Focus: US unemployment and Eurozone woes

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Updated 01 May 2020
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Focus: US unemployment and Eurozone woes

What happened:

US first-time jobless claims jumped another 3.8 million, topping 30 million over the last six weeks.

Eurozone growth rates were dismal too, coming in at minus 3.8 percent for the eurozone as a whole, minus 5.8 percent for France, minus 5.2 percent for Spain, and minus 4.7 percent for Italy.

The corporate earnings season continued with Apple, Amazon and Twitter all either taking a hit or showing lackluster results.

Apple’s net income stood at $11.2 billion. Revenue was up by 1 percent, which was below guidance. Twitter reported a loss of $8 million, due to slagging advertising revenue, and Amazon reported a net income of $2.5 billion, down 30 percent compared to the first quarter (Q1) of 2019. Sales increased by 26 percent as orders jumped due to the coronavirus disease (COVID-19) lockdowns. Operating amidst lockdown and social distancing increased the cost base, which explains the discrepancy between revenues and profit.

US multinational energy corporation ConocoPhillips reported a loss of $1.7 billion due to the challenging environment in the oil and gas sector.

RBS was forecasting an operating profit of £519 million and beefed up its loan loss provisions to £802 million.

Budget airline Ryanair announced that it would cut 3,000 jobs, representing 15 percent of its workforce. The company’s CEO Michael O’Leary told Bloomberg that the $30 billion in state aid to some carriers but not others would lead to market distortions, penalizing some of the more profitable budget airlines.

BA (British Airways) is temporarily closing its base at Gatwick airport.

Background:

The European Central Bank (ECB) left rates unchanged despite the eurozone’s dismal GDP numbers. ECB president, Christine Lagarde, predicted the eurozone economy to contract between 5 and 12 percent for the full year of 2020. In its downside scenario for the second quarter it sees a contraction of 15 percent.

The bank did not increase its 750 billion-euro emergency asset purchase program, but Lagarde indicated willingness to do so down the line.

The ECB left interest rates prima facie unchanged. Its TLTRO-III program lets banks obtain three-year liquidity between minus 0.5 and minus 1 percent if they meet lending goals.

Under its PELTRO (pandemic emergency longer-term refinancing operations) they can get loans with maturities up to 16 months at an interest rate of minus 0.25 percent. The ECB has also allowed banks in some cases to lower the requirements on collateral to BB. These measures are tantamount to a stealth interest-rate cut and are designed to ease the stress on European lenders.

Decision making is less clear cut at the ECB than it is at the US Federal Reserve, because the eurozone consists of 19 countries with their own fiscal systems. However, both institutions showed a similar trajectory by announcing huge programs last month and only tweaking them at the margins this month, while indicating willingness to do more if necessary and emphasizing the importance of further fiscal stimulus.

The EU has so far spent 3.5 trillion euros in rescue funding. Going forward the institution will frontload its seven-year budget. It will also borrow money for a recovery program, which European Commission President Ursula von der Leyen likened to the Marshall Plan (a 1948 post-war foreign aid scheme for Western Europe) and which will be funneled through the multiannual budget to be frontloaded again.

While US first-time jobless claims for the week ending April 24 are high, new claims seem to be on a downward trajectory. More than 30 million Americans have filed for unemployment benefits over the last six weeks. US Secretary of Labor Eugene Scalia told CNBC that benefits had not trickled through to recipients at the desired speed, because many states had antiquated computer systems rendering processing the sheer number of transactions challenging.

The unemployment rate will be higher than after the financial crisis, which is bound to leave a big dent on consumer confidence and consumer spending in an economy which depends 70 percent on the consumer.

Under any scenario, employment is not going to increase as fast as people have lost jobs over the last two months.

Where we go from here:

The dismal economic news combined with lackluster earnings reports resulted in markets sliding across the board on Thursday and into Friday. This stands in stark contrast to the April performance of all major stock exchanges. The S&P 500 was up by 18 percent and the Nasdaq by 21 percent.

Again, this is a striking difference with the overall macroeconomic picture, giving rise to the question, if or rather when we shall see a downward adjustment?

