Week in Review

---

Week in Review

04/25/2020

For the week 4/20-4/24

[Posted: 9:30 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 1,097

Embarrassed he would be hit with a barrage of questions on his daily briefing from yesterday when he expressed interest in injecting disinfectant into the body to kill the coronavirus, President Trump read a statement today on a few developments, turned it over to Mike Pence for some words on our terrific “whole of government approach,” and then the president left without taking a question.  What a small, small man.

And Trump’s claiming world leaders are calling him up, wanting to find out how the United States is doing so “beautifully” in combatting the pandemic?  Are you kidding me?!

Tonight’s display by the president was kind of ironic given that last Sunday, one of his old buddies, Piers Morgan, the outspoken host of “Good Morning Britain,” had issued a personal plea to his friend, asking the president to stop “playing petty politics” with the coronavirus pandemic and to “stop making it about yourself.”

Appearing on CNN’s “Reliable Sources,” Morgan said he had been watching Trump’s daily coronavirus briefings “with mounting horror.”  Trump, he said, couldn’t seem to stop blaming governors or attacking Democrats, and kept wasting time quarreling with reporters.

Morgan was spot on in saying the whirlwind news conferences were becoming “almost like a rally to him – almost like what’s more important is winning the election in November.”

“No it’s not, Donald Trump.  What is more important right now is saving American lives,” he said.

Morgan reached out to the president on Twitter as well.

“Mr. President @realDonaldTrump, you won’t want to watch this, but I hope you do,” Morgan wrote. “Please drop your angry, petty, disingenuous, blame-gaming, self-aggrandising daily briefing antics & start being a proper wartime president.”

Alas, the president did not take his friend’s advice to heart.

Wednesday, CDC Director Robert Redfield told the Washington Post: “There’s a possibility that the assault of the virus on our nation next winter will actually be even more difficult than the one we just went through.  And when I’ve said this to others, they kind of put their head back. They don’t understand what I mean.”

Redfield said a second wave could be more devastating to the healthcare system if it came at the same time hospitals were dealing with seasonal flu cases.

Well, President Trump didn’t like that and tweeted that Redfield was misquoted.  He then hauled the doctor in front of the cameras at the daily briefing that evening, again said Redfield was misquoted, only to have Redfield say he was quoted correctly.

The next day, as described below, brought the Trump Travelin’ Medicine Show.

Some Covid tidbits from here and around the world:

Death toll, globally…197,074
United States…52,168

--We learned that two Santa Clara County, California, residents, who both died in their homes in February, one a 57-year-old woman who perished at home Feb. 6, the other one a 69-year-old man killed by the coronavirus Feb. 17, were the actual first recorded deaths of Covid-19 in the United States, days before the first two deaths reported in Washington state Feb. 26.  Autopsies were conducted on the two Californians and confirmed by the Centers for Disease Control and Prevention.  As California Gov. Gavin Newsom called the discovery, it’s “important forensic information.”

Scientists also now believe the coronavirus emerged in China not in December, but as early as October, maybe even September.  So with all the travel between China and the U.S. West Coast, and China and Europe, and then Europe to the U.S., you can see how it was here amongst us long before we actually had our first confirmed case.

--Brazilian President Jair Bolsonaro, a Trump acolyte who has downplayed the coronavirus crisis in his country, saying the economy needed to open up as the death toll begins to soar, now 3,670, faces a political crisis of the highest order tonight.  Last week, the president fired popular Health Minister Luiz Henrique Mandetta, a truth teller.  Then he decided to fire the federal police chief Mauricio Valeixo for personal and political reasons.

And then today, Justice Minister Sergio Moro resigned, accusing the far-right leader of potentially criminal meddling in law enforcement. The Brazilian financial markets plunged 8% on the news.

Moro said Bolsonaro feared Supreme Court probes and wanted inside information from his top cop, which in the end Moro found intolerable.

As Moro finished an address on television, protests rang out across Brazil, with people banging pots and pans from their apartments and shouting “Bolsonaro out!”

Just about ten days ago, President Trump said his ‘friend’ was doing very well with great poll #s.  That hasn’t been the case in weeks.

--Britain’s death toll is at 19,500 tonight, after the government’s chief science adviser, Patrick Vallance, said on March 17 that keeping the toll under 20,000 would be “a good outcome in terms of where we would hope to get.” 

But in reality, the toll in the UK is already thousands higher as the figures released to the public only include “deaths in hospital.” Not deaths in nursing homes, which the government is just beginning to research.

And testing has been a disaster, especially for essential workers, ditto personal protective equipment for front-line healthcare  workers.

Whenever Prime Minister Boris Johnson returns, he will face the issue of attempting to avoid a second wave while coming out of a lockdown that is destroying the economy.

According to budget forecasters, Britain could be heading into its deepest recession in more than 300 years, yes, 300 years (the UK with amazing data going back that far), this despite a string of emergency stimulus measures.

--The Irish finance department on Tuesday said GDP for 2020 could fall by 13.8% if the coronavirus is not suppressed in the second quarter, and to 15.3% if there is a second wave.

--In a new study conducted by New York state, nearly a quarter of New York City’s population was found to have been sickened by coronavirus, revealing the shocking spread of the pandemic.

Gov. Andrew Cuomo said Thursday that 21% of people from the five boroughs who were picked to be tested outside supermarkets and big box stores have contracted the disease at some point.

“What does it mean? They were infected three weeks ago and four weeks ago and five weeks ago or six weeks ago,” Cuomo said. “They have the virus and they developed antibodies and they are recovered.”

[13.9 percent of people randomly tested in New York state overall had the antibodies.]

---

--The House passed a new $484 billion relief bill, signed by President Trump this afternoon, after the Senate had earlier passed it, the fourth large coronavirus package, reviving the Small Business Administration’s Paycheck Protection Program with an additional $310 billion, after the initial $350 billion ran out in two weeks. The vote was 388-5 after a unanimous vote in the Senate.

--Another 4.4 million Americans filed for unemployment, making it 26 million Americans over the last five weeks who have lost their jobs due to the coronavirus pandemic and government-ordered business closures.

And what’s become clear is the national effort to get coronavirus relief money to Americans is at risk of being overwhelmed by the worst economic downturn since the Great Depression, understaffed and underfunded agencies at both the state and national level, and dated technology.

The crisis and challenges have occurred with all three critical initiatives designed to keep Americans from hitting the bread lines: the $1,200 per adult relief payment, the initial $349 billion in Small Business Administration loans, now expanded, and $260 billion in unemployment benefits for the 26 million now out of work.

The big banks such as Wells Fargo have by all accounts done a terrible job.  Wells, Bank of America, JPMorgan Chase and US Bancorp were sued by small businesses that accused the lenders of prioritizing large loans, shutting out the smallest firms that sought money and totally defeating the original purpose of the rescue program.  The four were accused of not processing the applications on a first-come-first-served basis as the government promised, and instead processing the large loan amounts because they generated the highest fees.

A good friend has a highly-successful small manufacturing business in New Jersey and his bank, Wells, had an impossibly long PPP application and then the bank had seemingly zero staff to help with the processing of it.  He has shared with me the internal communications between himself and Wells Fargo and it’s pathetic.

The thing is the community banks are apparently doing a much better job and he’s now working that angle, especially as one approached him!

But the big banks were so ill-prepared, and amazingly seemed to be reducing staff and hours, that you then had the embarrassing situation of some larger companies (Shake Shack) and institutions (Harvard, Stanford, Princeton…) having no problem obtaining $millions, only to be shamed into giving it back.

Shake Shack smartly was first and did it without any real prodding.

--Bill Gates, from his blog post “Pandemic I: The First Modern Pandemic.”

“It’s entirely understandable that the national conversation has turned to a single question: ‘When can we get back to normal?’ The shutdown has caused immeasurable pain in jobs lost, people isolated and worsening inequity. People are ready to get going again.

“Unfortunately, although we have the will, we don’t have the way – not yet. Before the United States and other countries can return to business and life as usual, we will need some innovative new tools that help us detect, treat and prevent Covid-19.

“It begins with testing. We can’t defeat an enemy if we don’t know where it is. To reopen the economy, we need to be testing enough people that we can quickly detect emerging hotspots and intervene early. We don’t want to wait until the hospitals start to fill up and more people die.”

Sen. Marco Rubio / New York Times

“With the steadfast resolve of American communities and with government support to provide businesses the resources they need to pull through, Americans will overcome the challenge before us. But the society that follows should not be what it was before. We won’t properly absorb the lessons from the coronavirus crisis if we fall back into the traditional Republican and Democratic model of politics. We need a new vision to create a more resilient economy.

“I have worked to put forward a foundation for this, calling for the re-shoring of supply chains integral to our national interest – everything from basic medicines and equipment to vital rare-earth minerals and technologies of the future.  Before the pandemic, I proposed a reauthorization of the Small Business Act to serve as a template for how we could make our economy more productive.  There is a clear need for a sweeping pro-American industrial policy, brought into sharp relief by this crisis….

