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| Fed Steps In to Push Banks to Provide Small Business Loans: Live Updates | |
| (32 minutes later) | |
| The Federal Reserve said on Monday that it would provide a backstop to banks making loans to small businesses as part of the government’s coronavirus-tied lending program, an effort to get financing to vulnerable companies. | |
| Congress has made loans available to small businesses as part of the $2 trillion stimulus package it passed in March. The Fed said Monday that it would establish a program that will incentivize banks to make loans under the so-called Paycheck Protection Program, which is supposed to funnel some $350 billion in loans to cash-strapped companies. | |
| While the central bank released few particulars — saying only that additional details will be announced this week — the program could take several forms, either making outright purchases of those loans once banks have extended them, or providing funding to the banks to help them lend. | |
| U.S. stocks surged on Monday as investors looked to signs that the coronavirus outbreak was peaking in some of the world’s worst-hit places. | U.S. stocks surged on Monday as investors looked to signs that the coronavirus outbreak was peaking in some of the world’s worst-hit places. |
| The S&P 500 rose more than 5 percent by midday. | The S&P 500 rose more than 5 percent by midday. |
| After grappling with intense market volatility during the month of March as efforts to contain the spread of the virus weighed on the economy, investors were cheered by numbers showing that the pace of new confirmed infections and deaths was slowing in some areas 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. | After grappling with intense market volatility during the month of March as efforts to contain the spread of the virus weighed on the economy, investors were cheered by numbers showing that the pace of new confirmed infections and deaths was slowing in some areas 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. |
| Analysts highlighted the tentative deceleration of infections in New York as a good sign for other virus hot spots in the United States, as well as stock market sentiment. | Analysts highlighted the tentative deceleration of infections in New York as a good sign for other virus hot spots in the United States, as well as stock market sentiment. |
| “This is why the possibility of New York’s caseload peaking is so important, as it is a sign that the U.S. is likely to peak two weeks from now,” wrote Dan Clifton, a partner at Strategas Research Partners, a financial and economic consulting firm, in a note. | “This is why the possibility of New York’s caseload peaking is so important, as it is a sign that the U.S. is likely to peak two weeks from now,” wrote Dan Clifton, a partner at Strategas Research Partners, a financial and economic consulting firm, in a note. |
| “This does not mean that the all clear is immediate, nor does it mean that the U.S. economy will quickly recover. But the light at the end of the tunnel is starting to emerge.” | “This does not mean that the all clear is immediate, nor does it mean that the U.S. economy will quickly recover. But the light at the end of the tunnel is starting to emerge.” |
| European stocks were trading higher after a modest rally in Asia picked up steam later in the day. | European stocks were trading higher after a modest rally in Asia picked up steam later in the day. |
| U.S. Treasury bond prices fell, pushing yields, which move in the opposite direction higher, with the yield on the 10-year Treasury note rising to 0.65 percent. But the price of oil fell amid a continuing spat over supplies between Russia and Saudi Arabia. | U.S. Treasury bond prices fell, pushing yields, which move in the opposite direction higher, with the yield on the 10-year Treasury note rising to 0.65 percent. But the price of oil fell amid a continuing spat over supplies between Russia and Saudi Arabia. |
| Consumer pessimism about the labor market is testing new limits, based on a Federal Reserve survey conducted in March as coronavirus ripped through the United States, closing businesses and leaving hundreds of thousands of people out of work. | |
| Expectations that unemployment will be higher a year from now rocketed up, jumping to 50.9 percent from 34.2 percent in February and setting a new series high, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations. Workers put the chances that they might lose their own job over the next year at 18.5 percent in March, up 4.7 percentage points and also the highest since the series started in mid-2013. | |
| “The expected growth in households’ income and spending fell sharply and the perceived availability of credit worsened,” according to the New York Fed. “For both income and spending growth expectations, the drop was broad-based across age, education and income groups.” | |
| If there was a bright spot, it’s that consumers expect stocks to recover after their recent sell-off. The probability that U.S. stock prices will be higher in a year jumped to 47.7 percent in March, up from 42.5 percent in February. But that may be cold comfort, because stocks touched record highs in February before plummeting into a bear market. | |
