US FINANCIAL MARKET
U.S. Stocks Waver After Central Banks’ Action
- U.S. stocks traded roughly flat Thursday after central banks rolled out fresh measures to protect the global economy from the impact of the coronavirus pandemic.
- Policymakers in Europe have, like their counterparts in the U.S., taken action to try to reduce the pandemic’s hit to the economy.
- The ECB has launched a new €750 billion ($818.7 billion) bond-buying program, which it hopes will help ease worries about the most debt-laden nations in the eurozone and their ability to meet their obligations as spending demands increase.
- Many Asian currencies swooned and stock indexes plummeted to multiyear lows Thursday as investors dumped assets and paid dearly to swap local currencies into U.S. dollars.
- South Korea faced the biggest rout, with the Kospi benchmark index dropping 8.4% as its currency, the won, tumbled to a new decade low.
- In the Philippines, Indonesia and South Korea, exchanges halted trading temporarily after stocks fell steeply and tripped circuit breakers. Indonesia’s central bank also cut its benchmark rate.
- In the U.S., data has already shown the pandemic taking its toll on the economy.
- The number of workers applying for first-time unemployment benefits jumped to the highest level since September 2017, Labor Department data for the week through March 14 showed.
Ford Nixes Dividend, Suspends Guidance
- Ford said Thursday it would shore up its balance sheet by drawing on credit lines and suspending dividends as the Covid-19 pandemic roils the economy.
- The company also withdrew its guidance for 2020 issued in early February, citing economic uncertainty.
- Ford had guided for adjusted earnings per share of 94 cents to $1.20.
- Ford also suspended its dividend, a move aimed to improve financial flexibility in the short term, it said.
- The automobile giant told its lenders that it will draw down the entirety of two lines of credit, including $13.4 billion from a corporate credit facility and $2 billion from a supplemental facility.
Ventilator Makers Ramp Up Production Amid Coronavirus Crunch
- Manufacturers are racing to boost production of the medical ventilators required to save the lives of many critically-ill coronavirus patients, but there still may not be enough of the crucial machines if cases surge, industry officials say.
- Medtronic, Philips, Draegerwerk and Getinge, among the biggest suppliers of medical ventilators and related respiratory equipment, said they are working to meet increased global demand, including in the U.S.
- Even companies that don’t make medical devices may chip in. General Motors and Ford are exploring the possibility of making ventilators, spokespeople for the companies said Thursday.
- As many as 810,000 U.S. coronavirus patients could need ventilators by the end of May, if cases were to double every six days, according to Neil Carpenter, vice president of strategic planning at health-care consultancy Array Advisors.
- Yet the Society of Critical Care Medicine estimated, in a report released this week, that more than 200,000 mechanical ventilators may be available in the U.S.
Intel to Release Neuromorphic-Computing System
- Intel is releasing an experimental research system for neuromorphic computing, a cutting-edge method that simulates the way human brains work to perform computations faster, using significantly less energy.
- The system, called Pohoiki Springs, will be made available this month to members of the Intel Neuromorphic Research Community, which includes researchers, government labs and about a dozen companies such as Accenture and Airbus.
- Neuromorphic chips are expected to be the predominant computing architecture for new, advanced forms of artificial-intelligence deployments by 2025, according to technology research firm Gartner.
- With neuromorphic computing, it is possible to train machine-learning models using a fraction of the data it takes to train them on traditional computing hardware.
Square Gets Green Light to Open a Bank
- Federal and state banking regulators approved an application from financial-tech company Square to start its own bank in Utah.
- The bank, Square Financial Services, is expected to launch in 2021 and will be supervised by the Federal Deposit Insurance Corp and the Utah Department of Financial Institutions, the company said on Wednesday.
- Square Financial Services will offer small-business loans to merchants that use Square devices to process their payments.
NYSE to Close Trading Floor After Two Positive Coronavirus Tests
- The New York Stock Exchange will close its famed trading floor in lower Manhattan effective Monday after two people who work at the exchange tested positive for coronavirus.
- The NYSE’s parent company, Intercontinental Exchange, or ICE, said it was temporarily closing the floor and shifting to all-electronic trading in a press release Wednesday.
