with Brent D. Griffiths

Everyday Americans — not governors or President Trump — hold the fate of the nation’s economic revival in their hands. And they largely agree the persistent threat posed by the novel coronavirus pandemic means the coast is far from clear, even as a growing number of states determine it is safe to begin lifting restrictions.

Sizable majorities of Americans agree a broad range of businesses, from golf courses to movie theaters, should not be able to open yet, according to a new Washington Post-University of Maryland poll. Roughly three in four people, for example, say gyms, nail salons, and dine-in restaurants should stay closed.

Attitudes about reopening differed along partisan lines, with Republicans and Republican-leaning independents in favor of opening some establishments. Roughly six in ten of them, for example, support opening golf courses; but by about the same margin, that group opposes reopening dine-in restaurants.

The sentiment “reflects other cautions and concerns revealed in the survey, including continuing fears among most people that they could become infected by the coronavirus as well as a belief that the worst of the medical crisis is not yet over,” Dan Balz and Emily Guskin write.

And until Americans say they feel safe, they will likely vote with their wallets and continue to stay home, rendering moot attempts by governors to jump-start a return to the pre-pandemic consumption that drove economic growth.

Anecdotal evidence backs up the survey’s results.

The poll found 67 percent would be uncomfortable going to a retail clothing store, and 78 percent would be uncomfortable eating out in a restaurant. “People in states with looser restrictions report similar levels of discomfort as those in states with stricter rules,” per Dan and Emily.

And those findings track with the experience proprietors in Georgia reported over the weekend as the state became one of the first to reopen some retail establishments. Mario Zelaya, who runs an ax-throwing bar in Atlanta, told Bisnow Atlanta he had two customers, down from hundreds before the shutdown — in other words, “a disaster” and the “worst-case scenario, especially with all the marketing we did.” Ditto Alex Cunningham, who told my colleagues he had two customers Friday instead of the usual dozens at his two mobile phone repair kiosks in Houston's Galleria mall.

Given the uncertainty, some small business operators in states lifting lockdowns are choosing to stay shuttered. Michael Shemtov closed his ten restaurants in Charleston, S.C. and Nashville, laying off 350 of his 400 employees in the process. He tells The Post's Laura Reiley he hasn't signed the paperwork for the loan he received from the federal Paycheck Protection Program: He worries a trickle of returning patrons won't support the number of staff he needs to rehire in order to qualify for forgiveness. 

Other recent gauges of consumer sentiment point to widespread caution.

A NPR-PBS NewsHour-Marist poll published last week found wider fear, with just 19 percent of saying it's a good idea to reopen dine-in restaurants: 

And consumer confidence has fallen off a cliff — no surprise as unemployment surges and other measures of the wreckage brought on by the lockdowns continue piling up. The Conference Board’s index of consumer sentiment fell nearly 32 points in April, its largest monthly decline since 1973:

And the University of Michigan survey of consumer confidence also registered a two-month drop of 29.4, its steepest consecutive monthly decline on record. Richard Curtin, the University of Michigan economist who directs the survey, said how consumers respond to lifting restrictions “will be critical, by either putting further pressure on states to reopen their economies, or exerting added pressure for states to extend their restrictions.”

Some states nevertheless are racing ahead, with Trump cheering them on.

“A slew of states — such as Texas, Indiana, Colorado and Florida — have pushed forward with relaxing social distancing guidelines even as the number of people testing positive in many states has increased in recent weeks and testing continues to lag behind,” Tolls Olorunnipa, Griff White and Lenny Bernstein report.

As Trump encourages restarting, he and his administration have backed away from guidelines they issued last month recommending states establish declining cases over two weeks and ensure adequate testing before relaxing restrictions. “It underscores how an eagerness by Trump and several state governors to begin restarting normal activities after a weeks-long economic slowdown has clashed with a stubbornly high national caseload that has defied the president’s predictions of a swift and safe reopening,” they write.

It’s also potentially self-defeating, in light of what the polling reveals about Americans’ determination to make up their own minds. “The public will have to be persuaded that reopening is safe,” Goldman Sachs economists wrote in a note last month. “We see a few prerequisites: further declines in confirmed new infections, sufficient hospital and testing capacity, and the ability to trace and quarantine those who might be infected. These look achievable in coming months, but there is much uncertainty about the feasibility of controlling virus spread during reopening.”

The latest on the federal response

Treasury seeks to borrow record $3 trillion this quarter.

And it plans to borrow $677 billion more next quarter: “Allocations thus far have totaled more than $2 trillion, and at last one more package is expected to help the more than 30 million Americans who have hit the unemployment line as well as thousands of other businesses that have seen their revenue streams evaporate,” CNBC's Jeff Cox reports.

“Just since March 1, the national debt has grown by $1.5 trillion to $24.9 trillion, a 6.4 percent increase. The budget deficit through March, or the first six months of the fiscal year, totaled $744 billion, on pace to easily eclipse the biggest shortfall in U.S. history.” 

