Week in Review

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Week in Review

05/09/2020

For the week 5/4-5/8

[Posted 10:30 PM ET]

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Edition 1,099

Covid-19 Death Toll….

World 275,972
United States 78,611
UK 31,241
Italy 30,201
Spain 26,299
France 26,230

The good news is that the daily numbers are looking much better in Italy, Spain and France as they look to slowly open up.

But the last four days in the UK have seen 693, 649, 539 and 626 deaths.

There’s also a rapidly unfolding catastrophe in Brazil, now No. 6 with 9,992 deaths, including its four highest daily death tallies Tuesday through Friday.

Russia is another, with six consecutive days of 10,000 or more new cases, even as they are said to be significantly underreporting their numbers.

As for the United States, we have encouraging trends in New York and New Jersey, while numbers pick up elsewhere. 

So we have the health story, which remains dire in much of the world, and a global recession that has hit us like a ton of bricks and could yet evolve into a Depression.  There is a ton of pain in the world and we all need to work together.  It’s not a time for every nation for themselves.

Which brings me to the U.S. jobs report.  After another 3.2 million Americans applied for unemployment benefits last week, per the jobless claims report on Thursday, bringing the total in less than two months to 33.5 million, today, according to the Labor Department, 20.5 million lost their jobs in April, the unemployment rate hitting 14.7%.

The market actually rallied on the news, which was absurd, because the 14.7% was less than expected, even as the Labor Dept. said the real rate was likely 5 points higher, which is what we can expect to see with the May report, the survey for which is conducted next week.  U6, the underemployment rate, was a record high 22.8%.

The 20.5 million figure was the worst since record-keeping started in 1939, and the unemployment rate is the highest since the Great Depression.

Leisure and hospitality was hit especially hard, with payrolls falling by 7.7 million, while employers in education and health services cut 2.5 million positions, and retailers 2.1 million.

But those who wanted to find something positive in the jobs report pointed to 18 million of the 20.5m saying they were temporarily unemployed, that, in effect, as soon as the economy opened back up they would get their old jobs back.

Oh, were it that easy.  The pandemic will force major changes to businesses, starting with limiting the numbers allowed in a restaurant or a bar, or any retail establishment.  And the longer such restrictions remain in place, the greater the chance a business won’t survive.

I have company specific job carnage below and, for example, management at United Airlines that is losing their jobs is not likely to find something as good.  The only businesses with job growth these days are warehouse clubs, superstores and supercenters, or Amazon, i.e., companies like Walmart and Costco.  Delivery services are also adding workers, including FedEx and UPS, as well as the U.S. Postal Service.  You get the picture.  Work is good…all work…but where is that UAL executive ending up?

Aside from segments such as the above, there isn’t a single corporate CEO, around the world, talking of new capital spending, which was what juiced the economy in the second half of 2017 and 2018.

But don’t look to Donald Trump for sympathy.  Appearing on Fox News this morning, Trump shrugged off the 20.5 million jobs lost as “totally expected” and “no surprise.”

“Even the Democrats aren’t blaming me for that.  What I can do is I can bring it back.”

Sorry, Mr. President, not for a very long, long time…years and years and years.

The unemployment rate among black workers is suddenly 16.7%, the highest since 2010, and among Hispanics it’s a record 18.9%.  [A record-setting 14.2% for white workers.]

And now the coronavirus has hit the West Wing, with two positives popping up Thursday and Friday, one a personal valet to President Trump, the other, Katie Miller, a spokeswoman for Vice President Pence who is also Trump adviser Stephen Miller’s wife. 

So the West Wing is infected, as was inevitable, with everyone crammed into a small space, not wearing masks, until now…though don’t expect the president to don one, he being such a vain, small man.

Covid Bytes

--In New York and New Jersey, at least two children, ages 4 and 5, have died of a deadly illness associated with Covid-19 that has symptoms similar to Kawasaki disease and toxic shock-like syndrome.  It is known as pediatric multi-symptom inflammatory syndrome.

Other child deaths are now being investigated.

--Lawmakers and public health experts are raising alarms about the widespread embrace of blood tests to gauge whether somebody was previously exposed to the coronavirus.

The blood tests have been heralded by state and federal leaders who hope these so-called antibody tests can help guide decisions about when and how to reopen the country by identifying who has been exposed to the virus and may now have immunity even if they have never been diagnosed.

But in the rush to get the tests to the public quickly, the Food and Drug Administration has allowed companies to market tests with little to no oversight, raising the potential for a surge in inaccurate results.

False positives could mislead people into thinking they have already been infected when they have not.

A recent report by the House Oversight and Reform Committee found that the FDA allowed a flood of antibody tests on the market without review, resulting in hundreds of flawed tests that are still available for purchase.

--In a three-day survey of patients hospitalized in New York with the virus this week, shockingly, two-thirds were admitted from their homes, a statistic that defies social-distancing logic, Gov. Andrew Cuomo said Wednesday.

--The United Food and Commercial Workers International Union said today it opposed the reopening of meatpacking plants as the Trump administration had failed to guarantee workers’ safety.  At least 30 workers have died of the coronavirus and more than 10,000 have contracted it, said the UFCW, which represents more than 250,000 meatpacking and food processing workers.

Earlier, the U.S. Agriculture Department said 14 of 30 plants that had closed due to outbreaks of the virus were in the process of reopening.

--California’s government faces a $54.3-billin budget deficit through next summer according to an analysis released Thursday by advisors to Gov. Gavin Newsom, which raises the possibility of deep spending cuts or substantial new tax revenues to make up the difference, an issue faced in so many states, especially in the Northeast.

This afternoon, the White House halted talks with Congress over any further coronavirus stimulus package as it awaits the impact U.S. state reopenings have on the economy this month, per White House economic adviser Larry Kudlow.

So folks like Gavin Newsom and New York Gov. Andrew Cuomo can forget about new funding for their massive budget gaps, which will result in layoffs at the worst possible time.

Trump World

--A day after President Trump said the White House coronavirus task force was going to be disbanded, the next day he said it would continue its work, but refocusing on vaccines and therapeutics.

--Dr. Anthony Fauci was prohibited by the president from appearing before the Democratic-led House, but will be allowed to testify before the Republican-controlled Senate next week.

Trump told reporters, “The House is a set up.  The House is a bunch of Trump haters.  They put every Trump hater on the committee.  The House should be ashamed of themselves and, frankly, the Democrats should be ashamed because they don’t want us to succeed. They want us to fail so they can win an election, which they’re not going to win.”

--President Trump on Wednesday described the coronavirus pandemic as the worst attack the U.S. has ever endured, calling it worse than Pearl Harbor or 9/11.

“We went through the worst attack we’ve ever had in our country,” the president said.  “This is really the worst attack we’ve ever had.  This is worse than Pearl Harbor.  This is worse than the World Trade Center. There’s never been an attack like this,” he continued.

Trump suggested to reporters in the Oval Office that the nation would need to accept more deaths in the process.

“We have to be warriors.  We can’t keep our country closed down for years and we have to do something.”

--Under sustained pressure from President Trump, the Justice Department took the highly unusual step of dropping its prosecution of former national security adviser Michael Flynn on Thursday.  It was greeted as a triumph by Trump and his allies, while opponents saw the move as an attack on the rule of law.

Trump – who forced out Flynn in early 2017 after Flynn admitted to lying about his interactions with the Russian ambassador to the United States – showered Flynn with praise Thursday, calling him “an innocent man.”

Trump told reporters, “Things are falling out now and coming in line showing what a hoax this whole investigation was.  It was a total disgrace, and I wouldn’t be surprised if you see a lot of things happen over the next number of weeks.  This is just one piece of a very dishonest puzzle.”

Attorney General William Barr, in an interview on CBS News Thursday evening, said, “A crime cannot be established here. They did not have a basis for the counterintelligence investigation against Flynn at that stage.”

There are plans in the works for Flynn to come to the White House in the coming weeks and this case will be used by the Trump team extensively in the presidential campaign.

Congressional Democrats said they were appalled by Barr’s decision.

