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COVID-19 Vaccine Contenders Race Against the Clock, and Each Other

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  • Oxford University’s coronavirus vaccine gets significant financial backing and promises possible September vaccine delivery.
  • China and Canada teamed up on the first human testing of a vaccine, and initial results are positive.
  • Moderna’s recent vaccination tests were small in number but sent the stock market soaring.

In the race to find a COVID-19 vaccine, hope for more than one winner could emerge as early as September. The three leading contenders come from the UK, China, and the U.S. As the video below lays out, there are:

Two front runners in the hunt for the vaccine, both reporting great strides. The U.S.-backed Oxford University project announced its rapidly expanding human testing…. From the original epicenter, China, scientists … report promising results, too.

Oxford University’s Coronavirus Vaccine Leads The Pack

It began in January as a “little lab project” after a curious new disease emerged in China. Little more than four months later, the eyes of the nation – and perhaps the world – are firmly upon Professor Adrian Hill and his team at Oxford University.

Team Oxford ambitiously said at first that it hoped to have a million inexpensive doses ready by September. That would be the fastest finish to a vaccine ever.

In the article just quoted, however, project leader Prof Hill has warned against ‘over-promising,’ saying that the COVID-19 vaccine’s success is far from guaranteed.

Still, people placed big bets on the vaccine.

This week, the Oxford University vaccine, which began its first trial one month ago, got major support from another team:

The pharmaceutical giant AstraZeneca announced a $1.2 billion deal with the U.S. government to produce 400 million doses of the unproven coronavirus vaccine.

Suddenly the once-ambitious hope of a million doses looked modest.

The UK drugmaker received the money from the U.S. Biomedical Advanced Research and Development Authority, saying it has secured eventual capacity to make 1 billion doses.

Although AstraZeneca has said it expects to have shots ready as soon as September, the company’s vaccine candidate is still in human trials, with no guarantee of success.

AstraZeneca expects to have the 400-million doses of coronavirus vaccine ready by October if the fast-tracked test is a success.

According to the U.S. Department of Health and Human Services Department, the tests are being done under Operation Warp Speed to secure vaccines for the U.S.

AstraZeneca’s priority is to supply the UK with a vaccine, but it says it is working “to ensure global access.”

Astra said it’s working with groups including the World Health Organization … on making sure the vaccine is allocated fairly.

The Oxford University vaccine was first to go to trial. Hundreds of Britons have already been given the needle’s poke. Now the vaccine moves to an accelerated trial of 10,000.

That puts this competitor at the lead of the race to a COVID-19 vaccine. If successful, it will finish months ahead of the 12- to 18-month timeline projected by vaccine experts.

Team China Running Neck-And-Neck With U.S. and UK in Race for COVID-19 Vaccine

While the U.S. and UK race together to find a vaccine, China has teamed up with Canada.

Team China may not be more than a nose behind, but they don’t expect their vaccine to be ready this fall:

The study is being conducted in Wuhan, China, by the Beijing Institute of Biotechnology and CanSino Biologics, but it only includes 108 healthy adults.

The vaccine produced no serious adverse effects at all doses — and was tolerated well…. After two weeks, the vaccine produced virus-fighting antibodies across all dose levels.

The vaccine, however, is not 100% effective with the:

highest dose level triggering antibodies in 61 percent of those who took it.

CanSino’s vaccine was one of the first COVID-19 vaccines to enter early human trials back in March. According to LiveScience:

In the new study, published Friday (May 22) in the journal The Lancet, the researchers tested Ad5-nCoV in 108 healthy people ages 18 to 60 who didn’t have COVID-19…. By 28 days, nearly all participants had developed antibodies.

About ten percent of the participants reported adverse effects that included a fever.

One participant in the high dose group developed a high fever along with fatigue, shortness of breath  and muscle pain. However these effects lasted no more than 48 hours.

Cambridge’s Moderna Is Also a Major Front-Runner in the Race to Save Humanity

The third horse that looks like it may place in the top three is Moderna, a biotech firm based in Cambridge, Massachusetts.

