#relationshipscams | #dating | Stocks Fall as Powell Warns of Lasting Economic Damage


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Stocks slid on Wednesday, Wall Street’s second drop in two days, after the chair of the Federal Reserve warned of dire consequences if lawmakers don’t do enough to protect the economy.

Mr. Powell’s comments came as Democrats and Republicans argued about the merits of a new spending plan. On Tuesday, House Democrats unveiled a $3 trillion relief measure that Republicans dismissed as exorbitantly priced and overreaching.

Mr. Powell’s warning — which echoes those of other economists who have said that the government’s relief efforts to date have barely sustained individuals and companies — set the tone for the trading day on Wall Street. The S&P 500 fell nearly 2 percent, adding to its 2 percent loss from the day before.

Investors have shrugged off a number of risks to the economy in recent weeks, instead bidding up stocks since the Fed signaled that it was ready to purchase unlimited bonds to stabilize key financial markets and after President Trump signed a $2 trillion economic rescue package.

That rally, a nearly 30 percent gain in the S&P 500 in March, has lifted stock prices even as company fundamentals worsened, and it came despite a darkening outlook for growth.

Mr. Powell seemed to focus investors on the risks again, a day after they heard a different concern from Dr. Anthony S. Fauci, a central figure in the U.S. government’s coronavirus response. If economic interests were allowed to override public health concerns, Dr. Fauci warned, “there is a real risk that you will trigger an outbreak that you may not be able to control.”

And some influential investors have weighed in on the growing disconnect between the performance of the stock market and an ugly outlook for the American economy. On Wednesday, David Tepper, a longtime hedge fund manager, said on CNBC that he thought the market was the most overvalued it has been since 1999.

Uber raised $900 million in a debt sale to help fund potential acquisitions, the ride-hailing company said Wednesday.

Uber is in talks to acquire Grubhub, the food-delivery service, although the deal has not yet been finalized and could still fall apart. If it goes through, it would create one giant player in food delivery as more people turn toward those services in the coronavirus pandemic.

Uber’s debt sale puts it alongside Disney, ViacomCBS and Live Nation, which have all raised cash to ride out financial uncertainty caused by the coronavirus pandemic. Uber said it would put the proceeds toward “working capital and other general corporate purposes, which may include potential acquisitions and strategic transactions.”

Online sales in the United States have surged since shelter-in-place measures shuttered brick-and-mortar stores in March. But the recent gains have not been spread evenly, new data shows.

Big and sometimes unexpected winners have emerged in several of the industries that have come to define the coronavirus economy, according to data from Earnest Research, which tracks millions of credit and debit card transactions in the United States.

  • More than a third of all Americans ordered groceries online for the first time over the last month, according to several surveys, and people have spent more ordering groceries online each succeeding week of the crisis. The clear winner so far has been Instacart.

  • Target and Walmart have been investing more heavily in grocery sales to take on the behemoth of online shopping, Amazon. Both companies recently expanded their online sales much faster than Amazon.

  • DoorDash, the market leader in online meal delivery, expanded its dominant position as it focused on chain restaurants and areas outside the big cities, where the sense of crisis has been less acute. Grubhub grew more slowly, in large part, analysts say, because the company had long focused on independent restaurants, which have been more likely to close during the quarantines, and on New York, where the crisis hit the hardest.

  • One of the few apparel companies that has been doing well, at least online, is Lululemon, thanks to its generous selection of the sweatpants and leggings that serve as particularly good work clothes when your office is in the basement.

A retirement fund for more than 5.9 million current and former government employees has halted plans to invest in Chinese stocks.

The Thrift Savings Plan’s effort to diversify the international stock portion of the $593.7 billion it has in assets under management has become a flash point in an increasingly contentious relationship between the United States and China.

The board that controls the fund had for months defended its plans to increase its exposure to China, saying that it was simply seeking to diversify its investments and provide better returns for its savers.

But members of Congress, the Trump administration and outside advisers have criticized the move, saying that it would pump funds into some companies that work with the Chinese military or have been the subject of sanctions by the U.S. government.

Politicians of both parties, but particularly some in the Trump administration, have called for decoupling the Chinese and American economies, arguing that American efforts to work closely with China have strengthened its authoritarian government.

Others have criticized a lack of transparency in the Chinese financial system that could be putting American investors at risk of fraud. Chinese law restricts the company documentation that auditors can transfer out of the country, limiting their visibility to American regulators.

Clete Willems, a former Trump administration official who is now a partner at the law firm Akin Gump, said the decision “may just be the start of a broader reassessment about the risks of investing in China.”

The Treasury Department eased its call for all recipients of emergency small business loans to consider returning the money if they had other options and said on Wednesday that borrowers who took loans for less than $2 million would be considered to have applied in good faith.

But on Wednesday, Treasury said that borrowers who took smaller loans were in the clear.

The agency decided that smaller loans likely went to businesses that did not have other access to capital and that the money would allow them to keep workers on the payroll. Scaling back its effort to claw back money will also allow the Small Business Administration to focus its auditing efforts on bigger companies that took larger loans.

Any company that took a loan larger than $2 million and seeks to have the loan forgiven will face a review by the S.B.A.

Because these results are cumulative, a slowdown means that fewer people are joining the ranks of the unemployed, but also that few of the workers who became unemployed in March and April are returning to work.