Sen. Richard Blumenthal (Conn.), a member of the Judiciary Committee and a former U.S. attorney and state attorney general, said in an interview, “With no legitimate prosecutorial basis, they’ve simply thrown away a conviction.  It’s sad and outrageous for the justice system to be used in this way, for naked political ends and a coverup – and they’re obviously exploiting the pandemic as a means to distract from this.”

David Ignatius / Washington Post

“With the Justice Department’s move Thursday to drop its case against former national security adviser Michael Flynn, it’s useful to go back to a basic question: If Flynn did nothing wrong when he called the Russian ambassador on Dec. 29, 2016, the day President Barack Obama imposed sanctions on Russia for interfering in the presidential election, why did he conceal it?

“One issue from the beginning was whether Flynn’s call to Ambassador Sergey Kislyak violated the Logan Act, which bars private U.S. citizens from trying to influence another country about ‘disputes’ with the United States. But that was always a somewhat shaky legal argument.  As I noted in my Jan. 12, 2017, column, which first disclosed Flynn’s call, the Logan Act has never been criminally enforced.

“I wrote on Feb. 11, two days before he resigned: ‘Michael Flynn’s real problem isn’t the Logan Act, an obscure and probably unenforceable 1799 statute that bars private meddling in foreign policy disputes.  It’s whether President Trump’s national security adviser sought to hide from his colleagues and the nation a pre-inauguration discussion with the Russian government about sanctions that the Obama administration was imposing.’….

“There was always a deeper problem, one that still isn’t resolved. Why was the Trump administration so eager to blunt the punishment Obama gave to Russia for what we now know was gross interference in our presidential election?  In his Dec. 29 expulsion of 35 Russian diplomats, Obama was trying to impose costs on an adversary. The evidence shows that Flynn wanted to reassure this same adversary and to avoid confrontation.

“How do we know that was Flynn’s intention? Because he said so in his Nov. 30, 2017, guilty plea admitting he had made false statements about his conversations with Kislyak.  The ‘statement of the offense’ that accompanied the agreement states that on Dec. 29, 2016, after discussions with another transition team official, Flynn ‘called the Russian Ambassador and requested that Russia not escalate the situation and only respond to the U.S. Sanctions in a reciprocal manner.’

“Was Flynn improperly tricked in his Jan. 24, 2017, interview with the FBI into misstating what he had told Kislyak?  If so, why did he resign and later plead guilty?

“In Flynn’s Feb. 13, 2017, resignation letter, he admitted that he had made misleading statements to Vice President Pence about the Kislyak call.  Here’s how he put it: ‘Because of the fast pace of events, I inadvertently briefed the Vice President Elect and others with incomplete information regarding phone calls with the Russian ambassador.’ That’s not the FBI talking, it’s Flynn.  And the question, again, is why he misstated the facts….

“The intelligence community had first disclosed Russia’s meddling on Oct. 7, 2016, in a statement that charged that ‘Russia’s senior-most officials’ had conducted a cyberattack ‘intended to interfere with the U.S. election process.’

“That initial damning assessment was amplified in a Jan. 6, 2017, report, in which the intelligence community said Russia had tried to ‘denigrate’ the Democratic candidate, Hillary Clinton, and ‘harm her electability and potential presidency’ and that Moscow had a ‘clear preference’ for Trump.

“The Senate Intelligence Committee, led by a Republican, spent the past three years investigating whether our spy chiefs’ finding was correct.  Its judgment: ‘The committee found no reason to dispute the intelligence community’s conclusions.’

“We know the FBI made some serious mistakes in the Russia investigation.  The misstatements and omissions by FBI officials in their applications for surveillance of Trump campaign aide Carter Page were egregious. The recent disclosures about how they prepared to question Flynn in 2017 should trouble anyone who worries about abuse of power by federal investigators seeking damning information from a suspect.

“But none of that addresses the fundamental question that got this story rolling in the first place: Why was the incoming national security adviser telling the Kremlin’s man in Washington not to worry about the expulsion of 35 of his spies, because when the new administration took office, ‘we’ll review everything’?

“That was the wrong message to be sending in December 2016. And with the accumulation of evidence since then about the scope of Russian subversion, it’s even more troubling.”

--Hydroxychloroquine, the malaria drug trumpeted by the president, offered no obvious benefits to hospitalized patients diagnosed with Covid-19, according to a new study published in the New England Journal of Medicine.

The study, released Thursday, examined nearly 1,400 patients with coronavirus symptoms who were taken to emergency rooms in two New York City hospitals.

Nearly 60% of the patients administered hydroxychloroquine within 48 hours were found to be more severely ill than those who weren’t given the drug, researchers claimed.

“We don’t think at this point, given the totality of evidence, that it is reasonable to routinely give this drug to patients,” said Columbia University pulmonary specialist Dr. Neil Schluger.  “We don’t see the rationale for doing that.”

--Trump tweets:

“The Do Nothing Democrats and their leader, the Fake News Lamestream Media, are doing everything possible to hurt and disparage our Country.  No matter what we do or say, no matter how big a win, they report that it was a loss, or not good enough. The Enemy of the People!”

“A group of RINO Republicans who failed badly 12 years ago, then again 8 years go, and then got BADLY beaten by me, a political first timer, 4 years ago, have copied (no imagination) the concept of an ad from Ronald Reagan, ‘Morning in America,’ doing everything possible to [Ed. not completed]…

“…because they don’t know how to win, and their so-called Lincoln Project is a disgrace to Honest Abe.  I don’t know what Kellyanne did to her deranged loser of a husband, Moonface, but it must have been really bad.  John Weaver lost big for Kasich (to me).  Crazed Rick Wilson…

“…lost for Evan ‘McMuffin’ McMullin (to me).  Steve Schmidt & Reed Galvin lost for John McCain, Romney’s campaign manager (?) lost big to ‘O’, & Jennifer Horn got thrown out of the New Hampshire Republican Party. They’re all LOSERS, but Abe Lincoln, Republican, is all smiles!”

“Most of the money raised by the RINO losers of the co-called ‘Lincoln Project,’ goes into their own pockets.  With what I’ve done on Judges, Taxes, Regulations, Healthcare, the Military, Vets (Choice!), & protecting our great 2A, they should love Trump.  Problem is, I BEAT THEM ALL!”

Wall Street

In a private call with clients, BlackRock Inc. CEO Larry Fink had a stark message.  As bad as things seem for corporate America today, they’re likely to get worse.

As reported by Bloomberg: “Mass bankruptcies, empty planes, cautious consumers and an increase in the corporate tax rate to as high as 29% were part of a vision Fink sketched out on a call this week. The message from the leader of the world’s biggest asset manager contrasts with the ebullient tones of a stock market that has snapped back from recent lows.”

Fink said the U.S. will have to raise taxes to pay for emergency efforts to rescue sectors grappling with a difficult recovery, he warned on the call.

And politicians, business leaders and economists are beginning to confront the risks of a limited federal response that might speed up the demise of smaller companies and wreck state and municipal finances that pay for schools, law enforcement and infrastructure.

Fink also said he was concerned the worsening economic duress could further fan the flames of nationalism.  The devastating impact from the coronavirus could make it a bigger threat to the global order, he said.

On the economic data front, aside from today’s jobs report, the ISM non-manufacturing reading for April came in at 41.8 (50 the dividing line between growth and contraction), better than forecast, but down from 52.5 in March, the steepest decline on record and the first contraction since Dec. 2009.

March factory orders plunged 10.3% over February; -2.8% year-on-year.

Add it all up and the Atlanta Fed’s GDPNow barometer for the second quarter is forecasting, get this, a -34.9% annualized rate of growth.

Separately, the Treasury Department said it will need to borrow a record $2.99 trillion during the current April-June quarter to cover the cost of various rescue efforts dealing with the coronavirus pandemic, this figure far surpassing the $530 billion quarterly borrowing of Q3 2008 during the financial crisis.

Treasury said the huge sum is needed to fund the nearly $3 trillion the government has approved in various programs to support workers and businesses with direct economic payments. 

For the fiscal year, ending Sept. 30, the government expects to borrow a record $4.5 trillion, compared with $1.28 trillion last year.

The Congressional Budget Office is forecasting that the government will run a record budget deficit of $3.7 trillion this year.

