Coronavirus Economic News 25April 2020

Written by rjs, MarketWatch 666

The news posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. This includes both monetary policy and fiscal measures enacted this week, the politics surrounding that, plus financial regulations that were eased to grease the economic skids. The second part of this article reviews some economic impacts of businesses closing and jobs lost, both US and overseas. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) Articles are primarily related to the U.S. political and economic impacts. News items about epidemiology and other medical news for the virus are reported in a companion article.

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Fed Cuts Pace Of Treasury QE To Just $10 Billion Per Day – From an initial $75 billion per day when the Fed announced the launch of Unlimited QE, the US central bank first reduced its daily buying to $60 billion per day, then three weeks ago announced another ‘taper’ in its bond-buying program to $50 billion per day, which was followed by a reduction to 30 billion per day, and then last week, this amount was again cut in half to $15 billion per day. Now, the Fed has slashed its daily POMO by another 33%, to “only” $10BN per day. Here is the full schedule for the week ahead. Additionally, the Fed will also taper its MBS buying from $15 billion to $8 billion on average in in MBS per day next week:

• Mon: $8.213BN from $10.709BN last Monday
• Tue: $7.68BN from $8.938BN last Tuesday
• Wed: $8.213BN from $10.709BN last Wednesday
• Thur: $7.68BN from $8.938BN last Thursday
• Fri: $8.213BN from $10.7019 last Friday

The chart below summarizes all the Fed Treasury and MBS buying completed and scheduled since the relaunch of QE on March 13: […] So, in aggregate, The Fed will buy a total of $90 billion of MBS/TSYs next week, down from $125 billion but still vastly more on a weekly basis than the largest QE programs monthly totals before this crisis, if well below the $625 billion in purchases conducted in the week starting March 23, when the financial system was once again on the verge of collapse and only the Fed could bail it out… just don’t call it a bail out because nobody could have possibly anticipated an economic shock especially after banks repurchased trillions in their own stock in the past decade.

Fed Massively Tapered QE-4. Hasn’t Bought Any Junk Bonds, Was Just Jawboning -Wolf Richter -Since the Fed announced its market bailouts and interventions on March 15, it has printed and handed to Wall Street $2.06 trillion. But here is the thing: This was front-loaded, and over the past two weeks, it has cut its bailouts in half, and it has stopped lending new funds to its SPVs that were expected to buy all manner of securities, including equities, junk bonds, and old bicycles. Those loan amounts haven’t moved in four weeks. What it has bought were Treasury securities and mortgage-backed securities – and it’s cutting back on those too. Total assets on the Fed’s balance sheet rose by $285 billion during the week through April 15, reported Thursday afternoon, to $6.37 trillion. Over the past five weeks, including the partial bailout-week which started March 16 and ended March 18, total assets increased by these amounts – note the big taper from $586 billion and $557 billion early on to $287 billion in the latest week:

• $356 billion (Mar 18, partial bailout week started Mar 16)
• $586 billion (Mar 25)
• $557 billion (Apr 1)
• $272 billion (Apr 8)
• $285 billion (Apr 15)

The $6.37 trillion of assets on the Fed’s balance sheet are mostly composed of Treasury securities, mortgage-backed securities (MBS), repurchase agreements (repos), “foreign central bank liquidity swaps,” and “loans” to its Special Purpose Vehicles (SPVs). We’ll go through them one at a time. The Fed added $154 billion in Treasury securities during the week, down 47% from the $293 billion it had added the week before, and down 57% from the $362 billion it had added two week ago. This is a major factor in the Big Taper of QE-4. The sharp reduction in purchases of Treasuries confirms for now that the Fed is sticking to its announcement that it would drastically cut QE after the initial blast.Fed Chair Jerome Powell in a webcast on April 10 said that the Fed would pack away its emergency tools once “private markets and institutions are once again able to perform their vital functions of channeling credit and supporting economic growth.” Whatever that means.

“Chicago Fed National Activity Index Suggests Economic Growth Decreased Substantially in March” – From the Chicago Fed: Chicago Fed National Activity Index Suggests Economic Growth Decreased Substantially in March Led by declines in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to – 4.19 in March from +0.06 in February. All four broad categories of indicators used to construct the index made negative contributions in March, and three of the four categories decreased from February. The index’s three-month moving average, CFNAI-MA3, decreased to – 1.47 in March from – 0.20 in February. Following a period of economic expansion,an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below – 0.70. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

How Far Will the U.S. Economy Plunge During Lockdown? – Wolf Richter – “Three times deeper than the Great Recession?” —No one has ever been through an economy where enormous shifts have occurred, from one day to the next, shutting down part of the economy but also generating sectors that are vastly more vibrant than ever before. Monthly or quarterly economic indicators leave us in the dark because they lag too far behind and are at the moment largely useless. What we need is high-frequency data – daily and weekly that track this shifting economy in near-real time. For example, there has been an enormous boom in ecommerce – but we won’t get ecommerce data for Q1 until mid-May and for Q2 until August. Best Buy reported last week that its online sales had surged by 250% but that it would furlough 51,000 hourly store employees as stores were closed to customers, allowing only for curbside pickup. That duality that is now widespread impacts the economy in strange ways. Grocery store and supermarket sales – which are normally the epitome of slow and steady growth tied to inflation and population growth – are suddenly booming. Kroger reported a 30% surge in “identical retail supermarket sales without fuel.” Anything having to do with working-at-home, including hardware sales, is booming. Everything and anything that is online is booming – as are the sectors that make it all work, including delivery services. And there are other sectors that are suddenly hot.But other parts of the economy have essentially collapsed, with near-zero revenues, such as sit-down restaurants, sports & entertainment events, or the entire travel and accommodations industry, including airlines and hotels. Some manufacturing plants are operating, but many others are not. Much of the construction industry has shut down. Housing and auto sales are still ongoing, but at far lower levels. Supply chains are misaligned, insufficient for the surging activity at supermarkets and ecommerce, but useless for commercial venues such as restaurants and schools that have been shut down.Agriculture is operating mostly. Oil drilling has collapsed because of the demand for oil has collapsed, and the entire supply chain to the oil-and-gas sector, including the equipment manufacturing sector, and the services supporting it all have ground to a halt.The New York Fed’s Weekly Economic Index (WEI), released today for the week ending April 18, is based on ten daily and weekly indicators – “timely and relevant high-frequency data,” as it says – of “real economic activity.” These indicators cover consumer behavior, the labor market, and production. The researchers putting the index together have scaled the index “to align with the four-quarter GDP growth rate.” The index has plunged over the past five weeks to -10.95%. If this reading persists for the entire second quarter, then the year-over-year GDP plunge in Q2 is expected to be around -11%:

How Bad Might It Get? Think the Great Depression – Noah Smith – As the economic carnage from the coronavirus pandemic continues, a long-forbidden word is starting to creep onto people’s lips: “depression.” In the 19th and early 20th centuries, there was no commonly accepted word for a slowdown in the economy. “Panic” was the term typically used for financial crises, while long slumps were commonly called depressions. Presidents such as James Monroe and Calvin Coolidge used the d-word to describe downturns during their administrations. There was even a slump in the 1870s that many referred to as the “Great Depression” at the time. But then 1929 came, and there was no longer any doubt as to which depression deserved the modifier “great.” The crash hit the entire world, reducing economic output 15%. And it ground on mercilessly for years — by 1933, unemployment in the U.S. was at 25%. The Great Depression was so severe that governments permanently expanded their role in the economy. Since the 1930s, economists and commentators have used the word “recession” to describe economic slumps, and none of them have been nearly as severe as the Great Depression. The only time this convention was really challenged was after the financial crisis of 2008. The global nature of the downturn, sparked by troubles in the financial industry, led many to draw parallels with the Great Depression. In the end, the term “Great Recession” stuck. The economic damage from coronavirus, however, threatens to dwarf the 2008 downturn. More than 22 million people, or about 13% of the U.S. labor force, have already filed for unemployment: Current forecasts are for the unemployment rate to reach 20% this month. Some predict it could go as high as 30% this year. That would eclipse even the Great Depression in severity. So if severity alone is the criteria for a depression, this one will certainly deserve the moniker. President Ronald Reagan once quipped that “recession is when your neighbor loses his job; depression is when you lose yours.” There will be few people whose economic livelihoods are not hurt by the coronavirus.

Trump Instructs U.S. Navy To Fire On Iranian Boats If Harassed : NPR – President Trump says the U.S. Navy should fire on Iranian boats if they continue to harass U.S. warships in the Gulf, a move that raises the prospect of open hostilities between the two rivals. The president’s Wednesday morning tweet came shortly after Iran announced it had successfully launched a military satellite into orbit for the first time. With the U.S. and Iran both battling to control a coronavirus outbreak at home, the ongoing friction between the two countries had receded from the headlines. But Wednesday’s developments point to an escalation of tensions that have been building in recent days. Last week, U.S. military ships were in the northern Persian Gulf for exercises. The U.S. warships were in international waters, though relatively close to Iran. Iran sent small boats, known as “fast boats,” toward the American warships, with one coming as close as 10 yards, according to the Navy, which released a video. The Pentagon accused Iran of sending 11 fast boats to make “dangerous and harassing approaches” to six American warships. These kinds of standoffs in the Gulf have been taking place for many years. The U.S. and Iran usually observe unwritten rules and the confrontations rarely escalate into actual hostilities, with occasional exceptions. However, Trump’s instruction for the Navy to shoot Iranian boats raises the ante.

Coronavirus Drives Barrage of New Lobbying Activity – By Wolf Richter – When the $2.2 trillion bailout package was being put together by Congress in all haste in March, a mad scramble broke out over who would get what. Part of this deal was the $349 billion Paycheck Protection Program for “small businesses” – which can be, as we now know, a publicly traded company with over 5,700 employees, or a KKR-backed power company that, upon getting the loan, files for prepackaged Chapter 11 bankruptcy.And so, the program already ran out of money as of Thursday, according to the SBA. “Notice: Lapse in Appropriations. The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding,” it said on its website.The program dispersed 1.66 million loans, according to the SBA’s tally. There were 30.2 million small businesses in the US in 2019, so about 5.5% got loans. What’s going to happen to the remaining 94.5% of the small businesses?Congress is contemplating a $250-billion expansion of the program that would cover maybe another 4% of small businesses. In other words, most small businesses aren’t going to get any of it. A small business under the plan is a business with 500 employees or fewer. Loans were capped at $10 million. But wait… 4,412 loans were issued in amounts larger than $5 million each. And we already know which company with 5,700 employees got $20 million. Yup, a restaurant chain, because they and hotel chains were exempted from the employee limit. Restaurants and hotels got their own limit: 500 employees per location. They accomplished this through magnificent lobbying efforts. Ruth’s Chris Steakhouse with about 5,700 employees at the end of last year and 159 restaurants across the US – disclosed in an SEC filing on April 13 that on April 7, four days after the SBA opened the filing process and as the system was bogged down, it obtained a PPP loan of $20 million, spread over two loans of $10 million each for two of its entities. JPMorgan Chase was the lender. If the company follows the rules, this $20 million will be forgiven. And then there is the curious case of Longview Power LLC, in which KKR, one of the big private equity firms, has a 40% stake as a result of Longview’s bankruptcy in 2015. Longview owns a 700-megawatt coal-fired power plant in West Virginia and has about 140 employees. It was approved for a PPP loan last Friday, and on Tuesday it announced that it filed for Chapter 11 bankruptcy. It was in these bankruptcy filing documents that the PPP loan came to light, and was reported by the Wall Street Journal. Stockholders, including KKR, and holders of $44 million in unsecured bonds will be wiped out. Senior secured lenders will get 90% of the restructured company’s equity and agreed to provide $40 million in new funding. If the company follows the rules of the PPP loan, it will be forgiven and turn into pure profit for then new owners.

Emergency Grants to Small Businesses Average $4,360, Data Shows – WSJ – The federal government has issued emergency grants totaling $3.29 billion to 755,476 small businesses across the country, along with loans worth $5.57 billion to nearly 27,000 businesses, according to data released this week.The grants have averaged $4,360, according to a Wall Street Journal analysis of new data released by the Small Business Administration. The average size of the approved loans was $206,801, according to the analysis, similar to the average $206,022 approved under the Paycheck Protection Program.The grants and loans were made under the SBA’s Economic Injury Disaster Loan and EIDL Advance programs, which are separate from the larger $350 billion Paycheck Protection Program that provides forgivable loans. The emergency grants were seen as a short-term solution that would provide as much as $10,000 for businesses applying for loans. But demand has greatly outstripped supply, with SBA officials saying four million businesses have applied to the EIDL programs. New applications have been suspended due to oversubscription.States that had experienced early confirmed cases of the coronavirus infection, including Washington and California, were among the largest beneficiaries of the emergency-loan program, which started to cover the coronavirus impact in early March.Under the PPP a greater proportion of businesses in Midwest states received loans than elsewhere in the country, even though larger-population states received more money overall.With millions of business owners waiting for government assistance to survive the pandemic, the Senate on Tuesday approved additional funds for small-business relief, including $310 billion for the PPP and $60 billion for the EIDL programs.

Ruth’s Chris, Shake Shack, big hotel owners get millions in small business funds – The federal government gave national hotel and restaurant chains millions of dollars in grants before the $349 billion program ran out of money Thursday, leading to a backlash that prompted one company to give the money back and a Republican senator to say that “millions of dollars are being wasted.”Thousands of traditional small businesses were unable to get funding from the program before it ran dry. As Congress and the White House near a deal to add an additional $310 billion to the program, some are calling for additional oversight and rule changes to prevent bigger chains from accepting any more money.Ruth’s Chris Steak House, a chain that has 150 locations and is valued at $250 million, reported receiving $20 million in funding from the small business portion of the economic stimulus legislation called the Paycheck Protection Program. The Potbelly chain of sandwich shops, which has more than 400 locations and a value of $89 million, reported receiving $10 million last week. Shake Shack, a $1.6 billion burger-and-fries chain based in New York City, received $10 million. After complaints from small business advocates when the fund went dry, company founder Danny Meyer and chief executive Randy Garutti announced Sunday evening that they would return the money. They said they had no idea that the program would run out of money so quickly and that they understood the uproar.Treasury Secretary Steven Mnuchin, who has tried to defend the program in recent days, wrote on Twitter that he was “glad to see” Shake Shack return the money.In all, more than 70 publicly traded companies have reported receiving money from the program, according to filings with the Securities and Exchange Commission. Sen. Rick Scott (R-Fla.) criticized the program, saying that “companies that are not being harmed at all by the coronavirus crisis have the ability to receive taxpayer-funded loans that can be forgiven.”

Here are the largest public companies taking payroll loans meant for small businesses – Hundreds of millions of dollars of Paycheck Protection Program emergency funding has been claimed by large, publicly traded companies, new research published by Morgan Stanley shows. In fact, the U.S. government has allocated at least $243.4 million of the total $349 billion to publicly traded companies, the firm said. The PPP was designed to help the nation’s smallest, mom-and-pop shops keep employees on payroll and prevent mass layoffs across the country amid the coronavirus pandemic. But the research shows that several of the companies that have received aid have market values well in excess of $100 million, including DMC Global ($405 million), Wave Life Sciences ($286 million) and Fiesta Restaurant Group ($189 million). Fiesta, which employs more than 10,000 people, according to its last reported annual number, received a PPP loan of $10 million, Morgan Stanley’s data showed. At least 75 companies that have received the aid were publicly traded and received a combined $300 million in low-interest, taxpayer-backed loans, according to a separate report published by The Associated Press. “I think you’ve seen some pretty shameful acts by some large companies to take advantage of the system,” said Howard Schultz, former Starbucks chairman and CEO. Instead, the government should act “as a backstop for the banks to give every small business and every independent restaurant a bridge to the vaccine. And that is the money and the resources to make it through.” Statistics released by the Small Business Administration last week showed that 4,400 of the approved loans exceeded $5 million. The size of the typical loan nationally was $206,000, according to the SBA report released April 16. The SBA awarded the plurality of PPP dollars (13.12%) to the construction industry. Professional, scientific and technical services received 12.65%, manufacturing received 11.96%, health care received 11.65% and accommodation and food services received 8.9%. Congress approved the first-come-first-served PPP in March as part of the massive $2.2 trillion CARES Act, which at the time promised to ease some of the financial burden for many of the nation’s smallest business owners. But the program ran out of money on Thursday, when the SBA announced that it was “unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.”

Small-Business Loans: Strip Clubs, Marijuana Stores Need Not Apply – WSJ – Whatever they are called, businesses that “present live performances of a prurient sexual nature” are among the many that don’t qualify for the Small Business Administration’s Paycheck Protection Program, according to SBA regulations. The agency makes loans to small firms and provides other assistance. Its PPP program was initially funded at about $350 billion and has already run out of money, but legislation approved by the Senate and set for House vote Thursday would add $320 billion more for the program. Some of the exclusions were inherited by the SBA when it was founded in 1953 from federal agencies that created the provisions as long as a century ago. The exclusions mostly fall into three categories: enterprises such as strip clubs and marijuana businesses that are considered morally questionable by some; those viewed as speculative, including oil wildcatting and finance companies; and some that may be a little bit of both, like casinos. Nearly all the businesses cut out of the program are lobbying or suing to get cut in – including the lobbying industry itself, which has long been ineligible for SBA loans. An SBA spokeswoman says the agency tries to offer loans “in a compliant and consistent fashion,” but didn’t comment on any specific exclusion. Government provisions against loans to speculative businesses reach back to the early 20th century, says Gary Richardson, an economic historian at the University of California, Irvine, and have been added to most every lending institution created afterward, including the Federal Reserve. At the SBA, that principle spurred rules barring loans to banks, finance companies, wildcatters and “pyramid sale distribution plans.” Research funding is also barred as too unpredictable. For issues with a moral component, the SBA employs several lawyers to decide whether loan applicants cross the line into activities of a “prurient sexual nature” or that involve “indoctrinating religion.” Establishments that hire women for their looks and require them to wear skimpy outfits probably wouldn’t pass SBA muster, says Jane Butler, who headed the agency’s main lending programs in the 1990s and is now executive vice president of the National Association of Government Guaranteed Lenders, a trade group of SBA lenders. That’s because of discriminatory hiring practices, not prurience. “If they only hire women of a particular physique, that’s not appropriate for federal lending,” she said.

