The UK is about to experience its biggest economic boom since the aftermath of World War Two, according to Barclays boss Jes Staley. His upbeat assessment came as Barclays revealed its profits for the first three months of this year had more than doubled from a year earlier to £2.4bn. “We estimate the UK economy will grow at its fastest rate since 1948. That’s pretty spectacular,” he said. The vaccine programme and built-up savings will help to drive the rebound. Mr Staley said that a combination of the successful vaccine rollout and Barclays’ estimate of an extra £200bn sitting in customer and company bank accounts meant the UK would join the US in seeing some of the fastest economic growth in decades. The boost in Barclays’ latest profits was almost entirely driven by a more confident view on how many of its loans would be repaid. This time last year, the bank set aside more than £2bn to cover the risks that borrowers would be unable to repay all of their debts. This time round they are setting aside just £55m. Interestingly, Barclays – unlike other big banks in the UK and US – have decided not to adjust previous estimates of bad loan previsions, but hinted that they will do so in future. It will be equally interesting to watch just how much of their total £9bn kitty for future estimated debt defaults they are prepared to reconsider. Assuming the worst regarding future defaults is sometimes called “stuffing the cookie jar” – a jar that can be raided when needed to boost future earnings. All banks do this to a greater or lesser degree, But Mr Staley seems convinced that despite virus-related disasters in developing economies such as India and new lockdowns in developed counties such as Japan, the overall picture looks to be improving. He also concedes that many business sectors (like hospitality and leisure) have faced desperately challenging circumstances and it is unclear how many of the five million workers still on furlough can expect to return to full-time work. There are many business owners who will not recognise the rosy picture he paints of the UK’s economic future. It is probably wrong to talk in terms of an economic boom after we have seen the biggest economic downturn in 300 years, but Mr Staley is in tune with his US counterparts when he hopes and expects that, for him and his many business customers, the worst is behind us.
Amazon’s revenue surges 44% to 108.5 billion in Q1
Amazon (AMZN) reported better-than-expected first-quarter results on Thursday, with quarterly revenue surging past $100 billion again. Here’s what the company reported in its fiscal first-quarter results, compared to consensus estimates compiled by Bloomberg:
- Revenue: $108.5 billion vs. $104.57 billion expected
- Earnings per share: $15.79 vs. $9.69 expected
Revenue increased 44% to $108.5 billion in the quarter versus $75.5 billion in the same quarter a year ago. During the first quarter, Amazon’s core online stores business saw its net sales grow 44% to $52.9 billion compared to $36.65 billion in the year-ago quarter. Outside of e-commerce, Amazon Web Services’ net sales grew 32% from a year ago to $13.5 billion. “A lot of people were wondering if the stay-at-home theme is still intact, especially with the vaccine rollout, but what this company has proven today, is that a lot of these gains that they made in a pandemic will be potentially lasting. I mean there is a structural shift in consumer behavior that will benefit Amazon, not just on the e-commerce side but the cloud business,” CFRA analyst Tuna Amobi told Yahoo Finance Live. For the second quarter, Amazon said it expects revenues to be between $110 billion and $116 billion, an increase between 24% and 30% from the same period a year ago. Amazon, which recently revealed it has more than 200 million paid Prime members globally, will host its Prime Day during the second quarter. CFRA’s Amobi expects Prime Day to be “huge,” which he notes is consistent with prior years, which have set new records. “We have no reason to believe that this year is going to be any different, especially with those kinds of membership growth,” he said, adding that “all of the building blocks are in place” for Prime to be a “major profit center.” Amobi, who has a price target of $3,800 on Amazon’s stock, said it’s possible the stock could hit “way above” his price target, suggesting that it might not be “too long before we’d be looking at potentially at a stock that would be trading way over $4,000.” Shares of Amazon rose nearly 3% in the after-hours session to last trade near $3,574.
