with Brent D. Griffiths

The good news for President Trump’s reelection prospects is voters still give him positive marks on his economic leadership. The bad news is just about everything else.

Former vice president Joe Biden has opened up an 11-point lead over Trump nationally in a head-to-head matchup, according to a new Quinnipiac University poll that shows the president’s overall approval rating and marks for handling the coronavirus crisis dropping further into negative territory. As Biden effectively ties Trump, 48 percent to 47 percent, on who voters trust to handle the economy, the presumptive Democratic nominee handily outscores the president in assessments of honesty, leadership skills and caring about average Americans.

Trump's continued positive score on economic stewardship — in the Quinnipiac poll and other surveys — may seem surprising. Consider the circumstances: Just five months ago, about three-quarters of voters rated the economy itself as excellent or good, an all-time high in the Quinnipiac survey. The sentiment has since flipped. Three-quarters of respondents now say the economy is not so good or poor.

Approval of Trump’s economic leadership has slipped only four points in the survey during that time, to 50 percent, even as 36.5 million Americans and counting have filed for jobless benefits in the most severe economic cataclysm since the Great Depression.

“The president has gone out of his way to blame previous administrations for weaknesses in our defenses against a pandemic. He’s blamed China for the origins of the virus. Whether that is the case, the argument he’s making is that it’s not his fault,” Quinnipiac polling analyst Tim Malloy tells me. “And people may believe that.”

Indeed, the survey’s findings are consistent with other recent polls. Trump’s economic approval rating stands at 51 percent, with 45 percent disapproving, according to the RealClearPolitics average, while his overall approval score by the same measure is underwater by nearly 7 percent.

The lingering bright spot looks like a lagging indicator for the president — and cold comfort.

Inside Trump's campaign team, there is no disagreement the pandemic and its fallout have shredded a playbook once premised on the president's economic stewardship. Now, strategists agree, if the Trump team doesn’t drive up Biden’s unpopularity, “the president will have little shot at winning a second term,” Michael Scherer and Josh Dawsey recently wrote. It’s a state of affairs a “glum and shellshocked” Trump is struggling to process, per Josh, Ashley Parker, Phil Rucker and Yasmeen Abutaleb.

And ratings for Trump’s economic record notwithstanding, traditional measures of how people’s personal financial well-being predict election outcomes suggest the tide has turned dramatically against the president. 

As we noted here earlier this week, an updated forecast by Oxford Economics now sees a growing probability of a November wipeout for Trump. The firm’s model — based on data including unemployment, inflation and real disposable income to predict state-by-state results — sees Trump losing seven states he carried in 2016: Iowa, Ohio, Wisconsin, Michigan, Pennsylvania, Missouri, and North Carolina, on the way to the “worst incumbent performance in a century. ”

The economic wreckage from the shutdowns has hit particularly hard in some key swing states, as Cowen Washington Research Group notes:

As the firm’s Chris Krueger notes, in key swing states, jobless claims over the last two months outstrip Trump's 2016 margins by an order of magnitude: “Trump won Florida — the absolute ‘must win’ state for the President — by 112,911 votes. There have been 1,989,639 unemployment claims filed in the last 8 weeks … Trump won Georgia by 211,141 votes. There have been 1,838,980 unemployment claims filed in the last 8 weeks … Michigan was the thinnest margin of the election, decided by 10,704 votes. There have been 1,376,650 unemployment claims filed in the last 8 weeks.”

Meanwhile, consumer confidence — whose rebound will be key to powering an economic recovery — has stabilized but remains well below where it stood in early March, according to Morning Consult’s tracking of the sentiment. And a recent survey found while consumers are slowly feeling more confident about resuming public activities, most see a return to a version of normal as months away:

“The issue consumers raise is despite the shutdowns, they are really not going to feel comfortable going out and spending until there’s the testing capacity and a fewer number of cases,” Morning Consult economist John Leer says. “They’re telling us the surest way to get them to back to spending is to address the health concern.”

That leaves Trump's political fate at the mercy of twin health and economic disasters.

“He went from a president who was going to run on his record to one that says, ‘Brighter days are ahead,’ which is a very different posture. He needs to get the economy moving again and not get another spike on the healthcare front,” says Lee Miringoff, director of the Marist College Institute for Public Opinion. “It’s a very narrow argument Trump is advancing right now because he’s not controlling the path reality takes.”

But Republican pollster Neil Newhouse sees Trump’s economic approval rating as signaling an important strength in a campaign that could be singularly unpredictable given the ongoing crisis. “Americans are looking through the windshield, not the rearview mirror,” he says. “They want to see the economy going again. And they want to see the president be successful because their jobs and personal finances depend on it. They’re rooting for him.”

Market movers

Stocks rebound, S&P 500 closes at its highest since early March.

Investors focused on signs that reopening is gathering momentum: “The Dow Jones industrial average jumped 300 points at the opening bell and never looked over its shoulder, extending its gain to 369 points, or 1.5 percent, to finish at 24,575.90. Energy stocks were a big winner, with Chevron and ExxonMobil surging around 3 percent. Walt Disney and American Express, both of which stand to benefit from an economic reopening, paced the blue chips through the day,” Thomas Heath and Taylor Telford report.

