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Week in Review

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04/18/2020

For the week 4/13-4/17

[Posted 10:00 P.M., Friday]

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Edition 1,096

After another incredibly chaotic, and deadly, week, on Thursday, President Trump laid out new guidelines for the states to emerge from the coronavirus shutdown in a staggered, well-reasoned, three-stage approach meant to revive the economy.

The recommendations call on states to show a “downward trajectory” of Covid-19 cases or positive tests for the disease over 14 days before proceeding with the plan, which gradually loosens restrictions on businesses that have been shuttered to blunt the spread of the virus.

“We are not opening all at once, but one careful step at a time,” Trump told reporters at the White House.  Earlier, the president had said he wanted to open the economy with a “big bang.”

But the plan that was laid out is a set of recommendations for state governors, not orders.  Some might say that with the onus now on the governors, it gives Trump political cover if things do not go well, with the November election paramount on his mind.

And while I said the plan was well-reasoned in the steps that would be taken each of the three phases, there is nothing about ramping up testing or specific standards for levels of the disease before reopening.

In keeping with this, looking again to shirk all responsibility, Trump went on a Twitter rant this afternoon against the governors.

“The States have to step up their TESTING!”

“Governor Cuomo should spend more time ‘doing’ and less time ‘complaining.’  Get out there and get the job done.  Stop talking!  We built you thousands of hospital beds that you didn’t need or use, gave large numbers of Ventilators that you should have had, and helped you with….

“….testing that you should be doing. We have given New York far more money, help and equipment than any other state, by far, & these great men & women who did the job never hear you say thanks.  Your numbers are not good.  Less talk and more action!”

[As Gov. Cuomo said himself after, this from a man who spends his day watching TV.]

The president then dangerously tweeted the following as protests against the lockdown spread.

“LIBERATE MINNESOTA!”

“LIBERATE MICHIGAN!”

“LIBERATE VIRGINIA, and save your great 2nd Amendment.  It is under siege!”

Let’s have some civil disobedience!  Form crowds and spread the disease!

Meanwhile…back to the review…

Sure, states can show a “downward trajectory” if testing isn’t taking place on any large scale.  House Speaker Nancy Pelosi said in a statement, “The White House’s vague and inconsistent document does nothing to make up for the president’s failure to listen to the scientists and produce and distribute national rapid testing.”

But for some states, yes, the new guidelines effectively end the 30-day federal virus mitigation rules that were meant to stay in place through the end of April.

In the first phase of re-opening, groups of more than 10 people should still be avoided if appropriate distancing measures are not feasible.  Non-essential travel should be minimized, telework should be encouraged, and common areas in offices closed.  Schools remain closed in phase 1, but large venues such as movies, theaters, restaurants, sports stadiums, and places of worship can open with “strict physical distancing protocols.”  Hospitals, which are getting slammed financially by the crisis, may resume out-patient elective surgeries and gyms can re-open with new protocols.  Bars should remain closed.

In the second phase, states and regions with “no evidence of a rebound” in cases, could see groups of more than 50 but only if social distancing is practical.  Non-essential travel can resume, while schools and youth camps can reconvene and bars with “diminished standing-room occupancy” may re-open.  Hospitals may resume in-patient elective surgeries.

Phase three includes unrestricted staffing of workplaces, but as Dr. Deborah Birx, who played a lead role in coming up with the guidelines, put it, a “new normal” would remain in place; a need for higher hygiene standards and more space between people to prevent asymptomatic spread of the virus.

Meanwhile, the weekly jobless claims figure out of the Labor Department revealed another 5.245 million, for a sickening 22 million the last four weeks.  [Reminder, the worst weekly figure during the Financial Crisis was 665,000.]

Some tidbits from around the world on the coronavirus pandemic:

--In a surprising move, Chinese authorities revised the death toll in Wuhan, the hardest hit city and where the virus first emerged, up by 50 percent to 3,869 from 2,579.

Citing the number of patients who had died at home before reaching hospital, as well as late and inaccurate reporting, the city’s task force on virus prevention and control said: “Every loss of life during the epidemic is not just a source of sorrow for their family, but for the city as well.  We would like to send our sincere sympathies to the family members.”

The news from Wuhan comes after it was revealed the Chinese government waited six days before warning its citizens of the severity of Wuhan’s outbreak.

President Xi Jinping warned the public on Jan. 20 – nearly a week after Chinese officials had privately determined on Jan. 14 that the virus had evolved into a pandemic, the Associated Press reported, citing expert estimates based on infection data.

During those crucial days, more than 3,000 people in Wuhan came down with the coronavirus and millions of Chinese began traveling for Lunar New Year celebrations.

--Japanese Prime Minister Shinzo Abe has totally botched his nation’s response to the coronavirus, sloughing it off as officials desperately sought to hold the Tokyo Games.  Now Abe is scrambling, making a forceful appeal today to the nation to stay indoors to avoid further contagion, in his starkest remarks since the crisis began.  New cases hit a daily record in the capital, Tokyo, before the speech in which Abe said this week’s nationwide expansion of a state of emergency was prompted partly by fear that medical services could be overwhelmed in rural areas home to many elderly.

--Cases in Singapore continue to spike, the city-state reporting 623 new coronavirus cases, record numbers the last two days when weeks ago the threat was minimal.

--A report by the Iranian parliament’s research center suggested that the coronavirus tolls might be almost twice as many as those announced by the health ministry.

--Nearly 700 sailors assigned to the French aircraft carrier Charles de Gaulle’s naval group tested positive for Covid-19, the armed forces ministry said.

--Los Angeles Mayor Eric Garcetti said on Wednesday large gatherings like concerts and sporting events were not likely to be allowed in the city until 2021 due to the outbreak.  Facebook CEO Mark Zuckerberg said on CNN last night that his company will not hold any meetings over 50 people thru June of next year.

--The World Health Organization is not sure whether the presence of antibodies in blood gives full protection against reinfection.  Mike Ryan, the WHO’s top emergencies expert, said in a briefing today:

“A lot of preliminary information coming to us right now would suggest quite a low percentage of population have seroconverted (to produce antibodies). The expectation that…the majority in society may have developed antibodies, the general evidence is pointing against that, so it may not solve the problem of governments.”

--There are disturbing stories out of South Korea where patients have tested positive for a second time, after contracting and recovering from the virus.

By Thursday, at least 141 people in the country had retested positive, according to the Korea Centers for Disease Control and Prevention, most of them in Daegu and North Gyeongsang Province, the original center of the country’s outbreak.  55 of the cases were people in their 20s or 30s.

“In the case of Sars and Mers, we did not see people testing positive again after full recovery,” KCDC Deputy Director Kwon Jun-wook said Thursday.  “This novel coronavirus appears to be very evil and shrewd.”

It’s possible the testing is faulty, but the theory the virus could be “reactivated” after a period of dormancy is truly scary. 

The KCDC has yet to release detailed information on how many of those who tested positive a second time were symptomatic.  At least some of them are reported to have had mild symptoms such as fever.  [South China Morning Post]

--Patients who survive Covid-19 can still suffer lasting bodily damage, including to the liver, heart and brain, researchers are finding.

Multiple studies of recovered patients from China showed impaired liver and heart function, as reported by the Los Angeles Times.

“Covid-19 is not just a respiratory disorder,” Dr. Harlan Krumholtz, a cardiologist at Yale University, told the paper.

“It can affect the heart, the liver, the kidneys, the brain, the endocrine system and the blood system.”

Inflammation from the body’s immune response has been linked to strokes and heart attacks, which is depressing, I think you’d agree.

Researchers also wonder if the coronavirus that causes Covid-19 might lie dormant in the body for years or even decades – and then spring back to life, in the same way that the herpes virus that causes chickenpox can reemerge as shingles.  [Dr. W., who used to pass on his particular skills to doctors in Vietnam, has been telling me of similar awful potential scenarios.]

--There have been growing protests among workers for U.S. companies operating along the border in Mexico as increasing numbers are dying of suspected coronavirus.  Deaths have occurred at plants run by Honeywell, Plantronics, Lear and others.

--British Prime Minister Boris Johnson said it “could have gone either way” as he thanked healthcare workers for saving his life after being discharged from the hospital last Sunday.

Johnson singled out two nurses – Jenny from New Zealand and Luis from Portugal – who stood by his bedside for 48 hours at the most critical time and named several other hospital workers who cared for him.  He spent three nights in intensive care before returning to a ward on Thursday.

Death tolls as of Friday night:

U.S. 37,135
Italy 22,745
Spain 20,002*
France 18,681
UK 14,576
Belgium 5,163…awful for a nation of just 11.5 million
Canada 1,310…up from 556 in one week

New York State 17,131…up from 7,844
New Jersey 3,840…up from 1,932…it’s pretty depressing living here these days.  My town of Summit has seen a recent spike in cases, up to 120.

*Catalonia’s health department announced on Wednesday an additional 3,242 coronavirus deaths, nearly doubling its previous tally, as it included suspected and confirmed Covid-19 deaths in nursing homes and private homes for the first time.  These revised numbers have not yet been included in Spain’s official count.

Which brings up the point how the world continues to grossly undercount its deaths, with many countries still not including deaths in nursing homes that were the result of the disease, even with underlying conditions.

Trump World

--The week got off to an explosive start when on Monday, President Trump claimed “total authority” over when and how to ease restrictions aimed at fighting the outbreak.

Trump’s statement came hours after coalitions of governors on both coasts announced regional plans for reopening their states.

“When somebody is president of the United States, the authority is total.  The governors know that,” Trump said during the White House coronavirus briefing, when asked about the governors’ plans.

“You have a couple bands of Democratic governors, but they will agree to it,” Trump continued.  “They will agree to it.  But the authority of the president of the United States, having to do with the subject we’re talking about, is total.”

The Constitution gives public health and safety responsibilities primarily to state and local officials.

In an interview on CNN after the briefing, Cuomo rejected Trump’s claim as “aggressive” and “hostile.”

Pennsylvania Gov. Tom Wolf and New Hampshire Republican Gov. Chris Sununu also disagreed saying that since the responsibility to shut down had been up to state leaders, reopening should be up to them too.

Trump had opened the briefing in equally explosive fashion, ready to settle scores with the media, as the death toll was at more than 23,000 Americans.  It wasn’t about them, or the sick.  Or bringing the nation together and offering encouragement.  It was his profound sense of grievance that the media has been critical of his handling of the crisis.

The president opened with a video, produced by White House staff, a campaign video, Trump oozing contempt, as he centered his argument on how he stopped a lot of flights coming from China and that had saved countless American lives.

But the video then conveniently skipped the entire month of February, the critical period that historians for generations to come will point to.

When reporter Paula Reid from CBS pushed back forcefully on the Trump narrative, and how actions he took end of January weren’t followed up on in February, President Trump was enraged, and ended up calling Reid a “fake” and “disgraceful.”

[At which point many of us became huge Paula Reid fans.]

--Tuesday, after claiming “total authority,” President Trump came out and announced that the U.S. would suspend payments to the World Health Organization, saying the group had failed to report accurate information from China during the early stages of the pandemic.

“I am instructing my administration to halt funding of the World Health Organization while a review is conducted to assess the (WHO’s role) in severely mismanaging and covering up the spread of the coronavirus.

“Everybody knows what is going on there.  American taxpayers provide between $400 million and $500 million per year to the WHO. China contributes roughly $40 million,” the president continued.

He slammed the group for its initial opposition to travel bans and said his own restrictions on travel from China announced on Jan. 31 saved “thousands and thousands” of American lives.

“The United States has a duty to insist upon full accountability.  One of the most dangerous and costly decisions from the WHO was its disastrous decision to oppose travel restrictions from China and other nations,” he continued.

“The reality is that the WHO failed to adequately obtain and share information in a timely and transparent fashion.  The world depends on the WHO to work with countries to ensure that accurate information about international health is shared in a timely manner,” he said.

To say the least, there were voices in opposition to the plan to withdraw funding.

UN Secretary-General Antonio Guterres: “Not the time” to reduce resources for WHO operations.  “Now is the time for unity and for the international community to work together in solidarity to stop this virus and its shattering consequences,” he said.

Johns Hopkins University Center for Health Security: “The move sends the wrong message during the middle of a pandemic,” said Dr. Amesh Adalja, an infectious disease expert at the center.

Adalja said the WHO does make mistakes, as it did in delaying the response to the Ebola outbreak in 2013 and 2014 in West Africa.  He said reforms may be needed, but that work needs to take place after the pandemic has passed.

Australian Prime Minister Scott Morrison: While he sympathized with Trump’s criticisms of the WHO, “the WHO also as an organization does a lot of important work including here in our region in the Pacific and we work closely with them.  We are not going to throw the baby out with the bathwater here, but they are also not immune from criticism and immune from doing things better.”

Bill Gates: “Halting funding for the World Health Organization during a world health crisis is as dangerous as it sounds.”

The head of the WHO, Tedros Adhanom Ghebreyesus, told a news conference: “The U.S. is a long-standing and generous friend of the WHO and we hope it will continue to be so.  We regret the decision of the president of the United States to order a halt in the funding… In due course WHO’s performance in tackling this pandemic will be reviewed by WHO’s member states and the independent bodies that are in place to ensure transparency and accountability,” he said.

Look, I have a history on this topic.  As a big fan of Taiwan, I have blasted the WHO for years for not allowing Taiwan to join the organization.  Of course the reason Taiwan wasn’t allowed in was because China objected.  But President Trump has known this in his over three years in office.  I don’t recall him ever bringing the topic up with his great “friend” Xi.

--Wednesday, President Trump threatened to circumvent the Senate and unilaterally name people to federal posts using recess appointments during the pandemic.

Trump said he has the power to declare that both chambers of Congress are in recess so that he can make appointments and curtail Democratic opposition that has delayed judicial and other confirmations.

“It’s always roadblocks and a waste of time.  If the House will not agree to that adjournment, I will exercise my constitutional authority to adjourn both chambers of Congress.  The current practice of leaving town, while conducting phony pro forma sessions, is a dereliction of duty.”

Jonathan Turley, a constitutional scholar who argued against Trump’s impeachment last year, said the power has never been used before “and should not be used now.”

“Senators of both parties should vote to support the congressional control over adjournment.  Absent a ‘disagreement’ there is no presidential power to adjourn under Article II.  A pandemic should not be an invitation for pandemonium,” he tweeted.

The president then went after the Voice of America, saying “if you heard what’s coming out (from them), it’s disgusting.  What things they say are disgusting toward our country,” Trump said.

Oh brother.  Someone remind the president of the great work the VOA did during the days of the Iron Curtain and getting the word into those being oppressed, offering them a sliver of hope together with the “truth.”

--Rich Lowry / New York Post

“An irony of the coronavirus debate is that the more successful lockdowns are in squelching the disease, the more vulnerable they will be to attack as unnecessary in the first place.

“A rising chorus on the right is slamming the shutdowns as a panicked overreaction and agitating to end them, hoping to drive a wedge between President Trump and his more cautious advisers.

“While there’s no doubt there have been absurd lockdown excesses, and we should want to return to normal as soon as plausible, the case against the initial shutdowns is weak, contradictory and based on denying the seriousness of COVID-19.

“A good example of the genre was an op-ed coauthored by former Education Secretary William Bennett and talk-radio host Seth Leibsohn, headlined ‘Coronavirus Lessons: Fact and Reason vs. Paranoia and Fear.’ Bennett and Leibsohn are public-spirited, intelligent men, but they have got this wrong and in rather elementary ways.

“They cite the latest University of Washington estimate that the current outbreak will kill 68,000 people.  Then, they note that about 60,000 people died of the flu in 2017-18. For this, they thunder, we’ve scared Americans and imposed huge economic and social costs on the country. Their reasoning is obviously flawed.

“If we are going to have 60,000 deaths with people not leaving their homes for more than a month, the number of deaths obviously would have been higher – much higher – if everyone had gone about business as usual.  We didn’t lock down the country to try to prevent 60,000 deaths; we locked down the country to limit deaths to 60,000 from what would have been a number multiples larger.

“By Bennett and Leibsohn’s logic, we could just as easily ask; Why did we adopt tough-on-crime policies when crime rates are at historic lows?  Why did we work so hard to find a treatment for HIV when so many of the people with the disease now have normal life expectancies?

“Of course, it was precisely the actions we took that caused those welcome outcomes.

“If we had shut down the country a month sooner and there had been, say, only 2,000 deaths, then on their terms they’d have even a stronger argument, that is: ‘We did all this, and there were only a couple of thousand fatalities?’

“In other words, the more effective a lockdown would have been, the more opposed Bennett and Leibsohn would be to it.

“As for the flu comparison: The flu season stretches as long as from October to April, although it usually peaks between December and February.  The 2017-18 season, with 60,000 flu-related deaths, was particularly bad.  But the coronavirus might kill a similar number of people – with the country on lockdown.

“In the 2011-12 season, 12,000 people died of the flu nationwide. New York alone has eclipsed that in a little more than a month and recorded roughly 9,000 coronavirus deaths the first 15 days of April (again, while on lockdown).  In 2018-19, there were 34,000 flu-related deaths nationwide.  We are going to surpass that number nationally sometime soon (yet again, while on lockdown).

“Why have people reacted so dramatically to this virus, despite the fact that it is supposedly comparable to the run-of-the-mill flu?  Bennett and Leibsohn have a theory: ‘New York City is where the epidemic has struck the hardest.  The media is centered in New York City.’

“There is no doubt that New York is always going to get disproportionate attention. But Gotham is the biggest city in the country, and the Empire State accounts for 8 percent of the U.S. economy.  If New York were an independent state, it would rank as the 11th-biggest economy in the world. What happens there matters.  It’s part of America, as we all agreed after 9/11.

“If the disease struck smaller heartland cities like Omaha, Kansas City and Wichita, would Bennett and Leibsohn hope that the story got ignored and no one took any precautions based on major media companies not being headquartered in those places?

“Plus, the authors ignore the key fact that the economy began to shut down before there were widespread shutdown orders.  People voted with their feet, because they were fearful of a virulent disease. And they acted rationally.  If everything had gone on as normal, the outbreak would have been much worse, and we would have shutdowns anyway, just with even worse health outcomes.

