The widespread disruption from the coronavirus pandemic is obvious to everyone, but economic nowcasting and forecasting models are only just beginning to reflect the damage to what had been a moderately expanding US economy. Thanks to the lag in economic data, which can arrive as long as two to three months after the fact, formerly robust methodologies for tracking the US macro trend have become hopelessly out of date in recent weeks. But reality is quickly catching up with previously sunny estimates.

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Congress and White House agree on $2 trillion coronavirus rescue package: CNBC
Trump wants US to return to work by Easter: CNN
US Composite PMI in March reflects sharp economic contraction: IHS Markit
German economy could fall 20% this year, new survey advises: Reuters
Global economy suffers as coronavirus spreads, survey data show: IHS Markit
US stocks posted the biggest gain on Tuesday since the Great Depression: Fortune
Gold surges and Goldman Sachs expects the rally to continue: MW

The US stock market tumbled again yesterday, falling to a 3-1/2-year low, thanks to expanding coronavirus threat. The economic outlook is grim, at least for the near term, and so the market is attempting to price in this stark change. The result, not surprisingly, is a sobering, rapid fall from grace for stocks, which a bit more than a month ago reached a record high, based on the S&P 500. For the novice investor, the sharp slide in the market may appear to be off the charts. In fact, we’ve been here before, based on drawdown data. Perhaps new records for bear markets will be set in the weeks and months ahead, but for the moment it’s useful to consider how the current drawdown stacks up vs. history. In addition, running simulations on drawdowns adds another dimension of risk analytics to consider what’s possible.

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As Congress haggles over stimulus bill, economic outlook darkens: Politico
Will Trump reopen the economy, against the advice of medical experts? BBC
Fed rolls out major expansion of lending operations for corporates, munis: WSJ
Should Fed emergency lending go beyond banks? Bloomberg
Eurozone economic activity collapses in March, via PMI survey data: IHS Markit
Coronavirus woes offer business upside to technology companies: NY Times
Chicago Fed National Activity rebounded in Feb, but March data will be ugly: CF
Vanguard expects a “sharp but short contraction” for US economy: Vanguard

As risk-off sentiment deepens around the world due to the coronavirus pandemic, red ink has spread to nearly every corner of the major asset classes. For the one-year trend, however, there are still two slices of global markets holding on to modest gains, US bonds, based on a set of exchange-traded funds.

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Senate fails to advance latest version of economic stimulus bill: CBS
Fed officials: more policy moves are available to fight economic slide: BBG
Central banks offer record sums to keep financial system afloat: Reuters
China reports drop in new coronavirus cases on Monday: Reuters
S. Korea reports lowest number of new cases since peak of 4 wks ago: BBC
69 drugs on the short list that offer hope for treating covid-19: NY Times
How the gov’t can promote a “V” shaped economic recovery: NY Times
Will coronavirus become a seasonal problem? WSJ
S&P 500 drawdown fell to -32% on Friday:

● Radical Uncertainty: Decision-Making Beyond the Numbers
By John Kay and Mervyn King
Review via The Telegraph
That ripping sound you may have heard lately is the noise of economists around the world tearing up carefully-honed forecasts, thanks to the rapidly spreading coronavirus.
For former Bank of England Governor Mervyn King and the senior economist John Kay, the all-too-rapid redundancy of the investment banks’ glossy brochures merely underline the folly of such prognostications in the first place.
In their new book, Radical Uncertainty, the pair turn a critical gaze on their own economics profession and find it badly wanting. They paint an unsparing picture of a discipline enslaved by its models, pretending to knowledge it cannot possibly have, and losing public trust as a consequence.

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It’s been a brutal year to date for US stocks, but the pain varies substantially from sector to sector, based on a set of exchange traded funds as of Thursday’s close (Mar. 19). Consumer staples, tech and health care are suffering the least among the main sectors that comprise the US market. Energy, by comparison, is deep in the hole, posting the biggest loss by far in the sector space.

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California is first state to issue statewide stay-at-home order: CNN
Will the federal govt’s $1 trillion stimulus be enough? Politico
Search for coronavirus vaccine has become a global competition: NY Times
The stock market could bottom before the coronavirus epidemic peaks: MW
Some safe-haven assets aren’t as safe as assumed in this crisis: Mstar
Will small businesses survive the coronavirus crisis? NY Times
Trump administration attempting to suppress surging jobless claims data: WSJ
Fed expected to significantly ramp up bond purchases: WSJ
Is the Fed considering a tool known as yield curve control? Reuters
US jobless claims surged last week as coronavirus layoffs spread: CNBC

The global coronavirus pandemic is creating havoc in economies around the world and the US is no exception. In the wake of this crisis, the standard modeling techniques have become worthless for estimating current conditions and estimating the near-term. The only thing that’s certain is that a significant shock is unfolding in real time—a shock that’s not being picked up, yet, in the economic data that’s been published to date. But there will be blood. The key questions for the recession: how deep and how long? Unclear. Since we’re heading into an unprecedented period in modern times, uncertainty is extraordinarily high. Nonetheless, let’s run through the numbers, if only as an academic exercise to profile the US economy as it was on the eve of the deluge.

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