Test results came back promising last week for Moderna, but results are only back from eight people so far. Moderna is awaiting results from the test’s remaining thirty-seven participants.

The test’s early positive results were cheered by the stock market, but eight people are not considered enough to be meaningful in the medical community.

It is, however, enough to be hopeful.

The small study is too skewed toward otherwise healthy people to know if it’s safe or effective for the elderly or immuno-compromised.

The elderly often fail to build an antibody response to vaccines. Thirty to forty percent do not even respond to common flu vaccines.

Moderna is hoping to finish sometimes before the end of the year. Almost no adverse side effects have been reported so far.

Some say such breakthrough hopes are “fake news”:

Over 100 teams around the world are racing to find a vaccine.

The vaccines pulling to the front of the race all use a revolutionary viral RNA-splitting technique. That means, until now, we have no experience with the side effects of these kinds of vaccines in human beings.

This article was edited by Aaron Weaver.

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ASX to rise; Caution on China high

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Key Points

  • The Australian sharemarket is poised to rise at the open this morning.
  • Tensions between the US and China continue to simmer.

Sandfire to restart drilling in Botswana

William McInnes

Sandfire Resources is set to resume exploration activity in Botswana by early June after the government announced a phased ending of COVID-19 restrictions.

The company said plans are underway for a staged restart of exploration activity that should see resource drilling at its A4 discovery resume in the next few weeks.

The company also said it had executed a binding agreement with Australian explorer Kopore Metals to acquire a ~6,700 km² land package in Namibia.

The licences for the package are located immediately along strike to the west of Sandfire’s Tshukudu licences in Botswana and cover a large, underexplored area within the western part of the Kalahari Copper Belt.

China weighs on commodity prices

William McInnes

Oil, iron ore and base metal prices all fell over the weekend, with China driving the weakness across most markets.

Crude oil sank, with Brent crude down 2.6 per cent to $US35.13 a barrel on Friday as doubts lingered about China’s demand for the rest of the year.

Meanwhile iron ore prices dipped 1.1 per cent to $US96.85 a tonne with the Chinese government’s work report delivered on day 1 of the National People’s Congress disappointed steel markets.

Base metals were also broadly weaker.

“Increased tensions between the US and China weighed on sentiment after China introduced new security legislation impacting Hong Kong,” said NAB head of commodity research Lachlan Shaw.

China headwinds put recovery at risk

Luke Housego

The highs recorded on sharemarkets in Australia and overseas last week could come under threat in the coming days, as relations between the world’s two largest economies rattle optimism and threaten another sell-off in shares.

The S&P/ASX 200 Index hit a two-month high in the middle of last week, which came after the US Nasdaq ended Wednesday just 4.5 per cent from its record close.

In addition to central bank and government stimulus, the rally was fuelled by reported progress on a vaccine and the ongoing wind-back of restrictions, which has seen commodity prices rise as economic activity lifts from historical lows.

But investors’ nerves were tested towards the end of the week as tensions between the US and China were again thrown into the spotlight after officials in Washington rebuked Beijing for national security laws viewed as a threat to the autonomy of Hong Kong.

“As someone who’s lived in the Asian time zone for almost 40 years now, the move in Hong Kong is quite a serious issue,” said Federation Asset Management adviser and former Merrill Lynch executive, Greg Bundy.

“There’s been a handful of stocks that have led the US recovery,” Mr Bundy added, referring to Facebook, Apple, Amazon Netflix and Alphabet.

“If any of those stocks faced any retaliation from the Chinese Communist Party … you would probably see … a 5 to 10 per cent sell-off pretty quickly.”

