Tag: US

Kudlow says Trump wants US economy to reopen 'as rapidly as possible' but in a 'safe way'

Kudlow: US economy needs to reopen ‘as rapidly as possible’ but in a ‘safe way’

National Economic Council Director Larry Kudlow discusses U.S. economic recovery from the coronavirus, reopening America and U.S.-China relations.

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White House chief economic adviser Larry Kudlow said Tuesday that President Trump wants to see the U.S. economy reopen as fast as possible from the coronavirus lockdown, but stressed that stay-at-home guidelines need to be rolled back in a "safe way."

"The president has certainly noted it, and he wants to see the economy reopen as rapidly as possible, but it's got to be done in a safe way," Kudlow told FOX Business' Stuart Varney. "It's hard for me to make a judgment."

Kudlow's comments come on the heels of a Wall Street Journal editorial that found states opening most slowly are big states run by Democrats that represent roughly one-third of the nation's economy.

It's been close to 10 weeks since the Democratic governors of California, New York, New Jersey and Illinois ordered all nonessential businesses in their states to close to mitigate the spread of COVID-19. As a result of the severe restrictions, job losses in these states have been especially severe.

Kudlow said he's spoken with New York Gov. Andrew Cuomo and New Jersey Gov. Phil Murphy, both Democrats, about their economies reopening. New York is the epicenter of the coronavirus outbreak in the U.S.

"The level of cooperation has been good. And that's very positive. And they've acknowledged that," he said. "So yeah, I'd like to see them open up as fast as possible, but it's gotta be done safely."

Nearly two-thirds of leisure and hospitality jobs in New York and New Jersey and about half in California and Illinois disappeared between February and April, the Journal found, compared to about 43 percent in Florida (one of the first states to lock down and among the first to reopen).

Similarly, four percent of construction workers in Florida lost their jobs compared to 41 percent in New York, 27 percent in New Jersey, 17 percent in California and 11 percent in Illinois.

This is a developing story. Please check back for updates. 

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US stocks drop on simmering US-China trade tensions

US stock indexes dropped on Friday as Sino-US tensions weighed on markets struggling to gauge the pace of economic recovery from the coronavirus.

President Donald Trump’s statement on China’s plan for a national security law in Hong Kong on Thursday raised concerns over Washington and Beijing possibly reneging on their Phase-1 trade deal.

Fears of a renewed trade war cut short Wall Street’s April rally that was powered by optimism over a potential COVID-19 vaccine and the U.S. economy gradually emerging from the lockdowns.

The three main US stock indexes have kept to a tight range in May, but are still on course for weekly gains between 2.5 percent and 2.8 percent.

“It’s a bit of a push-pull as there’s some positive news from a healthcare perspective at least, but then we also have the rhetoric ramping up with China,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“Investors may be a little bit nervous, may pull in their horns ahead of a three-day weekend.”

At 11:23 a.m. ET, the Dow Jones Industrial Average was down 137.22 points, or 0.6 percent, at 24,336.90, the S&P 500 was down 9.8  points, or 0.3 percent, at 2,938.76 and the Nasdaq Composite was down 18.07 points, or 0.2 percent, at 9,266.81.

Eight of the 11 major S&P 500 sub-indexes were trading lower, led by energy as oil prices sank 5 percent.

Real Estate stocks were up in some defensive plays, while losses were limited in the consumer staples sector.

Mixed retail earnings from Walmart, Best Buy and Home Depot earlier in the week had shown online shopping gaining traction due to the stay-at-home orders, a trend that could damage brick-and-mortar players.

On Friday, Chinese e-commerce giant Alibaba reported better-than-expected quarterly profit, but its shares slipped 4.4 percent. Smaller rival Pinduoduo’s US-listed shares gained 9.6 percent after posting upbeat earnings report.

Hewlett Packard Enterprise fell 11.5 percent after missing second-quarter revenue and profit estimates, hit by global lockdowns since February.

Data analytics software maker Splunk rose 10.7 percent after saying it expects higher demand for its cloud services as people around the world take to working from home.