 

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.
Twitter: @MeyerResources


Israel says bodies of two hostages retrieved from Gaza

Updated 2 min 1 sec ago
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Israel says bodies of two hostages retrieved from Gaza

  • Yair Yaakov was seized in the Hamas-led October 7, 2023 attack on Israel and killed the same day

JERUSALEM: Israeli forces have retrieved the bodies of two hostages from the Gaza Strip, the military and Prime Minister Benjamin Netanyahu said Wednesday, as Israel presses its offensive in the Palestinian territory.
A military statement said a joint operation by the army and the Shin Bet security agency recovered the bodies of Yair Yaakov and “an additional hostage whose name has not yet been cleared for publication” from the Khan Yunis area of southern Gaza.
Yaakov, a member of Kibbutz Nir Oz, was 59 when he was seized in the Hamas-led October 7, 2023 attack on Israel and killed the same day.
The military statement said he had been abducted and killed by fighters from Islamic Jihad, a Hamas ally.
Yaakov was abducted along with his partner Meirav Tal, as they sheltered in their safe room in Nir Oz.
She was freed on November 28, 2023 during the first truce.
Abducted separately at the home of their mother, Yair’s two children Yagil and Or were also released on November 27 during the first truce.
Nir Oz was one of the communities hit hardest by the attack, with nearly a quarter of its residents killed or taken hostage.


Saudi national team arrives in Los Angeles ahead of CONCACAF Gold Cup debut

Updated 11 min 4 sec ago
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Saudi national team arrives in Los Angeles ahead of CONCACAF Gold Cup debut

  • Their opening group stage match is set for Sunday against Haiti at Snapdragon Stadium

LOS ANGELES: The Saudi national football team touched down in Los Angeles on Wednesday morning ahead of their participation in the 2025 CONCACAF Gold Cup, which kicks off on June 14 across the US.

The Green Falcons arrived at LAX International Airport from Jeddah and will hold their pre-tournament training camp in San Diego.

Their opening group stage match is set for Sunday against Haiti at Snapdragon Stadium.

The team was received at LAX by the Kingdom’s Consul General in Los Angeles, Bandar Al-Zaid.

Saudi Arabian Football Federation President Yasser Al-Misehal expressed appreciation to the consulate for its warm welcome and logistical support.

The squad will begin their preparations with a closed training session on Wednesday evening at the San Diego Performance Center.


Police detain more than 20 people during Los Angeles protest curfew

Updated 23 min 25 sec ago
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Police detain more than 20 people during Los Angeles protest curfew

  • Officers used rubber bullets to break up hundreds of protesters demonstrating against Donald Trump’s immigration crackdown
  • Officials said curfew was needed to stop vandalism and theft by agitators after five days of protests