“By all means, let’s open up the economy as soon as we can, but it will require more careful thought than the most feverish critics of the shutdowns have demonstrated.”

Amen.

--Trump tweets:      

“Crazy ‘Nancy Pelosi, you are a weak person.  You are a poor leader.  You are the reason America hates career politicians, like yourself.’ @seanhannity.  She is totally incompetent & controlled by the Radical Left, a weak and pathetic puppet.  Come back to Washington and do your job!”

“Today people started losing their jobs because of Crazy Nancy Pelosi, Cryin’ Chuck Schumer, and the Radical Left, Do Nothing Democrats, who should immediately come back to Washington and approve legislation to help families in America.  End your ENDLESS VACATION!”

“Why did the W.H.O. ignore an email from Taiwanese health officials in late December alerting them to the possibility that CoronaVirus could be transmitted between humans?  Why did the W.H.O. make several claims about the CoronaVirus that are either inaccurate or misleading….

“…in January and February, as the Virus spread globally?  Why did the W.H.O. wait as long as it did to take decisive action?”

“Tell the Democrat Governors that ‘Mutiny On The Bounty’ was one of my all time favorite movies.  A good old fashioned mutiny every now and then is an exciting and invigorating thing to watch, especially when the mutineers need so much from the Captain.  Too easy!”

“GET RID OF BALLOT HARVESTING, IT IS RAMPANT WITH FRAUD.  THE USA MUST HAVE VOTER I.D., THE ONLY WAY TO GET AN HONEST COUNT!”

“For the purpose of creating conflict and confusion, some in the Fake News Media are saying that it is the Governors decision to open up the states, not that of the President of the United States & the Federal Government.  Let it be fully understood that this is incorrect….

“….It is the decision of the President, and for many good reasons.  With that being said, the Administration and I are working closely with the Governors, and this will continue. A decision by me, in conjunction with the Governors and input from others, will be made shortly!”

“Cuomo’s been calling daily, even hourly, begging for everything, most of which should have been the state’s responsibility, such as new hospitals, beds, ventilators, etc.  I got it all done for him, and everyone else, and now he seems to want independence! That won’t happen!”

[Trump granted the governors independence.]

“Having been involved in the negotiations, to put it mildly, the number that OPEC+ is looking to cut is 20 Million Barrels a day, not the 10 Million that is generally being reported. If anything near this happens, and the World gets back to business from the Covid 19….

“….disaster, the Energy Industry will be strong again, far faster than currently anticipated.  Thank you to all of those who worked with me on getting this very big business back on track, in particular Russia and Saudi Arabia.”

[Oil fell to an 18-year low in response.]

“The big Oil Deal with OPEC Plus is done.  This will save hundreds of thousands of energy jobs in the United States.  I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia.  I just spoke to them from the Oval Office.  Great deal for all!”

[Hundreds of thousands of jobs could be lost, not saved.]

“Biden/Obama were a disaster in handling of the H1N1 Swine Flu.  Polling at the time showed disastrous approval numbers.  17,000 people died unnecessarily and through incompetence!  Also, don’t forget their 5 Billion Dollar Obamacare website that should have cost close to nothing!”

[The CDC estimates 12,500 died of H1N1, while as I proved to you the other week, it didn’t change our lives one bit.]

“Just watched Mike Wallace wannabe, Chris Wallace, on @FoxNews.  I am now convinced that he is even worse than Sleepy Eyes Chuck Todd of Meet the Press (please!), or the people over at Deface the Nation. What the hell is happening to @FoxNews.  It’s a whole new ballgame over there!”

--Lastly, President Trump’s re-election campaign and the Republican National Committee raised more than $212 million during the first three months of the year.  Not too shabby.

Wall Street and the Global Economy

The International Monetary Fund revised its forecasts for the global economy this week in its updated World Economic Outlook.  Back in January, it pegged global growth at 3.3% this year, and now because of the pandemic is projecting the world economy will contract by 3%.

IMF Chief Economist Gita Gopinath said in a report: “This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”

The IMF expects global growth to rebound 5.8% next year if the pandemic fades in the second half of 2020.

“A partial recovery is projected for 2021,” said Ms. Gopinath.  “But the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound.

“Much worse growth outcomes are possible and maybe even likely.”  A second pandemic wave in 2021 would be catastrophic.

The IMF projects the U.S. will contract by 5.9% this year, representing the biggest annual decline since 1946, with unemployment jumping to 10.4% for the year overall.

A partial recovery is expected in 2021, with expected U.S. growth of 4.7%.

Republican Senate Majority Leader Mitch McConnell and House Republican Leader Kevin McCarthy both vowed to oppose Democrats’ demands to match a $250 billion proposal to further aid small businesses, an extension of the existing program, with the same amount for hospitals and state and local governments.

I understand both sides.  Yes, we need more for the SBA program, but as noted in my opening, state and local governments are getting killed, ditto hospitals who haven’t been able to make money with the prohibition on elective surgeries, which is a profit-center for them.

It is also a fact that the poor need expanded food aid.  The whole situation is a disaster.  Everyone knows that.  New York state is broke, New York City is broke, New Jersey is broke, all local governments in the region are broke.  And New York and New Jersey are among the states extending the shutdown to May 15, even as others no doubt will be starting to reopen by May 1.

As for the stock market, the big recovery off the March lows continues (except for small- and mid-cap stocks), President Trump touting today’s rally in his daily briefing tonight.  I think the current action is rather irrational given the sickening economic backdrop and the reality we are not returning to normal anytime soon, certainly until we get a vaccine.  But others are bullish.

Goldman Sachs Group said this week that the likelihood of stocks hitting new lows was minimal owing to the “do whatever it takes” approach of policy makers.  A combination of unprecedented policy support and a flattening viral curve has “dramatically” cut risks to both markets and the U.S. economy, strategists including David Kostin wrote in a note on Monday.  If the U.S. doesn’t have a second surge in infections after the economy reopens, equity markets are unlikely to make new lows, they said.

Using the S&P 500 as its barometer, Goldman had called for a near-term downside of 2,000, from its three-year low of 2,237 on March 23, but now no longer sees this.

Goldman’s strategists also expect investors to look through first-quarter results from the current earnings season, and focus instead on the outlook for 2021, thus their “year-end S&P 500 target remains 3,000.”

Just a regional note.  According to the UCLA Anderson Forecast, California’s job market is plunging and the state’s unemployment rate may peak at 16.4% in the second quarter, then gradually slacken.  That would dwarf the 12.3% jobless rate in 2010, in the depths of the financial crisis.

But the UCLA forecast notes that even in the first quarter of 2022, nearly two years from now, the state’s joblessness will probably be as high as 8.5%, which would be more than twice as high as February’s 3.9% unemployment rate.

We had some important data points this week for the U.S., aside from the gruesome ongoing news on the jobless claims front.  March industrial production fell 5.4%, the worst level since Jan. 1946, while March retail sales plunged 8.7%, the biggest monthly decline ever, since the Commerce Department started tracking this metric in 1992.

March housing starts at an annualized 1.21 million were far worse than expected.

In an early look at April, the Empire (New York) State manufacturing survey was -78.2; far worse than ever seen before.

For the record, the latest reading from the Atlanta Fed’s GDPNow barometer for first-quarter growth is now -0.3%, though the number will end up being far worse and heaven help us regarding Q2.

Europe and Asia

Two data points on the broad eurozone economy.  February industrial production was down 0.1% vs. January, and off 1.9% year-over-year, though this was before the broad shutdown in Europe.

The final reading on March inflation for the EA19 was just 0.7%, down from 1.4% March 2019, with Italy and Spain running at an annualized rate of just 0.1%.

And the European auto manufacturers’ association, ACEA, reported Friday that the EU passenger car market recorded a dramatic 55.1% year-on-year drop in registrations of new vehicles in March amid the pandemic.  Italy took the biggest hit, with registrations falling by 85.4% to 28,326 new cars.  Demand also collapsed in France (72.2%) and Spain (69.3%).  Germany reported a less extreme drop of 37.7%.

From January to March 2020, demand for new cars in the European Union declined by 25.6%.

Separately, needless to say there has been zero on the Brexit front.  It doesn’t help when Prime Minister Boris Johnson is ensconced at his country retreat, recovering from his near-death experience with Covid-19.

The above-noted IMF World Economic Outlook predicts the Euro area economy will shrink by 7.5% this year, with Greece suffering the biggest decline at 10%, followed by Italy with a 9.1% drop.

The UK’s economy will fall by 6.5% in 2020, compared with the IMF’s January forecast for 1.4% GDP growth.

Such a decline in the UK would be bigger than the 4.2% drop in output seen in the wake of the financial crisis, and it would represent the biggest annual fall since 1921, according to reconstructed data out of the Bank of England.

But while the 6.5% number is ugly, it masks the potential 35% drop in the April-June period, as projected by the Office for Budget Responsibility in the UK, with the budget deficit soaring to 14% of GDP in the 2020/21 tax year, according to OBR, the worst such deficit since World War II.  [Britain’s finance minister is projecting a 30% hit in the second quarter.]

Meanwhile, the European Union faces major issues, with French President Emmanuel Macron warning of the collapse of the EU as a “political project” unless it supports stricken economies such as Italy and helps them recover from the pandemic.

Speaking to the Financial Times from the Elysee Palace, Macron said there was “no choice” but to set up a fund that “could issue common debt with a common guarantee” to finance member states according to their needs rather than the size of their economies.  But this is an idea that Germany and the Netherlands have opposed in a furtherance of the battle between the financially stable northern European countries vs. the heavily indebted southern tier, such as Italy, Spain and Greece.

The EU faced a “moment of truth” in deciding whether it was more than just a single economic market, with the lack of solidarity during the pandemic likely to fuel populist anger in southern Europe, Macron said.

“It we can’t do this today, I tell you the populists will win – today, tomorrow, the day after, in Italy, in Spain, perhaps in France and elsewhere,” he said.

“I believe [the EU] is a political project.  If it’s a political project, the human factor is the priority and there are notions of solidarity that come into play…the economy follows on from that, and let’s not forget that economics is a moral science.”

The northern member states argue that mutualizing debt would make their taxpayers liable for other countries’ borrowings.  EU leaders are to hold a conference call on the topic next week.

Asked if failure to agree on such a fund would risk triggering the collapse of the eurozone, Macron replied: “Yes, we must be clear – and also of the European idea….

“You cannot have a single market where some are sacrificed,” he added.  “It is no longer possible…to have financing that is not mutualized for the spending we are undertaking in the battle against Covid-19 and that we will have for the economic recovery.”

Investors have been selling the government bonds of Italy, Greece, Spain and Portugal over fears they won’t be able to sustain mounting public debt.

Italy this week, to give one stark example, said its debt-to-GDP ratio will explode to 10% this year, after the government had done a good job reducing it to 1.6% in 2019, which was the lowest in 12 years.

Turning to Asia…China released a torrent of gory economic news and for once, they clearly weren’t hiding the truth as the government reported GDP plunged a worse-than-expected 6.8% in the first quarter, the first negative quarter since they started record keeping in 1992, and presumed to be the worst performance since at least the 1970s.

March retail sales plunged 15.8% from a year ago, after a 20.5% decline for January and February.

Fixed asset investment fell 16.1% last month, vs. a fall of 24.5% the first two months.

Industrial production, though, was better than analysts’ forecasts, down just 1.1% after plunging 13.5% in January and February.

Separately, March exports fell 6.6% year-on-year, after falling 17.2% the first two months, while imports declined 0.9% vs. a 4% decline Jan.-Feb.  [All the above courtesy of the National Bureau of Statistics]

Separately, the 70 major city index of home prices rose 0.1% in March over February, up 5.3% year-over-year, which represents a continued slowdown with this metric, while real estate investment fell 7.7% in the first quarter vs. a year ago.

Despite China’s reopening of its economy, what’s clear is consumers are reluctant to spend, though there is anecdotal evidence that those who are better off are buying luxury goods after not doing so for months.

One more…pork output fell 29.1% in the first quarter vs. a year earlier due to the continued impact of African swine fever on China’s hog herd.

The IMF now projects the Chinese economy will expand by just 1.2% this year, which would be the slowest growth since 1976.

Asia overall is expected to have zero growth, vs. a low of 1.3% during the Asian financial crisis of the late 1990s.

One other from the region.  The IMF now predicts Australia will suffer its first recession since 1991.

Street Bytes

--Stocks finished up again, mostly as a result of today’s rally on the Trump administration’s guidelines for opening up the economy, as well as some early positive news on Gilead Sciences’ remdesivir drug which indicated Covid-19 patients were responding well to the treatment.  However, Gilead today tried to tone down the excitement, saying that although anecdotal reports are encouraging, they do not constitute a deep statistical analysis.  As in, would these patients have gotten better without taking the drug anyway?

The Dow Jones finished up 2.2% on the week to 24242, while the S&P 500 rose 3.0% and Nasdaq soared another 6.1%.  The latter is now down only 3.6% for the year.

But when you look below, you’ll see small- and mid-cap indices are down 24.3% and 26.3%, respectively.

Earnings thus far have been largely meaningless as most corporations have removed their guidance for the year.  No one knows squat except that the second-quarter will be uglier than any single quarter in American history.

--U.S. Treasury Yields

6-mo. 0.15%  2-yr. 0.20%  10-yr. 0.64%  30-yr. 1.26%

The yield on the 10-year finished the week just five basis points above its weekly all-time closing low of 0.59% set two weeks ago.

In Europe, the spread between the 10-year German bund and the Italian 10-year widened from 194 basis points (1.94%) to 227 bps.

--I told you any deal OPEC+ reached was essentially worthless, and then that President Trump’s involvement was as well.  The Wall Street Journal, looking to kiss the president’s ass, editorialized that Trump had engineered “The Art of the Oil Deal,” which The Donald loved.

So where do we stand on the price of West Texas Intermediate as the week closed?  $18.12.

The price sank below $20 again on Wednesday after the U.S. reported a 19 million-barrel increase in inventories, the biggest weekly build ever, while forecasts showed global demand crumbling to its lowest levels in a quarter of a century.

So much for the agreement between the Saudis, Russia and members of OPEC+ to cut output about 10 million barrels in coming months (9.7 million per day in May and June)*, when the world is awash in oil and demand is off 30 million barrels.

*The agreement will taper into a 7.7 million barrel per day cut from July to December and then to 5.8 million bpd from January 2021 to April 2022.

Other major producers like the United States and Canada gave indirect commitments to cuts as well, though this will come in the form of drastic reductions in production already in motion.  Oil and gas producers large and small are shutting in wells.  Continental Resources Inc., for example, which drills in Oklahoma and North Dakota, said it would reduce output in April and May by about 30%.

[This afternoon, the Baker Hughes U.S. rig count plunged by 66 to 438 for the week ended April 17, its lowest level since October 2016.  Data show 683 oil rigs operating as of March 13, so a drop of 245 rigs in a month.]

Longtime energy analyst John Kilduff said after the government’s inventory report, “We have crude oil backing up in the system in epic fashion.  This is probably one of the most bearish, if not darkest reports I’ve ever seen.”

The inventory report from the Energy Information Administration came after the International Energy Agency forecast an oil demand dive of 29 million barrels per day in April to levels not seen in 25 years and said no output cut could fully offset the near-term falls facing the market.

“There is no feasible agreement that could cut supply by enough to offset such near-term demand losses,” the IEA said in its monthly report.  “However, the past week’s achievements are a solid start.”

The IEA estimates there are 1.2 billion barrels of storage available at the end of January, but global stocks could increase by 11.9 million barrels a day in the second quarter, hitting “operational capacity” limits by the middle of the year.

The amount of oil in floating storage – on vessels at sea – rose 27% to 103.1 million barrels in March, the IEA said.

Global oil demand is expected to fall by a record 9.3 million barrels a day overall for 2020.

Separately, OPEC forecast that global demand would decline 6.9 million bpd for the full year.

--The International Air Transport Association (IATA) released updated analysis this week showing that the Covid-19 crisis will see airline passenger revenues drop by $314 billion in 2020, a 55% decline compared to 2019.

Just three weeks earlier, IATA estimated $252 billion in lost revenues in a scenario with severe travel restrictions lasting three months.

But the crisis has only deepened since.

“The industry’s outlook grows darker by the day.  The scale of the crisis makes a sharp V-shaped recovery unlikely.  Realistically, it will be a U-shaped recovery with domestic travel coming back faster than the international market.  We could see more than half of passenger revenues disappear. That would be a $314 billion hit.  Several governments have stepped up with new or expanded financial relief measures but the situation remains critical.  Airlines could burn through $61 billion of cash reserves in the second quarter alone.   That puts at risk 25 million jobs dependent on aviation.  And without urgent relief, many airlines will not survive to lead the economic recovery,” said Alexandre de Juniac, IATA’s Director General and CEO.

--So with the above in mind, major airlines and the Treasury Department reached agreement on a $25 billion coronavirus bailout to prevent layoffs after the plunge in demand.

The funds, approved last month by Congress as part of a more than $2 trillion stimulus bill, will be distributed to companies that agree not to furlough workers before Oct. 1.

American Airlines said it would receive $5.8 billion – including a $4.1 billion grant and a $1.7 billion low-interest loan.  Other airlines did not immediately spell out specific amounts they will receive under the so-called Payroll Support Program.

--United Airlines said it is cutting its flight schedule by 90% in May and expects similar cuts for June, warning that travel demand that is now “essentially at zero shows no sign of improving in the near term,” making job cuts likely.

In a memo to employees, CEO Oscar Munoz and President Scott Kirby said: “The historically severe economic impact of this crisis means even when travel demand starts to inch back, it likely will not bounce back quickly.  We believe that the health concerns about COVID-19 are likely to linger which means even when social distancing measures are relaxed, and businesses and schools start to reopen, life won’t necessarily return to normal.”

The $5 billion the airline expects to receive in government payroll support under the CARES Act bars it from involuntary furloughs before Sept. 30, though the airline indicated that it expects to have to cut payroll after that.  It said it will be offering new voluntary leave packages in the coming weeks and voluntary separation programs.