Small-Business Loan Fund May Run Dry Again. Is There Another Way? – WSJ – As Congress races to provide a fresh injection of aid to small businesses, lawmakers are contemplating a simpler, faster way to supply the next round of relief. One idea that is gaining momentum: Put the existing payroll tax system into reverse. The federal government could deliver a quick subsidy to employers by telling them to stop sending in money withheld from workers’ paychecks. That could be a more efficient way of subsidizing the salaries of workers idled by the coronavirus pandemic than the Paycheck Protection Program created by Congress last month, supporters say. That popular program, run by the Small Business Administration, requires employers to apply for loans through banks and wait for approval before money is delivered. Employers who qualify for the federal wage subsidy would just stop sending withheld taxes to the government while paying employees who aren’t working. Companies would also be able to keep the income and payroll taxes they would otherwise submit on behalf of their entire workforce. The wage subsidy could be set to cover a majority of wages, even exceeding all withheld taxes, so in some cases the Internal Revenue Service could make additional payments to employers to provide them with the full amount. While the tax credit idea resembles the broad payroll tax suspension President Trump has sought, it would deliver larger subsidies to more targeted groups. Mr. Trump’s idea would cut the payroll tax itself, which amounts to up to 15.3% of wages and would reduce the overall cost of labor. This idea instead might offer little or nothing in cases where people are still working, but could offer significantly larger subsidies for employers who keep people on the payroll at full wages for little or no work. The idea mostly has support among Democrats for now, though they differ on details, and it is far from certain that any significant new wage subsidy can get through a Congress that has quickly rallied behind the PPP program. “I do think the fact that these existing programs aren’t working well enough is pushing people to say, ‘What else can we do?’ ” said Rep. Pramila Jayapal (D., Wash.), whose twist on the idea would provide up-front payments to companies based on past payroll-tax filings. Some lawmakers may also be wary of open-ended subsidies for employers. Still, supporters for the concept range from progressive Ms. Jayapal to Sen. Mark Warner (D., Va.) to conservative Sen. Josh Hawley (R., Mo.). There are signs the concept is gaining support. On Monday, House Speaker Nancy Pelosi (D., Calif.) told Democrats during a caucuswide phone meeting that “beyond this week’s bill, we will need to look at a variety of options to keep people on their feet,” and she mentioned the legislative plan from Ms. Jayapal.

Senate passes $484 billion bill that would expand small-business aid, boost money for hospitals and testing – Washington Post – The Senate passed a $484 billion deal Tuesday to replenish a small-business loan program that’s been overrun by demand and to devote more money to hospitals and coronavirus testing. President Trump said he would sign it into law. The legislation, which came together over days of intense negotiation that followed a bitter partisan standoff, would increase funding for the Paycheck Protection Program by $310 billion. It would also boost a separate small-business emergency grant and loan program by $60 billion, and direct $75 billion to hospitals and $25 billion to a new coronavirus testing program.The House is expected to approve the measure Thursday.The Paycheck Protection Program was designed to help firms with fewer than 500 workers, but a number of larger companies found ways to obtain the funds in the past two weeks, leading to bipartisan outrage. Treasury Secretary Steven Mnuchin said Tuesday that larger firms would now be blocked from using the program, and Trump called on some big companies that had already obtained taxpayer-backed loans to return the money.The new legislation comes on top of a $2 trillion coronavirus rescue law that Congress passed late last month and increases the government commitment to fighting the pandemic to close to $3 trillion. That dwarfs by far any other federal intervention of its kind and underscores the depth of the economic blight befalling the nation and the scramble by policymakers to respond.Democratic lawmakers say it should be just the beginning. Speaking on the Senate floor shortly before the legislation passed by voice vote, Senate Minority Leader Charles E. Schumer (D-N.Y.) said lawmakers needed to quickly begin work on another piece of legislation that would match the size and scope of last month’s $2 trillion Cares Act. “I’d remind my colleagues this is an interim measure,” Schumer said. “There’s plenty of hard-won provisions that we Democrats are pleased with, but it’s ultimately a building block. In the weeks ahead Congress must prepare another major bill similar in size and ambition to the Cares Act. The next bill must be big and bold and suited to the needs of a beleaguered nation.”

Houses Passes New $484 Billion Coronavirus Stimulus Bill – After some initial delays, the House overwhelmingly passed and sent to President Trump a $484 billion coronavirus relief package, even as some members were already at odds over the next phase of rescue legislation. Once he receives the bill, Trump will swiftly sign off on the fourth coronavirus-related spending measure since early March. This bill would replenish funding to the Paycheck Protection Program for small businesses and provide other spending for hospitals and virus testing. The bipartisan 388-5 vote – four Republicans Massie, Hice, Buck and Biggs voted against it; one Democrat, Ocasio-Cortez voted no and independent Justin Amash voted present – was delivered by passed wearing masks and entering the House chamber under strict health precautions. Several members lamented people who’ve died from or are critically ill with the virus, including one lawmaker’s sister. “This is really a very, very sad day,” said Speaker Nancy Pelosi, giving a less-than-triumphant sendoff to the bill on a day when about 4.4 million additional workers were reported to have applied for unemployment benefits last week. “Our nation faces a deadly virus, a battered economy,” and hundreds of thousands of ill people. “Some died, and millions out of work,” said Pelosi. When asked by CNN if Dems should have held out longer, AOC who voted against the bill, said “I truly hope I’m wrong, my concern is we are giving Republicans what they want. McConnell is already talking about the deficit the moment we talk about getting people relief… That to me is a signal that Republicans are done.” According to Bloomberg, the House – which had not convened as a group since March 27 – also adopted a measure creating a special subcommittee to oversee the spending of coronavirus funds. The floor action was carried out with carefully choreographed movement and spacing of lawmakers to guard against spreading any infection. Groups of 60 members entered the chamber in alphabetical order to vote, then exited on the opposite side.While the bill was destined to pass, much of Thursday’s debate centered on GOP claims that Pelosi and Democrats needlessly delayed agreement on the bill, and Democratic arguments that Senate Republicans under Majority Leader Mitch McConnell refused for too long to add items that were needed, only to agree at the end.

Maher presses Pelosi on coronavirus spending: ‘Funny money’ may collapse economy into depression – HBO’s Bill Maher pressed House Speaker Nancy Pelosi (D-Calif.) on trillions of federal spending on the coronavirus pandemic, with the “Real Time” host saying a “house of cards” will eventually collapse, resulting in a depression. The back-and-forth comes as President Trump signed off on a $484 billion package on Friday to replenish a small business lending program prompted by the pandemic. The package also provides $100 billion for hospitals and COVID-19 testing as some states slowly reopen their economies. “I know we can bail out certain sectors as we have done in the past, I don’t know how you can keep indefinitely writing checks,” Maher said to Pelosi in a remote interview. “We were 20 trillion in the hole to begin with, and all world governments who are already in debt are doing this. How can the whole world be writing this funny money? “I’m worried about the whole thing collapsing and we go into a Depression,” he later added. “Because it’s a matter of life and death,” Pelosi replied. “This is more an investment in the lives and the livelihood of the American people. “We have to think big about that,” she continued. “The more we invest in science and health, the quicker our economy will recover from the pandemic. We expect a return on this money…that’s stimulus.” “Well, it will recover unless people get wise to the fact that we’re just writing checks with money that doesn’t exist,” Maher retorted. “I mean, what is the point of bailing out banks that are just going to loan back the money that doesn’t exist to us again? It seems like it’s a house of cards that could, in the end, wind up hurting more people than the disease.” Pelosi reiterated that she expected a return on the loans being given, defining them as a stimulus.

Treasury Toughens Guidance on Who Can Get Small-Business Funds – Companies seeking aid from the next round of small business relief will be required to attest to their needs for the loan and could be asked to prove it, as the Trump administration seeks to prevent larger firms with other funding options from crowding out mom-and-pop operations. Treasury Secretary Steven Mnuchin has said the fund is intended for small businesses, and new guidance from Treasury and the U.S. Small Business Administration released Thursday emphasizes that companies must “certify in good faith” the economic need for a loan under the Paycheck Protection Program, or PPP. The guidance was issued after small businesses complained that large, publicly traded companies and big chains such as Shake Shack Inc. were getting loans while they were shut out in the initial $349 billion in funding for loans. That money ran out in just 13 days and the U.S. House is expected to vote today on a relief bill for the program that includes an additional $320 billion, allowing for $10 billion in bank fees and processing costs. “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification,” the guidance says. Lenders may rely on a borrower’s certification, and borrowers that previously applied for a PPP loan and repay it in full by May 7 “will be deemed by SBA to have made the required certification in good faith,” according to the guidance. Restaurant chains Shake Shack and Sweetgreen Inc. returned their PPP loans. Mnuchin has encouraged other companies that “may have not been clear in understanding the certification” to do the same, and he’s also said companies that took funding and didn’t really need it could be “subject to investigation.” Republican Senator Marco Rubio of Florida tweeted on Monday that “any company that doesn’t need a PPP loan but got one made a false representation.” He also announced that the Senate Committee on Small Business and Entrepreneurship that he leads will conduct “aggressive oversight” of the program this fall, including subpoena power to determine whether companies made false certifications to obtain loans.

US Will Bar Hedge Funds, Private Equity Firms From Small Business Loan Program – The Treasury Department announced on Thursday that publicly traded companies such as Ruth’s Chris Steak House must repay loans received this month from the Paycheck Protection Program (PPP) designed to help struggling small businesses survive the next 8 weeks of the coronavirus pandemic. According to the Wall Street Journal, around 150 public companies have tapped nearly $600 million in loans from the PPP. ‘In updated guidance issued Thursday, the Treasury Department said it was “unlikely that a public company with substantial market value and access to capital markets” would be able to demonstrate that a government-backed loan was necessary for it to support its ongoing business. – WSJ Another public company, Shake Shack, Inc., was the largest recipient of funds despite their $1.7 billion market cap. Around two dozen of the public companies have more than 500 employees, while approximately 1/3 had over $100 million in annual revenue for their last fiscal year. Update (04/24/2020): The US will bar hedge funds from participating in the Paycheck Protection Program (PPP), along with private equity firms, as they are primarily engaged in investment speculation. According to Bloomberg, the Treasury, in consultation with the Small Business Administration (SBA), believes Congress did not intend on said industries obtaining loans under the program. The Treasury Department posted the new guidance on Friday.

Luxury Hotelier Who Backed Trump Wins Big in Small-Business Aid — A Dallas hotel executive and major donor to President Donald Trump has emerged as the biggest winner from the coronavirus bailout for small businesses. A combined total of $59 million from the small business lending package went to three lodging companies chaired by Monty Bennett, according to regulatory filings. The money went to Braemar Hotels & Resorts, which owns luxury properties including the Ritz-Carlton in St. Thomas in the U.S. Virgin Islands, Ashford Hospitality Trust Inc., which owns more than 100 hotels around the country, and the firm that manages both. The PPP has come under fire after big restaurant chains like Potbelly Corp. and Ruth’s Chris Steak House got loans, while many mom-and-pop firms were left stranded when the initial $349 billion in funding for the program ran out of money last week. The House is expected to vote Thursday on a bill approving an additional $320 billion for the initiative. For more: Small Business Relief Funds Drained Fast With Many Shut Out The loans to Bennett’s companies underscore how large firms were able to take advantage of the small business program because of a loophole nestled in the bailout package that allowed companies with multiple locations to apply for loans that can convert to grants if they maintain employees and payrolls at certain levels. That provision was inserted after lobbyists for hotels and restaurants pleaded with lawmakers designing the program, especially Republican Senator Marco Rubio of Florida, for special consideration. The carveout allowed hotels and restaurants to apply for the funds regardless of how many workers they had, so long as each location employed fewer than 500. Bennett donated $150,000 in the last six months to a fundraising committee for Trump’s reelection campaign and for Republicans, according to Federal Election Commission records. He also gave to Trump in 2016, and has made donations to prominent allies such as House GOP leader Kevin McCarthy and Senator Lindsey Graham. Ashford said in a statement that PPP “is working exactly as intended by providing much needed capital to small businesses and larger businesses that have been the hardest hit — hotels and restaurants” with fewer than 500 employees per location. Another Trump supporter and hotelier — Gordon Sondland — was also a beneficiary of the small-business relief package. Provenance Hotels, the hotel chain he founded, received a PPP loan, according to a spokeswoman. Sondland is the former ambassador to the EU who played a starring role in the Trump impeachment proceedings. The group has more than a dozen properties, including three in Washington state, which has been hard-hit by the virus. Ashford Hospitality said in a regulatory filing Tuesday that it expects to receive additional loans. The $30 million it received — the most money disclosed by a public company yet– was in 42 PPP loans to company affiliates that own hotels. Braemar, which also owns the Ritz-Carlton in Lake Tahoe, California, received $15.8 million in eight loans. Ashford Inc., which manages properties for Ashford and Braemar Hotels, got six loans totaling $12.8 million.

As US deaths exceed 40,000, Trump escalates reckless back-to-work campaign– On Sunday, the death toll from the COVID-19 pandemic crossed 40,000 in the United States, with nearly 20,000 deaths in the past week alone. The pandemic has exposed the complete dysfunctionality of American society and its incapacity to provide the most basic necessities – medical care, protective equipment and even food – to its citizens. The government did nothing to prepare for the pandemic, Trump downplayed the disease as a “hoax,” and the media ignored it for months. While thousands of heroic healthcare workers, forced to work in unsafe conditions, fell ill and died, banks and corporations received the largest bailouts in human history. Images of mass graves in New York City and of bodies piled up in refrigerated trailers and stuffed into spare rooms at Sinai Grace Hospital in Detroit will never leave the consciousness of the health care workers who witnessed them or the working class as a whole. All over the country, hundreds of thousands of people are grieving the loss of their friends and loved ones. With millions laid off, countless households are just days away from total penury, turning to overstretched food pantries. Despite Trump’s narrative that the pandemic has been contained, the disease is spreading to new parts of the country, with every state reporting at least one death, as the disease rampages through nursing homes and prisons. In the midst of this disaster, the Trump administration is single-mindedly focused on re-opening American businesses, despite the lack of measures necessary to contain the pandemic. The Trump administration’s overriding concern is to ensure that the pandemic does not interfere with the enrichment of Wall Street and the major corporations. The White House has made clear it is calling for businesses to reopen under conditions in which the infrastructure to test all suspected cases, quarantine those infected, and trace their contacts does not exist. This is despite the warning by the World Health Organization and leading epidemiologists that it is utterly irresponsible to reopen businesses under these conditions, which would only fuel a resurgence of the pandemic. Trump’s demand for a return to work has been supported by substantial sections of the media. On Sunday, NBC’s evening news program led not with the massive death toll, but with far-right protests, some with just dozens of participants, demanding the reopening of businesses. The media ignored the role of far-right groups in calling the demonstrations, occupying state capitols bearing assault rifles and flying Confederate flags and swastikas.

Why The Shutdown Must End – The shutdown of the American economy should end as soon as possible. We have reached the point where fear and panic have precluded logic and facts. The damage from our overreaction to the Covid-19 pandemic is likely to prove greater than the death toll from the disease itself. The virus is not containable, and our attempt to achieve the unachievable grows more costly every day. Covid-19 is not proving as deadly as first imagined. Last March 16, a group of researchers at Imperial College in London predicted 510,000 deaths in the UK and 2.2 million in the US. Within ten days, these early estimates were revised downward by more than an order of magnitude. As I write, the best estimate of ultimate deaths from Covid-19 in the US is about 60,000, the same as the 61,000 people who died from influenza during the winter of 2017-2018. Yet we continue to suffer from a shutdown whose imposition was justified by a fallacious model prediction.The spread of the coronavirus is both inevitable and necessary. It is necessary because, in the absence of a vaccine, the only way to counteract the disease is to build immunity in the population. A person who contracts the infection and recovers is immune. They can no longer become ill or spread the disease. Infection and recovery is the most effective vaccination possible. The whole idea behind shutdowns and quarantines is not to reduce cumulative mortality, but to “flatten the curve” so that our health care facilities are not overwhelmed. Individuals who need intensive care may be saved by this strategy but the net mortality reduction is likely to be small. Shutdowns and quarantines will prolong the course of the pandemic. When social distancing ends, as it must eventually, the disease will simply resume its inevitable course through the population. Flattening the curve does not reduce the area under the curve.Where did we get the idea that some businesses and occupations are “non-essential?” In a market economy, every job is essential. And every job is certainly essential to the person who depends on it for their livelihood. In the midst of a pandemic it’s sensible to ban mass gatherings of hundreds and thousands of people. But local governments are now imposing restrictions that make little sense. Parks and golf courses have been closed. The imposition of evening curfews is baffling. Every government official with totalitarian instincts now has the moral justification to impose arbitrary and senseless curtailments on freedom of movement and association.

Here Are The Key Dates As The World Reopens From The Coronavirus Coma –On April 16, the Trump administration released guidelines for reopening of the US. The Administration has suggested that Governors base their plans on criteria consisting of three aspects:

1. a downward trend in documented cases over 14 days, or a downward trend in testing positivity rates over 14 days while
2. maintaining the testing volume;
3. a downward trend in symptoms-based reporting systems, including ILI and COVID-like syndromes, for 14 days;and
4. enough capacity in hospitals and testing

Of course, as we previously documented, some states – and countries – are eager to restore some semblance of normalcy starting with Georgia, which hopes to reopen its economy starting today. Below, courtesy of BofA is a tentative calendar of the most notable publicly announced reopening events in the coming month. The above table is a more detailed version of a timeline that was previously presented (and recently updated) from Deutsche Bank: As Deutsche Bank’s Jim Reid previously detailed in his report “The Exit Strategy”, there is a specific step-by-step process of how reopening may work. Since then, announcements by several countries indicate they are planning for this style of gradual reopening. Spain has begun to allow construction and manufacturing staff back to work, and several countries have outlined plans to reopen schools and small stores as part of the first step. It is likely that only once countries have reopened themselves domestically will they reopen their borders. As countries begin to reopen, a key consideration is how to deal with the second wave of the virus that is likely from increased activity. This is being weighed up against the increasing awareness of the health problems associated with isolation and lockdown itself. Given various countries announcing different measures, a certain level of coordination is optimal. Hence why the EU is expected to present a continent-wide blueprint for lifting restrictions next week and is urging countries to coordinate their exit plans. Closely watched will be any recommendations for lifting the border restrictions on travellers from outside the Schengen area. The WHO this week released its six-step guide to assessing the criteria for reopening. In order to more fully reopen, many countries have pointed out that ‘test and trace’ capacity must be improved and widely implemented. Whilst testing capacity will be ramped up shortly, the ‘trace’ component could see the biggest change as people adopt new technology.