LOS ANGELES: Police detained more than 20 people, mostly on curfew violations, on the first night of restrictions in downtown Los Angeles and used crowd-control projectiles to break up hundreds of protesters demonstrating against President Donald Trump’s immigration crackdown, officials said Wednesday.
But there were fewer clashes between police and demonstrators than on previous nights, and by daybreak, the downtown streets were bustling with residents walking dogs and commuters clutching coffee cups.
Officials said the curfew was necessary to stop vandalism and theft by agitators after five days of protests, which have mostly been concentrated downtown. Demonstrations have also spread to other cities nationwide, including Dallas and Austin in Texas, and Chicago and New York, where thousands rallied and more arrests were made.
LA’s nightly curfew, which the mayor said would remain in effect as long as necessary, covers a 1-square-mile (2.5-square-kilometer) section that includes an area where protests have occurred since Friday in the sprawling city of 4 million. The city of Los Angeles encompasses roughly 500 square miles (1,295 square kilometers).
“If there are raids that continue, if there are soldiers marching up and down our streets, I would imagine that the curfew will continue,” Mayor Karen Bass said.
The tensions in LA and elsewhere emerged as immigration authorities seek to dramatically increase the number of daily arrests across the country.
Bass said the raids spread fear across the city at the behest of the White House.
“We started off by hearing the administration wanted to go after violent felons, gang members, drug dealers,” she told a news conference. “But when you raid Home Depots and workplaces, when you tear parents and children apart, and when you run armored caravans through our streets, you’re not trying to keep anyone safe. You’re trying to cause fear and panic.”
Referring to the protests, she added: “If you drive a few blocks outside of downtown, you don’t know that anything is happening in the city at all.”
Some 2,000 National Guard soldiers are in the city, and about half of them have been protecting federal buildings and agents, said Army Maj. Gen. Scott Sherman, head of Task Force 51, which is overseeing the deployment of National Guard and Marines to Los Angeles.
About 700 Marines will soon join the Guard troops, but they are still undergoing training and will not be mobilized Wednesday, Sherman said. Another 2,000 Guard troops should be on the streets by Thursday, he said.
Democratic Gov. Gavin Newsom has accused Trump of drawing a “military dragnet” across the nation’s second-largest city with his escalating use of the National Guard, which Trump activated, along with the Marines, over the objections of city and state leaders.
Newsom asked a court to put an emergency stop to the military helping federal immigration agents. The assistance includes some guardsmen now standing protectively around agents as they carry out arrests.
A judge set a hearing for Thursday, giving the administration several days to continue its activities.
The change moves the military closer to engaging in law enforcement actions such as deportations, as Trump has promised as part of his immigration crackdown. The Guard has the authority to temporarily detain people who attack officers, but any arrests would be made by law enforcement.
The president posted on the Truth Social platform that the city “would be burning to the ground” if he had not sent in the military.
Meanwhile in New York City, police said they took 86 people into custody during protests in lower Manhattan that lasted into Wednesday morning. Police Commissioner Jessica Tisch said the vast majority of demonstrators were peaceful.
A 66-year-old woman in Chicago was injured when she was struck by a car during downtown protests Tuesday evening, police said. Video showed a car speeding down a street where people were protesting.
In Texas, where police in Austin used chemical irritants to disperse several hundred demonstrators Monday, Republican Gov. Greg Abbott’s office said Texas National Guard troops were “on standby” in areas where demonstrations are planned.
Guard members were sent to San Antonio, but Police Chief William McManus said he had not been told how many troops were deployed or their role ahead of planned protests Wednesday night and Saturday.
Authorities announce arrests in protests
Two people accused of throwing Molotov cocktails at police during the LA protests over the weekend face charges that could bring up to 10 years in prison, the Justice Department announced Wednesday. No one was injured by the devices.
One of the suspects is a US citizen, and the other overstayed a tourist visa and was in the US illegally, authorities said.
“We are looking at hundreds of people,” US Attorney Bill Essayli said. “If you took part in these riots and were looking to cause trouble, we will come looking for you.”
Trump, Newsom locked in a war of words
Trump has called the protesters “animals” and “a foreign enemy” and described Los Angeles in dire terms that the governor says is nowhere close to the truth.
Newsom called Trump’s actions the start of an “assault” on democracy.
“California may be first, but it clearly will not end here. Other states are next,” he said.
The protests began Friday after federal immigration raids arrested dozens of workers in Los Angeles. Protesters blocked a major freeway and set cars on fire over the weekend, and police responded with tear gas, rubber bullets and flash-bang grenades.
Thousands of people have peacefully rallied outside City Hall and hundreds more protested outside a federal complex that includes a detention center where some immigrants are being held following workplace raids.
Despite the protests, immigration enforcement activity has continued throughout the county, with city leaders and community groups reporting US Immigration and Customs Enforcement present at libraries, car washes and Home Depots. School graduations in Los Angeles have increased security over fears of ICE action, and some have offered parents the option to watch on Zoom.
Los Angeles police detained 200 people related to the protests throughout the day on Tuesday, including 67 who were occupying a freeway, according to the city’s chief.
The majority of arrests since the protests began have been for failing to disperse, while a few others were for assault with a deadly weapon, looting and vandalism. At least seven police officers have been injured.


Expert sheds light on historic mosques in Makkah that remain unknown to many

Scattered throughout the city are historic mosques that witnessed pivotal moments in Islamic history. (SPA)
Updated 15 min 53 sec ago
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Expert sheds light on historic mosques in Makkah that remain unknown to many

  • Al-Dahas highlighted the significance of Namirah Mosque in Arafat, where the Prophet delivered his sermon during the Farewell Pilgrimage

MAKKAH: In Makkah, the holiest city in Islam, spiritual significance extends far beyond the Grand Mosque. Scattered throughout the city are historic mosques that witnessed pivotal moments in Islamic history.

Yet, amid the dense crowds and the rapid pace of modern development, many pilgrims and Umrah performers remain unaware of these sacred sites, quietly tucked away within the city’s expanding urban landscape.

Fawaz Al-Dahas, professor of history at Umm Al-Qura University, said that Makkah is home to several mosques of profound historical and religious value, yet they remain largely overlooked, receiving neither the media attention nor the organized religious visits they merit.