Editorial / The Economist

“Stock market history is packed with drama: the 1929 crash; Black Monday in 1987, when share prices lost 20% in one day; the dotcom mania in 1999.  With such precedents, nothing should come as a surprise, but the past eight weeks have been remarkable, nonetheless.  A gut-wrenching sell-off in shares has been followed by a delirious rally in America.  Between February 19th and March 23rd, the S&P 500 index lost a third of its value.  With barely a pause it has since rocketed, recovering more than half its loss. The catalyst was news that the Federal Reserve would buy corporate bonds, helping big firms finance their debts.  Investors shifted from panic to optimism without missing a beat.

“This rosy view from Wall Street should make you uneasy.  It contrasts with markets elsewhere. Shares in Britain and continental Europe, for example, have recovered more sluggishly.  And it is a world away from life on Main Street.  Even as the lockdown eases in America, the blow to jobs has been savage, with unemployment rising from 4% to about 16%*, the highest rate since records began in 1948.  While big firms’ shares soar and they get help from the Fed, small businesses are struggling to get cash from Uncle Sam.

*Editorial written Thursday, prior to jobs report.

“Wounds from the financial crisis of 2007-09 are being reopened.  ‘This is the second time we’ve bailed their asses out,’ grumbled Joe Biden, the Democratic presidential candidate, last month.  The battle over who pays for the fiscal burdens of the pandemic is just beginning.  On the present trajectory, a backlash against big business is likely.

“Start with events in the markets.  Much of the improved mood is because of the Fed, which has acted more dramatically than other central banks, buying up assets on an unimagined scale…. The market of new issues of corporate bonds, which froze in February, has reopened in spectacular style.  Companies have issued $560bn of bonds in the past six weeks, double the normal level.  Even beached cruise-line firms have been able to raise cash, albeit at a high price.  A cascade of bankruptcies at big firms has been forestalled.  The central bank has, in effect, backstopped the cashflow of America Inc.  The stock market has taken the hint and climbed….

“American shares are now higher than they were in August.  This would seem to imply that commerce and the broader economy can get back to business as usual.  There are countless threats to such a prospect, but three stand out.

“The first is the risk of an aftershock.  It is entirely possible that there will be a second wave of infections. And there are also the consequences of a steep recession to contend with – American GDP is expected to drop by about 10% in the second quarter compared with a year earlier.  Many individual bosses hope that ruthless cost-cutting can help protect their margins and pay down the debts accumulated through the furlough.  But in aggregate this corporate austerity will depress demand.  The likely outcome is a 90% economy, running far below normal levels.

“A second hazard to reckon with is fraud. Extended booms tend to encourage shifty behavior, and the expansion before the Covid crash was the longest on record….Already there have been two notable scandals in Asia in recent weeks, at Luckin Coffee, a Chinese Starbucks wannabe, and Hin Leong, a Singaporean energy trader that has been hiding giant losses.  A big fraud or corporate collapse in America could rock the markets’ confidence, much as the demise of Enron shredded investors’ nerves in 2001 and Lehman Brothers led the stock market down in 2008.

“The most overlooked risk is of a political backlash.  The slump will hurt smaller firms and leave the bigger corporate survivors in a stronger position, increasing the concentration of some industries that was already a problem before the pandemic. A crisis demands sacrifice and will leave behind a big bill.  The clamor for payback will only grow louder if big business has hogged more than its share of the subsidies on offer….

“For now, equity investors judge that the Fed has their back.  But the mood of the markets can shift suddenly, as an extraordinary couple of months has proved.  A one-month bear market scarcely seems enough time to absorb all the possible bad news from the pandemic and the huge uncertainty it has created. This stock market drama has a few more acts yet.”

Meanwhile, trade tensions with China ratcheted up anew as President Trump threatened to levy new tariffs on Chinese goods because of how Beijing handled the coronavirus.

“Look, I’m having a very hard time with China,” Trump said in his Fox & Friends interview this morning.  “I made a great trade deal months before this whole thing happened. And it was kicking in, you know, a month ago and starting to kick in and starting to produce and then this happens and it sort of overrides so much.”

But U.S. and Chinese officials did have a positive phone call among the country’s top trade negotiators, Chinese Vice Premier Liu He, and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.  They pledged to create favorable conditions for implementation of the bilateral trade deal and cooperate on the economy and public health, according to a statement from the Chinese Ministry of Commerce.

Lighthizer’s office said: “Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success.  In spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.”

It was the first time Liu and Lighthizer had spoken since the agreement was signed in January.

Europe and Asia

The European Commission released projections on Wednesday that Europe’s economy will shrink by 7.4% this year, the deepest in the European Union’s history.  The 27-nation bloc had been predicted to grow by 1.2% this year, prior to the outbreak.  In 2009, at the back of the global financial crisis, the EU shrank by 4.5%.

Italy and Spain will see their economies shrink by more than 9% each; Germany 6.5%, and France 8.5%, according to the EC.

The Bank of England is forecasting the UK economy will plunge 25% in the second quarter.

As expected, the PMI #s for the eurozone were godawful…generally the worst on record.

The final eurozone composite index for April in the EA19 was 13.6 vs. 29.7 in March.  Manufacturing was 33.4 vs. 44.5.  The services reading was 12.0 vs. 26.4 the prior month.

Germany 34.5 mfg., 16.2 services
France 31.5 mfg., 10.2 services
Italy 31.3 mfg., 10.8 services
Spain 30.8 mfg., 7.1! services
Ireland 36.0 mfg., 13.9 services

Others…

Netherlands 41.3 mfg.
Greece 29.5 mfg.

UK 32.6 mfg., 13.4 services

Chris Williamson / IHS Markit

“The extent of the euro area economic downturn was laid bare by record downturns in every country surveyed in April, with output falling at unprecedented rates across the region’s manufacturing and services sectors.

“With a large part of the region’s economy shut down while Covid-19 infections spiked higher, the economic data for April were inevitably going to be bad, but the scale of the decline is still shocking. The survey data are indicative of GDP falling at a quarterly rate of around 7.5%, far surpassing the worst decline seen in the global financial crisis.  Jobs are being lost at a rate never previously seen.

“Hopefully, with coronavirus curves flattening and governments making moves to ease lockdown restrictions, many sectors should start to see output and demand pick up. The process will be only very gradual, however, as governments juggle between reviving economies and preventing a second wave of infections.  Most companies will inevitably need to work at levels well below full capacity and sectors such as retail, travel, tourism and recreation – already the hardest hit – will continue to be badly affected by social distancing.

“While the rate of decline may ease in coming months, we do not expect to see any material signs of recovery until the second half of the year, and it is likely to be several years before the output lost due to the virus outbreak is fully regained.”

Separately, March retail trade in the euro area was down 11.2% compared with February.  Year-over-year, retail sales decreased by 9.2%.

One more…British new car sales fell by an annual 97% in April to the lowest level since Feb. 1946 as factories and dealerships shut due to the outbreak.

Brexit: Nothing new on this front.

Turning to Asia…China exports unexpectedly rose in April, 3.5% year-on-year, after declines of 6.6% in March and 17.2% for Jan. and Feb. combined.  But imports fell more than expected, 14.2%, after a -0.9% decline in March.

The Caixin/Markit service sector reading for April came in at 44.4 vs. 43.0 in March, the third straight month of contraction.  Reminder, the service sector is now 60% of China’s economy.

In Japan, the PMIs for April were 41.9 manufacturing, and just 21.5 for the service sector.

Household spending in Japan in March fell 6.0% year-on-year.

Other April PMI figures:

South Korea 41.6 mfg.
Taiwan 42.2 mfg.

Street Bytes

--After small losses the last two weeks in the major averages, stocks resumed their rally off the March lows, the Dow Jones adding 2.6% to 24331, while the S&P 500 gained 3.5% and Nasdaq 6%.  Nasdaq is now up 1.7% for the year.  Remarkable.

--U.S. Treasury Yields

6-mo. 0.13%  2-yr. 0.15%  10-yr. 0.68%  30-yr. 1.38%

Despite the godawful jobs numbers, bonds sold off with money moving back into the stock market, the yield on the 30-year rising from 1.25% to 1.38%.