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Microsoft calls US coronavirus progress ‘disappointing’ in memo to staff

Microsoft is gearing up to gradually reopen more than a dozen offices around the world — but its outlook for the US remains bleak, The Post has learned.

In a Tuesday note to staff detailing its “return to workplace plans,” Microsoft listed 16 countries where it’s eyeing potential reopenings in the coming weeks, including Austria, Denmark, Vietnam, South Korea, Switzerland and New Zealand.

The US, which has suffered from more than 80,000 deaths, wasn’t on the list. “The US data is particularly disappointing, as we are seeing just a handful of states with improving situations,” said the memo to staff, a copy of which was obtained by The Post.

Among the few US states showing improvement are Arkansas, Delaware, New Jersey and New York, said the memo. Microsoft’s headquarters of Washington state— one of the nation’s earliest coronavirus hot spots — “appears to be worsening,” the memo, which was not signed, noted.

In the memo, Microsoft set out five stages for reopening offices that call for “essential” employees to return before their colleagues, many of whom can keep working remotely into the fall.

“Our process of returning onsite will be gradual — more like turning a dial than flipping a switch,” Microsoft said in the note. “While that dial is beginning to slowly move forward for us in certain areas as we open some worksites, we can also dial backward.”

Social distancing will be key, the memo said, and any return to work can be recalled if the situation changes.

“Nothing is set in stone — if the data begins to show adverse effects in an area, or if government regulations change, we will adjust accordingly,” the company said. “The data shows progress across the world, but the situation is fragile, as proven by spikes in some locations,” it said, referencing South Korea.

Microsoft has started reopening offices in China, but working from home is either mandatory or “strongly encouraged” at the majority of its worksites, according to the note.

Microsoft confirmed to The Post that it outlined its current reopening strategy to its global workforce on Monday, adding that most employees will have the option of working from home through October.

“This approach will enable some employees to continue to work from home while others voluntarily return to the Microsoft workplace in stages,” a Microsoft spokesperson told The Post in a statement.

Microsoft is among several big tech firms that have had their staffs work remotely as the coronavirus continued to spread. Twitter CEO Jack Dorsey has said his company’s employees can work from home permanently if their jobs allow for it, while Facebook is allowing staffers to stay home until the end of the year.

Microsoft staff who do return to offices will have to attest through an “app-based screening” that they will follow social distancing guidelines, don’t have symptoms and haven’t had contact with someone who has the coronavirus in the last 14 days, the memo says.

The company said staff will also be given a “welcome kit” of supplies such as face coverings and hand sanitizer.

“We all play a major role in making sure our workplace is safe for everyone, which includes self-monitoring for COVID-19 symptoms,” the note says.

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Lawyers For Ousted Top Vaccine Official Announce Plans To File Whistleblower Complaint

Lawyers for Dr. Rick Bright announced Thursday that their client will file a whistleblower complaint based on the top vaccine official’s allegations he was ousted from his post for pushing back against President Donald Trump’s promotion of hydroxychloroquine.

Bright plans to file the complaint with both the Office of Special Counsel and the Health and Human Services inspector general, according to a statement from attorneys Debra Katz and Lisa Banks. The complaint will detail Bright’s allegation that he was ousted as director of the agency responsible for developing the drugs to fight the coronavirus pandemic in retaliation for raising science-based concerns about White House pressure on treatment and vaccines.

“In our filing we will make clear that Dr. Bright was sidelined for one reason only ― because he resisted efforts to provide unfettered access to potentially dangerous drugs, including chloroquine, a drug promoted by the Administration as a panacea, but which is untested and possibly deadly when used improperly,” the attorneys’ statement read. “The facts and concerns raised by Dr. Bright are compelling and well-documented and soon they will be public.”

A spokesperson for HHS did not immediately respond to request for comment.

Bright told The New York Times in a report published Wednesday that he had clashed with HHS “political leadership” over his resistance to funding “potentially dangerous drugs promoted by those with political connections.” According to the Times report, Bright said he specifically limited the “broad use of chloroquine and hydroxychloroquine,” the latter a drug used to treat malaria.

