Written by: Elizabeth Salas Evans, President & CCO at Cayena Capital Management; MFF Visiting Scholar
April 8, 2020
As COVID-19 continues to spread and paralyze economies across the world, global leaders are certainly not immune. Great Britain’s Prime Minister, Boris Johnson is currently checked into the Intensive Care Unit (ICU) of a local hospital in London. The United States (U.S.) is seeing estimated mortality rates of over 3% based on figures provided by the World Health Organization (WHO) and as I write this, experiencing the highest daily death tolls on record. The Mortgage Banker’s Associate (MBA) this morning reported a decline of seventeen point nine, close to eighteen percent in mortgage applications for the week ended April 3rd. With last week’s U.S. initial jobless claims smashing through estimates, coming in at just over six point six million claims, I anticipate jobless claims week ended April 4th due out tomorrow to also blow estimates of five point two million and be closer, if not over, ten million claims.
Stock markets have remained volatile as most businesses close, with the exception of those deemed as essential and uncertainty only deepening. Investors remain cautious as the impact of the Trump Administration’s recent stimulus measures still remain to be seen. The following chart shows interest rate changes on credit card plans for commercial banks in the U.S. As individual consumers are on average charged a borrowing rate (interest rate) of over fifteen percent, a question many are asking is: how is this debt going to be repaid? Along with many economic indicators, investors will also be watching delinquency rates.