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Lockdown slowing down the US economy

Coronavirus infected more than 2.3 million individuals with 169k death worldwide in 210 countries

Lockdown Coronavirus US economy Unemployment Stimulus
Author: Admin
Published: April 20, 2020, 8:38 p.m. GMT+8
Last Updated: April 28, 2020, 1:18 p.m. GMT+8
Coronavirus infected more than 2.3 million individuals with 169k death worldwide in 210 countries as of April 27, 2020. The US became the epicenter of the viral outbreak with 739K cases and more than 39k death with more than 97% of the US population in lockdown states.
Last week's unemployment claim was 5.24 million cases and dropped by 21% from 6.615 million cases the week before. Unemployment claim is a number of people filing for insured employment claims. It is different from the actual unemployment. The unemployment rate for last month was 4.1% and April data will be available early next month.
The outbreak closes down large parts of the country and disrupts the economy. The most affected areas were residential construction fell by 22.3% , retail sales dropped by 8.7%, the new business formation also dropped by 4.5%. WTI Oil price also fell to a historical low at USD 13.34 due to low demand. It will affect most oil and gas companies in the US with a higher breakeven price.
S&P 500 rally last week because of the stimulus bill and unlimited QE. The volume surged in the last week, and A/D also showed the stock-buying activity last week too. CCI at 40.41 indicated the uptrend of the market last week. However, If the market cannot sustain the bullish trend, the next support level to watch would be at 2707.51 index point of the S&P 500.
The Federal Reserve implementing buy-back of an unlimited amount of Treasuries and mortgage-backed securities to support the finance and housing market. In addition, the Fed also introducing lending programs worth $300 billion to support companies affected by the lockdown. The Fed implementing these aggressive moves to restore financial market stability and prevent unemployment.
The recent street protest might trigger a bigger wave of infection and causing the collapse of the health system. US citizens should listen to their state government order to stay at home until the outbreak is under control. The reopening of the economic activity must be done under the guidance from health professionals and not politicians alone. Resume of works must be done cautiously to prevent another wave of infection and lockdown causing more pain to the economy. Social distancing and wearing a mask would be a new normal until we have a vaccine in 12 to 18 months.
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As the real economy started to feel the impact of COVID-19 lockdown. The stimulus packages providing a cushion of support for the main street and wall street. The downside risk of stock markets remain high as the infection rate is still in the growth phase. The risks from the weak economic data and corporate quarter results are not pricing in yet. Investors should be more risk-averse and holding more cash or coronavirus resistant stock in their portfolio.

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