Trump pledges to U.S. farmers to continue admitting large numbers of H-2A visa workers
In Today’s Updates
* Oil prices surge on hopes of end to Saudi/Russia price/production war
* Trump pledges to continue admitting large numbers of H-2A foreign visa workers
* Thai rice prices are trading at the highest level since 2013
* China rejects U.S. intelligence claim the country concealed extent of Covid-19 there
* Focus on manufacturing and processing plants re: Covid-19
* Bracing for a very negative jobless claims report this morning
* Big drop in U.S. sales for major car companies
* Timeline for SBA Paycheck Protection Program
* Federal Reserve eases some rules
* Pelosi comments on infrastructure in Phase 4 of relief package
* Gas tax boost pushed to cover needed upgrades to infrastructure
* Dr. Anthony Fauci will receive enhanced personal security
* Vaccine 'ultimate game changer'
* Ocean-going shipping companies are going into survival mode: WSJ
* Trump looking at whether to ground some domestic air travel
* USDA boosts sugar imports to ease tight supplies
* Chao thanks truckers
* Trump rebuffing calls from companies to drop tariffs on imported goods
* Biden calls for moving Democratic National Convention to August, from mid-July
Oil prices surged on hopes of an end to the Saudi Arabia-Russia price/production war. Brent-crude, the global benchmark for oil, jumped as much as 13% and WTI gained more than 9% after President Trump said he was confident Saudi Arabia and Russia would resolve their dispute in coming days. Trump will meet Friday with executives from the country’s oil industry as he steps up efforts to intervene in the rout which threatens to wipe out tens of thousands of jobs in the shale industry. "I'm going to meet with the oil producers on Friday. I'm going to meet with independent oil producers also on Friday or Saturday. Maybe Sunday. We're going to have a lot of meetings on it," Trump told reporters at a media conference.
Prices also rallied in part on a Bloomberg News report (link) that China plans to buy crude for its strategic reserves. Bloomberg is reporting that the price decline has prompted China buy crude for its strategic reserves, with an initial target of holding government stockpiles equivalent to 90 days of net imports, which could eventually be expanded to as much as 180 days when including commercial reserves. Ninety days of net crude imports is about 900 million barrels, according to Bloomberg, with the effort potentially result in China buying an additional 80 million to 100 million barrels over the course of the year.
Meanwhile, producers are bidding up storage in response to a widening futures market contango, according to Alpine Macro. U.S. refineries have sharply cut back gasoline output as demand collapsed (decline in gasoline demand has been unprecedented) and inventories spiked. There are already some U.S. oil companies that are struggling with Whiting Petroleum Corporation filing for bankruptcy protection Wednesday. The fracking company’s action is expected to be the first of what could be many ahead if crude oil prices remain mired near current levels.
Equities: Asian stock markets ended Thursday with a mixed performance. The benchmark in Japan lost 1.4%, while China’s Shanghai Composite rose 1.7%. London and Frankfurt opened higher. U.S. stock futures climbed 2% overnight following Wall Street's rocky start to the second quarter.
Commodities: Thai rice prices are trading at the highest level since 2013. Prices of Thai white rice 5% broken, an Asian export benchmark, have surged more than 25% this year to $564 a ton on Wednesday, the highest level since 2013, because of drought in the country and increased buying from importers. Link to Bloomberg article for more.
The Federal Reserve on Wednesday eased rules around how banks account for their supersafe assets, easing capital constraints for lenders. The Fed said will delay the effective date for its revised control framework by six months (i.e., from April 1, 2020 to Sept. 30, 2020). The Board indicated the delay “will reduce operational burden and allow institutions to focus on current economic conditions.” No changes were made to the final rule itself.
Bracing for a very negative jobless claims report. More than 80% of Americans are now under some form of lockdown, up from less than 50% a couple of weeks ago, leaving state employment offices overwhelmed by an avalanche of applications. U.S. jobless claims probably surged to 3.7 million last week, consensus shows. But several estimates signal a report from the Labor Department today will show about five million people filed for jobless benefits last week, part of the growing economic fallout from the coronavirus pandemic. The numbers, set for release at 8:30 a.m. Eastern, come after last week’s record-breaking figure of 3.3 million new unemployment claims (four times the previous high in data going back to 1967), a total that could be revised upward today.
A collapse of showroom traffic in March led to a big drop in U.S. sales for major car companies in the first quarter. The weak first-quarter results provide a window into what is ahead for the U.S. car business as the outbreak continues to shut down large parts of society.
— President Trump says he has committed to American farmers to continue admitting large numbers of H-2A foreign visa workers to take agricultural jobs, even as jobless claims are set to climb above 3.3 million in the midst of the Chinese coronavirus crisis. During a press briefing on Wednesday, Trump suggested U.S. farms would not survive without a continuous flow of H-2A foreign visa workers who are brought to the country by farmers.