“A sensible industrial policy will also mean creating incentives for productive investment in workers and equipment through tax policy and robust federal guarantees, while discouraging unproductive corporate behavior like stock buybacks. Where foreign subsidies draw away investment outside our own borders, the federal government should introduce cooperatives to spur the creation of domestic supply chains.

“Though rebuilding a more productive and pro-worker economy will take time, we can achieve it and ensure that America’s next economic chapter will owe its character to the same spirit of resiliency, solidarity and collective pursuit of the common good that our people are now displaying to the world.”

Trump World

--Lysol and Dettol maker Reckitt Benckiser warned people against using disinfectants to treat the coronavirus, after President Trump suggested researchers try putting disinfectants into patients’ bodies.

“Under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route),” the company said.

Yesterday, Trump said researchers should try to apply their findings to coronavirus patients by inserting light or disinfectant into their bodies. “Is there a way we can do something like that by injection, inside, or almost a cleaning?” he said. “It would be interesting to check that.”

Reckitt said due to recent speculation and social media activity, it had been asked whether internal usage of disinfectants may be appropriate for investigation or use as a treatment for coronavirus.

So this afternoon President Trump walked back his suggestion that patients could cure themselves by injecting disinfectants, claiming he floated the wild proposal “sarcastically” just to “see what would happen.”

Yet another bald-faced lie, the president claiming he wanted to poke fun at “the fake news.”

“I said it sarcastically,” Trump told reporters in the Oval Office.  “It was put in the form of a question to a group of extraordinarily hostile people, namely the fake news media.”

Hours later he walked out of his briefing, afraid to face the music. 

--The U.S. Food and Drug Administration on Friday cautioned against the use of malaria drug hydroxychloroquine, touted by President Trump, in Covid-19 patients outside of hospitals and clinical trials, citing risks of serious heart rhythm problems.

The FDA said today it was aware of increased use of the drug through outpatient prescriptions and the drugs could cause abnormal heart rhythms and dangerously rapid heart rate.

Thursday, the European Union’s drug regulator warned of the side effects of the drugs (including chloroquine), urging medical professionals to closely monitor patients on the medicines.

--President Trump signed an executive order on Wednesday temporarily curbing the issue of new green cards for would-be U.S. permanent residents in what he described as a bid to limit competition for jobs as the U.S. takes steps toward reopening the economy.

“In order to protect our great American workers I’ve just signed an executive order temporarily suspending immigration into the United States,” Trump said Wednesday evening. “This will ensure unemployed Americans of all backgrounds will be first in line for jobs as our economy reopens. Crucially it will also preserve our health care resources for American patients.”

The president’s order will only apply to foreign nationals on foreign soil seeking residency in the U.S. and will not affect those who currently have valid visas or travel documents. It also exempts individuals seeking to permanently enter the country as a medical professional or researcher, as well as members of the armed forces, those seeking asylum or refugee status, and children being adopted by American parents.

The president did say there would be carve-outs for migrant agricultural workers, and promised Tuesday to make it even easier for farmers rebounding from the coronavirus crisis to hire labor from other countries.

Late Monday, Trump had tweeted that he planned to “temporarily suspend immigration into the United States,” catching businesses, farmers, and even some White House aides by surprise.

Editorial / Wall Street Journal

“All of which suggests that Mr. Trump’s real calculation here is political. White House adviser Stephen Miller has long wanted to shut down most immigration, legal and illegal. In the coronavirus he may have found his opening. The country is worried, and Mr. Trump’s core supporters will cheer. With his approval rating down, Mr. Trump may feel he needs to return to one of his favorite 2016 themes. You know cynicism is afoot when the White House press secretary cites Paul Krugman as an economic authority on immigration.

“But the price of all this may be a slower economic recovery that will hurt the larger public. As Kurt Huffman writes nearby, employers are having a hard time rehiring some employees who are now making much more in jobless benefits. Democrats will make Republicans vote to extend the extra $600 a week benefit for not working into the autumn. And how ‘temporary’ will Mr. Trump’s immigration ban be as the election approaches?

“Beyond the damage to life and livelihood, the greatest threat from the coronavirus are policy mistakes that prolong the economic pain. Democrats want to use the pandemic as an excuse to put government in charge of much more of the private economy. Now Mr. Trump wants to limit America’s supply of human talent. If they succeed, we will wake up in 2021 having defeated Covid-19 but at the high cost of a diminished economic future.”

--After boasting of his close working relationship with Govs. Phil Murphy and Andrew Cuomo, President Trump took a shot at the two states hardest hit by the coronavirus.

“New York and New Jersey were in a lot of trouble long before the plague came,” the president said at his daily briefing.

Trump mentioned the two after first claiming that the states with the most severe fiscal problems happened to be run by Democrats. “It is interesting that the states that are in trouble do happen to be blue,” he said.

According to New York’s Rockefeller Institute of Government, New York and New Jersey are among the states that send $billions more to Washington than they receive in services.  New Jersey taxpayers got 90 cents back for every $1 in taxes. New York got 91 cents.

And they were the two states among the hardest hit by Trump’s 2017 tax law, which capped the federal deduction for state and local taxes at $10,000, increased the federal deficit by $2 trillion over 10 years and, according to the Congressional Research Service, had little impact on wages or economic growth.

The state subsidized the most was Kentucky, which got $2.41 back for every $1 in federal taxes, according to the Rockefeller Institute report.

[More on a related issue below.]

--Secretary of State Mike Pompeo has said a fundamental reform of the World Health Organization is needed following its handling of the pandemic and that the United States, the WHO’s biggest donor, may never restore funding to the UN body.

“I think we need to take a real hard look at the WHO and what we do coming out of this,” Pompeo told Fox News late on Wednesday.

--Trump tweets:

“Our Country wants to move safely forward. There is a tremendous pent up demand. We will open big!”

“We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!”

“It is amazing that I became President of the United States with such a totally corrupt and dishonest Lamesteam Media going after me all day, and all night. Either I’m really good, far better than the Fake News wants to admit, or they don’t nearly have the power as once thought!”

“I’ve had great ‘ratings’ my whole life, there’s nothing unusual about that for me. The White House News Conference ratings are ‘through the roof’ (Monday Night Football, Bachelor Finale, @nytimes) but I don’t care about that. I care about going around the Fake News to the PEOPLE!”

“96% Approval Rating in the Republican Party. Thank you! This must also mean that, most importantly, we are doing a good (great) job in the handling of the Pandemic.”

Wall Street and the Economy

The economy continues to crater, jobless claims still rising at tragic levels, yet the stock market has largely held its gains off the March lows.  However, as you’ve seen in the numbers, there is a huge difference in the performance of big cap stocks and the small and medium variety.  I maintain many market participants are also in a state of denial.

‘Bulls,’ on the other hand, point to the massive amount of stimulus being injected into the economy, the latest being the aforementioned $484 billion package.

In a survey by the Pew Research Center released on Tuesday, however, 52 percent of low-income households – below $37,500 a year for a family of three – said someone in the household had lost a job because of the coronavirus, compared with 32 percent of upper-income ones.

But as the tussle between Senate Majority Leader Mitch McConnell and governors like New York’s Andrew Cuomo and New Jersey’s Phil Murphy shows, reality is the states and cities in the most hard-hit areas have lost $10s of billions, collectively, in revenues.

Conservatives argue states like New York, New Jersey and California are paying the price of their own mismanagement. And the Wall Street Journal editorializes that if there is to be another financial package to help the states, there should be conditions attached.

“Bailout conditions should include cuts in nonessential spending, immediate and permanent reductions in public pension benefits, and other reforms to put states on a path to fiscal recovery. Lawmakers will protest, but they are the ones asking Americans for help.  If states want more money, they need to show it won’t merely go to sustain unaccountable, one-party political machines.”

The bottom line is roughly 20 million people work in the public sector at the state and local level, which is more than the number employed in the retail industry.  Proponents of bailout cash ask what message is sent when you want to reopen the economy, but you are laying off potentially millions at the same time?

In terms of data this week, March existing home sales came in less than expected, a 5.27 million annualized pace, down 8.5% over February, but up 0.8% year-over-year.  The median home price of $280,600 was up 8% from March 2019.

March new home sales were also less than expected, 627,000, down 9.5% from a year ago.

March durable goods (big ticket items) plunged 14.4%. Of course April’s data points will be far worse.

IHS Markit’s flash PMI readings for April were terrible; 36.9 manufacturing, 27.0 services.

The Atlanta Fed’s GDPNow barometer for the first quarter remains at -0.3%, but this will worsen, and we will get our first look at the government’s official reading for Q1 next week.

