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Wall Street Gains as Washington Reaches Deal On $2 Trillion Aid

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US FINANCIAL MARKET

Wall Street Gains as Washington Reaches Deal On $2 Trillion Aid

  • Wall Street on Wednesday extended its massive bounce from the previous session as Washington reached a deal for a $2 trillion stimulus package to help businesses and millions of Americans hit by the economic fallout of the coronavirus pandemic.
  • Globally, cases of infection surpassed 438,000 Wednesday, with more than 19,500 dead, as the disease reached far corners of the world including the U.S. territory of Guam.
  • The pending legislation is likely to include direct financial checks to many Americans, as well as loans to businesses—reassuring to those who have been worried about the economic fallout from the pandemic.
  • Shares of airlines and aerospace companies jumped Wednesday on bets that the industry would be one of the major beneficiaries of the stimulus package.
  • Fresh survey data Wednesday showed that German business sentiment plunged further than initially estimated in March, adding to investors’ concerns about a deep recession in the eurozone.
  • Earlier in the day, major markets in Asia closed higher, with Japan’s Nikkei Stock Average advancing over 8% as investors cheered the agreement between U.S. lawmakers and the Trump administration.

Coronavirus Deaths in Spain Overtake China; India Puts 1.3 Billion People Into Lockdown

  • Spain surpassed China’s death toll from the new coronavirus, and India implemented the world’s most extensive stay-at-home order Wednesday as the U.S. and a growing number of other countries took steps to absorb the worst consequences of the pandemic. The number of infections has reached 47,610, health officials said Wednesday.
  • Health officials in Spain reported 738 fatalities from Covid-19, the steepest daily increase in a national death toll that has risen to 3,434, surpassing China’s.
  • Only in Italy, with 6,820 reported deaths, has the pandemic taken more lives.

Nike Says Digital Orders Offset Damage to Retail From Coronavirus

  • Nike Inc. said business has rebounded in China following the outbreak of coronavirus, and the sportswear giant was able to offset much of its lost retail sales with online orders, a strategy executives said they expected to follow in the U.S. and Europe.
  • Total revenue rose 5.1% to $10.10 billion in the third quarter, beating the average analyst estimate of $9.80 billion.
  • Digital sales rose 36% across the globe, including a 30% gain in Greater China in the third quarter.
  • Nike said Greater China sales fell 5.2% to $1.51 billion as a steep sales decline in February wiped out double-digit growth in the first two months of the quarter.
  • Revenue in Nike’s North American market, which accounts for the majority of total sales, rose 4.4% to $3.98 billion.
  • Net income fell to $847 million, from $1.10 billion a year earlier, due to the hit from the outbreak and a non-cash charge related to a shift to distributor model in South America.
  • Andy Campion, Nike’s finance chief, said the company expects Greater China sales to be flat in the fiscal fourth quarter compared with a year ago and are on track to return to growth in the next fiscal year.

Target withdraws forecasts, curbs spending to meet virus-related demand

  • Target on Wednesday withdrew its financial outlook and said it would scale back on planned investments to focus on meeting surging demand as Americans stock up on essentials and stay home to slow the spread of the coronavirus outbreak.
  • The big-box retailer said it now plans to remodel only about 130 stores in 2020, down from 300, moving the rest of the projects to 2021.
  • Target added it would open fewer small format stores than it had previously planned.
  • Target, like many other retailers, has reduced store hours for cleaning and restocking and said last week it would raise the minimum wage by $2 an hour for store and distribution center workers through May 2.

Facebook Usage Soars, But Online Advertising Plunges

  • Facebook said usage of its products was skyrocketing because of the coronavirus pandemic but warned that increased activity wouldn’t shield the company from the online-advertising pullback roiling Silicon Valley and Madison Avenue alike.
  • In a post on Tuesday afternoon, Facebook said total messaging across the platform’s services has increased 50% in countries hit hard by the virus, with video messaging more than doubling.
  • In Italy, which has undertaken some of the strictest restrictions on public life of any country outside China, group video calling is up by more than 1000% from a month ago and usage of all Facebook apps is up 70%.
  • The company said the higher usage wouldn’t protect it from expected declines in digital advertising across the globe.
  • The company didn’t provide official earnings guidance, but the executives said “our business is being adversely affected like so many others around the world.”

Facebook eyes multi billion dollar stake in Reliance Jio: FT

  • Facebook is in talks to buy a multi billion dollar stake in Reliance Industries’ telecom unit, the Financial Times reported on Tuesday, citing two people with knowledge of the matter.
  • The report said the social media giant was in talks for a 10% stake in Jio, controlled by India’s wealthiest man Mukesh Ambani, but the talks were halted due to global travel bans amid the coronavirus outbreak.

