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Trump’s dangerous dance with Wall Street — CNBC reported that President Donald Trump and Vice President Mike Pence held a conference call on Tuesday with big Wall Street investors to discuss re-starting the economy during the coronavirus crisis. Titans on the call reportedly included Third Point’s Dan Loeb, Blackstone’s Stephen Schwarzman, Vista Equity’s Robert Smith, Intercontinental Exchange’s Jeffrey Sprecher and Paul Tudor Jones, hedge fund manager and co-founder of JUST Capital.
“Sources described the call to CNBC’s Scott Wapner as ‘constructive’ and that the general idea was that the U.S. economy cannot be allowed to crash.” After the call, Trump participated in a Fox News town hall in which he said wants to re-open much of the economy by Easter, which is just 18 days away.
Scott and I got in a bit of a dust-up on CNBC over the report. I suggested that the politics of Trump appearing to be pressured by Wall Street billionaires to re-open the economy too quickly were terrible.
These money managers can easily work remotely and continue to socially distance. For them to suggest other workers return to bars, restaurants, hotels, airlines, construction sites etc. and risk getting sick seems pretty tone deaf. Scott suggested that’s not the way he understood the call and that it was more just consultation on markets and a smart approach to the economy.
Whatever the case, there is a real risk of significant social unrest if Trump tries to pressure states and localities and employers to re-open in mid-April before we have any real handle on the spread of Covid-19 or a hospital system prepared to treat victims. Some workers will refuse. Others will comply and get sick and perhaps spark fresh virus outbreaks. That could mean fresh lockdowns and even bigger hits to the economy, if not flat out social breakdown.
There is also a very good chance that corona cases and deaths spike between now and Trump’s proposed reopen date, which would blow away his timetable and thrust the medical experts back to the front of the decision-making line.
Stocks pop — Stocks popped back hard on reports that a stimulus deal was close with the Dow soaring 2113 points, or 11 percent, to get back above 20K, in one of the biggest jumps since the 1930s. The S&P soared 9 percent and the Nasdaq rose 8 percent.
We told you this exact thing would happen. But the stimulus bill remained “on the two yard line” as of late Tuesday with leadership scrambling to get something done and on paper before the Wednesday market open.
UPDATE: DEAL MADE! — Via our Andrew Desiderio, Melanie Zanona, and Sarah Ferris: “Senate leaders and the Trump administration clinched a bipartisan deal early Wednesday morning on a nearly $2 trillion emergency relief package in response to the coronavirus pandemic, a move intended to assist businesses and millions of Americans amid an unprecedented halt in the U.S. economy.”
So what happened with markets? Cumberland’s David Kotok (who warned very early on to MM readers about the likely coronavirus impact): “It was stimulus from the most deeply oversold market in a century. … POTUS is so full of himself. That is where we are. This is a wartime footing for the nation and its markets. We need trusted leadership, not an apprentice.”
RBA’s Richard Bernstein: “Bear markets typically have three phases: 1) It’s temporary and will be over shortly. 2) It’s worse than anyone could’ve ever imagined. 3) It’ll never end. I think we’re hearing No. 1 in real time. It’s somewhat unique the President is joining in, but the sentiment seems to be closely following historical precedent.”
GOOD WEDNESDAY MORNING — Or whatever day this is. Nobody knows. Days no longer have meaning. Time doesn’t really either, as far as MM can tell. It’s always corona-day and corona-o’clock. Email me at [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at [email protected] and follow her on Twitter @AubreeEWeaver.
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TRANSITION — Per our Nancy Cook: Brian McGuire, Treasury’s head of legislative affairs, left on Friday during negotiations over a huge stimulus package. He is a former aide to Senate Majority Leader Mitch McConnell.
EXCLUSIVE: THIS ISN’T AN EMERGENCY — The Department of Homeland Security stopped updating its annual models of the havoc that pandemics would wreak on America’s critical infrastructure in 2017, according to current and former DHS officials with direct knowledge of the matter. Read more from Daniel Lippman.
TOP TWEET — Via CNBC’s @kaylatausche: “NEW, as reported on @CNBC — Former Pence chief of staff Nick Ayers has been running backchannel between WH and corporate America, stressing dire impact of a long-term shutdown.”
FED LEADS THE WAY — Our Victoria Guida: “The Federal Reserve has been thrust into the lead role of saving the U.S. economy from the coronavirus pandemic, taking on the extraordinary task of rescuing households, businesses and local governments as Washington lawmakers have spent weeks debating how to come to grips with the crisis.
“In just over a week, the Fed has slashed its main borrowing rate to zero, pledged unlimited purchases of U.S. government bonds, announced plans to back state and local governments, and even promised to buy debt from large corporations.”
TRUMP BETS ON FRUSTRATION — Our John F. Harris: “Trump’s vow … that he would ‘love to have the country opened up and just raring to go by Easter,’ less than three weeks from now, was the clearest signal yet of the political logic he hopes to follow in a presidential campaign shadowed by global pandemic.
“He is eager to own the only good thing about a crisis that has paralyzed the country and left millions of people in housebound despair: The reality that life will at some point slowly lurch back to normal. He is determined to make other people — specifically, governors and public health officials—own everything else, including the reality that massive shutdowns will continue long after the Christian holy day on April 12.”