Europe and Asia

--We had flash PMI readings for the eurozone (EA19) for April and as you’d expect they were beyond ugly.

The flash composite for the EA19 was 13.5 (50 being the dividing line between growth and contraction) vs. 29.7 in March. Manufacturing was at 33.6 vs. 44.5 last month, while the services reading was a record low, 11.7, vs. 26.4 in March.

The flash manufacturing PMI for Germany was 34.4 vs. 45.4; services at a record low of 15.9 vs. 31.7.

France came in at 31.5 manufacturing vs. 43.2; 10.4 services vs. 27.4 (record low).

The UK had a flash manufacturing reading for April of 32.9, down from 47.8 in March; services 12.3 vs. 34.5 (record low).

[All the above courtesy of IHS Markit]

Chris Williamson, chief economist, IHS Markit:

“April saw unprecedented damage to the eurozone economy amid virus lockdown measures coupled with slumping global demand and shortages of both staff and inputs.

“The extent to which the PMI survey has shown business to have collapsed across the eurozone greatly exceeds anything ever seen before in over 20 years of data collection. The ferocity of the slump has also surpassed that thought imaginable by most economists, the headline index falling far below consensus estimates.

“Our model which compares the PMI with GDP suggests that the April survey is indicative of the eurozone economy contracting at a quarterly rate of approximately 7.5%.

“With large swathes of the economy likely to remain locked down to contain the spread of COVID-19 in coming weeks, the second quarter looks set to record the fiercest downturn the region has seen in recent history.

“Hopes are pinned on containment measures being slowly lifted to help ease the paralysis that businesses have reported in April. However, progress looks set to be painfully slow to prevent a second wave of infections. In the face of such a prolonged slump in demand, job losses could intensify from the current record pace and new fears will be raised as to the economic cost of containing the virus.”

Separately, Eurostat released debt-to-GDP ratios for the euro region.  Overall, for the fourth quarter of 2019, it was 84.1%.

Germany 59.8%; France 98.1%; Italy 134.8%; Spain 95.5%; Portugal 117.7%; Greece 176.6%.

The UK is at 85.4%.

Of course by the time the second quarter for 2020 is reported in about six months, these numbers will look entirely different.

As I got into last time, the European Union has a serious issue; how to work as a cohesive bloc to help those countries like Italy and Spain that are in the most need.

But, again, it’s the North-South divide in the EU.  French President Emmanuel Macron reiterated this week that Europe’s response to the economic turmoil caused by the pandemic required financial transfers to the hardest-hit regions and not just loans.

Speaking after EU leaders held a summit by video link on Thursday, Macron said the European Union’s rescue package to kickstart the recovery should be worth at least 5 to 10 percentage points of EU gross domestic product.

“Several instruments are being discussed. What matters is that the response is big enough, financed by debt that is put forward and guaranteed jointly, and that there is, on the other end of it, proper budgetary transfers to the hardest-hit regions and economic sectors,” Macron said.

But disagreements over the size and shape of the rescue package persisted, he said, adding that the European project had no future if member states failed to respond to the “exceptional shock.”

The deepest divisions between members states was not over the idea of jointly issued debt, but whether funds be transferred in the form of loans or grants, said the president.

Macron said loans were counter-productive, only serving to pile yet more debt on the worst-hit states.

So we’ll see.

As for Brexit and any negotiations, British Prime Minister Boris Johnson still hasn’t returned to 10 Downing Street as he continues to recover from the coronavirus at his retreat.

The British government’s response to the outbreak, however, specifically Johnson’s early  inaction, has become a huge issue as the death toll mounts. But in terms of Brexit, the government maintains the response has not impacted the handling of the emergency, amid reports there was a shortage of nurses because Brexit had led to some of them returning to the European Union.

Health Secretary Matt Hancock: “There is no impact at all of Brexit on our coronavirus response and the good news is we’ve had thousands of nurses and clinicians come back into service since this crisis started.”

Turning to Asia, after China’s torrent of economic releases last week, nothing new this go ‘round.

We did get flash PMI readings from Japan for April, with manufacturing at 43.7, down from 44.8 in March, while the services PMI was down to 22.8, the lowest ever, the survey starting in 2007.

Japan’s shutdown, which isn’t really a full shutdown, is until May 6 but will be extended last I saw.

Street Bytes

--Stocks got off to a sloppy start Monday and Tuesday before rallying back and cutting their losses for the week.  Earnings reports thus far have been largely meaningless.  The Dow Jones fell 1.9% to 23775, the S&P 500 lost 1.3% and Nasdaq declined only 0.2%.  Upcoming earnings from the likes of Google and Facebook will shed light on how much advertising is cratering.

--U.S. Treasury Yields

6-mo. 0.13%  2-yr. 0.21%  10-yr. 0.60%  30-yr. 1.16%

The yield on the 10-year was a tick from its record weekly close.

--It’s gloom and doom in the energy sector. Fuel demand has tumbled about 30% worldwide due to the pandemic, and then Russia and Saudi Arabia flooded markets with crude.

Monday, prices on the May contract, expiring the next day, suddenly traded as much as $38 per barrel in the red, even as U.S. producers announced broad spending and output cuts.  Physical demand for crude has dried up, creating a global supply glut, and with refiners processing much less crude than normal, hundreds of millions of barrels have gushed into storage facilities worldwide. Traders have hired vessels just to anchor them and fill them with the excess oil.  A record 160 million barrels is sitting in tankers around the world.

With U.S. oil prices trading in negative territory, that means sellers have to pay buyers for the first time ever to take oil futures.  When a futures contract expires, traders must decide whether to take delivery of the oil or roll their positions into another figures contract for a later month. Usually, this process is relatively uncomplicated, but this week there were few counterparties that would buy from investors and take delivery of the oil.

According to energy lawyers Haynes and Boone, approximately half of the 60 top independent U.S. oil producers will likely need to review options for securing more liquidity.

The forecast loan default rate for 2020 among energy companies is 18%, according to Fitch Ratings, while nearly 20% of all energy corporate bonds are trading below 70 cents on the dollar, according to data from MarketAxess.

An April survey of energy producers by the Federal Reserve Bank of Kansas City found nearly 40% would be insolvent within a year if oil prices remained around $30 a barrel.

Oil did rally big on Thursday as major oil-producing nations said they would accelerate planned production cuts to combat the dramatic slump in demand. The market was also higher in part after President Trump instructed the U.S. Navy to fire on any Iranian ships that harass it in the Gulf. The head of Iran’s Revolutionary Guards said Tehran will destroy U.S. warships if its security is threatened in the region.

But the price of West Texas Intermediate at week’s end was $17.18, still down another week.

Baker Hughes, the No. 3 oil-field services company, said it is cutting jobs and reducing capital spending by 20% as it tries to save cash and ride out the storm.  CEO Lorenzo Simonelli said Wednesday the company expects oil-field activity in North America to decline about 50% this year, with the industry’s outlook hinging on the pace of economic recovery amid the coronavirus pandemic and the speed at which crude supplies decline.

“There are now signs that the dramatic collapse in oil demand and the quickly growing threat to global storage capacity could prompt a quicker supply response with production shut-ins in the United States,” Simonelli said, noting that output in the continental U.S. will likely decline over the next 12 to 18 months.

Baker Hughes reported a first-quarter net loss of $10.2 billion, compared with a net income of $32 million in the same period last year. The company said it recorded restructuring, impairment and other charges of about $1.53 billion, mostly related to downsizing of business lines and its head count in certain geographies, but it didn’t provide specifics.  Revenue dropped to $5.4 billion from $5.62 billion.

Baker also announced it is shutting down its full-service drilling and completions fluids business in North America.

Oil-field services companies are expected to reduce their global workforce by 1 million this year, cutting 220,000 jobs in the U.S., according to consulting firm Rystad Energy.

Monday, rival Halliburton said it was cutting jobs, reducing its debt and slashing $1 billion in costs to prepare for a drop in activity for the rest of 2020.  Halliburton gave a bleak outlook for North American oilfields, with revenue dropping 25% in the region, while international revenue rose 5%.

The company also said it was facing logistical problems ranging from border closures and travel restrictions that have prevented the company from accessing certain facilities and sites.  Halliburton also said it would cut capital expenditure for the year to $800 million and reduce overhead and other costs by about $1 billion.

The company has laid off hundreds of staff and furloughed thousands.

Last week, Schlumberger Ltd., the world’s largest oil-field services company, cut its dividend 75% and said it expected North American oil-field activity to decline 40% to 60%.

*Today the weekly Baker Hughes rig count showed the number of oil rigs operating in the U.S. dropped another 60 to 378, the lowest in almost four years.

--Italian oil & gas giant ENI reported it was cutting both its production forecast and capital expenditure budget for 2020, the Rome-based company foreseeing a $2.5 billion reduction, or a 30% plunge, in cap-ex. In 2021, the projection is for an even deeper cut, or 30% to 35%, of the initial capital budget.