Read the full story at

Stocks mixed; gold firms

Here are the weekend market highlights:

  • AUD -0.4% to 65.37 US cents (Year to date: -6.9%)
  • On Wall St: Dow flat S&P 500 +0.2% Nasdaq +0.4%
  • In New York: BHP -0.1% Rio +0.6% Atlassian +1.3%
  • In Europe: Stoxx 50 flat FTSE -0.4% CAC flat DAX +0.1%
  • Spot gold +0.4% to $US1734.68 an ounce in New York
  • Brent crude -2.6% to $US35.13 a barrel
  • US oil -2% to $US33.25 a barrel
  • Iron ore -0.6% to $US97.65 a tonne
  • Dalian iron ore -0.1% to 722 yuan
  • LME aluminium -1.3% to $US1502 a tonne
  • LME copper -1.9% to $US5287.50 a tonne
  • 2-year yield: US 0.17% Australia 0.24%
  • 5-year yield: US 0.33% Australia 0.38%
  • 10-year yield: US 0.66% Australia 0.86% Germany -0.49%

Read Timothy Moore’s Before the Bell here.

Good morning

Good morning and welcome to Markets Live for Monday.

This blog is not intended as investment advice.

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Wall Street ends mixed as China-US tensions weigh

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New York | Wall Street ended mixed on Friday in a mostly tame finish to a week of strong gains, as investors gauged China-US tensions and amid ongoing uncertainty about the pace of economic recovery from the coronavirus.

President Donald Trump’s warning on Thursday that the US would react strongly to China’s plan for a national security law in Hong Kong has raised concerns over Washington and Beijing’s possibly reneging on their Phase 1 trade deal.

Late in the session, stocks edged lower after the US Commerce Department said it was adding 33 Chinese companies and other institutions to an economic blacklist for human rights violations and to address US national security concerns.

The increasing rhetoric between Washington and Beijing has knocked Wall Street off multi-month highs, although the three main indexes still all rose around 3 per cent for the week, fuelled by optimism about an eventual coronavirus vaccine and the easing of virus-related curbs.

“We still think COVID-19 concerns are in the driver’s seat, but we could see US-China relations move back into the front seat,” said Eric Freedman, chief investment officer at US Bank Wealth Management.

US stock exchanges will be closed on Monday for the Memorial Day holiday.

The Nasdaq index is down about 5 per cent from its February 19 record high, helped in recent weeks by gains in Microsoft, Amazon and other heavyweight companies seen coming out of the economic downturn stronger than their smaller rivals.

The S&P 500 real estate sector index jumped 2.2 per cent, leading the 11 sectors, while energy dropped 0.7 per cent as oil prices sank about 3 per cent.

A 1.9 per cent drop in Chevron weighed on the Dow.

The Dow Jones Industrial Average fell 0.04 per cent to end at 24,465.16 points, while the S&P 500 gained 0.24 per cent, to 2955.45. The Nasdaq Composite climbed 0.43 per cent to 9324.59.

For the week, the Dow added 3.3 per cent, the S&P 500 rose 3.2 per cent, and the Nasdaq climbed 3.4 per cent.

Mixed earnings from retailers Walmart, Best Buy and Home Depot earlier this week showed online shopping gaining traction with the lockdown orders, a trend that could damage brick-and-mortar players already feeling pressure from internet rivals.

On Friday, Chinese e-commerce giant Alibaba Group reported better-than-expected quarterly profit, but its shares tumbled almost 6 per cent. Smaller rival Pinduoduo’s US-listed shares surged over 14 per cent after the company posted upbeat results.

Nvidia climbed 2.9 per cent after forecasting strong quarterly revenue as demand surges for its data centre chips.

KKR & Co rose 1.1 per cent after India’s Reliance Industries said the private equity firm would buy a 2.3 per cent stake in its digital unit for 113.67 billion rupees ($US1.50 billion).

Data analytics software maker Splunk jumped over 12 per cent after it said it expects more demand for its cloud services.

Volume on US exchanges was 8.75 billion shares, compared to the 11.2 billion average for the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.30-to-1 ratio favoured advancers.

The S&P 500 posted six new 52-week highs and no new lows; the Nasdaq Composite recorded 62 new highs and nine new lows.


