U.S. daily death toll spikes as leaders warn of toll on poor | USDA mulls ag aid
In Today’s Updates
* White House urges another $251 bil. for SBA programs
* Massie could again try to foil quick passage of $251 bil. coronavirus relief
* Sen. Baldwin presses SBA to clarify farmers’ eligibility for EIDL
* White House is developing plans to get the U.S. economy back in action
* Bernanke: V-shaped recovery less likely
* Overall personal income could actually rise despite U.S. losing millions of jobs
* EU fails to reach recovery plan
* Coronavirus task force telephone briefings today to House, Thurs. to Senate
* Virus infecting and killing black people in the U.S. at disproportionately high rates
* ICE identifies 600 detainees as "vulnerable" to contracting Covid-19
* U.K. Prime Minister Boris Johnson remains in intensive care
* China announces two new deaths and 62 new Covid-19 cases
* U.S. Covid-19 testing rate is improving
* Grassley urges USDA to use CCC funds to support ethanol, corn
* USDA continues to mull new aid options as dairy, produce sectors give advice
* FDA issues guidelines about food safety and best practices
* ‘Do Your Job’ Pence tells food workers
* Pockets of Rural America are less vulnerable to economic fallout... for now
* Plunging oil demand and dwindling storage options
* U.S. gasoline demand has collapsed
* U.S. to return to being a net importer of crude; fuel demand to drop sharply: EIA
* Shipping data indicates U.S. LNG shipments to China resuming
* Bipartisan push for SPR purchase funding
* U.S. to block $5 billion emergency loan to Iran
* Poet, Inc. to idle production at several plants
* Trump initially said he would withdraw U.S. funding for the World Health Organization
* Sen. Fischer asks USDA to expand its investigation into potential beef price-fixing
* Acting Navy secretary, Thomas Modly, resigned
* Federal deficit reached $741 billion during first six months of fiscal 2020
* Fed Chairman Powell to give an 'Economic Update' tomorrow
* Reuters: China’s central bank to continue policy easing
Equities: Global stocks were mostly lower. In Japan, the Nikkei 225 index bucked the global trend and rose 2.1% one day after Japanese leaders announced their big economic rescue package. European stocks were pressured by a survey that signaled Germany’s gross domestic product would decline by nearly 10% in the second quarter. U.S. stock indexes are pointed toward narrowly mixed openings.
Other markets: The yield on the 10-year U.S. Treasury note slipped to 0.717%, from 0.735% Tuesday. Bond yields fall as prices rise. The U.S. dollar index is higher. Brent crude, the global gauge of oil prices, rose 1.6% to $32.39.
The White House is developing plans to get the U.S. economy back in action that depend on testing far more Americans for the coronavirus than has been possible to date, according to Bloomberg News, citing people familiar with the matter.
The effort would likely begin in smaller cities and towns in states that haven’t yet been heavily hit by the virus. Cities such as New York, Detroit, New Orleans and other places the president has described as “hot spots” would remain shuttered.
Bernanke: V-shaped recovery less likely. "I don't think it's going to be a rapid" bounceback, former Fed Chair Ben Bernanke told a virtual discussion hosted by the Brookings Institution. While the economy could contract at a 30% annualized rate or more in Q2, he brushed aside comparisons to the 12-year-long Great Depression, saying, "if all goes well in a year or two we should be in a substantially better position." Bernanke also sees interest rates at zero for a long time and said a case can be made to stop bank dividend payouts.
McKinsey has laid out nine recovery scenarios with a letter spaghetti of V’s, U’s, L’s, W’s and other unidentifiable squiggles.
Overall personal income could actually rise despite the U.S. losing millions of jobs. Economists at RBC Capital Markets calculate that most of the workers laid off thus far were relatively low-income and therefore will likely receive more money through direct-payment checks and scaled-up unemployment insurance than from their prior wages.
