Here’s what you need to know:
- Stocks tumble after bleak data highlights pandemic’s economic impact.
- Amazon will suspend operations in France over a labor dispute.
- A Fed survey shows businesses don’t expect a rapid recovery.
- To finance its relief effort, the government moves money from one pocket to another.
- Trump exempts Canada and Mexico from an export ban on protective gear.
Stocks tumble after bleak data highlights pandemic’s economic impact.
Stocks tumbled on Wednesday as investors faced a stream of bad news about the economic damage caused by efforts to contain the coronavirus pandemic, including data that showed a historic plunge in retail sales and a slump in factory output.
The S&P 500 dropped more than 2 percent. Stocks in Europe were also lower, and Asia had a downbeat day.
The retreat Wednesday came the day after the S&P 500 hit a one-month high. Though still far from the record reached on Feb. 19, stocks in the United States have been steadily climbing in recent weeks as investors have begun to focus on the prospect of an eventual rebound from the economic collapse set off by the pandemic.
But on Wednesday, they were confronted by a number of reports that highlight just how badly the economy is faring. The Commerce Department said that retail sales in March dropped 8.7 percent as consumers were forced to stay home, and the Federal Reserve said industrial production and manufacturing output in the United States fell by the most since 1946.
The German Economy Ministry said economic output in Europe’s largest economy was likely to plunge almost 10 percent from April through June.
As they reported earnings, the nation’s banks also raised more warnings about the potential for a wave of defaults on loans, saying that they are stockpiling cash in anticipation of losses.
Bank of America and U.S. Bancorp both dropped more than 6 percent after reporting results. JPMorgan Chase and Wells Fargo, which reported a downbeat reports yesterday, were also sharply lower. Goldman Sachs, which reported better-than-expected results on Wednesday, was a relative standout with a small gain after its trading unit performed better than expected in the first quarter.
The collapse in American retail sales slammed the stocks of apparel retailers. Nordstrom, L Brands and Gap all fell sharply.
Amazon will suspend operations in France over a labor dispute.
Amazon said Wednesday that it would temporarily halt its operations in France after a court ruled the company had failed to adequately protect warehouse workers against the threat of the coronavirus and that it must restrict deliveries to only food, hygiene and medical products until it addressed the issue.
Amazon contested the findings of the ruling, handed down Tuesday by a civil court outside of Paris, and said it would appeal. The court had given the company a deadline of Wednesday evening to carry out the order or face a fine of 1 million euros (nearly $1.1 million) per day.
“We have suspended activities in our distribution centers in France, despite the huge investment we have made to ensure and strengthen safety measures for our employees,” Amazon said in a statement, adding that it was “perplexed” by the court’s decision. The threatened fine was too steep to risk not complying, Amazon added.
The company lashed out at unions that had brought the court case despite what it said was “concrete evidence” that it had worked to strengthen safety measures at its six mammoth warehouses around France. The ruling “is likely to have consequences for many people in our country,” including thousands of employees, Amazon customers and French businesses that make sales on Amazon’s platform, it added.
Laurent Degousée, a representative of SUD-Commerce, the main union that filed the lawsuit, said he had learned that Amazon was expected to halt its French operations as of Thursday for five days to enhance safety measures and provide its 10,000 workers full pay during that time. Amazon did not provide details on the furloughs, but said it was asking employees to stay home this week, and that it would assess the implications for its French operations.
A Fed survey shows businesses don’t expect a rapid recovery.
Companies painted a picture of major economic upheaval in the Federal Reserve’s April survey of businesses across America, which cited the term “coronavirus” dozens of times.
The Fed publishes this anecdotal survey eight times a year, in what’s called the Beige Book.
The latest reports speak to how the virus, and the mass quarantines in place to halt its spread, have disrupted every aspect of American economic life. Cotton producers may shift into wheat as shoppers demand bread and pasta but clothing retail slows, according to the report. Vehicle sales in the New York region “dropped to near zero,” and businesses “slashed” capital spending plans.
Few businesses seemed to forecast a rapid bounceback: In the Fed’s Chicago district, companies “expected the recovery to still be underway a year from now,” and in the San Francisco region “many businesses expected heightened slack in the labor market going forward, eliminating any prior upward pressure on wage and price growth.”
“An expert on New York City’s tourism sector noted that almost nobody is visiting the city, and that New York City’s hotel occupancy fell from roughly 72 percent to 15 percent by the end of March,” the report said. Among service firms, “business contacts expressed great uncertainty, though there was fairly widespread pessimism.”
