Moody's Corporation · NYSE:MCO

Moody's — Coronavirus Live Webinar Series (April 2020)

38 slides from Moody's's conference presentation, Apr 26, 2020

  1. Slide 1: COVID-19: Q&A Update

    COVID-19: Q&A Update Mark Zandi, Chief Economist Cris deRitis, Deputy Chief Economist April 2020 Ryan Sweet, Senior Director

  2. Slide 2: Coronavirus Live | Webinar Series

    Coronavirus Live | Webinar Series Program Schedule events.moodys.io/coronavirus Get weekly updates on the Coronavirus Sign-Up once Live program Live Q&A Engage with the analysts and get your questions answered April 2020 2

  3. Slide 3: Businesses Batten Down the Hatches

    Businesses Batten Down the Hatches % of respondents to Moody’s Analytics business survey that are … 90 Investing 80 Hiring 70 60 50 40 30 20 10 0 03 05 07 09 10 12 14 16 18 Source: Moody’s Analytics April 2020 3

  4. Slide 4: Business Lockdowns Hit Hard

    Business Lockdowns Hit Hard Deviation from typical U.S. GDP, ann ppts, by industry 2020 March April May June July August Sep-Dec 5 -5 Enter Accom. Transp. Wholesale Manufact. Misc. Real Est. Energy -15 Constr. Educ. Finance Public admin. Prof. Other service Info Healthcare Total -25 Source: Moody’s

  5. Slide 5: Unemployment Surges

    Unemployment Surges Unemployment insurance claims, ths 8,000 7,000 26.7 million cumulatively 6,000 since crisis began the week of March 14th 5,000 4,000 3,000 2,000 1,000 0 67 70 72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17 Sources: Employment & Training Administration, Moody’s Analytics April 20

  6. Slide 6: Smaller Nest Eggs

    Smaller Nest Eggs Wilshire 5000 36 34 32 30 Value of publicly trade stocks, $ tril 28 26 24 22 Jan Feb Mar Apr Sources: Wilshire 5000, Federal Reserve, Moody’s Analytics April 2020 6

  7. Slide 7: Global Oil Glut

    Global Oil Glut Mil barrels per day 20 110 Global balance (L) 16 Global demand (R) 105 Global supply (R) 12 100 8 95 4 0 90 -4 85 17Q1 18Q1 19Q1 20Q1 Sources: International Energy Agency, Moody’s Analytics April 2020 7

  8. Slide 8: Business Start Ups Plunge

    Business Start Ups Plunge Start ups with high propensity to hire, % chg yr ago 10 5 0 -5 -10 -15 -20 -25 -30 Jan-19 Apr-19 Jun-19 Sep-19 Dec-19 Aug-20 Sources: Census Department, Moody’s Analytics April 2020 8

  9. Slide 9: Global Recession

    2 Global Recession

  10. Slide 10: Unprecedented Global Economic Downturn…

    Unprecedented Global Economic Downturn… Economies in red are expected to suffer a recession in 2020 Source: Moody’s Analytics April 2020 10

  11. Slide 11: …That Is Intensifying

    …That Is Intensifying Real GDP growth, annualized % change 2020Q1 2020Q2 2020Q3 2020Q4 2019 2020 January base 2.7 2.9 2.7 2.6 2.5 2.6 World March base 0.7 1.6 3.5 2.8 2.4 1.9 April base -10.9 -22.1 19.9 4.5 2.4 -4.2 January base 1.5 2.2 1.5 1.2 2.3 1.8 United States March base 1.1 -0.4 1.7 2.4 2.3 1

  12. Slide 12: A Swoosh Recovery

    A Swoosh Recovery Real GDP, % change since beginning of recession… 8 6 1980 1990 2001 4 2007 2020 2 0 -2 -4 -6 X-axis is qtrs since beginning of recession -8 -10 0 2 4 6 8 10 12 Sources: BEA, Moody’s Analytics April 2020 12

