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Wall Street begins the week on an upbeat note.
U.S. stocks rallied and global markets surged on Monday as investors looked to signs that the outbreak is peaking in some of the world’s worst-hit places.
The S&P 500 rose more than 4 percent in early trading.
After grappling with intense market volatility during the month of March as efforts to contain the spread of the coronavirus weighed on the economy, investors were cheered by numbers showing that the pace of new confirmed infections and deaths was slowing in some places in Europe. In the United States, the Trump administration, while warning of a hard week ahead, suggested that the outbreak could be near its peak in some places. Gov. Andrew M. Cuomo of New York said on Saturday that the outbreak there could reach its worst point in coming days.
European stocks were trading higher after a modest rally in Asia picked up steam later in the day.
Beyond stocks, other markets showed improvement. U.S. Treasury bond prices fell in Asian trading. But the price of oil, which generally rises on good economic news, fell amid a continuing spat over supplies between Russia and Saudi Arabia.
JPMorgan’s Jamie Dimon expects a ‘bad recession.’
Jamie Dimon’s annual letter to shareholders is widely read on Wall Street — he often uses it to discuss not just the bank’s performance, but regulation, the economy and America’s role in the world. In his latest letter, published today, the chief executive of JPMorgan, America’s largest bank, says he expects “a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008.”
Companies have recently drawn down more than $50 billion from their credit lines with the bank, which “dramatically exceeds” the amount borrowers tapped during the Great Recession, Mr. Dimon wrote. Still, JPMorgan had nearly $300 billion in undrawn commitments at the end of last month, he added.
The bank has kept three-quarters of its 5,000 branches open during the pandemic. Like other banks, JPMorgan has waived some fees and extended repayment periods for mortgages, auto loans and the like. “We are exposing ourselves to billions of dollars of additional credit losses as we help both consumer and business customers through these difficult times,” Mr. Dimon wrote. The projected hit to the bank’s earnings — it made $36 billion in net profit last year — will be detailed when it reports its first-quarter financial next week.
In his letter, Mr. Dimon also added his voice to the chorus of captains of industry worried about restarting the economy, noting that a “disciplined” reopening would “minimize the time, extent and suffering caused by the economic downturn.”
As orders skyrocket, Amazon employees are asserting themselves.
As governments order Americans to stay home during the pandemic and homes across the country turn to Amazon for food, medicines and other supplies, many of the more than 400,000 warehouse workers who fulfill orders for the online retailer have remained on the job. The challenge lies in keeping them there.
Orders for groceries have been as much as 50 times higher inside Amazon, and the company is struggling to keep its warehouses staffed as concerns grow that these massive distribution centers have been contaminated, according to more than 30 current and former Amazon employees who spoke with The New York Times.
Last month, one person with knowledge of the situation said, worker attendance inside Amazon warehouses had dropped as much as 30 percent.
Though Amazon is not unionized, the situation has provided added leverage for workplace organizers inside the company to demand more pay and better sick leave. Last week, small groups of workers staged protests against working conditions inside two Amazon warehouses, and government officials in New York State and New York City said they were investigating whether the company improperly fired one employee who was part of a protest on Staten Island.
Data show how European carmakers are under stress.
Everyone knew the last few months would be terrible for carmakers. New data is showing just how bad.
The German carmaker BMW said on Monday that vehicle sales plunged 20 percent in the first three months of 2020. That figure probably understates the extent of the damage caused by the coronavirus outbreak, because lockdowns in the United States and Europe did not become widespread until March. Most dealerships in Europe and the United States are closed, BMW said.
In Britain, registrations of new cars fell 44 percent in March, the Society of Motor Manufacturers and Traders said Monday. Dealers sold 200,000 cars fewer than they did in March 2019.
In yet another sign that the industry is under financial stress, two large European carmakers said they secured additional bank credits to get them through the downturn. PSA, the maker of Peugeot and Citroën cars, said on Monday that it had doubled the size of an existing line of credit with a group of banks, to 6 billion euros, or $6.5 billion.
The German carmaker Daimler said last week that it had arranged to more than double the credit it can draw on if needed, to €23 billion from €11 billion.
OPEC’s meeting is delayed as tensions resurface between Saudi Arabia and Russia.
As Saudi Arabia and Russia squabbled over who is to blame for the collapse in oil prices in the coronavirus outbreak, the two countries were set to meet with other major oil producers on Monday in an effort to ease turmoil across the energy markets. But the meeting is now off.
The meeting between the Organization of the Petroleum Exporting Countries, Russia and other oil producers was never officially announced but was widely reported on Friday, and its cancellation, confirmed by two OPEC delegates, could affect the markets worldwide on Monday.
