Japan's business mood hits 7-year low as virus revives deflation specter

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Japan's business confidence soured to levels not seen since 2013, a closely watched survey showed, as the coronavirus pandemic hit sectors from hotels to carmakers and pushed the economy closer to recession.

The worsening corporate morale underscores the challenge Prime Minister Shinzo Abe faces in ensuring the pandemic does not erase the benefits of his "Abenomics" fiscal and monetary stimulus, deployed seven years ago to revive a stagnant economy.


The Bank of Japan's quarterly "tankan" survey on Wednesday showed big manufacturers' sentiment turned pessimistic for the first time in seven years as supply chain disruptions caused by the outbreak hit sectors across the board.

Service-sector sentiment also hit a seven-year low as travel bans and social distancing policies hurt consumption, clouding an already dark outlook.

Analysts warn firms are yet to fully factor in the coming business hit from the pandemic and will likely slash spending plans in months ahead.

"The tankan clearly shows a sharp deterioration in business sentiment and confirms the economy is already in recession," said Yasunari Ueno, chief market economist at Mizuho Securities.


"Given there's so much uncertainty, companies are probably setting tentative capital spending plans now. A downward revision to their expenditure plans is inevitable," he said.

The headline index measuring big manufacturers' sentiment worsened to minus 8 in March from zero in December, the tankan showed, compared with a median market forecast of minus 10.

It was the first time in seven years the big manufacturers' index turned negative, with slumping global demand pushing sentiment among big carmakers to the lowest level since 2011.

Big non-manufacturers' sentiment index worsened to plus 8 from plus 20 in December, the survey showed. Morale among big hotels fell to a 16-year low as the pandemic led to a plunge in overseas and domestic tourism.

Both manufacturers and non-manufacturers expect business conditions to worsen further three months ahead, the survey showed.


For now, big firms expect to increase capital expenditure by 1.8% in the fiscal year that began April, compared with a median estimate of a 1.1% decrease.

However, companies may revise down their spending plans in the next tankan survey in June depending on the extent of economic damage caused by the pandemic, a BOJ official told a briefing.


About 70% of firms surveyed in the tankan turned in their replies by March 11, before lockdowns of cities intensified across the globe.

The pandemic has hit an economy that had already suffered its fastest contraction in 5-1/2 years in the December quarter due to last year's sales tax hike and the U.S.-China trade war.

Many analysts expect the world's third-largest economy to contract in January-March and the current quarters, keeping pressure on policymakers to deploy huge stimulus programs.

Abe has pledged a huge spending package that would be bigger than one launched during the global financial crisis to cushion the outbreak's hit to growth.

The BOJ also stands ready to ramp up stimulus for the second straight month in April to combat the widening damage from the pandemic, sources have told Reuters.


"We're now laying out a bold stimulus package. This will of course involve (issuing) government bonds," Abe told parliament on Wednesday. "We'll take necessary, sufficient economic policies to ensure Japan does not revert to deflation."

The tankan survey will be among key data the BOJ will analyze in deciding policy at its April 27-28 rate review. (Reporting by Tetsushi Kajimoto; Editing by Sam Holmes and Jane Wardell)

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Coronavirus could hit hedge fund titans who earned more than $1B in 2019

Coronavirus scaring homebuyers, but big rebound coming in summer: Million Dollar Listing’s Serhant

‘Million Dollar Listing New York’ star and licensed associate real estate broker Ryan Serhant discusses how people on the market to buy should continue to do so during the coronavirus outbreak.

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Eight hedge fund managers earned more than $1 billion apiece in 2019, according to the Institutional Investor’s Rich List, but have likely seen a slice of that wealth destroyed as the coronavirus pandemic threatens to tip the U.S. into a recession that rivals the 2008 financial crisis.

Christopher Hohn of TCI Fund Management was one of the highest individual earners last year, according to the list, raking in $1.8 billion on the back of a 40.6 percent return, the firm’s best year since 2013. Hohn tied with Jim Simons of Renaissance Technologies, who also earned $1.8 billion.