Fauci- No Recovery Possible If Virus Isn’t Under Control – President Trump’s top doctor on the White House coronavirus task force has pushed back against protesters demonstrating against stay-at-home orders, warning that the US economy won’t recover until COVID-19 is “under control.” “This is something that is hurting from the standpoint of economics,” Fauci acknowledged during an appearance on ABC‘s “Good Morning America,” in comments which sharply contrast with those by President Trump, who has encouraged the protests, Bloomberg reports. “Unless we get the virus under control, the real recovery economically is not going to happen,” Fauci added. “So what you do if you jump the gun and go into a situation where you have a big spike, you’re going to set yourself back.”“Clearly this is something that this is hurting …. but unless we get the virus under control, the real recovery, economically, is not going to happen.” – NIAID director Dr. Anthony Fauci on protests against stay-at-home orders. pic.twitter.com/n7x3cunEAm – Good Morning America (@GMA) April 20, 2020Fauci added that while it can be “painful” to follow federal guidelines regarding a phased re-opening, it will “backfire” if done too soon.Protests have erupted in Michigan, Minnesota, Texas and other states demanding that governors lift strict social distancing policies that have battered the U.S. economy. Some demonstrators have called for Fauci’s firing.Trump has encouraged the protests, tweeting that protesters should “liberate” Michigan, Minnesota and Virginia. The president said Sunday he watched footage of the crowded protests, called them “orderly” and said people “were all six feet apart.” – Bloomberg According to Trump, people on both sides – including state governors, have gone “too far.” “Some of the things that happened are maybe not so appropriate,” he said.

Former FDA Commissioner Warns Waiting For “Optimal” Testing Capacity Before Reopening Simply “Not Possible” – Eight days after oil was found in Prince William Sound in Valdez, a citizen oversight group says the initial response to the spill has been positive. “Any amount of oil hitting the water is a big deal. You can never clean up all of the oil once it’s been spilled, so we won’t know the full impacts of this until it’s over with and we can fully determine how much was spilled, how the process went confining and cleaning up, and do more long term monitoring for any lingering oil or impacts,” said Brooke Taylor, director of communications for Prince William Sound Regional Citizens Advisory Council. “To date, what we’ve seen is unified command, and specifically Alyeska as a responsible party, being very prompt and proactive with their response to this. We’ve seen they put together a great team to really respond to this. We’ve been very pleased with how well their containment and clean up so far has seemed to go.” PWSRCAC was created in the wake up of the Exxon Valdez oil spill to provide a voice for communities impacted by the Alyeska terminal and associated tankers. In addition to long-term environmental monitoring and spill prevention planning, the group monitors spill response training, including training that prepares captains operating fishing vessels to act as first responders to a spill. “They have called out a number of fishing vessels in this response to help setup boom, to help with containment, sensitive area protections,” Taylor said. “It’s one of the reasons that this contracted model is something that we’re big advocates for, because it means these people have been trained ahead of time, they know how to use the gear, they are ready to act. And in particular in light of whats happening with COVID-19 right now, it also means that there’s that much less direct interaction that Alyeska staff have to have with these operators because they’ve already been trained.” As of Monday afternoon, the unified command for the incident says 798 barrels of water and oil mixture have been recovered. Further analysis shows that the amount of oil recovered from the water so far is approximately 12 barrels, or 511 gallons. An additional 30 gallons has been recovered from land. The area has been boomed since April 12 and the boom has contained the spill.

Trump Says Coronavirus ‘Might Not Come Back at All’ in Fall — President Donald Trump expressed confidence that the coronavirus won’t hit the U.S. with the same intensity if it returns in the fall, suggesting the deadly disease “might not come back at all.” Trump’s assertion Wednesday at a White House briefing is at odds with medical experts who say the virus could pose a threat to the U.S. for months and years to come. He made the comment after accusing the Washington Post of mischaracterizing a warning to that effect from Robert Redfield, director of the Centers for Disease Control and Prevention. “We’re going to be watching for it. But it’s also possible it doesn’t come back at all,” Trump said. If Covid-19 does return, it “won’t be coming back in the form that it was” but in “smaller doses we can contain.” Asked how he could be certain, Trump said, “I didn’t say it’s not. I said if it does, it’s not going to come back on anything near what we went through.” “If it should come back in some form, we want to snuff it out very quickly before anything can happen,” the president later added. Public-health experts believe the virus, which has infected more than 846,000 people in the U.S., is likely seasonal. They have warned that a return to full normalcy could take months or years without a vaccine. But officials on the White House coronavirus task force have said the country will be better equipped to address a second outbreak, thanks in part to the development of treatments and surveillance efforts. “We will have coronavirus in the fall. I am convinced of that because of the degree of transmissibility that it has,” said Anthony Fauci, the task force’s top infectious disease expert. “What happens with that will depend on how we’re able to contain it when it occurs.” Other countries like South Korea have also said they expect another wave in the fall. A senior health ministry official in the Asian nation that’s successfully curbed its outbreak said Thursday there is a high chance of rapid spread again in the fall and winter with no vaccine available.

Democrats blast Trump team’s handling of federal workers in coronavirus crisis – As President Donald Trump tries to reopen the country after more than a month of lockdown, Democrats say the government’s top human resources office is stonewalling their efforts to understand how and when the federal government itself will return to normal. Specifically, the Office of Personnel Management is refusing to brief Capitol Hill on the status of the agency and federal employees’ teleworking arrangements, Democrats say. “Congressional oversight isn’t an optional exercise to be left up to the Trump administration,” said Rep. Gerry Connolly (D-Va.), chairman of the government operations subcommittee of the House Oversight and Reform Committee. “Our committee has serious questions about OPM’s decision-making related to Covid-19, including unclear telework guidance; a lack of actions taken to protect federal employees; and now we learn, guidance or standards to reopen government that abdicate any leadership responsibility. This lack of accountability from OPM will not be tolerated.” OPM is essentially the federal government’s HR department: It guides the 2-million-strong federal workforce, which makes up a disproportionately large percentage of employees across the Washington, D.C. area. And decisions about how to deploy federal workers are more firmly in the control of the president — who is eager to get the U.S. economy humming again — than are those of America’s governors and mayors. The requests for updates have come from a number of congressional committees, including Connolly’s subcommittee and the Senate Homeland Security and Governmental Affairs Committee. But in the last three weeks, Jonathan Blyth, the head of OPM’s congressional affairs shop and the former chief of staff at the agency, has twice declined the requests, citing “a very dynamic situation with our response to covid19.” “It has always been difficult to get information from this administration, but the refusal to provide Congress with a basic briefing during a pandemic is especially egregious,” said a Democratic Senate aide. “We’ve never been denied a briefing like this before.”

Health Chief’s Early Missteps Set Back Coronavirus Response – WSJ – On Jan. 29, Health and Human Services Secretary Alex Azar told President Trump the coronavirus epidemic was under control. The U.S. government had never mounted a better interagency response to a crisis, Mr. Azar told the president in a meeting held eight days after the U.S. announced its first case, according to administration officials. At the time, the administration’s focus was on containing the virus. When other officials asked about diagnostic testing, Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, began to answer. Mr. Azar cut him off, telling the president it was “the fastest we’ve ever created a test,” the officials recalled, and that more than one million tests would be available within weeks. That didn’t happen. The CDC began shipping tests the following week, only to discover a flaw that forced it to recall the test from state public-health laboratories. When White House advisers later in February criticized Mr. Azar for the delays caused by the recall, he lashed out at Dr. Redfield, accusing the CDC director of misleading him on the timing of a fix. “Did you lie to me?” one of the officials recalled him yelling. Six weeks after that Jan. 29 meeting, the federal government declared a national emergency and issued guidelines that effectively closed down the country. Mr. Azar, who had been at the center of the decision-making from the outset, was eventually sidelined. Many factors muddled the administration’s early response to the coronavirus as officials debated the severity of the threat, including comments from Mr. Trump that minimized the risk. But interviews with more than two dozen administration officials and others involved in the government’s coronavirus effort show that Mr. Azar waited for weeks to brief the president on the threat, oversold his agency’s progress in the early days and didn’t coordinate effectively across the health-care divisions under his purview. The ramp-up of the nation’s diagnostic testing for the disease caused by coronavirus, which many health experts regard as critical for limiting new infections and safely reopening the economy, has been slower than promised and hampered by obstacles. As of Wednesday, more than four million government and private-lab tests had been administered. The president now says states bear the primary responsibility for testing, and that the federal government plays only a supporting role.

Special Report: Former Labradoodle breeder tapped to lead U.S. pandemic task force – (Reuters) – On January 21, the day the first U.S. case of coronavirus was reported, the secretary of the Department of Health and Human Services appeared on Fox News to report the latest on the disease as it ravaged China. Alex Azar, a 52-year-old lawyer and former drug industry executive, assured Americans the U.S. government was prepared. “We developed a diagnostic test at the CDC, so we can confirm if somebody has this,” Azar said. “We will be spreading that diagnostic around the country so that we are able to do rapid testing on site.” While coronavirus in Wuhan, China, was “potentially serious,” Azar assured viewers in America, it “was one for which we have a playbook.” Azar’s initial comments misfired on two fronts. Like many U.S. officials, from President Donald Trump on down, he underestimated the pandemic’s severity. He also overestimated his agency’s preparedness. As is now widely known, two agencies Azar oversaw as HHS secretary, the Centers for Disease Control and Prevention and the Food and Drug Administration, wouldn’t come up with viable tests for five and half weeks, even as other countries and the World Health Organization had already prepared their own. Shortly after his televised comments, Azar tapped a trusted aide with minimal public health experience to lead the agency’s day-to-day response to COVID-19. The aide, Brian Harrison, had joined the department after running a dog-breeding business for six years. Five sources say some officials in the White House derisively called him “the dog breeder.” Azar’s optimistic public pronouncement and choice of an inexperienced manager are emblematic of his agency’s oft-troubled response to the crisis. His HHS is a behemoth department, overseeing almost every federal public health agency in the country, with a $1.3 trillion budget that exceeds the gross national product of most countries. Azar and his top deputies oversaw health agencies that were slow to alert the public to the magnitude of the crisis, to produce a test to tell patients if they were sick, and to provide protective masks to hospitals even as physicians pleaded for them. The first test created by the CDC, meant to be used by other labs, was plagued by a glitch that rendered it useless and wasn’t fixed for weeks. It wasn’t until March that tests by other labs went into production. The lack of tests “limited hospitals’ ability to monitor the health of patients and staff,” the HHS Inspector General said in a report this month. The equipment shortage “put staff and patients at risk.”

How overly optimistic modeling distorted Trump team’s coronavirus response – As coronavirus cases climbed daily by the thousands and the nation entered its second month of an economic standstill, President Donald Trump latched onto a sign of hope: A pandemic model closely followed by political leaders and public health specialists projected the virus would kill as few as 60,000 Americans, a figure far below what officials previously feared.The new April forecast signaled the worst would soon be over, with some states effectively ending their bout with coronavirus as early as the end of the month. According to the model’s bell-shaped curves, hospitalizations and deaths nationwide were set to drop off nearly as quickly as they rose. Trump swiftly adopted the projection from the University of Washington’s Institute for Health Metrics and Evaluation as his newest measure of success – while top administration health officials including infectious disease expert Anthony Fauci and coronavirus response coordinator Deborah Birx touted the lower figure as a clear indication the U.S. was winning its fight with the disease.“It looks like we’ll be at about a 60,000 mark, which is 40,000 less than the lowest number thought of,” Trump said during a news briefing on Sunday, April 19, adding the next day that “the low number was supposed to be 100,000 people. We could end up at 50 to 60.” That’s not going to happen. More than 50,000 Americans are dead from the coronavirus already, following several days during which the nation’s death toll routinely topped 2,000. The U.S. is now expected to blow past the 60,000 mark around the beginning of May, earlier than the IHME model had projected and with less of the dramatic leveling-off that its forecast had initially baked in.

Poll finds Americans rate Trump negatively on coronavirus response and praise governors. – The Washington Post – Most Americans expect no immediate easing of the health risks associated with the coronavirus pandemic, despite calls by President Trump and others to begin reopening the economy quickly. A majority say it could be June or later before it will be safe for larger gatherings to take place again, according to aWashington Post-University of Maryland poll.Most Americans – 54 percent – give the president negative marks for his handling of the outbreak in this country and offer mixed reviews for the federal government as a whole. By contrast, 72 percent of Americans give positive ratings to the governors of their states for the way they have dealt with the crisis, with workers also rating their employers positively.Partisan allegiances shape perceptions of when it will be safe to have gatherings of 10 or more people and of the president’s performance during the pandemic. But governors win praise across the political spectrum for their leadership, which has sometimes put them sharply at odds with Trump and his administration. Personal health concerns are widespread, with 57 percent saying they are “very” or “somewhat” worried about becoming infected and seriously ill from the coronavirus, including at least 40 percent of people in every major demographic and political group. For those most concerned – particularly Republicans – the fear is enough to override partisanship when it comes to the safety of public gatherings. Disruptions caused by the coronavirus outbreak continue to ripple through households across the nation, with businesses and schools closed and most Americans being urged to stay at home. About 7 in 10 adults, and more women than men, say the pandemic has been a source of stress in their lives. Half of all adults say the crisis has produced financial hardship for themselves or members of their family.

How the Obama administration ignored the pandemic threat – With deaths from the coronavirus pandemic surpassing 41,000 in the US, apologists for the capitalist system have sought to pin the anarchic and criminally inadequate response of the government and health care system on the singular sociopathic figure of President Donald Trump. The Trump’s administration handling of the preventable pandemic has been reprehensible, but a review of the record of the Obama-Biden administration in dealing with deadly viruses such as H1N1, Ebola and Zika makes clear that the political responsibility for the death and suffering growing by leaps and bounds today is shared by both big business parties. In a recent Politico article, health officials from the previous two administrations, those of Obama and George W. Bush, detailed the reluctance of the government to sufficiently prepare for and develop the necessary infrastructure to combat the viruses and potential pandemics present in a modern globalized society. Upon assuming the presidency in 2001, Bush blazed a trail that Obama and Trump would follow by abolishing the White House Health and Security Office previously established by Bill Clinton. Following the events of September 11, 2001, however, the Bush administration reversed course. Through the newly created Department of Homeland Security (DHS), it established a new Office of Public Health and Emergency Preparedness, whose main purpose was to create biosecurity plans in the event of a terrorist attack. Vice President Dick Cheney advocated a vast expansion of the DHS, including a nationwide smallpox vaccination program to protect against a biological terrorist attack. This was resisted by top health officials, including Dr. Anthony Fauci, and Cheney’s plan for mandatory smallpox vaccination was eventually discarded. Even though the flu claimed over 62,000 Americans in 2001, it wasn’t until 2005 that Bush administration officials, including Health and Human Services Secretary Mike Leavitt and his deputy, lawyer Alex Azar, were tasked by the White House with implementing a “pandemic flu plan.”

Trump suggests using light, heat as coronavirus treatment -President Trump on Thursday suggested medical experts should study exposing the human body to heat and light as a treatment for the coronavirus during Thursday’s White House briefing by the president’s task force on the virus. Trump’s remarks followed a presentation from William Bryan, undersecretary for science and technology at the Department of Homeland Security. Bryan presented the results of a study that showed the virus deteriorates more quickly when subjected to higher temperatures and humidity – a finding that quickly drew skepticism from other experts on social media and cable television given outbreaks in a number of places with warm climates, such as Singapore and Brazil. Bryan presented data that found how long the virus can live on solid surfaces or in the air was cut significantly under high temperatures, higher humidity and when exposed to sunlight. He said his office was also studying how certain disinfectants might kill the virus more effectively than others, referencing isopropyl alcohol and bleach. Trump latched onto the findings, inquiring multiple times about harnessing the light and heat as part of a potential cure. “So, supposing we hit the body with a tremendous – whether it’s ultraviolet or just very powerful light – and I think you said that hasn’t been checked but you’re going to test it,” Trump said. “And then I said, supposing you brought the light inside of the body, which you can do either through the skin or in some other way. And I think you said you’re going to test that too. Sounds interesting.” Trump also asked if there was a way to use disinfectants on the body “by injection inside or almost a cleaning.”

Lysol maker issues warning against injections of disinfectant after Trump comments -Lysol manufacturer Reckitt Benckiser on Friday issued a warning that “under no circumstance” should its products be administered into the human body or be used as a treatment for the coronavirus, a day after President Trump discussed whether disinfectants could be used to treat the disease. The company, which also sells Dettol in the United Kingdom, shared in a statement on its website that “due to recent speculation and social media activity,” they had “been asked whether internal administration of disinfectants may be appropriate for investigation or use as a treatment for coronavirus.” “As a global leader in health and hygiene products, we must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route). As with all products, our disinfectant and hygiene products should only be used as intended and in line with usage guidelines. Please read the label and safety information,” the company shared Friday. Trump on Thursday during a White House briefing suggested medical experts should study exposing the human body to heat and light as a treatment for coronavirus. He also asked if there was a way to inject disinfectant. “And then I see the disinfectant, where it knocks it out in a minute. One minute. And is there a way we can do something like that, by injection inside or almost a cleaning. Because you see it gets in the lungs and it does a tremendous number on the lungs. So it would be interesting to check that. So, that, you’re going to have to use medical doctors with,” Trump said during the briefing. “But the whole concept of the light, the way it kills it in one minute, that’s – that’s pretty powerful,” he continued.