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US aviation legend pitching for Virgin says low-cost to recover first

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Jacob Greber

Washington | Budget aviation pioneer Bill Franke, whose Phoenix-based aviation firm Indigo Partners is one of four groups bidding for Virgin Australia, said low-cost airlines will probably rebound from the coronavirus crisis sooner than full-service legacy carriers and that he was keen to find an Australian partner.

Because leisure consumers will return to the industry faster than business consumers, airlines whose model is skewed towards corporate travel will “be behind the recovery that the ultra-low cost [carriers] see”, Mr Franke said early on Wednesday (AEST).


Bill Franke. AP

Though cagey about getting into details, Mr Franke said he regarded as Australia as “a very interesting market” that needs two carriers, but declined to say whether his bid for Virgin would mean dumping the airline’s international business.

“We have to look at the Australian market in terms of what the Australian consumer wants in the product,” he said. “It’s a process and development at this point of time.”

“I get asked all the time: ‘Are you going to keep international flying?’ And the answer is that you have to fit yourself to the market and what the market wants.

“It’s not done abstractly. It’s done based on an understanding of the market and what the market wants you to provide.”

Speaking on an overnight industry online “masterclass” hosted by Sydney-based aviation market intelligence firm CAPA, Mr Franke said he was limited in what he could say about Indigo’s Virgin Australia bid by a non-disclosure agreement “with a mind-boggling amount of detail that only an Aussie law firm can dream up”.

“But at the end of the day we see Australia as a very interesting market,” he said. “You have a duopoly between Qantas and Virgin Australia and we think that’s a helpful competitive environment.

“We think the country needs to have two airlines and we want to assist Virgin Australia in being one of those airlines.”

Mr Franke, 83, is a legendary US and global founder of low-cost airlines such as Wizz Air and Arizona-based Frontier airlines, and over the weekend was selected by Virgin Australia administrator Deloitte to take part in the second round of the carrier’s auction process.

The other three bidders are Bain Capital, BGH Capital and New York-based investor Cyrus Capital Partners, which has previously invested with Richard Branson’s Virgin America.

Indigo has so far had no conversations with the Australian government, Mr Franke said, because that “would be premature”.

“In terms of local Australian partners we’ve been approached by a number of Australian entities and would at the end of the day, we’d like to have an Australian partner.

“It would be the right thing to do, but it all depends on the details and that process has to unfold over roughly the next month.”

Mr Franke said he expected final bids to be lodged with Deloitte in the early part of June, followed by a process to close the transaction with the winning bidder, which he added would probably take the sale into early July.

“We’re working diligently,” he said of the Indigo bid, but lamented the challenges imposed by the global coronavirus lockdowns.

“In our consortium we have a partner with Oaktree Capital and the two of us are working best we can, considering that we can’t travel to Australia, we can’t have in-person meetings or in-person diligence which would be the norm.

“We’re trying to adapt ourselves to becoming the genius of the digital age.”

Mr Franke said another advantage low-cost carriers have over legacy airlines as the world recovers is that they are better placed to raise prices if COVID-19 safety-related costs such as keeping middle seats vacant are needed to make customers willing to resume travel.

“Low cost airlines will be raising fares off a cost-base 30 per cent lower than legacy airlines,” he said.

“Net-net I think the [low-cost] model performs better than other models as we recover from COVID-19.”

On the outlook for the aviation industry more generally, Mr Franke said the primary focus for all airlines at the moment is managing their cash burn and warned that some won’t survive without government support.

“Until there is either a treatment and a vaccine… we’re all going to be dealing with waves of events here and that in turn leads to a question about when revenue will revive to a standard that permits break-even cash flow.”

Much of that will depend on making sure passengers feel safe to fly.

Airports and airlines need to convince the traveller, through a series of actions – this is before any vaccine is available – that the passenger is safe getting on the airplane.”

Mr Franke also took aim at airlines and aircraft makers for doing “an imperfect job” of explaining air filtration systems.

“Airlines need to have those seats filled to get more money coming in the door than going out the door.

“If we can convince [passengers that] the air in the aircraft is safer than in a restaurant or their office, which by the way it is, that would be a major step.”

