LBLV provides an overview of economic news.
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The main economic news for Wednesday, May 6:
1. U.S. works on pact that allows moon mining
The Trump administration is working on a legal blueprint for mining on the moon under a new U.S.-sponsored international agreement called the Artemis Accords, said people familiar with the proposed pact. The agreement would be the latest effort to round up allies around NASA’s plan to put humans and space stations on the moon within the next decade. The Trump administration and other spacefaring countries see the moon as a key strategic asset in outer space. The moon also has value for long-term scientific research that could enable future missions to Mars. The Artemis Accords propose «safety zones» that would surround future moon bases to prevent damage or interference from rival countries or companies operating in close proximity. The pact also aims to provide a framework under international law for companies to own the resources they mine.
2. Disney reports lower profit, reopens Shanghai park
Walt Disney Co reported that global measures to contain the coronavirus pandemic cut profits by $1.4 billion, mostly from its shuttered theme parks, but said it would reopen Shanghai Disneyland to a reduced number of visitors next week. Disney said it will not pay a dividend for the first half of the fiscal year, which will preserve $1.6 billion in cash assuming it had kept the dividend constant at 88 cents per share. The entertainment giant posted adjusted earnings per share of 60 cents in the first quarter, down 63% from a year earlier and short of the 89 cents expected by analysts, according to IBES data from Refinitiv. Net income from continuing operations dropped 91% to $475 million. Meantime, Disney’s chief executive Bob Chapek announced the company would reopen the Shanghai park on May 11, while it remains unclear when Disney’s other parks in Asia, the United States and France would again welcome visitor.
3. Russia’s GDP falls amid lockdown and oil slump
Russia plans to increase state borrowings and use more funds from the National Wealth Fund (NWF) this year as it expects a 5% fall in gross domestic product (GDP), stated Finance Minister Anton Siluanov. Due to the coronavirus spread, Russia has been largely on a lockdown since late March, which along with weak oil prices is hurting the domestic economy. Amid this, the country’s budget revenues are expected to fall 4 trillion roubles below expectations, along with lower oil and gas revenues will account for a reduction of around 1.5 trillion roubles. As a result, this year’s budget deficit is expected to hit 4% of GDP, while the country was expecting a 2020 budget surplus of 0.8% of GDP.
4. Bundesbank plans to limit ECB powers
Germany’s Constitutional Court ruled that the ECB overstepped its powers in expanding 2 trillion euros ($2.17 trillion) of government debt in the past five years, and gave the central bank three months to prove that the purchase scheme was necessary and «proportional». If the ECB fails, the Bundesbank must quit the scheme and sell its 533.9 billion euros worth of German government debt, the court said, setting the stage for potential mayhem in bond markets. In turn, the ECB will struggle to expand stimulus any further and a fresh legal challenge to its recently launched Pandemic Emergency Purchase Programme (PEPP), a key tool to overcome the bloc’s coronavirus-induced economic meltdown, appears to be just a matter of time.
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