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Don’t Stop Believin’
Relations between the U.S. and China are at their lowest point in decades, and the Covid-19 pandemic has rattled consumers the world over. U.S. businesses are doubling down on China anyway. From Popeyes to Walmart, Tesla to Exxon Mobil, companies are betting that the country’s long-term growth potential still outweighs the mounting case against further expansion—including geopolitical tensions and slowing growth. While the pandemic has spurred businesses to rethink supply chains to reduce dependency on China, companies that are producing in China for Chinese customers are bulking up their local presence, Trefor Moss reports.
WHAT TO WATCH TODAY
U.S. housing starts for April are expected to fall to 900,000 from 1.216 million a month earlier. (8:30 a.m. ET)
Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin appear by videoconference before the Senate Banking Committee. Live streamed here. (10 a.m. ET)
President Trump delivers remarks on supporting the food supply chain at 11 a.m. ET.
Minneapolis Fed President Neel Kashkari speaks during an online town hall at 10 a.m. ET and Boston Fed President Eric Rosengren speaks online on Covid-19’s impact on New England’s economy at 2 p.m. ET.
Where’s My Next $1,200 Check?
Americans have gotten $239 billion—and counting—from the IRS to help them ride out the coronavirus pandemic. Whether households get another round of $1,200 stimulus payments is tied to the increasingly partisan debate over how quickly the economy should reopen, Richard Rubin reports.
Coronavirus has split California. The San Francisco Bay Area and Sacramento account for only 16% of the state’s Covid-19 cases. Southern California is coping with about three-quarters of the state’s infections. The disparity could result in significantly different economic trajectories for the two regions in the months and years to come, Jim Carlton and Alicia A. Caldwell report.
Asking the Tough Questions
Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell appear via videoconference at the Senate Banking Committee for a quarterly hearing on how they are managing $500 billion in emergency lending programs. Look for tough questions that highlight two trade offs. First, the tension between speed and operational simplicity. Second, the tension between protecting taxpayers and providing generous relief to businesses, cities and states. Mr. Powell has repeated a refrain in recent weeks that the Fed has the power to lend money, not spend money. That makes it tricky to determine how it should extend credit to businesses that banks aren’t likely to make. —Nick Timiraos
U.K. Claims Spike
The number of people claiming unemployment benefits in the U.K. recorded the biggest monthly jump on record in April. The Office for National Statistics said 2.1 million people claimed jobless-related benefits, up 70% from a month earlier. The figures highlight the scale of the economic damage caused by the new coronavirus on the U.K. economy, even with expansive government support packages designed to cushion the blow, Jason Douglas reports.
France and Germany proposed a €500 billion Europe-wide recovery fund to support regions worst hit by the coronavirus pandemic. The plan aims to correct for the fact that some of the continent’s hardest-hit countries are also those with the smallest fiscal reserves. European officials have warned that a two-speed recovery across the region could entrench the differences between the EU’s stronger northern economies and the hardest-affected countries in the south. But the proposal immediately ran into opposition from countries worried it could create large-scale wealth transfers within the bloc, Bojan Pancevski and Laurence Norman report.
A global economic recovery might take up to three years. European CEOs and chairman surveyed by the Conference Board were overwhelmingly pessimistic about near-term prospects, mirroring the grim outlook of American chief executives, Daniel Michaels reports.
A new age of air travel is taking shape. As lockdowns loosen, airlines are plotting a path out of hibernation, reformulating routes and services, and balancing safety protocols with the challenge of convincing passengers to board the enclosed space of an aircraft in the midst of a pandemic, Alison Sider, Benjamin Katz and Mike Cherney report.
Last Contango in Paris
The oil market is betting people want crude for Christmas. In futures markets for both overseas-benchmark Brent and West Texas Intermediate, the main U.S. price, barrels for December delivery have the highest open interest, or total number of options and outstanding contracts. It is unusual for betting to center on barrels scheduled for delivery so far into the future. The situation reflects traders’ aversion to near-term contracts as long as the coronavirus pandemic is pummeling fuel demand. The popularity of the December contracts also indicates optimism that prices will rebound later this year, Ryan Dezember and Mike DeStefano report.
Good News, Bad News
Drugmaker Moderna said its initial Covid-19 vaccine results were positive. The experimental coronavirus vaccine induced immune responses in volunteers, raising hopes that a weapon to slow the pandemic could be on the horizon.
Uber Technologies is cutting several thousand additional jobs, closing more than three dozen offices and re-evaluating big bets in areas ranging from freight to self-driving technology as Chief Executive Dara Khosrowshahi attempts to steer the ride-hailing giant through the coronavirus pandemic.
Corrections & Amplifications
Italian cafes and restaurants have lost at least €25 billion ($27 billion) in sales, or around 28% of typical annual sales, because of the shutdown, according to Fipe. An item yesterday incorrectly said Italian cafes and restaurants have lost at least €25 billion ($27 million) in sales.
WHAT ELSE WE’RE READING
Wisconsin voters on April 7 cast ballots in the presidential primary, local and state races. “We find a statistically and economically significant association between in-person voting and the spread of Covid-19 two to three weeks after the election. Furthermore, we find the consolidation of polling locations, and relatively fewer absentee votes, increased positive testing rates two to three weeks after the election,” University of Wisconsin and Ball State economists write in a National Bureau of Economic Research working paper.
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