Where from here
Business NewsMay 16, 2020 / 6:05 AM
Fed warns of 'significant' financial vulnerabilities from pandemic.
“The COVID-19 outbreak poses severe risks to businesses of all sizes and millions of households,” the central bank said as it ran down a list of trouble spots that could arise depending on how long the virus persists and keeps the economy on its heels.
Fed Governor Lael Brainard said
" a key worry at the central bank is that what might start as a cash crunch could spiral into something worse. Among highly indebted businesses, she said, “we will be monitoring closely for solvency stresses...which could increase the longer the Covid pandemic persists.”
Few if any parts of the economy are safe. The Fed noted for example that both commercial office buildings and farmland held high valuations relative to the income produced, possibly setting the stage for a drop in price. That could mean stress for property owners who have borrowed against their property, or for the financial institutions that hold the loans.
“Financial sector vulnerabilities are likely to be significant, in the near term,” the Fed said. “The strains on household and business balance sheets from the economic and financial shocks since March will likely create fragilities that last for some time.”
Buffett's Berkshire Hathaway trims exposure to banks,
Warren Buffett's Berkshire Hathaway Inc. BRK.A, -1.06% BRK.B, -0.98% has trimmed its exposure to banks, including Goldman Sachs Group Inc. GS, -1.47% and U.S. Bancorp USB, -1.57%, and sold out of insurer Travelers Cos. Inc. TRV, +0.10% and refiner Phillips 66 PSX, +0.11% according to a late Friday filing. Buffett said earlier this month he had sold off his large stakes in four U.S. air carriers for a lot less than he paid for them
China is considering targeting more Australian exports including wine and dairy, according to people familiar with the matter, in what would be a dramatic deterioration in ties as the key trading partners spar over the coronavirus outbreak.
Chinese officials have drawn up a list of potential goods also including seafood, oatmeal and fruit that could be subject to stricter quality checks, anti-dumping probes, tariffs or customs delays, the people said, asking not to be identified as the discussions are private. State media could also encourage consumer boycotts, they said, adding a final decision on the measures had not been made.
The sooner Australia stops feeding the CCP the better,plenty of other countries in the world to feed without blackmail.
House prices are tipped to fall by 11 per cent over the next three years as the COVID-related economic downturn bites, and for one group of Australian homeowners, it could not come at a worse time.
Many small-scale investors use interest-only loans to buy property
These loans convert to principal and interest after a set time
This increases financial pressure for those hit by the COVID downturn
There are an estimated 730,000 investors, many of whom are self-funded retirees or people planning for retirement, who have taken out interest-only bank loans in the belief property was a safe bet.
Coronavirus has already delivered challenges, including rent arrears and the prospect of losing their tenants altogether.
But now these private landlords are facing big hikes in their monthly bank repayments as they switch from interest-only to paying off the principal of their loans as well.