--Oil prices rallied again this week to $24.63 on West Texas Intermediate following news that China’s exports unexpectedly rose last month and a sharp increase in Saudi Arabia’s crude oil official selling price.  U.S. output cuts and the slow return of activity in Europe lent further support.

U.S. gasoline stocks fell for a second week as some U.S. states eased lockdowns that had sharply reduced traffic volumes.

But you still have a mismatch between demand and supply.  U.S. crude inventories were up for a 15th straight week, rising by 4.6 million barrels, the Energy Information Administration said on Wednesday, less than expected, but it still shows how much supply is being stored.

OPEC agreed to cut production from May 1, by around 10 million barrels per day to help support prices, while China bucked the global demand trend as its imports climbed to 10.42 million bpd in April from 9.68 million in March.

Lastly, the number of oil rigs operating in the U.S. dropped to the lowest level in more than 10 years, down another 33 to 292 in the week through Friday, the lowest since the week ended Sept. 11, 2009, according to data compiled by Baker Hughes. A year earlier, the U.S. had 805 oil rigs in operation.

To avoid huge job losses in the energy sector, which have already started, crude needs to get back to at least $40 and that’s just not happening anytime soon.

--Fiat Chrysler on Tuesday reported a first-quarter net loss of $1.84 billion due to a steep decline in car sales triggered by the pandemic.  The impact on the second-quarter will be even more severe.

Revenues fell 16% as global shipments slumped 21% to 818,000, with production suspended in all regions and global demand collapsing.

The Italian-American carmaker has withdrawn full-year earnings forecasts due to the volatility of the economic crisis provoked by the virus.  Fiat said an internal stress-test indicates it could survive a 50% reduction in volumes by slashing costs and cash burn.

The company said it still intends to complete its merger with French carmaker PSA Peugeot by the end of the year or early 2021.

Most of Fiat Chrysler’s plants in Europe will be reopened between late May and early July.  It aims to start reopening U.S. factories May 19, depending on the easing of government restrictions.

The company was encouraged by the initial activity in China after its reopening.

--Walt Disney Co. reported that the coronavirus crisis cost the company as much as $1.4 billion in lost profit for the first quarter, with $1 billion coming from shuttered theme parks alone, and nearly every part of the business taking a hit.

Earnings plunged, with net income falling 91% to $475 million, though revenue rose 21% to $18 billion, which was driven by the acquisition of 21st Century Fox’s entertainment assets last year.

It’s only going to get worse.  Disney has already lost more than a full month of parks business and cruises in the current quarter, along with the shutdown of movie theaters and the loss of live sports on its flagship ESPN cable networks.  [Newly cost-conscious consumers are canceling their cable service in larger numbers.] Analysts predict the company will lose hundreds of millions of dollars this period, with revenue in free fall.

Disney has taken a variety of steps to cut costs, including furloughs (100,000 of its 223,000 employees), while the company said it will forgo its July dividend payment, saving about $1.6 billion, and cut capital spending by $900 million.

Disney at least offered some near-term hope for the theme-park business, saying its resort in Shanghai will reopen on May 11.  It will be with “controlled capacity,” temperature checks and everyone wearing masks.  This will be a crucial test of how all the parks eventually reopen.

But the company’s dominance in theme parks and movies is hurting it badly this year.  An ad slump and the blackout of live sports have also hurt.  But Disney+, its streaming service launched in November, is a bright spot.  It now has 54 million subscribers, far more than originally projected.

The outbreak came just as Disney was transitioning to new leadership, with Bob Iger stepping aside from the chief executive role in late February to make way for his successor, Bob Chapek, who previously ran the parks and resorts empire.

“The challenges we’re now facing are unprecedented,” Iger said on a call with analysts.  However, he added, “I have absolute confidence in our ability to get through this challenging period.”

--United Airlines Holdings Inc. plans to cut at least 3,400 management and administrative positions in October, and has told pilots to brace for changes as well, according to two internal memos.

United and other major U.S. airlines accepted U.S. government payroll aid that bans job or pay cuts before Sept. 30.  However, after that date, with demand unlikely to recover to pre-crisis levels by that date, there will be massive layoffs.  The United pilots union has been told to prepare for “displacement” that will affect roughly 30% of 12,250 pilots.

--British airline Virgin Atlantic announced it was cutting 3,150 jobs.  CEO Shai Weiss said in a statement:  “We have weathered many storms since our first flight 36 years ago, but none has been as devastating as Covid-19…now is the time for further action to reduce our costs, preserve cash and to protect as many jobs as possible.

“It is crucial that we return to profitability in 2021.  This will mean taking steps to reshape and resize Virgin Atlantic in line with demand.”

Virgin Atlantic is based in Britain and 51% owned by Richard Branson’s Virgin Group and 49% owned by Delta Air Lines.

--Israeli flag carrier El Al Airlines said on Thursday it was extending the unpaid leave for 6,000 workers until June 30, a day after it said a suspension of scheduled passenger flights would remain in effect until at least May 30.  El Al said the eventual return of workers would be gradual, depending on commercial demand as well as the company receiving necessary loans.

--General Electric Co. is cutting roughly 13,000 jobs in its jet engine business as part of its plan to cut 25% of its global aviation workforce in coming months.  The unit makes engines for Boeing and Airbus, both of which have cut production as airlines ground hundreds of planes.

--Warren Buffett announced Saturday at his Berkshire Hathaway Inc. annual meeting that Berkshire had sold its entire stakes in the four largest U.S. airlines in April, saying “the world has changed” for the aviation industry.

The conglomerate had held sizeable positions in the airlines, including an 11% stake in Delta, 10% of American Airlines, 10% of Southwest and 9% of United at the end of 2019.  Berkshire had begun investing in the four carriers in 2016 after avoiding the sector for years.

Buffett said Berkshire had invested around $7 billion or $8 billion amassing stakes in the four airlines.  “We did not take out anything like $7 or $8 billion and that was my mistake.  I am the one who made the decision.”

Buffett’s decision to place a big bet on the airlines in 2016 was a huge one for him. He had never liked the airlines, writing in his 2007 annual letter, “If a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.  Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it.”

Buffett also said Berkshire could have layoffs at its manufacturing businesses and that its giant GEICO insurance unit could be hurt if its policyholders are involved in crashes with a growing number of uninsured drivers, who collectively are involved in a disproportionately large number of crashes.

Buffett said Berkshire hasn’t provided financial support to companies as it did during the 2008 financial crisis because “we don’t see anything that attractive,” adding Berkshire has provided money to a few of its struggling operating businesses, but won’t do so indefinitely.

After taking questions in a largely empty arena in Omaha, Neb., Buffett vowed to “fill this place” for the 2021 Berkshire annual meeting.

--Social-distancing regulations on airplanes could drastically jack up the price of tickets when air travel slowly restarts, according to the International Air Transport Association.

Flyers could see anywhere between a 43% and 54% fare increase when compared to rates last year if airlines are required to keep their middle seats empty, according to the industry association representing 290 airlines.

“Airlines are fighting for their survival. Eliminating the middle seat will raise costs,” Alexandre de Juniac, the IATA’s CEO said in a statement.

“If that can be offset with higher fares, the era of affordable travel will come to an end.  On the other hand, if airlines can’t recoup the costs in higher fares, airlines will go bust.”

The measures would reduce the maximum plane capacity to 62%, far below the “average industry breakeven load factor” of 77%, according to the association.

For trips in North America, the average 2019 ticket price would increase from $202 to $289, a 43% climb.

The IATA is instead recommending a package of policies to reduce the spread of the virus during air travel without impacting capacity.

Along with calling for mandatory face coverings for crew and passengers, the group recommends temperature screenings for passengers and workers, overhauling boarding and deplaning processes to reduce contact and restricting movement within the cabin during flights.

--Norwegian Cruise Line Holdings Ltd., the world’s third-largest cruise operator, warned of a cash crunch and raised doubts about its ability to keep running its business, making it the first in the sector to signal it may succumb to the coronavirus crisis.

--Uber Technologies Inc. will cut about 3,700 full-time jobs and CEO Dara Khosrowshahi will forgo his base salary for the remainder of the year, the company said on Wednesday.  The layoffs affect 17% of its employee count.