EU fails to reach recovery plan. "We came close to a deal but we are not there yet," tweeted Eurogroup head Mario Centeno, following 16 hours of discussions over additional stimulus to help the bloc weather the coronavirus pandemic. "I suspended the #Eurogroup & continue tomorrow, thu." Reasons for the breakdown? A dispute reportedly took place between the Netherlands and Italy over the conditions attached to the potential use of credit lines from the European Stability Mechanism. Ministers also sparred over the wording of a joint statement.
Plunging oil demand and dwindling storage options, not a coordinated supply cut with the Saudis and Russia, will force U.S. producers to voluntarily cut production 30%-35%, Continental Resources Executive Chairman Harold Hamm told S&P Global Platts. President Trump suggested last week that American producers might agree to curtailments to help break the oil price war between Riyadh and Moscow, but "U.S. producers don't need to coordinate between themselves," Hamm said. "That's unnecessary. Each one of them will have his own situation to deal with."
GasBuddy figures show total U.S. gasoline demand down 51% from the daily average from Jan 1-Mar 1.
U.S. gasoline demand has collapsed as stay-at-home orders keep drivers off the road, following the pattern seen in the hardest-hit parts of Europe. Sales at retail stations were down 46.6% from a year earlier in the week ending March 28, according to a report from OPIS by IHS Markit. The average station sold about 11,000 gallons — less than two tanker trucks’ worth.
U.S. to return to being a net importer of crude; fuel demand to drop sharply: EIA. The U.S. will return to being a net importer of crude oil in the third quarter of 2020, according to the Short Term Energy Outlook (STEO) issued by the Energy Information Administration (EIA). “This is a result of higher net imports of crude oil and lower net exports of petroleum products,” EIA said. “Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export.”
The agency also downwardly revised their forecast for consumption of motor fuel, jet fuel and distillates. EIA forecasts US motor gasoline consumption will average 8.4 million barrels per day (bpd) in 2020, a 9% decrease from 2019, while jet fuel consumption is seen off 10% and distillate consumption is expected down 5%. The report did not offer any commentary on the ethanol situation, but its summer fuels outlook forecasts a decline in fuel ethanol blending of 27.3% in the second quarter and 13.4% in the third quarter. Their outlook forecasts a 20.4% fall in fuel ethanol blending for 2020 compared with 2019. Fuel ethanol production is forecast to fall from 1.04 million bpd in the first quarter of 2020 to 630,000 bpd in the second quarter, 740,000 bpd in the third quarter and 860,000 bpd in the fourth quarter. For all of 2020, EIA forecasts ethanol production to average 820,000 bpd compared with 1.04 million bpd in 2019.
Crude supply data amid price war. The American Petroleum Institute reportedly showed a build of 11.9M barrels of oil for the week ended April 3, its second consecutive increase after two straight declines. Gasoline inventories increased by 9.45M barrels, distillate inventories showed a draw of 177K barrels and Cushing inventories displayed a build of 6.8M barrels. Data from the Energy Information Administration to be released this morning is expected to show that crude inventories rose by 8.4M barrels last week, according to analysts polled by S&P Global Platts.
Shipping data indicates U.S. LNG shipments to China resuming. Four tankers of U.S. liquefied natural gas (LNG) are en route to China after loading in the U.S. in March, according to ship-tracking data from Refinitiv and data intelligence firm Kpler. The shipments are expected to arrive in China late this month and early May, the data showed according to Reuters. The shipments are to arrive at the Chinese port of Tianjin.
Flushing out the true cause of the global toilet paper shortage amid coronavirus pandemic... Link to WaPo article for details.
No distancing for two pandas... Ying Ying and Le Le, two giant pandas, finally got into the mood after 13 years of living together in a Hong Kong zoo. The two mated this week.
— White House requests $251 billion more small-business loan funds. The White House submitted a formal request for $251 billion in additional Small Business Administration (SBA) lending authority for a new program in the recently enacted economic rescue package. If approved by Congress, the new funds would bring total loan authorizations for small businesses, known as the Paycheck Protection Program, to $600 billion. Congressional leaders said they will try to pass legislation appropriating funds for the additional loans this week by voice vote or unanimous consent but a usual grandstander in the House could stymie quick passage. Link to the letter, including the legislative text.