- Investors will likely see little impact to the markets from the closing of the floor, which plays a far less important role in the U.S. stock market than it did 20 years ago.
- The NYSE has a backup plan to operate in an all-electronic mode, without human traders on its floor.
Disney says coronavirus could impact consumer behavior
- Walt Disney said on Thursday the spread of the coronavirus could lead to changes in consumer behavior, resulting in further disruption to its business.
- The company has already closed its theme parks, suspended cruises and theatrical shows, delayed film distribution, and took a hit to its supply chain and ad sales.
Airline industry crisis deepens as coronavirus pain spreads
- The crisis for airlines deepened on Thursday as Lufthansa warned the industry might not survive without state aid if the coronavirus pandemic lasts a long time, and Qantas Airways told most of its 30,000 staff to take leave.
- Global airlines group IATA has forecast the industry will need up to $200 billion of state support, piling pressure on governments facing demands from all quarters and a rapid worsening in public finances as economies slump.
- Shares in U.S. airlines fell sharply on Wednesday after Washington proposed a rescue package of $50 billion in loans, but no grants as the industry had requested, to help address the financial impact from crisis.
- Government sources in India told Reuters that the government was planning a rescue package of up to $1.6 billion to aid carriers battered by coronavirus.
US ECONOMY & POLITICS
Jobless Claims Rise Sharply at Front End of Expected Coronavirus Surge
- The number of Americans applying for first-time unemployment benefits increased sharply last week, the front end of a surge in claims tied to the new coronavirus pandemic.
- Initial jobless claims increased by 70,000 in the week ended March 14 to a seasonally adjusted 281,000.
- Ohio’s three-day total for jobless claims through Tuesday was 78,000, compared with about 3,000 for the same period last week.
- Continuing claims, those filed by workers unemployed for longer than a week, logged in at 1.701 million in the week ended March 7, a historically low level. Continuing claims are reported with a one-week lag.
- The U.S. Travel Association estimated this week that the coronavirus outbreak could eliminate 4.6 million travel-related jobs in the country this year.
- Projections from the National Restaurant Association were even dire, with the lobby group predicting the industry could lose 5 million to 7 million jobs over the next three months.
Mid-Atlantic factory activity plunges
- The darkening economic outlook was underscored by other data on Thursday that showed factory activity in the mid-Atlantic region plunged to its lowest level since 2012 in March, as the highly contagious virus disrupted the supply chain.
- The Philadelphia Fed said its business conditions index plunged to a reading of negative 12.7 in March, the weakest since July 2012, from 36.7 in February.
- The survey’s measures of new orders at factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware plunged to -15.5 this month from a reading of 33.6 in February.
Senate Republicans Prepare Third Coronavirus Measure
- Senate Republicans are completing their own proposal for a broad package aimed at preventing a prolonged economic slowdown as Congress moves to approve more legislation addressing the coronavirus pandemic in the coming days.
- In a memo Wednesday, the Treasury Department proposed two rounds of direct payments to Americans that would total $500 billion.
- Steven Mnuchin said that in each round, the administration wanted to send $1,000 to each adult and $500 to each child.
- The memo also calls for setting up a credit facility to offer $50 billion to the airline industry, lending $150 billion for other sectors of the economy, and guaranteeing $300 billion in loans to small businesses.
- Republicans expect to have their own proposals prepared by Thursday morning before they begin negotiating in earnest with Democrats, aiming to win bipartisan support and pass the legislation by the beginning of next week.
Trump Spurns Business Plea to Ease Tariffs Amid Coronavirus
- The Trump administration is brushing aside calls to put broad import tariffs on hold, despite pleas from the business community that it could stimulate the increasingly rocky U.S. economy.
- On Wednesday, more than 100 business organizations wrote to President Trump and top administration officials to ask for the suspension of tariffs on Chinese-made goods and global steel imports to help the economy.
- Mr. Mnuchin and Peter Navarro, a White House trade and manufacturing adviser, have said Mr. Trump isn’t looking to cancel broad tariffs right now.
- Currently, U.S. officials are seeking to keep the health and humanitarian issue separate from trade conflicts, according to a person familiar with the matter.