Last week rival Lyft laid off 982 employees, or 17% of its workforce, and cut base salaries of top executives in addition to furloughing hundreds of employees.

Thursday, Uber reported a loss of $2.9 billion for the first quarter, but said it saw encouraging signs in markets hit by the epidemic as it posted a 14% rise in revenue growth, supported by its Uber Eats food-delivery business.

The loss includes a $2.1 billion pretax writedown of the value of some of Uber’s minority investments.

--Pfizer began testing multiple versions of an experimental coronavirus vaccine in healthy young people in the United States this week, a first step toward establishing the safety, dosage and most promising candidate to take into larger trials that will test effectiveness.

In an unusual trial design, Pfizer is initially testing four versions of the vaccine, side by side, evidence of the urgency.  Normally, companies spend years on animal experiments and select a single promising candidate for human testing.

“The pandemic came upon us, fast and furious, and we didn’t have a lot of time to do years of research,” said Kathrin Jansen, head of vaccine research and development at Pfizer.

Jansen said the goal is to have a vaccine ready for use in high-risk groups by the fall – which is the timeline from a group at the University of Oxford in the UK.

--Moderna Inc. sped up plans for its experimental Covid-19 vaccine on Thursday and said it expected to start a late-stage trial in early summer.  The company said it would start a mid-stage trial for the vaccine shortly and CEO Stephane Bancel said there is potential for a marketing application approval for a vaccine in 2021.

--A bankruptcy judge gave J. Crew Group Inc. permission to borrow more than $100 million under a Chapter 11 loan provided by a group of creditors led by hedge fund Anchorage Capital Group LLC.

The judge overruled objections from a rival lender to fees the Anchorage-led group is charging for providing a loan of up to $400 million to carry the retailer through its planned restructuring.

J. Crew filed for Chapter 11 protection Monday with a proposed deal in hand with the Anchorage-led group to swap more than $1.6 billion in debt for all of the reorganized company’s equity.

The company has struggled for years with slumping sales and a heavy debt load from a leveraged buyout by private-equity firms.  It had six consecutive years of losses before the coronavirus pandemic prompted it to close stores.

Suppliers are going to fare badly in the proposed restructuring plan, with their unpaid bills paid out at 50 cents on the dollar.

--Neiman Marcus Group filed for bankruptcy; no surprise with its crushing debt load.  But like J. Crew it will survive, I’m guessing, however, not without major pain in the workforce. 

I’m dying (bad choice of words) to get back into The Mall at Short Hills down the road from me when it reopens to see if Neiman Marcus, the other anchors (Nordstrom, Macy’s, Bloomingdale’s) and the many high-end brands survived.

--L Brands Inc. and Sycamore Partners have agreed to scrap their plans to take Victoria’s Secret private.  Instead, L Brands said it wanted to focus on navigating the crisis rather than litigation to force Sycamore into their partnership.

L Brands said Monday it plans significant cost reductions at Victoria’s Secret, while it also plans to spin off its fast-growing Bath & Body Works division into a separate publicly traded company.

--There are strong rumors tonight that J.C. Penney is the next to declare Chapter 11.

--Several FedEx Corp. workers at the company’s Newark, N.J., air hub have died due to complications of the coronavirus, a sign of the toll that the outbreak is taking on front-line delivery workers.

FedEx declined to comment on the number of cases and fatalities in the facility at the Newark Liberty International Airport.

Given New Jersey’s sickeningly large outbreak, the above is hardly surprising, but reports put the toll at at least five employees at the facility.

--At least 48 employees at an Amazon fulfillment center in Edison, N.J., have contracted the coronavirus, and that was as of a week ago.

Ergo, my fellow New Jerseyans, be careful with your packages, as you should be with all Amazon packages around the country, and the world.

--Home rental startup Airbnb Inc. is planning to lay off 1,900 employees, 25% of its workforce, due to the impact of the pandemic.  The employees will receive a four-month pay package, accelerated equity vesting and health insurance for a year.

--Statistics Canada estimated that about a third of the workforce was either out of work, or working less than half of their usual hours, its unemployment rate rising to 13.0%.  Ireland reported its jobless rate soared to 28.2% in April.

--Hong Kong’s economy experienced its worst performance on record, slumping 8.9 percent in the first quarter of the year.

The Financial Secretary warned that Hong Kong was heading for its worst recession ever as he downgraded his full-year GDP forecast to a contraction of anywhere between 4 and 7 percent.

Hong Kong has suffered only four fatalities, doing a phenomenal job at keeping the virus at bay, but it was at a high cost to an economy already suffering from a lack of tourism due to the protests.

--Prior to the crisis, at chains such as McDonald’s, the drive-through accounted for as much as 70 percent of revenue, and during the pandemic, sales have mostly held steady.  In March, drive-throughs generated $8.3 billion across the fast-food industry, an increase from $8 billion in sales over the same period in 2019, according to data from the NPD Group, a market research firm.

But while the drive-through has shielded some fast-food companies from the worst economic effects of the pandemic, it has also become a dangerous place for some low-wage workers, who cook and serve food in cramped conditions, often without access to protective equipment.

--New York Times Co. reported its biggest quarterly increase in digital subscriptions ever, which allowed it to report an overall revenue increase of 1% to $443.6 million, despite a steep slide in advertising that is expected to accelerate in the second quarter.

The Times said it added 587,000 net new digital subscriptions in the first quarter, compared with an increase of 342,000 in the prior one.  The company is looking for continued strong growth in the current quarter.

But overall advertising revenue declined 15% to $106.1 million.

Net profit was $32.9 million, up 8.9%.

As of the end of April, the Times had more than 6 million total subscribers including digital and print, with more than 5 million digital subscribers in total, more than 4 million of which were for its core news offering.

--Sinclair Broadcast Group, a conservative media outlet that is a vocal proponent of President Trump and his policies, was fined $48 million by the Federal Communications Commission, the largest ever levied against a broadcaster in the commission’s history, after a series of investigations of the company and its thwarted attempt to acquire Tribune Media.

Sinclair, in an attempt to be the new Fox News, attempted to buy Tribune, which would have created the nation’s largest owner of broadcast stations and minted a new national conservative voice.   The new company would have reached seven in 10 American households if the deal had  gone through.

Three years ago, the merger seemed to be a done deal but Tribune was eventually sold to another TV broadcast group, Nexstar Communications, in December 2018 for about $6.4 billion, creating the largest local broadcast company in the nation.

The issue then became Sinclair’s hardball tactics, revealed by Tribune in a lawsuit after the merger plan fell through.  At the same time, facing opposition from the Justice Department, the F.C.C. told Sinclair it would need to sell off stations in at least 10 markets to obtain approval, but the company refused, “deciding instead to antagonize D.O.J. officials,” the suit read.

--NBCUniversal announced a sweeping corporate reorganization Monday that includes the departure of NBC News Chairman Andy Lack, as the network attempts to reboot after years of controversies.

Lack was slated to retire at the end of 2020, with NBC News President Noah Oppenheim stepping up as his successor.  But instead, NBCUniversal Chief Executive Jeff Shell has selected Cesar Conde – chairman of Telemundo and the company’s international business – to head a newly formed NBCUniversal news Group.

The new division will put NBC News, MSNBC and CNBC under the same roof.

The New York Post reported that a New York state investigation into alleged sexual misconduct and cover-ups at NBC News began around the time that “Today” show host Matt Lauder was fired in 2017, with the investigation reportedly revolving around Andy Lack.

According to the Daily Mail, about a dozen people have been interviewed, including former NBC anchor Linda Vester, who said she was questioned in January about her 2018 claim that Tom Brokaw twice tried to forcibly kiss her during the 1990s.

“They wanted to know as many details as I could offer about what Andy Lack’s involvement was in orchestrating a public response against me and a defense or cover-up.  He was one of many,” Vester told the Mail.

At the time Lauer was fired, Lack said it was for unspecified “inappropriate workplace conduct” that the network had learned about just two days earlier.