Light at end of the tunnel’: New York mayor envisions full reopening by July 1
NEW YORK — New York City aims to “fully reopen” on July 1 after more than a year of closures and capacity restrictions, Mayor Bill de Blasio said on Thursday, citing satisfactory progress in its vaccination campaign. “We are ready to bring New York City back fully on July 1,” de Blasio told a news briefing. “Now we can see that light at the end of the tunnel.” De Blasio said he had not discussed the city’s reopening date with Governor Andrew Cuomo but his announcement comes a day after Cuomo lifted restrictions that would clear the way for a revival of the city’s nightlife. The state has the power to impose or lift restrictions on restaurants and other venues. “I think the best way to proceed here is to set out the city’s vision,” de Blasio said. Even though the July 1 date is still aspirational, the mayor’s announcement is significant in that New York is the country’s most populous city and was the early epicenter of the pandemic as the virus began sweeping across the United States last spring. The mayor said his optimism on the city’s imminent return to normal reflected the success of a massive drive to get New Yorkers vaccinated. He said 6.4 million doses of vaccine have been administered in the city of more than 8 million residents. While the mayor acknowledged the city needed to make more progress on vaccinations, he said more than 70% of New Yorkers have had at least one dose of a coronavirus vaccine. “People are showing up,” he said. “We need to keep the momentum going,” he added. “This is exactly how we get to the full reopening we’re all looking forward to.” Coronavirus cases, hospitalizations and deaths have trended lower in New York City since the beginning of the year. On a seven-day rolling average, the city reported over 7,000 new cases a day at the outbreak’s peak in January. By March new infections ebbed to 4,000 a day and now average about 2,000 a day. De Blasio did not provide clear guidelines on whether those attending shows, dining indoors or frequenting gyms and salons would have to adhere to any specific requirements, such as presenting proof of vaccination. “There certainly will be particular institutions that may choose to have rules around a vaccination or testing,” de Blasio told reporters, adding that the city will keep monitoring COVID-19 data and adjust its approach accordingly. Currently, the New York Yankees and Mets require those attending baseball games to take a rapid COVID-19 test or show proof of vaccination before gaining admission to their ballparks in keeping with New York state guidelines. Attendance is limited to 20% of capacity. New York City theaters have started to reopen this month for special events in front of limited indoor audiences. Some producers have targeted June 1 for their reopening dates, though many Broadway shows are not expected to pull back the curtains until September.. On Wednesday, Cuomo set a date for the end of a curfew that had forced city restaurants to end their bar and food service by midnight. The curfew would end on May 17 for outdoor dining areas and on May 31 for indoors, he said. The governor also allowed seating at bars across the state to reopen for the first time on May 3. In addition, Cuomo said capacity limits would increase starting May 15 for several businesses outside of New York City, including gyms and casinos. Offices across the state, including in the city, will be able to increase capacity from 50% to 75%, the governor said.
Royal Caribbean CEO Sees Return to Cruising by July as CDC Clarifies Guidance
It’s looking increasingly likely that cruise ships will resume sailing out of U.S. ports in July, a prospect that Royal Caribbean Group CEO Richard Fain thinks is realistic. Late Wednesday, the Centers for Disease Control and Prevention sent a letter to the cruise operators updating the conditional sailing order that’s been in effect since October, according to USA Today. Fain told Barron’s in an interview Thursday morning that the CDC clarified and amplified its guidance for the order, noting that there are two paths to the resumption of sailing: “One path is if we require nearly all of our guests to be vaccinated. The other path is if we don’t have nearly everybody vaccinated.”
Under the CDC’s updated guidance, cruise ships can bypass previously mandated test cruises and start regular passenger sailings if 98% of crew and 95% of passengers are fully vaccinated, according to Patrick Scholes, an analyst at Truist Securities. Most children, however, aren’t eligible for Covid vaccines yet, posing a potential problem on some cruises. “If we opt for the vaccinated route, for many our cruises that’s simply not a problem because the number of children is small enough that it doesn’t make that much of a difference,” Fain said. For other cruises, he said, “It makes a difference but again, when the vaccines for the 12- to 15-year-olds become available, which is expected relatively soon, that would go a long way to help that too.” The large U.S. cruise operators— Royal Caribbean Group (ticker: RCL), Carnival (CCL), and Norwegian Cruise Line Holdings (NCLH)—have largely been shut down since March 2020 due to the pandemic, though there have been limited sailings in Europe and Asia. Getting the green light from the CDC, which oversees U.S. ports, would be a huge boost for an industry that has scrambled to stay afloat and been forced to raise billions of fresh capital. Since the suspension of cruises 13 months ago, Royal Caribbean has raised about $12.3 billion of capital—in moves that sharply increase its debt load and are dilutive to earnings. The company’s monthly cash burn in the first quarter was about $300 million. As of March 31, the company’s liquidity totaled about $5.8 billion, including $5.1 billion of cash. On Thursday morning, Miami-based Royal Caribbean reported an adjusted first-quarter loss of $4.44 a share, compared with a loss of $1.48 a year earlier—another in a series of huge losses owing to the pandemic. Revenue plunged to $42 million versus $2 billion in the corresponding quarter in 2020. The stock was at $86 and change late Thursday morning, down about 0.8% on the day’s trading. The shares have gained about 17% this year. The company, which has four ships sailing outside of U.S. waters in places like the Canary Islands, Greece, and Singapore, has announced itineraries for 11 additional ships in the Caribbean, including the Bahamas and Bermuda, and Europe. Alaska is an important cruise destination in the summer, but the Canadian government is banning large cruise vessels from its waters into 2022. Fain said he is “a little less confident about that [getting resolved] because it involves more parties,” but he added that “there’s good chance we can sort that out.” Fain said 2022 will involve “a little bit a transition” for the company but that he’s confident it will be a good year, owing to the pent-up demand among cruise takers and the growing adoption of Covid vaccines, among other factors. Royal Caribbean’s consensus adjusted FactSet profit estimate for 2022 is $1.43 a share and $6.20 in 2023, up from minus $13.65 this year. The company earned $9.54 a share in 2019 before the pandemic. Nick Note: i am not so sure this is so smart. We shall see. I wish them well
