The World
Protection measures against the coronavirus continued to tear through the employment ranks, with 5.245 million more Americans filing first-time claims for unemployment insurance last week, the Labor Department reported Thursday.
That brings the crisis total to just over 22 million, nearly wiping out all the job gains since the Great Recession. The total was a bit worse than the 5 million expected from economists surveyed by Dow Jones. Though the most recent count, for the week ended April 11, represented a drop from the previous two weeks, it showed that the damage to the U.S. labor market remains profound. (CNBC)
The $349 billion cap for small business loans for the coronavirus stimulus was reached Thursday, taking less than two weeks to run out. While it's a sign that more than 1.6 million small businesses (and some larger ones) will eventually get desperately needed cash, it's now officially a sign that more is needed. Meanwhile, glitches prevent $1,200 stimulus checks from reaching millions of Americans. Several million people who filed their taxes via H&R Block, TurboTax and other popular services were unable to get their payments. Some parents reported they didn’t get the $500 promised for their dependent children. (Reuters, Washington Post)
Total industrial production fell 5.4 percent in March, as the COVID-19 (coronavirus disease 2019) pandemic led many factories to suspend operations late in the month. Manufacturing output fell 6.3 percent; most major industries posted decreases, with the largest decline registered by motor vehicles and parts. The decreases for total industrial production and for manufacturing were their largest since January 1946 and February 1946, respectively. Further, the Fed’s Beige Book added that all Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months. (U.S. Federal Reserve, Beige Book)
China’s central bank has cut one of its most important lending rates to a record low as Beijing seeks cushion the hit to the economy from the coronavirus pandemic.
The move by the People’s Bank of China will inject RMB100bn ($14.2bn) into the country’s financial system and comes ahead of its release first-quarter gross domestic product figures on Friday. Analysts expect the data to reveal the country’s first official year-on-year decline in economic output since 1976. Meanwhile, the Philippine central bank cut its benchmark interest rate in an unscheduled move, seeking to keep the economy afloat amid the coronavirus outbreak. (Financial Times, Bloomberg)
Japanese Prime Minister Shinzo Abe on Thursday expanded the state of emergency to the entire country. Government wants people to stay at home as coronavirus clusters expand. (Nikkei Asian Review)
Finance officials from the Group of 20 major economies agreed on Wednesday to suspend debt service payments for the world’s poorest countries through the end of the year, a move quickly matched by a group of hundreds of private creditors. The actions to freeze both principal repayments and interest payments will free up more than $20 billion for the countries. (Reuters)
Popular support for nearly every head of government has risen during this crisis: President Emmanuel Macron, never very popular, has touched his highest approval ratings in France since the onset of the coronavirus. As Italy has been devastated, Prime Minister Giuseppe Conte has hit a remarkable 71 percent, up 27 points. Even in Britain, where Prime Minister Boris Johnson waffled over a strong response, then became seriously ill himself, the government is the most popular in decades. The question is whether that will last once the crisis eases, criticism mounts and normal politics resumes. Usually, it does not last long. (New York Times)
Protests grow demanding that businesses open:
Michigan: Demonstrators drove thousands of vehicles — many draped with protest signs — to Michigan's state Capitol on Wednesday, loudly protesting Gov. Gretchen Whitmer's stay-at-home order intended to fight the coronavirus pandemic. Further, with roughly a quarter of its workforce seeking unemployment benefits, virus unleashes economic havoc in Michigan. Meanwhile, Michigan residents are suing Governor Whitmer over coronavirus pandemic orders. (Lansing State Journal, Washington Post, Reuters)
Kentucky: They came with signs denouncing “King Beshear.” They came with a microphone, a speaker and a shofar. They talked of “herd immunity” and the flu and their rights as Americans. They eventually bunched up as they successfully disrupted Gov. Andy Beshear’s 5 p.m. coronavirus news conference by shouting outside the Capitol briefing room. (Lexington Herald Leader)
Illinois: The coronavirus outbreak, which has yet to touch some areas of the state, has become the most recent flashpoint, inspiring both serious promises to reintroduce secession on the ballot and Facebook memes that call for building a wall around Chicago. The secession conversation is a dramatic expression of the much more widespread — and potentially dangerous — frustration with a sweeping governmental response to the pandemic that many question in areas where some homes sit acres apart and people predominantly travel by car, not public transportation. (ProPublica Illinois)
President Trump’s attempt to enlist corporate executives in a push to reopen parts of society amid the coronavirus pandemic got off to a rocky start Wednesday, with some business leaders complaining the effort was haphazard and warning that more testing needs to be in place before restrictions are lifted. (Washington Post)