Foreign Affairs

China: Secretary of State Mike Pompeo renewed his aggressive criticism of China, blaming it for the hundreds of thousands of deaths from the coronavirus and demanding again that it share information about the outbreak.

“They knew. China could have prevented the deaths of hundreds of thousands of people worldwide.  China could have spared the world descent into global economic malaise,” Pompeo told a State Department news conference on Wednesday.  “China is still refusing to share the information we need to keep people safe.”

Pompeo has said there is significant evidence the virus came from a laboratory in Wuhan, and not a wet market as most experts believe.

Critics of Pompeo and the Trump administration say that while China has much to answer for in terms of its actions in the early days of the outbreak, the administration is seeking to deflect attention from what they see as a slow U.S. response.

Pompeo has said there was “a significant amount of evidence” the virus emerged from the Wuhan Institute of Virology, but then he’s also said the United States did not have certainty, while claiming his statements have been “entirely consistent.”

China has said the virus did not originate at the lab.  Dr. Anthony Fauci said in an interview published on Monday that the best evidence showed the virus was not made in a lab, but appeared to have “evolved in nature and then jumped species.”

Trump was asked last week if he had seen evidence that gave him a “high degree of confidence” that the virus came from the Wuhan lab, and replied that he had seen evidence that gave him a “high degree of confidence,” but then he’s declined to give specifics since.

China’s ambassador to the United States, Cui Tiankai, in an op-ed in the Washington Post, said “blaming China will not end this pandemic.”  “It is time to end the blame game. It is time to focus on the disease and rebuild trust between our two countries,” he said.

Last weekend, Chinese state media unleashed a torrent of criticism against Pompeo – calling him “evil” and a liar.  Newscaster Li Zimeng said, “If the cheating behaviors from evil politicians like Pompeo continue, the U.S.’s ‘Make America Great Again’ could become merely a joke.”

But state media steered clear of directly attacking President Trump.  Trump in turn has not criticized Xi Jinping directly.

Meanwhile, a bombshell 15-page research document from the “Five Eyes” intelligence alliance (the U.S., UK, Australia, New Zealand and Canada) claims China lied to the world about human-to-human transmission of the virus, disappeared whistleblowers and refused to hand over virus samples so the West could make a vaccine.

The report called China’s shady handling of the virus “an assault on international transparency.”

Editorial / Wall Street Journal

“The evidence is clear that the Chinese Communist Party covered up for weeks the extent of the coronavirus outbreak in Wuhan, but what we don’t know is why. One emerging theory is that the virus originated in a Wuhan lab. Beijing denies it, but the world deserves a full accounting of what China knew and when.

“President Trump and Secretary of State Mike Pompeo have both said in recent days that they’ve seen evidence the coronavirus did come from a Wuhan lab.  Mr. Trump said it appears to be an accidental release.  If they don’t want the issue to be dismissed as an anti-China campaign ploy, they should make the evidence public.

“Scientists think the virus was carried naturally in horseshoe bats and jumped to humans for the first time in Wuhan late last year.  The question is: Under what circumstances did that happen?  It could have happened at the city’s wet market, though that theory is complicated by a changing timeline and the fact that the bats don’t appear to have been sold there.

“It could also have jumped from bats to another animal like a pangolin before infecting a person, or patient zero could have encountered a bat in the wild.  The ‘lab theory’ isn’t that it was a bioweapon gone wrong.  It’s that a lab worker was inadvertently infected at the Wuhan Institute of Virology (WIV) or Centers for Disease Prevention and Control, both of which are located near the first reported cases….

“The Washington Post reported last month on 2018 State Department cables sounding the alarm about safety failures.  WIV researchers themselves wrote in a 2019 article that ‘laboratory biosafety personnel training is relatively lacking,’ according to the geopolitical consultancy Horizon Advisory.

“Beijing reportedly ordered that other labs destroy test samples in the early weeks of the outbreak.  And the WHO says China has declined to cooperate with an independent probe into the virus’ origins.  When Australia proposed an independent investigation, Chinese officials threatened diplomatic and economic reprisals.

“Asked what evidence he’d seen that the virus came from the lab, Mr. Trump said ‘I can’t tell you that.’  Perhaps the U.S. intercepted communications or other information that is more conclusive.  But Beijing rolled up much of the American spy network in China during the Obama years, and the Administration has revealed nothing that isn’t in the public record.

“The world has a responsibility to help prevent the next pandemic by understanding how this one started.  China’s cover-up is cause for suspicion, and Messrs. Trump and Pompeo are right to press the question.  But until they produce the evidence they’re alluding to, the Wuhan lab theory will remain just that.”

Separately, Beijing has ramped up its attacks against the anti-government protest movement in Hong Kong, warning it will not allow the “political virus” of violence to turn the city into an independent entity.

A spokesman for the cabinet-level Hong Kong and Macau Affairs Office, in its sixth such statement since April, on Wednesday urged all people and institutions that exercise public powers in the city to put a stop to violence, adding that, unless they did so, Hong Kong would never be peaceful.

“The forces orchestrating the black violence want to resist the central government’s comprehensive jurisdiction over Hong Kong and turn the city into an independent or semi-independent political entity at the cost of destroying Hong Kong,” the spokesman said, adding that the central government would not “sit idly by with these recklessly demented forces.”

“Black violence and the ‘if we burn, you burn with us’ mentality are a political virus in Hong Kong and a big enemy of the ‘one country, two systems’ formula,” he said.

Lastly, Washington has accelerated its push for Taiwan to be represented at the World Health Organization in a move that further deepens the rift with Beijing.

The U.S. has promoted the island’s “incredible expertise” in battling the disease and rallied its allies – including Japan, Canada, Australia and the European Union – to support Taiwan’s participation in the global health body.

Beijing has warned that any official role for Taiwan at the WHO would violate China’s sovereignty and territorial integrity.

The decision-making body of the WHO will hold a two-day meeting on the pandemic through teleconference later this month.  Taipei wants to attend but said it has yet to receive an invitation.  It won’t get one.

North Korea: It was last Friday that Kim Jong-un suddenly reappeared, attending the completion of a fertilizer plant he had first opened three months earlier, which was suspicious.  And there are still stories he was using a body double, which he has been known to use in the past.

But South Korea is reporting there are no signs Kim had heart surgery.  Yonhap news agency reported Wednesday that he disappeared from state media for three weeks and reduced his public activity due to coronavirus concerns.

Yonhap said Seoul’s National Intelligence Service met with members of the parliamentary intelligence committee calling reports of heart surgery “groundless.”

North Korea has still not confirmed it has Covid-19 cases, but the country had been taking stringent steps to head off an outbreak, according to South Korean officials.

Iraq: Parliament chose an American-backed former intelligence chief as the new prime minister early Thursday morning, giving the country its first real government in more than five months as it confronts an array of potentially crippling crises.

Mustafa al-Kadhimi, 53, who has a reputation for pragmatism, was also seen as an acceptable choice to Iran, the other major foreign power competing for influence in Iraq.

Al-Kadhimi is Iraq’s first real prime minister since the last one resigned in November in the face of anti-government protests.

He has already promised to take a new approach to the social unrest, meeting protesters and consulting with them rather than the previous government’s confrontational approach.

But now it’s about the pandemic and historically low oil and gas revenues, the government’s main source of income.

Plus you have the simmering tensions between the U.S. and Iran playing out on Iraqi soil.

Syria: Sanctions-hit Syrian tycoon Tami Makhlouf said that security forces were arresting employees at his companies in what he said was “mounting pressure” on him days after Syrian authorities asked him to pay hefty taxes.

Maklouf, a maternal cousin of President Bashar al-Assad and widely considered part of the president’s inner circle, has a business empire that ranges from telecoms and real estate to construction and oil trading.  He played a big role in financing Assad’s war effort, Western officials have said.

Maklouf has been under U.S. sanctions since 2008 for what Washington calls public corruption and it has since toughened measures against those associated with him.

Israel: The High Court of Justice green-lighted Prime Minister Benjamin Netanyahu to form the next government as well as controversial aspects of the Blue and White-Likud coalition deal. 

Despite misgivings about the “grave charges pending” in the bribery indictment against Netanyahu and aspects of the coalition arrangement, the justices voted unanimously that they could not intervene.