Jacob Greber writes about American politics, economics and business from our Washington bureau. He was previously our economics correspondent based in Canberra. Connect with Jacob on Twitter. Email Jacob at [email protected]

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Virgin Australia’s fantastic four, shortlist confirmed

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Street Talk

Virgin Australia and its administrator Deloitte have wrapped up a long weekend of negotiations by shortlisting four parties for the auction’s second round.

Street Talk can reveal the four parties are financial sponsors Bain Capital and BGH Capital, US aviation firm Indigo Partners and European investor Cyrus Capital Partners, which was previously invested alongside Richard Branson in Virgin Atlantic.


Virgin Australia administrator Deloitte, led by Vaughan Strawbridge, right, has been working with the company’s management team, headed by Paul Scurrah.  Louise Kennerley

The second round starts on Monday. Final bids are due on June 12.

Management was due to be briefed at 9am on Monday morning.

There were two big surprises in the shorlisting. The first surprise was the emergence of Cyrus Capital Partners which had escaped the spotlight until Sunday night when this column flushed the firm out.

The second was that Canadian investor Brookfield did not make the cut.

Street Talk understands the asset manager was not shortlisted after a long weekend of talks that stretched into the early hours of Monday morning.

Regional Express and Alliance Aviation – two listed Australian regional airlines – were not in the mix, sources said.

The bidders were told Virgin’s data room would open on Monday morning and Virgin’s management would make its pitch to the four respective groups next week.

Deloitte is seeking to sell the company to recoup money owed to creditors, including aircraft owners, bondholders, employees and airport owners.

Virgin’s board put the company into administration in April and Deloitte has since found that more than 10,000 creditors were together owed more than $6.8 billion.

Virgin CEO Paul Scurrah is working with Deloitte to find a new owner and would like to continue to run the airline should it re-emerge from administration.

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Sarah Thompson has co-edited Street Talk since 2009, specialising in private equity, investment banking, M&A and equity capital markets stories. Prior to that, she spent 10 years in London as a markets and M&A reporter at Bloomberg and Dow Jones. Email Sarah at [email protected]

Anthony Macdonald co-edits Street Talk, specialising in private equity, investment banking, M&A and equity capital markets. He has 10 years’ experience as a business journalist and worked at PwC, auditing and advising financial services companies. Connect with Anthony on Twitter. Email Anthony at [email protected]

Tim Boyd is a journalist based in Sydney who writes for the Street Talk column. Connect with Tim on Twitter. Email Tim at [email protected]

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Coronavirus pandemic could force a major U.S. airline out of business, says Boeing CEO –

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The airline industry is having an “apocalyptic” moment that could force a major U.S. carrier out of business, said David Calhoun, president and CEO of Boeing, in an interview with Savannah Guthrie on NBC’s “TODAY” show that aired on Tuesday morning.

“The threat to the airline industry is grave. There’s no question about it. And apocalyptic does actually accurately describe the moment,” Calhoun said of the impact of the coronavirus.

The airline industry raked in record profits for a decade, due to lower jet fuel prices and consolidation through a series of mergers. That ended with the coronavirus pandemic, which has devastated the industry and has led to a 95 percent drop in air travel demand. American Airlines, United, Southwest and Delta all reported huge quarterly losses, their first in years. Airline executives have said the pandemic is the industry’s worst crisis, and have compared its impact to the events of September 11.

Despite billions of dollars in emergency funding as part of the government’s CARES Act, the future for the industry remains uncertain, with many airline executives forecasting traffic will not return to prior levels for three to five years, leading to questions about the survival of some major carriers.

“I don’t want to get too predictive on that subject. But yes, most likely,” Calhoun said when asked if he thought a major U.S. carrier would have to go out of business.

“Something will happen when September comes around. Traffic levels will not be back to 100 percent. They won’t even be back to 25 percent. So there will definitely be adjustments that have to be made on the part of the airlines,” Calhoun said.

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The air travel experience will be very different, he acknowledged. While he recommended that regulators require face masks, he said the interior of a plane’s cabin was nonetheless “designed to prevent transmission of exactly this kind of airborne carrier.”