Since the program began accepting applications on Friday, the SBA has recorded 220,000 loans for $66 billion, according to the Office of Management and Budget's acting director, Russell Vought. "Given the level of demand for the program, the Administration believes the funds appropriated for this program will soon be exhausted," Vought wrote to congressional leaders. Vought wrote that the additional loans should be made under the same rules as the existing program, and that the window for applying should still close on June 30, as in current law. "The aim of this request is to meet the immediate demand for the program as authorized and to ensure that employers can keep employees on payrolls for the remainder of the covered period," he wrote. "This request is not intended to expand program eligibility or the duration of the program."
SBA figures show that 99% of U.S. businesses fall under the economic relief law’s 500-employee threshold, and as many as 47.5% of workers could ultimately benefit from the program. On Monday, Bank of America said it had received 178,000 loan applications totaling $32.9 billion from small businesses.
The Senate could move as early as Thursday to approve the request, congressional leaders said on Tuesday. Senate Majority Leader Mitch McConnell (R-Ky.) said he is working with Minority Leader Chuck Schumer (D-N.Y.) on the matter.
House Speaker Nancy Pelosi (D-Calif.), in a CNN interview Tuesday, said the SBA needs more money "right away." But she also suggested that legislative tweaks to the program would be necessary before the House acts. "We want to make sure the program is administered in a way that does not solidify inequality and how people have access to capital," Pelosi said. She said she told Treasury Secretary Steven Mnuchin on Tuesday morning that Democrats would "want to have certain considerations" if they were to go forward with providing more money.
A familiar grandstander could disrupt the rush to passage. Rep. Thomas Massie (R-Ky.) for hours on March 27 held up final passage of the massive relief bill, citing the Constitutional requirement that a quorum, or majority, of House members be present for a recorded vote. Massie voiced his frustration via Twitter. "Folks, this isn't some esoteric House rule," Massie wrote. "This is the U.S. Constitution."
— Sen. Tammy Baldwin (D-Wis.) is pressing the SBA to clarify farmers’ eligibility for Economic Injury Disaster Loans (EIDL), and to allow ag producers seeking aid through the Paycheck Protection Program to use alternative calculations rather than payroll costs to determine the size of their loans. “Many sole-proprietors do not pay themselves an income,” Baldwin wrote in a letter (link) to Administrator Jovita Carranza on Tuesday. “Additionally, because of the unique circumstances of agricultural production, basing the PPP loan size on a farm’s payroll costs will likely yield loans that are far smaller than needed.”
— Coronavirus update:
- Summary: World-wide, more than 1,432,500 confirmed cases and 82,100 deaths, according to Johns Hopkins University.
The total death toll in the U.S. from the new coronavirus rose sharply to more than 12,900, according to data compiled by Johns Hopkins University. Confirmed infections in the U.S. neared 400,000, more than double the number of any other nation. New York, New Jersey, Louisiana and Illinois reported their highest daily number of coronavirus deaths.
Globally, the number of confirmed cases rose to more than 1.4 million, while deaths topped 82,000, according to the Johns Hopkins data.
Italy reported its fewest new infections since March 13 as the government considers easing some containment measures, while France recorded fewer new cases too, even as the total number of deaths rose sharply and Paris banned daytime outdoor exercise. Spain, however, reported an increase in both daily fatalities and new cases.
- White House coronavirus task force will give parallel telephone briefings to House Democrats and Republicans today, according to House aides. Similar briefings are scheduled for senators tomorrow. The briefings are expected to be headed by Vice President Mike Pence and Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases.
- The virus is infecting and killing black people in the U.S. at disproportionately high rates, figures from several states indicate. President Trump acknowledged the disparity on Tuesday and said that the authorities were working to provide more information. Link for more on this from the NYT.
- California strikes deal for masks. Gov. Gavin Newsom of California said late Tuesday that the state had secured nearly 200 million masks a month for California health care workers, an extraordinary sum amid the severe shortage of masks.
