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Quick Fix
Powell steps back on stage — Federal Reserve Chairman Jay Powell steps back on the stage Wednesday with the latest FOMC announcement and press conference. Powell is NOT likely to please President Trump — who has warmed to him lately — by flirting with negative interest rates. But he’s likely to offer more detail and perhaps expansions of the Main Street and municipal bond buying coronavirus relief efforts. Still, a POTUS tweet ripping Powell for not going negative seems ... somewhat likely.
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And Powell will certainly face questions about what other cannons the central bank might still roll out and get pressed on the extent of Fed transparency on its lending facilities, which it has promised will be extensive.
Cap Alpha’s Ian Katz: “The Fed is unlikely to take major monetary policy action at its FOMC meeting ending Wednesday … We doubt that the Fed is considering negative interest rates. That will disappoint … Trump, who may jump off the Jay Powell bandwagon and back onto the criticism train.
White House sets low bar — White House officials are beginning to brace the public for the awful jobs report set to come out one week from Friday on May 8. Here was temporary White House adviser Kevin Hassett on ABC’s “This Week”: “This is the biggest negative shock that our economy I think has ever seen … We're going to be looking at an unemployment rate that approaches rates that we saw during the Great Depression."
That would require joblessness to hit nearly 25 percent which it is not likely to do on May 8 so theoretically something below that could be considered relatively “good” news, though it will in fact be awful. And the unemployment number could be held down by a shrinking labor force, which is a bad reason.
Biden wants to go big — MM pal Mike Grunwald interviewed presumptive Democratic nominee Joe Biden and the former VP wants to go much bigger on stimulus. Biden ‘said the next round of coronavirus stimulus needs to be ‘a hell of a lot bigger’ than last month’s $2 trillion CARES Act, that it needs to include massive aid to states and cities to prevent them from ‘laying off a hell of a lot of teachers and cops and firefighters,’ and that the administration is already ‘wasting a hell of a lot of money.’”
Grim comments from NABE — The latest National Association for Business Economics survey, unsurprisingly, has some pretty brutal numbers on business conditions.
“Respondents report that last quarter was the worst since the global financial crisis for sales, profit margins, prices, and capital spending, … Compared to the outlook three months ago, respondents in the April survey report huge declines in the outlook for the next three months for each of these measures, as well as for wages and employment.”
GOOD MONDAY MORNING — Welcome to another week in coronaland. And happy birthday to Raphael “Rafi” White who turns 11 today! Email me at [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at [email protected] and follow her on Twitter @AubreeEWeaver.
JOIN ME TUESDAY MORNING — Global financial markets have been on a rollercoaster since the coronavirus pandemic hit. Join me on Tuesday 4/28 at 9 a.m. ET for a Morning Money Virtual Briefing conversation with Nasdaq CEO Adena Friedman to discuss how the pandemic is affecting trading and the economy and how she sees things playing out the next few months. RSVP here. And email me questions or tweet at me hashtagged #AskPOLITICO
Driving the Day
Trump has ditched the daily briefings that were devolving into nightmares for him. Instead at 2:00 p.m. Monday he participates in a Governors’ Video Teleconference on COVID-19 Response and Economic Revival … The Paycheck Protection program revives with new funding Monday that is likely to be gone by Friday …
ALSO THIS WEEK — FOMC meeting begins Tuesday with announcement Wednesday at 2:00 p.m. and Powell presser at 2:30 p.m. … Consumer confidence at 10:00 a.m. Tuesday expected to drop to 87.9 from 120.0 …
First read of Q1 GDP at 8:30 a.m. Wednesday expected to show a decline of 3.9 percent setting the stage for official recession with a much bigger drop in the second quarter … Initial jobless claims at 8:30 a.m. Thursday expected to drop from 4.4M to a still huge 3.5M …
TRUMP’S SUNDAY TWITTER TIRADE — Our Rishika Dugyala: “The day of his wife’s birthday … Trump decided to forgo a coronavirus briefing — but he didn’t log out of his Twitter account. … Trump started off his Sunday with warm wishes: ‘Happy Birthday to Melania, our great First Lady!’ …
“Three hours later, he began sending tweet after tweet deriding reporters for not accurately portraying him as a leader who’s ‘gotten more done in the first 3 1/2 years than any President in history.’ … Pulitzer Prizes have been used to reward journalistic excellence and impact since 1917. On Sunday, in a thread that has since been deleted, Trump seemed to confuse those awards with Nobel Prizes — which he also misspelled on each reference”
Have no fear. MM archived the classic Noble Prices tweets here.
MNUCHIN ON REOPENING — From Fox News Sunday: “As we begin to reopen the economy in May and June, you're going to see the economy really bounce back in July, August, September. … We are putting an unprecedented amount of fiscal relief into the economy. You're seeing trillions of dollars that's making its way into the economy and I think this is going to have a significant impact."
On more aid for state and local governments: “This is something he'll consider. ... If we need more money, as I've said, this is a war. We'll win this war. If we need to spend more money, we will. And we'll only do it with bipartisan support.”
PELOSI ON STATE AND LOCAL AID — House Speaker Nancy Pelosi on CNN’s “State of the Union with Jake Tapper: “Just calm down. We will have state and local, and we will have it in a very significant way. It's no use going on to what might have been.”
DEMOCRATS PRESS FOR MINORITY BANK MONEY — Our Zachary Warmbrodt:
“Pelosi and Senate Minority Leader Chuck Schumer are pressing the Trump administration to set aside at least $10 billion in small business rescue money for minority banks and other community lenders, saying they're concerned the aid is not reaching underserved, low-income areas.
ACCESS FOR PAYDAY LENDERS? — Also via the Zach Attack: “A bipartisan group of lawmakers is pressing the Trump administration to let payday lenders gain access to small business rescue money, going to bat for companies that have been accused of engaging in predatory behavior toward lower-income people.”