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Coronavirus fallout

In the U.S.:
  • At least 1,1750,000 cases have been reported; 68,172 people have died.
  • Trump administration privately sees death toll rising: The model sees deaths increasing to 3,000 a day by June 1. “The projections, based on data collected by various agencies, including the Centers for Disease Control and Prevention, and laid out in an internal document obtained … by The New York Times, forecast about 200,000 new cases each day by the end of May, up from about 30,000 cases now. There are currently about 1,750 deaths per day, the data shows,” the Times's Sheryl Gay Stolberg and Eileen Sullivan report.
  • America is facing a mental health crisis: “Just as the initial coronavirus outbreak caught hospitals unprepared, the country’s mental health system — vastly underfunded, fragmented and difficult to access before the pandemic — is even less prepared to handle this coming surge,” William Wan reports. “Researchers have created models — based on data collected after natural disasters, terrorist attacks and economic downturns — that show a likely increase in suicides, overdose deaths and substance use disorders.”
  • California borrows from federal government to make unemployment payments: “The Golden State borrowed $348 million in federal funds after receiving approval to tap up to $10 billion for this purpose through the end of July, a Treasury Department spokesman said …,” the Wall Street Journal's Sarah Chaney reports of the first state to need such support.
  • Factory orders plunged in March. Commerce Department data shows “new orders for manufactured goods fell 10.3% from February to a seasonally adjusted $445.8 billion in March, the biggest month-to-month fall in records dating to 1992. Orders for aircraft, autos and oil field machinery all declined, reflecting decisions to halt travel and close factories, as well as rising consumer caution and plummeting energy prices,” the WSJ's Jeffrey Sparshott reports.
Corporate impact: 
  • J. Crew's bankruptcy likely first of many: “The mall staple known for preppy basics became the first national store brand to seek Chapter 11 protection since the covid-19 crisis began, but others are nearly certain to follow. Neiman Marcus and J.C. Penney are low in cash and widely reported to be considering similar action,” Abha Bhattarai reports.
  • Discounts may help spark the auto market: “Automakers have been burning through money while their plants are shuttered. Many industry experts agree that larger discounts could generate demand and cash flow when they reopen, even if they erode carmakers’ profit margins,” Reuters's Nick Carey reports.
  • GE Aviation to cut up to 13,000 jobs: “The GE Aviation job cuts are part of the $3 billion in cost and cash savings announced by the company last month and include previously announced cuts, including a 10% percent cut to its U.S. workforce announced in March,” Reuters's David Shepardson reports.
  • Zillow sees home prices shrinking 2-3 percent nationally: “Home prices have only fallen nationally once since the Great Depression, and that was following the subprime mortgage crisis and the Great Recession. Now, barely eight years after hitting bottom, and after a mighty recovery, prices are predicted to fall nationally again …,” CNBC's Diana Olick reports.
  • Ferrari surpasses GM & Ford: The Italian sports car maker “is now worth more than General Motors or Ford, after its market value surged Monday morning to about $30 billion,” CNBC's Robert Frank reports.
  • Amazon vice president quits over firings of warehouse workers and climate activists. Per Jay Greene: “Tim Bray, who held the title of distinguished engineer, wrote in a blog post that he was giving up his job, and forgoing a paycheck that could top $1 million, because he no longer felt comfortable working for a company that’s comfortable firing whistleblowers with legitimate concerns. ‘It’s evidence of a vein of toxicity running through the company culture,’ Bray wrote.” (Amazon chief executive Jeff Bezos owns The Washington Post.)
Around the world:
  • Australian PM says virus most likely came from Wuhan market: “Australian Prime Minister Scott Morrison said that the coronavirus probably originated in a wildlife market in China, but he couldn’t discount the possibility that it escaped from a virology lab,” Antonia Farzan reports. Morrison again called for an independent probe to address the question.
  • Chinese media attack Pompeo after lab claim: “The heightened allegation by U.S. Secretary of State Mike Pompeo that the coronavirus pandemic can be traced to a Chinese laboratory sparked an angry response by China’s media … in the absence of any official government comment during a national holiday,” the Wall Street Journal's James T. Areddy reports. “The official news agency Xinhua … accused Pompeo of speaking ‘nonsense’ and telling ‘lies,’ while a news reader on China Central Television called the secretary ‘evil’ and said he was ‘spitting poison.’ ”

Trade fly-around

The Trump administration is pressing ahead on decoupling.

New tariffs are also being considered: “Economic destruction and the massive U.S. coronavirus death toll are driving a government-wide push to move U.S. production and supply chain dependency away from China, even if it goes to other more friendly nations instead, current and former senior U.S. administration officials said,” Reuters's Humeyra Pamuk and Andrea Shalal report.

“ 'We’ve been working on [reducing the reliance of our supply chains in China] over the last few years but we are now turbo-charging that initiative,' Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the U.S. State Department, told Reuters. The U.S. Commerce Department, State and other agencies are looking for ways to push companies to move both sourcing and manufacturing out of China. Tax incentives and potential re-shoring subsidies are among measures being considered to spur changes, the current and former officials [said].”