Citadel’s Ken Griffin nabbed second place on the list, with his fund up more than 20 percent, the highest in six years.

Point72’s Steve Cohen and Appaloosa Management’s David Tepper each made $1.3 billion last year, while Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, earned $1.1 billion.

The massive incomes for these individuals came before the virus outbreak, which has forced restaurants, airlines, cruise lines, bars and entertainment venues to shutter their doors, began to batter the economy and the financial markets. The Federal Reserve and lawmakers have both taken unprecedented action to try to mitigate the economic fallout, including a $2 trillion stimulus bill, the largest in recent memory.


Markets have somersaulted since the end of last year, with the Dow Jones Industrial Average at one point erasing the majority of its gains since President Trump took office.

The pandemic has hammered the fortunes of some of the wealthiest Americans: The number of millionaires in the U.S. has plummeted from a record-high amid the dual financial and health crises. At the end of 2019, there were an unprecedented 11 million American millionaires, evidence of the historic 11-year economic expansion and the tax cuts and ultra-low interest rates that accompanied it, according to a new study published by research firm Spectrem Group.


The wealthiest people in the world have seen especially dramatic losses: According to the Bloomberg Billionaire Index, the world’s 500 richest people have lost almost $1.3 trillion since the start of the year. That’s close to a 21.6 percent decline in their collective net worth.

Of course, ordinary Americans are likely to experience a more severe fallout from the virus outbreak and will be among the people hit the hardest by an economic slowdown that experts warn could rival the 2008 financial crisis.

Unemployment claims from the period between March 14 and March 21 surged to 3.28 million, the Labor Department said on Thursday, shattering a decades-old record. Economists have warned that jobless claims will likely continue to skyrocket as the economy remains partially shut down.


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U.S. businesses see big hit from coronavirus, Fed survey shows

Fed’s Powell: Coronavirus was a risk to the outlook of US economy

Federal Reserve Chairman Jerome Powell discusses how the coronavirus becoming a risk to the U.S. economy stimulated a rate cut.

U.S. businesses expect a "very large and very negative impact" from the coronavirus pandemic and efforts to slow its spread, according to a survey published on Monday by the Atlanta Federal Reserve Bank.

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Quarter-ahead sales growth forecasts fell to below zero, from 5 percent last quarter, the Small Business Uncertainty survey showed, "the starkest swing" from one quarter to the next in the survey's six-year history, the Atlanta Fed said.


Two-thirds of those responding in the first week of the March 9-20 survey expected on average a 9 percent decline in sales from the virus. In the second week 85 percent of respondents expected an average 16% decline in sales.

"We are still months away from confidently gauging COVID-19's impact on output growth," Atlanta Fed economists wrote in a blog on the survey's findings. But the survey "indicates that firms are bracing for a huge negative impact on their businesses."

Interestingly, the firms surveyed did not signal much change to employment or capital spending plans for 12 months ahead. Perhaps, the economists wrote, they see the virus' impact "as sharp but short-lived, with little impact on longer-term employment and plans for capital expenditure."


The drop in sales forecast by firms may be too optimistic, the Atlanta Fed economists wrote, as governments respond with stricter limits on travel and business operations.

The survey covers all regions of the United States, every industry sector except agriculture and government, and firms of all sizes.


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Woolworths profits hit as wage underpayments blow out to $315m

Costs for the supermarket giant's underpayment of salaried team members has blown out above the company's initial $200 million to $300 million estimate, leading to a drop in overall net profit for the first half of the financial year.

In a statement to the market on Wednesday morning, Woolworths revealed its total payment shortfall to its salaried team members was $315 million, $15 million above initial estimates, with investigations ongoing.