Trump has repeatedly promoted hydroxychloroquine as a potential treatment for COVID-19, the disease caused by the virus, despite scientific evidence not supporting that claim. At least one recent study of 368 patients showed that there were no benefits of using hydroxychloroquine, and that more patients who received the drug died than those who received standard care.

The disagreement in drug use, according to Bright, led to his removal as director of the Biomedical Advanced Research and Development Authority, which is the HHS agency in charge of the federal government’s effort to develop vaccines. Bright had been with the agency since 2010 and served as its director since 2016, but was reassigned to the National Institutes of Health in what he said was a smaller role.

When asked about Bright during Wednesday’s daily coronavirus briefing, Trump told reporters that he had “never heard” of the doctor ― a response he’s given regarding others in the past.

“The administration is now making demonstrably false statements about Dr. Bright, one of the nation’s leading vaccine, drug and diagnostic experts, to deflect attention from its retaliatory removal of him as the Director of [BARDA],” Katz and Banks said in their statement.

The attorneys both previously represented Christine Blasey Ford, who caught the nation’s attention when she alleged that Supreme Court Justice Brett Kavanaugh sexually assaulted her when they were in high school.

Trump has had a bumpy history with inspectors general, who are tasked with being watchdogs of the federal government. The intelligence whistleblower in the Ukraine scandal that eventually led to Trump’s impeachment had used the same route for his complaint: a report to the appropriate agency’s inspector general, who then had to decide whether the complaint was “urgent” enough to send to Congress. The intelligence community’s inspector general, Michael Atkinson, was recently fired for deciding to send the whistleblower complaint to Congress.

Earlier this month, Trump questioned the independence of HHS Principal Deputy Inspector General Christi Grimm after the watchdog released a report detailing supply shortages and testing delays at hospitals responding to the pandemic across the country. The president claimed without evidence that the report was wrong and that Grimm was biased against him.

Just weeks ago, the president removed acting Pentagon Inspector General Glenn Fine, who was set to provide oversight of the government’s $2 trillion coronavirus response law along with nine other inspectors general. Trump replaced Fine  on the Pandemic Response Accountability Committee with Environmental Protection Agency Inspector General Sean O’Donnell.

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US oil prices fall below zero for the first time ever

New York (CNN Business)The American oil industry is facing a doomsday scenario.

The coronavirus pandemic has caused oil demand to drop so rapidly that the world is running out of room to store barrels. At the same time, Russia and Saudi Arabia flooded the world with excess supply.
That double black swan has caused oil prices to collapse to levels that make it impossible for US shale oil companies to make money. US crude for May delivery turned negative on Monday — something that has never happened since NYMEX oil futures began trading in 1983. It was easily the oil market’s worst day on record.

    US crude for June delivery is still trading above $20 a barrel — but even that’s disastrous.
    “$30 is already quite bad, but once you get to $20 or even $10, it’s a complete nightmare,” said Artem Abramov, head of shale research at Rystad Energy.

    Many oil companies took on too much debt during the good times. Some of them won’t be able to survive this historic downturn.
    In a $20 oil environment, 533 US oil exploration and production companies will file for bankruptcy by the end of 2021, according to Rystad Energy. At $10, there would be more than 1,100 bankruptcies, Rystad estimates.
    “At $10, almost every US E&P company that has debt will have to file Chapter 11 or consider strategic opportunities,” Abramov said.

    OPEC cuts failed to end the panic

    The most stunning part of the record low in oil prices is that it comes after Russia and Saudi Arabia agreed to end their epic price war after President Donald Trump intervened. OPEC+ agreed to cut oil production by a record amount.
    Trump said the OPEC+ agreement would save countless jobs and much-needed stability to the oil patch.
    “This will save hundreds of thousands of energy jobs in the United States,” Trump tweeted on April 12. “I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia.”
    Yet crude has kept crashing, in part because those production cuts don’t kick in until May. And demand continues to vanish because jets, cars and factories are sidelined by the coronavirus pandemic.
    The hope in the oil industry is that Monday’s negative prices are somewhat of a fluke caused by the rolling over futures contracts.
    The record low in the May contract comes on very thin trading volume ahead of Tuesday’s expiration. That’s because there are concerns that there will be no room to store those barrels delivered in May. The June contract, however, only dropped around 10% to $22 a barrel. And Brent crude, the world benchmark, fell just 5% to $26.50 a barrel.
    Still, oil contracts roll over each month and they don’t crash to record lows.
    “There will be a lot of companies that don’t survive this downturn,” said Ryan Fitzmaurice, energy strategist at Rabobank. “This is one of the worst on record.”