Trump remarks on injecting disinfectants draw blowback from doctors – President Trump’s suggestion that people could inject disinfectants as a way to treat coronavirus is drawing strong criticism from doctors who warn the remarks from the White House could endanger the public.“I think we need to speak very clearly that there’s no circumstance under which you should take a disinfectant or inject a disinfectant for the treatment of anything, and certainly not for the treatment of coronavirus,” Scott Gottlieb, Trump’s former FDA Commissioner, said on CNBC when asked about the president’s comments.“There’s absolutely no circumstance under which that’s appropriate and it can cause death and very adverse outcomes.”In an unusual statement, the company that makes Lysol also warned against ingesting its products on Friday. “We must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route),” said the company, Reckitt Benckiser, saying it was responding to “recent speculation and social media activity.”The comment that set off the reaction came at Trump’s press briefing on Thursday. After a presentation from a Department of Homeland Security official about the effects of disinfectants and sunlight on the virus, Trump mused that the same techniques could be used as treatments inside the body. “I see the disinfectant, where it knocks it out in a minute,” Trump said. “One minute. And is there a way we can do something like that, by injection inside or almost a cleaning?”

Lawsuit filed against Trump over stimulus checks denied to those married to immigrants – The Trump administration is facing a lawsuit filed Friday over a provision in the $2.2 trillion coronavirus relief package that denies stimulus checks to more than 1 million U.S. citizens married to undocumented immigrants. The plaintiff is a man under the pseudonym John Doe who claims the administration is discriminating against him “based solely on whom he chose to marry.” The lawsuit, filed in a federal court in Chicago, cites a Migration Policy Institute report that estimates 1.2 million unauthorized immigrants in the country are married to U.S. citizens. The bill distributes stimulus checks through the Internal Revenue Service (IRS). Most people who have filed taxes in the U.S. and have a Social Security Number is eligible to receive a stimulus check. However, in order to qualify under a provision implemented by the Trump administration, both spouses in families that file joint tax returns must have Social Security numbers, unless one of them is a member of the military. John Doe, who is a U.S. citizen, claims that his wife pays taxes with a Taxpayer Identification Number, which is issued by the IRS. The litigants claim that Trump, Treasury Secretary Steven Mnuchin and Senate Majority Leader Mitch McConnell (R-Ky.) did not treat John Doe “as equal to his fellow United States citizens,”

Trump claims he will temporarily suspend immigration over coronavirus fears – Trump administration officials on Tuesday morning scrambled to finalize an executive order after President Donald Trump said in a late-night tweet he would temporarily suspend immigration to the United States as the nation battles the health and economic effects of thecoronavirus pandemic. “In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States!” he tweeted. Officials were still working to draft the executive order, according to an administration official, but hope to have it completed in the next few days for Trump to sign. While the language is still being finalized, the order is expected to temporarily halt the issuance of new green cards and work visas — steps that had already effectively already been in place amid the coronavirus pandemic. A second administration official told CNN the executive order will be a “temporary 120 days or so” halt on “some” work visas to mitigate some of the unemployment concerns related to the pandemic. Other aspects of the order remain unclear inside the administration, including what legal authorities the President will rely upon in the order and what other elements of immigration — including family immigration and potential exemptions — might be included.The order is expected to include some exemptions for farm workers and health care providers, according to the official, but could also exempt some other workers deemed “essential.” Meanwhile, as Trump is looking to close the border, he is encouraging protests against stay-at-home orders and has issued a call for the states to phase-in reopenings beginning May 1. In a statement on Tuesday, White House press secretary Kayleigh McEnany did not provide additional details or timing for the executive order, nor did she mention any health benefits to the ban. Instead, she emphasized employment implications of the planned immigration pause.”President Trump is committed to protecting the health and economic well-being of American citizens as we face unprecedented times,” she wrote. “As President Trump has said, ‘Decades of record immigration have produced lower wages and higher unemployment for our citizens, especially for African American and Latino workers.’ At a time when Americans are looking to get back to work, action is necessary.”

Trump administration working out details of suspending immigration during coronavirus crisis, plans to close off the United States to a new extreme – The Washington Post — Attorneys and senior Trump administration officials are meeting Tuesday to work out the logistics and legal implications of the president’s order to freeze the U.S. immigration system in response to the coronavirus pandemic, according to senior officials involved with the plans. Trump decreed via tweet late Monday that he intends to sign an executive order suspending immigration to the United States, but the president appears to have again publicly declared a U.S. policy that was not yet ready for implementation, leaving his aides rushing to deliver on his pronouncement.The order is currently with the Justice Department’s Office of Legal Counsel for a review, as that office reviews all executive orders, a Justice Department spokeswoman said. It is unclear if the office’s legal opinion on the matter would be released publicly, as some are.The president has broad authority to restrict entry into the United States – a point the U.S. Supreme Court affirmed in upholding his controversial travel ban in 2018 – and that power is perhaps no greater than during a public health emergency.Trump announced his intentions with a tweet at 10:06 p.m. Monday night, and he said the move to suspend immigration is needed to safeguard American jobs and defend the country from the pandemic, calling coronavirus “the Invisible Enemy.”“In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States!,” the president wrote. Trump, who is running for reelection on his immigration record and his effort to build a wall on the Mexico border, has long been frustrated with the limits on his ability to seal off the United States by decree. An executive order suspending all immigration to the country would take the president’s impulses to an untested extreme.

Trump to Bar Immigration for Family of U.S. Citizens, Foreign Workers for 60 Days – WSJ – President Trump said Tuesday that his administration would temporarily bar new immigrants, including some family members of U.S. citizens and foreign workers looking to move to the U.S., in the next 60 days under a new executive order. Mr. Trump said the immigration suspension, which he announced in a tweet Monday night but hasn’t formally signed, is designed to reduce immigration at a time when tens of millions of Americans have lost jobs as a result of the coronavirus crisis. “We must first take care of the American worker,” Mr. Trump said, adding that suspending immigration would also help “conserve vital medical resources for American citizens.” The executive order wouldn’t impact immigrants already living in the U.S. or foreigners coming on temporary visas for work or travel. That category includes H-1B visas, which allow more than 85,000 high-skilled foreigners to come to the U.S. for at least three years to work. It also includes seasonal migrant workers who come to the U.S. annually to work on farms, where they make up about one-tenth of the agricultural workforce, and at other businesses such as resorts or county fairs. The executive order is less restrictive than advocates on both sides of the immigration debate had earlier expected, and doesn’t impact most employment-based immigration, the order’s stated purpose. About 90% of employment-based green cards go to people already living in the U.S., on temporary visas that the order doesn’t touch. “It’s a PR stunt more than anything else,” said Mark Krikorian, president of the Center for Immigration Studies, a nonprofit that advocates eliminating most temporary work-based visas, which the organization believes undercut American workers. Mr. Trump said Tuesday that the order was still being written and would include certain exemptions but that he would detail them Wednesday. Mr. Trump tweeted Wednesday morning that he would sign the order later in the day. The president said he is weighing a second, more restrictive executive order on immigration but declined to offer additional details or say when he might sign it. He said migrant farmworkers wouldn’t be affected. The scope of a temporary immigration moratorium was the subject of debate inside the Trump administration Tuesday, according people familiar with the matter. They said the disagreement centered on whether to curb access to employment-based visas, which immigration hard-liners including senior adviser Stephen Miller and DHS officials have said are used to undercut American workers.

Coronavirus Border Expulsions: CDC’s Assault on Asylum Seekers and Unaccompanied Minors On March 20, the Centers for Disease Control (“CDC”) issued a largely unnoticed but sweeping order authorizing the summary expulsion of noncitizens arriving at the border without valid documents. The Order operates wholly outside the normal immigration removal process and provides no opportunity for hearings or assertion of asylum claims. It deploys a medical quarantine authorization to override the protections of the immigration and refugee laws through the use of an unreviewable Border Patrol health “expulsion” mechanism unrelated to any finding of disease or contagion. The CDC Order is based on an emergency Department of Health and Human Services (HHS) Interim Final Rule issued simultaneously with the Order under the authority of an obscure provision of the 1944 Public Health Service Act. Section 362 of that Act authorizes the Surgeon General to suspend “introduction of persons or goods” into the United States on public health grounds. Based on an unprecedented interpretation of the 1944 Act, the CDC regulation invokes the COVID-19 pandemic to redefine what constitutes “introduction of persons” and “introduction of communicable diseases” into the United States. It establishes a summary immigration expulsion process that ignores the statutory regime governing border arrivals and disregards the protections and procedures mandated by the 1980 Refugee Act and Refugee Convention as well as the special safeguards for unaccompanied minors under the Trafficking Victims Protection Reauthorization Act (“TVPRA”). The CDC Order “suspending introduction of certain persons” applies to land travel from two countries, Mexico and Canada, and only to those noncitizens defined as “covered aliens.” That definition is unrelated to infection or disease. It includes only those who arrive by land without valid travel documents and immediately “suspends” their “introduction” for a renewable period of 30 days. In actuality the Order singles out those who seek asylum – and children – to order them removed to the country from which they entered or their home country “as rapidly as possible.” A recently leaked Customs and Border Protection directive makes clear that expulsion is the goal and that no process is provided. The Order’s stated rationale is the risk alleged from “covered aliens” being crowded in “congregate settings.” The apparent justification for bypassing all legal protections and procedures is the CBP’s assertion that Border Patrol officers are “not operating pursuant to” their authority under the immigration laws. This shadow immigration expulsion regime is not part of some coherent public health or safety plan to seal our borders or to diminish the risk of COVID-19’s introduction into the U.S. A web of other proclamations and restrictions leave open many avenues for other travelers to enter the United States.

US farm relief program hands billions to agribusiness while millions lack food – The United States Department of Agriculture (USDA) announced plans on Friday, April 17, for a farm relief program. Funded largely through the CARES Act, the $19 billion package will be used to funnel funds to corporate farms while providing little assistance for the vast majority of small or working farmers.Like other government programs to help farmers, most of this money will end up in the hands of agribusiness. The majority of farmland is owned by farms grossing over $500,000 in sales, a figure that demonstrates the demise of the American family farm. In total, $16 billion will be handed directly to farmers, of which $9.6 billion goes to the livestock industry. This funding will be given largely as reimbursements for “losses” and will not be contingent upon providing food to those in need.The remaining $3 billion will be used to purchase $100 million each of produce, meat and dairy that will be distributed to food banks, nonprofits and community and faith organizations every month. This is a paltry sum, amounting to just 27 cents a day for every food insecure person, a figure that will only decline as America’s now 22 million unemployed seek assistance.It will also provide funds to distribute 1,000,000 meals a week to children in “a limited number of rural schools.” How this would actually be done given the wide dispersion of such students, many of whom rode buses for an hour or more to reach their schools, is unclear.This bailout is intended to offset financial losses from the collapse of distribution systems during the pandemic. While grocery stores are having difficulty keeping their shelves stocked, much of the food in the pipeline is packaged in bulk quantities for institutional buyers such as restaurants and schools. The closure of restaurants, schools and other institutional buyers has resulted in farmers destroying millions of pounds of food as their distribution chains are disrupted. This is not because there is no demand, but because transitioning to retail packaging is too costly. It is cheaper to destroy food than to repackage it and send it elsewhere. This mass destruction of crops and dairy products comes at a time when millions of Americans have lost their jobs and are now turning to food banks to feed their families. Some food banks are reporting an increase in demand as high as 300 percent. Lines of cars in the thousands have been reported queuing up at food banks across the country.

Social Security Costs Expected to Exceed Total Income in 2021 – WSJ – The coronavirus pandemic is expected to weigh on the financial condition of Social Security, which is currently projected to pay benefits that exceed its income in 2021 for the first time in nearly 40 years. Trustees for Social Security and Medicare in an annual report said the latest estimate for when benefits would exceed income is one year later than previously projected. But the projections don’t account for the potential effects of the coronavirus pandemic, which could substantially boost costs and accelerate the depletion of the trust funds. The trustees said the uncertainty over the virus’s impact made it impossible to adjust estimates accurately. “The actual status of the program in the near term is almost certainly somewhat less favorable than is presented in this year’s trustees’ report,” a senior administration official said of Social Security. “It’s clear that employment, earned income and payroll-tax revenue will be significantly affected, and lower for at least a portion of 2020 than estimated for the report. Additional claims for retirement, disability and survivors’ benefits might increase costs.” In their annual report, the trustees said they expect Social Security’s reserves to be depleted by 2035, which would require an automatic reduction in benefits unless Congress steps in to shore up the program. That projection remained the same from last year’s estimate, though officials said the depletion date could be earlier than projected if employment levels suffer a significant or sustained drop from the pandemic.

Trump mulls tying USPS changes to emergency coronavirus loan: report – The Trump administration is considering tying changes to the U.S. Postal Service to the emergency coronavirus loan from Congress, according to The Washington Post. Treasury Department officials told the Post they are speaking with senior officials at the USPS about using the $18 billion loan allocated to the Postal Service by Congress as leverage to influence the way the agency charges for package delivery. Treasury Secretary Steven Mnuchin is also reportedly seeking to influence the hiring process for senior officials at USPS. Trump has often said that the way the Postal Service is run benefits companies like Amazon. The administration would like USPS to increase how much it charges for package deliveries in general and double what it charges Amazon. Congress issued $10 billion in loans to USPS in the $2.2 trillion stimulus bill passed last month. Mnuchin rejected a bipartisan Senate proposal to give the Postal Service a bailout in early negotiations, according to the Post. UPS and FedEx told the Post they are in favor of USPS maintaining flexibility, but would welcome accountability from the agency. The Postal Service is projecting a $13 billion shortfall due to the pandemic while employees remain classified as essential. According to the American Postal Workers Union, 1,219 workers of the Postal Service’s 630,000-person workforce have tested positive for the coronavirus and 44 workers have died.

Facebook Bans Civil Disobedience, Removes Posts Organizing Anti-Lockdown Protests – Facebook has removed several pages promoting protests against state quarantine orders designed to slow the spread of coronavirus.The social media giant acknowledged removing the posts promoting protests in California, New Jersey and Nebraska which violated measures taken by governors to slow the spread of COVID-19.Facebook has been the main main hub for the coordination and promotion of these events, bringing together anti-government and conspiracy-minded fringe activists, including militia groups, religious fundamentalists and anti-vaccination proponents, with the common cause of ending state and federal efforts to restrict freedom of movement to halt the coronavirus’ spread. –NBC News“Unless government prohibits the event during this time, we allow it to be organized on Facebook,” said Facebook. “For this same reason, events that defy government’s guidance on social distancing aren’t allowed on Facebook,” said Facebook spokesman Andy Stone in a statement to the Washington Post.Says it is working to get answers from New York, Wisconsin, Ohio, and Pennsylvania as to whether anti-quarantine protests breaks those states’ social distancing measures. – Donie O’Sullivan (@donie) April 20, 2020 “We do classify that as harmful misinformation and we take that down,” said Facebook CEO Mark Zuckerberg on Monday during an appearance on ABC, adding “At the same time, it’s important that people can debate policies so there’s a line on this, you know, more than normal political discourse. I think a lot of the stuff that people are saying that is false around a health emergency like this can be classified as harmful misinformation.”

Treasury Department reviews bank seizures of $1,200 stimulus checks amid bipartisan criticism – The Washington Post –The Treasury Department is reviewing whether it has the legal authority to prevent banks and private debt collectors from seizing $1,200 government stimulus payments, according to a person familiar with the internal deliberations, as blowback builds over private lenders clawing back parts of the emergency financial relief package.The review is being conducted by legal counsel at the Treasury Department, said the person, who declined to speak on record because the matter had not been finalized. It was unclear when a determination about the payments would be made.Earlier this month, the Trump administration began directly depositing stimulus checks in the bank accounts of 80 million Americans to help them survive the economic downturn caused by the coronavirus. Reports quickly surfaced that some of these payments were being redirected to banks and private debt collectors from people who have overdraft fees, delinquent loans or other debt obligations. These garnishments have sparked a bipartisan backlash in Congress, with lawmakers arguing the money should be walled off from collection by banks and private debt collectors. Several large banks announced they would stop taking the money amid public criticism. USAA, which services veterans and military families, announced last week that it would return the stimulus funds and change its policy after the American Prospect reported the bank took $3,400 in payments from the family of a disabled veteran to offset an existing debt. The seizure of stimulus checks by private lenders threatens to further undermine the rocky rollout of the $2 trillion coronavirus relief package. A number of obstacles have surfaced blocking Americans from swift access to the direct payments, a massive increase in unemployment benefits and emergency loans through the Small Business Administration. The Trump administration has defended its implementation of the law, saying it sent out 80 million checks within three weeks with an error rate of under 1 percent and has successfully disbursed hundreds of billions in small-business aid.

Wells Fargo, JPMorgan among banks sued over aid to small businesses – Wells Fargo, Bank of America, JPMorgan Chase and U.S. Bancorp were sued by small businesses that accused the lenders of prioritizing large loans distributed as part of the virus rescue package, shutting out the smallest firms that sought money. The four banks processed applications for the largest loan amounts because they generated the highest fees, rather than processing them on a first-come, first-served basis as the government promised, according to lawsuits filed Sunday in federal court in Los Angeles. As a result, thousands of small businesses that were entitled to loans under the program administered by the Small Business Administration, known as the Paycheck Protection Program, were left with nothing, the plaintiffs said. JPMorgan declined to comment on the lawsuit. The bank said in a FAQ that its smallest business clients received more than twice as many loans as the rest of its clients combined. Representatives for the other lenders didn’t immediately respond to requests seeking comment. The complaints are based on two reports released by the SBA about the loans. One had data from April 3 when the program launched through April 13, when about three-quarters of the program’s funding had been claimed. The other report showed data as of April 16, after the funding was exhausted and the SBA stopped taking applications. The complaint says in the last three days before the money ran out, loan applications for $150,000 and less were processed at twice the rate of larger loans compared with the initial report, suggesting the largest loans were front-loaded. But the SBA hasn’t released data showing loan activity by lender, or how many loans and what loan amounts were processed on each day. The program, which was enacted last month as part of a $2.2 trillion relief package in response to the outbreak, offered loans of as much as $10 million that are guaranteed by the SBA and disbursed by lenders to small businesses. The loans convert to grants if proceeds are used to keep workers on the payroll and cover rent and other approved expenses for about two months, a short-term stopgap designed to help businesses get by until the economy reopens. Banks earned origination fees of 5% on loans up to $350,000; 3% on loans between $350,000 and $2 million; and 1% on loans between $2 million and $10 million. That means they earned $17,500 for processing a $350,000 loan, compared to $100,000 for a $10 million loan.