Costs for Woolworths underpayment has blown out beyond expectations.Credit:Janie Barrett

The underpayment scandal also hit the supermarket's bottom line, with group net profit after tax down 7.7 per cent at $887 million, damaged by an $80 million provision for remediation costs and $51 million in costs from the Endeavour Group demerger.

Woolworths also retroactively adjusted its profit and loss statements for prior trading periods to reflect the impact of its staff remediation, including a $52 million drop in earnings for the prior financial year.

A total of $69 million in backpayments were made to staff in the first half.

Total net profit after tax, before significant items such as underpayments and discounting the impact of a new accounting standard came in in line with analyst expectations, at $1.36 billion for the half.

Overall sales for the company were also in line with expectations, with Woolworths reporting $32.33 billion in revenue for the half. Comparable sales for the company's key food division were up 5.1 per cent, down on analyst expectations of 5.6 per cent growth.

Struggling department store Big W posted its first profit growth since 2016, contributing $50 million in earnings before interest and tax, with comparable sales up 3.2 per cent as the company picked better product ranges and kept prices low.

Comparable sales at the business' soon to be demerged Endeavour Drinks division grew 1.7 per cent and EBIT increased 6.7 per cent to $338 million, largely driven by growth in the company's own-brand liquor division Pinnacle. Costs of $51 million relating to Endeavour's demerger were also booked.

Woolworths chief executive Brad Banducci said the half was positive but had many "material challenges".

"While some of the challenges will continue to be felt in the second half, as a business, we also have a lot to be positive about as we look forward to moving from ownership to partnership with Endeavour Group, building out the Woolworths Group digital retail ecosystem and working with our partners and other stakeholders to create a better tomorrow," he said.

However, trading for the new year was muted, Mr Banducci warned, with total sales growth of just 3 per cent and comparable sales of just 2 per cent.

Final calculations of Woolworths' underpayments will involve a "substantial volume of data", Mr Banducci said, warning the total underpayment provision could change in the future.

"Determining the historical payment shortfall requires consideration of numerous clauses of the [general retail award], which translates into over 2,000 decision rules for the purposes of the Group’s analysis, across each year, for every current and former team member," he said.

"Changes to any of these variables have the potential to result in a future adjustment to the provision in subsequent periods as analysis and work continues."

Woolworths announced an interim dividend of 46¢ a share, up from 45¢ in the prior corresponding half, payable April 9.

More to come

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Coronavirus to deliver big hit to China's economy, says Xi

Trump: President Xi handling coronavirus ‘very professionally’

President Trump discusses China’s handling of the deadly coronavirus outbreak.

BEIJING (Reuters) – China will step up policy adjustments to help cushion the blow on the economy from a coronavirus outbreak that authorities are still trying to control, President Xi Jinping was quoted as saying on Sunday.

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The situation is showing a positive trend after arduous efforts but there is no room for "weariness and relaxed mentality'' among officials, state television quoted him as saying.

"At present, the epidemic situation is still severe and complex, and prevention and control work is in the most difficult and critical stage,'' Xi said.


"The outbreak of novel coronavirus pneumonia will inevitably have a relatively big impact on the economy and society,'' Xi said, adding that the impact would be short-term and controllable.

In this Feb. 10, 2020, photo released by Xinhua News Agency, Chinese President Xi Jinping gestures near a heart shape sign and the slogan “Race against time, Fight the Virus” during an inspection of the center for disease control and prevention of Ch

The outbreak is one of the most serious public health crises to confront Chinese leaders in decades.

"For us, this is a crisis and is also a big test,'' Xi said.

Chinese policymakers have implemented a raft of measures to support an economy jolted by the virus, which is expected to have a devastating impact on first-quarter growth.


Low-risk provinces should focus on restoring work and production in an all-round way, provinces with medium-level risks should aim for an orderly work resumption, while high-risk regions should focus on epidemic controls, Xi said.

The government would step up policy support to help achieve economic and social development targets for 2020, Xi said.