- In China, Ren Zhiqiang, the former Chinese property tycoon and outspoken critic of the government's handling of the coronavirus outbreak, is under investigation for alleged "serious violations of law and discipline,” the Communist Party's disciplinary watchdog announced.
China reports. After reporting that April 6 saw no new deaths from Covid-19 for the first time since January, China announced two new deaths and 62 new cases. Suspicion lingers that the number is being underreported. China is now concentrating on asymptomatic cases and arrivals from abroad.
One report was taken offline. In the past few days, the government has tightened restrictions on some housing complexes, and said others will remain in place, after confirming dozens of new asymptomatic cases. An official newspaper said Monday there could be 10,000 to 20,000 such cases in Wuhan. The report was swiftly deleted online.
Two-thirds of Chinese infections in past week had no symptoms. Of the 885 infections reported between March 31 and April 7, 601 people showed no visible signs, the National Health Commission said.
- Immigration and Customs Enforcement has identified 600 detainees as "vulnerable" to contracting the novel coronavirus and is considering them for monitored release.
- U.K. Prime Minister Boris Johnson remains in intensive care as his country heads into the peak of its outbreak and the government contends with criticism over its handling of the pandemic. “I’m confident he’ll pull through,” Foreign Secretary Dominic Raab said as he was deputized as the head of the government. The PM is in a stable condition receiving oxygen and has not been diagnosed with pneumonia or put on a ventilator, officials said. Meanwhile Cabinet Minister Michael Gove — a key member of Johnson’s top team — said he is in self-isolation after a family member displayed symptoms.
- U.S. Covid-19 testing rate is improving. Although the U.S. has now tested over 2 million people, its per capita testing rate still lags behind other countries. The U.S. has conducted 582 tests per 100,000 people compared to Italy’s 600 per 100,000 and South Korea’s 709 per 100,000. The rate of testing in the U.S. has improved from March 31 when it was just 318 per 100,000.
- U.S. to block $5 billion emergency loan to Iran. Iran is one of the countries hit hardest by the pandemic, but the U.S. says Tehran could divert a loan from the International Monetary Fund to finance militants in the Middle East or bolster its economy, rather than to fight the coronavirus.
- The FDA has been issuing guidelines about food safety and best practices to keep serving customers during the pandemic. They contain everything from ways to keep social distancing in retail and food production facilities, how to clean facilities to reduce the virus's spread, and what happens if a worker tests positive for Covid-19. Link for details.
- ‘Do Your Job’ Pence tells food workers. Hours after a labor union reported what may be the first poultry-worker deaths associated with the coronavirus in the U.S., Vice President Pence urged American food workers to continue to “show up and do your job” and said their work was vital. The Retail, Wholesale and Department Store Union that represents thousands of poultry-processing workers across the southern U.S. reported that two members at a Tyson Foods facility in Camilla, Ga., died from the virus.
— Pockets of Rural America are less vulnerable to economic fallout — for now. Every part of the country will feel the economic fallout from the coronavirus crisis. But the small and isolated rural areas that lagged during the economic boom may fare better, relatively speaking, in the aftermath of the pandemic, according to a report (link) from Pew Research Center. With little population density, they are less conducive to virus transmission. So far, states such as Wyoming, the Dakotas, Nebraska and Iowa have reported far fewer Covid-19 cases than New York and other states with large cities. The states least affected by the huge spike in unemployment claims are largely rural. They include West Virginia, Arkansas and Georgia. In part, that’s because those states have taken less dramatic steps to slow the spread of the virus. Among them, only West Virginia issued a stay-at-home order before the end of March.
— Sen. Grassley urges USDA tap CCC funds to support ethanol. The corn-based ethanol industry said they are being squeezed by the economic slowdown amid Covid-19 restrictions and need federal help. Sen. Chuck Grassley (R-Iowa) spoke Tuesday with USDA Secretary Sonny Perdue about this and other agricultural issues. Link to letter.