Funneling PPP money to the smallest businesses: A fintech exec’s plan – John Pitts, policy lead for the data aggregator Plaid, has been one of the vocal critics of the Paycheck Protection Program who have complained that too many of the loans in its first round – which ran out of funding late last week – were made to larger companies like Shake Shack and Ruth’s Chris Steak House instead of smaller businesses. A Senate vote on legislation that would provide additional funding was expected late Tuesday, and a House vote reportedly is set for occur Thursday. Details of the Senate bill were still emerging, but Minority Leader Chuck Schumer says it would provide an additional $320 billion in PPP funding, including $125 billion aimed at rural and minority areas. Pitts in an interview this week offered two ideas to ensure that as Congress pumps more money into the program, some of it is steered to the smallest businesses through fintech lenders.

Small banks could get big break in emergency loan program’s next round – Smaller banks seem a step closer to getting designated funds in the next phase of the Paycheck Protection Program. Congress is negotiating a new round of stimulus that could add up to $310 billion to the program, said sources familiar with the discussions. Lawmakers are looking at setting aside $50 billion to $60 billion for banks and community development financial institutions with less than $50 billion in assets, said one of the sources, who asked not to be named. Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, called on legislators last week to set aside a quarter of the program’s second round of funding for those lenders. There are other efforts under way to curb how much individual lenders could originate during the PPP’s next round. Sen. Marco Rubio, R-Fla., wants to cap the volume of loans individual lenders make during the next phase of the Paycheck Protection Program. Sen. Marco Rubio, R-Fla., tweeted last weekend that he wants the Treasury Department, one of the program’s administrators, to limit the amount of Paycheck Protection loans a single lender makes to “no more than 5% of the new funds being approved.” No lenders crossed that threshold in the first round.

Something Impossible Just Happened- A CLO Failed Its AAA Overcollateralization Test – Over the weekend, we reported that in its quest to bailout the richest Americans and the country’s financial system, the Fed unleashed an unprecedented array of actions meant to backstop capital markets, going so far as buying investment grade, high yield bonds and even AAA-rated CLO bonds.However, as we warned, it won’t be enough, for two reasons: first, recall that the expanded Term Asset-Backed Securities Loan Facility (TALF) announced by the Fed last Thursday only buys AAA-rated bonds of CLOs, which after the coming tsunami of CLO downgrades is complete, will not only collapse in nominal size but will mean that any further attempts to stabilize the CLO space will require yet another Fed backstop of even riskier – i.e., rated AA and lower – structured products.The second reason – one which Bloomberg called a “bigger and more ominous force at work that has investors bracing for the kind of pain they’ve never experienced in the decades that the [CLO] market has existed” – is that late on Friday, in the most draconian and widespread ratings action since the financial crisis, Moody’s warned it may cut the ratings on $22 billion of U.S. collateralized loan obligations – a fifth of all such bonds it grades – as a result of the collapse in cash flows due to the Covid-19 pandemic. The ratings agency took action on 859 bonds from 358 CLOs that package leveraged loans into securities of varying degrees of risk and return. The step – which according to Bloomberg affects about 19% of Moody’s-rated CLOs that purchase broadly syndicated loans – comes as the underlying debt gets downgraded at a record pace.The action followed a report by Moodys earlier in the week in which it reported that its “B3 Negative and lower list” soared to its highest tally ever – 311 companies. That tops a former peak of 291 companies, reached during the credit crisis of 2009 and the commodity-related downturn in April 2016. At 20.7% of the total rated spec-grade population, the list also shot up above its long-term average of 14.8%, and closing in on its all-time high of 26.1%. This spike is the result of the confluence of a coronavirus outbreak, plunging oil prices, and mounting recessionary conditions, which created severe and extensive credit shocks across many sectors, regions and markets, the effects of which are unprecedented. And with the underlying bonds set to suffer an unprecedented collapse in solvency, it is only a matter of time before the products where they are packaged are also hammered. Products such as CLOs.

Negative Oil Prices Pose Headache for Futures Giant CME – WSJ -Negative oil prices threaten to tarnish the image of West Texas Intermediate, the U.S. crude benchmark, and hurt the company that has long relied on it as a key source of revenue: exchange giant CME Group Inc. CME -0.51% Chicago-based CME is home to the WTI futures contract, which is a popular way for oil drillers to protect themselves against price drops or for hedge funds to speculate on the direction of energy markets. Futures are contracts that let traders bet on the future price of commodities like oil and gold, or on financial indexes like the S&P 500. Unlike stocks, futures can sometimes drop below zero, particularly in physical commodity markets when storage facilities fill up and producers pay to get rid of their excess inventories. . Negative prices have occurred in futures on natural gas, electricity and some obscure regional grades of crude oil, but until this week they had never happened in a flagship oil contract like WTI. On Monday, WTI futures for May delivery slid to minus $37.63. They later rebounded to $10.01 Tuesday when the May contract expired. CME had just changed its computer systems earlier this month to allow negative pricing in WTI, anticipating such a scenario, and many traders had discussed it as a possibility. But for many casual investors, the move was puzzling and appeared to be the latest sign of market mayhem unleashed by Covid-19. CME Chairman and Chief Executive Terrence Duffy said in an interview that WTI futures worked as designed, and their foray into negative territory was a signal of real market forces at work. “It’s not a price that makes you feel good,” he said. “But the reality is, there is oversupply, there is under-demand that’s virus-driven, and there is nowhere to put the stuff.”

Mortgage servicers remain hopeful U.S. will deliver coronavirus relief – Despite recent comments by a federal official who questioned the need to aid the mortgage sector, servicers are holding out hope that a government liquidity backstop could still be rolled out within days.Some servicers and other mortgage industry observers say a federal liquidity facility appears to be on the table to cover skipped payments by homeowners hit by the coronavirus pandemic. But several obstacles remain before a plan can be announced, they said.Many say the deadline to launch a backstop with enough time to help cover May 1 payments is approaching. “I would not be surprised to see some form of liquidity facility introduced as early as this week,” said Scott Buchta, head of fixed income strategy at Brean Capital. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell have both expressed support for aiding the mortgage market, but the Fed faces statutory limitations on whom it may lend to and what collateral it can accept. Some on Wall Street have pointed the finger at Mark Calabria, director of the Federal Housing Finance Agency, as standing in the way of any potential government solution. Earlier this month, Calabria was quoted as saying recent forbearance data does not indicate servicers are on the verge of collapse.“Nothing we are seeing as of today suggests that this is a systemic problem,” Calabria said in a recent interview with Bloomberg News. “What we are seeing suggests that for the next couple of months, this is sustainable.”But the sharp rise in forbearance requests and the potential for massive delinquencies could force the government to finally act. “It has to happen by mid-to-late April to be effective for the May collection period,” Buchta said.

FHFA tries to cut liquidity-strained mortgage servicers some slack – Servicers of loans in forbearance that are backed by Fannie Mae must advance missed payments only for four months, under a policy unveiled Tuesday to addressing liquidity concerns stemming from the coronavirus.The four-month obligation announced by the Federal Housing Finance Agency aligns the duration on Fannie-backed loans with that already in place for Freddie Mac. After the four-month period, the two mortgage giants will stand ready to take over advancing payments to investors in mortgage-backed securities.“Mortgage servicers can now plan for exactly how long they will need to advance principal and interest payments on loans for which borrowers have not made their monthly payment,” FHFA Director Mark Calabria said in a press release. “The four-month servicer advance obligation limit for loans in forbearance provides stability and clarity to the $5 trillion Enterprise-backed housing finance market.” The housing finance system has been grappling since mid-March with how to recoup lost revenue from homeowners who have asked to skip payments. To help homeowners, the FHFA and lawmakers have allowed forbearance periods of between six months to a year on loans backed by Fannie and Freddie. When borrowers stop paying their mortgage, servicers are contractually obligated to advance principal and interest payments to MBS investors. Unlike banks that have access to federal liquidity facilities, nonbank mortgage servicers rely on financing from commercial banks and private firms.Servicers maintain liquid reserves to cover these advances for loans backed by Fannie and Freddie – as well as MBS backed by Ginnie Mae – that together make up the majority of the mortgage market.The FHFA said it is instructing the GSEs to maintain loans in MBS pools for the duration of a forbearance plan. Before the COVID-19 outbreak, loans in forbearance typically were bought out of MBS pools.

Housing Regulator Moves to Ease Crunch at Mortgage Companies – WSJ – The federal agency that oversees the bulk of the U.S. housing market is stepping in to help cash-starved mortgage firms – but it is exacting a price. The firms, including companies like Quicken Loans Inc. and Freedom Mortgage Corp., have been stuck with mortgages they would typically sell, as borrowers suspend payments amid the economy’s pandemic-driven downturn. The Federal Housing Finance Agency said Wednesday that mortgage firms can sell some of those loans to Fannie Mae and Freddie Mac, the government-controlled companies that buy mortgages and package them into securities. “Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending,” FHFA Director Mark Calabria said in a statement. Industry officials praised the regulator’s move but suggested that fees Fannie and Freddie will charge for the purchases – from 5% to 7% of a loan’s value – were high and should be subject to negotiation. “The new fees attached to the sale of loans may be cost-prohibitive for many credit unions and limit affordable loan options for home buyers,” Dan Berger, chief executive of the National Association of Federally Insured Credit Unions, said in a statement. Like banks and nonbank mortgage companies, credit unions originate loans that they sell to Fannie and Freddie Bob Broeksmit, chief executive of the Mortgage Bankers Association, said the move was “an important first step but more needs to be done,” both on pricing and on including all types of loans. The loans will be priced “to mitigate the heightened risk of loss” to Fannie and Freddie, the FHFA statement said.Fannie and Freddie don’t make loans but instead buy them from lenders and package them into securities that are sold to other investors. Industry officials were anticipating federal action to help banks and mortgage companies that typically lend to home buyers and then quickly sell the loans to Fannie and Freddie. Their business model was upended recently when Fannie and Freddie said they wouldn’t buy loans in so-called forbearance – meaning borrowers have stopped making payments. . The problem stems from the stimulus package passed by Congress last month. The law allows homeowners to suspend payments on government-guaranteed loans for as long as a year without penalty if they suffered a hardship related to the coronavirus pandemic.

As mortgage bailout balloons amid coronavirus outbreak, servicers finally get some relief — For weeks, the mortgage industry has been crying for help from being left on the hook to pay for much of the government’s mortgage bailout. Now, they’re getting some relief. More than 3 million borrowers have taken advantage of the mortgage forbearance program, which allows those with government-backed loans to delay up to a year’s worth of monthly mortgage payments if they have been hurt financially by the economic fallout from the coronavirus. Borrowers would have to make those payments at a later date, or over time. Mortgage servicers, however, the companies that collect the payments, were required to advance that money to bondholders for up to a year. Now, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, has reduced that requirement to 4 months. “The four-month servicer advance obligation limit for loans in forbearance provides stability and clarity to the $5 trillion Enterprise-backed housing finance market,” said FHFA Director Mark Calabria. “Mortgage servicers can now plan for exactly how long they will need to advance principal and interest payments on loans for which borrowers have not made their monthly payment.” The percentage of loans now in forbearance jumped from 3.74% of servicers’ portfolio volume in the prior week to 5.95% as of April 12, 2020, according to new numbers released Monday by the Mortgage Bankers Association. The share of Fannie Mae and Freddie Mac loans in forbearance increased from 2.44% to 4.64%. Since the program rolled out a little over three weeks ago, the number of loans in forbearance has tripled.

Black Knight: National Mortgage Delinquency Rate Increased in March, First Increase in March Ever – Note: Loans in forbearance will be counted as delinquent in this survey, so the delinquency rate will jump in April (see Black Knight’s on this below) From Black Knight: Black Knight’s First Look: Mortgage Delinquencies See First-Ever March Increase from Early COVID-19 Impact; Foreclosures, Serious Delinquencies Hit Record Lows

• In what’s typically the strongest month of the year for mortgage performance, delinquencies rose by 3.33%, the first March increase since the turn of the century, an early sign of COVID-19’s impact on the market

• Both the national foreclosure and 90-day delinquency rates set new record lows in March, a lingering reminder of the strength of the mortgage market heading into the pandemic

• At just 27,600 for the month, foreclosure starts also fell to their lowest level on record, as COVID-19-related moratoriums began to impact foreclosure inflows

• Prepayment activity jumped by nearly 40% in March, driven by record-low 30-year mortgage rates

• Note: For the purposes of this report going forward, the millions of homeowners who have since entered into forbearance will be counted as past due, but should not be reported as such to the credit bureaus by their servicers

According to Black Knight’s First Look report for March, the percent of loans delinquent increased 3.3% in March compared to February, and decreased 7.3% year-over-year. The percent of loans in the foreclosure process decreased 7.7% in March and were down 18.0% over the last year.Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.39% in March, up from 3.28% in February. The percent of loans in the foreclosure process decreased in March to 0.42% from 0.45% in February.The number of delinquent properties, but not in foreclosure, is down 111,000 properties year-over-year, and the number of properties in the foreclosure process is down 44,000 properties year-over-year.

NAR: Existing-Home Sales Decreased to 5.27 million in March – From the NAR: Home Sales Increase Year-Over-Year Despite Expected Monthly March Sales Decline Due to Impact of COVID-19 Existing-home sales fell in March following a February that saw significant nationwide gains, according to the National Association of Realtors®. Each of the four major regions reported a dip in sales, with the West suffering the largest decrease. Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 8.5% from February to a seasonally-adjusted annual rate of 5.27 million in March. Despite the decline, overall sales increased year-over-year for the ninth straight month, up 0.8% from a year ago (5.23 million in March 2019). … Total housing inventory at the end of March totaled 1.50 million units, up 2.7% from February, but down 10.2% from one year ago (1.67 million). Unsold inventory sits at a 3.4-month supply at the current sales pace, up from three months in February and down from the 3.8-month figure recorded in March 2019.This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in March (5.27 million SAAR) were down 8.5% from last month, and were 0.8% above the March 2019 sales rate. The second graph shows nationwide inventory for existing homes. Existing Home InventoryAccording to the NAR, inventory increased to 1.50 million in March from 1.46 million in February. Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory. Year-over-year Inventory Inventory was down 10.2% year-over-year in March compared to March 2019. Months of supply was increased to 3.4 months in March.

Comments on March Existing Home Sales – Earlier: NAR: Existing-Home Sales Decreased to 5.27 million in March – A few key points:

1) This is mostly pre-crisis data. Existing home sales are counted at the close of escrow, so this report is mostly for contracts signed in January and February. Sales will decline sharply in April and May.

2) Existing home sales were up 0.8% year-over-year (YoY) in March.

2) Inventory is very low, and was down 10.2% year-over-year (YoY) in March. Inventory will probably stay low as people wait to list their homes – and do not want strangers in their house. This is the lowest level of inventory for March since at least the early 1990s. Signed contracts will probably be down sharply year-over-year in April and May. Note that existing home sales picked up somewhat in the second half of 2019 as interest rates declined. Existing Home Sales NSAThe second graph shows existing home sales Not Seasonally Adjusted (NSA) by month (Red dashes are 2020), and the minimum and maximum for 2005 through 2019. Sales NSA in March (415,000) were just above sales last year in March. Note that sales have been in the middle of the range recently – not absurdly high like in 2005, and not depressed like in 2010 and 2011. With the pandemic, sales will decline sharply over the next few months.

Americans Pulled Back From Home Purchases in March – Americans pulled back from purchases of previously owned homes in March as the coronavirus pandemic shut down much of the U.S. economy, triggering a decline in the biggest part of the housing market. Sales of previously owned homes decreased 8.5% in March – the biggest month-over-month decline since November 2015 – from the prior month at a seasonally adjusted annual rate of 5.27 million, the National Association of Realtors said Tuesday. Previously-owned homes make up most of the housing market. Economists surveyed by The Wall Street Journal expected a 7.5% decline last month. The NAR data suggest the coronavirus is hitting the normally active spring home-selling season hard. About 40% of the year’s sales typically take place from March through June, making these months pivotal for the housing market each year. “We are missing out on the spring buying season,” said Lawrence Yun, the trade group’s chief economist. “The latter part of March is clearly indicating that sales activity will be markedly lower in coming months.” As plans emerge to reopen parts of the U.S. economy, a new WSJ/NBC News poll shows the majority of Americans think it will be a long time before the economy can return to normal. WSJ’s Gerald F. Seib explains. Photo: G. Ronald Lopez/ZUMA Wire Homes typically go under contract a month or two before the contract closes, so the March data largely reflects purchase decisions made in February or January. The U.S. entered March still riding an 11-year economic expansion. By the end of the month, millions had applied for unemployment benefits and icons of American commerce were shutting down, seeking government aid and shedding staff. The sales data suggest regions hit with early coronavirus outbreaks struggled, such as California, Washington and New York. Existing-home sales in the West dropped 13.6% on the month, while sales in the Northeast dropped 7.1%. At the current sales pace, there was a 3.4-month supply of homes on the market at the end of March.