    ‘Unprecedented’ stress in the oil industry

    Signs of stress abound in the oil patch.
    The S&P 500’s energy sector has lost more than 40% of its value this year — despite the dramatic rebound in the overall stock market over the past month.
    Noble Energy (NBL), Halliburton (HAL), Marathon Oil (MRO) and Occidental (OXY) have all lost more than two-thirds of their value. Even Dow member ExxonMobil (XOM) is down 38%.
    Whiting Petroleum became the first domino to fall when the former shale star filed for Chapter 11 protection on April 2. But it certainly won’t be the last.
    Rystad’s $20 scenario predicts more than $70 billion of oil company debt will get reorganized in bankruptcy, followed by $177 billion in 2021. And that only accounts for exploration and production companies, not the servicing industry that provides the tools and manpower to drillers.
    The key will be how long oil prices stay dirt cheap. A rapid rebound in prices could allow many oil companies to avoid bankruptcy.
    Buddy Clark, co-chair of the energy practice at Houston law firm Haynes and Boone, said his firm is “extremely busy” working on potential oil bankruptcies. Haynes and Boone has been forced to pull lawyers from other areas of the firm to work on the oil problem.
    “I don’t think I’ve seen anything like it in my lifetime. It’s unprecedented,” said Clark, who started working in the industry in 1982.
    Clark thinks that despite the further collapse in prices, there will still be only — “only” — 100 oil bankruptcies in 2020.
    “It’s hard to believe that 100 bankruptcies is the optimistic view. That just shows you where we are,” Clark said.

    Liquidations could be on the way

    There would probably be more bankruptcies already if it weren’t for the extreme volatility in oil prices. Clark said companies are having trouble drawing up restructuring plans because they don’t know what the price of the commodity will be.
    “Ironically, the lower price has slowed down the process,” Clark said. “A number of companies may have teed up filings but they need to go back to the drawing board.”
    The dire outlook in the oil industry will make it very difficult for companies attempting to reorganize in Chapter 11 proceedings to get the required financing and support. Debtholders who would normally swap their debt for equity may not want that equity.
    That means, unlike the 2014-2016 crash, some oil companies may not survive altogether.
    “Chapter 11 requires financial sponsors to back you. You may see more Chapter 7 liquidations,” said Reid Morrison, US energy leader at PwC.
    The nightmare scenario could present lucrative buying opportunities for the industry’s biggest players. That’s because struggling oil companies, either in bankruptcy or before it, will be forced to sell off prime acreage — at fire sale prices. Exxon and Chevron (CVX), the industry’s supermajors, could be tempted to make acquisitions.
    “Those with strong balance sheets will be able to take advantage of the situation,” said Morrison.
    However, he noted the supermajors will be “cautious about pulling the trigger” in the next six months because they must defend their coveted dividends first.

    The next dominoes?

    The oil crash has set off a guessing game about which companies will be next to succumb to bankruptcy. The most vulnerable companies are the ones that piled on too much debt, face looming debt maturities and can’t generate cash flow to even make their interest payments.
    Rystad’s Abramov said “no one would be surprised” if Chesapeake Energy (CHK) and Oasis Petroleum (OAS) were forced to consider bankruptcy.
    Chesapeake recently suspended dividend payments on preferred stock. Its stock price crashed so low that it turned to a one-for-200 reverse stock split to comply with exchange requirements.
    Shale driller Oasis has lost more than 90% of its value this year. Its stock is trading below 30 cents.

      Although American frackers rebounded from the 2014-2016 oil crash, there are concerns the shale industry could be permanently scarred.
      Investors were already tired of the industry’s horrible returns following years of excessive spending and oversupply. And that was before the great oil crash of 2020.
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      US airline industry seeks about $50B in federal help

      London (CNN Business)Virgin Atlantic and Virgin Australia will need government support if they’re to survive the economic crisis triggered by the coronavirus pandemic.