  13. Slide 13: Output to Collapse With Gradual Recovery

    Output to Collapse With Gradual Recovery Inflation adjusted GDP, % annualized quarterly growth 20 10 0 -10 -20 Baseline (50%ile) S0 (4%ile) -30 S4 (96%ile) -40 19 20 21 22 23 24 Source: Moody’s Analytics April 2020 13

  14. Slide 14: Not Since the Great Depression

    Not Since the Great Depression U.S. unemployment rate, % 25 1930s Depression COVID crisis 20 April 2020 15 Fed slays inflation Financial crisis WW II 10 5 0 30 40 50 60 70 80 90 00 10 20 Sources: Federal Reserve, BEA, Moody’s Analytics April 2020 14

  15. Slide 15: Unemployment to Spike

    Unemployment to Spike U-3 unemployment rate, quarterly average, % 20 18 Baseline (50%ile) 16 S0 (4%ile) 14 S4 (96%ile) 12 10 8 6 4 2 0 19 20 21 22 23 24 Source: Moody’s Analytics April 2020 15

  16. Slide 16: Job Market Will Struggle to Recover

    Job Market Will Struggle to Recover 15 10 8.1 13 5 0.5 0.4 0.6 0.6 1.0 1.3 1.4 1.4 1.3 1.2 0.4 0.0 11 0 -0.6 -0.3 9 -5 7 -10 Employment Change (Mil., R) 5 -17.1 -15 Unemployment Rate (L) 3 -20 19 20 21 22 Sources: BLS, Moody’s Analytics April 2020 16

  17. Slide 17: Regional Risk Factors for COVID-19

    Regional Risk Factors for COVID-19 Virus Exposure Demographics Tourism Global Interconnectedness Finance/Investment Commodities (Trade/Travel) April 2020 17

  18. Slide 18: Large Coastal Urban Areas Are Hit Hardest

    Large Coastal Urban Areas Are Hit Hardest Weighted avg Z-score across rankings, 0 = metro area average >0.25 0 to <0.25 -0.25 to <0 <-0.25 Source: Moody’s Analytics April 2020 18

  19. Slide 19: Active Listings Collapse Across Major Metros

    Active Listings Collapse Across Major Metros Active listing count, % yr ago Seattle Providence Riverside Denver Cincinnati Philadelphia San Jose San Diego Milwaukee Phoenix -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% Sources: Realtor.com, Moody’s Analytics April 2020 19

  20. Slide 20: U.S. Real Estate Prices Slump

    U.S. Real Estate Prices Slump Index: 2019Q4 = 100, April baseline 105 100 FHFA HPI 95 90 85 Moody’s Analytics CPPI 80 75 19 20 21 22 Sources: FHFA, Moody’s Analytics April 2020 20

  21. Slide 21: Home Prices Could Fall Fast…

    Home Prices Could Fall Fast… FHFA all-transactions index forecasts from March 2020 V2 vintage, % year ago 15 10 5 0 Baseline -5 Scenario 1 Scenario 3 -10 Scenario 4 -15 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 Sources: BEA, Moody’s Analytics April 2020 21

  22. Slide 22: …As Commercial Properties Are Hit From All Sides

    …As Commercial Properties Are Hit From All Sides Commercial property price index, % yr ago 20 10 0 -10 Baseline -20 Scenario 1 Scenario 3 -30 Scenario 4 -40 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 Sources: Reis, Moody’s Analytics April 2020 22

  23. Slide 23: House Prices Slump…Foreclosures Increase

    House Prices Slump…Foreclosures Increase April baseline forecast 120 2,500 Foreclosures started FHFA HPI 110 ths., SA, (R) Index: 2020Q1 = 100, (L) 2,000 100 1,500 90 1,000 80 70 500 60 0 05 10 15 20 25 Sources: FHFA, MBA, Moody’s Analytics April 2020 23

  24. Slide 24: Price Declines Vary Throughout the Country

    Price Declines Vary Throughout the Country Baseline forecast FHFA purchase-only index for 2021Q1, % year ago Sources: FHFA, Moody’s Analytics April 2020 24