The Trump administration plans to buy milk and meat from U.S. farmers as part of an initial $15.5 billion effort to help them weather the impact of the coronavirus outbreak, Agriculture Secretary Sonny Perdue said on Wednesday. The decision comes amid rising pressure from the U.S. farm lobby for government purchases as growers and ranchers struggle to get their goods to market because of disruptions caused by the pandemic, forcing some of them to throw out their supplies. (Reuters)
UnitedHealth Group, parent company of the nation's largest private insurer, disclosed that members struggling to pay premiums and now using a payment plan or grace period represents 3% of the company's entire premium base, up from just 0.4% in a typical month. (HealthcareDive)
Neiman Marcus Group Inc. is the latest retailer to skip a payment owed to bondholders as the coronavirus pandemic keeps stores closed, setting a clock ticking for the company to restructure its debt or file for bankruptcy. Further: Electronics retailer Best Buy said it is furloughing 51,000 of its hourly store employees in the U.S. (One piece of good news: Best Buy’s online sales are up 250% since the company switched to curbside pickup of orders on March 22.). Opendoor, the SoftBank-backed home-buying startup, laid off 600 people, or 35% of its workforce. Equity management company Carta is laying off 16% of its workforce. Google is slowing hiring for the rest of the year, CEO Sundar Pichai told staff. Senior staff at the Financial Times are taking a 10% pay cut. Meanwhile, United cuts May flights by 90%, tells employees to brace for job cuts. (Wall Street Journal, The Information, Reuters)
India cannot test the majority of its 1.3 billion people, so the country has sent thousands of public-health workers into villages, towns and cities to trace and quarantine those who might have had contact with infected people. Epidemiologists say India’s approach could be relevant for countries facing similar challenges — but widespread testing is needed to suppress the virus, or cases will be missed. (Nature)
Israel President Reuven Rivlin called time on Blue and White leader Benny Gantz’s efforts to form a government, bypassed Prime Minister Benjamin Netanyahu, and gave the mandate to form a coalition to the Knesset, on Thursday morning. The president decided that Gantz and Netanyahu were not sufficiently close to forming the long-discussed national-unity government, and ostensibly reasoned that shortening the timeline for a coalition agreement would increase the pressure on both sides to compromise. (Jerusalem Post)
Joint Chiefs Chairman Gen. Mark Milley on Tuesday said that the U.S. intelligence community has looked “hard” into rumors that the coronavirus had its origins in a Chinese biolab, not an open-air market as is widely believed. “There’s a lot of rumor and speculation in a wide variety of media, blog sites, etc.,” Milley said. “It should be no surprise to you that we have taken a keen interest in that, and we have had a lot of intelligence take a hard look at that.” He continued: “At this point it’s inconclusive, although the weight of evidence seems to indicate natural, but we do not know for sure,” Milley said. Fox News reports that sources believe coronavirus outbreak originated in Wuhan lab as part of China's efforts to compete with US. (Defense One, Fox News)
Finance
Earnings news:
Money management giant BlackRock Inc.’s profits fell by 23% in the first quarter, as a global pandemic and waves of selling gripped the investment world. Investors added a net $35 billion in new money to the firm’s coffers, down by about half from the prior-year period. Most of the money coming into the firm went to cash, a sign heightened investor caution is driving money into less profitable businesses for the investment industry. (Wall Street Journal)
Morgan Stanley on Thursday posted first-quarter profit that missed analysts’ expectations and warned that a sole bright spot for the industry, robust trading results, may prove to be fleeting. The bank said earnings dropped 30% to $1.7 billion, or $1.01 a share, compared with the $1.14 estimate of analysts surveyed by Refinitiv. Companywide revenue of $9.49 billion was also below the $9.73 billion estimate. Morgan Stanley shares dipped 1.3% in premarket trading. (CNBC)
Big banks’ trading desks posted their strongest results in years during the first three months of 2020—when the deepening coronavirus crisis wreaked havoc on the markets—buying and selling trillions of dollars worth of stocks and bonds, commodities and interest-rate products. “March was the most extraordinary month of my career,” said Jim Esposito, a 25-year veteran of Goldman and co-head of its trading arm. “We had both a spike in client volumes and spike in volatility. That’s a very potent combination that had been missing for quite some time.” (Wall Street Journal)
Banks are bracing for increased credit card losses as jobless and underemployed consumers lose the opportunity to repay revolving debt at a better time. The results reflect dramatic changes in customer behavior that occurred when the US closed in March – including a dramatic reduction in consumer spending. Perhaps the most striking report on the consumer downturn came from Citigroup, whose US customers spent $ 450 billion on the bank’s credit cards last year. According to Mark Mason, chief financial officer, card spending fell “by about 30%” in the last week of March, with categories like food service and discretionary retailing falling much more. (FR24 News)
Abnormal moves in currencies shortly before the calculation of daily benchmarks are bumping up costs for investors and could even suggest that high-speed traders are trying to manipulate exchange rates, according to Raidne, a market surveillance company. (TechnoCodex)