“The cabin itself replaces its air every two to three minutes,” he said. “By the time you layer those protections, and you consider the responsible actions of the public themselves, I believe you do gradually get back to the same level of confidence that we’ve had before.”

Calhoun told the “TODAY” show he does not share the same view on the future of airlines as does billionaire investor Warren Buffet, who recently sold his entire $4 billion stake in U.S. airlines. Buffett said at the time he did not think people would fly as many passenger miles as they did last year.

“The world has changed for the airlines,” Buffett said earlier this month at the annual shareholder meeting for his investment firm, Berkshire Hathaway. “I don’t know if Americans have now changed their habits or will change their habits because of the extended period.”

“I don’t happen to share the view,” Calhoun told Guthrie. “I share the near-term turmoil. Near-term for me doesn’t mean a few months. I believe it’s three full years before we return to the traffic levels that we had just in 2019, and then probably another two before we begin to return to the growth rates that we used to have. And I’m hopeful that somewhere between here and there, there’s a vaccine, and that the moment of high anxiety begins to really subside. But I still believe in the future of the industry.”

Guthrie also questioned Calhoun about the future of Boeing itself. The company’s troubled 737 Max jet fleet remains grounded worldwide, after two crashes led to hundreds of fatalities.

“In remembrance of the two accidents, which were as real as can be, our heartfelt sorrows to everybody who was touched by those accidents,” Calhoun said.

“We made a bad assumption, with respect to the design envelope for that airplane, at that moment in time, under that condition. Our assumption about how a pilot would react in a very tense, difficult moment was wrong. Simple as that. But I do believe that has been fixed. I also believe in the culture at Boeing. I believe — actually, all of our employees believe — deeply in safety. And have we taken a magnifying glass to everything we do, everything, so that we don’t ever allow for something like that to happen in the future.”

“I am confident in the Max,” Calhoun said. “The certification work, the FAA’s work, has been as thorough as anything I’ve ever seen. We’ve worked every scenario we can possibly work into the testing programs. And it does exceedingly well.”

Calhoun also spoke proudly of how “magical” it was for Boeing to be helping out during the pandemic, delivering front-line emergency supplies.

“The pilots who fly these airplanes around the world, to deliver these supplies, it’s our front line helping the health care front line,” Calhoun said. “It’s pretty magical when it happens, and it is wildly motivating for me, of course, but mostly for our people. And they need that kind of motivation.”

Image: Lucy BaylyLucy Bayly

Lucy Bayly is the business editor for NBC News.

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Coronavirus Updates: Under Armour Sees Slow Recovery; a Fix for Small-Business Aid

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Some states were cautiously making plans to reopen parts of their economies Monday as the U.S. death toll from the coronavirus pandemic surpassed 80,000, but its spread slowed in some areas.

New York Gov. Andrew Cuomo advised cities across the state to prepare for a phased reopening starting Friday. With deaths and hospitalizations falling to rates not seen since the early days of the pandemic, businesses and activities will resume in phases, with low-risk undertakings restarting first. Recreational spaces such as drive-in theaters, nurseries and tennis courts will reopen statewide Friday.

Under phase one of the governor’s plan, retail business will be permitted to operate with curbside service, and construction and manufacturing businesses will resume. Professional services and real-estate businesses will reopen in the second phase. In the third, restaurants and hotels will be permitted to open their doors. Artistic institutions, entertainment venues and schools will resume operations in the fourth and final phase of the state’s reopening, Mr. Cuomo said. He didn’t provide a timeline for the phases.

Massachusetts Gov. Charlie Baker meanwhile said the state’s gradual reopening process could begin as soon as next week. Mr. Baker said the state’s plan also includes four phases and timing would depend on the rate of infections and hospitalizations from the virus, among other benchmarks. “The process is complicated, it’s gradual, and it requires an incredible amount of patience from pretty much everybody, including me, but we believe we are trending in the right direction,” the Republican said.