| The New York Fed’s survey is internet-based and nationally representative. This edition was conducted March 2 to March 31, while February’s was fielded between Feb. 2 and Feb. 28. | |
| President Trump and his economic advisers are considering the possibility of issuing coronavirus “war bonds” as an effort to finance the swelling cost of propping up an economy facing a deep recession. | President Trump and his economic advisers are considering the possibility of issuing coronavirus “war bonds” as an effort to finance the swelling cost of propping up an economy facing a deep recession. |
| The CNBC television host Jim Cramer has been calling publicly for the Trump administration to issue war bonds to finance the economic relief effort and rally the country. On Monday, he asked Larry Kudlow, Mr. Trump’s top economic adviser, if the concept was on the table. | The CNBC television host Jim Cramer has been calling publicly for the Trump administration to issue war bonds to finance the economic relief effort and rally the country. On Monday, he asked Larry Kudlow, Mr. Trump’s top economic adviser, if the concept was on the table. |
| “You know, Jimmy, as far as I’m concerned, I think it’s a great idea,” Mr. Kudlow said. “This is a time, it seems to me, to sell bonds in order to raise money for the war effort.” | “You know, Jimmy, as far as I’m concerned, I think it’s a great idea,” Mr. Kudlow said. “This is a time, it seems to me, to sell bonds in order to raise money for the war effort.” |
| Mr. Kudlow said that he has spoken to Mr. Trump and Treasury Secretary Steven Mnuchin about the idea. They have not decided whether to move ahead with it or what the maturity or rate on the bonds would be. It’s possible that a war bond could just be the existing 30-year bond rebranded. | Mr. Kudlow said that he has spoken to Mr. Trump and Treasury Secretary Steven Mnuchin about the idea. They have not decided whether to move ahead with it or what the maturity or rate on the bonds would be. It’s possible that a war bond could just be the existing 30-year bond rebranded. |
| Earlier in Mr. Trump’s term, Mr. Mnuchin formally studied the possibility of issuing 50 or 100-year bonds but found that there was not sufficient appetite in the market. In January, the Treasury Department announced plans to roll out 20-year bonds for the first time since 1986. | Earlier in Mr. Trump’s term, Mr. Mnuchin formally studied the possibility of issuing 50 or 100-year bonds but found that there was not sufficient appetite in the market. In January, the Treasury Department announced plans to roll out 20-year bonds for the first time since 1986. |
| When asked about the idea by Mr. Cramer last week, Mr. Mnuchin suggested that the current menu of bonds insufficient. | When asked about the idea by Mr. Cramer last week, Mr. Mnuchin suggested that the current menu of bonds insufficient. |
| “You can buy as many 30-years as you want,” Mr. Mnuchin said. “That’s no problem.” | “You can buy as many 30-years as you want,” Mr. Mnuchin said. “That’s no problem.” |
| There has been discussion in Europe about the possibility of the European Union issuing “corona bonds” to help finance health systems and emergency employment measures. | There has been discussion in Europe about the possibility of the European Union issuing “corona bonds” to help finance health systems and emergency employment measures. |
| Senator Chuck Schumer of New York, the Democratic leader, and Speaker Nancy Pelosi urged the Trump administration to quickly provide America’s airlines with direct payroll assistance. | Senator Chuck Schumer of New York, the Democratic leader, and Speaker Nancy Pelosi urged the Trump administration to quickly provide America’s airlines with direct payroll assistance. |
| Major airlines began submitting their applications for government support to the Treasury Department on Friday but there is growing concern within the industry that Treasury Secretary Steven Mnuchin will demand strict terms, such as large equity stakes in the companies, to ensure that taxpayers are compensated. | Major airlines began submitting their applications for government support to the Treasury Department on Friday but there is growing concern within the industry that Treasury Secretary Steven Mnuchin will demand strict terms, such as large equity stakes in the companies, to ensure that taxpayers are compensated. |
| The Democrats, in a letter reviewed by The New York Times on Sunday, said they fear that if Mr. Mnuchin drives too hard of a bargain, airlines will balk and lay off more workers. | The Democrats, in a letter reviewed by The New York Times on Sunday, said they fear that if Mr. Mnuchin drives too hard of a bargain, airlines will balk and lay off more workers. |
| The Treasury had no comment on the letter from lawmakers. | The Treasury had no comment on the letter from lawmakers. |
| 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.” | 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. | 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. | 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.” | 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.” |