The pandemic provides a window of opportunity for private equity investors: As stay-at-home orders are taking their toll on the economy and businesses are in need of cash, the private equity industry could be well positioned to pick up better priced assets in the backwaters of the crisis. (Private Equity Wire)
Ad giant Publicis warns of unprecedented spending pullback: The head of No. 3 ad company says the sector is at beginning of annual downturn likely worse than 10% decline in 2009. (Wall Street Journal)
From the Washington Post:
Technology
Companies world-wide are diverting capital spending from information-technology hardware to cloud services, artificial intelligence and other tools that hold the promise of cutting costs and boosting revenue, according to research group International Data Corp. Overall corporate spending on enterprise technology is expected to decline this year, as companies slash IT budgets to cope with a downturn in business sparked by the coronavirus pandemic. (Wall Street Journal)
The Covid-19 pandemic is ushering in a new era of digital surveillance and rewiring the world’s sensibilities about data privacy. Governments are imposing new digital surveillance tools to track and monitor individuals. Many citizens have welcomed tracking technology intended to bolster defenses against the novel coronavirus. Yet some privacy advocates are wary, concerned that governments might not be inclined to unwind such practices after the health emergency has passed. Authorities in Asia, where the virus first emerged, have led the way. Meanwhile, Google pressured by Brussels over privacy in coronavirus tracing apps. (Wall Street Journal, Financial Times)
Verizon signed a deal Thursday to acquire BlueJeans, a business-focused video conferencing service that competes with Zoom and Microsoft Teams. The deal comes as the coronavirus pandemic has led to lockdowns and shelter-in-place orders -- meaning many people are now working from home and in need of video conferencing options. (CNET)
Digital payments platform Stripe has raised $600 million in new funding and is now valued at nearly $36 billion, co-founder and president John Collison tells Axios. (Axios)
FDA's proposed approach to regulating artificial intelligence and machine learning misses an important point. Researchers from Harvard University and Europe-based INSEAD business school call for FDA to stop evaluating individual AI/ML products in favor of assessing systems. The case is based on a belief that the real-world performance of AI/ML products will vary too much for a narrow focus on the technology to be effective. Instead, the researchers want FDA to factor in wider issues, such as physician training, and potentially limit authorizations of AI/ML products to specific hospitals. (HealthcareDive)
Alongside Zoom Video Communications Inc., Houseparty may be the product that most defines the current moment, when some 300 million Americans have been urged to stay home to help mitigate the spread of Covid-19. Houseparty’s free mobile and desktop apps let people video chat with friends or family, similar to Zoom or Apple Inc.’s FaceTime. The company doesn’t disclose total user numbers, but it has been the most-downloaded social networking app in Apple’s U.S. App Store every day since March 20—ahead of Facebook Inc.’s trio of Facebook, Messenger and WhatsApp, according to App Annie. (Bloomberg)
Spurred by an existential threat to society, Silicon Valley startups—and biotech companies in general—are pivoting en masse to address Covid-19. The early stage startup accelerator Y Combinator is touting a list of more than 25 “bio or health care” companies that are addressing the crisis in some fashion. DCVC, a venture capital firm that specializes in deploying what it calls machine learning “deep tech” on a wide variety of fronts, has investments in nearly a dozen more health-care-related companies which could potentially help with Covid 19. (Wired)
The Defense Department’s inspector general said it was unable to determine whether White House influence affected the award of the Pentagon’s multibillion-dollar Joint Enterprise Defense Infrastructure cloud contract because several officials asserted a “presidential communications privilege.” The department selected Microsoft in October over Amazon Web Services, which is challenging the decision in an ongoing federal court case. (Defense One)
Grocery delivery, with its one-click ordering and “contactless” drop-offs, was supposed to be the ultimate pandemic convenience. But the system is cracking under the weight of surging demand, and an incommensurate supply of workers and groceries. Shoppers throughout the country are reporting weeks-long waits on platforms like Instacart, Shipt, Peapod and Amazon’s Prime Now, fueling ongoing frustrations and questions about how, or when, the outlook might improve. (Washington Post)
Smart Links
3 in 4 college students who secured internships or jobs after college have since seen them canceled or thrown into uncertainty. (Business Insider)
Carnival executives knew they had a virus problem, but kept the party going. (Bloomberg)
Los Angeles may hold off on allowing big gatherings such as concerts and sporting events until 2021. (Los Angeles Times)
COVID-19 may not go away in warmer weather as do colds. (Harvard Gazette)
Schools Will Look Very Different When They Reopen, Says California Governor. (EdSurge)
Long spaceflights affect astronaut brain volume. (Science Daily)
As humans stay indoors, wild animals take back the streets. (Washington Post)