--Norwegian Air shares plummeted again this week and are now about 97% from their 2015 peak, with the airline’s survival depending on creditors accepting a rescue plan proposed last week.  The $4.3 billion of debt would be converted into shares and raise some new equity – wiping out much of the remaining value of the company’s current stock.  A meeting on April 30 of the bondholders will be held for final approval.

7,300 staff are on temporary layoff, at least 90% of the workforce.  If the bondholders don’t accept the plan, the airline proceeds into bankruptcy, and shareholders are definitely left holding some useless scrip.

--Boeing Co. reported another 75 cancellations for its 737 MAX jetliner in March, adding to 75 previously reported from the Irish leasing company Avolon.  New cancellations came from buyers including 34 of 135 aircraft ordered by Brazil’s GOL.

Boeing, facing a 13-month-old freeze on deliveries of the MAX and now disruption to deliveries of larger planes due to the coronavirus epidemic, said it had delivered 50 planes in the first quarter, nearly a third of the 149 seen a year earlier.

But, Thursday, Boeing announced it would resume commercial airplane production next week in Washington State after suspending operations last month.  Approximately 27,000 people in the Puget Sound area will return to production of the wide-body aircraft programs.  A big positive and the stock rallied.

This afternoon, though, General Electric’s aircraft-leasing business said it had cancelled its order with Boeing for 69 undelivered 737 MAX jetliners.  GE Capital Aviation Services said it still has 82 planes on order.

--Boeing supplier Triumph Group Inc., however, said it was furloughing about 2,300 employees across its U.S. and European plants for two to four weeks to cut capacity linked to Boeing commercial aircraft programs amid the outbreak.

--It was Big Bank week for earnings reports and JPMorgan Chase & Co.’s profit plunged by more than two-thirds in the first quarter as the largest U.S. bank put aside nearly $7 billion in reserves to protect it from a wave of potential loan defaults in the months ahead.

The results painted a grim picture at the start of a long, tough period for lenders, with CEO Jamie Dimon saying the economy was facing a “fairly severe” recession because of the economic shutdown caused by the coronavirus.  “If the economy gets worse, we’ll bear additional loss,” Dimon said on a call with analysts.  “But we do forecast all of that. We know we can handle really adverse consequences.”

In total, JPMorgan recorded charges worth $8.3 billion in the first quarter, mostly due to money the bank set aside to cover loans.  JPM also reported a $951 million loss on derivatives and an $896 million markdown on its bridge loans.

CFO Jennifer Piepszak said that the bank may “meaningfully” increase the amount it is holding in credit reserves next quarter and later in the year if the economy worsens.

“We haven’t actually seen the stress emerge yet,” Piepszak said.  “What we took in the first quarter is the best estimate of future losses.  It is our best estimate of the losses that will inevitably emerge through this crisis.”

The reserves included $4.5 billion against potential consumer loan defaults as millions of Americans lose their jobs and struggle to make payments on anything from iPhones to cars to new microwaves.

Because they are the biggest, everyone needs to follow JPMorgan’s comments, especially because CEO Dimon is one of the more honest and forthright business leaders in America.  He’s not optimistic, but when he gets so, down the road, that will be a good sign for us all.

--Wells Fargo & Co. also reported profits plunged, down 89%, as it boosted reserves in the first quarter.  The bank said it set aside an additional roughly $3 billion in the quarter for potentially bad loans, both in the consumer and commercial divisions.  That raised its total provision to $3.83 billion.

Revenue was $17.7 billion, down from $21.6 billion a year ago.

“We don’t know what the time frame is or how quickly the economy will recover,” said Wells Fargo CEO Charles Scharf.  “What we do know is the contraction is real.”

--Bank of America’s profit fell 45% in the quarter, $4.01 billion, down from $7.31 billion a year earlier.  Revenue of $22.77 billion was down 1% vs. a year ago.

The bank set aside an additional $3.6 billion for potential bad loans, with its total provision for credit losses now $4.76 billion, up from $941 million the previous quarter.

--Goldman Sachs Group Inc.’s profit fell 46% in the first quarter, as the pandemic hammered markets and the economy ground to a halt.

Goldman reported a $868 million loss in its own investment portfolio, though it reported strong results in its core businesses of trading and investment banking.

The company reported a quarterly profit of $1.21 billion, down from $2.25 billion a year ago, while revenue of $8.74 billion was essentially flat with the first quarter of 2019.

Goldman set aside $937 million to cover expected loan losses, with corporate clients drawing down about $19 billion in loans in the quarter.

But its trading revenue rose 28% to $5.16 billion.  The fixed-income unit had their best quarter in five years.

--Citigroup said its first-quarter profit plunged 46% to $2.52 billion from $4.71 billion a year earlier.  Revenue rose 12% to $20.73 billion.

Citi increased its loan-loss provision by $4.92 billion, compared with just $278 million in the prior quarter.  The bank warned it will be difficult to estimate the full extent of the loan losses the bank is likely to suffer in the coming months, as there are likely to be a flood of missed debt payments.

CEO Michael Corbat said on a conference call with analysts: “Looking forward, there are too many unknowns to count.  But I feel confident in our ability to manage through whatever scenario comes to pass.”

CFO Mark Mason said Citigroup’s credit-card customers have cut their spending by some 30% since late March.  Spending on travel has fallen 75%, while dining and entertainment spending is down 60%.

The bank’s markets group recorded a 39% gain in revenue, with equities and fixed income up the same amount.

--Morgan Stanley reported declines in its first-quarter results on Thursday as revenue in its investment banking and wealth management segments were dented by the impact of the pandemic, with the company warning that the negative effects are poised to continue.

Revenue fell to $9.49 billion from $10.29 billion a year earlier, and earnings decreased to $1.01 a share from $1.39 a share previously.

Sales and trading revenue jumped to 30% to $4.87 billion amid higher client volumes in equities and “strong client engagement and volatility” in markets in the fixed income group.

CEO James Gorman, who himself was diagnosed with the coronavirus and has since recovered, said: “Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating Covid-19 than at any time since the financial crisis.  While it’s too early to predict how this will unfold, Morgan Stanley navigated the quarter well given the conditions, and our results bear testament to the strength of our balanced business model.”

Gorman added in a call with analysts: “We’re in a wild period.  A CEO who stands by their short-term targets that were set right before this virus hit, I don’t know what planet they’re on.”

--The world’s largest money manager, BlackRock Inc., saw its profit fall 23% in the first quarter to $806 million, though investors added a net $35 billion in new money to the firm’s coffers, about half the level in the year-ago period.

Plummeting markets dragged the world’s largest money manager’s assets under management below $7 trillion, to $6.5 trillion, down from $7.43 trillion at the end of 2019.

As I noted a few weeks ago, BlackRock was tapped to steer as much as hundreds of billions of dollars in bond purchases for the Federal Reserve.

--Tesla shares have been soaring following a surge in China car registrations, up 450% in March, month on month (though February was a dead month there).  Registrations rose to 12,709 units last month from 2,314 in February.  Overall auto sales plunged 43.4% in China in March.

Tesla’s stock price target was raised by Goldman Sachs, arguing Tesla is uniquely positioned “to maintain a strong market position” with its production facility in Shanghai.

The shares have doubled off their March low.  The company said it will post financial results for the first quarter after the market closes April 29.

--Apple finally announced a new iPhone SE – four years after the company first unveiled this version.  The new phone adheres to the original idea of offering top-of-the-line performance in a smaller and cheaper design, with a starting price of $399 – 43% less than the starting price of the base iPhone 11 model.

--McDonald’s Corp. rejected a request from its U.S. franchisees to delay collecting some march rent and royalty payments, prompting claims that the company is not providing enough support during the crisis, as first reported by Reuters.

Franchisees had asked McDonald’s for a 14-day reprieve in their March rent, but the request was denied.

More than 1,600 franchisees own and operate 95% of the fast-food chain’s nearly 14,000 U.S. restaurants, with most owning just a few.

McDonald’s is the landlord for most of its franchisees, who pay a flat base rent on the first day of each month and another rent and service fee payment on the 10th, based on the previous month’s sales.

But with most locations having to switch to drive-through and delivery and carry-out only operations, as reported last week, McDonald’s sales plunged 13.4% in the U.S. in March.

--Amazon.com Inc. said on Monday it plans to hire an additional 75,000 for jobs ranging from warehouse staff to delivery drivers as the coronavirus epidemic kept Americans locked in their homes and demand for online orders surged.

--Walmart Inc. said today it would hire 50,000 more workers at its stores, clubs and distribution centers to meet the surge in demand for groceries and household essentials from consumers stockpiling.

--Neiman Marcus failed to make a $5.7 million interest payment that was due Wednesday, according to a bondholder, Marble Ridge Capital LP, which owns a significant amount of the $137.7 million in bonds that mature on Oct. 15, 2021.

The company has 30 days to pay the interest.  Last summer, Neiman Marcus completed a debt restructuring that pushed its obligations out to 2023 and 2024, but Marble Ridge didn’t participate in it.

Neiman Marcus is a leader in luxury retailing with 43 stores nationwide, including one at The Mall at Short Hills, a stone’s throw away from yours truly, and this is but one example of the huge issues facing retail…as well as mall operators.  Most of Neiman Marcus’ 14,000 employees are being furloughed after all the stores closed March 18.

--Johnson & Johnson on Tuesday said it expects its medical device business to begin recovering in the fourth quarter as elective medical procedures delayed by the pandemic start to resume. 

The healthcare conglomerate lowered its full-year 2020 forecast due to the hit to its medical device business with procedures like hip and knee replacements on hold.  The division accounts for nearly 30% of its total quarterly sales.

But investors took heart that J&J didn’t simply withdraw its 2020 forecasts over the uncertainty created by the coronavirus and even raised its quarterly dividend.

The company is developing a coronavirus vaccine and plans to start human trials by September, with an eye on having it ready under an emergency use authorization in early 2021.

Overall, the company said pharmaceutical sales rose 8.7% in the quarter to $11.13 billion, helped by demand for cancer drugs Darzalex and Imbruvica.  Consumer health sales jumped 9.2% to $3.63 billion, driven by a surge in demand for products like Tylenol and Motrin as consumers faced with an illness that causes fever and cough stocked up on essentials.  Medical device sales fell 8.2% to $5.93 billion.

--Smithfield Foods, the world’s biggest pork processor, said on Sunday it was forced to shut a U.S. plant in Sioux Falls, South Dakota, due to a rash of coronavirus cases among employees and warned the country was moving “perilously close to the edge” in supplies for grocers.

Slaughterhouse shutdowns are disrupting the U.S. food supply chain, crimping availability of meat at retail stores and leaving farmers without outlets for their livestock.

The facility in Sioux Falls represents about 5% of U.S. pork production, according to the company.  As of Saturday, 238 Smithfield employees had active cases, accounting for 55% of the state’s total.

There have been other outbreaks at meat plants in the U.S., with a JBS SA beef facility in Colorado’s Weld County, and a Cargill meat-packaging plant in Pennsylvania suffering large numbers of Covid cases.  A significant number of employee deaths are also being reported across the country.

--The head of one of the world’s largest ad-agency conglomerates, Arthur Sadoun, CEO of Publicis Groupe SA, warned the industry is facing a far more severe pullback in advertising spending than the one that buffeted Madison Avenue in the wake of the global financial crisis.

“This crisis is going to be unprecedented by its magnitude, complexity and length,” Sadoun said.

Ad spending plunged about 10% in 2009, but, “There is no comparison.  It’s going to be steeper.”

Advertising is one of the first expenses cut by companies looking to preserve cash in times of crisis.  The plunge has already started and is severely impacting television networks and the print media, for starters.

Just an example, Gannett, the publisher of USA TODAY, the Detroit Free Press and more than 250 other daily newspapers, has ordered the majority of its 24,000 employees to take five days off per month without pay in April, May and June, according to memos obtained by the New York Times, with executives taking a 25% pay cut.

And Sports Illustrated laid off 31 people, including journalists, on March 30.

--Shares in Best Buy fell over 6% after the company said it would furlough about 51,000 employees amid dropping sales due to coronavirus-led store closures.  BBY said its sales in the first two months of the year fell 5%, and then the store closures and decreased foot traffic led to a 30% sales plunge from March 21 through April 11.

--Procter & Gamble Co. beat expectations for quarterly profit on Friday as consumers stocked up on everything from diapers and detergents to toilet rolls amid the sweeping lockdowns around the world to curb the spread of Covid-19.

Sales at P&G’s health care unit rose 7%, while fabric, home care unit sales rose 8%.  The baby and feminine products business logged a 6% rise in sales.  Beauty and grooming were units that posted sales declines.

Many of the company’s products, including Bounty paper towels, Charmin toilet paper (not a fan), and Pampers have obviously seen strong demand.  I started hoarding toilet paper (Scott) in February and am well-positioned.  I am not when it comes to disinfectant wipes.

For the company’s fiscal third quarter ended March 31, P&G reported a net sales rise of 5% to $17.21 billion.  Net earnings rose to $2.92 billion, from $2.75 billion a year earlier.

--Personal-computer shipments fell in the first quarter as production and logistical challenges offset higher demand, driven by the need to work remotely and school orders, according to preliminary data from two industry research firms.

Gartner Inc. on Monday said global PC shipments fell 12.3% to 51.6 million units, the steepest decline since 2013.  There was a slight increase in the U.S., however, from a year earlier, but a 30.2% drop from the previous quarter.

International Data Corp. (IDC) said global shipments fell 9.8% to 53.2 million, with the U.S. marking its lowest quarterly-shipment volume in more than a decade.

The difference in data between Gartner and IDC has to do with how each defines PCs, as the lines have increasingly been blurred between personal computers and devices like tablets.

Lenovo Group Ltd. retained the No. 1 spot in vendor rankings, followed by HP Inc. and Dell Technologies Inc.  The three combined have more than half of the global market share.

--India’s Ministry of Home Affairs warned that Zoom Video Communications online meeting platform was not “safe.”  But if you still wish to use it, the ministry is recommending a new user identification and password for each meeting to prevent unauthorized entry of a third party.

Zoom shares have rallied off their lows as the company has said it is fixing the holes in its security, with the company hiring dozens of outside security consultants over just the past two weeks.

Consumer-intelligence company J.D. Power said this week that Zoom was the most popular online meeting platform for Americans, with almost half of those surveyed saying they had used its teleconferencing software over rivals’.

--A senior cybersecurity official with the FBI said on Thursday that foreign government hackers have broken into companies conducting research into treatments for Covid-19.  FBI Deputy Assistant Director Tonya Ugoretz told participants in an online panel discussion hosted by the Aspen Institute that the bureau had recently seen state-backed hackers poking around a series of healthcare and research institutions.

--Royal Caribbean Cruises Ltd. said it would lay off or furlough about 26% of its workforce in the United States, affecting nearly 1,300 of its more than 5,000 employees in the country, as the coronavirus chokes international travel.

The news comes as the Centers for Disease Control extended its “no sail order” for all cruise ships through June, at least.

--New York City is set to lose a half-million jobs and run about $10 billion short on tax revenue through mid-2021 because of the pandemic, the city’s Independent Budget Office estimated.

Retail employment will take the biggest hit, shedding 100,000 jobs in all, starting with 60,000 from April through June.  Another 86,000 jobs in hotels and restaurants, and 26,000 in the arts, entertainment and recreation industries will be lost, according to a report released Wednesday by the fiscal monitor.

While finance and professional services will also experience declines, the awful part is the most severe losses will be concentrated in sectors with low- and moderate-paying jobs.

The projected drop of 475,000 jobs would represent almost half the 996,500 jobs the city has gained since November 2009, when it hit its low point just after the Great Recession, according to state Labor Department statistics.  The city held a record 4.7 million jobs in February. 

The IBO projections are in line with Mayor Bill De Blasio’s forecasts of a $10 billion shortfall in tax revenue.  [Crain’s New York Business]

--Some of the hedge fund industry’s biggest names had a terrible March.  Firms run by Ray Dalio, Michael Hintze and others suffered their worst-ever losses last month, with some funds down as much as 40%.  Overall, three out of four hedge funds lost money, according to Bloomberg.

Dalio’s Bridgewater Associates saw its flagship Pure Alpha II hedge fund get caught on the wrong side of the sell-off that began late February, sending it down about 16% last month.

Hintze’s $3 billion CQS Directional Opportunities Fund plunged 33% in March.

What makes such performance doubly troubling for investors is they are getting wacked with some of the highest fees in the money management industry.

--Cantor Fitzgerald is cutting hundreds of jobs across divisions, even as the bulk of Wall Street has vowed not to lay off employees during the pandemic.

“We have made prudent headcount and cost reductions to position the firm for the uncertain macroeconomic conditions expected for the remainder of the year,” the company said in an emailed statement.

CEO Howard Lutnick is worried about the hit from an extended economic downturn.

--Arrivals in Hong Kong dived nearly 99% to another new low of 82,000 in March, as the pandemic forced the city’s tourism industry to a standstill.

The Tourism Board’s latest statistics showed an 80.9% drop in visitors for the entire first quarter.

Foreign Affairs

China: Secretary of State Mike Pompeo on Wednesday stressed to China’s top diplomat the need for full transparency and information sharing to fight against the coronavirus outbreak.

Pompeo also stressed China’s facilitation of medical supply exports to meet critical demand in the United States.

The renewed pressure on the Chinese came after President Trump decided to pull funding for the World Health Organization which it accused of being “China-centric.”

China insists it has been transparent about the pandemic and has sharply criticized U.S. officials who cast doubt on that.

But then the State Department said in a report Wednesday that China may have secretly set off low-level underground nuclear test explosions despite claiming to observe an international pact banning such blasts.

The finding, first reported by the Wall Street Journal, may worsen ties even further.  For years I have said we have no freakin’ idea what China has been doing with its nuclear weapons program, let alone have any clue just how many nukes the country may have.  Everything is an estimate.  And so here we have an example of Beijing’s total lack of transparency on its nuclear testing activities, including blocking data transmissions from sensors linked to a monitoring center operated by the international agency that verifies compliance with a treaty banning nuclear test explosions.

The 1996 Comprehensive Test Ban Treaty (CTBT) allows activities designed to ensure the safety of nuclear weapons.  China denies it is blocking data transmissions.