--Delta Air Lines Inc. reported its first quarterly loss in over five years, as the pandemic ravaged the travel industry. Passenger volumes have plummeted 95% in the U.S., and airlines expect fears of illness to weigh heavily on travel demand for the foreseeable future.

Delta had posted 10 consecutive years of annual profits and was anticipating another year of buoyant demand in 2020. The airline’s last quarterly loss was in the fourth quarter of 2014.

Delta CEO Ed Bastian said: “These are truly unprecedented times for all of us, including the airline industry. Delta is taking decisive action to prioritize the safety of our employees and customers while protecting our business and bolstering liquidity.”

Delta reported a net loss of $534 million for the first three months of the year, down from a profit of $730 million during the first quarter of 2019.

Preserving cash is a priority.  Delta is aiming to slow the rate at which it is burning through cash from $100 million a day at the end of March to $50 million a day by the end of June. The airline expects too end the second quarter with $10 billion in liquidity, up from $6 billion. Delta said it has raised $5.4 billion since March, including loans and a $1.2 billion deal to sell aircraft and lease them back. The airline also sought government aid to pay workers in the coming months and said it has already received the first $2.7 billion in funds from the Treasury Department, half of what it will receive under that program.  The airline is also eligible for an additional $4.6 billion secured loan from the government.

The airline can’t reduce its workforce in the coming months as a condition of receiving federal aid, but some 35,000 employees have volunteered for unpaid leave.

--United Airlines Holdings Inc. said it expects to report a $2.1 billion pretax loss in the first quarter, as the coronavirus pummeled demand. The airline said it lost about $100 million in revenue a day in the last two weeks of March compared with the previous year, and plans to cancel all but 10% of its flights in May to match severely diminished demand that it says could linger for months.

The $2.1 billion pretax loss is United’s largest since 2008, when airlines were ravaged by the financial crisis. The airline reported revenue of $8 billion during the first quarter, down 17% from a year ago.

United said it has applied to the Treasury Department to borrow as much as $4.5 billion under the stimulus program. Once the terms are finalized, the airline will have until the end of September to decide whether to draw the money.

The loan would be in addition to the roughly $5 billion in grants and loans that United expects to receive under the Treasury’s payroll support program to pay salaries and benefits this summer.

--Discount airline giant Ryanair has angered passengers who had been told refunds for cancelled flights were being processed, but now the airline is pressing them to accept vouchers instead. 

Passengers had applied for refunds, which they are legally entitled to, but then the airline reversed course and included vouchers, saying in an email to passengers, “Over the past months the spread of the Covid-19 virus has caused many EU governments to impose flight and/or travel bans which grounded over 99 percent of Ryanair’s flights.

“We are doing everything we can to support our customers, our people and protect jobs. We are planning to return to flying when Covid-19 is defeated, hopefully sooner rather than later.”

--Target Corp. announced extensions of enhanced team member wages and benefits in recognition of the significant contributions of frontline team members. Target has extended its $2 an hour temporary wage increase until May 30. The company is also continuing to extend access to free, safe and reliable backup care for team members, and a 30-day paid leave for team members who are 65 or older, pregnant or who have underlying medical conditions as defined by the CDC, through the end of May.

CEO Brian Cornell said: “We have deep gratitude for the remarkable effort our team has put into supporting guests around the country. We remain committed to prioritizing our efforts to provide for their well-being so they can take care of themselves and their families during this unprecedented time.”

Target announced that quarter-to-date, total same-store sales have grown more than 7 percent, reflecting a slight decline in stores and more than 100 percent growth in digital channels. Across the Company’s core merchandise categories, comp sales have grown more than 20 percent in Essentials & Beverage, more than 16 percent in Hardlines, increased slightly in Home and declined more than 20 percent in Apparel & Accessories. During the quarter, there have been significant changes in shopping patterns.

Sales weakened significantly in late March and early April in stores, while online sales surged, which is squeezing profits.

Consumers at first flocked to stores to stock up in late February and early March, but traffic slowed considerably and buying shifted online through home delivery, store pickup and other services.

Brian Cornell said: “As expected, as millions sheltered in place, sales trends in stores started to soften. The consumer is listening to direction.”

--Netflix Inc. more than doubled its own projections for new customers as quarantined audiences binged on series such as “Tiger King,” but the company predicted a weaker second half of the year if stay-at-home orders to fight the coronavirus are lifted.  The world’s largest streaming service gained 15.8 million paying customers from January through March, bringing its global total to 182.9 million.  Netflix had predicted it would add 7 million during the period.

The company warned that it expected fewer new subscribers from July to December compared with a year earlier, however. But it did say it would add 7.5 million new customers for the current quarter, which ends in June, though the company said it was “mostly guesswork” given uncertainty over when stay-at-home orders might be lifted. Analysts had expected 3.8 million.

Netflix generated a net income of $709 million in its first quarter, more than double from a year earlier. Revenue rose 28% during the same period to $5.77 billion. The income number was below expectations, while revenues were basically in line with forecasts.

Netflix has been among the few businesses to benefit from government shutdown orders.  The most popular Netflix plan in the U.S. costs $13, nearly double the $7-per-month cost for Disney+. Netflix does not currently plan to raise its prices given the global pandemic, CEO Greg Peters said.

Netflix continues to distribute some of the most talked-about shows, including the docuseries “Tiger King,” which drew 64 million households and unscripted dating show “Love is Blind,” which pulled in 30 million households during its first four weeks.

But if the economic recession deepens, some consumers could view paying for Netflix as a luxury.

During the week of March 16, Americans streamed more than 156 billion minutes of content, up 36% compared with three weeks earlier, according to Nielsen.

--Walt Disney has stopped paying more than 100,000 employees this week as it struggles with coronavirus closures.

Stopping pay for almost half of its workforce will save Disney up to $500m a month, according to the Financial Times.

Disney made operating income of $1.4bn for its parks, experiences and products in the last three months of 2019.

--A report from the National Restaurant Association showed that in a survey of more than 6,500 restaurant operators nationwide from April 10-16, 97 percent say their total dollar sales volume was lower than it was during the same period in 2019, with overall sales down 78 percent on average.

Based on these results, the trade group estimates that the restaurant and foodservice industry will lose more than $50 billion in sales in April.

On average, of the 88 percent of operators who said they laid off or furloughed employees, they cut on average 83 percent of their restaurant’s total staff. 41 percent laid off or furloughed 100 percent of their staff.

Based on these results, the NRA estimates that more than 8 million restaurant employees have been laid off or furloughed since the beginning of the coronavirus outbreak in March. This represents more than two-thirds of the 12 million employees that were working at the nation’s eating and drinking establishments in February.

--IBM reported first-quarter earnings of $1.18 billion, topping Wall Street’s expectations, with the company posting revenue of $17.57 billion, down 3.4% from $18.18 in the same period last year, in part dented by currency movements.

IBM said it was withdrawing full-year earnings guidance, citing the Covid-19 crisis, but would reassess the situation at the end of the current quarter.

The company has been trying to focus increasingly on the booming cloud-computing field while shedding more traditional but less profitable parts of a global business spanning IT service, consulting and hardware.

New CEO Arvind Krishna, who took over for Ginni Rometty on April 6, said, “These are unprecedented times, and this quarter is not the time to declare we have clarity.”

IBM, like most large corporations, has asked almost all of its employees to work remotely during the crisis.

--Intel Corp. reported a jump in first-quarter earnings, aided by sales in its data-center business as the work-from-home economy spurred demand, but at the same time Intel, like virtually everyone else, pulled its full-year guidance because of business uncertainty.

Intel reported sales of $19.83 billion for the March quarter, a 23% increase over the same period last year, while earnings per share rose 51% to $1.31.

The company said its data-center division saw sales increase 43%. Providers of data centers, the huge server farms that store data and power the internet, have been accelerating upgrades, including Intel processors, to meet growing demand.

Sales in the division that includes chips powering personal computers came in ahead of expectations, rising 14%, as we buy more PCs and other devices to work remotely.

But Intel doesn’t know if the data-buying will be sustained through the year, thus the reason for pulling guidance, though it did provide a sales outlook for the current quarter of $18.5 billion that topped expectations.

--The UK is moving to drop Huawei as a vendor for the country’s 5G cellphone network in a major blow to Communist China over its poor coronavirus transparency.

Prime Minister Boris Johnson gave the Chinese company a role in 5G infrastructure this year, squashing opposition last month by 24 votes in the 650-seat House of Commons.

But concerns over the Chinese Communist Party’s inaccurate reporting on the coronavirus has lawmakers crafting plans for a retreat.

--Coca-Cola Co. forecast a significant hit to current-quarter results as restaurants, theaters and other venues that represent about half of the company’s revenue remain closed.  The company said it saw volumes drop about 25% globally since the beginning of April, largely stemming from the loss of sales other than at retail stores.