Boeing plans 737 MAX production restart by May – sources

  • Boeing plans to restart 737 MAX production by May, ending a months-long halt triggered by a safety ban on its best-selling jet after fatal crashes, people familiar with the matter said on Tuesday.
  • Boeing’s planning hinges on the scale of disruptions from the fast spreading coronavirus, and U.S. regulators clearing the 737 MAX to return to service, a milestone Boeing still expects to reach in mid-2020.
  • One industry source said Boeing has asked some suppliers to be ready to ship 737 parts in April.
  • Another person said production was planned to restart in May.
  • A third person said coronavirus is throwing a wrench in Boeing’s plans – they had initially hoped for April, but that fell to May.

Boeing CFO says aerospace industry needs credit urgently, markets closed to new debt

  • Boeing’s chief financial officer said on Tuesday the U.S. aerospace industry urgently needs credit to cope with the coronavirus pandemic but “markets essentially are closed” to new debt.
  • Greg Smith also stressed the strategic value of a $4.2 billion deal to acquire the commercial planemaking arm of Embraer, driving up shares in the Brazilian group.
  • Smith said Boeing, which drew down a $13.8 billion credit line it took in February but has a further $9.6 billion in reserve, was not in discussions to add new commercial debt facilities.

Spirit AeroSystems suspends Boeing-related production for two weeks

  • Spirit Aerosystems, Boeing’s largest supplier, is temporarily suspending production for the airplane maker at many of its facilities in the United States for two weeks, as the global coronavirus pandemic saps demand across the industry.
  • The company said on Tuesday it would suspend production beginning March 25 until April 8, including at its main Wichita, Kansas facility, a day after Boeing halted production at its Washington state twin-aisle jetliner factory.
  • Spirit said it would continue to pay employees who are sent home during the two-week period due to the suspension of Boeing work. It will also continue to support 787 work for Boeing’s Charleston, South Carolina, facility.
  • Smaller rival Triumph Group said following Boeing’s plan to close its Washington State factories for 14 days, the company plans to lay off 250 salaried employees and 250 contractors.

Apple expects to start reopening some stores in first half of April: Bloomberg News

  • Apple could start re-opening some of its retail stores in the first half of April, Bloomberg reported citing an internal memo.
  • The company has also extended remote work abilities for many employees through at least April 5, the report added.
  • Apple reopened its stores in China earlier this month.

U.S. automakers to extend shutdown into April: sources

  • Detroit’s Big Three automakers plan to extend a current shutdown of vehicle production in North America into April as the coronavirus pandemic continues, people briefed on the matter said Tuesday.
  • The automakers had said on March 18 they would halt production until at least March 30.
  • A group representing major U.S. and foreign automakers warned in a letter to U.S. lawmakers with other industry groups on Monday that “Auto industry analysts are expecting sales to be down by as much as 40 percent in March compared to 2019.”
  • The letter said 95% of North American auto plants are currently closed.

 

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US ECONOMY & POLITICS

White House Reaches Deal with Lawmakers on $2 Trillion Coronavirus Stimulus Bill

  • Lawmakers and the Trump administration reached an agreement on an estimated $2 trillion stimulus package aimed at shielding the U.S. economy from the worst consequences of the coronavirus pandemic.
  • While the final terms of the bill remained under wraps early Wednesday, lawmakers had been eyeing sending one-time checks worth $1,200 to many Americans, with $500 available to children, with the assistance capped above certain income levels.
  • Those payments would be in addition to a broad expansion in unemployment benefits, which would be extended to nontraditional employees, including gig workers and freelancers, according to a Democratic aide familiar with the negotiations.
  • The agreement is also set to increase current unemployment assistance by $600 a week for four months.
  • The Senate is also poised to approve $350 billion in loans to small businesses in an effort to keep Americans on payrolls as economic activity across the country comes to a standstill.

Surge in Unemployment Claims Sparks Delayed Checks Amid Coronavirus Crisis

  • Americans are waiting anxiously for unemployment benefits as state unemployment systems adjust to record-high levels of claims in the wake of the new coronavirus.
  • States say they are waiving waiting periods for accruing benefits and bulking up with staff to field calls and quickly process claims.
  • But the unemployment-insurance system wasn’t designed to move as quickly as the coronavirus is knocking the U.S. labor market off course.
  • Economists surveyed by The Wall Street Journal estimated that 1.5 million new jobless claims were filed last week.
  • The U.S. Labor Department will release a national compilation of claims on Thursday. The highest number of new claims on record is 695,000 filed in the week ended Oct. 2, 1982.