China would maintain a prudent monetary policy and roll out new policy steps in a timely way, he said, adding the government would also study and roll out phased tax cuts to help tide small firms over difficulties.


The government would also take steps to support flexible employment and help college graduates to find jobs, Xi added.


(Reporting by Yingzhi Yang and Kevin Yao; Editing by Frances Kerry and Alex Richardson)

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Chinese factory hit hard by coronavirus appears to be open again

One of the Chinese factories that’s been hardest hit by the coronavirus appears to be returning to activity, signaling that China’s government is allowing people to return to work there, The Post has learned.

Located about 20 miles outside of Wuhan — the epicenter of the deadly virus — the Daye Hubei copper plant where more than 1,000 employees had been quarantined since late January is no longer dormant, according to RS Metrics.

The research firm uses satellites to track activity at 500 factories worldwide, including 200 in China that produce metals including steel, aluminum and copper, supplying raw materials for everything from kitchen appliances to cars and home construction.

RS Metrics measures factory output as well as employee cars and other signals that monitor productivity.

In the case of the Daye Hubei plant, “We can see the actual copper again outside,” RS Metrics founder Tom Diamond said.

Only one or two metals factories in China shut down in the aftermath of the outbreak, according to Diamond, whose customers are large hedge funds and companies who have been scrambling to obtain independent data about the outbreak.

“It’s certainly interesting that the Chinese authorities feel comfortable enough to have employees go back to work at this plant that is next to the epicenter of the virus,” Diamond said.

In the wake of the outbreak, the Chinese government shut down all forms of transportation, including trains and buses that employees use to get to work. But there were reports last week that the government ordered idled factories to resume production.

The Daye Hubei employees were unable to come to work because they were quarantined, not because of transportation issues, according to RS Metrics.

The fact that Daye Hubei has activity again is telling, Diamond maintains, because it requires the regular transport of trucks that have to haul away the sulfuric acid these plants produce.

“Copper and aluminum are among the most polluting factories and require the regular removal of waste,” Diamond said.

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Furious dad hit with £70 parking ticket during son’s hospital visit because it took him 45 minutes to leave car park

AN OUTRAGED father has been hit with a £70 parking ticket after it took him 45 minutes to leave a hospital car park.

Scott Michael Clarke was visiting Lincoln County Hospital for an appointment for his one-year-old son who had broken his leg when he was struck with the harsh penalty.

The 31-year-old from Sleaford, Lincolnshire, paid £1.70 to park outside the hospital during the check-up, before returning with 30 minutes to spare.

But banked up traffic in the car park made it almost impossible to leave his space, with it taking 45 minutes to reach the exit where the automatic cameras recorded his registration.

He was shocked when he received the ticket last week, which stated he could face legal action if he failed to pay.

Scott said: "We got in the car with the ticket and went to leave but then that's when we noticed all the traffic.

How to appeal a parking ticket

  • Hold off paying your parking ticket immediately if you want to appeal the charge.
  • Check how long you have to challenge the ticket.
  • Make an initial appeal to the ticket issuer by phone, post or email. Include supporting evidence like photos which show the parking signs weren’t clear.
  • Write a further appeal if your ticket issuer has a formal complaints procedure in place. Some ticket issuers belong to independent appeal schemes which provide a free and impartial service.
  • Pay your parking ticket if your appeal is turned down. You could be hit with further costs if you don’t.

"The main road was packed and not moving. It took us 45 minutes to get out of the car park.

"We didn't think anything of it as we had paid, but then a few weeks later we received the letter.

"We tried phoning but there was no way of calling them, so we sent a copy of the ticket and a letter to Parking Eye thinking it was all sorted until we got another letter."

Scott plans on fighting the ticket with the parking firm.

He said: "Getting the ticket in the first place when we know we paid and the fact that getting it was due to something out of control with the traffic is horrendous.

"I definitely believe the system needs changing because if it's happened to me, who else will be next?