New Home Sales Decrease to 627,000 Annual Rate in MarchThe Census Bureau reportsNew Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 627 thousand. The previous three months were revised down. Sales of new single‐family houses in March 2020 were at a seasonally adjusted annual rate of 627,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 15.4 percent below the revised February rate of 741,000 and is 9.5 percent below the March 2019 estimate of 693,000.” The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are just at a normal level. The second graph shows New Home Months of Supply. New Home Sales, Months of SupplyThe months of supply increased in March to 6.4 months from 5.2 months in February. The all time record was 12.1 months of supply in January 2009. This is slightly above the normal range (less than 6 months supply is normal). Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973. The inventory of completed homes for sale is still somewhat low, and the combined total of completed and under construction is close to normal. The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate). In March 2020 (red column), 61 thousand new homes were sold (NSA). Last year, 68 thousand homes were sold in March. The all time high for March was 127 thousand in 2005, and the all time low for March was 28 thousand in 2011. This was below expectations of 645 thousand sales SAAR, and sales in the three previous months were revised down. I’ll have more later today. The sales in March were only partially impacted by COVID-19 crisis. Sales in April will probably be much lower.

A few Comments on March New Home Sales – New home sales for March were reported at 627,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised down. New home sales are counted when contracts are signed, so the impact of COVID-19 was probably in the second half of March. I expect sales will decline significantly in the April New Home sales report (to be released in May). Earlier: New Home Sales Decrease to 627,000 Annual Rate in March. This graph shows new home sales for 2019 and 2020 by month (Seasonally Adjusted Annual Rate). New home sales were down 9.5% year-over-year (YoY) in March. Year-to-date (YTD) sales are still up 6.7%, but sales will be down YTD soon. The comparisons are easy over the first five months of the year, but sales will probably be down YoY for the next several months – at least – due to COVID-19. And here is another update to the “distressing gap” graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales. The “distressing gap” graph shows existing home sales (left axis) and new home sales (right axis) through March 2020. This graph starts in 1994, but the relationship had been fairly steady back to the ’60s. Following the housing bubble and bust, the “distressing gap” appeared mostly because of distressed sales. Now the gap is mostly closed. However, this assumes that the builders will offer some smaller, less expensive homes. Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different. Over the next several months, both new and existing home sales will be negatively impacted by COVID-19.

UMich Consumer Sentiment Crashes By Most Ever, Home-Buying Conditions Worst In 37 Years – The preliminary April UMich confidence data was a bloodbath, and the final data (albeit very marginally better than the flash print) offered little hope for any change anytime soon… The University of Michigan’s final sentiment index for April slumped 17.3 points to 71.8 from a month earlier after a preliminary reading of 71, according to data Friday. The measure, while the lowest since 2011, was higher than the median projection of 68 in a Bloomberg survey of economists. The gauge of current conditions fell to 74.3, better than the 72.4 preliminary reading, while a measure of expectations dropped to 70.1. Buying Conditions collapsed across the board with home-buying intentions at their lowest since 1983 (and buying conditions for large household durables are the worst ever… While all income levels were affected, it appears the wealthiest suffered the biggest drop but the poorest are the worst levels since 2013…(4 Bloomberg graphs) Shutdowns of non-essential businesses across most U.S. states have resulted in an unprecedented 26.5 million applications for jobless benefits in the past five weeks. With thousands of storefronts closed as governments await some semblance of easing in the health crisis, consumer spending has weakened significantly. “In the weeks ahead, as several states reopen their economies, more information will reach consumers about how reopening could cause a resurgence in coronavirus infections,’’ said Richard Curtin, director of the survey, in a statement. “Consumers’ reactions to relaxing restrictions will be critical.’’

AIA: Architecture Billings Index Decreased Sharply in March –Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Architecture Billings Index points to major downturn in commercial construction Reflecting the deteriorating conditions in the overall economy, demand for design services from architecture firms recorded a record fall, according to a new report today from The American Institute of Architects (AIA).AIA’s Architecture Billings Index (ABI) score of 33.3 for March reflects a decrease in design services provided by U.S. architecture firms (any score below 50 indicates a decrease in billings). During March, both the new project inquiries and design contracts scores dropped dramatically, posting scores of 23.8 and 27.1 respectively.

“Though most architecture firms have made quick transitions to remote operations, the complete shutdown of business activity is severely impacting architects,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “The dramatic pullback in new and ongoing design projects reflects just how quickly and fundamentally business conditions have changed across the country and around the world in the last month as a result of the COVID-19 pandemic.”

• Regional averages: West (45.3); South (44.2); Midwest (44.2); Northeast (38.4)

• Sector index breakdown: institutional (46.9); multi-family residential (43.3); commercial/industrial (41.9); mixed practice (40.6)

This graph shows the Architecture Billings Index since 1996. The index was at 33.3 in March, down from 53.4 in February. Anything below 50 indicates contraction in demand for architects’ services. Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.This was the largest one month decline on record for this index. This also matches the lowest level for this index during the Great Recession.

Hotels: Occupancy Rate Declined 69.8% Year-over-year to All Time Record Low – From HotelNewsNow.com: STR: US hotel results for week ending 11 April Reflecting the continued impact of the COVID-19 pandemic, the U.S. hotel industry reported significant year-over-year declines in the three key performance metrics during the week of 5-11 April 2020, according to data from STR.In comparison with the week of 7-13 April 2019, the industry recorded the following:

• Occupancy: -69.8% to 21.0%

• Average daily rate (ADR): -45.6% to US$74.18

• Revenue per available room (RevPAR): -83.6% to US$15.61

“There was not much of a change from last week. As we’ve noted, RevPAR declines of this severity are our temporary new normal,” said Jan Freitag, STR’s senior VP of lodging insights. “Several weeks of data also point to occupancy in the 20% range to be the low point, and economy hotels holding at a higher occupancy level is the pattern right now.” The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).2020 was off to a solid start, however, COVID-19 has crushed hotel occupancy.Note: Y-axis doesn’t start at zero to better show the seasonal change.This is the lowest weekly occupancy on record, even considering seasonality.

TSA checkpoint travel numbers — The TSA is providing daily travel numbers. (ht @conorsen) This is another measure that will be useful to track when the economy starts to reopen. This data shows the daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red).On April 19th there were 105,382 travelers compared to 2,356,802 a year ago. That is a decline of 95%.

Credit Cards Start Offering Lower Limits Amid U.S. – Major U.S. credit-card issuers are starting to lower customer spending limits as the coronavirus pandemic leaves millions of Americans jobless and struggling to keep up on loans. Discover Financial Services just became the largest lender yet to acknowledge it’s begun reining in lines of credit for new customers. In a regulatory filing late Wednesday, the firm said it’s also easing off efforts to sign up consumers and that it expects to take a hit from programs letting existing borrowers skip payments or delay the accrual of interest. “As the number of loans enrolled in these programs increases, our financial results will be adversely impacted in the short term due to forgone interest,” Discover said. The announcement came a day after Synchrony Financial, the company behind cards for J.C. Penney Co., Gap Inc. and American Eagle Outfitters Inc., said it will try to stem losses by closely managing customers’ accounts. In a conference call with analysts Tuesday, Chief Financial Officer Brian Wenzel said the firm is using its own vast trove of data, as well as information from credit bureaus, to “dynamically reevaluate a customer’s creditworthiness.” That means some may be allowed to spend more, but others less. The defensive moves are a pivot for both companies, which more often give updates on marketing campaigns and their progress in building up interest-bearing balances. On a conference call with analysts Thursday morning, Discover Chief Executive Officer Roger Hochschild said efforts to curtail risk since the crisis began include conducting additional verification of employment and setting lower limits for new accounts, while offering fewer increases to existing cardholders. “As part of our credit response to Covid-19, we haven’t made any changes in terms of closing inactive accounts or doing more line decreases,” Hochschild said in a separate interview Thursday. “We think it’s very challenging to do those now. Pulling away credit when they need it most can have tremendously adverse impacts.”

Discover takes new approach to fraud as coronavirus drives more online, phone applications – As the coronavirus pandemic has forced branch closures and halted many mail-in applications, consumers have increasingly shifted to phone and digital channels to open new accounts and service existing ones – creating new challenges in fighting fraud. Discover transitioned all of its 8,600 U.S.-based call center personnel to work from home within a matter of days following the U.S. declaration of a national emergency on March 13. By March 20, Discover had 95% of its agents working from home using a thin- client device to emulate their call center desktops. While this has proved critical in keeping employees safe, it has also created a new learning challenge. Traditionally, call centers employees work in teams because it aids in the fight against fraud and improves overall customer satisfaction, since a team leader is able to provide real-time, “in the moment” teachings. In a distributed environment, this practice is much more difficult and creates an opportunity for potential fraud to be overlooked. “We’re learning a lot about how to collaborate in this environment. I think it’s forced us to become better connected in working from home than when we were all in our offices,” said Dennis Michel, senior vice president of customer service and engagement at Discover. “It’s important because we’ve seen an uptick in travel-related chargeback disputes – 300% higher overall and airlines alone up over 967%. We need to address valid customer requests quickly.” Addressing valid customer disputes is important, but so is figuring out if there is an attempt at first-party customer fraud. For many companies, including Discover, the amount of telephone calls received has risen significantly since mid-March, exacerbating the transition process since there has been no easy way to change a company’s operations on such short notice.

Empty Grocery Shelves and Rotting, Wasted Vegetables: Two Sides of a Supply Chain Problem In Florida, farmers are tossing away thousands of pounds of zucchini and leaving tomatoes to rot on the vine. In California, they’re plowing under squash. In Wisconsin, dairy producers are dumping milk down drains. And in at least eight states, the coronavirus has sickened and killed workers at meat processing facilities, forcing operations to a halt. A single pork processing facility, in Sioux Falls, South Dakota, is now the biggest Covid-19 hotspot in the country, with more than 600 workers ill. With no place for their livestock to go and unable to afford feed, farmers are being forced to euthanize animals they raised for slaughter. “They’re going back to their farms to kill birds because they can’t process them,” said Mary Hendrickson, an expert in food systems with the University of Missouri. “No farmer wants to do that.” All this at a time when food insecurity is on the rise. As the coronavirus pandemic rips through the food system, the supply chain – from farm to supermarket – is showing signs of distress and sending up warning flares about the fragility of the world’s food production system. Many analysts, farmers and researchers are now examining with fresh urgency how supply chains might be retooled or regionalized to handle disruptions, including those projected to increase with climate change. “What this immense public health crisis has done is exposed really sharply the cracks in so many of the systems we’re living with, the food system among them,” said Melissa Leach, a member of the Brussels-based International Panel of Experts on Sustainable Food Systems (IPES-Food). “Disaster as it is, it might be an opportunity to rethink food systems fundamentally.” A decades-long trend toward mega-mergers and corporate consolidation across the food system – from seeds to processing to consumer staples – has led to a sprawling supply chain that’s more easily upended when disasters hit, critics say. “A highly specialized, centralized, concentrated agri-business food system is never resilient, so it’s vulnerable to anything that comes its way,” Hendrickson said. “Farmers have to be able to make decisions; they can’t be beholden to these centralized supply chains. That’s going to make us better prepared for climate change and ongoing pandemics.”

Egg demand shifted, and 61,000 Minnesota chickens euthanized – Kerry Mergen, a contract egg farmer near Albany, Minn., got word on a Wednesday the chickens in his barn would be euthanized. A crew showed up the next morning and started gassing the birds with carbon dioxide.The sudden drop in demand for food at restaurants, school cafeterias and caterers shut down by the pandemic has ripped through farming. Milk has been dumped, eggs smashed and ripe lettuce plowed under.Now, farms are killing animals sooner than planned. Mergen said he initially couldn’t believe it when a field manager from Daybreak Foods, the Lake Mills, Wis.-based firm that owned and paid to feed the flock of 61,000 birds, said they might be killed early. His contract called for the flock to produce eggs until fall.“I was wrong and the company decided to do it anyway,” Mergen said.A primary destination for eggs from the flock – a Cargill Inc. fluid egg plant in Big Lake, Minn. – temporarily shut down last week and laid off 300 employees there. The company cited declining demand for the decision to idle the facility, which handles 800 million eggs a year and sends containers of fluid egg to food-service companies across North America.“It is important to note that food-service orders have not stopped, but with the decline in food-service orders, Cargill and its egg suppliers are working diligently to rebalance supply to match these consumer and customer shifts,” Cargill said in a statement.Demand for eggs in grocery stores is high and the price of a dozen eggs has risen. But much of the egg-production system is built to provide fluid eggs to food service companies and changing farms to provide eggs for retail is neither simple nor quick.Mergen said his was one of five egg farms where chickens were euthanized in Minnesota in recent weeks, and that the other four were larger than his farm.That figure couldn’t be independently confirmed, and an official at the Minnesota Board of Animal Health said livestock producers do not have to report euthanizing large numbers of animals. The practice is not uncommon, particularly with hens whose egg-laying productivity is up after about two years. But the decision to cull animals while they are still productive is rare.

At Least 10 Meatpacking Plants Close In Weeks Across America Stoking Food Shortage Fears – At least ten meatpacking facilities have shuttered operations over the last several weeks, stoking fears of imminent food shortages across the country.n Hormel Foods Corporation announced Jennie-O Turkey Store, Inc., “will temporarily pause operations at its Willmar Avenue and its Benson Avenue facilities, both located in Willmar, Minn.”“Based on information about the community spread of COVID-19 in the area, the company decided it was the right decision to pause operations to undergo a facility-wide cleaning that will enhance already robust safety and sanitization protocols. Under its pay program, all Jennie-O Turkey Store employees will continue to receive 100 percent of their base pay and benefits during the pause in production. Jennie-O Turkey Store is a wholly-owned subsidiary of Hormel Foods Corporation.” Steve Lykken, president of Jennie-O Turkey Store, said, “The health, well-being and safety of our team members is our top priority. Out of an abundance of caution, we have decided to take a pause in operations.” “During this pause, we will maintain our thorough food processing sanitation practices, as well as the enhanced procedures that we have been employing since the emergence of COVID-19. The facilities will be deep cleaned, including all common areas and high-touch surfaces,” Lykken added. Both facilities are expected to close by the end of the weekend. There were reports earlier in the week that 14 employees out of 1,200 had tested positive for the virus.We noted on Thursday that “dominos are falling, with meatpacking plants shuttering operations across the country because of the coronavirus outbreak.”Also, health officials in Illinois closed Hormel’s Rochelle Foods plant last Friday, a move that could trigger a shortage of Spam products. In the days and or weeks ahead, more meatpacking plants will likely close for virus-related reasons – which will lead to food shortages in May.

Farmers Are Starting to Destroy Their Pigs After Factories Close A wave of shutdowns at some of North America’s largest meat plants is starting to force hog producers to dispose of their animals in the latest cruel blow to food supplies. Shuttered or reduced processing capacity has prompted some farmers in eastern Canada to euthanize hogs that were ready for slaughter, said Rick Bergmann, chair of the Canadian Pork Council. In Minnesota, farmers may have to cull 200,000 pigs in the next few weeks, according to an industry association. Carcasses are typically buried or rendered. “This is an unacceptable situation and something must be done,” Bergmann, who is also a farmer, said Thursday. The culling highlights the disconnect that’s occurring as the coronavirus pandemic sickens workers trying to churn out food supplies just as panicked shoppers seek to stock up on meat. Wholesale pork prices in the U.S. have surged in the past week. Hogs are the latest commodity that’s seeing supplies potentially go to waste as farmers in the U.S. and Canada lose money, with nowhere to sell their animals. Dairy farmers are spilling milk that can’t be sold to processors, broiler operations have been breaking eggs to reduce supplies and some fruit and vegetables are rotting in fields amid labor and distribution disruptions. In the U.S., at least eight major meat facilities have seen halts in the space of a few weeks, shuttering more than 15% of the nation’s pork processing capacity. In Canada, Olymel’s plant in Yamachiche, Quebec, that normally processes 28,000 hogs a week closed for two weeks on March 29 and is currently operating with one less shift. With packing plants closing, demand was getting hit for hogs already fattened up for slaughter, and for piglets that would typically replace those animals on the farm. Prices for 40-pound feeder pigs in the U.S. plunged to the lowest since August 2018, according to U.S. Department of Agriculture data.)

The World’s Top Pork Processor Is Battling Two Epidemics at Once – As businesses around the globe buckle under the strain of Covid-19, the world’s biggest pork producer is fighting not just one highly contagious virus, but two. And the outcome could determine whether Americans will have enough hot dogs, bacon, and ham this summer. Hong Kong-based WH Group Ltd. is struggling to cope with the virus that causes African swine fever (ASF), a deadly malady that’s devastated hog herds and helped more than double pork prices in China, while also spreading to other countries in Asia and Europe. Like Covid-19, ASF is currently incurable and researchers have yet to come up with a vaccine. China’s pork production fell 29% in the first three months of 2020; the swine disease has slashed the size of the country’s hog herd by about half. Now the coronavirus is piling on. Smithfield Foods, the Virginia-based subsidiary of WH Group, shut three of its U.S. plants this month because of Covid-19. They include a processing facility in Sioux Falls, S.D., that accounts for about a quarter of the company’s U.S. revenue. When Smithfield announced the indefinite closure, more than 200 workers were sick; that number has risen to more than 700 – almost half the state’s total. With the Sioux Falls site alone handling about 5% of all hog processing in the U.S., the maker of Farmland bacon, Farmer John hot dogs, Eckrich sausage, and Armour ham warned of possible supermarket shortages. “The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” Smithfield Chief Executive Officer Ken Sullivan said on April 12. “It is impossible to keep our grocery stores stocked if our plants are not running.” WH isn’t the only meat company facing virus woes. Tyson Foods Inc. on April 22 said it’s closing its 2,800-worker pork plant in Waterloo, Iowa. Brazilian processor JBS SA had said it would indefinitely close its pork plant in Worthington, Minn., after employees tested positive for Covid-19. And deaths have been reported among workers at Tyson’s pork plant in Iowa and poultry plant in Georgia as well as at Cargill Inc. plants in Colorado and Alberta, Canada. Even before the coronavirus disruptions, the world wasn’t producing enough pork. The number of hogs worldwide has declined about 25% because of ASF, according to the U.S. Meat Export Federation. Now the double epidemic raises the specter of shortages that could put WH in the middle of a fight between its two biggest markets, says Brett Stuart, president of Denver-based consulting firm Global AgriTrends. “Smithfield is going to say, ‘I have X amounts of hogs to sell, and the highest bidder gets the pork,’ ” he says. “Could we get to a situation where China is outbidding U.S. consumers for pork? Potentially, yes.”