Friday, Secretary Pompeo told his Russian counterpart that any future arms control talks must focus on a U.S. proposal for a new arms control accord that includes both Russia and China.

Lastly, today, Secretary Pompeo said China’s role in the coronavirus pandemic should force countries to rethink their telecommunications infrastructure, including the adoption of China-based Huawei’s 5G networks.

Pompeo told Fox Business Network in an interview: “I am very confident that this moment – this moment where the Chinese Communist Party failed to be transparent and open and handle data in an appropriate way – will cause many, many countries to rethink what they were doing with respect to their telecom architecture… And when Huawei comes knocking to sell them equipment and hardware, that they will have a different prism through which to view that decision.”

***If you want an infuriating example of the Communist Party’s police state, you can watch PBS’ “Frontline” episode of April 14 on the handling of the Uighurs, available through the Frontline link at pbs.org. 

North Korea:  Leader Kim Jong Un’s absence from an important anniversary event this week rekindled speculation over his potential health problems, analysts said today.  On Wednesday, North Korea marked the anniversary of the birthday of its national founder and Kim’s grandfather, Kim Il sung, as a national holiday known as the Day of the Sun.

Senior officials paid tribute to the embalmed body of Kim Il Sung, state media KCNA said on Thursday, but did not mention Kim as part of the delegation, unlike in the past.  He was also absent from photos released by a party mouthpiece.

Kim, age 36, is clearly significantly overweight and has had a number of health issues.  He never misses commemorating the birthdays of his grandfather and father.

Tuesday, Pyongyang fired multiple short-range missiles into the sea between the Korean peninsula and Japan, which South Korea’s Joint Chiefs of Staff said was part of the celebration.  Such military events would usually be observed by Kim, but there was no KCNA report on the test at all.

He was last seen publicly presiding over a meeting of the ruling Workers’ Party’s politburo last Saturday, but was not wearing a mask, even as he called for tougher and more thorough countermeasures to keep citizens safe from the coronavirus.

Separately, the U.S. State Department, Treasury, and Department of Homeland Security, along with the FBI, issued an advisory on Wednesday about North Korean cyber threats that called particular attention to banking and finance.

“North Korea’s malicious cyber activities threaten the United States and countries around the world and, in particular, pose a significant threat to the integrity and stability of the international financial system,” the State Department said in a statement on the advisory.

South Korea: President Moon Jae-in’s ruling party won an absolute majority in parliamentary elections, a landslide victory propelled by successes in the country’s efforts to contain the coronavirus outbreak. 

The election was watched around the world as one of the first nationwide votes since the pandemic began.  Authorities took stringent safety measures, disinfecting all 14,000 polling stations and requiring voters to wear masks, have their temperatures checked, use hand sanitizer and plastic gloves and maintain a safe distance from others.  Driven by record high participation in early voting over the weekend, turnout was 66.2%, higher than any parliamentary elections held since 1992, according to the National Election Commission.

Approval ratings for Moon and his Democratic Party took a big hit in February when the first major outbreak outside China enveloped South Korea, but since then, the administration’s largely successful campaign against the virus provided a boon for Moon and his progressive party, as they secured 180 seats in the 300-member, single-chamber parliament, up from the current 120.

Israel: Once again, Prime Minister Benjamin Netanyahu and rival Benny Gantz struggled to agree on terms for a unity government, raising the prospects of yet another general election, while Israel deals with a coronavirus lockdown.

The two had agreed in principle to a unity government, with Netanyahu leading it for two years before turning power over to Gantz, but then talks broke down.

Israel’s President Rivlin then said he would give the two another few days to form a government, and after that Wednesday deadline expired, Rivlin handed the task over to Parliament, starting another 21-day countdown that could lead to the fourth election in little over a year.

Neither Netanyahu nor Gantz can currently muster a majority without joining forces, and their parties issued a joint statement on Thursday saying that negotiations for a unity government would continue.

Failing an agreement, Parliament would automatically disperse on May 7, and then send Israelis back to the ballot box.

Turkey: An organized crime boss serving a prison sentence in Turkey was set free Thursday as authorities continued releasing thousands of inmates to ease overcrowding during the coronavirus pandemic.  But government critics are being kept behind bars, which is pathetic.

Far-right mob boss Alaattin Cakici was released from an Ankara prison, the 67-year-old having been imprisoned for convictions on charges that included instigating murder, armed attack, money laundering and leading an illegal organization. He had served 16 years of his decades-long sentence.

At the same time, though, scores of journalists, activists, and politicians and members from opposition parties are ineligible for early release under penal legislation that took effect this week.

At least 85 journalists are behind bars, according to the Journalists’ Union of Turkey.  The pro-Kurdish Peoples’ Democratic Party says more than 3,500 party members, including former party leaders and lawmakers, are imprisoned.

Two European Union lawmakers called the law “a great disappointment.”

“Turkish ruling parties have decided to deliberately expose the lives of journalists, human rights defenders and those whom they deem to be political opponents to the risk of the deadly disease.”

1,769 have died of Covid in Turkey as of tonight.

Russia: I have been watching Russia’s cases and deaths from coronavirus spike, 32,000 cases in all, 273 deaths, including 41 today, and it has become clear that Russia is unlikely to escape a severe hit, which poses a major challenge to the nation’s poor health system.

President Vladimir Putin told senior officials at the Kremlin on Monday, “We have a lot of problems, and we don’t have much to brag about, nor reason to, and we certainly can’t relax.  We are not past the peak of the epidemic, not even in Moscow.”

There is a very real threat to Putin’s rule.

Brazil: The nation became the first country in the southern hemisphere to surpass 1,000 deaths with coronavirus, now over 2,100 as I go to post, the daily toll spiking this week.

Most states imposed quarantine measures but President Jair Bolsonaro has challenged the restrictions, saying they needlessly harm the economy.

So what does Bolsonaro do on Thursday?  Amid growing concern the virus was on the verge of spiraling out of control, especially in poorer areas like favelas, crowded slums where social distancing is near impossible and basic sanitation is lacking, the president fired his highly-respected health minister, Luiz Henrique Mandetta.

In televised remarks met with pot-banging protests in several major cities, Bolsonaro said Mandetta did not fully appreciate the need to protect jobs and he called again for a resumption of business in Latin America’s largest economy.

“We need to return to normal, not as fast as possible, but we need to start having some flexibility,” Bolsonaro said.  The government cannot afford emergency aid to the poor for much longer, he added.

Mandetta warned in his parting comments: “Do not think we are past a peak in growth of the virus.  The health system is still not prepared for an acceleration.”

A survey of Brazilians by pollster Datafolha rated the Health Ministry’s response to the epidemic as “good” or “great” by 76%.  Just 33% gave Bolsonaro the same ratings.

Meanwhile, Nicaraguan dictator Daniel Ortega has not been seen or heard in public in a month.  His government claims there is no coronavirus issue in the nation, reporting just nine cases and one death.  Neighboring Honduras, however, has reported over 400 cases and 41 deaths.  It just makes no sense.

Random Musings

--Presidential tracking polls….

Gallup: As I expected, a new Gallup survey for the period April 1-14 revealed 43% approve of President Trump’s job performance, vs. 54% disapproval.  This compares with a 49-45 split for March 13-22.  But 93% of Republicans still approve, while 39% of independents do, down four points from March.
Rasmussen: 46% approve, 53% disapprove (Apr. 17), an improvement over last Friday’s 43-56 figures.

A new Pew Research Center poll has President Trump’s approval rating little changed since late March at 44%, while 53% disapprove of his handling of the job.

--In a new USA TODAY/Ipsos Poll, by an overwhelming 69%-21% margin, Americans endorse a nationwide lockdown through the end of April; an idea backed by 8 in 10 Democrats and 62% of Republicans.

By 92% to 4%, Americans want the federal government to make the Covid-19 test widely available.  About 8 in 10 support drastic steps on immigration: imposing mandatory quarantines for people who have traveled to any other country and temporarily stopping immigration from all other countries.  Seven in 10 want to ground all international flights.  Almost half, by 49%-34%, want to ground all domestic flights.

The sources most trusted for accurate information about the pandemic continue to be the Centers for Disease Control and Prevention, trusted by 80%, and the World Health Organization, trusted by 70%.  President Trump is trusted by 44%, Vice President Pence 46%, and the U.S. Congress 41%.  Trust in the news media is at 48%.

We’ll see how the campaign by the president against the WHO plays out in the “trust” number as the poll was conducted before the offensive.

A Pew Research Center survey had 73% of Americans believing the problems the country is facing from the outbreak will worsen.  About twice as many Americans say their concern is that state governments will lift restrictions on public activity too quickly (66%) than not quickly enough (32%).

65% say President Trump was too slow to take major steps to address the threat to the United States when cases of the disease were first reported in other countries.

81% of Democrats and Democratic-leaning independents say their greater concern is that governments will lift the bans on public activity too quickly, while Republican and Republican leaners are evenly divided.  51% say their bigger concern is that state governments will act too quickly while 46% worry that more restrictions on public movement will not be lifted quickly enough.

47% of Republicans say it is acceptable for officials to fault the administration’s response, while 52% find this unacceptable.  85% of Democrats think it is acceptable for elected officials to criticize how the administration has addressed the outbreak.

--Bernie Sanders endorsed former foe Joe Biden in a livestreamed event Monday.

“We must come together to defeat the most dangerous president in modern history,” Sanders tweeted in conjunction with the joint appearance online.

Biden assured the senator’s supporters that he would be advising him on key issues including the economy, education and health care.

“Bernie, I’m gonna need you,” Biden acknowledged to Sanders.  “You’ve been maybe the most powerful voice for every generation of Americans.”

Biden later told Sanders’ supporters in a tweet: “I see you, I hear you, and I understand the urgency of what it is we have to get done in this country.  I hope you will join us.  You are more than welcome on this campaign.  You’re needed.”

Barack Obama then endorsed Biden, as did Sen. Elizabeth Warren.

--Sen. Amy Klobuchar, op-ed, New York Times, on voting by mail:

“In a democracy, no one should be forced to choose between health and the right to vote.

“Imagine if days before the November election you learn that your polling place has been closed, that your request for an absentee ballot has gone unfulfilled and that you have to risk a grave infection by standing in line – possibly for hours – to claim your stake in our democracy.

“If that sounds outrageous to you, it should.  But it’s exactly what happened in the Wisconsin election last week. First the Republican-controlled State Legislature blocked Gov. Tony Evers’ efforts to delay the election for public safety reasons, and then the United States Supreme Court reversed his order to extend the absentee ballot deadline.

“In Milwaukee, which has the largest minority population in the state, the number of open polling places was shrunk to five from 180, as poll workers dropped out.  In Green Bay, the number plunged to two from 31.  Needless to say, the lines were hours long.  Voters wore homemade face masks to protect themselves from contracting the coronavirus – if they were willing to risk voting at all.

“And if you think there ought to be a better way, you’re not alone.  I know of one person who, with an election approaching in his newly adopted state, simply requested an absentee ballot from the comfort of his own home – so he could vote safely and easily by mail.

“His name?  Donald Trump.  His address?  1600 Pennsylvania Avenue.  If it’s good enough for him, it’s good enough for all Americans.

“I’m lead sponsor on a bill, with Senator Ron Wyden, that would require every state to allow its citizens to vote easily by mail.  We are asking Congress to help states ramp this up in a big way, with funding for everything from workers to envelopes to postage.

“My husband, John, just recovered from Covid-19.  I know firsthand that it’s a brutal illness, even if, like him, you’re 52 and healthy – and for too many, it’s deadly.  Public health officials have warned us that we simply don’t know how long it will last – or if there will be a second, third or fourth wave, once we reopen businesses and resume our lives.  And many of those same experts will tell you that many Americans will still be at risk on Nov. 3, the date of the general election.

“That is why we must reform our election systems, so that sheltering in place can also mean voting in place.  And we must do it now, while we still have the time to preserve everyone’s ability to vote in November.

“What we’re proposing is neither radical nor untried.  About a quarter of voters already cast their ballots by mail.  In fact, all states offer some form of it.  Five states – Colorado, Hawaii, Oregon, Utah and Washington – vote almost entirely by mail.  And these are states that have elected Republicans and Democrats alike; there’s nothing partisan about full participation.  At the same time, both Democratic and Republican governors and secretaries of state have recently taken actions to make voting by mail more accessible during this pandemic.

“It’s troubling that many states still insist on making it hard to mail in a ballot.  Sixteen states require voters to provide an excuse to obtain an absentee ballot (though several have lifted that requirement for their primary elections); six states also require more than one witness, or a notary, to validate a mail-in ballot.  Imagine trying to drum up witnesses – much less a notary – in the thick of a public health crisis.  We need to do away with the hurdles and the back flips once and for all….

“Reform won’t come without a cost. We are pushing for ample funding to help states immediately prepare for mail voting, in addition to the $400 million Congress has already approved for that purpose, as well as for more early, in-person polling locations and protecting the health and safety of poll workers.

“As we debate the next federal legislative relief package for Covid-19, here is what we know for sure: Failure to prepare for this pandemic has cost so much.  Lives have been lost.  Businesses large and small – representing lifetimes of hard work – now stand boarded up.

“Yet there were so many signs it was coming.

“November is coming, too.  We need to make sure all of America doesn’t suffer what Wisconsin just did.

“And if you want to know what it’s like to vote in a healthy, safe and secure way – from the comfort of your own home – just ask President Trump. He’s been doing it for years.”

--So for President Trump, the Wisconsin primary was a big deal because he touted Dan Kelly for the state Supreme Court, only Kelly lost to liberal challenger Jill Karofsky.  Funny how the president said nothing about this, after the Democratic governor tried to postpone the primary.

--Having been to the island of Guam many times, I can appreciate how the people there, while used to seeing lots of U.S. military in their midst, with two giant bases, are nonetheless concerned that more than 1,700 sailors from the USS Theodore Roosevelt are isolating in the island’s hotels, while more than 580 sailors have been confirmed infected, one has died.  The sick remain on base, Navy officials said.

As many as 10 hotels have been set aside to house up to 4,000 sailors in total, with each sailor staying in a room stocked with two weeks’ worth of linens, towels and water.  There is no contact with hotel workers, and only military police and medical teams can visit.  Military personnel deliver the food prepared in the kitchens.

So now some residents are asking Guam’s governor to reconsider allowing the sailors to stay in the hotels.

Said a spokeswoman for the Chamorro, the indigenous people of the Mariana Islands, which include Guam, of the sailors: “Being negative today doesn’t mean that they won’t be in a week or so.  The decision to house them in the middle of our community is playing a game of chance with the health of our people.”

Not including the sailors, Guam had 135 confirmed cases of coronavirus and five deaths at last report.

--From an article by Jo Craven McGinty of the Wall Street Journal:

“A snapshot of the 2009 H1N1 influenza pandemic shows the difference in the speed of transmission between a raging flu and the new coronavirus.  Comparing only laboratory-confirmed cases, in the first 102 days of the H1N1 flu pandemic, the CDC reported 43,677 illnesses and 302 deaths.  In 22 fewer days, Covid-19 infected 11 times as many people and killed 60 times as many.”

--Since my parents both went to the University of Pittsburgh, along with my nephew, my godmother, godfather and countless relatives, some of us are rooting particularly hard for some researchers there today.

Salena Zito / Wall Street Journal

“Jonas Salk developed the polio vaccine at a University of Pittsburgh lab. The deadly disease that crippled infants disappeared almost overnight, and Salk became a hero.  He wasn’t Steel City’s only history-making physician.  Thomas Starzl, who performed the first liver transplant in 1963, joined the Pitt faculty in 1981.

“As the world faces another terrifying disease, Pitt medical scientists are again at work on a potentially revolutionary vaccine.  Luis Falo and Andrea Gambotto, respectively a dermatologist and a surgeon, have developed a Covid-19 inoculation that rapidly produces large numbers of coronavirus antibodies when injected in mice.  A peer-reviewed paper describing their work appeared in the journal EBioMedicine, which is published by The Lancet.  They await approval from the Food and Drug Administration to conduct human trials on their vaccine candidate, which is delivered via a unique skin patch containing 400 tiny needles.

“ ‘This is a collision of two stories,’ Dr. Falo says.  ‘We’ve been developing the delivery technologies for this for the past several years and working with Dr. Gambotto in trying to use the skin as the ideal target for vaccine delivery.  While we were doing that, Dr. Gambotto has been working on SARS and MERS.’ The two physicians’ labs are next door to each other.”

We wish the pair Godspeed.  [There is also suddenly talk an oral polio vaccine may work with Covid, which would be amazing.]

--While there is renewed doubt as to the origin of Covid-19, and whether it started in a wet market in Wuhan or a controversial laboratory nearby, researchers have now discovered six additional coronaviruses in Myanmar-based bats.

The research, published in PLOS ONE, notes that the viruses were discovered between 2016 and 2018, but aren’t believed to be related to SARS-CoV-2, severe acute respiratory syndrome (SARS) or Middle East respiratory syndrome (MERS), which all jumped from animals to humans.

“Viral pandemics remind us how closely human health is connected to the health of wildlife and the environment,” said the study’s lead author and former wildlife veterinarian with the Smithsonian’s Global Health program, Marc Valitutto, in a statement.  “Worldwide, humans are interacting with wildlife with increasing frequency, so the more we understand about these viruses in animals – what allows them to mutate and how they spread to other species – the better we can reduce their pandemic potential.”

It’s believed that “thousands of coronaviruses – many of which have yet to be discovered – are present in bats,” the statement added.

Additional studies will be needed to determine if these newly discovered coronaviruses have “the potential for transmission across species to better understand the risks to human health.”

---

Gold $1692…down $60 on the week
Oil
$18.12

Returns for the week 4/13-4/17

Dow Jones  +2.2%  [24242]
S&P 500  +3.0%  [2874]
S&P Midcap  -1.6%
Russell 2000  -1.4%
Nasdaq  +6.1%  [8650]

Returns for the period 1/1/20-4/17/20

Dow Jones  -15.1%
S&P 500  -11.0%
S&P Midcap  -24.3%
Russell 2000  -26.3%
Nasdaq  -3.6%

Bulls 40.9
Bears
32.4

Hang in there.  Wash your hands.