'Some little, old lady that will just end up paying as she doesn't know how to use the internet and can't appeal."

A Parking Eye spokesperson said: "In this case the motorist was 28 minutes over the time purchased.

"We are not aware that there were any delays in exiting the car parks on this date.

"In the event that a motorist stays beyond their time purchased they are able to pay for additional time via the good2go website up to 24 hours after leaving the car park."

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Walmart Stock Could Hit New 2020 Low

Dow component Walmart Inc. (WMT) is trading lower by around 1% in Tuesday's pre-market after reporting in-line fourth quarter 2019 revenues and missing earnings per share (EPS) estimates by a small margin. Quarterly revenues rose just 2.1% year over year, continuing a string of steady but slow growth. The stock bounced off a deeper low after the company announced an annual dividend of $2.16 per share for fiscal year 2021, $0.04 higher than the last fiscal year.

The retail giant's stock has acted poorly since the last quarterly report in November, dropping nearly 6% while the Dow Jones Industrial Average has lifted to an all-time high. Even so, 2019's healthy 27% return has kept shareholders warm at night, while the current correction makes sense given the market's long-observed tendency for rallies that make big moves to carve equally big bases after topping out.

WMT Long-Term Chart (1993 – 2020)

A multi-year uptrend ended at a split-adjusted $16.84 in 1993, giving way to a slow-motion decline that bottomed out in the single digits in 1996. The subsequent uptick mounted the prior high in 1997, setting off a period of intense buying interest that continued into the December 1999 peak at $70.25. That marked the highest high for the next 12 years, ahead of a vertical slide that found support in the mid-$40s in March 2000. A slightly lower low at $41.44 in October rounded out a trading range that contained price action for the next 12 years as well.

A 2002 uptick into the mid-$60s marked the highest high for the rest of the decade, while 2005, 2006, and 2007 tests at 2000 support found willing buyers. The stock held up relatively well during the 2008 economic crisis, with many analysts expecting the company to benefit from new customers hit hard by the downturn. Even so, Walmart stock continued to underperform into the fourth quarter of 2011, when a rapidly improving U.S. economy generated committed buying interest.

That uptick reached the 1999 high in 2012 and broke out, but gains were limited into a 2015 rally that ended with a failed breakout when e-commerce took huge market share from brick-and-mortar retailers. The decline settled in the lower $50s in October, marking a major buying opportunity, ahead of a multi-wave advance that reached a new high in 2017. Buying pressure eased at $110 in early 2018, while a June 2019 breakout above that level posted an all-time high at $125.38 after the November earnings report.

The monthly stochastic oscillator crossed into a sell cycle from the overbought zone in November 2019, predicting at least six to nine months of relative weakness. The indicator is just now crossing the panel's midpoint, while this morning's downturn confirms that bears remain in control. As a result, it's likely that the stock will post lower lows into the spring or summer, potentially finding support near the rising trendline and 50-month exponential moving average (EMA) in the mid-$90s.

WMT Short-Term Chart (2017 – 2020)

The on-balance volume (OBV) accumulation-distribution indicator ended a long-term accumulation phase in February 2018 and turned lower for the rest of the year, coming to rest at a 17-month low. Buying power in 2019 reached 2017 resistance at the same time the stock posted the all-time high and reversed, highlighting OBV's power to predict price action. It has now settled into a holding pattern just below the red line, pointing to a garden-variety correction that may not have run its course.

The stock is trading at the 50-day EMA ahead of Tuesday's opening bell after breaking out above that resistance level last week. Watch this level closely because the outcome of this bull-bear conflict could dictate price action through the rest of the first quarter. Specifically, a close above $117 or so could set the stage for a buying spike above $120, while a close under that level raises the odds that the stock will test the 200-day EMA at $113.

The Bottom Line

Walmart stock is trading lower after the retail giant missed fourth quarter profit estimates, and the shares could hit a new 2020 low before attracting committed buying interest.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.

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