Ultimately, the justices said there was a two-part test to giving Netanyahu the green light.

First, they said he was not automatically disqualified by law since the Knesset law only automatically disqualifies a prime minister who was convicted and exhausted his appeals.

Second, they said the court could still review the discretion of any appointment.

The issue then became who appoints the prime minister, and the justices ruled that the Knesset is the body that appoints the prime minister and that they must give heavy deference to such an inherently political decision.

The Knesset then passed into law all the bills required for the formation of the government on Thursday by a large majority, thus giving Israel its first fully functioning government for the first time since December 2018.

Libya: The United States said it does not support the offensive of Libya’s eastern-based military leader Khalifa Haftar against the capital Tripoli, with the U.S. State Department adding that Washington found Haftar’s establishing ties with Syrian President Assad “troubling.”

U.S. Special envoy for Syria Jim Jeffrey also said that Russia was working with Assad to transfer militia fighters, possibly from a third country as well as Syrians, and equipment to Libya.

Russia: Three Russian doctors have fallen from hospital windows in two weeks, amid reports of dire conditions in the hospitals battling the pandemic.  Two died, one is in critical condition.

The three were all critics of the public health authorities; the medical community under siege with a shortage of doctors and nurses, as well as a lack of PPE.

Many have taken to social media, some professionals quitting, because they weren’t even provided appropriate masks.

As of Wednesday, at least 108 health-care workers had died of the coronavirus in Russia.

Vladimir Putin had promised health-care workers bonus pay but none has been forthcoming.  Putin’s approval rating has fallen to 59%, its lowest level in more than two decades, per a survey from the Levada-Center on Wednesday.

Venezuela: According to a document published by the Washington Post, members of Venezuela’s opposition in October negotiated a $213 million deal with a small Florida security company to invade the country and overthrow President Nicolas Maduro.

Venezuelan authorities this week arrested more than a dozen people, including Americans who work for the company, Silvercorp USA, as part of a bungled incursion that has served as a public relations victory for Maduro’s struggling government.

The two captured Americans appeared on state television on Wednesday and Thursday, saying they had been tasked by Silvercorp with taking control of the airport in Caracas in order to fly out Maduro.  Both will be tried in Venezuela’s civilian courts, Maduro said.

The document deals a blow to the credibility of opposition leader Juan Guaido, who has vehemently denied any links to Silvercorp or involvement in the attempt to remove Maduro by force.

The 42-page document offers minute tactical details, but no explanation for how a small group of commandos could overpower hundreds of thousands of security forces who remain loyal to the ruling Socialist Party.

Today, President Trump, in an interview with Fox News, reiterated, “I know nothing about it.  I think the government has nothing to do with it at all, and I have to find out what happened.”

“If we ever did anything with Venezuela, it wouldn’t be that way.  It would be slightly different.  It would be called an invasion.”

East Africa: Already dealing with Covid-19 and a locust invasion, flooding from heavy rains has killed at least 200 people across Kenya, washing away 8,000 acres of crops and some vital infrastructure.  In Uganda, Lake Victoria has reached unprecedented levels.

Random Musing

--Presidential tracking polls….

Gallup: 49% approval of President Trump’s job performance, 47% disapproval; 93% of Republicans approve, 47% of independents (Apr. 14-28).
Rasmussen: 49% approve, 49% disapprove (May 8).

--After former Vice President Joe Biden denied an allegation of sexual assault against him, a Monmouth University poll found Americans are split on whether they believe the presumptive Democratic nominee or the woman who accused him. 

86% of registered voters had heard about the assault allegation, and asked in the survey whether they thought the allegation was probably true or not, 37% said it was probably true, 32% said it was probably not true and 31% replied they had no opinion on the matter.  More Democrats believed Biden, more Republicans believe accuser Tara Reade.

But in the Monmouth survey, Biden still leads with voters against President Trump, 50% of registered voters to 41% for Trump, while 3% said they would back an independent candidate and 5% were undecided.

A Reuters/Ipsos poll conducted earlier this week found that Biden’s edge over Trump was just two points, 43%-41%.  This survey did not include a question on Reade’s allegation.

For her part, since last ‘WIR,’ Reade said the 1993 complaint she filed against Biden did not include any explicit accusations of sexual assault.

The Associated Press reported that its notes from its interview last year with Reade show she said she “chickened out” after visiting the Senate Personnel Office.  In the interview, Reade spoke about Biden making her uncomfortable and inappropriate touching, but did not allege sexual assault.

Tara Reade is a fraud.  If I am proved to be wrong, I’ll say so.

Maureen Dowd had a fascinating take from her perch at the New York Times last Sunday.  It went both ways, including:

“When liberals heralded the idea that all women must be believed, it made me wince.  Al Franken was pressured to pack up without a hearing, given a push by Kirsten Gillibrand, who told The New Yorker’s Jane Mayer that while she had not talked to any of her colleague’s accusers: ‘The women who came forward felt it was sexual harassment.  So it was.’”

Ms. Dowd also stated;

“To suggest that every woman who alleges a sexual assault is as credible as the next is absurd.  The idea that no woman can ever be wrong just hurts women.  Half the human race is female.  Who has never been lied to by people of both genders?  Who has never seen the mesmerizing female psychopaths of film noir?”

Dowd adds:

“I’ve covered Biden my entire political career, and he is known for being sometimes warmly, sometimes inappropriately, hands-on with men and women.  What Reade accuses him of is a crime and seems completely out of character.”

Yes, I have selectively cherrypicked from Dowd’s column.  As I said last week, I do not believe Tara Reade’s story.

But Thursday, in an interview with Megyn Kelly, Reade recounted the alleged assault and urged Biden to “please step forward and be held accountable.”

She added: “You should not be running on character for the president of the United States.”

--A federal court judge has ordered New York Democrats to reinstate the presidential primary election for June 23 after one-time candidate Andrew Yang challenged its cancellation.

Judge Analisa Torres in her decision ruled that the New York Board of Elections’ decision to cancel the vote was unconstitutional and that all qualified candidates as of April 26 must be on the ballot.

--According to a Washington Post-University of Maryland poll, Americans clearly oppose the reopening of restaurants, retail stores and other businesses, even as governors begin to lift restrictions that have kept the economy locked down in an effort to combat the pandemic.

56 percent of Americans have been making trips to grocery stores and say they are comfortable doing so.  But 67 percent say they would be uncomfortable shopping at a retail clothing store, and 78 percent would be uncomfortable eating at a sit-down restaurant.  People in states with looser restrictions report similar levels of discomfort as those in states with stricter rules.

President Trump continues to receive negative marks for his response to the outbreak, with 44 percent positive and 56 percent negative, in line with where he was two weeks ago.  But nearly 8 in 10 Republicans rate the president positively, and only 2 in 10 Democrats do so.

Governors earn positive marks from 75 percent of Americans.  Dr. Anthony Fauci has a positive rating of 74 percent.

The most significant opposition is to reopening movie theaters, with 82 percent of Americans saying they should not be allowed to open up in their state.  There is also broad opposition to reopening gyms (78 percent opposed), dine-in restaurants and nail salons (both with 74 percent opposed).

69 percent are opposed to barbershops and hair salons reopening.  59 percent are opposed to reopening golf courses.

--Separately, a Quinnipiac University poll of the hard-hit tri-state region, New York, New Jersey and Connecticut, found that seven out of 10 residents in the region said their state should focus on limiting the impact of the pandemic by keeping residents home, even at the expense of damaging the economy.

About seven in 10 said they would be uncomfortable going to restaurants or bars if restrictions were lifted in the coming weeks, and more than 80% said they wouldn’t be comfortable at a large sporting event.

--The Supreme Court has thrown out the conviction of two people involved in New Jersey’s “Bridgegate” scandal.

The court said in a unanimous decision Thursday that the government had overreached in prosecuting Bridget Kelly and Bill Baroni for their roles in creating a massive traffic jam to punish a New Jersey mayor who refused to endorse the reelection of then-Republican Gov. Chris Christie.

Kelly and Baroni were convicted of fraud and conspiracy for scheming in 2013 to change the traffic flow onto the George Washington Bridge between New York City and New Jersey to artificially create gridlock in New Jersey’s Fort Lee.