ANY NYC VISITORS SHOULD SELF-QUARANTINE — Our David Lim: “Anyone who recently traveled from the New York City metro area should self-quarantine for 14 days from the time they left due to the high coronavirus infection rate in the city, members of the White House Coronavirus Task Force said …
“The move comes after Florida Gov. Ron DeSantis announced Monday that passengers flying from New York would be subject to mandatory isolation for two weeks to slow the spread of the virus.”
FISCAL HAWKS THROUGH IN THE TOWEL — Via Committee for a Responsible Federal Budget: “[N]ow is not the time to worry about near-term deficits. Combating this public health crisis and preventing the economy from falling into a depression will require a tremendous amount of resources – and if ever there were a time to borrow those resources from the future, it is now. Larger deficits are not only an inevitability, but are, unfortunately, a necessity.”
COULD WE SHUT MARKETS? — Our Zachary Warmbrodt: “Wall Street is facing a grim question as stock prices plunge on most days with no end in sight: Is it time to shut the market down for a while?”
LEFT NOT ALL ON BOARD — Via Maurice BP-Weeks, Co-Executive Director the Action Center on Race and Economy (ACRE): “The legislation, as it stands, is nowhere close to sufficient — and will only worsen the already existing racial wealth gap.”
SOFT BANK SENDS MASKS — Via Softbank CEO Marceo Claure, @marceloclaure: “The heroes of this pandemic are the health workers who put themselves in harm’s way to keep us safe. Yet they are in dire need of N95 respirator masks … @SoftBank is proud to donate 1.4 million N95 respirator masks to the State of New York.”
MIDDLE GROUND? — NYU’s Paul Romer and Harvard’s Alan M. Garber: “Social distancing is an emergency measure that will save lives but brings economic activity to a near-halt. … To protect our way of life, we need to shift within a couple of months to a targeted approach that limits the spread of the virus but still lets most people go back to work and resume their daily activities.”
TRUMP CANT DO IT ANYWAY — Michael R. Strain on Bloomberg Opinion: “Trump seems to think he can restart the U.S. economy … He’s wrong. Trump is deluding himself if he thinks that he can step behind a podium and reopen the economy.
“First, there is the practical problem that the economic shutdowns have been ordered by governors and mayors. … The president does not have the necessary credibility with many of these state and local officials to convince them to rescind their guidance to businesses, households and schools.”
AND HE SHOULDN’T — RSM’s Joe Brusuelas: “Based on our economic analysis, the U.S. is better off taking a one-time hit to economic growth, as efforts to terminate the virus continue, rather than run the risk of multiple economic shutdowns.”
STOCK BUYBACK BINGE OVER (FOR NOW) — NYT’s Matt Phillips: “The spreading outbreak has sent stocks down about 30 percent in the past month, triggered millions of layoffs and prompted the Federal Reserve to pump trillions of dollars into the economy to prevent collapse.
“And companies are navigating a rapidly shifting landscape — one in which spending cash to buy back their own shares is both politically and economically untenable. Over the weekend, as Congress worked to fashion a $1.8 trillion stimulus package for the economy, President Trump lent his support to provisions in the bill meant to block companies that receive federal money from using it to buy back shares.”
HOW THE U.S. COULD HELP WEAKEN ITS SURGING DOLLAR — Reuters’ Saqib Iqbal Ahmed: “A blistering dollar rally has revived speculation that the U.S. may rein in its currency if the buck goes much higher.
“The dollar has jumped about 7% in the last 15 days, as fears over the economic fallout of the coronavirus pandemic have sent investors into the greenback, often seen as a haven of last resort. It has remained near multi-year highs despite the U.S. Federal Reserve’s efforts to ease a global shortage of dollars, including enhancing swap lines to foreign central banks to ensure a sufficient supply of the currency to financial markets.”
BANKS WORK TO SAVE STUNNED BORROWERS — AP’s Ken Sweet: “Tarred as villains during the 2008 financial meltdown, banks of all sizes are trying to help out Americans reeling from the economic crisis caused by the coronavirus outbreak.
“Banks are scrambling to put into place loan forgiveness and relief programs, working to keep their customers from panicking or falling into financial ruin. They have a vested interest preventing millions of people and businesses from defaulting on hundreds of billions of loans at once, something that would do significant damage to the banks’ own finances.”
And banks can do more, but let’s be careful — WSJ’s Telis Demos: “If the Federal Reserve’s latest round of massive liquidity injections don’t succeed in unclogging markets, it may be faced with another tough choice: whether to lift more constraints on banks.”
CORONAVIRUS TRIGGERS RECORD DROPS IN U.S., EUROPEAN BUSINESS — WSJ’s Harriet Torry, Paul Hannon and Megumi Fujikawa: “The U.S. and Europe saw record declines in business activity in March, as economic activity slowed around the world due to measures aimed at containing the new coronavirus.”
SEC GIVES RELIEF TO MUTUAL FUNDS FACING REDEMPTION ISSUES — WSJ’s Dave Michaels, Justin Baer and Paul Kiernan: “Mutual funds facing stress from the market turmoil caused by coronavirus will be able to tap their parent asset-management companies and other affiliates for funding under relief announced this week by the [SEC]”