In Louisiana, the state’s stay-at-home order will expire Friday, Gov. John Bel Edwards said, and some businesses will be able to reopen with capacity restrictions and other safety measures in place. The Democratic governor encouraged individuals who are more at risk of severe illness caused by the virus to continue to stay home. “We’re not declaring victory, this is not ‘mission accomplished,'” the Democrat said. “We still have eyes all over the state of Louisiana.”

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Coronavirus Could Squander the Housing Market’s Best Months

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  • May and June are traditionally the best months to sell a home.
  • This year will be an entirely different story.
  • With the coronavirus wreaking havoc on the housing market, it can ill afford to miss out on the late-spring jolt.

Whether the coronavirus pandemic causes a housing market crash or not, it will, at the very least, ruin the market’s best selling months.

ATTOM data solutions just released a report stating that late spring to early summer is the best time to sell a house. Unfortunately, much of the nation will either still be under stay-at-home orders or they’ll be trying to adjust to the realities post-lockdown life.

The Housing Market Blossoms in May and June

According to the study, warmer months bring higher premiums.

Home sellers get an average premium boost of 8.3% above market value in May. Houses fetch a 9.6% higher premium in June.

Source: ATTOM Data Solutions

Todd Teta, chief product officer with ATTOM Data Solutions, explains:

Since Summer is a time for vacations and outings, it’s no surprise that it’s also a time when people are most likely to move. Families start their home search when they know their kids will be out of school and when the weather is ideal for home viewing and moving, giving home sellers an upper hand in price negotiations.

Unfortunately, this summer could be drastically different.

Vacations and outings will likely be at an all-time low this year as coronavirus fears will keep more people close to home, even as lockdowns lift. Naturally, they probably won’t be looking to start their home search amidst the uncertainty of the ongoing pandemic.

The catastrophic unemployment rates are not helping the situation. Potential buyers who are still working will likely be wary of their job security until we have a better grip on the outlook of the economy. It’s hard to picture that happening before the summer ends.

The Housing Market May Miss Out on a Much Needed Boost

Last year, Zillow named May 1st-15th the best time to sell a house. They reported that:

Homes sold in the first half of May sell six days faster and for $1,600 more than the average listing.

At a time when the housing market could desperately use a shot in the arm, it appears as though it will miss out on this fruitful period. That’s terrible news for a housing market that checks all four boxes that led to the 2008 housing crisis.

According to the National Association of Realtors’ (NAR), the pending home sales index crashed by nearly 21% this year. Actual contract signings in March plummeted 16.3% compared to last March.

U.S. home sales crashed in March. | Source: Trading Economics

There is some glimmer of hope on the horizon, though. Reports from the Mortgage Bankers Association point to a growing pent up demand for homes. Mortgage applications have increased for the third consecutive week.

Only time will tell how it all shakes out, but at the very least, we can’t expect summer to save the market.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of The above should not be considered investment advice from The author holds no investment position in real estate or finance.

This article was edited by Sam Bourgi.

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Shell Stock Is Reeling From Dividend Cut & Looming Oil Disaster

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  • Shell stock took a 13% spill Thursday after slashing its dividend.
  • Oil stocks face a monumental “crisis of uncertainty” in this recession.
  • But an even bigger existential threat to oil is looming ahead.

The oil price collapse just obliterated Shell’s dividend.

It’s alarming news for oil stock investors because even the 2018 and 2014 oil price crashes didn’t wipe out 66% of Shell Oil Company’s dividend.

Indeed, this is the first time Shell has cut its dividend since 1945:

The energy giant told its shareholders, including thousands of retail investors and pension funds, that it would be in their best interests for payouts to fall for the first time in almost 80 years. The payout is being cut by 66%, from $15bn last year to $5bn this year.

Shell is the U.S.-based subsidiary of Royal Dutch Shell, which until now, had the highest dividend-paying stock on the London FTSE-100.

Shell CEO Ben van Buerden warned the oil company faces a “crisis of uncertainty.”