The Philadelphia region summed it up like this: “Uncertainty clouds outlooks as firms wait for the COVID-19 threat to subside.”
To finance its relief effort, the government moves money from one pocket to another.
The United States has responded to the economic havoc wrought by the coronavirus with the biggest relief package in its history: $2 trillion.
And where is all that cash coming from? Mostly out of thin air.
The traditional view of economic theory holds that governments and central banks have distinct responsibilities. A government sets fiscal policy — spending the money it raises through taxes and borrowing — to run a country. And a central bank uses various levers of monetary policy — like buying and selling government securities to change the amount of money in circulation — to ensure the smooth operation of the country’s economy.
But the relief package, called the CARES Act, will require the government to vastly expand its debt at the same time that the Federal Reserve has signaled its willingness to buy an essentially unlimited amount of government debt. With those twin moves, the United States has effectively undone decades of conventional wisdom, embedding into policy ideas that were once relegated to the fringes of economics.
Playing out in the background of this shift is a debate over what is known as modern monetary theory, which says countries that control their own currency can run much larger budget deficits than they typically do, in part because of the power of central banks to create new money to help finance the shortfall.
Trump exempts Canada and Mexico from an export ban on protective gear.
The Trump administration has issued several exemptions to an export ban put in place almost two weeks ago, allowing respirators, surgical masks and gloves manufactured in the United States to continue to flow to Canada and Mexico, among other places.
In an April 9 memo obtained by The New York Times, the U.S. Customs and Border Protection laid out several exceptions to an administration rule that aims to keep scarce protective equipment like respirators, surgical masks and gloves in the United States.
The CBP said that export restrictions would only apply to commercial shipments. Exports to Canada, Mexico and U.S. government entities overseas like military bases would be exempted, as would exports made by the 3M company, U.S. government agencies and American charities.
The exemptions come as a relief to foreign governments, companies and other organizations which feared President Trump’s export ban would cut them off from a supply of much-needed masks and protective gear.
The Fed’s municipal bond plan could leave out cities with large black populations.
The Federal Reserve is about to jump into the market for municipal bonds in a bid to keep credit flowing to states, large counties and huge cities — but researchers at the Brookings Institution warn that the new program’s design could skip cities with large black populations.
Under the new initiative, announced April 9, the Fed will buy short-term bonds issued by states or counties with more than two million people, or cities with more than one million. A number of cities with large black populations fall below this size threshold.
“None of the thirty-five most African-American cities in America meets the Fed’s criteria for direct assistance,” the researchers, Aaron Klein and Camille Busette, wrote in an April 14 analysis. “For every 10 percent more black the city’s population, it is 10 percent less likely to qualify for the Fed’s program.”
That seems unintentional, the researchers note: The central bank has been moving at breakneck speed to roll out economic solutions as coronavirus outbreak chokes off sales tax revenue and tanks local economies. But black Americans are disproportionately affected by the coronavirus, and the way the lines are drawn could affect whether their communities benefit from funding. States can shuttle money to local governments, but politics might get in the way.
The Fed “will evaluate whether additional measures are needed to support the flow of credit and liquidity to state and local governments,” according to last week’s announcement. A start date for the program, which will buy up to $500 billion in securities, has yet to be announced. The Brookings researchers suggest that the central bank make tweaks, such as expanding to the 50 largest cities.
“It’s an easy fix, and if they don’t fix it, it’s going to have unintended consequences,” Mr. Klein said in an interview.
U.S. retailers suffered a record decline in sales last month.
RETAIL AND FOOD SERVICES SALES
Change from previous month
+
8
%
+
6
+
4
+
2
0
–
2
–
4
–
6
MARCH ’20
RECESSIONS
– 8.7%
–
8
–
10
’00
’01
’02
’03
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
’20
RETAIL AND FOOD SERVICES SALES
Change from previous month
+
8
%
+
6
+
4
+
2
0
–
2
–
4
MARCH ’20
–
6
– 8.7 %
RECESSIONS
–
8
–
10
’00
’05
’10
’15
’20
RETAIL AND FOOD SERVICES SALES
Change from previous month
+
8
%
+
6
+
4
+
2
0
–
2
–
4
–
6
MARCH ’20
RECESSIONS
– 8.7%
–
8
–
10
’00
’01
’02
’03
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
’20
Another bleak economic reckoning from the coronavirus pandemic arrived on Wednesday: the biggest one-month plunge in U.S. retail sales in the nearly three decades of record keeping.