Brian Trumbore



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Week in Review

04/18/2020

For the week 4/13-4/17

[Posted 10:00 P.M., Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 1,096

After another incredibly chaotic, and deadly, week, on Thursday, President Trump laid out new guidelines for the states to emerge from the coronavirus shutdown in a staggered, well-reasoned, three-stage approach meant to revive the economy.

The recommendations call on states to show a “downward trajectory” of Covid-19 cases or positive tests for the disease over 14 days before proceeding with the plan, which gradually loosens restrictions on businesses that have been shuttered to blunt the spread of the virus.

“We are not opening all at once, but one careful step at a time,” Trump told reporters at the White House.  Earlier, the president had said he wanted to open the economy with a “big bang.”

But the plan that was laid out is a set of recommendations for state governors, not orders.  Some might say that with the onus now on the governors, it gives Trump political cover if things do not go well, with the November election paramount on his mind.

And while I said the plan was well-reasoned in the steps that would be taken each of the three phases, there is nothing about ramping up testing or specific standards for levels of the disease before reopening.

In keeping with this, looking again to shirk all responsibility, Trump went on a Twitter rant this afternoon against the governors.

“The States have to step up their TESTING!”

“Governor Cuomo should spend more time ‘doing’ and less time ‘complaining.’  Get out there and get the job done.  Stop talking!  We built you thousands of hospital beds that you didn’t need or use, gave large numbers of Ventilators that you should have had, and helped you with….

“….testing that you should be doing. We have given New York far more money, help and equipment than any other state, by far, & these great men & women who did the job never hear you say thanks.  Your numbers are not good.  Less talk and more action!”

[As Gov. Cuomo said himself after, this from a man who spends his day watching TV.]

The president then dangerously tweeted the following as protests against the lockdown spread.

“LIBERATE MINNESOTA!”

“LIBERATE MICHIGAN!”

“LIBERATE VIRGINIA, and save your great 2nd Amendment.  It is under siege!”

Let’s have some civil disobedience!  Form crowds and spread the disease!

Meanwhile…back to the review…

Sure, states can show a “downward trajectory” if testing isn’t taking place on any large scale.  House Speaker Nancy Pelosi said in a statement, “The White House’s vague and inconsistent document does nothing to make up for the president’s failure to listen to the scientists and produce and distribute national rapid testing.”

But for some states, yes, the new guidelines effectively end the 30-day federal virus mitigation rules that were meant to stay in place through the end of April.

In the first phase of re-opening, groups of more than 10 people should still be avoided if appropriate distancing measures are not feasible.  Non-essential travel should be minimized, telework should be encouraged, and common areas in offices closed.  Schools remain closed in phase 1, but large venues such as movies, theaters, restaurants, sports stadiums, and places of worship can open with “strict physical distancing protocols.”  Hospitals, which are getting slammed financially by the crisis, may resume out-patient elective surgeries and gyms can re-open with new protocols.  Bars should remain closed.

In the second phase, states and regions with “no evidence of a rebound” in cases, could see groups of more than 50 but only if social distancing is practical.  Non-essential travel can resume, while schools and youth camps can reconvene and bars with “diminished standing-room occupancy” may re-open.  Hospitals may resume in-patient elective surgeries.

Phase three includes unrestricted staffing of workplaces, but as Dr. Deborah Birx, who played a lead role in coming up with the guidelines, put it, a “new normal” would remain in place; a need for higher hygiene standards and more space between people to prevent asymptomatic spread of the virus.

Meanwhile, the weekly jobless claims figure out of the Labor Department revealed another 5.245 million, for a sickening 22 million the last four weeks.  [Reminder, the worst weekly figure during the Financial Crisis was 665,000.]

Some tidbits from around the world on the coronavirus pandemic:

--In a surprising move, Chinese authorities revised the death toll in Wuhan, the hardest hit city and where the virus first emerged, up by 50 percent to 3,869 from 2,579.

Citing the number of patients who had died at home before reaching hospital, as well as late and inaccurate reporting, the city’s task force on virus prevention and control said: “Every loss of life during the epidemic is not just a source of sorrow for their family, but for the city as well.  We would like to send our sincere sympathies to the family members.”

The news from Wuhan comes after it was revealed the Chinese government waited six days before warning its citizens of the severity of Wuhan’s outbreak.

President Xi Jinping warned the public on Jan. 20 – nearly a week after Chinese officials had privately determined on Jan. 14 that the virus had evolved into a pandemic, the Associated Press reported, citing expert estimates based on infection data.

During those crucial days, more than 3,000 people in Wuhan came down with the coronavirus and millions of Chinese began traveling for Lunar New Year celebrations.

--Japanese Prime Minister Shinzo Abe has totally botched his nation’s response to the coronavirus, sloughing it off as officials desperately sought to hold the Tokyo Games.  Now Abe is scrambling, making a forceful appeal today to the nation to stay indoors to avoid further contagion, in his starkest remarks since the crisis began.  New cases hit a daily record in the capital, Tokyo, before the speech in which Abe said this week’s nationwide expansion of a state of emergency was prompted partly by fear that medical services could be overwhelmed in rural areas home to many elderly.

--Cases in Singapore continue to spike, the city-state reporting 623 new coronavirus cases, record numbers the last two days when weeks ago the threat was minimal.

--A report by the Iranian parliament’s research center suggested that the coronavirus tolls might be almost twice as many as those announced by the health ministry.

--Nearly 700 sailors assigned to the French aircraft carrier Charles de Gaulle’s naval group tested positive for Covid-19, the armed forces ministry said.

--Los Angeles Mayor Eric Garcetti said on Wednesday large gatherings like concerts and sporting events were not likely to be allowed in the city until 2021 due to the outbreak.  Facebook CEO Mark Zuckerberg said on CNN last night that his company will not hold any meetings over 50 people thru June of next year.

--The World Health Organization is not sure whether the presence of antibodies in blood gives full protection against reinfection.  Mike Ryan, the WHO’s top emergencies expert, said in a briefing today:

“A lot of preliminary information coming to us right now would suggest quite a low percentage of population have seroconverted (to produce antibodies). The expectation that…the majority in society may have developed antibodies, the general evidence is pointing against that, so it may not solve the problem of governments.”

--There are disturbing stories out of South Korea where patients have tested positive for a second time, after contracting and recovering from the virus.

By Thursday, at least 141 people in the country had retested positive, according to the Korea Centers for Disease Control and Prevention, most of them in Daegu and North Gyeongsang Province, the original center of the country’s outbreak.  55 of the cases were people in their 20s or 30s.

“In the case of Sars and Mers, we did not see people testing positive again after full recovery,” KCDC Deputy Director Kwon Jun-wook said Thursday.  “This novel coronavirus appears to be very evil and shrewd.”

It’s possible the testing is faulty, but the theory the virus could be “reactivated” after a period of dormancy is truly scary. 

The KCDC has yet to release detailed information on how many of those who tested positive a second time were symptomatic.  At least some of them are reported to have had mild symptoms such as fever.  [South China Morning Post]

--Patients who survive Covid-19 can still suffer lasting bodily damage, including to the liver, heart and brain, researchers are finding.

Multiple studies of recovered patients from China showed impaired liver and heart function, as reported by the Los Angeles Times.

“Covid-19 is not just a respiratory disorder,” Dr. Harlan Krumholtz, a cardiologist at Yale University, told the paper.

“It can affect the heart, the liver, the kidneys, the brain, the endocrine system and the blood system.”

Inflammation from the body’s immune response has been linked to strokes and heart attacks, which is depressing, I think you’d agree.

Researchers also wonder if the coronavirus that causes Covid-19 might lie dormant in the body for years or even decades – and then spring back to life, in the same way that the herpes virus that causes chickenpox can reemerge as shingles.  [Dr. W., who used to pass on his particular skills to doctors in Vietnam, has been telling me of similar awful potential scenarios.]

--There have been growing protests among workers for U.S. companies operating along the border in Mexico as increasing numbers are dying of suspected coronavirus.  Deaths have occurred at plants run by Honeywell, Plantronics, Lear and others.

--British Prime Minister Boris Johnson said it “could have gone either way” as he thanked healthcare workers for saving his life after being discharged from the hospital last Sunday.

Johnson singled out two nurses – Jenny from New Zealand and Luis from Portugal – who stood by his bedside for 48 hours at the most critical time and named several other hospital workers who cared for him.  He spent three nights in intensive care before returning to a ward on Thursday.

Death tolls as of Friday night:

U.S. 37,135
Italy 22,745
Spain 20,002*
France 18,681
UK 14,576
Belgium 5,163…awful for a nation of just 11.5 million
Canada 1,310…up from 556 in one week

New York State 17,131…up from 7,844
New Jersey 3,840…up from 1,932…it’s pretty depressing living here these days.  My town of Summit has seen a recent spike in cases, up to 120.

*Catalonia’s health department announced on Wednesday an additional 3,242 coronavirus deaths, nearly doubling its previous tally, as it included suspected and confirmed Covid-19 deaths in nursing homes and private homes for the first time.  These revised numbers have not yet been included in Spain’s official count.

Which brings up the point how the world continues to grossly undercount its deaths, with many countries still not including deaths in nursing homes that were the result of the disease, even with underlying conditions.

Trump World

--The week got off to an explosive start when on Monday, President Trump claimed “total authority” over when and how to ease restrictions aimed at fighting the outbreak.

Trump’s statement came hours after coalitions of governors on both coasts announced regional plans for reopening their states.

“When somebody is president of the United States, the authority is total.  The governors know that,” Trump said during the White House coronavirus briefing, when asked about the governors’ plans.

“You have a couple bands of Democratic governors, but they will agree to it,” Trump continued.  “They will agree to it.  But the authority of the president of the United States, having to do with the subject we’re talking about, is total.”

The Constitution gives public health and safety responsibilities primarily to state and local officials.

In an interview on CNN after the briefing, Cuomo rejected Trump’s claim as “aggressive” and “hostile.”

Pennsylvania Gov. Tom Wolf and New Hampshire Republican Gov. Chris Sununu also disagreed saying that since the responsibility to shut down had been up to state leaders, reopening should be up to them too.

Trump had opened the briefing in equally explosive fashion, ready to settle scores with the media, as the death toll was at more than 23,000 Americans.  It wasn’t about them, or the sick.  Or bringing the nation together and offering encouragement.  It was his profound sense of grievance that the media has been critical of his handling of the crisis.

The president opened with a video, produced by White House staff, a campaign video, Trump oozing contempt, as he centered his argument on how he stopped a lot of flights coming from China and that had saved countless American lives.

But the video then conveniently skipped the entire month of February, the critical period that historians for generations to come will point to.

When reporter Paula Reid from CBS pushed back forcefully on the Trump narrative, and how actions he took end of January weren’t followed up on in February, President Trump was enraged, and ended up calling Reid a “fake” and “disgraceful.”

[At which point many of us became huge Paula Reid fans.]

--Tuesday, after claiming “total authority,” President Trump came out and announced that the U.S. would suspend payments to the World Health Organization, saying the group had failed to report accurate information from China during the early stages of the pandemic.

“I am instructing my administration to halt funding of the World Health Organization while a review is conducted to assess the (WHO’s role) in severely mismanaging and covering up the spread of the coronavirus.

“Everybody knows what is going on there.  American taxpayers provide between $400 million and $500 million per year to the WHO. China contributes roughly $40 million,” the president continued.

He slammed the group for its initial opposition to travel bans and said his own restrictions on travel from China announced on Jan. 31 saved “thousands and thousands” of American lives.

“The United States has a duty to insist upon full accountability.  One of the most dangerous and costly decisions from the WHO was its disastrous decision to oppose travel restrictions from China and other nations,” he continued.

“The reality is that the WHO failed to adequately obtain and share information in a timely and transparent fashion.  The world depends on the WHO to work with countries to ensure that accurate information about international health is shared in a timely manner,” he said.

To say the least, there were voices in opposition to the plan to withdraw funding.

UN Secretary-General Antonio Guterres: “Not the time” to reduce resources for WHO operations.  “Now is the time for unity and for the international community to work together in solidarity to stop this virus and its shattering consequences,” he said.

Johns Hopkins University Center for Health Security: “The move sends the wrong message during the middle of a pandemic,” said Dr. Amesh Adalja, an infectious disease expert at the center.

Adalja said the WHO does make mistakes, as it did in delaying the response to the Ebola outbreak in 2013 and 2014 in West Africa.  He said reforms may be needed, but that work needs to take place after the pandemic has passed.

Australian Prime Minister Scott Morrison: While he sympathized with Trump’s criticisms of the WHO, “the WHO also as an organization does a lot of important work including here in our region in the Pacific and we work closely with them.  We are not going to throw the baby out with the bathwater here, but they are also not immune from criticism and immune from doing things better.”

Bill Gates: “Halting funding for the World Health Organization during a world health crisis is as dangerous as it sounds.”

The head of the WHO, Tedros Adhanom Ghebreyesus, told a news conference: “The U.S. is a long-standing and generous friend of the WHO and we hope it will continue to be so.  We regret the decision of the president of the United States to order a halt in the funding… In due course WHO’s performance in tackling this pandemic will be reviewed by WHO’s member states and the independent bodies that are in place to ensure transparency and accountability,” he said.

Look, I have a history on this topic.  As a big fan of Taiwan, I have blasted the WHO for years for not allowing Taiwan to join the organization.  Of course the reason Taiwan wasn’t allowed in was because China objected.  But President Trump has known this in his over three years in office.  I don’t recall him ever bringing the topic up with his great “friend” Xi.

--Wednesday, President Trump threatened to circumvent the Senate and unilaterally name people to federal posts using recess appointments during the pandemic.

Trump said he has the power to declare that both chambers of Congress are in recess so that he can make appointments and curtail Democratic opposition that has delayed judicial and other confirmations.

“It’s always roadblocks and a waste of time.  If the House will not agree to that adjournment, I will exercise my constitutional authority to adjourn both chambers of Congress.  The current practice of leaving town, while conducting phony pro forma sessions, is a dereliction of duty.”

Jonathan Turley, a constitutional scholar who argued against Trump’s impeachment last year, said the power has never been used before “and should not be used now.”

“Senators of both parties should vote to support the congressional control over adjournment.  Absent a ‘disagreement’ there is no presidential power to adjourn under Article II.  A pandemic should not be an invitation for pandemonium,” he tweeted.

The president then went after the Voice of America, saying “if you heard what’s coming out (from them), it’s disgusting.  What things they say are disgusting toward our country,” Trump said.

Oh brother.  Someone remind the president of the great work the VOA did during the days of the Iron Curtain and getting the word into those being oppressed, offering them a sliver of hope together with the “truth.”

--Rich Lowry / New York Post

“An irony of the coronavirus debate is that the more successful lockdowns are in squelching the disease, the more vulnerable they will be to attack as unnecessary in the first place.

“A rising chorus on the right is slamming the shutdowns as a panicked overreaction and agitating to end them, hoping to drive a wedge between President Trump and his more cautious advisers.

“While there’s no doubt there have been absurd lockdown excesses, and we should want to return to normal as soon as plausible, the case against the initial shutdowns is weak, contradictory and based on denying the seriousness of COVID-19.

“A good example of the genre was an op-ed coauthored by former Education Secretary William Bennett and talk-radio host Seth Leibsohn, headlined ‘Coronavirus Lessons: Fact and Reason vs. Paranoia and Fear.’ Bennett and Leibsohn are public-spirited, intelligent men, but they have got this wrong and in rather elementary ways.

“They cite the latest University of Washington estimate that the current outbreak will kill 68,000 people.  Then, they note that about 60,000 people died of the flu in 2017-18. For this, they thunder, we’ve scared Americans and imposed huge economic and social costs on the country. Their reasoning is obviously flawed.

“If we are going to have 60,000 deaths with people not leaving their homes for more than a month, the number of deaths obviously would have been higher – much higher – if everyone had gone about business as usual.  We didn’t lock down the country to try to prevent 60,000 deaths; we locked down the country to limit deaths to 60,000 from what would have been a number multiples larger.

“By Bennett and Leibsohn’s logic, we could just as easily ask; Why did we adopt tough-on-crime policies when crime rates are at historic lows?  Why did we work so hard to find a treatment for HIV when so many of the people with the disease now have normal life expectancies?

“Of course, it was precisely the actions we took that caused those welcome outcomes.

“If we had shut down the country a month sooner and there had been, say, only 2,000 deaths, then on their terms they’d have even a stronger argument, that is: ‘We did all this, and there were only a couple of thousand fatalities?’

“In other words, the more effective a lockdown would have been, the more opposed Bennett and Leibsohn would be to it.

“As for the flu comparison: The flu season stretches as long as from October to April, although it usually peaks between December and February.  The 2017-18 season, with 60,000 flu-related deaths, was particularly bad.  But the coronavirus might kill a similar number of people – with the country on lockdown.

“In the 2011-12 season, 12,000 people died of the flu nationwide. New York alone has eclipsed that in a little more than a month and recorded roughly 9,000 coronavirus deaths the first 15 days of April (again, while on lockdown).  In 2018-19, there were 34,000 flu-related deaths nationwide.  We are going to surpass that number nationally sometime soon (yet again, while on lockdown).

“Why have people reacted so dramatically to this virus, despite the fact that it is supposedly comparable to the run-of-the-mill flu?  Bennett and Leibsohn have a theory: ‘New York City is where the epidemic has struck the hardest.  The media is centered in New York City.’

“There is no doubt that New York is always going to get disproportionate attention. But Gotham is the biggest city in the country, and the Empire State accounts for 8 percent of the U.S. economy.  If New York were an independent state, it would rank as the 11th-biggest economy in the world. What happens there matters.  It’s part of America, as we all agreed after 9/11.

“If the disease struck smaller heartland cities like Omaha, Kansas City and Wichita, would Bennett and Leibsohn hope that the story got ignored and no one took any precautions based on major media companies not being headquartered in those places?

“Plus, the authors ignore the key fact that the economy began to shut down before there were widespread shutdown orders.  People voted with their feet, because they were fearful of a virulent disease. And they acted rationally.  If everything had gone on as normal, the outbreak would have been much worse, and we would have shutdowns anyway, just with even worse health outcomes.

