues roiling U.S. economy:
• U.S. braces for record surge in jobless claims amid coronavirus fallout
• Oil sheds more than $1 as weakening demand outweighs stimulus hopes
• Factbox: Trade restrictions on food exports due to coronavirus pandemic
• Bigger economic trouble developing all over:
• China's factories reopen, only to fire workers as virus shreds global trade
• Trade bellweather Singapore signals deep recession for world as virus batters economy
• Japan says virus has made economy's condition 'severe', worst view in seven years
• German economy could shrink by 10% this year due to coronavirus: IW
• Italy PM sees Europe in 'hard, severe' recession post-coronavirus
• Euro zone faces 2% recession, 10% if lockdown lasts: S&P Global
• Bigger stimulus developing all over:
• U.S. Senate passes $2 trillion bill for 'strange and evil' coronavirus crisis
• Lackadaisical leadership in the House of Representatives: Pelosi expects bipartisan House vote for $2 trillion coronavirus bill Friday
• G20 leaders to inject $5 trillion into global economy to fight coronavirus
• IMF calls meeting of steering committee on pandemic response: source
• Fed actions to revive liquidity:
• Fed balance sheet tops $5 trillion for first time as it enters coronavirus war mode
• U.S. banks borrow at discount window after Fed offers stigma relief
• Wall Street powers stocks higher on $2 trillion stimulus; dollar takes a hit

Friday, 27 March 2020

• Global oil industry being hammered:
• Oil plunges posting fifth straight weekly loss despite stimulus efforts
• Exclusive: Russia calls for new enlarged OPEC deal to tackle oil demand collapse
• Global oil refiners shut down as coronavirus destroys demand
• Bigger trouble developing in Germany:
• Volkswagen burning through $2.2 billion a week as coronavirus halts production: CEO
• Around one in five German firms see themselves at risk of insolvency: survey
• Bigger stimulus developing all over:
• Cash handouts and bond buying: $10 trillion-plus deployed against virus
• Japan plans huge stimulus package to cushion blow from coronavirus
• Bank of Canada slashes policy rate, to start purchase of government securities
• Historic $2.2 trillion coronavirus bill passes U.S. House, headed to Trump
• Fed minion acknowledges U.S. recession:
• Fed working to bolster credit during 'self-mandated' recession: Kaplan
• Dividend cuts coming to Euro zone banks: ECB tells banks to be prudent on dividends, avoid capital hole later
• Wall Street tumbles as U.S. virus cases pass 85,000

What else happened during the week that was? Barry Ritholtz succinctly summarized the positives and negatives he found in the past week's economics and market-related news.

As for what will happen this week, if you're accessing this article on a site that republishes our RSS news feed, please be sure to check in on the original version of this article as it appears on our site for daily updates, which we'll continue until the market's volatility settles.

Stimulus Speculation Continues Powering S&P 500

Update 30 March 2020 6:00 PM Eastern: After the U.S. took the lead in the global stimulus charge last week, Japan followed that lead at the beginning of this week in announcing an absolutely massive stimulus effort. Combined with a recognition the Fed can and will need to continue expanding its monetary stimulus efforts, which is starting to show some signs of traction, the S&P 500 powered higher in response, rising 3.35% to close at 2,626.65. Looking at the influence of last week's passage of the U.S.'s latest relief package, health care firms did particularly well on the day.

At the same time, the outlook for dividend futures deteriorated sharply for 2020-Q2, 2020-Q3, and 2020-Q4, shown on the first chart below, while the trajectory of the S&P 500 moved up while the alternative futures based on those expectations for future dividends continue to point downward, shown on the second chart below.

It is highly likely that firms receiving relief via the U.S. government's relief package signed into law last week will be suspending their dividends to preserve their cash flow, which may account for the deterioration in the expectations for future dividends. That this negative change in expectations for fundamentals was accompanied by rising stock prices perhaps suggests an unstable speculative bubble based on promises of central bank and government relief and stimulus is inflating the stock market at this time.

The Worst First Quarter Ever?

Update 31 March 2020 5:30 PM Eastern: Normally, we look to ZeroHedge to cover doom and gloom in the U.S. stock market. But today, professional market cheerleader CNBC confirmed that the first quarter of 2020 was the worst ever in the 135 year history of the Dow!

But wait, that's not the worst of what happened today. Expectations for S&P 500 dividends in 2020-Q3 and 2020-Q4 continued down their very pessimistic paths, with both continuing their trends of notable deterioration. By contrast, the S&P 500 closed down 1.6% to 2,584.59, which though down for the day, was positively bubbly compared to the thrashing that dividend futures saw.

There was an upside in that expectations for dividends in 2020-Q2 rebounded from the pessimism that drove them down yesterday, but that's a small consolation considering the decoupling we're observing between dividend futures and the S&P 500 during the current disruptive event the markets are experiencing as order is being left behind.

President Trump began pitching a $2.2 trillion infrastructure spending bill, which we think is likely contributing to the speculation sustaining the S&P 500 at the level it is. How long that might last remains to be seen, but the one thing we can say for certain is 2020-Q1 is best considered in the rear-view mirror.

Stock Prices Start Deflating from Bubbly Speculation Levels

Update 1 April 2020 5:00 PM Eastern: No April Fool's Day jokes here. Quarterly dividend futures continued to go haywire in a very thinly traded market, with expectations for 2020-Q2 rising, but apparent expectations dropping significantly for 2020-Q3 and 2020-Q4 again, before suddenly rebounding strongly in 2021-Q1. Let's just say that there looks like a pricing error in the underlying dividend futures contracts, where a futures-savvy investor may have the opportunity to figuratively pick money up off the sidewalk if they can tell in which direction the errors are being made.

Meanwhile, some of the bubbly speculation that has been fueling the S&P 500 appears to have deflated, with the index falling 4.41% to close at 2,470.50.

We'll be depressing everyone tomorrow with a report on dividend cuts in March 2020 and in 2020-Q1.

Trump-Negotiated Truce in Saudi-Russian Oil Price War Boosts S&P 500

Update 2 April 2020 6:30 PM Eastern: President Trump's apparent negotiated truce in Saudi Arabia's and Russia's oil price war boosted the S&P 500, despite the news that over 6 million Americans had filed for unemployment as a result of all the state and local government-ordered business closures and stay-at-home orders that have been imposed to combat the spread of the coronavirus epidemic in the U.S. The S&P 500 closed up 2.28% to close the day at 2,526.90.

At the same time, some sense of sanity looks to have returned to the dividend futures market, which saw boosts across the board, thanks to the Trump-negotiated deal's effect on the future outlook for oil and gas company dividends.

We're also wondering if we need to revisit the empirically-determined 'constant' amplification factor we have typically used in our dividend futures-based model. It occurs to us that the market has experienced a regime change with the introduction of such a massive amount of stimulus since 23 March 2020, both fiscal and monetary, where the amplification factor constant that we have been using for the past 10+ years may no longer consistent with how investors are currently valuing stock prices.

We've been playing with that idea behind the scenes, where if say the amplification factor constant has shrunk from 5 to 2, the outlook for stock prices would be better than what the alternative futures chart above indicates. Then again, the amplification factor is how the model absorbs the effect of speculative noise, so that possibility would also still exist.

Either way, the change may only be temporary, so it's just another thing to watch. Regardless, the near term trend for stock prices would be downward.