U.S. jobless benefit claims continue to grind lower
Applications for benefits sink 13,000 to pandemic low 553,000
U.S. Economy Appears to Be Lifting Off
U.S. Economy Appears to Be Lifting Off
GDP likely grew robustly in the first quarter as the government distributed Covid-19 stimulus checks and consumers stepped up spending
The U.S. economy appears to have expanded rapidly in the first quarter, extending what economists project will be a robust, consumer-led recovery from the pandemic this year. Fueled by a flood of federal cash to households and rising vaccinations, the nation’s gross domestic product likely grew at a 6.5% seasonally adjusted, annual rate in the first three months of 2021, according to economists surveyed by The Wall Street Journal. Official figures on GDP—the broadest measure of goods and services produced across the U.S—are set to be released by the Commerce Department on Thursday at 8:30 a.m. ET. Output grew at a 4.3% rate in the fourth quarter of last year after rising at a 33.4% clip in the third. The rebound from a steep downturn last spring early in the pandemic was quicker than what many economists expected but still left the economy in a hole. For all of last year, the economy shrank by 2.4% when comparing fourth-quarter output to a year earlier—the first contraction since the 2007-09 recession. The recovery likely accelerated in the first quarter as more people received a Covid-19 vaccine, states and cities lifted business restrictions, and stimulus payments landed in bank accounts. Consumer confidence rose in April to the highest level in 14 months, the Conference Board said Tuesday. “The U.S. economy is clearly in the nascent period of the recovery and headed for a robust expansion,” said Joseph Brusuelas, chief economist at RSM, a consulting firm. It is possible first-quarter output may have returned to pre-pandemic levels, he said.
Bars and restaurants reopen as Italy eases COVID-19 restrictions, in Rome
Bars, restaurants, cinemas and concert halls will partially reopen across Italy Monday in a boost for coronavirus-hit businesses, as parliament debates the government’s 220-billion-euro ($266-billion) EU-funded recovery plan. After months of stop-start restrictions imposed to manage its second and third waves of Covid-19, Italy hopes this latest easing will mark the start of something like a normal summer. Three-quarters of regions will drop into the low-risk “yellow” categories from Monday, with bars and restaurants permitted to restart table service outside — including, for the first time in six months, in the evening, although a 10:00 pm curfew remains in place. “Finally!” said Daniele Vespa, the 26-year-old head waiter at Baccano, a restaurant near Rome’s Trevi Fountain, as he made preparations for the return of customers. “Hopefully… we can soon reopen inside as well,” he told AFP, adding: “It’s the start of a return to normality.” Cinemas, theatres and concert halls can also open at 50-percent capacity, followed by the staggered opening of swimming pools, gyms, sporting events and theme parks by July 1. Prime Minister Mario Draghi has been under intense pressure from regional governments and increasingly regular street protests to ease restrictions, as Italy battles its deepest recession since World War II. He has admitted to taking a “calculated risk”, as infection rates and intensive care admissions fall but deaths still mount at more than 300 every day to more than 119,000. The vaccination programme is gaining pace with more than 17.5 million jabs administered so far in a population of around 60 million, but there are disparities between regions. “Clearly if the gradual reopening is interpreted as a ‘free-for-all’, a new surge in infections risks compromising the summer season,” warned Nino Cartabellotta, head of the GIMBE Foundation health think tank. Italy was the first European country to be hit by the pandemic in early 2020 and remains one of the worst affected, with the EU’s highest reported death toll and one of the deepest recessions. The economy contracted by a staggering 8.9 percent last year and a million jobs have been lost. Italy is pinning its hopes on a 222.1-billion-euro investment and reform plan funded largely by the European Union. Rome is the biggest recipient of the bloc’s 750-billion-euro post-pandemic recovery fund. In parliament on Monday, Draghi will formally present the programme he hopes will boost growth by 3.6 percentage points by 2026, ahead of a Friday deadline to submit the package to Brussels. In a statement Sunday, the government said the plan was a “historic intervention” that would repair the damage caused by the pandemic and address “the structural weaknesses” of the Italian economy, while putting it on a greener footing. Priorities include infrastructure, notably high-speed railways; green energy, including hydrogen power projects; investment in internet services and digitalisation. There will be money to help women and young people, who have disproportionately lost out during the pandemic, while around 40 percent will be targeted at historically under-performing southern Italy. Draghi, a former European Central Bank chief, has also highlighted the importance of reform, and the plan sets out an “ambitious programme” focused on modernising notably public administration and the snail-paced justice system. Disputes over the spending plan brought down the previous prime minister and his coalition, after which Draghi was parachuted in to lead a national unity government in February. His broad support in parliament “gives him significant room for manoeuvre to deliver the necessary reforms”, noted Jesus Castillo, an economist at Natixis.