“By all means, let’s open up the economy as soon as we can, but it will require more careful thought than the most feverish critics of the shutdowns have demonstrated.”

Amen.

--Trump tweets:      

“Crazy ‘Nancy Pelosi, you are a weak person.  You are a poor leader.  You are the reason America hates career politicians, like yourself.’ @seanhannity.  She is totally incompetent & controlled by the Radical Left, a weak and pathetic puppet.  Come back to Washington and do your job!”

“Today people started losing their jobs because of Crazy Nancy Pelosi, Cryin’ Chuck Schumer, and the Radical Left, Do Nothing Democrats, who should immediately come back to Washington and approve legislation to help families in America.  End your ENDLESS VACATION!”

“Why did the W.H.O. ignore an email from Taiwanese health officials in late December alerting them to the possibility that CoronaVirus could be transmitted between humans?  Why did the W.H.O. make several claims about the CoronaVirus that are either inaccurate or misleading….

“…in January and February, as the Virus spread globally?  Why did the W.H.O. wait as long as it did to take decisive action?”

“Tell the Democrat Governors that ‘Mutiny On The Bounty’ was one of my all time favorite movies.  A good old fashioned mutiny every now and then is an exciting and invigorating thing to watch, especially when the mutineers need so much from the Captain.  Too easy!”

“GET RID OF BALLOT HARVESTING, IT IS RAMPANT WITH FRAUD.  THE USA MUST HAVE VOTER I.D., THE ONLY WAY TO GET AN HONEST COUNT!”

“For the purpose of creating conflict and confusion, some in the Fake News Media are saying that it is the Governors decision to open up the states, not that of the President of the United States & the Federal Government.  Let it be fully understood that this is incorrect….

“….It is the decision of the President, and for many good reasons.  With that being said, the Administration and I are working closely with the Governors, and this will continue. A decision by me, in conjunction with the Governors and input from others, will be made shortly!”

“Cuomo’s been calling daily, even hourly, begging for everything, most of which should have been the state’s responsibility, such as new hospitals, beds, ventilators, etc.  I got it all done for him, and everyone else, and now he seems to want independence! That won’t happen!”

[Trump granted the governors independence.]

“Having been involved in the negotiations, to put it mildly, the number that OPEC+ is looking to cut is 20 Million Barrels a day, not the 10 Million that is generally being reported. If anything near this happens, and the World gets back to business from the Covid 19….

“….disaster, the Energy Industry will be strong again, far faster than currently anticipated.  Thank you to all of those who worked with me on getting this very big business back on track, in particular Russia and Saudi Arabia.”

[Oil fell to an 18-year low in response.]

“The big Oil Deal with OPEC Plus is done.  This will save hundreds of thousands of energy jobs in the United States.  I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia.  I just spoke to them from the Oval Office.  Great deal for all!”

[Hundreds of thousands of jobs could be lost, not saved.]

“Biden/Obama were a disaster in handling of the H1N1 Swine Flu.  Polling at the time showed disastrous approval numbers.  17,000 people died unnecessarily and through incompetence!  Also, don’t forget their 5 Billion Dollar Obamacare website that should have cost close to nothing!”

[The CDC estimates 12,500 died of H1N1, while as I proved to you the other week, it didn’t change our lives one bit.]

“Just watched Mike Wallace wannabe, Chris Wallace, on @FoxNews.  I am now convinced that he is even worse than Sleepy Eyes Chuck Todd of Meet the Press (please!), or the people over at Deface the Nation. What the hell is happening to @FoxNews.  It’s a whole new ballgame over there!”

--Lastly, President Trump’s re-election campaign and the Republican National Committee raised more than $212 million during the first three months of the year.  Not too shabby.

Wall Street and the Global Economy

The International Monetary Fund revised its forecasts for the global economy this week in its updated World Economic Outlook.  Back in January, it pegged global growth at 3.3% this year, and now because of the pandemic is projecting the world economy will contract by 3%.

IMF Chief Economist Gita Gopinath said in a report: “This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”

The IMF expects global growth to rebound 5.8% next year if the pandemic fades in the second half of 2020.

“A partial recovery is projected for 2021,” said Ms. Gopinath.  “But the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound.

“Much worse growth outcomes are possible and maybe even likely.”  A second pandemic wave in 2021 would be catastrophic.

The IMF projects the U.S. will contract by 5.9% this year, representing the biggest annual decline since 1946, with unemployment jumping to 10.4% for the year overall.

A partial recovery is expected in 2021, with expected U.S. growth of 4.7%.

Republican Senate Majority Leader Mitch McConnell and House Republican Leader Kevin McCarthy both vowed to oppose Democrats’ demands to match a $250 billion proposal to further aid small businesses, an extension of the existing program, with the same amount for hospitals and state and local governments.

I understand both sides.  Yes, we need more for the SBA program, but as noted in my opening, state and local governments are getting killed, ditto hospitals who haven’t been able to make money with the prohibition on elective surgeries, which is a profit-center for them.

It is also a fact that the poor need expanded food aid.  The whole situation is a disaster.  Everyone knows that.  New York state is broke, New York City is broke, New Jersey is broke, all local governments in the region are broke.  And New York and New Jersey are among the states extending the shutdown to May 15, even as others no doubt will be starting to reopen by May 1.

As for the stock market, the big recovery off the March lows continues (except for small- and mid-cap stocks), President Trump touting today’s rally in his daily briefing tonight.  I think the current action is rather irrational given the sickening economic backdrop and the reality we are not returning to normal anytime soon, certainly until we get a vaccine.  But others are bullish.

Goldman Sachs Group said this week that the likelihood of stocks hitting new lows was minimal owing to the “do whatever it takes” approach of policy makers.  A combination of unprecedented policy support and a flattening viral curve has “dramatically” cut risks to both markets and the U.S. economy, strategists including David Kostin wrote in a note on Monday.  If the U.S. doesn’t have a second surge in infections after the economy reopens, equity markets are unlikely to make new lows, they said.

Using the S&P 500 as its barometer, Goldman had called for a near-term downside of 2,000, from its three-year low of 2,237 on March 23, but now no longer sees this.

Goldman’s strategists also expect investors to look through first-quarter results from the current earnings season, and focus instead on the outlook for 2021, thus their “year-end S&P 500 target remains 3,000.”

Just a regional note.  According to the UCLA Anderson Forecast, California’s job market is plunging and the state’s unemployment rate may peak at 16.4% in the second quarter, then gradually slacken.  That would dwarf the 12.3% jobless rate in 2010, in the depths of the financial crisis.

But the UCLA forecast notes that even in the first quarter of 2022, nearly two years from now, the state’s joblessness will probably be as high as 8.5%, which would be more than twice as high as February’s 3.9% unemployment rate.

We had some important data points this week for the U.S., aside from the gruesome ongoing news on the jobless claims front.  March industrial production fell 5.4%, the worst level since Jan. 1946, while March retail sales plunged 8.7%, the biggest monthly decline ever, since the Commerce Department started tracking this metric in 1992.

March housing starts at an annualized 1.21 million were far worse than expected.

In an early look at April, the Empire (New York) State manufacturing survey was -78.2; far worse than ever seen before.

For the record, the latest reading from the Atlanta Fed’s GDPNow barometer for first-quarter growth is now -0.3%, though the number will end up being far worse and heaven help us regarding Q2.

Europe and Asia

Two data points on the broad eurozone economy.  February industrial production was down 0.1% vs. January, and off 1.9% year-over-year, though this was before the broad shutdown in Europe.

The final reading on March inflation for the EA19 was just 0.7%, down from 1.4% March 2019, with Italy and Spain running at an annualized rate of just 0.1%.

And the European auto manufacturers’ association, ACEA, reported Friday that the EU passenger car market recorded a dramatic 55.1% year-on-year drop in registrations of new vehicles in March amid the pandemic.  Italy took the biggest hit, with registrations falling by 85.4% to 28,326 new cars.  Demand also collapsed in France (72.2%) and Spain (69.3%).  Germany reported a less extreme drop of 37.7%.

From January to March 2020, demand for new cars in the European Union declined by 25.6%.

Separately, needless to say there has been zero on the Brexit front.  It doesn’t help when Prime Minister Boris Johnson is ensconced at his country retreat, recovering from his near-death experience with Covid-19.

The above-noted IMF World Economic Outlook predicts the Euro area economy will shrink by 7.5% this year, with Greece suffering the biggest decline at 10%, followed by Italy with a 9.1% drop.

The UK’s economy will fall by 6.5% in 2020, compared with the IMF’s January forecast for 1.4% GDP growth.

Such a decline in the UK would be bigger than the 4.2% drop in output seen in the wake of the financial crisis, and it would represent the biggest annual fall since 1921, according to reconstructed data out of the Bank of England.

But while the 6.5% number is ugly, it masks the potential 35% drop in the April-June period, as projected by the Office for Budget Responsibility in the UK, with the budget deficit soaring to 14% of GDP in the 2020/21 tax year, according to OBR, the worst such deficit since World War II.  [Britain’s finance minister is projecting a 30% hit in the second quarter.]

Meanwhile, the European Union faces major issues, with French President Emmanuel Macron warning of the collapse of the EU as a “political project” unless it supports stricken economies such as Italy and helps them recover from the pandemic.

Speaking to the Financial Times from the Elysee Palace, Macron said there was “no choice” but to set up a fund that “could issue common debt with a common guarantee” to finance member states according to their needs rather than the size of their economies.  But this is an idea that Germany and the Netherlands have opposed in a furtherance of the battle between the financially stable northern European countries vs. the heavily indebted southern tier, such as Italy, Spain and Greece.

The EU faced a “moment of truth” in deciding whether it was more than just a single economic market, with the lack of solidarity during the pandemic likely to fuel populist anger in southern Europe, Macron said.

“It we can’t do this today, I tell you the populists will win – today, tomorrow, the day after, in Italy, in Spain, perhaps in France and elsewhere,” he said.

“I believe [the EU] is a political project.  If it’s a political project, the human factor is the priority and there are notions of solidarity that come into play…the economy follows on from that, and let’s not forget that economics is a moral science.”

The northern member states argue that mutualizing debt would make their taxpayers liable for other countries’ borrowings.  EU leaders are to hold a conference call on the topic next week.

Asked if failure to agree on such a fund would risk triggering the collapse of the eurozone, Macron replied: “Yes, we must be clear – and also of the European idea….

“You cannot have a single market where some are sacrificed,” he added.  “It is no longer possible…to have financing that is not mutualized for the spending we are undertaking in the battle against Covid-19 and that we will have for the economic recovery.”

Investors have been selling the government bonds of Italy, Greece, Spain and Portugal over fears they won’t be able to sustain mounting public debt.

Italy this week, to give one stark example, said its debt-to-GDP ratio will explode to 10% this year, after the government had done a good job reducing it to 1.6% in 2019, which was the lowest in 12 years.

Turning to Asia…China released a torrent of gory economic news and for once, they clearly weren’t hiding the truth as the government reported GDP plunged a worse-than-expected 6.8% in the first quarter, the first negative quarter since they started record keeping in 1992, and presumed to be the worst performance since at least the 1970s.

March retail sales plunged 15.8% from a year ago, after a 20.5% decline for January and February.

Fixed asset investment fell 16.1% last month, vs. a fall of 24.5% the first two months.

Industrial production, though, was better than analysts’ forecasts, down just 1.1% after plunging 13.5% in January and February.

Separately, March exports fell 6.6% year-on-year, after falling 17.2% the first two months, while imports declined 0.9% vs. a 4% decline Jan.-Feb.  [All the above courtesy of the National Bureau of Statistics]

Separately, the 70 major city index of home prices rose 0.1% in March over February, up 5.3% year-over-year, which represents a continued slowdown with this metric, while real estate investment fell 7.7% in the first quarter vs. a year ago.

Despite China’s reopening of its economy, what’s clear is consumers are reluctant to spend, though there is anecdotal evidence that those who are better off are buying luxury goods after not doing so for months.

One more…pork output fell 29.1% in the first quarter vs. a year earlier due to the continued impact of African swine fever on China’s hog herd.

The IMF now projects the Chinese economy will expand by just 1.2% this year, which would be the slowest growth since 1976.

Asia overall is expected to have zero growth, vs. a low of 1.3% during the Asian financial crisis of the late 1990s.

One other from the region.  The IMF now predicts Australia will suffer its first recession since 1991.

Street Bytes

--Stocks finished up again, mostly as a result of today’s rally on the Trump administration’s guidelines for opening up the economy, as well as some early positive news on Gilead Sciences’ remdesivir drug which indicated Covid-19 patients were responding well to the treatment.  However, Gilead today tried to tone down the excitement, saying that although anecdotal reports are encouraging, they do not constitute a deep statistical analysis.  As in, would these patients have gotten better without taking the drug anyway?

The Dow Jones finished up 2.2% on the week to 24242, while the S&P 500 rose 3.0% and Nasdaq soared another 6.1%.  The latter is now down only 3.6% for the year.

But when you look below, you’ll see small- and mid-cap indices are down 24.3% and 26.3%, respectively.

Earnings thus far have been largely meaningless as most corporations have removed their guidance for the year.  No one knows squat except that the second-quarter will be uglier than any single quarter in American history.

--U.S. Treasury Yields

6-mo. 0.15%  2-yr. 0.20%  10-yr. 0.64%  30-yr. 1.26%

The yield on the 10-year finished the week just five basis points above its weekly all-time closing low of 0.59% set two weeks ago.

In Europe, the spread between the 10-year German bund and the Italian 10-year widened from 194 basis points (1.94%) to 227 bps.

--I told you any deal OPEC+ reached was essentially worthless, and then that President Trump’s involvement was as well.  The Wall Street Journal, looking to kiss the president’s ass, editorialized that Trump had engineered “The Art of the Oil Deal,” which The Donald loved.

So where do we stand on the price of West Texas Intermediate as the week closed?  $18.12.

The price sank below $20 again on Wednesday after the U.S. reported a 19 million-barrel increase in inventories, the biggest weekly build ever, while forecasts showed global demand crumbling to its lowest levels in a quarter of a century.

So much for the agreement between the Saudis, Russia and members of OPEC+ to cut output about 10 million barrels in coming months (9.7 million per day in May and June)*, when the world is awash in oil and demand is off 30 million barrels.

*The agreement will taper into a 7.7 million barrel per day cut from July to December and then to 5.8 million bpd from January 2021 to April 2022.

Other major producers like the United States and Canada gave indirect commitments to cuts as well, though this will come in the form of drastic reductions in production already in motion.  Oil and gas producers large and small are shutting in wells.  Continental Resources Inc., for example, which drills in Oklahoma and North Dakota, said it would reduce output in April and May by about 30%.

[This afternoon, the Baker Hughes U.S. rig count plunged by 66 to 438 for the week ended April 17, its lowest level since October 2016.  Data show 683 oil rigs operating as of March 13, so a drop of 245 rigs in a month.]

Longtime energy analyst John Kilduff said after the government’s inventory report, “We have crude oil backing up in the system in epic fashion.  This is probably one of the most bearish, if not darkest reports I’ve ever seen.”

The inventory report from the Energy Information Administration came after the International Energy Agency forecast an oil demand dive of 29 million barrels per day in April to levels not seen in 25 years and said no output cut could fully offset the near-term falls facing the market.

“There is no feasible agreement that could cut supply by enough to offset such near-term demand losses,” the IEA said in its monthly report.  “However, the past week’s achievements are a solid start.”

The IEA estimates there are 1.2 billion barrels of storage available at the end of January, but global stocks could increase by 11.9 million barrels a day in the second quarter, hitting “operational capacity” limits by the middle of the year.

The amount of oil in floating storage – on vessels at sea – rose 27% to 103.1 million barrels in March, the IEA said.

Global oil demand is expected to fall by a record 9.3 million barrels a day overall for 2020.

Separately, OPEC forecast that global demand would decline 6.9 million bpd for the full year.

--The International Air Transport Association (IATA) released updated analysis this week showing that the Covid-19 crisis will see airline passenger revenues drop by $314 billion in 2020, a 55% decline compared to 2019.

Just three weeks earlier, IATA estimated $252 billion in lost revenues in a scenario with severe travel restrictions lasting three months.

But the crisis has only deepened since.

“The industry’s outlook grows darker by the day.  The scale of the crisis makes a sharp V-shaped recovery unlikely.  Realistically, it will be a U-shaped recovery with domestic travel coming back faster than the international market.  We could see more than half of passenger revenues disappear. That would be a $314 billion hit.  Several governments have stepped up with new or expanded financial relief measures but the situation remains critical.  Airlines could burn through $61 billion of cash reserves in the second quarter alone.   That puts at risk 25 million jobs dependent on aviation.  And without urgent relief, many airlines will not survive to lead the economic recovery,” said Alexandre de Juniac, IATA’s Director General and CEO.

--So with the above in mind, major airlines and the Treasury Department reached agreement on a $25 billion coronavirus bailout to prevent layoffs after the plunge in demand.

The funds, approved last month by Congress as part of a more than $2 trillion stimulus bill, will be distributed to companies that agree not to furlough workers before Oct. 1.

American Airlines said it would receive $5.8 billion – including a $4.1 billion grant and a $1.7 billion low-interest loan.  Other airlines did not immediately spell out specific amounts they will receive under the so-called Payroll Support Program.

--United Airlines said it is cutting its flight schedule by 90% in May and expects similar cuts for June, warning that travel demand that is now “essentially at zero shows no sign of improving in the near term,” making job cuts likely.

In a memo to employees, CEO Oscar Munoz and President Scott Kirby said: “The historically severe economic impact of this crisis means even when travel demand starts to inch back, it likely will not bounce back quickly.  We believe that the health concerns about COVID-19 are likely to linger which means even when social distancing measures are relaxed, and businesses and schools start to reopen, life won’t necessarily return to normal.”

The $5 billion the airline expects to receive in government payroll support under the CARES Act bars it from involuntary furloughs before Sept. 30, though the airline indicated that it expects to have to cut payroll after that.  It said it will be offering new voluntary leave packages in the coming weeks and voluntary separation programs.