Several concerts and sporting events, including the company-sponsored Tokyo 2020 Olympics, have been postponed or canceled.  “The ultimate impact on the second quarter and full year 2020 is unknown at this time… However, the impact to the second quarter will be material,” the company said in a statement.

--Tyson Foods reported it is indefinitely suspending operations at its Waterloo, Iowa, pork plant, the company’s largest such facility.

The company said the facility’s 2,800 workers will be invited to come to the plant for Covid-19 testing by week’s end. Earlier three Iowa state lawmakers filed a complaint with the Occupational Safety and Health Administration against the plant after they said employees complained of unsafe working conditions.

Tyson then on Thursday announced it would temporarily halt production at a beef facility in Pasco, Washington.

--With the above in mind, and many other food processing plant closures, it shouldn’t be a surprise that Beyond Meat had its best week ever and is now up about 60% for the month of April.  It helped that Starbucks said on Monday that it would roll out a new plant-based lunch menu in China launching Beyond’s products.

--Domino’s Pizza reported first-quarter results that were bolstered by higher sales and comparable-store sales growth as consumers stay at home. Total revenue rose to $873.1 million from $836 million in the prior-year period, above expectations, ditto earnings.

Domino’s said U.S. comparable-store sales rose 1.6% while they grew 1.5% at international locations, but both of these were down from last year’s pace when U.S. comps accelerated 3.9% and international was up 1.8%.

--The Southern California housing market has seized up. Data released from real estate company Zillow shows the number of deals entering escrow has fallen off a cliff since mid-March. But the number of owners who are listing their house or condo for sale is also much lower so for now prices are holding steady.

But as more homeowners struggle to pay their mortgages, more homes could be forced onto the market.

In the week ended April 19, home buyers in Los Angeles and Orange counties signed sales contracts for nearly 60% fewer homes than the same period last year. Similar declines were seen a week earlier.

--Zoom video conferencing app’s user base grew by another 50% to 300 million in the last three weeks, as the company battles security and safety concerns. German carmaker Daimler was the latest company on Thursday to say it had banned use of Zoom for all corporate content until further notice. Sweden’s Ericcson apparently advised its employees not to use it. Last week I told you governments in Germany, Taiwan and Singapore were among those warning folks on Zoom.

--We note the passing of former Treasury Secretary Paul O’Neill, 84.

O’Neill was in the job less than two years until President George W. Bush fired him in December 2002. His outspoken independence was seen as political disloyalty.

O’Neill, after a career in the corporate world, was accused of being insensitive to Washington realities and of being “politically tone-deaf,” according to David Aufhauser, who worked with O’Neill in the Treasury Department.  “He wasn’t.”

But O’Neill was brutally honest and said President Bush’s tax cuts were ill-advised, though he acknowledged that he had misjudged the influence he could have in the Bush administration. “I thought I knew the players well enough, and that we were like-minded about fact-based policymaking,” he said. “It turned out that was all wrong.”

Foreign Affairs

China: As alluded to above, tensions between the United States and China are growing, and a Pew Research Center poll from a few days ago sums up the growing anti-China sentiment in the U.S., with 66% of Americans now having an unfavorable opinion of the country, and just 26% viewing China favorably.  It’s the highest percentage of unfavorable since Pew began asking the question in 2005.

China’s isn’t helping with its offensive on the disinformation front as its envoys defend their country against accusations it did not act quickly enough to stem the spread of the coronavirus.

The tougher approach on the part of the diplomats has been building for several years under President Xi Jing, who has jettisoned former leader Deng Xiaoping’s approach of hiding China’s ambitions and biding its time. Xi, instead, is urging his envoys to pursue “major-country diplomacy with Chinese characteristics” – a call for China to reassert its historic status as a global power.

State-run newspaper Global Times recently editorialized: “The days when China can be put in a submissive position are long gone.” The Chinese people, it said, “are no longer satisfied with a flaccid diplomatic tone.”

The Associated Press reported that the Chinese ambassador to Sweden recently belittled journalists, “comparing them to a lightweight boxer seeking to go toe-to-toe with heavyweight China. A commentary on the embassy website last month assailed a Swedish reporter for an article on the impact of China’s one-party political system on its virus response.

“Using this epidemic for political purposes, waging ideological attacks and spreading lies in the name of ‘freedom of speech’ will only lead to self-sabotage,” it said.

Sen. Mitt Romney, op-ed, Washington Post:

“America is awakening to China. The Covid-19 pandemic has revealed that, to a great degree, our very health is in Chinese hands; from medicines to masks, we are at Beijing’s mercy. Embarrassed by the revelation of this vulnerability, politicians in Washington will certainly act to remedy our medical dependence – with the usual fanfare and self-congratulation. But China’s stranglehold on pharmaceuticals is only a small sliver of its grand strategy for economic, military and geopolitical domination. The West’s response must extend much further – it will require a unified strategy among free nations to counter China’s trade predation and its corruption of our mutual security.

“In recent years, China has succeeded in disproportionately positioning its citizens and proxies with loyalties to the Chinese Communist Party in key international governing bodies, allowing it to expand its geopolitical influence. China relentlessly badgers and bribes nations to avert their leaders’ eyes from its egregious abuses of Tibetans, Uighurs and other minorities – as well as its targeting of pro-democracy leaders in Hong Kong.  The same methods result in the geopolitical isolation of Taiwan. All the while, China spreads pacifying propaganda throughout the world; even right under our noses, so-called Confucius Institutes peddle pro-China messages in America’s colleges and high schools.

“China’s alarming military build-up is not widely discussed outside classified settings, but Americans should not take comfort in our disproportionately large military budget. The government of President Xi Jinping doesn’t report its actual defense spending. An apples-to-apples analysis demonstrates that China’s annual procurement of military hardware is nearly identical to ours; but because our military has missions around the world, this means that in the Pacific, where China concentrates its firepower, it will have military superiority. No wonder the Philippines and other Pacific nations have cozied up to their powerful neighbor.

“Today, however, Beijing’s weapon of choice is economic: The tip of its spear is global industrial predation. China not only steals technology from other nations, it massively subsidizes industries it determines to have strategic importance. Further, it employs competitive practices that have long been forbidden by developed nations, including bribery, monopoly, currency manipulation and predatory pricing.

“As China ascended in the global marketplace, the West indulged its aberrant industrial policies, hoping it would move toward freedom and adherence to the international rules of commerce. That indulgence exacted a heavy toll. For example, China achieved a breathtaking capture of the global steel market through means that are illegal or impossible elsewhere: pricing far below cost, artificially depressing currency, massive government subsidies and, to be sure, a measure of bribes. Between 2000 and 2009, China more than tripled its global share of steel production, and now it controls more than half of the world’s output – resulting in steel plants shuttered around the globe and the sacrifice of hundreds of thousands of jobs.

“China employs its predatory tools across the economy, from high-tech and national security sectors of nanotechnology, telecommunications and artificial intelligence to basic mining and manufacturing. A Chinese conglomerate recently acquired a dominant Indonesian stainless steel company. Indonesia just happens to be the largest producer of the world’s nickel, an essential ingredient in the production of stainless steel. Suddenly, Indonesia has agreed to shut off nickel exports to any of China’s foreign competitors. Another near-monopoly is born, thanks to anti-competitive tactics.

“When a predator, unbound by the rules followed by its competitors, is allowed to operate in a free market, that market is no longer truly free.

“As a first step, President Trump was right to blow the whistle on Xi and apply tariffs. But we must go a good deal further. We must align our negotiating strategy and policies with other nations that adhere to the global rules of trade. This means narrowing trade disputes with our friends and uniting against China’s untethered abuse. China must understand that it will not have free, unfettered access to any of our economies unless it ceases to employ anti-competitive and predatory practices. It will face a simple choice: Play by the global rules, or face steep economic penalties.

“Further action should be applied in national security sectors such as artificial intelligence, telecommunication and, as we now know, pharmaceuticals. The free nations must collectively agree that we will buy these products only from other free nations. In addition to protecting our security, such an agreement would incentivize our research and industrial institutions to invest in these areas, knowing that they will not be undercut by Chinese predatory practices.

“China has done what we have allowed it to do; to save a few dollars, we have looked the other way. Covid-19 has exposed China’s dishonesty for all to see. And it is a clarion call for America to seize the moment. When the immediate health crisis has passed, the United States should convene like-minded nations to develop a common strategy aimed at dissuading China from pursuing its predatory path.”

Alas, Donald Trump is not the leader we need for this time. Think about how many times he has trashed our European allies, at the very moment we need them the most.

Separately, Secretary of State Mike Pompeo on Wednesday blasted the Chinese Communist Party and the World Health Organization for failing to alert countries worldwide about the coronavirus outbreak and neglecting to report accurate numbers of cases even as the outbreak continued to spread.

