Feb 8, 2017

Investors are tripping over themselves to lend Europe money

At first glance, the European Union doesn't seem like the most creditworthy of borrowers. But the Wall Street Journal highlights the massive investor demand for European sovereign bonds, a demand that is enabling countries like Austria to issue bonds at 1% for 70 years.

The Journal looks at countries like Spain, France, and Italy that face outsized political and economic risks in the coming years. These economies are facing slowing or even negative population growth, historically high debt burdens, widening economic inequality, and the rise of populist parties with unorthodox economic philosophies. None of these trends should inspire the confidence of lenders, yet the search for yield has inspired investors to front the money nonetheless.

Why it matters: That bond investors are unafraid of a slow-growing, highly-indebted, and perennially-gridlocked country like Italy defaulting on debt over the next thirty or more years tells us that:

  • Central bank stimulus has helped make government borrowing cheaper;
  • The market thinks that countries have a much higher capacity for debt than politicians do;
  • Significantly higher inflation isn't on the way;
  • The U.S. should seriously consider issuing debt at maturities longer than 30 years. Locking in today's interest rates for 70 or more years would be a godsend to future budgeters.

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China tries to contain coronavirus, as Apple warns of earnings impact

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's NHC; Note: China refers to mainland China and the Diamond Princess is the cruise ship offshore Yokohama, Japan. Map: Danielle Alberti/Axios

As China pushes to contain the spread of the novel coronavirus — placing around 780 million people under travel restrictions, per CNN — the economic repercussions continue to be felt globally as companies like Apple warn of the impact from the lack of manufacturing and consumer demand in China.

The big picture: COVID-19 has now killed at least 1,775 people and infected more than 70,000 others, mostly in mainland China. There are some signs that new cases are growing at a slower rate now, although the World Health Organization said Monday it's "too early to tell" if this will continue.

Go deeperArrowUpdated 1 hour ago - Health

Apple will miss quarterly earnings estimates due to coronavirus

Apple CEO Tim Cook

Apple issued a rare earnings warning on Monday, saying it would not meet quarterly revenue expectations due to the impact of the coronavirus, which will limit iPhone production and limit product demand in China.

Why it matters: Lots of companies rely on China for production, but unlike most U.S. tech companies, Apple also gets a significant chunk of its revenue from sales in China.

America's dwindling executions

The Trump administration wants to reboot federal executions, pointing to a 16-year lapse, but Pew Research reports the government has only executed three people since 1963.

The big picture: Nearly all executions in the U.S. are done by states. Even those have been steadily dropping for two decades, per the Bureau of Justice Statistics (BJS) — marking a downward trend for all executions in the country.