As Coronavirus Spreads, U.S. Looks to New Tools to Fight Fallout
- The U.S. escalated its response to the coronavirus pandemic as growing shutdowns increased fears of economic fallout, pushing the stock market to levels not seen since 2017.
- President Trump said Wednesday the White House would be invoking the Defense Production Act, “just in case we need it.”
- That act, first passed during the Korean War, gives the president powers to require and incentivize businesses to produce goods tied to national defense.
- The U.S. Air Force flew about 500,000 test kits from Italy to Memphis this week, said Gen. David Goldfein, chief of staff for the Air Force.
U.S. Military to Deploy Two Hospital Ships to Help Slow Coronavirus
- The U.S. military is planning to deploy its two hospital ships to aid in the country’s coronavirus emergency, the Pentagon said Wednesday, but both vessels first must finish undergoing maintenance and staff preparation.
- Defense Secretary Mark Esper said Tuesday that the two vessels—the U.S. Naval Ship Mercy, based on the West Coast, and the USNS Comfort, based on the East Coast—were being readied for possible deployments.
- Each ship has a 1,000-patient capacity and is designed primarily to provide short-term care. The ships would be used to support noncoronavirus patients to relieve pressure on civilian hospitals, the Pentagon said.
Bernie Sanders’s Revolution Has a Math Problem
- The political revolution Bernie Sanders hoped would sweep him into the White House has run into the cold, hard realities of math: He needs to win roughly 63% of the remaining unallocated Democratic delegates to overtake Joe Biden and win the presidential nomination.
- To capture that many delegates, the Vermont senator would likely need to notch a victory in every state by significant margins because Democrats award delegates proportionally rather than using a winner-take-all system.
- In an email to supporters Wednesday, Mr. Sanders’s campaign manager, Faiz Shakir, said Mr. Sanders and his wife, Jane Sanders, would head back Wednesday to Burlington, Vt., where they will assess the path forward.
EUROPE & WORLD
China Reports No New Domestic Coronavirus Infections for the First Time
- China reported no new domestic coronavirus infections for the first time since the outbreak surfaced, as countries around the world increasingly barricaded their national borders by imposing quarantines on inbound travel and broader bans on nonresident arrivals to tackle the fast-spreading pandemic.
- The number of confirmed coronavirus infections world-wide passed 222,000, according to data from Johns Hopkins University.
- More countries, especially in Asia, are seeing new infection cases predominantly coming from those with recent travel history outside their home borders, prompting fears of a second wave of infections.
- China recorded 34 imported cases of the virus, officials said Thursday.
- Of the 47 new cases announced in Singapore on Wednesday, 33 people had traveled outside the island nation.
Italy’s Virus Death Toll on the Cusp of Overtaking China’s
- Italy’s death toll from the coronavirus is poised to overtake China’s, making Italy’s outbreak the deadliest in the world and highlighting the danger that the pandemic poses for elderly people in particular.
- Italy’s death toll is especially grim because its total confirmed infections are still much lower, at 35,713 people as of Wednesday, compared with China’s total of 80,928 confirmed cases.
- Data compiled by Italy’s National Health Institute, its top disease-control body, shows that 87% of those who have died are over 70.
- The death toll may be worse, as the outbreak has grown there has been a silent surge in fatalities in nursing homes, where dozens of patients a day are dying untested for the virus, suggests the real total may be higher.
ECB to Buy Bonds to Combat Economic Slowdown from Coronavirus
- The European Central Bank unveiled a new €750 billion ($818.7 billion) bond-buying program aimed at shielding the eurozone economy from the spreading coronavirus, casting aside longstanding taboos to send a determined signal to investors that the bank will stand behind the region’s embattled governments.
- It means the ECB will be able to buy almost €120 billion a month of eurozone debt for the rest of the year—the largest amount ever.
- Under the rules of the program, the ECB could focus its purchases in the short-term on Italy and other struggling governments.
TODAY in HISTORY
- The United States Senate voted down signing the Treaty of Versailles for the second time. (1920)
- Operation Iraqi Freedom is launched with air strikes on Baghdad, the beginning of the war with Iraq (March 20 in Iraq). (2003)
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