| With much of the country under stay-at-home orders that are keeping drivers off the roads, Allstate says it will issue partial refunds to most of its auto insurance customers, while American Family Insurance said it would issue customers one-time payments of $50 per vehicle. | With much of the country under stay-at-home orders that are keeping drivers off the roads, Allstate says it will issue partial refunds to most of its auto insurance customers, while American Family Insurance said it would issue customers one-time payments of $50 per vehicle. |
| The company said Monday it would return 15 percent of customers’ premiums for April and May. The refund will be sent back to Allstate, Esurance and Encompass customers through their usual payment method or credited to their accounts. The repayments would total more than $600 million, the company said. | The company said Monday it would return 15 percent of customers’ premiums for April and May. The refund will be sent back to Allstate, Esurance and Encompass customers through their usual payment method or credited to their accounts. The repayments would total more than $600 million, the company said. |
| Tom Wilson, Allstate’s chief executive, cited “an unprecedented decline in driving” as the reason for the refunds. “This is fair because less driving means fewer accidents,” he said in a statement. | Tom Wilson, Allstate’s chief executive, cited “an unprecedented decline in driving” as the reason for the refunds. “This is fair because less driving means fewer accidents,” he said in a statement. |
| Allstate is also allowing auto- and home-insurance customers to delay two consecutive payments or choose to pay what they can afford. It is also expanding insurance coverage to people who use their personal vehicles to deliver food, medicine and other goods for commercial purposes — activities that are usually not covered by personal auto insurance policies. | Allstate is also allowing auto- and home-insurance customers to delay two consecutive payments or choose to pay what they can afford. It is also expanding insurance coverage to people who use their personal vehicles to deliver food, medicine and other goods for commercial purposes — activities that are usually not covered by personal auto insurance policies. |
| As epidemiologists, virologists and other health experts scramble to understand the coronavirus and fight its spread, economists believe they can help. | As epidemiologists, virologists and other health experts scramble to understand the coronavirus and fight its spread, economists believe they can help. |
| One economist at the Inter-American Development Bank, who typically spends his days thinking about industrial policy in Latin America, recently looked at a map showing that hospitals may not have the resources needed to treat patients while those in other regions have plenty of supplies. That is the kind of problem, he argued, that economists can help solve. | One economist at the Inter-American Development Bank, who typically spends his days thinking about industrial policy in Latin America, recently looked at a map showing that hospitals may not have the resources needed to treat patients while those in other regions have plenty of supplies. That is the kind of problem, he argued, that economists can help solve. |
| They could help set up a new market for ventilators, for instance, that would allow hospitals with a surplus to move their equipment to facilities facing a deficit. | They could help set up a new market for ventilators, for instance, that would allow hospitals with a surplus to move their equipment to facilities facing a deficit. |
| The governor of New York on Friday issued an executive order telling hospitals to share ventilators. But he does not have the power to enforce the order. | The governor of New York on Friday issued an executive order telling hospitals to share ventilators. But he does not have the power to enforce the order. |
| One economist said that the federal government could set up an agreement between states that requires sharing. It could also act as a clearinghouse for ventilators or offer incentives to hospitals that lend or rent their equipment. | One economist said that the federal government could set up an agreement between states that requires sharing. It could also act as a clearinghouse for ventilators or offer incentives to hospitals that lend or rent their equipment. |
| 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. | 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. | 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. | 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. | 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. |
| BMW said on Monday that it was extending the suspension of production at its plant in Spartanburg, S.C., by three weeks to at least April 30. | BMW said on Monday that it was extending the suspension of production at its plant in Spartanburg, S.C., by three weeks to at least April 30. |
| 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. Airbus, a Boeing competitor, said on Monday that it is pausing production at a facility in Mobile, Alabama. | |
| 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 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. |
| Reporting was contributed by Karen Weise, Alan Rappeport, Ron Lieber, Kate Conger, Ben Dooley, Cade Metz, Jeanna Smialek, Stanley Reed, Niraj Chokshi, Nicole Sperling, Neal E. Boudette, Eduardo Porter, Jason Karaian, Jack Ewing, Mohammed Hadi, Katie Robertson, Carlos Tejada and Daniel Victor. |