“Retailers Target and Lowe’s reported better-than-expected first quarter results on Wednesday. Weekly mortgage applications … point to a strong recovery in that sector. Airlines have said bookings are up, gasoline usage is increasing as more cars take to the road. And the Federal Reserve this week reiterated its pledge to do what it takes to prevent a depression.”

  • Facebook shares reached an all-time high: “The social media giant announced Facebook Shops on Tuesday, which will make listing products to Facebook and Instagram easier. The stock ended the day up just over 6 percent,” CNBC's Jessica Bursztynsky reports. Morgan Stanley wrote in a note “that this could make Facebook a competitor to Amazon and Alphabet’s Google. Shops also presents itself as a multibillion dollar opportunity.”
Fed minutes show fear of “extraordinary amount of uncertainty."

Officials in April discussed how to indicate they will keep interest rates low: “The minutes indicated that more action is likely ahead, though they did not specify when. Members said ‘further clarity’ on asset purchases might be needed ‘later this year,’ ” CNBC's Jeff Cox reports.

“The Fed’s coming discussions for monetary policy are turning on how to signal its plans to keep interest rates low, according to minutes released … of its April 28-29 policy meeting,” the Wall Street Journal's Nick Timiraos reports. “One strategy would tie future plans to achieving specific economic outcomes, such as saying the central bank wouldn’t raise rates until inflation reached 2 percent. Another option would be to provide calendar-based guidance, such as saying the Fed would hold rates low until some date in the future.”

  • Bullard doesn't see coronavirus second wave as a major threat: “St. Louis Federal Reserve leader James Bullard broke from some of his central bank colleagues and said he isn’t that worried that the economy will be again felled again by a later resurgence of the coronavirus,” the WSJ's Michael S. Derby reports. “When it comes to managing risks around the pandemic, ‘so much has been said about this already, that I think as soon as something would pop up we’d be all over that as a society, pounce on it at that point and keep it under control,’ Bullard said.”
The March 16 stock crash was part of a broader liquidity crisis that pummeled even seemingly safe bonds, threatening the viability of companies and municipalities across America. Only action from the Federal Reserve brought things back from the brink.
WSJ

Latest on the federal response

House to vote on extending PPP's timeline.

Senate lawmakers are also working on the future of the program: “The bills would give companies more time to use funding under the Paycheck Protection Program, allowing them additional flexibility to rehire workers later this year rather than rush to bring people back by June,” Erica Werner reports.

“It’s unclear, though, whether a political compromise to rework the [PPP] is near, even as many businesses argue they are on the verge of shuttering for good."

  • In the House: “Speaker Nancy Pelosi (D-Calif.) announced a vote next week on legislation by Reps. Dean Phillips (D-Minn.) and Chip Roy (R-Tex.) that would extend the loan forgiveness deadline from eight to 24 weeks, and make a number of other changes as well.”
  • In the Senate: "Small Business Committee Chairman Marco Rubio (R-Fla.) is finalizing legislation he said would give businesses up to 16 weeks to use the loans — less than the 24 some businesses are seeking. Rubio said in a video posted on Twitter that he expects GOP senators to attempt to pass the legislation on the floor this week. It’s unclear whether Democrats would block such a move.”
White House, GOP oppose extending unemployment benefits. 

Republicans say benefits expiring in July discourage Americans from returning to work: “The reluctance by the White House and top GOP leaders drew sharp rebukes from congressional Democrats, who argue the coronavirus outbreak threatens to further ravage the U.S. workforce unless the government authorizes additional aid,” Tony Romm and Jeff Stein report

“Their clash could intensify in the next six weeks, as policymakers stare down a July deadline while the country’s labor market is expected to only worsen. At issue is the enhanced unemployment aid that Congress approved in late March, which includes an extra $600 in weekly payments to out-of-work Americans. On Tuesday, President Trump articulated his reluctance to extend those benefits during a closed-door lunch with Senate Republicans.”

Economists expect another 2.4 million Americans filed jobless claims last week. That's according to a Reuters survey. The Labor Department will release the latest data this morning. 

Coronavirus fallout

From the U.S.:
  • At least 1,544,000 cases have been reported; at least 92,000 people have died
  • Earlier lockdowns could have saved lives, researchers say: “If the United States had begun imposing social distancing measures one week earlier than it did in March, about 36,000 fewer people would have died in the coronavirus outbreak, according to new estimates from Columbia University disease modelers,” the New York Times's James Glanz and Campbell Robertson report. “And if the country had begun locking down cities and limiting social contact on March 1, two weeks earlier than most people started staying home, the vast majority of the nation’s deaths — about 83 percent — would have been avoided, the researchers estimate.”
  • Experts warn of possible second wave in the South: “Dallas, Houston, Southeast Florida’s Gold Coast, the entire state of Alabama and several other places in the South that have been rapidly reopening their economies are in danger of a second wave of infections over the next four weeks, according to a research team that uses cellphone data to track social mobility and forecast the trajectory of the pandemic,” Joel Achenbach, Rachel Weiner, Karin Brulliard and Isaac Stanley-Becker report.
Banks are beginning to worry about $150 billion in frozen loans.

