In a similar pattern to that of the 2008 Global Financial Crisis, it appears to be Main Street (small businesses, the middle class, and the general economy), and not Wall Street (large investment firms, major corporations, and super-wealthy individuals), who are carrying the real burden of the economic impacts of the coronavirus. Millions of people around the world have lost their jobs, world hunger is anticipated to rise, hospitals are overrun, while a few of the globe’s largest corporates continue to thrive and reach new heights.
But the tenacity of Wall Street is seeing signs that it may fray – big banks have announced massively reduced profit margins and political tensions are escalating.
- Russia has been accused by the UK, the US, and Canada of hacking universities and pharmaceutical companies in an attempt to steal coronavirus vaccine research.
- Six of the largest banks in the US have cut $35 billion from their profits, anticipating many bad loans, with the view that conditions will deteriorate further. US businesses and consumers are being propped up by the massive stimulus packages provided by the government, and so the enduring effect of 20 million people losing their jobs is yet to be felt. An example of stimulus impact was when unemployment spiked, the percentage of loans falling into delinquency actually dropped, but this negative correlation will not be maintained indefinitely.
- The Trump administration has started requiring hospitals to submit their coronavirus patient data to the White House rather than the Center for Disease Control and Prevention (CDC). The reason given for this shift was that the CDC’s system for gathering hospital data was inadequate and that the administration would implement a “new, faster and complete data system”. This was followed by outrage as many concerned Americans fear that this is a way for the White House to avoid transparency in the face of mounting coronavirus cases.
- China’s economy has grown 3.2% from a year earlier in the second quarter. This is the first major economy to return to growth since the impact of the coronavirus.
- The US has responded to France after the country said that it was planning to tax Silicon Valley tech giants. Luxury and beauty products from France (worth $1.3billion), will face a 25% tariff if both nations fail to reach an agreement.
- The UK announced that it would ban equipment from Huawei, a Chinese telecommunications giant, shutting the company out of its role in building the UK’s 5G wireless infrastructure. This was an apparent victory for the Trump administration which has blacklisted Huawei and encouraged their allies to follow suit.
- Apple has won a landmark court battle with the EU over a 2016 decision that ordered the tech company to pay $14.9 billion in unpaid taxes to Ireland.
- Moderna Inc has experienced further success in its attempts to find a coronavirus vaccine. Federal researchers have found that the vaccine produced antibodies (to the coronavirus), in all patients tested in an initial safety trial.
- In an opinion piece entitled “100 days of lockdown: The flaws are starting to show,” our consulting political analyst, Professor Ivor Sarakinsky, sets out policy failures; how the management of the crisis could have been improved through positive messaging; the incapability of the state; and the flaws within the DA and EFF. Follow this link to the article as published recently in News24.
- Around three million South Africans lost their jobs over the lockdown period, representing an 18% decline in employment from 17 million people employed in February, to 14 million people employed in April 2020.
- Mention of South Africa was made this week in the New York Times and Bloomberg over the reinstated ban on alcohol. The largely justifiable reason given by the authorities for this reinstatement was to alleviate pressure on the healthcare system, reasoning that alcohol-related injuries take up extra hospital beds.
- Eskom spokesperson, Sikonathi Mantshantsha, told Reuters that Eskom does not know when there will be an end to load shedding. Eskom implemented planned power outages on July 10, ending a period of unusually stable power supply thanks to reduced demand during the coronavirus-induced lockdown.
- The National Treasury and Finance Minister Tito Mboweni have agreed to fund the restructuring of SAA which will cost the government at least R10 billion, yet it is still unclear where Treasury will source the funds, given the massive deficit recently outlined in the emergency budget. The business rescue plan was accepted on Thursday by the majority of the airline’s creditors.
- As South Africans face increased hunger, poverty, and unemployment, the government announced its intention to introduce a Basic Income Grant for unemployed, non-social-grant recipients between the ages of 18 and 59.
- Liberty Properties revalued its R20 billion property portfolio downwards by 20% as at the end of March. However, the company allegedly failed to inform its clients whose portfolio values fell by the same percentage. Follow this link for more details.
Sources: Dynasty, Reuters, Bloomberg Markets, The New York Times, Daily Maverick, and Moneyweb, etc