Trump said: “We want the farmers to be able to get people that have been working those farms for years, or we’re not going to have farms. So they’re going to come in. And they’re going to be given a certain pass and we’re going to check them very, very closely — especially over the next month, because remember after a month or so once this passes, we’re not going to have to be, hopefully, worried too much about the virus. But we want them to come in. We’re not closing the border so that we can’t get any of those people to come in. They’ve been there for years and years, and I’ve given a commitment that they’re going to continue to come or we’re not going to have any farmers.”
Acting Department of Homeland Security (DHS) Secretary Chad Wolf said his agency is considering “a number of different options with the H-2A workers” at the direction of Trump and Vice President Mike Pence. “Nothing to announce here today, but again, at the direction of the President and Vice President, we’re looking at a variety of different options that I think we will have soon and be very beneficial,” Wolf said.
Background. H-2A foreign visa workers make up only about 10% of the total U.S. crop farm workforce. Last year, U.S. farmers hired roughly 250,000 H-2A foreign visa workers. Secretary of State Mike Pompeo has issued waivers for the H-2A and H-2B visa programs that will help fast-track foreign workers into the U.S. to take agricultural and nonagricultural jobs. In March, Wolf announced he would allow seasonal employers to import an additional 35,000 H-2B foreign visa workers this year — above the 66,000 annual admission cap.
— The Small Business Administration (SBA) as previously noted on March 31 released the loan application for the Paycheck Protection Program (PPP) and an information sheet containing loan guidelines. Some highlights of the guidelines:
• April 3, 2020: Loan applications will start being accepted for businesses and sole proprietors.
• April 10, 2020: Loan applications will start being accepted for independent contractors and self-employed individuals.
• More lenders will be added as they are approved/enrolled. To apply, you should reach out to one of the approved lenders.
• There are no changes to affiliation standards from those specified in the CARES Act. However, additional guidance may be released by SBA as appropriate.
• All loan terms will be the same for everyone.
• Due to anticipated high demand, SBA anticipates allowing not more than 25% of the forgiven loan amount to be used for nonpayroll costs (utilities, rent and interest on a mortgage).
• Interest Rate: 0.5% fixed rate, lowered from 4%.
• Maturity: 2 years, shortened from 10 years.
— Pelosi comments on infrastructure in Phase 4 of relief package. House Speaker Nancy Pelosi (D-Calif.) said the next coronavirus package (Phase 4) should include at least $760 billion over five years for water projects, transportation and other items as a way to strengthen U.S. infrastructure and the economy. “We need to invest in our infrastructure to address some of the critical impacts and vulnerabilities that have been laid bare by the coronavirus,” Pelosi said yesterday on a call with reporters. The total cost for this part of Democrats’ phase-four virus proposal would exceed the plan they released in late January by adding $10 billion for health-care centers and additional funds for housing and education, Pelosi said.
Five U.S. steel-industry groups are also pushing for infrastructure investments to be included in the next phase of coronavirus stimulus.
In the Senate, Environment and Public Works Chairman John Barrasso (R-Wyo.) has called for his $287 billion surface transportation renewal bill to be part of the next coronavirus package. But Senate Majority Leader Mitch McConnell (R-Ky.) told the Washington Post in an interview yesterday (link) he will move slowly on considering any follow-up coronavirus aid legislation, and will ignore attempts by Pelosi to jump-start discussions.
President Donald Trump said the U.S. should borrow the money to pay for infrastructure at the low interest rates currently available, but he hasn’t released his own plan for what should be in a bill. Pelosi has not said she would support borrowing money specifically for infrastructure.
Timeline. The next measure — which Congress could take up when it returns April 20 — will be intended to stimulate an economic rebound, Pelosi said.
— Gas tax boost pushed to cover needed upgrades to infrastructure. The American Farm Bureau Federation and the American Trucking Associations are suggesting Congress include a federal gas tax increase in the upcoming recovery package to cover needed upgrades to infrastructure. The policy could be implemented “without adding a dime to a federal deficit that has exploded in recent weeks,” Farm Bureau President Zippy Duvall and ATA President Chris Spear said in a letter to Senate Finance Chairman Chuck Grassley (R-Iowa), House Ways and Means Chairman Richard Neal (D-Mass.) and the minority leaders of the two panels.
Background. The groups say the 18.4 cents federal gas tax that supports the Highway Trust Fund hasn’t been raised since 1993 but the coronavirus crisis presents the right time to raise it. “Gas is selling at historically low prices,” they wrote. “Compared to one year ago, Americans are paying about 60 cents per gallon less today for fuel.” Revenue from the gas tax is funneled into the trust fund, which that pays for highways, bridges, and roads. However that funding source is declining due to coronavirus restrictions on travel. A Tax Foundation study (link) released Tuesday found that personal travel has declined almost 40% since Feb. 22, meaning that the federal government is likely collecting fewer gas tax dollars.
— Coronavirus update:
- Summary: The pandemic has infected more than 935,000 people globally and killed more than 47,000. The death toll in the U.S. surpassed 5,100, as confirmed cases climbed to over 215,000.