They say it's unclear just how many customers are in need of aid: In interviews, executives said they’re concerned that at least some borrowers sought relief unnecessarily and that they should be coaxed into paying. A number of firms aim to whittle out such participants, or charge interest to continue,” Bloomberg News's Jennifer Surane and Hannah Levitt report.

“Some mid-sized banks placed more than 15% of their loan books into forbearance by the end of March, Janney Montgomery Scott analysts wrote in a report last week. In regions like the U.S. Southeast, relatively high rates of borrower relief contrasted with low infection rates at the time. Many programs have remained open since then, continuing to take on borrowers who have fallen on hard times.”

More from the corporate front: 
  • McDonald's offers aid and warns of downsizing: “The company has earmarked about $40 million in aid for restaurant owners that are in crisis …,” Bloomberg News's Leslie Patton reports. “Nevertheless, franchisees that want aid beyond the existing measures were advised by McDonald’s U.S. President Joe Erlinger on a call last week that they may have to consider selling locations or seeking other alternatives …”
  • Airlines step up safety measures: JetBlue will continue blocking some seats on its aircraft through at least July 6 while checking crew members’ temperatures and stepping up aircraft cleaning with electrostatic aircraft fogging,” Reuters's Tracy Rucinski and David Shepardson report. “United will roll out Clorox Co.’s electrostatic sprayers and disinfecting wipes at its Chicago and Denver hub airports, followed by other locations.”
  • Target gains strength: “Target Corp. said sales surged in the most recent quarter, driven initially by online shoppers who stockpiled food and other essentials … and more recently by rising demand for items like electronics and apparel as states have begun to lift stay-at-home orders,” the WSJ's Sarah Nassauer reports. “Digital sales rose 141 percent, growing each month during the quarter, while comparable-store sales increased less than 1 percent in the period.”
  • It's a seller's market in housing: “While sales are way down, the lack of inventory has propped up prices and led to bidding wars, even as economic fallout from the pandemic mounts and real estate agents adjust to new public health guidelines that have made it more difficult to market homes,” Bloomberg's Noah Buhayar, Prashant Gopal and John Gittelsohn report.
Around the world:
  • Bolivian health minister arrested in probe of overpriced ventilators: “Marcelo Navajas was detained in connection with an investigation into the contract to buy ventilators from the Spanish firm GPA Innova using Inter-American Development Bank (IDB) funds. Navajas was also dismissed from his position in the government, and several other health officials were detained,” Katie Shepherd reports.

When superpowers collide

Pandemic blame game spills over.

U.S., China's rising diplomatic tension has drawn in Taiwanese President Tsai Ing-wen: “China issued angry warnings after senior U.S. officials, including [Secretary of State Mike] Pompeo and deputy national security adviser Matt Pottinger, sent rare, high-level messages to congratulate Tsai. China claims Taiwan as part of its territory and has threatened to absorb the island by force, if necessary,” Gerry Shih, Eva Dou and Anne Gearan report.

“China's Defense Ministry said Pompeo's message ‘seriously endangered relations between the two countries and two militaries and seriously damaged peace and stability in the Taiwan Strait.’ The People's Liberation Army, it added, has a ‘firm will, full confidence, and sufficient capacity to frustrate any form of external interference and Taiwan independence plots.’”

The regulators

Top bank regulator moves to overhaul historic anti-redlining law.

Comptroller of the Currency Joseph Otting also plans to step down soon: “Otting … put out a rule designed to create a more objective framework for grading banks’ performance under the Community Reinvestment Act, which requires them to lend to low-income neighborhoods. The move comes just six weeks after the public comment period closed on the proposed version — breakneck speed in government terms,” Politico's Victoria Guida reports.

“Otting took the lead in making the first revision since the 1990s of a law that banks and community groups have criticized as outdated given the advent of online banking. Banks have also sought more certainty on how to comply with the regulation, saying the criteria are often arbitrary and sometimes decided long after loans are made … At the heart of the concern for Democrats and community groups is that the rule would use broad measures of how many loans a bank has made to low-income borrowers and how much it has invested in poorer areas to determine its CRA grade, rather than placing an emphasis on getting a community’s input on what it needs.”

Chart topper

From RSM chief economist Joe Brusuelas: 

Daybook

Today:

  • The Labor Department releases weekly jobless claims
  • The National Association of Realtors releases existing home sales for April
  • Best Buy, Hormel Foods, Intuit and BJ's Wholesale Club are among the notable companies reporting their earnings

Friday:

  • China kicks off its annual legislative session, the National People's Congress
  • Alibaba Group, Deere, Foot Locker and Buckle are among the notable companies reporting their earnings

The funnies

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Bull session