Bullard: 46 million workers could be jobless in short-term

  • As many as 46 million people in the U.S. may be left jobless in the short term as companies shut down services that have “high contact” with the public during the battle against the coronavirus epidemic, St. Louis Federal Reserve president James Bullard said on Wednesday.
  • “They are people who are in some kind of occupation where they have interaction with the public and that is exactly what our health authorities say is not supposed to be occurring,” Bullard said in the latest of a series of interviews with media.
  • Restaurants and bars, many of which have been ordered closed, employed 12.3 million people as of February.

U.S. Workers, Businesses Lack Funds to Tide Them Over Until Help Comes

  • Small businesses, which account for about half of U.S. employment, according to the Small Business Administration, are among those most at risk.
  • In a 2016 study, researchers at JPMorgan Chase Institute, the bank’s think tank, found that the median small business had a cash balance that would last just 27 days.
  • In a survey conducted last year by research organization NORC at the University of Chicago, 31% of working adults said missing a single paycheck would mean that they couldn’t cover necessities.
  • An additional 20% said they couldn’t miss more than one paycheck.
  • Among respondents to a survey conducted by the TIAA Institute and George Washington University making less than less than $25,000, 54% said they would be unable to come up with $2,000 in an emergency.
  • Even among people earning in excess of $100,000 a year, 10% said they wouldn’t be able to raise the money.

U.S. Income Tax Delay to Strain States

  • The Trump administration’s decision to move the deadline for filing income taxes to July 15 because of the new coronavirus crisis is creating a cash crunch for state governments that were counting on an infusion of state income-tax revenue next month to pay bills.
  • Many state budgets run from July 1 through June 30, so the new filing date—instead of April 15—means state officials can’t count on that tax money for the current fiscal year.
  • States could have to borrow in volatile financial markets or cut into their budgets between now and the end of June.

U.S. Customs Tells Importers It Will Approve Tariff Delays on a Case-by-Case Basis

  • The U.S. government has told importers it will approve temporary suspensions of tariff payments on a case-by-case basis, setting up a clash with steel producers and other domestic firms who oppose any tariff relief on foreign-made products.
  • The case-by-case consideration comes as big business groups are asking the administration to cancel or at least suspend its punitive tariffs on imports from China as well as steel and aluminum products from around the globe.
  • On Wednesday a group of domestic steel associations sent a letter to CBP opposing delays in tariff payments.

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EUROPE & WORLD

China to resume U.S. LPG imports as Beijing waives trade-war tariff: sources

  • China has begun buying U.S. liquefied petroleum gas (LPG) again after a hiatus of nearly 20 months as Beijing waived punitive tariffs to boost imports of U.S. goods as part of the Sino-U.S. Phase 1 trade deal, industry sources said.
  • Importers have rushed to apply for waivers for the 25% tariff to buy the fuel, a by-product from U.S. shale gas production, after Beijing started granting exemptions this month for nearly 700 U.S. goods.
  • With the exemptions, U.S. LPG is subject only to a 1% import duty, same as rival supplies from the Middle East.

Thyssenkrupp to cut 3,000 jobs at struggling steel unit

  • German conglomerate Thyssenkrupp will cut 3,000 jobs and invest 4.2 billion euros ($4.6 billion) at its struggling steel division by 2026 as part of a wage deal struck with powerful labor union IG Metall, it said on Wednesday.
  • The measures, which follow a landmark deal to sell the group’s prized elevator division, are aimed at making Thyssenkrupp’s steel production business competitive once more against rivals including ArcelorMittal and Voestalpine.
  • The steel business, the second-biggest in Europe by sales, is reeling from weakening demand, cheap Chinese imports and a botched attempt to merge it with the European division of Tata Steel, a deal blocked by Brussels on antitrust concerns.

India likely to unveil $20 billion-plus stimulus package to tackle coronavirus downturn – sources

  • India is likely to agree an economic stimulus package of more than 1.5 trillion rupees ($19.6 billion) to fight a downturn in the country that is currently locked down to stem the spread of coronavirus, two sources familiar with the matter told Reuters.
  • One of the sources, a senior government official, said the stimulus plan could be as large as 2.3 trillion rupees, but final numbers were still in discussion.
  • The package, which could be announced by the end of the week, will be used to put money directly into the accounts of more than 100 million poor and to support businesses hit the hardest by the lockdown, the sources said.

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TODAY in HISTORY

  • The 25,000-person Alabama Freedom March to protest the denial of voting rights to blacks, led by Martin Luther King , ended its journey from Selma on the steps of the State Capitol in Montgomery, Ala. (1965)

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