  25. Slide 25: Known Unknowns

    3 Known Unknowns

  26. Slide 26: U.S. New Daily Cases Hovering Around 30,000

    U.S. New Daily Cases Hovering Around 30,000 Number of confirmed COVID-19 cases 40,000 1,000,000 35,000 # Daily Cases (L) 900,000 # Cumulative Cases (R ) 800,000 30,000 700,000 25,000 600,000 20,000 500,000 15,000 400,000 300,000 10,000 200,000 5,000 100,000 0 0 03-Apr 06-Apr 09-Apr 12-Apr 15-Apr 18-

  27. Slide 27: Growth Rate of COVID Cases Falling

    Growth Rate of COVID Cases Falling Daily growth of COVID-19 cases, days since 100 confirmed cases, % 3-day MA 60% Italy S Korea EU US 50% Day 1 Dates Italy Feb 23 40% S Korea Feb 20 US March 3 30% EU Feb 23 20% 10% 0% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56

  28. Slide 28: Epidemiological Assumptions

    Epidemiological Assumptions S1 Scenario Baseline Forecast S3 Scenario • <1 mil confirmed U.S. infections • 1-3 mil confirmed U.S. infections • 5-6 mil confirmed U.S. infections • New infections peak in April • New infections peak in May • New infections peak in June • 5-6% case fatality rate* • 7-11

  29. Slide 29: Federal Reserve Must Shore Up the Firewall

    Federal Reserve Must Shore Up the Firewall Corporate debt outstanding by rating, $ bil 8,000 7,000 C B Ba Baa A Aa Aaa 6,000 5,000 4,000 3,000 2,000 1,000 0 95 00 05 10 15 Sources: Moody’s Investor Service, Moody’s Analytics April 2020 29

  30. Slide 30: Up, Up and Away

    Up, Up and Away Assets held outright on the Fed’s balance sheet, $ tril 10 9 8 7 6 5 4 3 2 1 0 03 05 07 09 11 13 15 17 19 21 23 25 Source: Moody’s Analytics April 2020 30

  31. Slide 31: Lawmakers Act, But Need to Do More

    Lawmakers Act, But Need to Do More Cost of Coronavirus Aid, Relief, & Economic Security (CARES) Act $180 Bil $377 Bil $290 Bil Health Small Business One-time $510 Bil Loans & Grants Checks $150 Bil $72 Bil Loans & Loan Aid to States Transp. Grants Guarantees for Large Firms & Governments $32 Bil $28

  32. Slide 32: Running Out of Fiscal Space

    Running Out of Fiscal Space Sovereign borrowing capacity given current yields, projected output growth and primary balance 450 Circle size=Real GDP, US$ 400 Y-axis: Fiscal space 350 China X-axis: Debt-to-GDP ratio 300 Canada As of 2020Q1 (ex COVID-19 policies) U.S. 250 200 Russia Spain 150 Italy 100

  33. Slide 33: U.S. Risk Matrix

    U.S. Risk Matrix Source: Moody’s Analytics April 2020 33

  34. Slide 34: Questions & Answers

    Questions & Answers Questions? Contact us at help@economy.com April 2020 34

  35. Slide 35: Moody's Webinars

    Coronavirus Live events.moodys.io/coronavirus coronavirus@moodys.com Moody’s Full webinars schedule Webinars events.moodys.io events.emea@moodys.com April 2020 35

  36. Slide 36: We Want to Hear From You!

    We Want to Hear From You! Please complete our survey A survey will appear on your screen at the end of our presentation. Please take a few moments to complete it and let us know how we can continue to improve. April 2020 36

  37. Slide 37: Contact Us: Economics & Business Analytics Offices

    Contact Us: Economics & Business Analytics Offices West Chester, EBA-HQ London Prague Singapore +1.610.235.5299 +44.20.7772.5454 +420.22.422.2929 +65.6511.4400 121 North Walnut Street, Suite 500 One Canada Square Washingtonova 17 6 Shenton Way West Chester PA 19380 Canary Wharf 110 00 Prague 1 #14-0

  38. Slide 38: April 2020

    © 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liabilit

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