“We strongly believe that the Chinese Communist Party did not report the outbreak of the new coronavirus in a timely fashion to the World Health Organization,” Pompeo said during a news briefing at the State Department.

Even after notifying the WHO of the outbreak in the city of Wuhan in December, the ruling Communist Party “didn’t share all of the information that it had and instead covered up how dangerous the disease was. It didn’t report human-to-human transmission for a month until it [the illness] was in every province inside of China.”

Pompeo went on to say that Beijing censored those who tried to “warn the world” and destroyed existing samples of the virus to halt testing.

Pompeo went after the WHO for not following procedures on how countries report public health threats. Those rules also gave the WHO’s director-general the ability to go public when a country failed to follow those guidelines.

“That didn’t happen in this case either,” Pompeo said.

Meanwhile, as expected, the South China Sea is heating up.

Editorial / Wall Street Journal

“With the world preoccupied by the coronavirus pandemic, China has been looking to exert more military control in the South China Sea. This week three warships from the U.S. Seventh Fleet, joined by an Australian frigate, responded by sailing into the disputed waters in a show of force. The danger is that Chinese naval officers misread America’s public mood and think they can embarrass the U.S. without escalation.

“The South China Sea is a critical waterway in the Western Pacific, bordered by Taiwan, Vietnam, Singapore, the Philippines, Indonesia and Brunei. Beijing has long claimed control over it, and during the Obama Administration it moved on its claim by militarizing islands despite international protests.

“This month Vietnam said a Chinese ship deliberately rammed and sunk a Vietnamese fishing boat. Indonesia’s fishermen are also reporting escalating harassment, and in recent weeks Chinese government and militia ships have been tailing Malaysian oil-exploration boats.

“U.S. freedom of navigation exercises are intended to affirm that Beijing cannot unilaterally seize control of the waterway. Some waters of the South China Sea are claimed by multiple neighboring countries, but China is the strongest power in the region and last week it announced its sovereignty over more islands over objections from Vietnam and the Philippines. China wants to assert its dominance, chasing other countries’ commercial maritime traffic out of waters even near their own coasts….

“Another potential flashpoint is Taiwan, which has won deserved international recognition for its handling of the coronavirus. That’s also infuriated China, which has increased military flyovers close to the island.

“U.S.-Chinese tensions are also increasing, as Americans blame China for its deceptions about the coronavirus in an election year. Chinese propagandists have claimed the U.S. may have created the virus….

“Freedom of navigation exercises are important but not enough to secure the Western Pacific from Chinese domination. The U.S. has remained neutral on territorial claims, but it may need to start recognizing claims of countries like Vietnam to make China pay a price for further expansion. The U.S. should also try to maintain its defense pact with the Philippines under mercurial President Rodrigo Duterte.

“China’s recent behavior has badly damaged its claims to be a global stakeholder that plays by the rules. The U.S. is right to make clear that it remains a Pacific power and that the coronavirus hasn’t lessened its resolve.”

Lastly, the Trump administration condemned Hong Kong’s arrests of 15 activists, including veteran politicians, a publishing tycoon and senior lawyers, describing them as “inconsistent” with China’s international commitments.

Secretary Pompeo said, “Beijing and its representatives in Hong Kong continue to take actions inconsistent with commitments made under the Sino-British Joint Declaration that include transparency, the rule of law, and guarantees that Hong Kong will continue to ‘enjoy a high degree of autonomy.’”

Among those detained on charges of illegal assembly were Democratic Party founder Martin Lee, 81, publishing tycoon Jimmy Lai, 71, and former lawmaker Margaret Ng, 72.

Martin Lee wrote an op-ed in the Washington Post, saying in part:

“Our arrests are part of a larger plan.

“In 1984, Chinese leader Deng Xiaoping promised the world that the policy of ‘one country, two systems’ would be applied to Hong Kong for 50 years, with Hong Kong people governing ourselves with a ‘high degree of autonomy.’ Chinese President Xi Jinping’s regime has completely changed this agreement by declaring in 2014 that Communist officials can exercise ‘comprehensive jurisdiction’ in Hong Kong….

“In March, Chinese officials announced the expulsion of journalists working for the New York Times, the Wall Street Journal and The Post. With international media ejected from China, Hong Kong is a final bastion for reporting news the Chinese Communist Party doesn’t want the outside world to learn. But under the Article 23 national security legislation, international publications operating or just distributing in Hong Kong could face prosecution for sedition.

“Article 22 of our Constitution, the Basic Law, states, ‘No department of the Central People’s Government…may interfere in the affairs which the Hong Kong Special Administrative Region administers on its own in accordance with this Law.’ Chinese leaders now claim the Hong Kong and Macao Affairs Office and the Central Liaison Office in Hong Kong are not subject to Article 22, and therefore can interfere in Hong Kong’s affairs without breaching the Basic Law. This absurd argument shows how determined Xi has become to choke off freedoms in Hong Kong.

“Hong Kong people now face two plagues from China: the coronavirus and attacks on our most basic human rights. We can all hope a vaccine is soon developed for the coronavirus. But once Hong Kong’s human rights and rule of law are rolled back, the fatal virus of authoritarian rule will be here to stay.”

North Korea: Last week I chose to write of Kim Jong Un’s absence from the anniversary of the birthday of North Korea’s founding father and Kim’s grandfather, Kim Il Sung, on April 15.

Then Tuesday, CNN reported an unidentified U.S. official as saying the United States was “monitoring intelligence” that Kim was in grave danger after surgery.  Trump’s national security adviser, Robert O’Brien, told Fox News on Tuesday that the White House was monitoring the reports “very closely.”

State media on Wednesday made no mention of Kim’s health or whereabouts, presenting  a business as usual image, carrying routine reporting of Kim’s achievements and publishing some of his older, or undated, comments on issues like the economy.

South Korean and Chinese officials and sources familiar with U.S. intelligence have cast doubt on reports Kim was seriously sick.

President Trump on Thursday at his daily briefing said he did not believe the reports from the likes of CNN and Bloomberg.

Iran: Tehran launched a military satellite this week and the U.S. believes it was overseen by a high-ranking commander involved in past attacks on American targets. Iranian state television reported that the Revolutionary Guards launched Iran’s first such satellite Tuesday. Named “Noor,” it reportedly reached orbit.

The launch was of particular concern to U.S. officials, who have said the rockets used for Iran’s satellites help advance its ballistic-missile program as the technology in the two types of launches is similar.

The next day, President Trump issued his above-noted threat on Iranian vessels harassing the U.S. Navy in the Gulf.

Israel: Kind of out of nowhere, after three elections and a 17-month political stalemate, Prime Minister Benjamin Netanyahu and Blue and White leader Benny Gantz reached agreement on a new coalition government Monday.

Netanyahu, who has served as caretaker prime minister since December 2018, will remain PM for another 18 months and then will be replaced in October 2021 by Gantz, who will serve as vice prime minister in the meantime.  Netanyahu will then be vice prime minister under Gantz after that, but if Netanyahu leaves the Prime Minister’s office sooner, Gantz would take over.

“I promised the State of Israel a national emergency government that will work to save lives and livelihoods of Israeli citizens,” Netanyahu said.

Gantz expressed his relief that an election that would have been held on August 4 if a deal was not reached by May 7 had been averted.

“We prevented a fourth election,” Gantz said. “We will protect our democracy and fight against the coronavirus.”

Among the controversial clauses in the agreement between the two is one that calls for as many as 36 ministers and 16 deputy ministers, split equally between the two sides, each with offices, staff, higher salaries and other perks. At a time when more than one million Israelis currently lack jobs, expanding the size of government doesn’t sit well with the public.

Another aspect of the agreement is that Netanyahu has veto rights over the appointment of a new attorney-general, state’s attorney and police inspector-general, while he faces three criminal indictments.

And both Netanyahu and Gantz will be entitled to an official residence funded by the state during the entire three years, which means that when Netanyahu leaves office in October 2021, presumably his villa in Caesarea will become an all-expenses paid property of Israel, with an entire taxpayer-funded staff serving him, Sara, and their son if he still lives there. They will all be entitled to bodyguards, wherever they go.

Russia: Patrick Tucker / Defense One

“The Kremlin is trying to project an image of competence and power as the pandemic roils the world, and aiming to conceal a darker reality back home: an uneven healthcare system, a vulnerable military, weakening centralized control, and a largely absent authoritarian leader.

“At the end of March, as the United States implemented social-distancing guidelines that put the economy into shock, the Kremlin took the easier route of just giving people the week off: a paid ‘holiday’ that Putin then extended.  But Russia’s infection numbers reached an official 47,121 on Monday [Ed. Now over 68,000], and despite some signs that the growth rate is declining, even Putin concedes that deaths will continue to climb. [Ed. 615 as of Friday.]