Grocery stores, pharmacies and other sellers of essential items experienced a surge of demand last month. But that was outweighed by a steep decline in other categories as businesses shuttered and shoppers restricted their spending.
The Commerce Department’s preliminary report showed a seasonally adjusted drop of 8.7 percent from February’s total sales, which include purchases in stores and online, auto and gasoline sales and money spent at bars and restaurants.
Spending on cars and car parts fell by more than 25 percent in March. Sales at gas stations, pushed down by low oil prices as well as reduced commuting, fell 17 percent. And sales at clothing stores fell by more than half.
Even those bleak figures do not fully capture the economic deep freeze. Most states did not issue shutdown orders to nonessential businesses until late March or early April, meaning data for the current month could be worse still.
Until now, the largest one-month downturn in retail sales came in the fall of 2008, when the financial crisis led spending to fall nearly 4 percent for two straight months.
Big banks report their profit was almost halved last quarter.
U.S. banks reporting quarterly earnings on Wednesday said they were socking away money to prepare for a wave of loan defaults by consumers and businesses over the coming months.
-
Goldman Sachs reported a big surge in its trading revenue, accompanied by gains in investment banking and consumer banking units, even as it set aside $937 million in additional provisions for potential virus-related losses, bringing its total allowance for future credit losses to $3.2 billion. Profit fell 46 percent for the quarter to $1.2 billion, down from $2.3 billion for the same period last year.
-
Citigroup, another of the country’s four largest banks, said it added to its reserves and that the move had cut into its quarterly profit. Citi earned $2.5 billion, a 46 percent drop from the same period a year ago. It added $7 billion to its reserves, bringing the total size of its pool to nearly $21 billion.
-
Bank of America’s quarterly profit fell to $4 billion in the first three months of 2020 from $7.3 billion during the same period a year earlier. The difference came mostly from a $3.6 billion increase in the amount of money the bank decided to set aside for bad loans this year. The total reserved by the bank during this quarter reached $4.8 billion.
-
PNC Financial Services Group made a similar disclosure. The regional bank said it was increasing its quarterly contribution to a reserve for loan losses by $693 million. In all, it moved $914 million to its reserves during the quarter, while earning $915 million.
Catch up: Here’s what else is happening.
-
UnitedHealth Group, one of the nation’s major insurers, reported on Wednesday that its earnings increased this past quarter, adding that the costs of the coronavirus pandemic were offset by the cancellations of routine medical appointments and elective surgeries. The company said it was not changing its profit outlook for the year, but executives emphasized that it was too soon to predict what the final impact of the coronavirus would be on its varied businesses.
-
United Airlines said it expected to receive about $5 billion in stimulus funds from the Treasury Department to pay employees through September. Of that amount, about $1.5 billion will be in the form of a low-interest loan. The airline said it expected to issue warrants that would give the federal government the right to buy about 4.6 million shares of its common stock.
-
The retailer Best Buy said that it would furlough 51,000 hourly store employees, including nearly all of its part-time staff, beginning Sunday. The company, which has 125,000 employees over all, said it would keep most of its full-time store and field staff on its payroll, but it added that some corporate employees were taking part in voluntary furloughs and pay reductions.
-
The International Monetary Fund projected that the global economy would contract by 3 percent in 2020. That would be its worst downturn since the Great Depression — and an extraordinary reversal from earlier this year, when the fund forecast that the world economy would outpace 2019 and grow by 3.3 percent.
Reporting was contributed by Reed Abelson, Matt Phillips, Ana Swanson, Jeanna Smialek, Sapna Maheshwari, Ben Casselman, Mary Williams Walsh, Liz Alderman, Stanley Reed, Jason Karaian, Joe Gose, Erin Griffith, Vindu Goel, Alan Rappeport, Niraj Chokshi, Amie Tsang, Carlos Tejada and Mike Ives.
"Market" - Google News
April 16, 2020 at 03:57AM
https://ift.tt/3b9YnJq
Stocks Fall as Data Shows Extent of Economic Damage: Live Updates - The New York Times
"Market" - Google News
https://ift.tt/2Yge9gs
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
/cloudfront-us-east-1.images.arcpublishing.com/bostonglobe/VNG7YMZTRWJ5WBFTJ5NVETPCQI.jpg)
No comments:
Post a Comment