Al-Dahas highlighted the significance of Namirah Mosque in Arafat, where the Prophet delivered his sermon during the Farewell Pilgrimage. He said that this mosque was not merely a physical structure, but a sacred site where the foundational principles of Islam were proclaimed. He also referenced the Bay’ah Mosque in Mina, which commemorates the pivotal moment when the Ansar pledged allegiance to the Prophet, paving the way for the Hijrah and the establishment of the Islamic state.

According to Al-Dahas, the importance of these mosques transcends their geographic locations, reflecting their profound political and religious significance in Islamic history.

Al-Dahas shed light on Al-Rayah Mosque: “Located in the Jarwal neighborhood, where the Prophet’s banner was raised on the day of the Conquest of Makkah, a powerful symbol of victory tempered by forgiveness.”

He also drew attention to Al-Hudaibiya Mosque, situated west of Makkah, where the historic Bay’at Al-Ridwan pledge took place, an event referenced in the Holy Qur’an. He said that while the mosque still stands on the original site of the Treaty of Hudaibiya, it remains largely unknown, with few visitors aware of its exact location.

Mohammed Al-Joud, a Hajj and Umrah specialist, said that these mosques were not merely historical structures, but vital educational landmarks that enrich a pilgrim’s understanding of the deeper spiritual dimensions of Hajj. He pointed to Al-Khayf Mosque in Mina, where the Prophet and prophets before him are believed to have prayed, as a powerful symbol of the continuity of prophethood: “Yet, many pilgrims remain unaware of its significance outside the Hajj season.”

Al-Joud also highlighted Al-Mashar Al-Haram Mosque in Muzdalifah, which is mentioned in the Holy Qur’an, emphasizing that awareness of such sacred sites bridges the rituals of Hajj with their Qur’anic and historical roots, enhancing the spiritual journey.

Al-Joud also drew attention to Al-Kabsh Mosque in Mina, linked to the story of the sacrifice of Ismail. He explained that the mosque symbolizes the values of sacrifice and obedience, yet remains largely overlooked in media coverage and excluded from most pilgrimage programs. He described it as an essential part of a broader, interconnected network of sacred sites that trace the prophetic journey — from revelation to migration, and from peace to conquest.

Al-Dahas underscored the importance of launching awareness initiatives to shed light on these mosques and restore their rightful standing. He said that safeguarding Makkah’s Islamic heritage was not limited to preserving its prominent landmarks, but also required reviving these historically significant mosques, which once stood as pivotal markers along the journey of the prophetic message.

He said that reconnecting pilgrims with these sacred sites revived the educational and historical depth of Hajj, enriching the journey with a more profound, informed, and spiritually immersive experience.

 


Milei says Argentina to move Israel embassy to Jerusalem in 2026

Argentine President Javier Milei attends a Plenum session of the Knesset, Israel’s Parliament, in Jerusalem. (Reuters)
Updated 11 June 2025
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Milei says Argentina to move Israel embassy to Jerusalem in 2026

  • “I am proud to announce before you that in 2026 we will make effective the move of our embassy to the city of west Jerusalem,” Milei told Israeli parliament Wednesday

JERUSALEM: Argentine President Javier Milei said Wednesday his country would move its embassy in Israel to Jerusalem, the status of which is one of the most delicate issues in the Israel-Palestinian conflict.
“I am proud to announce before you that in 2026 we will make effective the move of our embassy to the city of west Jerusalem,” Milei said in a speech in the Israeli parliament during an official state visit.
Argentina’s embassy is currently located near the coastal city of Tel Aviv.
Several countries, including the United States, Paraguay, Guatemala and Kosovo, have moved their embassies to Jerusalem, breaking with international consensus.
Israel has occupied east Jerusalem since 1967, later annexing it in a move not recognized by the international community.
Israel treats the city as its capital, while Palestinians want east Jerusalem to become the capital of a future state.
Most foreign embassies to Israel are located in the coastal hub city of Tel Aviv in order to avoid interfering with negotiations between Israelis and Palestinians.
In 2017, during his first term as US president, Donald Trump unilaterally recognized Jerusalem as Israel’s capital, sparking Palestinian anger and the international community’s disapproval.
The United States transferred its embassy to Jerusalem in May 2018.