“Many Western observers believe the official figures vastly understate the actual problem. ‘The Kremlin is underreporting the extent of the pandemic and using propaganda to make Russia look strong when in fact Russia is on the cusp of health care catastrophe,’ Michael Carpenter, Managing Director of the Penn Biden Center for Diplomacy and Global Engagement, told Defense One via email on April 3…. ‘Fatalities are being classified as comorbidities with no mention of COVID. It’s quite likely that by the end of the month the Russian health care system will be stretched beyond the breaking point, at which point Russia will need medical assistance from the West.’

“In fact, Russia has begun to buy large amounts of protective gear from China. While it scored an early propaganda victory by sending much needed medical supplies to coronavirus-hit Italy and the United States, evidence suggests that the medical supplies it sent to Italy were useless and that the mission served as cover for an intelligence-gathering operation.

“Russian military activity has remained consistent. Russian-backed militia continue to fight in eastern Ukraine while hiding Covid-19 rates among their ranks. Russian jets continue provocative probing maneuvers against U.S. aircraft in the Mediterranean. Russia has also continued to collect intelligence on foreign targets, including U.S. supply lines, according to a recently revealed DHS memo. And on Tuesday, U.S. Northern Command’s Gen. Terrence J. O’Shaughnessy said he expects aggressive Russian behavior to continue….

“Where is Putin in all of this? He has distanced himself from the problem and put the onus of responsibility on local governors and other bureaucrats, (analyst Michael) Kofman said.

“ ‘I think Putin is letting mayors and governors take the political hit for unpopular measures, especially in cases like Moscow, in response to the outbreak,’ he said. ‘Individual mayors or governors will become their own local lightning rods, depending on the scale of the crisis, while national leadership hopes to avoid being blamed for how the situation is being managed.’”

Canada: Due to the pandemic, this story didn’t receive as much attention as it deserved but what an amazing tragedy in Nova Scotia last weekend, as a motive was being sought in Canada’s worst mass shooting, at least 23 dead, including the 51-year-old gunman Gabriel Wortman, who at one point masqueraded as a Royal Canadian Mounted Police officer and disguised his car to look like a police cruiser.  Some of the victims were known to the gunman, others were not as he moved throughout the province. There were at least 16 separate crime scenes, with five burned-down properties and numerous vehicles set on fire.

The carnage began Saturday night and ended in a gunfire exchange Sunday with police about 60 miles from the first location he hit.

Among the dead were a police officer, an elementary school teacher, a nurse, and a waitress.

Wortman operated a denture clinic in Dartmouth, Nova Scotia.

Today, the RCMP said an “argument” with his girlfriend may have set Wortman off.

Random Musings

--Presidential tracking polls….

Gallup: 43% approve of President Trump’s job performance, 54% disapprove; 93% of Republicans approve, 39% of independents (Apr. 1-14).
Rasmussen: 45% approval, 54% disapproval (Apr. 24).

--A new NBC/Wall Street Journal national poll found that President Trump had an approval rating of 46%, disapproval 51%...exactly the same split as one year ago.

His approval number on how he has handled the coronavirus is 44%, similar to 45% in March.

A Reuters/Ipsos poll had 72% of adults in the U.S. saying people should stay at home “until the doctors and public health officials say it is safe.”  That included 88% of Democrats, 55% of Republicans, and seven in 10 independents.

But it also found that 45% of Republicans said stay-at-home orders should be lifted to get the economy going again, up from 24% of Republicans who said the same thing in a similar poll that ran March 30-31.

Trump’s overall job approval in this one is 42% vs. 52% who disapprove.

44% approved of the president’s handling of the coronavirus crisis, and 52% disapproved, which is an 8-point drop in net approval since last week, and a 13-point drop from last month.

--An Associated Press/NORC survey published Thursday found that just 23% of Americans consider President Trump a trustworthy source of information on the virus, while 52% said they trust their state and local leaders.

--The above-noted NBC/Wall Street Journal poll of likely voters also found Joe Biden ahead of President Trump, 49%-42%.

--In a Harvard Institute of Politics poll, Biden holds a 60%-30% lead over President Trump among likely voters ages 18 to 29 years old, only one point below a 62%-31% lead Bernie Sanders would have among young voters if he were the nominee.

But 50% view Biden unfavorably, meaning it’s more about Trump than Biden or Sanders.  So Biden needs to work hard to get these folks out.

In 2016, at this point Hillary Clinton held a 61%-25% lead over Trump among young voters, but ended up with just a 55%-36% advantage on election day, according to exit polls.

--The United Auto Workers union announced Tuesday it is endorsing Biden.

--Biden raked in about $33 million in the first half of March. For the entire month he raised $46.7 million, Federal Election Commission reports show. It was the best fundraising month of Biden’s campaign, but he’s still running up against the Trump juggernaut, which, including the Republican National Committee, raised $63 million in March and had $244 million in the bank as of the beginning of this month.  Biden and the Democratic National Committee collectively had about $57 million in cash on hand, after accounting for the DNC’s $5 million in debts.

--Michael Walsh had an op-ed in the New York Post the other day on Biden’s choice for a running mate. Since he’s committed to selecting a woman, I’ve said Sen. Amy Klobuchar is a layup and fully qualified to be president.

But Walsh touts Michelle Obama and that would indeed be a potential game-changer. She’s not qualified to be prez day one, but she’s good.  Real good.

Walsh:

“Nov. 3: With the black vote and the Bernie Sanders wing of the party solidly behind them, the Biden-Obama(s) team would defeat Trump in both the popular vote and the Electoral College, flipping Pennsylvania, Michigan, Wisconsin, Arizona and North Carolina and winning both houses of Congress.”

Mr. Walsh then says Biden is inaugurated on Jan. 20, 2021, and the next day, Jan. 21, tearfully resigns as he is “unable to discharge the powers and duties of his office,” and that under the 25th Amendment, he’s resigning.  Michelle Obama is president.

Many of us believe that this last part, a President Biden resigning quickly, isn’t far-fetched at all.

--A Wall Street Journal/NBC News poll finds that a majority of voters support changing election law so that everyone can vote by mail.

58% of voters surveyed said they favor changing the election laws permanently to allow voting by mail. While 39% oppose a permanent change, one-quarter of that group says mail-in voting should be allowed this November due to the virus.

When those findings are combined, 67% of voters in the survey say they favor a mail-in voting option for this November.

But while 82% of Democrats back a permanent change, only 31% of Republicans do. 61% of independents favor expanding the option.

--Long Island GOP Rep. Pete King on Wednesday ripped Mitch McConnell as the “Marie Antoinette of the Senate” after the Majority Leader suggested struggling states go bankrupt amid the coronavirus crisis.

Earlier in the day on a radio talk show, McConnell dismissed the idea of more federal aid to states, claiming governors “would love to have free money.”

“McConnell’s dismissive remark that States devastated by Coronavirus should go bankrupt rather than get the federal assistance they need and deserve is shameful and indefensible,” King tweeted.

“To say that it is ‘free money’ to provide funds for cops, firefighters and healthcare workers makes McConnell the Marie Antoinette of the Senate.”

McConnell said on “The Hugh Hewitt Show” that the states bore some responsibility for their debt due to “pension programs” and said bankruptcy should be the first option.

“I would certainly be in favor of allowing states to use the bankruptcy route,” he said. “It’s saved some cities, and there’s no good reason for it not to be available.”

New Jersey Gov. Phil Murphy said his breath was taken away when he read of McConnell’s comments.

“This is the time – in a moment of crisis – unlike any our country has faced in at least a hundred years, to suggest our states go bankrupt?” Murphy questioned.  “Encouraging, engendering, explicitly almost hoping for bankruptcies of American states in the midst of the biggest healthcare crisis this country has ever faced is completely and utterly irresponsible.”

Murphy pledged that New Jersey would not go bankrupt. But he predicted that without federal assistance, all states would be “gutted of the services” particularly those citizens need right now.

“We will just cut, cut, and cut,” said Murphy, directing his comments to McConnell. “We won’t go bankrupt, Senator. But we will leave our citizens in the lurch at their most profound hour of need. We will leave people alone on the beach, hopeless.”

--Speaking of Gov. Murphy, his approval ratings have skyrocketed during the pandemic to the highest he’s seen since becoming governor in January 2018.

A Monmouth University poll released Tuesday found a vast majority of Garden State residents agree with the unprecedented lockdown measures Murphy has instituted to combat Covid-19.

71% of residents approve of the job the Democratic governor is doing – a 30-point increase from September.

The high number is similar to the high grades his Republican predecessor, Gov. Chris Christie, got following Superstorm Sandy.  Christie’s rating grew as high as 73% in a January 2013 poll.

Murphy’s highest previous approval rating was 54% in October 2018, in a Quinnipiac University poll.