      Billionaire founder Richard Branson said Monday that the airlines need money from the UK and Australian governments to keep going “in the face of the severe uncertainty surrounding travel today,” including the lack of clarity over how long planes will have to remain grounded.
      In an open letter to employees, Branson said the survival of Virgin Atlantic and Virgin Australia was important to provide much needed competition to British Airways, an IAG (ICAGY) subsidiary, and Qantas (QABSY). “If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies,” he noted.

        Branson, who has already pumped $250 million into Virgin Group companies in response to the pandemic, said he would offer his Necker Island estate in the Caribbean as collateral “to raise as much money against the island as possible to save as many jobs as possible around the group.”
        Boeing won't be returning to 'normal' anytime soon
        Virgin Atlantic will seek a commercial loan from the UK government, which it will repay, Branson added, without giving details of how much money it needs.

        “The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it. Without it there won’t be any competition left and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value,” he said.
        Travel bans and nationwide lockdowns have brought global aviation almost to a standstill, prompting dozens of airlines to ground planes and place workers on unpaid leave. The International Air Transport Association said last week that airline passenger revenues will be cut in half this year, tumbling by $314 billion from 2019.
        Lufthansa (DLAKY), one of Europe’s biggest airline groups, is permanently reducing the size of its fleet and shutting down one of its low-cost carriers, warning that the aviation sector will take years to recover from the crisis.
        United says demand for travel is 'essentially zero' and signals layoffs
        While US airlines will receive tens of billions of dollars in support as part of the country’s $2 trillion stimulus package, governments in Europe have not promised wholesale bailouts to their carriers. Instead, individual airlines are tapping government support to pay staff salaries and raise debt.
        Budget carrier EasyJet (ESYJY) said earlier this month that it had raised £600 million ($746.6 million) through the UK government’s Covid Corporate Financing Facility. The government said it will consider the situation of firms on a case-by-case basis.
        British Airways and Virgin Atlantic have furloughed some 38,000 staff between them and are relying on the government to pay 80% of these employees’ wages.
        A spokesperson for Virgin Atlantic said the airline is “exploring all available options to obtain additional external funding.” The airline declined to comment on a Financial Times report that it had been told to resubmit its proposal for a £500 million ($622.2 million) coronavirus loan because the UK government was not satisfied with its initial bid.
        Virgin Group operates in many of the sectors that have been hardest hit by the coronavirus pandemic, including aviation, leisure, hotels and cruises. “The challenge right now is that there is no money coming in and lots going out,” Branson said. The company employs 70,000 people in 35 countries.
        Branson has been criticized for seeking help from the government when he does not pay UK income tax because his primary residence is on Necker Island, which he bought when he was 29.

          He addressed the criticism in his letter, saying that he and his wife Joan “did not leave Britain for tax reasons but for our love of the beautiful British Virgin Islands and in particular Necker Island.” Virgin companies paid tax in the United Kingdom, he said.
          — Eoin McSweeney contributed reporting.
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          US home construction collapsed 22.3% in March

          Pause on residential construction during coronavirus promotes safety: NAHB CEO

          NAHB CEO Jerry Howard discusses the pause being put on residential construction sites and home building being excluded from coronavirus stimulus programs.

          U.S. home-building activity collapsed in March as the coronavirus spread, with housing starts tumbling 22.3% from a month ago.

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          The Commerce Department said Thursday that ground breakings occurred last month at a seasonally adjusted annual rate of 1.2 million units, down from a 1.56 million pace in February. Construction of single-family houses fell 17.5%, while apartment and condo starts were off 32.1% from a month ago.

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          All of this paints a bleak outlook for housing as the lockdown to contain COVID-19 have led more than 20 million Americans to lose their jobs in the past four weeks.

          There was a 6.1% decline in the completion of homes being constructed, which means many homes are being left half built. The drop was 15% of single-family houses, meaning that unless economic activity picks up soon there could be ghost towns half-built housing developments, an phenomenon last seen in the aftermath of the 2008 financial crisis.