Vanguard’s Davis Sees ‘Once in a Generation’ Type Opportunities in Markets
Consumption makes up about 70% of all U.S.economic activity. With savings rates near all-time highs, consumers are primed to turbo-charge the post-pandemic recovery. However, a full recovery will require more than another e-commerce spending boom.
Paul Krugman Is Pretty Upbeat About the Economy
Paul Krugman is one of the world’s most influential and provocative economists. Although Krugman made his professional mark in academia, where his work on trade and economic geography earned him a Nobel prize in 2008, it is his commentary that has brought wider public recognition. Last week, Bloomberg Opinion writer Noah Smith interviewed Krugman online about the state of the U.S economy in the midst of the coronavirus crisis.
Gottlieb: US may never achieve true herd immunity to COVID
- “I don’t think we should be thinking about achieving herd immunity,” Dr. Scott Gottlieb told CNBC on Friday.
- The former FDA chief said the country’s goal should instead be to “keep the level of virus down.”
- Covid hospitalizations, not just cases, need to be the focus as vaccinations are rolled out, he added.
Dr. Scott Gottlieb told CNBC on Friday he believes the United States may struggle to reach “true herd immunity” to Covid, suggesting coronavirus infections will be around in the years ahead. However, the former commissioner of the U.S. Food and Drug Administration stressed that new cases alone should not be the metric receiving the most focus as more people are vaccinated against Covid. “I don’t think we should be thinking about achieving herd immunity. I don’t know that we ever achieve true herd immunity, where this virus just stops circulating,” Gottlieb said on “Closing Bell.” “I think it’s always going to circulate at a low level. That should be the goal, to keep the level of virus down.” Gottlieb, who serves on the board of Covid vaccine maker Pfizer, said he expects the U.S. to see significant progress toward that goal in the coming weeks. “I think that we are going to get to a point this summer where the circulation of this virus is going to be extremely low. We’re probably going to see cases start to collapse at some point in May, pretty soon. We’re seeing it already in parts of the country,” Gottlieb said. Even so, Gottlieb said, the U.S. could level off somewhere around 5,000 to 10,000 new coronavirus cases per day this summer, partly due to how commonplace Covid testing has become. “We’ll pick up a lot of asymptomatic and mildly symptomatic infection,” he said. “I think the bottom line is that the vulnerability of the American population is being dramatically reduced as a result of vaccination, and that’s really what we need to focus on,” said Gottlieb, who led the FDA from 2017 to 2019 in the Trump administration. “We shouldn’t focus just on cases alone. There will be cases, but we should focus on how many people are being hospitalized and getting sick from this virus, and that’s going to dramatically decline as we roll out the vaccines,” he said. Public health experts have stressed throughout the pandemic that as more people in a population have immunity protection for a particular virus, the less readily it will spread. However, while vaccines have been shown to reduce transmission, Gottlieb is not the first to suggest reaching durable herd immunity for Covid is likely to be challenging. White House chief medical advisor Dr. Anthony Fauci has estimated that 75% to 85% of the population being vaccinated against Covid would create an “umbrella” of immunity. “That would be able to protect even the vulnerables who have not been vaccinated or those in which the vaccine has not been effective,” he told CNBC in December shortly after the FDA granted Pfizer’s vaccine emergency use authorization.
Roughly 41% of the U.S. population has now received at least one Covid vaccine dose and 27.5% is fully vaccinated, according to the latest figures from the Centers for Disease Control and Prevention. More than 220 million total doses have been administered, CDC data shows.
Gottlieb has previously said the U.S. could, in theory, get to a point where Covid is eradicated like other diseases such as polio and smallpox. “It’s possible. We don’t seem to be prepared to do it and take the collective action that it’s going to require,” he told CNBC on April 16. “It will require people exercising some civic virtue to get vaccinated even if they individually feel they’re at low risk of the infection,” he said. “Because even if they’re personally low risk they can still get and transmit the infection, and you can’t eradicate a disease where you have a significant contingent of people who are going to continue to catch it and transmit it.”