HOW TO FIX PPP — Brookings Aaron Klein, a fellow long-suffering Redskins fan, writing for POLTICO’s Agenda on PPP: “[I]t's not too late to fix the program. The Treasury Department has the ability to correct many of these problems through changing how it administers the program."
Suggestions include: cap the loans at $1 million, change the way lenders are compensated (so they get paid per loan not by loan amount), and ease rules that advantage businesses with existing accounts at a bank.”
MORE FED PREP — Via Mohamed A. El-Erian on Bloomberg Opinion: “Among the three systemically important central banks holding policy meetings this week — the Bank of Japan, the European Central Bank and the Federal Reserve — the Fed is least likely to announce new policy measures. Yet its assessment of the economic outlook and, more important, its guidance on future policy measures will go a long way in determining the performance of financial markets.”
GOP NERVOUS ABOUT TRUMP TAKING DOWN SENATE — NYT’s Jonathan Martin and Maggie Haberman: “Trump’s erratic handling of the coronavirus outbreak, the worsening economy and a cascade of ominous public and private polling have Republicans increasingly nervous that they are at risk of losing the presidency and the Senate if Mr. Trump does not put the nation on a radically improved course.
“The scale of the G.O.P.’s challenge has crystallized in the last week. With 26 million Americans now having filed for unemployment benefits, Mr. Trump’s standing in states that he carried in 2016 looks increasingly wobbly: New surveys show him trailing significantly in battleground states like Michigan and Pennsylvania, and he is even narrowly behind in must-win Florida.”
FAUCI: DOUBLE TESTING LEVEL — Our Mohana Ravindranath: “The U.S. should at least double coronavirus testing in the coming weeks before easing into reopening the economy, the government's top infectious disease expert said Saturday. National Institute of Allergy and Infectious Diseases Director Anthony Fauci said the U.S. now churns through about 1.5 million to 2 million tests a week.
“‘We probably should get up to twice that as we get into the next several weeks, and I think we will,’ he during the National Academy of Sciences annual meeting. Public health experts have called for increased testing to get a clearer picture of the pandemic's scope, as well as to identify, isolate and trace contacts for infected patients.”
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Fly Around
MIXED SIGNALS ON THE ECONOMY — WSJ's Amrith Ramkumar: “Stocks continue to rise despite an unprecedented freeze in global economic activity and an oil-price crash, a divergence that makes some investors skeptical the gains can continue.
“The S&P 500 has baffled many investors by rebounding 27% since March 23 even as job losses have mounted. The broad equity gauge is now only down about 3% in the past year, with recent gains led by Amazon.com Inc. and Netflix Inc. … Many investors credit the Federal Reserve with halting stocks' slide.”
FLOOD OF BUSINESS BANKRUPTCIES LIKELY TO COME — AP’s Joyce M. Rosenberg: “The billions of dollars in coronavirus relief targeted at small businesses may not prevent many of them from ending up in bankruptcy court. Business filings under Chapter 11 of the federal bankruptcy law rose sharply in March, and attorneys who work with struggling companies are seeing signs that more owners are contemplating the possibility of bankruptcy.
Speaking of bankrupt companies … — WSJ’s Jonathan Randles: “The Trump administration is blocking companies in bankruptcy from receiving stimulus funds Congress has authorized to help small businesses survive the coronavirus pandemic, putting them at risk of closing permanently.
WALL STREET TRIES TO FIGURE OUT HOW TO RETURN TO THE OFFICE — Bloomberg’s Jennifer Surane and Michelle F. Davis: “Inside Citigroup Inc.’s headquarters in Manhattan, executives are trying to solve a problem bedeviling much of Wall Street: How to get employees up elevators. With the coronavirus pandemic just starting to ebb in New York, the world’s largest banks are busily designing logistics to eventually bring staff back to mostly empty towers.”
U.S. TO CAP HOW MUCH EACH BANK CAN LEND UNDER EMERGENCY LOAN PROGRAM — Reuters’ Michelle Price and Chris Prentice: “The U.S. government notified lenders on Sunday that it will cap how much each bank can lend under the emergency loan program designed to keep workers on payrolls amid the coronavirus pandemic, hours ahead of the reopening of the lending program.
“The Small Business Administration will impose a maximum dollar amount for individual lenders at 10 percent of [PPP] funding, or $60 billion per lender, and pace the applications filed, according to SBA guidance”
MILLIONS OF CREDIT CARD CUSTOMERS CAN’T PAY, LENDERS BRACE FOR IMPACT — WSJ’s AnnaMaria Andriotis and Orla McCaffrey: “Millions of Americans are skipping their credit-card payments as the coronavirus pandemic puts them out of work. Banks and other lenders that for years relied on heavy consumer spending to create big profits are preparing to struggle alongside their customers."
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For Your Radar
USMCA TO TAKE EFFECT JULY 1 — Our Sabrina Rodriguez: “The Trump administration notified Congress … that the U.S.-Mexico-Canada Agreement will take effect on July 1, bringing to a close an almost three-year process that … Trump began in rewriting the 25-year-old NAFTA.
“The three countries still need to wrap up certain requirements in the next two months, but the move triggers the clock for the deal to enter into effect in July. The step, however, is opposed by many North American business leaders who sought to delay USMCA implementation because of the economic difficulties arising from the spread of the coronavirus.”
NEW FROM THE FINANCIAL SERVICES FORUM — Via Blog post this a.m.: “Our chief economist, Sean Campbell, shows that the 8 Forum banks increased their lending to businesses by roughly $272 billion last quarter, a more than 15 percent increase from Q4. This increase is unprecedented.”
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Fed Chair Powell steps back on the stage - Politico
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