Owing to the coronavirus epidemic, demand for oil has dropped precipitously. Led by Saudi Arabia, OPEC had proposed a deal that would trim oil production, but Russia declined to go along with it. More recently, the Saudis increased production while offering discounts to customers.
Japan pledges nearly $1 trillion to boost its economy.
Japan will offer up an economic rescue package valued at roughly one-fifth of its annual economic output, or nearly a trillion dollars, Prime Minister Shinzo Abe said on Monday, to prevent its economy from collapsing under the strain of coronavirus as he prepares to declare a state of emergency that could bring many of the company’s businesses to a standstill.
Japan’s economy has slowed dramatically as many consumers and workers spend more time at home in an attempt to avoid the virus. Tourism and exports have plunged as countries close their borders. But Japan has so far managed to avoid the kinds of large scale lockdowns that have wreaked havoc on workers and companies in the United States, Europe and China.
How the economic package will work — and how it will reach the nearly $1 trillion mark — remain unclear. Speaking to reporters on Monday, Mr. Abe said that “given the serious damage to the economy, I have decided to take an unprecedented scale of economic measures worth 108 trillion yen, equivalent of 20 percent of GDP,” public broadcaster NHK reported.
These C.E.O.s are placing a $1.8 billion bet on a streaming app. In a pandemic.
The coronavirus is spreading, but two veteran business leaders, Jeffrey Katzenberg and Meg Whitman, have stuck with a Monday start date for Quibi, a short-form video app for smartphones that they hope will attract millions of subscribers.
The two have a combined 80 years of experience in leadership roles at some of the nation’s top companies. But they have spent nearly two years in start-up mode, prodding investors to kick in nearly $1.8 billion and bringing aboard producers and stars like Jennifer Lopez, LeBron James, Chance the Rapper, Idris Elba, Chrissy Teigen and more. Now Mr. Katzenberg and Ms. Whitman are ready to unveil their venture.
“This is either going to be a massive home run or a massive swing and miss,” said Michael Goodman, a media analyst at Strategy Analytics.
Quibi, a portmanteau of “quick bites,” will offer movies, reality shows and news programs made for the smartphone, with no installment lasting more than 10 minutes. Its offerings fall into three main categories: movies that will be released in chapters; documentaries and unscripted reality shows; and quick-hit news and sports reports from NBC, BBC, ESPN and others. Fifty shows will be available Monday.
There is, however, the question of how much people are willing to spend on streaming at a time when nearly 10 million people are out of work. Quibi (rhymes with “libby”) announced last month that it would be free for its first three months. After that, the cost will be $5 a month with ads and $8 without.
What we know about how the Fed plans to spend its new pot of money.
Congress has earmarked $454 billion for Federal Reserve programs that are meant to keep credit flowing to businesses, states and local governments — money that could help it to fend off a worst-case scenario for the United States economy.
During troubled times, the Fed can lend more or less directly to companies and governments using its emergency authorities. Treasury Secretary Steven Mnuchin must sign off on the programs, and the Treasury Department backstops the programs with a layer of financing meant to absorb losses.
The central bank’s actions so far, taken when the Treasury had far less money to provide backup, offer a rough outline of how it might use the new appropriation.
For individuals: Indirectly. The Fed is rolling out one lending program that gives eligible companies cheap loans in exchange for asset-backed securities — basically, bundles of debt — built on newly issued credit card debt, student loans, auto loans and the like. By creating a big incentive, the program should make loans available and cheaper for consumers.
For small businesses: The main support for small business is coming from the Small Business Administration, but the Fed is also taking bundles of business-related loans as collateral for loans, which could help smaller companies access financing. And the central bank’s Main Street Business Lending Program, so far scantly detailed, should help businesses that are too big to qualify for small business loans but too small to have easy access to capital markets.
For big businesses: The Fed has unveiled several programs to help. One will support a type of short-term funding known as commercial paper, and another will buy company debt secondhand. A third program will buy newly issued debt or make direct loans to corporations.
For local governments: The Fed has unveiled programs to help municipal bond markets by allowing banks to use some types of local debt as collateral to access loans. But officials have stopped short of buying local debt outright, and many lawmakers are urging them to think bigger.
Catch up: Here’s what else is happening.
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Boeing has extended the closure of its production operations in the Seattle area “until further notice.” The company’s work force has been hit hard by the pandemic and its business hurt by the grounding of the travel industry.
Reporting was contributed by Karen Weise, Kate Conger, Ben Dooley, Cade Metz, Jeanna Smialek, Stanley Reed, Nicole Sperling, Jason Karaian, Jack Ewing, Carlos Tejada and Daniel Victor.
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