--According to a CDC study, a higher percentage of older people required hospitalization during the early stages of the coronavirus pandemic compared to the early part of the previous five flu seasons.  Among adults 85 and older, between about 2 to 6 people per 100,000 required hospitalization for flu, while more than 17 people per 100,000 required hospitalization for coronavirus.

--Steve G. reported from Cancun, Mexico, where he’s been holed up for a while, that all beer was pulled from store shelves because the government thinks it will cut down on the “local macho husbands who are abusing their wives.”  Yet you can still buy all the hard liquor you want.  Go figure.

--Michelle and Barack Obama announced that they will deliver speeches at a handful of virtual graduations this spring to celebrate the millions of American students stuck at home because of the pandemic.

The former president will kick off the commencement circuit with an afternoon speech at a virtual graduation event for historically black colleges and universities on May 16.

That same evening, Obama will deliver another speech addressed to all U.S. high school graduates as part of a virtual hourlong event that will also feature LeBron James, Lady Gaga, Ben Platt and Malala Yousafzai, among other celebrities.  The speech will be carried live on all major networks at 8 p.m. Eastern Time.

Both Obamas will then wrap up their graduation tour by delivering speeches at a June 6 virtual event addressed to all 2020 graduates in the country.

You just know President Trump hates this.

--It was sickening that security guard Calvin Munerlyn, a father of nine, was gunned down after turning a customer away for trying to enter a Family Dollar store in Michigan without a mask, according to authorities.

Three suspects were charged in the murder.

From Meredith Spelbring of the Detroit Free Press:

“Officials said Sharmel Teague and her daughter went to the Family Dollar in Flint, Michigan, Friday afternoon.  Security footage shows Munerlyn and Teague got into a verbal altercation after he told the woman her daughter needed a face mask to enter the store.  Teague yelled and spit at Munerlyn, who asked her to leave the store and instructed a cashier not to serve her.

“Under Gov. Gretchen Whitmer’s executive order, everyone must wear a mask in all enclosed public spaces…If customers refuse to comply, businesses can turn them away.

“The security footage shows the two driving off in a red GMC Envoy.

“The same vehicle returned about 20 minutes later…Two suspects, Larry Teague, Sharmel’s husband, and Ramonyea Bishop, her son, entered the store.  Teague confronted the security guard about disrespecting his wife, and Bishop fatally shot him in the back of the head.”

Last I saw, both suspects remained at large, while Sharmel Teague is in custody.  Here’s hoping police track down the other two and dispatch with them quickly. 

--The father-son duo caught on camera sparking the confrontation that led to the shooting death of unarmed black jogger Ahmaud Arbery were charged with murder on Thursday.

Gregory McMichael, 64, and Travis McMichael, 34, both armed, approached Arbery on Feb. 23 on a street in Brunswick, Georgia before Travis fatally shot the jogger, according to the Georgia Bureau of Investigation.

The case sparked national attention this week when video of the confrontation emerged.

It’s pathetic it took this long for the state to get it right.

--After ripping Vice President Mike Pence last week for not wearing a mask in his visit to the Mayo Clinic, it’s only fair I note that on Sunday as part of the Fox News town hall with President Trump, Pence acknowledged “I should have worn a mask at the Mayo Clinic.”

But then yesterday, Pence was seen delivering masks to some charity and wasn’t wearing one again.

--But to end on a better note, sort of, we had former President George W. Bush.

Damon Linker / The Week

“If you’re like me, you were a severe critic of Bush during his presidency.  You disliked the irresponsible tax cuts for the upper class that turned a budget surplus under his predecessor into a deficit.  You rolled your eyes when he relied on his ‘gut’ in dealing with foreign leaders.  You were angered by his effort to privatize Social Security… And most of all, you were furious that he made an unforced world-historical error in toppling the government of Iraq and destabilizing the Middle East for much of the next two decades.

“Yet here we are, more than 11 years since he left office, and more than three years into the appalling presidency of Donald Trump, and Bush no longer seems quite so bad.  Some of this is a function of the contrast with Trump.  Instead of trying to eliminate the health insurance relied upon by millions, Bush oversaw the expansion of Medicare to cover prescription drugs.  Instead of stoking xenophobia, attempting to shut down immigration, and imposing a travel ban on people from majority-Muslim countries, Bush consistently favored a more liberal immigration policy and took a stand against anti-Muslim bigotry after the 9/11 attacks.  Instead of striving to put ‘America first’ in all things and failing to take public-health issues seriously, Bush spearheaded an effort to fight AIDS in Africa – an initiative that was an enormous (and largely unheralded) humanitarian and geopolitical success.

“The bright spots in Bush’s record aren’t enough to get me to overlook all the things that made me dislike him when he was in office.  But the 3-minute video Bush released on Saturday points to something that I thoroughly took for granted during his presidency (and during every other presidency in my lifetime).  It’s a quality I’ve come to appreciate, admire, and miss terribly through the civic desert of the Trump administration: the capacity of a president to rise above partisanship to speak from and to the nation as a whole….

“It’s not just that the video is rhetorically and visually effective, with the former president speaking movingly (over images of medical workers and ordinary Americans wearing masks) about ‘how small our differences are’ and how ‘in the final analysis, we are not partisan combatants.  We are human beings, equally vulnerable and equally wonderful in the sight of God.’  Those and other lines in the video stir us because that’s how presidents, in their capacity as heads of state, are supposed to talk. They don’t speak as political actors out to vanquish ideological enemies.  They speak as if they reside in a civic space shared by all political actors, on every side of every conflict that divides the polity.  They seek to elevate themselves above the political fray and communicate to each and every one of us first and foremost as Americans.

“Achieving this exalted position is often a challenge for presidents – precisely because they are expected to fulfill two roles at once, one political and one extra-political….

“This is part of the job that Trump is thoroughly incapable of performing.  Instead of aspiring to unity, he exudes divisiveness and provokes antagonism with everything he says.  That’s how he does politics, and it’s been incredibly effective for him.  But it is incompatible with serving as the American head of state.  Instead of binding the nation together with words, his constant vituperation tears it apart….

“In all the hours Trump has spent speaking to the country since mid-March, how much time has he devoted to expressions of condolence or sympathy for the nearly 70,000 people who have thus far died from Covid-19?  Five minutes?  It’s outrageous.

“But it is also our reality – in a country without a head of state.  This is the glaring absence that George W. Bush’s video helps to highlight. Whatever Bush’s flaws as a president – and there were many – he was nonetheless an effective head of state.  Hearing familiar presidential cadences spoken by the voice  of a man who once held the office cannot help but bring into sharp relief what we have lost – and what, in a time of national crisis, we sorely lack.”

Of course President Trump had to have the last word following Bush’s evocative video.  Bush didn’t mention Trump or any political leaders during his “Call for Unity” message.

But Trump tweeted: “He was nowhere to be found in speaking up against the greatest Hoax in American history!”

Not exactly President Bush’s: “Let’s remember that the suffering we experience as a nation does not fall evenly.  In the days to come, it will be especially important to care in practical ways for the elderly, the ill and the unemployed.”

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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.

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Gold $1704
Oil $24.63

Returns for the week 5/4-5/8

Dow Jones  +2.6%  [24331]
S&P 500  +3.5%  [2929]
S&P MidCap  +5.4%
Russell 2000  +5.5%
Nasdaq  +6.0%  [9121]

Returns for the period 1/1/20-5/8/20

Dow Jones  -14.7%
S&P 500  -9.3%
S&P MidCap -18.8%
Russell 2000  -20.3%
Nasdaq  +1.7%

Bulls  48.1
Bears 26.9

Hang in there.  Wash your hands.

We remember VE Day, the end of World War II in Europe, 75 years ago.  Queen Elizabeth remembered the day back then as a 19-year-old princess, when her father, King George VI, “saluted (the) men and women at home and abroad who had sacrificed so much in pursuit of what he rightly called ‘a great deliverance,’” she said.

At 21:00 hours today, all of Britain then took to the streets to sing Vera Lynn’s “We’ll Meet Again.”

Brian Trumbore

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