--Norwegian Air shares plummeted again this week and are now about 97% from their 2015 peak, with the airline’s survival depending on creditors accepting a rescue plan proposed last week.  The $4.3 billion of debt would be converted into shares and raise some new equity – wiping out much of the remaining value of the company’s current stock.  A meeting on April 30 of the bondholders will be held for final approval.

7,300 staff are on temporary layoff, at least 90% of the workforce.  If the bondholders don’t accept the plan, the airline proceeds into bankruptcy, and shareholders are definitely left holding some useless scrip.

--Boeing Co. reported another 75 cancellations for its 737 MAX jetliner in March, adding to 75 previously reported from the Irish leasing company Avolon.  New cancellations came from buyers including 34 of 135 aircraft ordered by Brazil’s GOL.

Boeing, facing a 13-month-old freeze on deliveries of the MAX and now disruption to deliveries of larger planes due to the coronavirus epidemic, said it had delivered 50 planes in the first quarter, nearly a third of the 149 seen a year earlier.

But, Thursday, Boeing announced it would resume commercial airplane production next week in Washington State after suspending operations last month.  Approximately 27,000 people in the Puget Sound area will return to production of the wide-body aircraft programs.  A big positive and the stock rallied.

This afternoon, though, General Electric’s aircraft-leasing business said it had cancelled its order with Boeing for 69 undelivered 737 MAX jetliners.  GE Capital Aviation Services said it still has 82 planes on order.

--Boeing supplier Triumph Group Inc., however, said it was furloughing about 2,300 employees across its U.S. and European plants for two to four weeks to cut capacity linked to Boeing commercial aircraft programs amid the outbreak.

--It was Big Bank week for earnings reports and JPMorgan Chase & Co.’s profit plunged by more than two-thirds in the first quarter as the largest U.S. bank put aside nearly $7 billion in reserves to protect it from a wave of potential loan defaults in the months ahead.

The results painted a grim picture at the start of a long, tough period for lenders, with CEO Jamie Dimon saying the economy was facing a “fairly severe” recession because of the economic shutdown caused by the coronavirus.  “If the economy gets worse, we’ll bear additional loss,” Dimon said on a call with analysts.  “But we do forecast all of that. We know we can handle really adverse consequences.”

In total, JPMorgan recorded charges worth $8.3 billion in the first quarter, mostly due to money the bank set aside to cover loans.  JPM also reported a $951 million loss on derivatives and an $896 million markdown on its bridge loans.

CFO Jennifer Piepszak said that the bank may “meaningfully” increase the amount it is holding in credit reserves next quarter and later in the year if the economy worsens.

“We haven’t actually seen the stress emerge yet,” Piepszak said.  “What we took in the first quarter is the best estimate of future losses.  It is our best estimate of the losses that will inevitably emerge through this crisis.”

The reserves included $4.5 billion against potential consumer loan defaults as millions of Americans lose their jobs and struggle to make payments on anything from iPhones to cars to new microwaves.

Because they are the biggest, everyone needs to follow JPMorgan’s comments, especially because CEO Dimon is one of the more honest and forthright business leaders in America.  He’s not optimistic, but when he gets so, down the road, that will be a good sign for us all.

--Wells Fargo & Co. also reported profits plunged, down 89%, as it boosted reserves in the first quarter.  The bank said it set aside an additional roughly $3 billion in the quarter for potentially bad loans, both in the consumer and commercial divisions.  That raised its total provision to $3.83 billion.

Revenue was $17.7 billion, down from $21.6 billion a year ago.

“We don’t know what the time frame is or how quickly the economy will recover,” said Wells Fargo CEO Charles Scharf.  “What we do know is the contraction is real.”

--Bank of America’s profit fell 45% in the quarter, $4.01 billion, down from $7.31 billion a year earlier.  Revenue of $22.77 billion was down 1% vs. a year ago.

The bank set aside an additional $3.6 billion for potential bad loans, with its total provision for credit losses now $4.76 billion, up from $941 million the previous quarter.

--Goldman Sachs Group Inc.’s profit fell 46% in the first quarter, as the pandemic hammered markets and the economy ground to a halt.

Goldman reported a $868 million loss in its own investment portfolio, though it reported strong results in its core businesses of trading and investment banking.

The company reported a quarterly profit of $1.21 billion, down from $2.25 billion a year ago, while revenue of $8.74 billion was essentially flat with the first quarter of 2019.

Goldman set aside $937 million to cover expected loan losses, with corporate clients drawing down about $19 billion in loans in the quarter.

But its trading revenue rose 28% to $5.16 billion.  The fixed-income unit had their best quarter in five years.

--Citigroup said its first-quarter profit plunged 46% to $2.52 billion from $4.71 billion a year earlier.  Revenue rose 12% to $20.73 billion.

Citi increased its loan-loss provision by $4.92 billion, compared with just $278 million in the prior quarter.  The bank warned it will be difficult to estimate the full extent of the loan losses the bank is likely to suffer in the coming months, as there are likely to be a flood of missed debt payments.

CEO Michael Corbat said on a conference call with analysts: “Looking forward, there are too many unknowns to count.  But I feel confident in our ability to manage through whatever scenario comes to pass.”

CFO Mark Mason said Citigroup’s credit-card customers have cut their spending by some 30% since late March.  Spending on travel has fallen 75%, while dining and entertainment spending is down 60%.

The bank’s markets group recorded a 39% gain in revenue, with equities and fixed income up the same amount.

--Morgan Stanley reported declines in its first-quarter results on Thursday as revenue in its investment banking and wealth management segments were dented by the impact of the pandemic, with the company warning that the negative effects are poised to continue.

Revenue fell to $9.49 billion from $10.29 billion a year earlier, and earnings decreased to $1.01 a share from $1.39 a share previously.

Sales and trading revenue jumped to 30% to $4.87 billion amid higher client volumes in equities and “strong client engagement and volatility” in markets in the fixed income group.

CEO James Gorman, who himself was diagnosed with the coronavirus and has since recovered, said: “Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating Covid-19 than at any time since the financial crisis.  While it’s too early to predict how this will unfold, Morgan Stanley navigated the quarter well given the conditions, and our results bear testament to the strength of our balanced business model.”

Gorman added in a call with analysts: “We’re in a wild period.  A CEO who stands by their short-term targets that were set right before this virus hit, I don’t know what planet they’re on.”

--The world’s largest money manager, BlackRock Inc., saw its profit fall 23% in the first quarter to $806 million, though investors added a net $35 billion in new money to the firm’s coffers, about half the level in the year-ago period.

Plummeting markets dragged the world’s largest money manager’s assets under management below $7 trillion, to $6.5 trillion, down from $7.43 trillion at the end of 2019.

As I noted a few weeks ago, BlackRock was tapped to steer as much as hundreds of billions of dollars in bond purchases for the Federal Reserve.

--Tesla shares have been soaring following a surge in China car registrations, up 450% in March, month on month (though February was a dead month there).  Registrations rose to 12,709 units last month from 2,314 in February.  Overall auto sales plunged 43.4% in China in March.

Tesla’s stock price target was raised by Goldman Sachs, arguing Tesla is uniquely positioned “to maintain a strong market position” with its production facility in Shanghai.

The shares have doubled off their March low.  The company said it will post financial results for the first quarter after the market closes April 29.

--Apple finally announced a new iPhone SE – four years after the company first unveiled this version.  The new phone adheres to the original idea of offering top-of-the-line performance in a smaller and cheaper design, with a starting price of $399 – 43% less than the starting price of the base iPhone 11 model.

--McDonald’s Corp. rejected a request from its U.S. franchisees to delay collecting some march rent and royalty payments, prompting claims that the company is not providing enough support during the crisis, as first reported by Reuters.

Franchisees had asked McDonald’s for a 14-day reprieve in their March rent, but the request was denied.

More than 1,600 franchisees own and operate 95% of the fast-food chain’s nearly 14,000 U.S. restaurants, with most owning just a few.

McDonald’s is the landlord for most of its franchisees, who pay a flat base rent on the first day of each month and another rent and service fee payment on the 10th, based on the previous month’s sales.

But with most locations having to switch to drive-through and delivery and carry-out only operations, as reported last week, McDonald’s sales plunged 13.4% in the U.S. in March.

--Amazon.com Inc. said on Monday it plans to hire an additional 75,000 for jobs ranging from warehouse staff to delivery drivers as the coronavirus epidemic kept Americans locked in their homes and demand for online orders surged.

--Walmart Inc. said today it would hire 50,000 more workers at its stores, clubs and distribution centers to meet the surge in demand for groceries and household essentials from consumers stockpiling.

--Neiman Marcus failed to make a $5.7 million interest payment that was due Wednesday, according to a bondholder, Marble Ridge Capital LP, which owns a significant amount of the $137.7 million in bonds that mature on Oct. 15, 2021.

The company has 30 days to pay the interest.  Last summer, Neiman Marcus completed a debt restructuring that pushed its obligations out to 2023 and 2024, but Marble Ridge didn’t participate in it.

Neiman Marcus is a leader in luxury retailing with 43 stores nationwide, including one at The Mall at Short Hills, a stone’s throw away from yours truly, and this is but one example of the huge issues facing retail…as well as mall operators.  Most of Neiman Marcus’ 14,000 employees are being furloughed after all the stores closed March 18.

--Johnson & Johnson on Tuesday said it expects its medical device business to begin recovering in the fourth quarter as elective medical procedures delayed by the pandemic start to resume. 

The healthcare conglomerate lowered its full-year 2020 forecast due to the hit to its medical device business with procedures like hip and knee replacements on hold.  The division accounts for nearly 30% of its total quarterly sales.

But investors took heart that J&J didn’t simply withdraw its 2020 forecasts over the uncertainty created by the coronavirus and even raised its quarterly dividend.

The company is developing a coronavirus vaccine and plans to start human trials by September, with an eye on having it ready under an emergency use authorization in early 2021.

Overall, the company said pharmaceutical sales rose 8.7% in the quarter to $11.13 billion, helped by demand for cancer drugs Darzalex and Imbruvica.  Consumer health sales jumped 9.2% to $3.63 billion, driven by a surge in demand for products like Tylenol and Motrin as consumers faced with an illness that causes fever and cough stocked up on essentials.  Medical device sales fell 8.2% to $5.93 billion.

--Smithfield Foods, the world’s biggest pork processor, said on Sunday it was forced to shut a U.S. plant in Sioux Falls, South Dakota, due to a rash of coronavirus cases among employees and warned the country was moving “perilously close to the edge” in supplies for grocers.

Slaughterhouse shutdowns are disrupting the U.S. food supply chain, crimping availability of meat at retail stores and leaving farmers without outlets for their livestock.

The facility in Sioux Falls represents about 5% of U.S. pork production, according to the company.  As of Saturday, 238 Smithfield employees had active cases, accounting for 55% of the state’s total.

There have been other outbreaks at meat plants in the U.S., with a JBS SA beef facility in Colorado’s Weld County, and a Cargill meat-packaging plant in Pennsylvania suffering large numbers of Covid cases.  A significant number of employee deaths are also being reported across the country.

--The head of one of the world’s largest ad-agency conglomerates, Arthur Sadoun, CEO of Publicis Groupe SA, warned the industry is facing a far more severe pullback in advertising spending than the one that buffeted Madison Avenue in the wake of the global financial crisis.

“This crisis is going to be unprecedented by its magnitude, complexity and length,” Sadoun said.

Ad spending plunged about 10% in 2009, but, “There is no comparison.  It’s going to be steeper.”

Advertising is one of the first expenses cut by companies looking to preserve cash in times of crisis.  The plunge has already started and is severely impacting television networks and the print media, for starters.

Just an example, Gannett, the publisher of USA TODAY, the Detroit Free Press and more than 250 other daily newspapers, has ordered the majority of its 24,000 employees to take five days off per month without pay in April, May and June, according to memos obtained by the New York Times, with executives taking a 25% pay cut.

And Sports Illustrated laid off 31 people, including journalists, on March 30.

--Shares in Best Buy fell over 6% after the company said it would furlough about 51,000 employees amid dropping sales due to coronavirus-led store closures.  BBY said its sales in the first two months of the year fell 5%, and then the store closures and decreased foot traffic led to a 30% sales plunge from March 21 through April 11.

--Procter & Gamble Co. beat expectations for quarterly profit on Friday as consumers stocked up on everything from diapers and detergents to toilet rolls amid the sweeping lockdowns around the world to curb the spread of Covid-19.

Sales at P&G’s health care unit rose 7%, while fabric, home care unit sales rose 8%.  The baby and feminine products business logged a 6% rise in sales.  Beauty and grooming were units that posted sales declines.

Many of the company’s products, including Bounty paper towels, Charmin toilet paper (not a fan), and Pampers have obviously seen strong demand.  I started hoarding toilet paper (Scott) in February and am well-positioned.  I am not when it comes to disinfectant wipes.

For the company’s fiscal third quarter ended March 31, P&G reported a net sales rise of 5% to $17.21 billion.  Net earnings rose to $2.92 billion, from $2.75 billion a year earlier.

--Personal-computer shipments fell in the first quarter as production and logistical challenges offset higher demand, driven by the need to work remotely and school orders, according to preliminary data from two industry research firms.

Gartner Inc. on Monday said global PC shipments fell 12.3% to 51.6 million units, the steepest decline since 2013.  There was a slight increase in the U.S., however, from a year earlier, but a 30.2% drop from the previous quarter.

International Data Corp. (IDC) said global shipments fell 9.8% to 53.2 million, with the U.S. marking its lowest quarterly-shipment volume in more than a decade.

The difference in data between Gartner and IDC has to do with how each defines PCs, as the lines have increasingly been blurred between personal computers and devices like tablets.

Lenovo Group Ltd. retained the No. 1 spot in vendor rankings, followed by HP Inc. and Dell Technologies Inc.  The three combined have more than half of the global market share.

--India’s Ministry of Home Affairs warned that Zoom Video Communications online meeting platform was not “safe.”  But if you still wish to use it, the ministry is recommending a new user identification and password for each meeting to prevent unauthorized entry of a third party.

Zoom shares have rallied off their lows as the company has said it is fixing the holes in its security, with the company hiring dozens of outside security consultants over just the past two weeks.

Consumer-intelligence company J.D. Power said this week that Zoom was the most popular online meeting platform for Americans, with almost half of those surveyed saying they had used its teleconferencing software over rivals’.

--A senior cybersecurity official with the FBI said on Thursday that foreign government hackers have broken into companies conducting research into treatments for Covid-19.  FBI Deputy Assistant Director Tonya Ugoretz told participants in an online panel discussion hosted by the Aspen Institute that the bureau had recently seen state-backed hackers poking around a series of healthcare and research institutions.

--Royal Caribbean Cruises Ltd. said it would lay off or furlough about 26% of its workforce in the United States, affecting nearly 1,300 of its more than 5,000 employees in the country, as the coronavirus chokes international travel.

The news comes as the Centers for Disease Control extended its “no sail order” for all cruise ships through June, at least.

--New York City is set to lose a half-million jobs and run about $10 billion short on tax revenue through mid-2021 because of the pandemic, the city’s Independent Budget Office estimated.

Retail employment will take the biggest hit, shedding 100,000 jobs in all, starting with 60,000 from April through June.  Another 86,000 jobs in hotels and restaurants, and 26,000 in the arts, entertainment and recreation industries will be lost, according to a report released Wednesday by the fiscal monitor.

While finance and professional services will also experience declines, the awful part is the most severe losses will be concentrated in sectors with low- and moderate-paying jobs.

The projected drop of 475,000 jobs would represent almost half the 996,500 jobs the city has gained since November 2009, when it hit its low point just after the Great Recession, according to state Labor Department statistics.  The city held a record 4.7 million jobs in February. 

The IBO projections are in line with Mayor Bill De Blasio’s forecasts of a $10 billion shortfall in tax revenue.  [Crain’s New York Business]

--Some of the hedge fund industry’s biggest names had a terrible March.  Firms run by Ray Dalio, Michael Hintze and others suffered their worst-ever losses last month, with some funds down as much as 40%.  Overall, three out of four hedge funds lost money, according to Bloomberg.

Dalio’s Bridgewater Associates saw its flagship Pure Alpha II hedge fund get caught on the wrong side of the sell-off that began late February, sending it down about 16% last month.

Hintze’s $3 billion CQS Directional Opportunities Fund plunged 33% in March.

What makes such performance doubly troubling for investors is they are getting wacked with some of the highest fees in the money management industry.

--Cantor Fitzgerald is cutting hundreds of jobs across divisions, even as the bulk of Wall Street has vowed not to lay off employees during the pandemic.

“We have made prudent headcount and cost reductions to position the firm for the uncertain macroeconomic conditions expected for the remainder of the year,” the company said in an emailed statement.

CEO Howard Lutnick is worried about the hit from an extended economic downturn.

--Arrivals in Hong Kong dived nearly 99% to another new low of 82,000 in March, as the pandemic forced the city’s tourism industry to a standstill.

The Tourism Board’s latest statistics showed an 80.9% drop in visitors for the entire first quarter.

Foreign Affairs

China: Secretary of State Mike Pompeo on Wednesday stressed to China’s top diplomat the need for full transparency and information sharing to fight against the coronavirus outbreak.

Pompeo also stressed China’s facilitation of medical supply exports to meet critical demand in the United States.

The renewed pressure on the Chinese came after President Trump decided to pull funding for the World Health Organization which it accused of being “China-centric.”

China insists it has been transparent about the pandemic and has sharply criticized U.S. officials who cast doubt on that.

But then the State Department said in a report Wednesday that China may have secretly set off low-level underground nuclear test explosions despite claiming to observe an international pact banning such blasts.

The finding, first reported by the Wall Street Journal, may worsen ties even further.  For years I have said we have no freakin’ idea what China has been doing with its nuclear weapons program, let alone have any clue just how many nukes the country may have.  Everything is an estimate.  And so here we have an example of Beijing’s total lack of transparency on its nuclear testing activities, including blocking data transmissions from sensors linked to a monitoring center operated by the international agency that verifies compliance with a treaty banning nuclear test explosions.

The 1996 Comprehensive Test Ban Treaty (CTBT) allows activities designed to ensure the safety of nuclear weapons.  China denies it is blocking data transmissions.

