Good morning! I'm coming to you from Washington, D.C., at the National Association for Business Economics policy conference. Speaking of...
Situational Awareness: Members "no longer believe a recession is likely in 2020 — a reversal from the predominant view of panelists in the February 2019 survey,” NABE president Constance Hunter, who also serves as chief economist at KPMG, said in a statement.
📺 Mark your calendars — Season 3 of “Axios on HBO” kicks off 6 pm ET/PT Sunday, March 1! (Today's Smart Brevity count: 1,249 words, < 5 minutes.)
New cases of the novel coronavirus have rocked asset prices in Japan, South Korea and Italy, as those nations and others have ratcheted up emergency efforts to contain the outbreak.
What's happening: Asian stock markets continued to tank overnight, as South Korea's Kospi dropped nearly 4%, Australia's ASX fell by 2.3% and Hong Kong's Hang Seng declined by 1.8%. MSCI’s index of Asia-Pacific stocks outside Japan touched its lowest since early February.
Driving the news: South Korean President Moon Jae-in called for “emergency steps in this time of emergency” on Sunday after the country reported more than 160 new cases of the coronavirus, a number which grew to 833 total infections this morning. The government raised the infectious disease alert to its highest level.
What they're saying: Finance ministers and central bank governors of the world's largest countries pledged to "enhance global risk monitoring" and warned the coronavirus posed a serious threat to global growth during their weekend meeting in Riyadh, Saudi Arabia.
The big picture: “The news flow from the weekend has changed the game somewhat, where the focus is much more on the threat of an outbreak outside of China,” Chris Weston, head of research at broker Pepperstone, told Reuters.
The U.S. economy has taken a significant hit so far in February, due in part to the coronavirus outbreak.
By the numbers: The all-important U.S. services sector contracted for the first time in four years, data released Friday from IHS Markit showed, and fell to its lowest level in more than six years.
Why it matters: The services sector accounts for more than two-thirds of the U.S. economy and held up remarkably well last year as the U.S.-China trade war ravaged manufacturing and sent the industry into recession.
Warning: The rate of decline for new business was the strongest in the history of the survey, dating back to October 2009, and total new orders fell for the first time in more than a decade, according to IHS Markit.
Reality check: Economists largely expect the negative impact of the coronavirus to recede after the second quarter, but IHS Markit chief economist Chris Williamson warned that it was not the only issue weighing on this month's readings.
"The deterioration in was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions."
"However, companies also reported increased caution in respect to spending due to worries about a wider economic slowdown and uncertainty ahead of the presidential election later this year."
But, but, but: Friday's reading was a flash estimate of the current month and IHS Markit, along with data provider ISM, will release a deeper look at February's manufacturing and services in early March.
Fox has interest in acquiring ad-supported streaming service Tubi at a valuation near $500 million, while NBCUniversal is in advanced talks for Vudu, purchased by Walmart in 2010 for $100 million. (WSJ)
Intuit is close to making its largest ever deal, purchasing personal finance website Credit Karma for about $7 billion in cash and stock. (WSJ)
China has cut interest rates, ordered banks to boost lending and proffered other stimulus, but many private businesses say they can't access the funding needed to meet upcoming debt and salary payments. (Bloomberg Quint)
Wisconsin had the highest number of farming bankruptcies in a decade, and the number of dairy farms across the state has fallen by 49% over 15 years, while per-capita dairy consumption in the U.S. reached its highest since 1962. (The Guardian)
Fed governor Lael Brainard said that interest rates may need to stay low for some time to get inflation to the Fed's 2% target and argued in a speech Friday that the central bank needed "a different strategy."
"The current generation of central bankers faces a different core challenge than the last generation, with substantially smaller scope for cutting interest rates to buffer the economy and inflation that is low and relatively unresponsive to resource utilization."
"With trend inflation running below the symmetric 2 percent objective, there is a risk that inflation expectations have slipped. ... policy may have to remain accommodative for a long time to achieve 2 percent inflation following a period of undershooting. With the equilibrium interest rate very low, the Federal Open Market Committee can cut the federal funds rate by only about half as much as it has done historically to buffer the economy from recession."
"Today's new normal calls not only for a broader set of tools, but also a different strategy. We should clarify in advance that we will deploy a broader set of tools proactively to provide accommodation when shocks are likely to push the policy rate to its lower bound."
Why it matters: Brainard is considered one of the most influential members of the Fed's rate setting committee and is the latest to highlight too-low inflation as a problem for the central bank.
The U.S. Treasury yield curve inverted again, with 3-month Treasury bills holding a higher yield (1.56%) than 10-year Treasury notes (1.46%).
Why it matters: Economists at the Fed call the 3-month/10-year inversion the "best summary measure" of economic downturn and a yield curve inversion has preceded every recession of the last 50 years within approximately six to 24 months.
Trading volume at online and discount brokers like TD Ameritrade and the recently acquired E*Trade has exploded over the past year, Bloomberg reports, with TD Ameritrade alone having seen million-trade days multiplying at a "record pace."
Driving the news: "[D]aily average revenue trades ... have almost doubled to an all-time high since last September, data compiled by Sundial Research showed," per Bloomberg.
Details: At TD Ameritrade, there were 38 days when the amount of trades topped 1 million during the fiscal first quarter that ended Dec. 31, Steve Boyle, TD's interim president and CEO, told Bloomberg. That compares to 23 such days in all of fiscal year 2019.
Sadie Tanner Mossell Alexander is considered America’s first black economist, even though few have ever heard of her.