U.S. Durable-Goods Orders Drop as Economic Outlook Sours – Orders for aircraft, cars and spare parts fell sharply in March, and consumers’ souring view on the economy suggested the decline in demand related to the coronavirus pandemic could deepen in the coming months. New orders for aircraft and parts fell by more than $16.3 billion in March from February, the Commerce Department said Friday. Since orders are recorded on a net basis, the figure incorporates canceled orders. New orders for automobiles and parts fell 18.4% in March. Overall orders for durable goods – products designed to last at least three years – were down 14.4% in March, the biggest monthly drop since August 2014. Excluding the volatile transportation sector, orders were down a more modest 0.2%. New orders for nondefense capital goods excluding aircraft – a closely watched proxy for business investment – were up 0.1%. The collapse in net aircraft orders in March reflected what Boeing Co. called its biggest monthly spike in jetliner cancellations in decades as airlines started to adjust their fleets in response to the pandemic. Boeing secured deals for 31 jets last month compared with 43 in March 2019, but had cancellations for 150 of its 737 MAX planes, which have been grounded for more than a year awaiting regulatory approval to fly again after two fatal crashes. The company removed deals for 307 planes from its order book in the first quarter, while aerospace suppliers also suffered a big drop in sales of spare parts to airlines in March as the collapse in air travel forced the grounding of two-thirds of the global jet fleet. Analysts said the transportation sector appears to have been the first to bear the brunt of the economic shock related to the coronavirus. Other sectors will probably show similar sharp declines in the months ahead, said Gregory Daco, chief U.S. economist at Oxford Economics. Friday’s report covers the month of March, when the lockdowns to contain the spread of the coronavirus were in their early stages. “We’re going to see steep drops across different categories,” he said. Separately, an index measuring Americans’ outlook for the economy posted the sharpest single-month decline, according to a University of Michigan survey released Friday.

Cancellation Wave Continues, China Leasing Firm Scraps Boeing 737 MAX Order – As thousands of Boeing employees head back to work in the Puget Sound region over the last week, the Washington-based aircraft manufacturer has noticed a string of recent cancellations of the grounded 737 MAX jet. Last Tuesday (April 14), Boeing announced a total of 150 MAX cancellations in March, including 75 previously reported from Irish leasing company Avolon. Cancellations also came from other buyers, including 34 of 135 aircraft ordered by Brazil’s GOL. Now on Monday morning (April 20), China Development Bank Financial Leasing Co. (CDB) has joined the cancellation party, slashing 29 MAX planes from its order, worth about $2.9 billion, reported Bloomberg.The MAX jet has been grounded globally for a little more than a year after two deadly crashes in Indonesia and Ethiopia.”In light of evolving aviation market dynamics, we’ve been working together with Boeing over many months to re-calibrate our MAX order book to be in line with our long-term view of the market and related opportunities,” Xuedong Wang, chairman of CDB Financial unit CDB Aviation, said in a statement to the Hong Kong stock exchange Monday.The statement says CDB’s outstanding MAX order is now 70 after the adjustment. The coronavirus pandemic coupled with MAX groundings, has crushed Boeing. CEO Dave Calhoun recently warned that the commercial jet market could take years to recover.Boeing published a statement on Monday outlining how it continues to partner with CDB amid challenging times.“As we work to return the 737 MAX to service, our focus remains on addressing our customers’ fleet needs while optimizing the delivery of the more than 4,000 airplanes in our 737 backlog,” it said.

The plunge in oil prices is the last thing Boeing and Airbus need right now – The coronavirus pandemic, the threat of airline bankruptcies and a global recession. Now a historic oil glut and price crash are adding to the woes of Boeing and Airbus. The duopoly that dominates most of the world’s aircraft production spent more than a decade racking up record orders for planes they boasted could save millions in fuel. “One thing that kept the industry aloft during the great financial meltdown [in 2008] is fuel prices actually rose,” said Richard Aboulafia, an aviation analyst at vice president at Teal Group, referring to record oil prices that year. Rising oil prices can help boost sales of more fuel-efficient aircraft, the opposite of sales trends for larger personal vehicles like SUVs. The Airbus A320neo and the Boeing 737 Max, each manufacturer’s best-selling narrow-body airplanes were developed after the Great Recession when fuel prices were again rising and airlines were on the hunt for models that would help them cut fuel costs. Both companies amassed years of orders for thousands of planes. But manufacturers have lost that selling point, adding to a slate of challenges that are expected to last at least into 2021, if not later, and a sharp turnaround from earlier this year when airlines couldn’t get new single-aisle airplanes fast enough.

Kansas City Fed: “Tenth District Manufacturing Activity Decreased Further” in April, Lowest Reading on Record – From the Kansas City Fed: Tenth District Manufacturing Activity Decreased Further: Tenth District manufacturing activity decreased further to the lowest reading in survey history (since 1994), while expectations for future activity improved but remained slightly negative. Month-over-month price indexes declined again in April, but District firms expected prices to rise slightly in the next six months. The month-over-month composite index was -30 in April, the lowest composite reading in survey history, and down considerably from -17 in March and 5 in February. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The decrease in district manufacturing activity was steepest at durable goods factories such as primary and fabricated metals, and activity at non-durable goods plants including food and beverage manufacturing declined as well. All month-over-month indexes dropped further in April except for supplier delivery time which continued to increase. Year-over-year factory indexes also decreased again in April, and the composite index fell from -14 to -30. The future composite index improved from -19 April, but remained slightly negative at -6. All of the regional surveys for April have been very weak.

Weekly Initial Unemployment Claims decrease to 4,427,000 – The DOL reported: In the week ending April 18, the advance figure for seasonally adjusted initial claims was 4,427,000, a decrease of 810,000 from the previous week’s revised level. The previous week’s level was revised down by 8,000 from 5,245,000 to 5,237,000. The 4-week moving average was 5,786,500, an increase of 280,000 from the previous week’s revised average. The previous week’s average was revised down by 2,000 from 5,508,500 to 5,506,500. The previous week was revised down. The following graph shows the 4-week moving average of weekly claims since 1971.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 5,786,500. This was higher than the consensus forecast. The second graph shows seasonally adjust continued claims since 1967 (lags initial by one week while increasing sharply).

Week 5 of the Collapse of the U.S. Labor Market –Wolf Richter -Over the past five weeks, 26.5 million initial claims for unemployment insurance have been processed. In the week ended April 18, 4.427 million unemployment claims, seasonally adjusted, have been processed, over six times the peaks during the prior unemployment crises in 1982 and 2009:m The unemployment claims reported today by the US Department of Labor are those that the state offices were able to process – not including claims that have been filed but haven’t been processed yet.Under the sudden explosion of unemployment claims a month ago, state unemployment offices fell far behind in processing the claims, amid reports of crashed websites, unanswered phones, and eternal hold-times. Since then, the unemployment offices have ramped up staffing, expanded hours of their call centers, and boosted the capacity of their servers to where they can better handle the tsunami of people trying to file claims online. And they’re gradually catching up.Nevertheless, new layoffs are constantly being announced. And the implementations of the provisions in the stimulus package to expand unemployment insurance to contract workers, the self-employed, and gig workers are just now being rolled out state by state, and will mostly fall into future initial claims data.Florida is finally making some progress in catching up in processing claims. In the report a week ago, Florida had processed only 181,000 claims. But in the current reporting week, it was able to process 505,137 claims, just behind California. The table below shows the 12 states that had the most initial claims for unemployment insurance in the week ended April 18:

U.S. Unemployment Waves Keep Hitting With Millions More Claims – The tidal waves of unemployment filings across the U.S. showed only the barest signs of abating last week as more than 4 million people applied for benefits, bringing the five-week total during the coronavirus pandemic to 26.5 million. Most states continued to see initial claims decline on an unadjusted basis, and several states did report decreases in layoffs for the prior week — both signs that job losses are indeed slowing a bit. And government aid to small businesses could spur some employers to restore jobs in coming months. But filings might continue at an extraordinary pace for several more weeks, boosting an unemployment rate that may already be around 20%. While most of the layoffs in sectors like retail have likely already occurred, there will be “collateral damage” as companies faced with weak demand dismiss workers, said Jay Bryson, acting chief economist at Wells Fargo & Co. Bryson said he believes the U.S. is past the peak in initial claims “for the foreseeable future,” but “if we open up too soon and this coronavirus comes roaring back then we may in fact see those sorts of numbers again.” It’s still unclear to what extent the most recent claims totals reflect millions of people still losing their jobs each week or whether it’s largely a reflection of jobless Americans who are just now able to get through jammed websites and phone lines after weeks of trying. States are racing to boost the capacity to computer systems built years ago, adding workers to handle unprecedented volumes of claims and trying to get the $600 in additional weekly aid to the unemployed. Some states have taken steps such as staggering applications by alphabetical order of last name or the last digit of one’s social security number on certain days of the week in order to manage the flow. Read more: ‘Scary Time’ for American Middle Class as Office Jobs Disappear Initial jobless claims of 4.43 million in the week ended April 18 followed a slightly downwardly revised 5.24 million in the prior week, according to Labor Department figures Thursday. The median estimate of economists was for 4.5 million claims. California reported the most initial claims last week, at an unadjusted 533,600, down from 655,500 the prior week. Florida was next, followed by Texas at 280,400, up slightly from the prior week. Georgia and New York also reported more than 200,000 filings, though both down from the previous week.

Three Hours Longer, the Pandemic Workday Has Obliterated Work-Life Balance– People are overworked, stressed, and eager to get back to the office. – An executive at JPMorgan Chase & Co. gets unapologetic messages from colleagues on nights and weekends, including a notably demanding one on Easter Sunday. A web designer whose bedroom doubles as an office has to set an alarm to remind himself to eat during his non-stop workday. At Intel Corp., a vice president with four kids logs 13-hour days while attempting to juggle her parenting duties and her job. Six weeks into a nationwide work-from-home experiment with no end in sight, whatever boundaries remained between work and life have almost entirely disappeared. With many living a few steps from their offices, America’s always-on work culture has reached new heights. The 9-to-5 workday, or any semblance of it, seems like a relic of a bygone era. Long gone are the regretful formalities for calling or emailing at inappropriate times. Burnt-out employees feel like they have even less free time than when they wasted hours commuting. Some predicted the great work-from-home migration of the pandemic would usher-in a new age of flexible work arrangements. As of 2017 only 3% of full-time workers in the U.S. said they “primarily” worked out of a home office in a Census Bureau survey. Then millions sheltered at home for what was originally thought to be a temporary hiatus. Many mapped out plans to fill time they would’ve spent commuting to take up new hobbies, like learning a foreign language, baking or getting into the best shape of their lives. It looked like the beginnings of a telecommuting revolution. A month and a half later, people are overworked, stressed, and eager to get back to the office. In the U.S., homebound employees are logging three hours more per day on the job than before city and state-wide lockdowns, according to data from NordVPN, which tracks when users connect and disconnect from its service. Out of all countries that NordVPN tracks, U.S. workers had tacked on the most hours. In France, Spain, and the U.K. the day has stretched an additional two hours, NordVPN’s data found. Italy saw no change at all. The contours of the workday have changed, too. Without commutes, wake-up times have shifted later, NordVPN found, but peak email time has crept up an hour to 9 a.m., according to data from email client Superhuman. Employees are also logging back in late at night. Surfshark, another VPN provider, has seen spikes in usage from midnight to 3 a.m. that were not present before the COVID-19 outbreak.

Gov. Brian Kemp sets Georgia on aggressive course to reopen, putting his state at center of deepening national debate – The Washington Post -Georgia Gov. Brian Kemp’s move Monday to lift restrictions on a wide range of businesses, one of the most aggressive moves yet to reignite commercial activity in the midst of the coronavirus pandemic, put his state at the center of a deepening national battle over whether Americans are ready to risk exacerbating the public health crisis to revive the shattered economy.The announcement from Kemp (R), who was among the last of the nation’s governors to impose a statewide stay-at-home directive, caused blowback from public health experts, who said the state did not yet meet the criteria issued by the White House, and set up a potential confrontation with the mayor of Atlanta and leaders from other cities advising residents to stay at home.Kemp, a first-term governor, said he would allow gyms, barber shops, tattoo parlors and bowling alleys, among other businesses, to reopen on Friday, though they would be required to follow social distancing guidelines and screen their employees for signs of fever and respiratory illness. He said theaters and dine-in restaurants would be permitted to resume activity on April 27. Meanwhile, a statewide shelter-in-place order expires at the end of the month.The only other state pursuing as swift a strategy is South Carolina, where a range of retail stores were allowed to reopen Monday. The Republican governor, Henry McMaster, also lifted the state’s controls on beaches but left decisions about whether to reopen them to local officials. The decisions in those two Southern states came as scattered protests across the country have targeted governors’ stay-at-home orders, encouraged in some places by President Trump, who has chafed at the social distancing guidelines issued by his own administration. Epidemiologists say restrictions on economic activity and public assembly, combined with ramped-up testing and aggressive contact tracing to identify other potentially infected people, are necessary to contain the outbreak of the new coronavirus, which has killed more than 42,000 Americans. Many governors, including some Republicans, have heeded that advice, holding out against protesters who have descended on state capitol buildings to decry the emergency orders.

Georgia got lifting coronavirus restrictions backward, Connecticut Gov. Ned Lamont says – As states across the U.S. weigh lifting coronavirus restrictions at risk of inducing a second wave of infections, Georgia is reopening the wrong businesses first, Connecticut Gov. Ned Lamont told CNBC Tuesday.Georgia Gov. Brian Kemp, a Republican, announced Monday that the state will reopen businesses on Friday, starting with retail locations such as gyms, barber shops, fitness centers and bowling alleys. Kemp’s decision came after several states mostly in the South unveiled plans to restart parts of their economy.“I think the things that come later are the things that Georgia opened up first, which surprised me, those things that have very close personal contact,” Lamont, a Democrat, said on CNBC’s “Squawk Box.” “Bars, restaurants where you’re closed in, probably even barbershops, nail salons, places where you have close personal contact, there I think we’d have to wait until we have a little more testing and more masks.”Kemp’s office did not immediately respond to a CNBC request for comment.On Monday, Kemp said his plan is to focus on small businesses hardest hit by the lockdown. His move came amid a wave of announcements mostly by Republican governors about how states will shift into phase one of President Donald Trump’s ‘Opening Up America Again’ plan. Last week, Florida Gov. Ron DeSantis, a Republican, announced the reopening of some beaches and parks. Tennessee Gov. Bill Lee, a Republican, announced Monday he will not extend the state’s “safer-at-home” order on April 30, allowing most businesses to reopen on May 1. “Unlike other businesses, these entities have been unable to manage inventory, deal with payroll, and take care of administrative items while we shelter in place,” Kemp said Monday. “This measure allows them to undertake baseline operations that most other businesses in the state have maintained since I issued the shelter-in-place order.”

Texas governor takes heat from his right as he plots careful course on coronavirus – – Gov. Greg Abbott is charting a high-stakes conservative course through the pandemic, forcing him to navigate between influential activists motivated by new restrictions and a rising death toll.The Texas governor is set to announce a plan Monday for reopening the country’s largest conservative state. Not only will it be taken as a potential model for Republican-led attempts to balance their right flank and more cautious business interests, but how to manage a relationship with cities, largely held by Democrats.As other Republican governors in the South, like Georgia’s Brian Kemp and Florida’s Ron DeSantis, grab the spotlight with their eagerness to reopen their economies amid pressure from conservatives, Abbott appears content to let them move faster than Texas. So far his approach seems out of step for a state that prides itself on being the standard bearer of conservative politics and where the lieutenant governor was one of the loudest voices saying older Americans should be willing to sacrifice their lives for an economic revival.“I’m focusing on the next year,” Abbott said in a radio interview this week, “and making sure that Texas over the course of the next year is going to be able to open up and steps that ensure that we will be able to continue the economic expansion in the state of Texas as opposed to rushing the gate and having everybody getting sick and having to close businesses down again.” He added: “If you’re looking at the long game, there are some people who want to be real impulsive and think about let’s just focus on tomorrow.”

“Tourist Go Home” – Tensions Soar As Hawaiians Urge Non-Residents To Leave – Hawaiians are becoming increasingly angry, not because the tourism industry has collapsed, and 37% of the labor force has just filed for unemployment, but mostly because US mainlanders, motivated by super discounted flights and hotel rooms, continue to pour into the various Hawaiian Islands during the pandemic. Troy Kane, a local on Oahu, who was interviewed by The Guardian, said residents are abiding by the stay-at-home orders as cases and deaths surge. He points out tourists on the island are ignoring social distancing rules and risk spreading the virus to locals.“Locals are following the orders, staying home. But there are people, who are clearly tourists, here by the dozens,” said Kane. “They’re still out here, still in groups of seven or more, still coming, and that’s a problem.”The Guardian says, “$100 airfares” are enticing people in quarantine in the continental US to vacation in Hawaii. Last week, nearly 800 tourists arrived on the islands. The influx triggered a nerve among locals and officials who argue tourists need to leave. As of Monday, 580 cases and ten deaths have been confirmed across the Hawaiian Islands. About 35 cases have been non-residents. Kane is a neighborhood board member and community representative of Waimanalo and says the native Hawaiian and Micronesian populations on the islands are at higher risk of contracting the disease. He worries for his community and family that tourists are blatantly disregarding the public health order. “People will always see this place as their playground. And in this moment, as a Native Hawaiian, this is very reflective of many historical circumstances, where people from outside of the islands have come in and caused real harm to the native population. It’s not always with the direct intent to do so, but the impacts, especially on Hawaiian people, are very real,” he said.“If you take our history, it tells us that we are not very well protected.”