J.C. Penney, the department-store chain that was founded in 1902, might file for bankruptcy as soon as Friday after skipping two interest payments on its debt in the past month, according to two people familiar with the matter.

The company is in talks to secure about $450 million in debtor-in-possession financing, which would allow it to keep operating the business, according to the people, who spoke on condition of anonymity because discussions were confidential. The company declined to comment.

Southwest Airlines began a monthlong sale on Tuesday for flights between May 26 and Aug. 31 in an effort to encourage summer travel. One-way tickets range from $49 to $99, with the airline offering double frequent flier points.

Devastated carriers are struggling to fill planes as stay-at-home orders keep most people from traveling. The Transportation Security Administration said that it conducted checks on 163,205 passengers on Tuesday, compared with 2,191,387 passengers on the same day in 2019. Most planes have been flying with an average of 23 passengers.

“This promotion is designed to see if Southwest can stimulate demand among personal or leisure travelers,” said Robert Mann, an airline industry analyst and former executive. “They’re trolling for adventurous souls to go out and sample the travel environment.”

Southwest, the largest domestic carrier, typically has two popular sales each year — one in June and another in October, but neither sale includes summer trips. The current sale fares don’t apply to flights on popular travel days like Fridays and Sundays or trips over the Memorial Day and Labor Day holiday weekends.

Mr. Powell’s blunt diagnosis was the clearest signal yet that the trillions of dollars in support that policymakers have already funneled into the economy may not be enough to prevent lasting damage from a virus that has already shuttered businesses and thrown more than 20 million people out of work.

It also serves as a rejoinder to lawmakers and the Trump administration, whose discussions of additional rescue measures have run aground as Democrats unveil a dramatic wish-list and Republicans shy away from federal spending, betting instead that “reopening” the economy will quickly and dramatically lift growth.

“The recovery may take some time to gather momentum,” Mr. Powell said at a virtual event put on by the Peterson Institute for International Economics, where he lauded Congress’s early response packages and suggested that an uncertain outlook may call for more. “Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

Mr. Powell and his central bank colleagues are stepping into their role as economic experts and informal advisers to prod fiscal policymakers into action. They say the recovery remains “highly uncertain,” and if the policy response proves inadequate, the consequences could be long-lasting and painful.

Mr. Powell pointed out that the burden often falls on the most disadvantaged, explaining that a Fed survey set for release on Thursday will show that almost 40 percent of people who were working in February and were members of households making less than $40,000 a year had lost their jobs in March.

He also said on Wednesday that the central bank was not considering cutting interest rates below zero, adding that the Fed would instead rely on the same tools it employed during the last recession — forward guidance about the path of interest rates and asset purchases.

A motorcade of hundreds of buses drove around Washington, D.C., on Wednesday, part of a “rolling rally” calling for federal assistance as the industry struggles during the coronavirus pandemic. The American Bus Association and United Motorcoach Association are asking lawmakers for $15 billion in grants and loans.

“In the last stimulus bill, every form of passenger transportation was funded: airlines, Amtrak and transit, and the only form that wasn’t funded was private bus operators,” said Peter J. Pantuso, president of the American Bus Association. “The industry provides transport for 600 million people a year — as many as the airplanes do — and we were completely left out by Congress.”

More than 90 percent of the industry’s work force was laid off or furloughed because of the impact of stay-at-home orders on travel.

Normally, strict rules prevent employees from changing health insurance plans in the middle of a year. But the I.R.S. is giving employers a way to let workers make changes without waiting for the usual enrollment period.

Under the new guidance, employers can let their workers drop out of their health insurance if they have another option, or sign up if they failed to earlier in the year. Workers could also be allowed to add more family members to their plan, or switch from one workplace plan to another.

  • A United Nations report Wednesday predicted that the global economy would contract by 3.2 percent in 2020 because of the pandemic. A small increase had been expected before the crisis started. The U.N. further expects 34.3 million people to fall into extreme poverty this year, with more than half of the increase happening in Africa.

  • Condé Nast plans to lay off nearly 100 employees, the company’s chief executive, Roger J. Lynch, announced in a memo to staff members on Wednesday. The publisher of Vogue, Vanity Fair and The New Yorker has sought to cut costs across the company as luxury sales tumble during the coronavirus pandemic. The staff reductions follow pay cuts for top executives, including Anna Wintour, the company’s artistic director, which the company announced last month. Another 100 people will be furloughed for a few months and other employees will see reduced hours.

  • Britain’s economy contracted by 2 percent in the first three months of 2020 compared with the previous quarter, the government reported on Wednesday, the steepest quarterly drop since the financial crisis in 2008. In March alone, the economy shrank by 5.8 percent from February, the largest drop since the Office of National Statistics began keeping monthly tallies in 1997.

Reporting was contributed by Kate Conger, Ana Swanson, Nathaniel Popper, Jeanna Smialek, Sapna Maheshwari, Alan Rappeport, Michael J. de la Merced, Stanley Reed, Ernie Tedeschi, Quoctrung Bui, Sophia June, Tariro Mzezewa, Jack Ewing, Carlos Tejada, Mohammed Hadi, Vikas Bajaj, Niraj Chokshi, Edmund Lee, Neal E. Boudette, Jane Margolies, Katie Robertson and Gregory Schmidt.



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