Friday, Secretary Pompeo told his Russian counterpart that any future arms control talks must focus on a U.S. proposal for a new arms control accord that includes both Russia and China.

Lastly, today, Secretary Pompeo said China’s role in the coronavirus pandemic should force countries to rethink their telecommunications infrastructure, including the adoption of China-based Huawei’s 5G networks.

Pompeo told Fox Business Network in an interview: “I am very confident that this moment – this moment where the Chinese Communist Party failed to be transparent and open and handle data in an appropriate way – will cause many, many countries to rethink what they were doing with respect to their telecom architecture… And when Huawei comes knocking to sell them equipment and hardware, that they will have a different prism through which to view that decision.”

***If you want an infuriating example of the Communist Party’s police state, you can watch PBS’ “Frontline” episode of April 14 on the handling of the Uighurs, available through the Frontline link at pbs.org. 

North Korea:  Leader Kim Jong Un’s absence from an important anniversary event this week rekindled speculation over his potential health problems, analysts said today.  On Wednesday, North Korea marked the anniversary of the birthday of its national founder and Kim’s grandfather, Kim Il sung, as a national holiday known as the Day of the Sun.

Senior officials paid tribute to the embalmed body of Kim Il Sung, state media KCNA said on Thursday, but did not mention Kim as part of the delegation, unlike in the past.  He was also absent from photos released by a party mouthpiece.

Kim, age 36, is clearly significantly overweight and has had a number of health issues.  He never misses commemorating the birthdays of his grandfather and father.

Tuesday, Pyongyang fired multiple short-range missiles into the sea between the Korean peninsula and Japan, which South Korea’s Joint Chiefs of Staff said was part of the celebration.  Such military events would usually be observed by Kim, but there was no KCNA report on the test at all.

He was last seen publicly presiding over a meeting of the ruling Workers’ Party’s politburo last Saturday, but was not wearing a mask, even as he called for tougher and more thorough countermeasures to keep citizens safe from the coronavirus.

Separately, the U.S. State Department, Treasury, and Department of Homeland Security, along with the FBI, issued an advisory on Wednesday about North Korean cyber threats that called particular attention to banking and finance.

“North Korea’s malicious cyber activities threaten the United States and countries around the world and, in particular, pose a significant threat to the integrity and stability of the international financial system,” the State Department said in a statement on the advisory.

South Korea: President Moon Jae-in’s ruling party won an absolute majority in parliamentary elections, a landslide victory propelled by successes in the country’s efforts to contain the coronavirus outbreak. 

The election was watched around the world as one of the first nationwide votes since the pandemic began.  Authorities took stringent safety measures, disinfecting all 14,000 polling stations and requiring voters to wear masks, have their temperatures checked, use hand sanitizer and plastic gloves and maintain a safe distance from others.  Driven by record high participation in early voting over the weekend, turnout was 66.2%, higher than any parliamentary elections held since 1992, according to the National Election Commission.

Approval ratings for Moon and his Democratic Party took a big hit in February when the first major outbreak outside China enveloped South Korea, but since then, the administration’s largely successful campaign against the virus provided a boon for Moon and his progressive party, as they secured 180 seats in the 300-member, single-chamber parliament, up from the current 120.

Israel: Once again, Prime Minister Benjamin Netanyahu and rival Benny Gantz struggled to agree on terms for a unity government, raising the prospects of yet another general election, while Israel deals with a coronavirus lockdown.

The two had agreed in principle to a unity government, with Netanyahu leading it for two years before turning power over to Gantz, but then talks broke down.

Israel’s President Rivlin then said he would give the two another few days to form a government, and after that Wednesday deadline expired, Rivlin handed the task over to Parliament, starting another 21-day countdown that could lead to the fourth election in little over a year.

Neither Netanyahu nor Gantz can currently muster a majority without joining forces, and their parties issued a joint statement on Thursday saying that negotiations for a unity government would continue.

Failing an agreement, Parliament would automatically disperse on May 7, and then send Israelis back to the ballot box.

Turkey: An organized crime boss serving a prison sentence in Turkey was set free Thursday as authorities continued releasing thousands of inmates to ease overcrowding during the coronavirus pandemic.  But government critics are being kept behind bars, which is pathetic.

Far-right mob boss Alaattin Cakici was released from an Ankara prison, the 67-year-old having been imprisoned for convictions on charges that included instigating murder, armed attack, money laundering and leading an illegal organization. He had served 16 years of his decades-long sentence.

At the same time, though, scores of journalists, activists, and politicians and members from opposition parties are ineligible for early release under penal legislation that took effect this week.

At least 85 journalists are behind bars, according to the Journalists’ Union of Turkey.  The pro-Kurdish Peoples’ Democratic Party says more than 3,500 party members, including former party leaders and lawmakers, are imprisoned.

Two European Union lawmakers called the law “a great disappointment.”

“Turkish ruling parties have decided to deliberately expose the lives of journalists, human rights defenders and those whom they deem to be political opponents to the risk of the deadly disease.”

1,769 have died of Covid in Turkey as of tonight.

Russia: I have been watching Russia’s cases and deaths from coronavirus spike, 32,000 cases in all, 273 deaths, including 41 today, and it has become clear that Russia is unlikely to escape a severe hit, which poses a major challenge to the nation’s poor health system.

President Vladimir Putin told senior officials at the Kremlin on Monday, “We have a lot of problems, and we don’t have much to brag about, nor reason to, and we certainly can’t relax.  We are not past the peak of the epidemic, not even in Moscow.”

There is a very real threat to Putin’s rule.

Brazil: The nation became the first country in the southern hemisphere to surpass 1,000 deaths with coronavirus, now over 2,100 as I go to post, the daily toll spiking this week.

Most states imposed quarantine measures but President Jair Bolsonaro has challenged the restrictions, saying they needlessly harm the economy.

So what does Bolsonaro do on Thursday?  Amid growing concern the virus was on the verge of spiraling out of control, especially in poorer areas like favelas, crowded slums where social distancing is near impossible and basic sanitation is lacking, the president fired his highly-respected health minister, Luiz Henrique Mandetta.

In televised remarks met with pot-banging protests in several major cities, Bolsonaro said Mandetta did not fully appreciate the need to protect jobs and he called again for a resumption of business in Latin America’s largest economy.

“We need to return to normal, not as fast as possible, but we need to start having some flexibility,” Bolsonaro said.  The government cannot afford emergency aid to the poor for much longer, he added.

Mandetta warned in his parting comments: “Do not think we are past a peak in growth of the virus.  The health system is still not prepared for an acceleration.”

A survey of Brazilians by pollster Datafolha rated the Health Ministry’s response to the epidemic as “good” or “great” by 76%.  Just 33% gave Bolsonaro the same ratings.

Meanwhile, Nicaraguan dictator Daniel Ortega has not been seen or heard in public in a month.  His government claims there is no coronavirus issue in the nation, reporting just nine cases and one death.  Neighboring Honduras, however, has reported over 400 cases and 41 deaths.  It just makes no sense.

Random Musings

--Presidential tracking polls….

Gallup: As I expected, a new Gallup survey for the period April 1-14 revealed 43% approve of President Trump’s job performance, vs. 54% disapproval.  This compares with a 49-45 split for March 13-22.  But 93% of Republicans still approve, while 39% of independents do, down four points from March.
Rasmussen: 46% approve, 53% disapprove (Apr. 17), an improvement over last Friday’s 43-56 figures.

A new Pew Research Center poll has President Trump’s approval rating little changed since late March at 44%, while 53% disapprove of his handling of the job.

--In a new USA TODAY/Ipsos Poll, by an overwhelming 69%-21% margin, Americans endorse a nationwide lockdown through the end of April; an idea backed by 8 in 10 Democrats and 62% of Republicans.

By 92% to 4%, Americans want the federal government to make the Covid-19 test widely available.  About 8 in 10 support drastic steps on immigration: imposing mandatory quarantines for people who have traveled to any other country and temporarily stopping immigration from all other countries.  Seven in 10 want to ground all international flights.  Almost half, by 49%-34%, want to ground all domestic flights.

The sources most trusted for accurate information about the pandemic continue to be the Centers for Disease Control and Prevention, trusted by 80%, and the World Health Organization, trusted by 70%.  President Trump is trusted by 44%, Vice President Pence 46%, and the U.S. Congress 41%.  Trust in the news media is at 48%.

We’ll see how the campaign by the president against the WHO plays out in the “trust” number as the poll was conducted before the offensive.

A Pew Research Center survey had 73% of Americans believing the problems the country is facing from the outbreak will worsen.  About twice as many Americans say their concern is that state governments will lift restrictions on public activity too quickly (66%) than not quickly enough (32%).

65% say President Trump was too slow to take major steps to address the threat to the United States when cases of the disease were first reported in other countries.

81% of Democrats and Democratic-leaning independents say their greater concern is that governments will lift the bans on public activity too quickly, while Republican and Republican leaners are evenly divided.  51% say their bigger concern is that state governments will act too quickly while 46% worry that more restrictions on public movement will not be lifted quickly enough.

47% of Republicans say it is acceptable for officials to fault the administration’s response, while 52% find this unacceptable.  85% of Democrats think it is acceptable for elected officials to criticize how the administration has addressed the outbreak.

--Bernie Sanders endorsed former foe Joe Biden in a livestreamed event Monday.

“We must come together to defeat the most dangerous president in modern history,” Sanders tweeted in conjunction with the joint appearance online.

Biden assured the senator’s supporters that he would be advising him on key issues including the economy, education and health care.

“Bernie, I’m gonna need you,” Biden acknowledged to Sanders.  “You’ve been maybe the most powerful voice for every generation of Americans.”

Biden later told Sanders’ supporters in a tweet: “I see you, I hear you, and I understand the urgency of what it is we have to get done in this country.  I hope you will join us.  You are more than welcome on this campaign.  You’re needed.”

Barack Obama then endorsed Biden, as did Sen. Elizabeth Warren.

--Sen. Amy Klobuchar, op-ed, New York Times, on voting by mail:

“In a democracy, no one should be forced to choose between health and the right to vote.

“Imagine if days before the November election you learn that your polling place has been closed, that your request for an absentee ballot has gone unfulfilled and that you have to risk a grave infection by standing in line – possibly for hours – to claim your stake in our democracy.

“If that sounds outrageous to you, it should.  But it’s exactly what happened in the Wisconsin election last week. First the Republican-controlled State Legislature blocked Gov. Tony Evers’ efforts to delay the election for public safety reasons, and then the United States Supreme Court reversed his order to extend the absentee ballot deadline.

“In Milwaukee, which has the largest minority population in the state, the number of open polling places was shrunk to five from 180, as poll workers dropped out.  In Green Bay, the number plunged to two from 31.  Needless to say, the lines were hours long.  Voters wore homemade face masks to protect themselves from contracting the coronavirus – if they were willing to risk voting at all.

“And if you think there ought to be a better way, you’re not alone.  I know of one person who, with an election approaching in his newly adopted state, simply requested an absentee ballot from the comfort of his own home – so he could vote safely and easily by mail.

“His name?  Donald Trump.  His address?  1600 Pennsylvania Avenue.  If it’s good enough for him, it’s good enough for all Americans.

“I’m lead sponsor on a bill, with Senator Ron Wyden, that would require every state to allow its citizens to vote easily by mail.  We are asking Congress to help states ramp this up in a big way, with funding for everything from workers to envelopes to postage.

“My husband, John, just recovered from Covid-19.  I know firsthand that it’s a brutal illness, even if, like him, you’re 52 and healthy – and for too many, it’s deadly.  Public health officials have warned us that we simply don’t know how long it will last – or if there will be a second, third or fourth wave, once we reopen businesses and resume our lives.  And many of those same experts will tell you that many Americans will still be at risk on Nov. 3, the date of the general election.

“That is why we must reform our election systems, so that sheltering in place can also mean voting in place.  And we must do it now, while we still have the time to preserve everyone’s ability to vote in November.

“What we’re proposing is neither radical nor untried.  About a quarter of voters already cast their ballots by mail.  In fact, all states offer some form of it.  Five states – Colorado, Hawaii, Oregon, Utah and Washington – vote almost entirely by mail.  And these are states that have elected Republicans and Democrats alike; there’s nothing partisan about full participation.  At the same time, both Democratic and Republican governors and secretaries of state have recently taken actions to make voting by mail more accessible during this pandemic.

“It’s troubling that many states still insist on making it hard to mail in a ballot.  Sixteen states require voters to provide an excuse to obtain an absentee ballot (though several have lifted that requirement for their primary elections); six states also require more than one witness, or a notary, to validate a mail-in ballot.  Imagine trying to drum up witnesses – much less a notary – in the thick of a public health crisis.  We need to do away with the hurdles and the back flips once and for all….

“Reform won’t come without a cost. We are pushing for ample funding to help states immediately prepare for mail voting, in addition to the $400 million Congress has already approved for that purpose, as well as for more early, in-person polling locations and protecting the health and safety of poll workers.

“As we debate the next federal legislative relief package for Covid-19, here is what we know for sure: Failure to prepare for this pandemic has cost so much.  Lives have been lost.  Businesses large and small – representing lifetimes of hard work – now stand boarded up.

“Yet there were so many signs it was coming.

“November is coming, too.  We need to make sure all of America doesn’t suffer what Wisconsin just did.

“And if you want to know what it’s like to vote in a healthy, safe and secure way – from the comfort of your own home – just ask President Trump. He’s been doing it for years.”

--So for President Trump, the Wisconsin primary was a big deal because he touted Dan Kelly for the state Supreme Court, only Kelly lost to liberal challenger Jill Karofsky.  Funny how the president said nothing about this, after the Democratic governor tried to postpone the primary.

--Having been to the island of Guam many times, I can appreciate how the people there, while used to seeing lots of U.S. military in their midst, with two giant bases, are nonetheless concerned that more than 1,700 sailors from the USS Theodore Roosevelt are isolating in the island’s hotels, while more than 580 sailors have been confirmed infected, one has died.  The sick remain on base, Navy officials said.

As many as 10 hotels have been set aside to house up to 4,000 sailors in total, with each sailor staying in a room stocked with two weeks’ worth of linens, towels and water.  There is no contact with hotel workers, and only military police and medical teams can visit.  Military personnel deliver the food prepared in the kitchens.

So now some residents are asking Guam’s governor to reconsider allowing the sailors to stay in the hotels.

Said a spokeswoman for the Chamorro, the indigenous people of the Mariana Islands, which include Guam, of the sailors: “Being negative today doesn’t mean that they won’t be in a week or so.  The decision to house them in the middle of our community is playing a game of chance with the health of our people.”

Not including the sailors, Guam had 135 confirmed cases of coronavirus and five deaths at last report.

--From an article by Jo Craven McGinty of the Wall Street Journal:

“A snapshot of the 2009 H1N1 influenza pandemic shows the difference in the speed of transmission between a raging flu and the new coronavirus.  Comparing only laboratory-confirmed cases, in the first 102 days of the H1N1 flu pandemic, the CDC reported 43,677 illnesses and 302 deaths.  In 22 fewer days, Covid-19 infected 11 times as many people and killed 60 times as many.”

--Since my parents both went to the University of Pittsburgh, along with my nephew, my godmother, godfather and countless relatives, some of us are rooting particularly hard for some researchers there today.

Salena Zito / Wall Street Journal

“Jonas Salk developed the polio vaccine at a University of Pittsburgh lab. The deadly disease that crippled infants disappeared almost overnight, and Salk became a hero.  He wasn’t Steel City’s only history-making physician.  Thomas Starzl, who performed the first liver transplant in 1963, joined the Pitt faculty in 1981.

“As the world faces another terrifying disease, Pitt medical scientists are again at work on a potentially revolutionary vaccine.  Luis Falo and Andrea Gambotto, respectively a dermatologist and a surgeon, have developed a Covid-19 inoculation that rapidly produces large numbers of coronavirus antibodies when injected in mice.  A peer-reviewed paper describing their work appeared in the journal EBioMedicine, which is published by The Lancet.  They await approval from the Food and Drug Administration to conduct human trials on their vaccine candidate, which is delivered via a unique skin patch containing 400 tiny needles.

“ ‘This is a collision of two stories,’ Dr. Falo says.  ‘We’ve been developing the delivery technologies for this for the past several years and working with Dr. Gambotto in trying to use the skin as the ideal target for vaccine delivery.  While we were doing that, Dr. Gambotto has been working on SARS and MERS.’ The two physicians’ labs are next door to each other.”

We wish the pair Godspeed.  [There is also suddenly talk an oral polio vaccine may work with Covid, which would be amazing.]

--While there is renewed doubt as to the origin of Covid-19, and whether it started in a wet market in Wuhan or a controversial laboratory nearby, researchers have now discovered six additional coronaviruses in Myanmar-based bats.

The research, published in PLOS ONE, notes that the viruses were discovered between 2016 and 2018, but aren’t believed to be related to SARS-CoV-2, severe acute respiratory syndrome (SARS) or Middle East respiratory syndrome (MERS), which all jumped from animals to humans.

“Viral pandemics remind us how closely human health is connected to the health of wildlife and the environment,” said the study’s lead author and former wildlife veterinarian with the Smithsonian’s Global Health program, Marc Valitutto, in a statement.  “Worldwide, humans are interacting with wildlife with increasing frequency, so the more we understand about these viruses in animals – what allows them to mutate and how they spread to other species – the better we can reduce their pandemic potential.”

It’s believed that “thousands of coronaviruses – many of which have yet to be discovered – are present in bats,” the statement added.

Additional studies will be needed to determine if these newly discovered coronaviruses have “the potential for transmission across species to better understand the risks to human health.”

---

Gold $1692…down $60 on the week
Oil
$18.12

Returns for the week 4/13-4/17

Dow Jones  +2.2%  [24242]
S&P 500  +3.0%  [2874]
S&P Midcap  -1.6%
Russell 2000  -1.4%
Nasdaq  +6.1%  [8650]

Returns for the period 1/1/20-4/17/20

Dow Jones  -15.1%
S&P 500  -11.0%
S&P Midcap  -24.3%
Russell 2000  -26.3%
Nasdaq  -3.6%

Bulls 40.9
Bears
32.4

Hang in there.  Wash your hands.

Brian Trumbore