Illinois Senate Democrats Seek Massive Federal Bailout for State, Going Far Beyond Coronavirus Impact – Wirepoints has obtained a copy of a letter detailing a federal bailout request sent by Illinois Senate President Don Harmon (D-Chicago) in substantially similar form to all members of the Illinois Congressional Delegation. The letter, which is reproduced below, was sent on April 14 on behalf of Harmon’s 40-member Democratic caucus, which holds a majority in the Illinois Senate. The requested bailout is galling in scope and shameless in purpose – a clear attempt to use the pandemic as cover to get federal money to pay for Illinois’ pre-pandemic fiscal mismanagement, particularly of its pensions. The Democratic caucus seeks well over $41.6 billion, including important crisis-related relief such as $1 billion in public-health aid to minority communities and unspecified amounts for increased Medicaid reimbursements and hardship payments to health care facilities. But the vast majority of their request amounts to a national bailout of Illinois’ pre-pandemic failures. It includes:

• $15 billion for a no-strings-attached block grant;
• $6 billion for the state’s unemployment trust fund;
• $10 billion for the state’s pension funds; and,
• $9.6 billion in unrestricted aid to Illinois municipalities, again for pensions.

The $15 billion for the state is more than double the state’s projected losses caused by the pandemic and downturn, depending on how you count it. Gov. J.B. Pritzker released estimates on Wednesday. Pritzker said total budget shortfalls for this year and next total $6.2 billion, assuming the state’s pending constitutional amendment to allow for a progressive tax increase passes in November. Harmon’s letter claims revenue losses could exceed $14.1 billion, without explanation for the difference with Pritzker’s numbers. Also notable is that the $6 billion bailout for Illinois’ unemployment trust fund stems from the state’s comparatively poor management of it. Illinois, prior to the pandemic, had the fourth-worst funding level for that state fund. The new bailout would be in addition to federal assistance already authorized by Congress and the Federal Reserve Bank. They include, for Illinois, approximately $4.9 billion under the new CARES Act and about $9.6 billion in a new Federal Reserve facility to purchase municipal bonds. Chicago may also be seeking its own federal bailout money separately.

Youth and the COVID-19 pandemic –The COVID-19 pandemic is revealing the reality of social conditions for millions of workers and youth throughout the US and around the world. In the US, nearly 40,000 people have now died from the virus. More than 5 million Americans filed for unemployment benefits last week alone, bringing the total over the past four weeks to 22 million. Dozens of videos have circulated showing families waiting in mile-long lines for food at shelters and food banks. To the shock of millions, images of coffins being lined up in a mass grave in New York have appeared on the front page of newspapers and been shared on social media hundreds of thousands of times.These horrific conditions are the result of decades of ruling class policy, which have left the US, the center of world capitalism, completely unprepared for a significant health care emergency.While the virus is known to be significantly more lethal for older people and for those with underlying conditions, it would be a horrible mistake to think that young people are somehow immune because of their age. There have been many harrowing cases of young people who caught the virus and ended up needing hospitalization and intubation, some of whom have died. In fact, according to a report published by the Centers for Disease Control (CDC) on Wednesday, over 25 percent of patients admitted to hospitals between March 1 and March 30 were less than 50 years of age. In some states, especially in the American South, the number of cases among younger patients is much higher. Recent reports coming from North Carolina show that 42 percent of reported cases in the state are between the ages of 24 and 49. An Alabama report states that 41 percent of deaths in the state were people aged between 19 and 64 years. Similar numbers have been reported for Georgia and Louisiana.

New York City mayor announces $827 million in cuts to public education — On Thursday, New York City’s Democratic mayor Bill de Blasio announced the city was making massive budget cuts due to a steep fall in revenue brought about the COVID-19 pandemic. Of the $2 billion in cuts, some $827 million will be cut from the Department of Education (DOE), far more than the $273 million in cuts announced by the DOE on April 7. The cuts are among the earliest of a broad assault on public education funding now being discussed across the US, including in California, Colorado, Nevada, Michigan, Tennessee, Virginia, Washington, and many other states. In the coming months, virtually every state will further slash education funding due to a decline in tax revenues stemming from mass unemployment. While funneling trillions of dollars to Wall Street, they will repeat the constant refrain that “there is no money” for the social needs of the working class. The New York City school system, which teaches 1.1 million students – 70 percent of whom are poor, including 114,000 homeless students – will be devastated by the immense cuts. Recovering from the emergency measures taken during the pandemic will now be virtually impossible. In a letter to staff on Thursday, Schools Chancellor Richard Carranza said that the cuts include, “all non-essential, non-mandated DOE activities, including training, overtime, and materials at schools, central and field offices.” The cuts will wipe out civics programs and health certification programs for teachers. There will be reductions in counseling for students and cuts in after-school programs that will be necessary to help students catch up when they return to their buildings next year. Even funds for the installation of air conditioners and the control of rat infestations will be cut. In addition, the DOE has ordered schools to immediately stop spending funds on any budget line not directly related to the coronavirus. This has caused widespread confusion since the DOE has issued no guidelines as to what constitutes this kind of spending.

U.S. colleges brace for a devastating summer and fall – For many U.S. colleges, the worst may still be ahead. The upheaval in higher education has been unprecedented already, with campuses closed for months, graduation ceremonies scrapped and entrance exams canceled. Administrators across the nation increasingly fear their schools may not reopen for the fall semester. In the meantime, many have canceled summer programs, sports camps and on-campus weddings – all of which would be lucrative most years. The double whammy of losing summer and fall income would hurt all schools, and it could be fatal to those that were already struggling. “They will have less financial cushion because that summer revenue is no longer is there.” College finances are under siege on many fronts. Endowment values have fallen with markets. Fundraising is a steep challenge now. New and returning students may have increased need for financial aid, because many families have lost income in the Covid-19 downturn. Some colleges even fear they won’t be able to fill their freshman class for fall 2020 as students may decide to wait a year instead of starting online, which would strangle tuition revenue. High school counselors are advising students that planning ahead even as far as September will be difficult. “I would tell kids: Number one, the likelihood of having face-to-face classes in September is pretty darn small,” said Scott White, a retired guidance director for more than 20 years at Montclair High School in New Jersey. Referring to covid-19’s risk to older people, he said: “You’re not going to get 65-year-old college professors going in.” Northwestern University is still making that tough call. “Our return to on-campus instruction in the summer or fall quarters is also not guaranteed,” the school’s president, Morton Schapiro, wrote in a letter Thursday. He said the decision to refund room-and-board payments and student fees for the spring had cost more than $25 million, and the school is facing more losses from endowment declines, increased financial aid and the cancellation of some on-campus programs.

“The Hit Is Huge”: Colleges Brace For ‘Fatal’ Blow Of Next Fall As Face-To-Face Instruction Uncertain – A viral post written by a veteran professor on Medium recently grabbed prospective students’ attention in saying provocatively: “This is a message to all high school seniors (and their parents). If you were planning to enroll in college next fall – don’t.”“No one knows whether colleges and universities will offer face-to-face instruction in the fall, or whether they will stay open if they do,” University of La Verne law professor Diane Klein wrote. “No one knows whether dorms and cafeterias will reopen, or whether team sports will practice and play.””It’s that simple. No one knows. Schools that decide to reopen may not be able to stay that way. A few may decide, soon, not even to try. Others may put off the decision for as long as possible – but you can make your decision now,” the veteran teacher said, making the case that it’s the worst time ever for families to make the massive financial commitment. After all, who wants to drop an initial $50K or more to potentially sit at home for Fall 2020 and take online classes? And it’s 100% accurate that colleges and universities are flying through the coronavirus economic ‘pause’ blindly, now slashing budgets for next year and in many instances notifying employees that drastic cuts are coming, including regarding salaries and staffing positions – possibly even reaching into faculty ranks.Colleges and universities across the nation are stuck in financial limbo at a moment that key staffing, faculty contracts, student recruiting, tuition and donor revenue-related decisions are typically made for next year, also as controversy erupts over refusal to refund student housing and campus activity fees. Crucially, endowment values have plunged along with markets.The $600 billion-plus higher education industry is expected to suffer effects of this Spring’s campus shutdowns at least through next Fall, given everything down to campus tours for potential recruits have been canceled, leaving open the crucial question of incoming levels of freshmen and vital tuition revenue for next year. And now it’s not a question of profitability, academic reputation or long-term growth, but of mere survival. In a new report Bloomberg warns this week: “Administrators across t he nation increasingly fear their schools may not reopen for the fall semester.” This amid mass cancellations of everything from sports to summer programs and classes, to shuttering of on-campus facilities and student activities. It further details panicked institutions which were already struggling, now fearing amid coronavirus closures and ‘online only’ format, bracing for the “fatal” blow of next Fall, when students may opt to not return and wait things out.

Dentistry at ‘Virtual Standstill’ and 2021 Isn’t Safe Either — The American Dental Association warned that the ongoing Covid-19 pandemic’s unprecedented impact is likely to slash dental spending into 2021, a stark warning that contrasts with some optimism of a quick recovery. More than 80% of dental practices reported that patient volume for the week of April 6 was less than 5% of normal, findings from the ADA showed. The organization estimates Covid-19 could lead to a two-thirds reduction in U.S. dental spending for the year, with 2021 expected to face a 32% reduction. That would be worse than investors have feared, according to Evercore ISI analysts. The ongoing plunge in spending, followed by a slower rebound, could harm companies that make and sell equipment to dentists and orthodontics. The fact that more than 80% of practices have seen such large declines “points to a more severe short-term impact than many investors have been anticipating,” Evercore ISI analyst Elizabeth Anderson wrote in a note to clients. The biggest difference compared to recent reports is the “assumption about the slower re-ramp of practice volumes in 2020 and 2021,” she continued. The caution from both the ADA and Evercore ISI was echoed by Blueshift Research findings that were published this morning, cautioning against clear-aligner manufacturers Align Technology and SmileDirectClub Inc. The firm’s report said “demand for clear aligners is nonexistent” with no new patients at either company’s practices and shops.

UN: Acute Food Shortages Worldwide May Double Due to COVID-19 -A stark new assessment from the UN’s World Food Program (WFP) found that the economic implications from the economic downturns due to the coronavirus crisis might raise the number of people facing acute foodshortages to 265 million, according to Reuters. That’s nearly twice as many as were already suffering from acute hunger.The WFP experts warned that swift action is required to provide food and humanitarian relief to the most at-risk areas of the planet before more than a quarter of a billion people are at risk of starving, as The Guardianreported.”COVID-19 is potentially catastrophic for millions who are already hanging by a thread,” said Dr. Arif Husain, chief economist at the World Food Program, as The Guardian reported.”It is a hammer blow for millions more who can only eat if they earn a wage. Lockdowns and global economic recession have already decimated their nest eggs. It only takes one more shock – like COVID-19 – to push them over the edge. We must collectively act now to mitigate the impact of this global catastrophe.”The surge in food shortages is due to precipitous drops in tourism, as well as less money being sent to poorer regions, and travel and other restrictions that are driving economic engines to a halt, as Reuters reported.”We all need to come together to deal with this because if we don’t the cost will be too high – the global cost will be too high: many lost lives and many, many more lost livelihoods,” Husain told reporters at a virtual briefing in Geneva, Switzerland, according to Reuters.The report warned that, in some of the poorest countries around the globe, attempts to save people from COVID-19 may be in vain if it means watching people die from hunger, according to the Global Report on Food Crises published on Tuesday by the UN Food and Agriculture Organization, the World Food Program and 14 other organizations.

Bank of Japan to Debate Unlimited Bond Buys, Nikkei Reports – The Bank of Japan will discuss abandoning its annual 80 trillion yen ($742 billion) annual purchase target for Japanese government bonds at its monetary policy meeting Monday and replacing it with the ability to buy an unlimited amount of bonds, the Nikkei reported.

• Nikkei report doesn’t cite anyone
• BOJ is set to double its purchase targets for CP and corporate bonds, and is likely to keep the 10-year JGB yield target at around 0% and maintain the negative rate at -0.1%
• The central bank is set to hold its next meeting on April 27 from 9 a.m. local time, having switched to a one-day format due to the spread of the coronavirus
• NOTE: The bank has kept its reference to the 80 trillion yen purchase target, pledging to “conduct purchases in a flexible manner so that their amount outstanding will increase at an annual pace of about 80 trillion yen,” even though actual purchases have fallen substantially below that target in recent years

When $8 Trillion in Global Fiscal Stimulus Still Isn’t Enough – As governments dedicate more than $8 trillion to fight the coronavirus pandemic, a further widening in the gap between rich and poor countries threatens to exacerbate the global economy’s pain. Wealthy nations have delved deep to cushion the blow. For instance, Germany and Italy have each allocated more than 30% of gross domestic product to direct spending, bank guarantees, and loan and equity injections, for a combined $1.84 trillion in aid, figures from the International Monetary Fund show. Yet the countries IMF analysts say they’re most concerned about have only been able to trickle out support: Many African and Latin American economies have failed to reach even a few billion dollars in fiscal aid, according to IMF data and reporting from more than 60 countries collated by Bloomberg News. “Governments worldwide are unleashing fiscal support measures, but not all fiscal packages are the same,” said Chua Hak Bin, a senior economist at Maybank Kim Eng Research Pte. in Singapore. While “fiscal bazookas are the norm in the more advanced economies,” emerging-market governments “don’t have that kind of ammunition and fiscal space. Their fiscal packages are more water pistols than bazookas.” IMF Chief Economist Gita Gopinath has repeatedly voiced concern that developing nations have less policy space and less sophisticated infrastructure to manage the virus outbreaks taking hold in their countries. Much of the global fiscal tally of more than $8 trillion consists of bank guarantees in developed nations — France and Spain have allocated more than $300 billion and $100 billion respectively for this kind of support, for example. Total virus-relief spending in the U.S. stands in excess of $2.3 trillion. South Africa, the continent’s only member of the Group of 20, has managed to boost its support to about $26 billion, yet many of its neighbors are far more strapped. Tracking fiscal support across the world isn’t a straightforward exercise, making global comparisons difficult. Some countries like Russia haven’t yet published official figures for aid, while others like Mexico provide too few details to estimate a support package. For Bloomberg’s collection of data, no central bank funding was considered. Fiscal support generally fell into three categories: direct aid for medical response to the virus; consumer support, including cash handouts; and funds for businesses, including tax breaks, loan support, bank guarantees, and wage subsidies. In many cases, governments have reallocated spending that was already budgeted, while also adding new measures.

European Central Bank to Accept Some Junk-Rated Bonds as Loan Collateral – The European Central Bank said it would accept some junk-rated bonds as collateral for its loans in its latest move to ensure eurozone banks can access central bank cash during the coronavirus pandemic. The decision, announced Wednesday, means banks could continue to use government bonds of Italy or Spain as collateral for ECB loans, even if those countries’ credit ratings were to be downgraded. To qualify as collateral, the bonds must have been rated as investment grade on April 7, the ECB said. The bank will also demand “appropriate haircuts,” and the changes will remain in place until September 2021. The ECB said earlier in April that it would start accepting a broader range of collateral at its loan operations including Greek government debt, and would allow banks to borrow more money against the same amount of collateral.

Euro zone business activity ground to a halt in April: PMI – (Reuters) – Economic activity in the euro zone all but ground to a halt this month as the new coronavirus sweeping across the world forced governments to impose lockdowns and firms to down tools and shut their businesses, a survey showed on Thursday. The coronavirus has infected more than 2.57 million people globally and killed over 178,000, and with citizens told to stay at home economic activity has plummeted. IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI), seen as a good gauge of economic health, sank to 13.5, by far its lowest reading since the survey began in mid-1998 and considerably below all forecasts in a Reuters poll. Even the most pessimistic contributor to the poll had predicted a reading of 18.0. As countries began to shut down last month the index staged its biggest one-month fall on record in March, hurtling below the 50 mark that separates growth from contraction to 29.7. “April saw unprecedented damage to the euro zone economy amid virus lockdown measures coupled with slumping global demand and shortages of both staff and inputs,” said Chris Williamson, chief business economist at IHS Markit. “The ferocity of the slump has also surpassed that thought imaginable by most economists.” Williamson said the PMI was consistent with the economy contracting 7.5% this quarter. A Reuters poll published on Wednesday had a 9.6% contraction pencilled in. Demand all but dried up this month, headcount was reduced at a record pace and firms cut prices at one of the steepest rates since the survey began. Unsurprisingly therefore, optimism was also at a survey low. The future output sub-index, which almost halved last month, was 34.5. With restaurants, bars and other leisure activities shuttered, holidays cancelled and travel restricted the situation in the bloc’s dominant services industry was dire. The flash services PMI sank to a new record low of 11.7 from 26.4.

Ryanair Announces It Won’t Fly Again If “Idiotic” Rules Eliminating Middle Seats Are Enforced -Ryanair CEO Michael O’Leary, said the planes of the discount Irish carrier won’t return to the skies if the airline is forced to leave the middle seat empty to comply with “idiotic” in-flight social distancing rules. The boss of the no-frills carrier, which has thrived by packing its flights as full as possible with cattle passengers lured by low prices, has previously said that blocking out the space in between seats is “nonsense” that would have no beneficial effect, according to the Guardian.O’Leary doubled down on the comments on Wednesday, saying that if governments insisted on social distancing measures, then Ryanair’s business model would be in tatters and the carrier would not fly. The CEO said that Ryanair had told the Irish government that if it imposes the restriction, then “either the government pays for the middle seat or we won’t fly”.The Dublin-based carrier’s business model relies on flying as frequently as possible, carrying as many people as possible, and stripping out costs and running an extremely high “load factor”, a polite way of saying with planes full of passengers. “We can’t make money on 66% load factors,” he said. “Even if you do that, the middle seat doesn’t deliver any social distancing, so it’s kind of an idiotic idea that doesn’t achieve anything anyway,” he added, in an interview with the Financial Times. Commenting on this, Rabo’s Michael Every correctly notes that proper, 2-meter social distancing logic would require not the middle seat being empty, but 3-4 people per row, and two rows empty between each occupied one. The problem with this is that an economy class ticket would “surely be closer to business class fares – in which case the potential number of people willing and able to fly is going to be even lower than projected (an exponential/fat tail effect where less means less, just as more can mean more).”

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