- China rejects U.S. intelligence claim it hid virus numbers. Foreign Ministry spokeswoman Hua Chunying today defended as “open and transparent” China’s response to the virus first identified in December in the central Chinese city of Wuhan. She was responding to a Bloomberg News report saying that the U.S. intelligence community had concluded in a classified report to the White House that Beijing under-reported both total cases and deaths from the disease. “Some U.S. officials just want to shift the blame,” Hua told a regular briefing in Beijing. “Actually we don’t want to fall into an argument with them, but faced with such repeated moral slander by them, I feel compelled to take some time and clarify the truth again.” Hua questioned the speed of the U.S.’ response to the virus after banning arrivals from China on Feb. 2. “Can anyone tell us what the U.S. has done in the following two months?” she said.
- WHO chief expresses concern over rapid spread of Covid-19. Officials with the World Health Organization (WHO) are “deeply concerned” over the spread of the Covid-19 virus and expect the level of deaths to reach 50,000 within a few days and cases top one million —figures are already near that mark as of this morning (see above). “Over the past five weeks, we have witnessed a near exponential growth in the number of new cases, reaching almost every country, territory and area,” WHO Director-General Tedros Adhanom Ghebreyesus said at a news briefing Wednesday. Particularly troubling, he said, is that this marks the world’s first pandemic caused by a coronavirus “and whose behavior is not really known.”
- Focus on manufacturing and processing plants relative to Covid-19. Poultry and meat processing plants are some of the workplaces where tensions between workers and employers are rising amid the Covid-19 situation, according to a report (link) in the Wall Street Journal, with workers at meat plants in particular concerned over their proximity to other workers while cutting carcasses and trimming meat. “Some companies have spaced workers farther apart and staggered shift starts and break times. Tyson and others have begun offering employees masks and gloves, and taking their temperatures,” the item noted. Tyson Foods said a small number of workers have tested positive and they have set in place efforts to address situations where employees may have had contact with an infected worker. However, the concern is not over transmission of the virus through food, but from worker to worker. The item points out the Occupational Safety and Hazard Administration (OHSA) has taken a “largely hands-off approach to coronavirus safety enforcement,” the item said, releasing guidance on steps that employers can take to protect a workplace from an outbreak, but has stressed it was just an advisory as “OSHA standards do not specifically over infectious-disease protections, although there are basic requirements for bathrooms, sanitation and some protective gear.”
- Dr. Anthony Fauci will receive enhanced personal security after becoming the target of online conspiracy theorists, according to the New York Times. Link for details.
- Vaccine 'ultimate game changer.’ The first “human trial” testing a potential coronavirus vaccine is "on track" with public distribution still projected in 12 to 18 months. That's according to White House health advisor Dr. Anthony Fauci, who said the vaccine, being developed with Moderna, will be the "ultimate game changer" in the fight against the pandemic.
- Ocean-going shipping companies are going into survival mode as the coronavirus pandemic takes a toll on global trade. The financial pain is growing for carriers that along with other transportation providers are essential to the flow of commerce, the Wall Street Journal reported (link), and many now are resetting their business for a long downturn. Moody’s Investors Service fired a warning shot over ocean transport this week when it cut its outlook for Denmark’s A.P. Moller-Maersk A/S, the world’s biggest boxship operator, from stable to negative. Maritime companies are adjusting to a demand downturn that is deepening as countries lock down their economies. The article said container ship operators are canceling dozens of sailings to preserve cash. But smaller operators don’t have big cash cushions, and some may not survive as shipping demand slows while debt worries expand.
- President Trump said he was looking at whether to ground some domestic air travel between cities that are coronavirus hot spots to slow the pandemic’s spread.
— Other items of note:
- Sugar policy: USDA announced reassignments of fiscal year 2020 domestic marketing allocations and increases to fiscal year 2020 raw and refined sugar tariff-rate quotas. Link for details.
- Chao thanks truckers. Transportation Secretary Elaine Chao addressed the nation’s truck drivers by radio yesterday, and said the agency is working with states to make sure that they aren’t impeded by quarantine orders. She has worked with locked-down states to keep rest stops and roads open to truckers so they can continue delivering food and supplies. “The whole country is cheering for America’s truck drivers,” Chao said on Sirius XM’s Road Dog Trucking.
- Biden calls for Democratic convention to be delayed into August. Former Vice President Joseph R. Biden Jr. on Wednesday night called for moving the Democratic National Convention from mid-July to August, making him the most prominent member of his party to say the convention must be rescheduled because of the coronavirus outbreak. “I doubt whether the Democratic convention is going to be able to be held in mid-July, early July,” Biden told Jimmy Fallon on The Tonight Show. “I think it’s going to have to move into August.” Meanwhile, the New York Times said, “Taking their cue from President Trump, Republicans at every level of the party are pushing ahead with plans to put on their national convention this summer and provide Trump the kind of gauzy coronation he seeks.” Think the NYT is biased? Duh.
- President Trump is rebuffing calls from companies to drop tariffs on imported goods, according to the Wall Street Journal (link).
— Markets. The Dow on Wednesday fell 973.65 points, 4.44%, at 20,943.51. The Nasdaq lost 339.52 points, 4.41%, at 7,360.58. The S&P 500 declined 114.09 points, 4.41%, at 2,470.50.