          Construction activity will likely continue to slow. There was also a 6.8% drop in permits to begin construction in March.

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          Homebuilders have become fearful. A confidence index released Wednesday by The National Association of Home Builders and Wells Fargo plunged 42 points in April to a reading of 30, the largest single monthly change in the history of the index. Any reading below 50 signals a decline.

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          How we should reopen the US when coronavirus slows down

          It’s time to plan for a grand reopening of the American economy, and we need to execute it in a safe, methodical and robust way.

          The country must come back strong in honor of the many lives lost to this horrendous virus and the many who have suffered through it — and as a testament to the medical heroes to whom we are now and forever grateful.

          As the numbers improve due to strict social distancing, the rollout needs to be done with an air of caution, because without safety, there will be no success.

          The plan should initially focus on areas of the country that have been lightly affected, and then move on to the states and cities where the pandemic is under control — and where enough of a turn in the curve has taken place that commerce can be safely conducted.

          It’s my feeling that all stores, restaurants and companies in the least-affected regions should be permitted to open soon, perhaps by May 1.

          But in many areas, at least for a while, symptom testing by security and paramedics should be conducted before employees and patrons enter the workplace or commercial businesses.

          Reopening should lag in New York City, San Francisco, Chicago, Detroit and other major cities, perhaps by just a few weeks to a month — or slightly more for any new hotspots.

          For NYC, June 1 seems realistic, based on the current curve data, but it could possibly be sooner.

          With the Fed, Treasury, Congress and the White House pulling out all the stops, we are ready to enter the transition stage. Yes, more still needs to be done to help the big banks distribute the cash, and the regulatory structure needs to be relaxed so that the loans can be delivered to millions of needy small businesses.

          But get ready, world, America is on the mend. The greatest country on earth will soon be open for business once more.

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          US economy's recovery from coronavirus could be stunted by excessive corporate borrowing, Janet Yellen says

          Fox Business Flash top headlines for March 31

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          Former Federal Reserve Chairwoman Janet Yellen said the high level of corporate debt across Wall Street — aided in part by historically low interest rates and a lack of regulatory oversight — could make it more difficult for the U.S. economy to recover from the coronavirus pandemic.

          Although the banking and financial sector entered the economic crisis brought on by the novel coronavirus outbreak in “generally good shape,” Yellen said Monday during a video broadcast hosted by the Brookings Institution that enormous debt loads were an existing vulnerability.

          “But nonfinancial corporations entered this crisis with enormous debt loads, and that is a vulnerability,” Yellen said. “They had borrowed excessively.”

          CORONAVIRUS HYPERINFLATION RISK LOOMS, BUY GOLD: PETER SCHIFF

          Much of that borrowing, Yellen said, was not spent on productive purposes like investments or expanding payroll but rather used for stock buybacks and to pay dividends to shareholders.

          The borrowing spree happened because regulators had “few, if any” tools to rein it in and because low interest rates made it easier for companies to borrow, according to Yellen, who led the U.S. central bank between 2014 and 2018.

          “The problem is that it creates risks to the economy. And I'm afraid we'll see that in spades in the coming months, because it may trigger a wave of corporate defaults,” she said. “Even where a company avoids default, highly indebted firms usually cut back a lot on investment and hiring. And that will make the recovery more difficult.”

          CORONAVIRUS-TRIGGERED RECESSION COULD BE WORSE THAN 2008 FINANCIAL CRISIS, ANALYST SAYS

          Corporate indebtedness has exploded in recent years, with companies that are outside the financial sector now owing a $9.6 trillion debt load in the U.S. compared to just $4.9 trillion in 2007. Globally, outstanding corporate debt issued by nonfinancial companies is at $13 trillion, according to the Organization for Economic Cooperation and Development.

          If companies are struggling to make debt payments as a result of a coronavirus-triggered recession, they may be more likely to lay off workers or cut costs, possibly deepening the downturn.

          CORONAVIRUS CAUSING 'UNPRECEDENTED' US DOLLAR STRENGTH

          Still, the Federal Reserve has unleashed its full firepower to support the economy, including launching crisis-era lending facilities to ensure that credit flows to households and businesses.

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