In response, Shell stock (NYSE:RDS.A) crashed 13% in Thursday trading. British Petroleum (NYSE:BP) took a 6% spill, but Exxon Mobil (NYSE:XOM) managed to escape the worst of the fallout, with a 2.5% decline.

Exxon reports first-quarter earnings Friday. The Irving, Texas-based oil conglomerate is expected to post earnings of 4 cents per share on $53.5 billion in revenue. That would be a 15.8% decline over last year’s first-quarter revenues of $63.6 billion.

Monumental Oil Industry Uncertainty

West Texas Intermediate (WTI) Oil Price Graph 1983 to Present | Source: TradingEconomics

Back in 2008, oil prices crashed in the wake of the Great Recession. The first global economic contraction in GDP since the Great Depression halted demand for oil.

In 2014, a combination of factors crashed the price of a barrel again.

The Federal Reserve began to unwind years of quantitative easing and strengthened the purchasing power of the dollar. Oil is generally priced in U.S. dollars, so a stronger dollar pushed down prices. Meanwhile, demand in China lagged, while increased oil production in the U.S., Canada, and Saudi Arabia created a supply glut, further crashing prices.

Oil stocks correlate tightly with the oil price, which makes the last month’s rally in energy somewhat baffling. When the barrel crashed in 2008, Shell stock followed along with it. It didn’t rally until prices picked up at the beginning of 2009.

Royal Dutch Shell stock and Brent Crude oil prices, percent change since 2006. | Source: TradingView

But Shell stock never fully recovered and took five years until July 2014 to get near the previous peak. That was just in time for the 2014 price collapse. Shares of Royal Dutch have never fully recovered from the 2014 crash.

Now a global economic contraction unlike any in history has cratered demand, while a price war between Russia and Saudi Arabia made the situation for oil even more dire.

Fossil Fuels Will Be On Sale Forever

Oil prices and equities will remain dampened as long as the intense global economic contraction lasts. So the medium-term outlook for oil stock investments is not great.

To make matters worse, the energy sector went into the crisis catastrophically over-leveraged with debt. The rise in debt-to-equity ratios for U.S. oil companies over the past decade is almost too extreme to believe. Smaller to mid-size companies in this sector face bankruptcy without massive government assistance during this crisis.

But long term valuations face an even more existential threat from the rise of alternative, clean, renewable energy sources like solar energy. Solar prices have collapsed parabolically since the 70s, sounding the death knell for fossil fuels.

Solar is poised to scale up quickly, a death knell for oil stocks. | Graph: Clean Technica

As of this year, solar is now cheaper than coal, which has traditionally been the cheapest available form of energy. Meanwhile, the likes of Elon Musk are creating an all-electric, battery-powered motor infrastructure to replace fossil-fuel-burning engines.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of The above should not be considered investment advice from The author holds no investment position in oil securities, nor the stocks mentioned.

This article was edited by Aaron Weaver.

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Jerome Powell eyes future ‘shrouded in uncertainty’

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“It may well be the case that the economy will need more support from all of us if the recovery is to be a robust one,” Mr Powell said.

While Mr Powell avoided making any specific predictions about how high the US jobless rate would go, he said economic data for the second quarter will be “worse than anything seen” before.

“We are going to see economic data for the second quarter worse than anything seen”, amid surging unemployment and a collapse in spending.

Mr Powell warned investors that markets are trying to price in “something that’s is unknowable” – the scale and duration of the pandemic.

He listed among his doubts the potential of a second wave of infections whether there will be drug treatments to combat the COVID-19 virus.

“All of that is very much shrouded in uncertainty,” he said.

Mr Powell also cautioned that a prolonged downturn could cause a legacy of lasting damage by pushing too many workers into long-term unemployment.

He added that another source of weakness would be needless bankruptcies.

Businesses are “worth so much more to the economy than the sum of their net assets”.

“If we see an unnecessary wave of insolvency that could be damaging to the economy over time.”

“Third… this is a very global phenomenon. We’re seeing economic data around the world which is very negative… that too can weigh” on the US economy, the chairman said.

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