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Illustration: Aïda Amer/Axios
The Wuhan coronavirus outbreak is already scuttling supply chains and wreaking havoc on companies from around the world that do business in China, but if analysts' projections are correct, the rebound from the virus could help propel the U.S. economy to new heights right around the time of the 2020 presidential election.
What's happening: S&P Global expects the outbreak to "stabilize globally in April 2020, with virtually no new transmissions in May."
What we're hearing: "We’re likely to return not just to normal but above normal because of the U.S.-China trade deal," Kristina Hooper, chief global market strategist at Invesco, tells Axios.
Plus, U.S. economic data had been strengthening ahead of the outbreak — last month the all-important services sector notched its best reading since September, a private payrolls survey showed the highest job growth in five years and consumer confidence held at historically high levels.
But, but, but: The bullish expectations are based on the assumption that Trump won't ratchet up tensions with China again or launch a second trade spat with Europe.
The bottom line: With limited options to further juice the economy — as the Democrat-controlled House of Representatives would need to pass any new tax cuts or large-scale spending projects — Trump's best option for economic growth will likely be to do nothing.
The U.S. economy may even have something of an insurance policy, in the form of the Federal Reserve.
What it means: Danielle DiMartino Booth, CEO of Quill Intelligence and a former adviser to the Dallas Fed, tells Axios that she expects the Fed to "abide by what futures markets price in as it pertains to rate cuts."
Intercontinental Exchange is abandoning its pursuit of eBay after its investors pushed back strongly against the move. (WSJ)
The U.S. and its allies should consider taking a "controlling stake" in Nokia and Ericsson to counter Huawei's dominance over 5G wireless technology, the White House said. (Reuters)
Elliott Management has built a stake of more than $2.5B (or 3%) in Softbank and is pushing the company to make changes to boost its share price (WSJ)
Net farm income is expected to fall by 11% this year, as President Trump's government aid programs decline, expenses rise and prices for corn and soybeans fall. (USDA)
With more than half of the companies on the S&P 500 having reported earnings, the consensus estimate for fourth-quarter earnings is down just 0.1% from three weeks ago. That's well above the 1.3% average decline for the past five years, excluding 2018, which was boosted significantly by the Tax Cuts and Jobs Act.
By the numbers: So far, 22% of S&P companies have revised first-quarter profit targets higher, the highest percentage since Q2 2018 and third-highest since 2012, Bloomberg data show.
Yes, but: The coronavirus outbreak may lower 2020 earnings, Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, told Bloomberg. She expects downside effects from the virus could pull growth figures down by about 4%.
The steady decline in U.S. interest rates helped the housing sector recover from its malaise in early 2019, and the momentum is continuing so far in 2020.
Driving the news: National housing inventory fell by nearly 14% in January — the steepest year-over-year decline in more than four years, according to a survey released this morning from Realtor.com.
What's happening: As mortgage rates decline, applications are spiking and so are prices.
What they're saying: “With fewer homes coming up for sale, we’ve hit another new low of for sale-listings in January,” Realtor.com chief economist Danielle Hale said.
The latest reading of the Green Street Commercial Property Price Index fell in January for the first time since March 2019. Prices had held steady over the previous three months and have risen just 2.1% in the last 12 months.
Why it matters: The data suggest price increases in commercial real estate have hit a standstill.
What it means: The index measures pricing of U.S. commercial properties at the current negotiated and contracted prices. January's 0.5% fall was driven by lower mall values. Pricing of other property types was unchanged, Green Street said in a release.
The big picture: Increases in other segments of the market also have been unimpressive. With the exception of apartment (6%), industrial (13%), and manufactured home park (16%) — which collectively make up just 17.5% of the total index — no category of commercial real estate has seen even a 5% price increase over the last 12 months, Green Street's data show.
Flashback: Last month, Fed data showed U.S. commercial and industrial loans had the largest drop in nearly three years, and the total amount of C&I loans declined to levels last seen in May.
Shirley Jackson is the president of RPI (Troy, New York's Rensselaer Polytechnic Institute) whose experiments with theoretical physics paved the way for the touch-tone telephone, portable fax, caller ID, call waiting and the fiber-optic cable.