Even 45% of Republicans give him high marks, and I’m one of ‘em.

79% of New Jerseyans give Murphy high marks for his handling of the pandemic, specifically.

Actually, a Monmouth poll from earlier in the month has the average approval rating for all 50 U.S. governors in handling the crisis at 72%.

President Trump’s approval rating in my state is 41%, 56% disapproving, up from a 37-55 split in September.

--Kind of interesting how Fox News’ night-time hosts largely stopped promoting hydroxychloroquine.

On Tuesday, a study of 368 Veterans Affairs patients showed that the use of the drug was associated with an increased risk of death. Previously, Dr. Anthony Fauci, the nation’s leading expert on infectious diseases, has urged caution about hydroxychloroquine, noting the potential adverse effect on patients with heart troubles.

Then came the above-noted FDA warning.

New York State has been conducting a larger study and the results of this are supposed to be released sometime next week, but Gov. Cuomo is hinting it really won’t tell us anything.

--As a follow-up to last week’s bits on the coronavirus and the scary potential long-term side effects…Ariana Eunjung Cha /Washington Post:

“Craig Coopersmith was up early that morning as usual and typed his daily inquiry into his phone. ‘Good morning, Team Covid,’ he wrote, asking for updates from the ICU team leaders working across 10 hospitals in the Emory University health system in Atlanta.

“One doctor replied that one of his patients had a strange blood problem. Despite being put on anticoagulants, the patient was still developing clots. A second said she’d seen something similar. And a third. Soon, every person on the text chat had reported the same thing.

“ ‘That’s when we knew we had a huge problem,’ said Coopersmith, a critical-care surgeon.  As he checked with his counterparts at other medical centers, he became increasingly alarmed: ‘It was in as many as 20, 30 or 40 percent of their patients.’

“One month ago when the country went into lockdown to prepare for the first wave of coronavirus cases, many doctors felt confident they knew what they were dealing with.  Based on early reports, Covid-19 appeared to be a standard variety respiratory virus, albeit a contagious and lethal one with no vaccine and no treatment. They’ve since seen how Covid-19 attacks not only the lungs, but also the kidneys, heart, intestines, liver and brain.

“Increasingly, doctors also are reporting bizarre, unsettling cases that don’t seem to follow any of the textbooks they’ve trained on. They describe patients with startlingly low oxygen levels – so low that they would normally be unconscious or near death – talking and swiping on their phones. Asymptomatic pregnant women suddenly in cardiac arrest.  Patients who by all conventional measures seem to have mild disease deteriorating within minutes and dying at home.

“With no clear patterns in terms of age or chronic conditions, some scientists hypothesize that at least some of these abnormalities may be explained by severe changes in patients’ blood.

“The concern is so acute some doctor groups have raised the controversial possibility of giving preventive blood thinners to everyone with Covid-19 – even those well enough to endure their illness at home….

“Autopsies have shown some people’s lungs fill with hundreds of microclots. Errant blood clots of a larger size can break off and travel to the brain or heart, causing a stroke or heart attack. On Saturday, Broadway actor Nick Cordero, 41, had his right leg amputated after being infected with the novel coronavirus and suffering from clots that blocked blood from getting to his toes….

“Harlan Krumholz, a cardiac specialist at the Yale-New Haven Hospital Center, said no one knows whether blood complications are a result of a direct assault on blood vessels, or a hyperactive inflammatory response to the virus by the patient’s immune system.

“ ‘One of the theories is that once the body is so engaged in a fight against an invader, the body starts consuming the clotting factors, which can result in either blood clots or bleeding. In Ebola, the balance was more toward bleeding. In Covid-19, it’s more blood clots,’ he said.”

Lovely.  This is why we wear masks to protect each other, for starters.  You don’t want to catch this!

--At least 83 Metropolitan Transportation Authority (MTA) employees in New York City have died from coronavirus…staggering.  Of the workforce of roughly 71,000, the MTA has confirmed 3,048 cases of Covid-19, of which 2,636 work in the agency’s subway or bus divisions.

--The Arctic Ocean will be ice-free in the summer within the next 30 years, a study says, which will result in “devastating consequences for the Arctic ecosystem,” according to McGill University in Montreal.

The amount of summer sea ice in the Arctic has been steadily shrinking over the past few decades because of global warming. According to the National Oceanic and Atmospheric Administration, the amount of summer sea ice reached its second-smallest level on record in 2019.

Not good for our polar bear friends.

--Finally, last Sunday was the 25th anniversary of the Oklahoma City bombing.  I’ll never forget that day as I was in my hotel room, preparing for a presentation I was giving at a financial planner conference, when I saw the “Breaking News” headline and the sickening scene. Needless to say, I didn’t feel like giving a speech on bond funds hours later.

I’ve been to the OKC National Memorial and Museum twice.  An incredibly moving experience.

Last Sunday, former President Bill Clinton had an opinion piece in The Oklahoman, looking back on that awful day.

“On April 19, 1995, a truck bomb destroyed the Alfred P. Murrah Federal Building in Oklahoma City, claiming 168 innocent lives in what was then the deadliest act of terror in American history. Most of those killed in the attack were public servants who showed up to work that morning, as they did every morning, to do the business of the American people – helping veterans and farmers, supporting the elderly and disabled, and keeping our country safe.  Among them was a Secret Service agent named Al Whicher who had recently left my protective detail for Oklahoma City because he and his wife thought it would be such a wonderful community to raise their three children. Like Al, all those who died had real lives, stories, families and friends. Nineteen of the victims were small children in the building’s day care center as their parents worked.

“This act of unimaginable cruelty broke our hearts but brought out the very best of America. First responders, doctors and nurses, and construction workers from across the country put their own lives on hold to aid in the recovery. Donations poured in from individuals and organizations of all kinds. Schoolchildren sent drawings, cards, teddy bears and pennies. We grieved as one American family for those who lost their lives and their loved ones, the many who were wounded, and everyone whose life changed forever that day.

“When Hillary and I attended the memorial service four days after the bombing, I tried to speak for all of us in saying to the people of Oklahoma City: ‘You have lost too much, but you have not lost everything. And you have certainly not lost America, for we will stand with you for as many tomorrows as it takes.’ The American people kept that promise – but what we couldn’t have known then was just how much more the people of Oklahoma City would give back to America in return.

“In the weeks, months, and years since the bombing, the people of Oklahoma City have shown courage and commitment in building a future worthy of those who were lost. They have dedicated a stirring memorial and museum, rebuilt their downtown, and revitalized their riverfront. Most important, they have refused to allow an evil act to poison their own hearts, responding instead with what has come to be known as the Oklahoma Standard: a commitment to serving those in need, honoring those lost and damaged by the bombing, and treating all with neighborly kindness.

“After 25 years, this lesson from Oklahoma City is as important as ever, as America is facing another unprecedented challenge. Covid-19 has claimed the lives of people we know and love, upended millions of livelihoods, and forced all of us to change the ways we interact with one another – including, for the first time, preventing the Oklahoma City community from coming together in person for the anniversary of the bombing.

“There are difficult and uncertain days ahead. In many ways, this is the perfect time to remember Oklahoma City, and to repeat the promise we made to them in 1995 to all Americans today: we have not lost each other, we have not lost America, and we will stand together for as many tomorrows as it takes.

“In recent weeks and months, we’ve seen so many people rise to the challenges of the moment: the first responders, and the doctors, nurses, and hospital staff working around the clock to save lives, often by risking their own; the warehouse workers, grocery store and pharmacy employees, drivers, delivery people, and mail carriers who are making it possible for all of us to keep going; the teachers who are still on the job and keeping our children learning, even though schools are closed; the volunteers who provide, prepare, and deliver food to people young, old, and in between who would go hungry without their service.

“The rest of us must take care of all these workers who are taking care of us, and our families and loved ones, however we can. We all can follow the advice of health officials, staying home as much as we can and keeping our distance to slow the spread of the virus. Within our means, we can find creative and safe ways to support those in need, and when so many are hurting and afraid, we can reach out to one another with love, compassion and empathy. If we all do what we can, we’ll be out of this emergency sooner, and the life we return to will be better and kinder than before.” 

---

Pray for the men and women of our armed forces…and all the fallen.

We pray for our healthcare workers and first responders.

God bless America.

---

Gold $1745
Oil $17.18

Returns for the week 4/20-4/24

Dow Jones  -1.9%  [23775]
S&P 500  -1.3%  [2836]
S&P MidCap  -0.7%
Russell 2000  0.3%
Nasdaq  -0.2%  [8634]

Returns for the period 1/1/20-4/24/20

Dow Jones  -16.7%
S&P 500  -12.2%
S&P MidCap  -24.9%
Russell 2000  -26.1%
Nasdaq  -3.8%

Bulls 40.9…new figures not available…
Bears 32.4

Hang in there. Wash your hands.

Brian Trumbore

---