An internal Chinese report warns that Beijing faces a rising wave of hostility in the wake of the coronavirus outbreak that could tip relations with the United States into confrontation.
Reuters

Market movers

Stocks rally to eke out a gain. CNBC's Yun Li and Fred Imbert: “Stocks rose slightly as an advance in the biggest U.S. technology shares lifted the market into the green from losses earlier in the session. The Dow Jones Industrial Average traded 0.1%, or 26.07 points, higher at 23,749.76 after being down as much as 360 points at one point. The S&P 500 rose 0.4%, or 12.03 points, to 2,842.74.”

Traders jockey between ride-hailing giants before they report earnings.

Lyft will go first on Wednesday with Uber following a day later: “Analysts at Citi Research resumed coverage on Lyft with a buy rating on Friday despite its recent underperformance versus Uber, saying they had a positive long-term outlook for the company’s ‘pure-play’ North America-focused business,” CNBC's Lizzy Gurdus reports.

Boris Schlossberg, managing director of FX strategy at BK Asset Management, told CNBC that Uber has other advantages, though. “Uber, with Uber Eats, has really carved out a very interesting, unique business ... of on-demand transport of goods rather than people,” he said. 

Oil headed for the longest run of daily gains in more than nine months as the impact of production cuts indicated the glut may be beginning to ease.
Bloomberg

Pocket change

WeWork begins legal fight against company that once tried to save it.

Co-founder Adam Neumann sues SoftBank for terminating a $3 billion tender offer: The tender offer was part of a $9.6 billion rescue financing package that SoftBank agreed with WeWork in October and gave it control of the company. Since then, WeWork’s occupancy rates have plummeted amid the covid-19 pandemic,” Reuters's Joshua Franklin and Bharath Manjesh report.

“In April, SoftBank said it would not press ahead with the tender offer because several pre-conditions had not been met, frustrating WeWork’s minority shareholders, who were expecting a payout. The investors included Adam Neumann … An independent special committee, comprised of Bruce Dunlevie, who is a general partner at WeWork shareholder Benchmark Capital, and Lew Frankfort, former CEO of luxury handbag maker Coach, had also filed a lawsuit, calling SoftBank’s decision to terminate the tender offer wrongful.”

L Brands moves forward after Victoria's Secret deal is scrapped: “L Brands shares tumbled 15 percent in extended trading … after announcing it struck an agreement with Sycamore Partners to terminate its Victoria’s Secret deal,” CNBC's Lauren Hirsch reports.

“In February, private equity firm Sycamore had agreed to acquire a 55 percent share in Victoria’s Secret for $525 million, allowing the brand to go private. L Brands was hoping to focus on running its better-performing store, Bath & Body Works … The retailer announced that it is still interested in “establishing Bath & Body Works as a pure-play public company” and it hopes to prepare its Victoria’s Secret businesses to operate as a standalone company as well.”

Banks baffle investors in how they calculate losses: “These discrepancies are rooted in the interpretation of new accounting rules called IFRS9, which have been designed to promote transparency and stability by making banks account for loan losses earlier,” Reuters's Lawrence White and Sinead Cruise report.

“But rather than solving problems seen during the 2008-9 financial crisis, when markets were blindsided by a sudden deterioration in bank balance sheet health, IFRS9 is confounding the same investors they are meant to help. While the rules aim to provide a more realistic and timely picture of bank exposures, some have described their application as more art than science. Critics go further; complaining the system is complex, opaque and vulnerable to abuse.”

Wells receives outstanding" rating for community lending: “The Office of the Comptroller of the Currency assigned the rating to the bank under the Community Reinvestment Act, a law meant to promote lending to poor neighborhoods,” Reuters's C Nivedita reports.

“The rating is usually assessed every five years. The bank has paid over $7 billion in penalties and fees since a sales practices scandal erupted in 2016.”

Daybook

Today:

  • Walt Disney, Fiat Chrysler, Occidental Petroleum, Royal Caribbean, Cheesecake Factory, Allstate, Mattel, Beyond Meat, Marathon Petroleum, Wynn Resorts, Electronic Arts and DaVita are among the notable companies reporting their earnings

Wednesday:

  • CVS Health, General Motors, Lyft, Wendy’s, GrubHub, T-Mobile US, Re/Max Holdings, Discovery, Peloton Interactive, Hyatt Hotels, New York Times,  Office Depot, and Papa John’s are among the notable companies reporting their earnings

Thursday:

  • The Labor Department releases weekly jobless claims
  • JetBlue Airways, Anheuser-Busch InBev, ViacomCBS, Hilton, Norwegian Cruise Line, Roku, Bristol-Myers Squibb, Raytheon Technologies, Denny's and YETI Holdings are among the notable companies reporting their earnings

Friday:

The funnies

Bull session