“The loss of fuel demand has drastically hurt the biofuel industry and corn prices have plummeted,” Grassley told reporters in a conference call Tuesday. He said he, Sens. Joni Erns (R-Iowa), Tammy Duckworth (D-Ill.) and other senators are calling on Perdue to use money from the Commodity Credit Corporation (CCC) to support the ethanol industry. “I look forward to working with Secretary Perdue to make sure that our biofuels industry gets through this crisis so we can continue to use America’s grown energy in our gas tanks,” Grassley said.
Grassley said he would like to see parity for the ethanol industry with the oil industry, noting the Trump administration is buying crude oil to store in the Strategic Petroleum Reserve (SPR), easing a glut on the market caused by lower U.S. driving demand and a global oversupply caused by a disagreement between major producers Saudi Arabia and Russia over cuts to oil output. Grassley said he does not know if a strategic reserve for ethanol is practical.
Others in biofuel industry speak up. “Fuel demand has cratered, foreign nations have flooded the market with crude oil, and U.S. ethanol producers are bleeding cash after one of the toughest years in memory,” Growth Energy CEO Emily Skor said. Skor said biofuel plants have closed in 12 states as public health directives for people to work from home and travel only for essential reasons translates into less demand for gasoline, the fuel that ethanol is blended into. Less consumer demand for gasoline means less refiner demand for ethanol, which is used as a fuel additive in gasoline.
The worst may still be ahead, according to the U.S. Energy Information Administration. “We expect the biggest effect of Covid-19 related restrictions on U.S. liquid fuels demand will occur in the second quarter of 2020 before gradually dissipating over the next year and a half as normal travel and business activity slowly recover,” the agency said in a forecast released Tuesday. “U.S. motor gasoline consumption will reach some of the lowest levels in 20 years in the second quarter of 2020.”
— USDA continues to mull ways to aid the U.S. ag sector. Initial focus is on dairy, livestock and fruit and produce growers. The produce industry urged USDA to provide up to $5 billion in payments to growers and dealers impacted by market losses after restaurants, hotels and schools shut down. As previously noted, the National Milk Producers Federation and International Dairy Foods Association jointly asked USDA for aid (link) in which producers would be paid $3 per cwt on 90% of their production if they cut production by 10% from March 2020 levels. The program would run for six months from April through September.
In the Phase 3 aid package, Congress provided USDA with $9.5 billion specifically for areas impacted by the Covid-19 pandemic, and $14 billion for the CCC, a fund USDA uses for farm price support and other programs (at the time, remaining CCC funds totaled $7 billion to $9 billion).
Link to Farm Bureau's updated report on the impact of Covid-19 on the ag sector.
— Court rejects refiners’ request for en banc hearing. The 10th Circuit Court of Appeals has rejected the request by Wynnewood Refining Company and HollyFrontier Cheyenne Refining to rehear the case in which a three-judge panel ruled that three small refinery exemptions (SREs) granted for the 2016 compliance year were invalid.
The court did not indicate why it rejected the request. The court said in its initial ruling that the law indicated the SREs were only available as extensions to companies that had received them in 2010.
The matter could now be appealed to the Supreme Court but it is not known if the refineries will opt to pursue that.
Background and outlook. The Trump administration waffled on whether to appeal (request an en banc hearing by the full court) and did not opt to take that step. That lowered expectations that the refiners would be successful in their challenge of the decision. This shifts attention to EPA as they stated March 27, “EPA intends to develop an appropriate implementation and enforcement response to the 10th Circuit's decision in RFA v. EPA once appeals have been resolved and the court's mandate has been issued.” Expectations are that if EPA applies the 10th Circuit Court decision nationwide, it would mean few refiners would qualify for SREs — reports indicate that only two or three would qualify. Currently, there are 25 SREs pending for the 2019 compliance year.
— Bipartisan push for SPR purchase funding. A bipartisan group of Senate and House members said they will introduce legislation to provide funding for the Department of Energy (DOE) to purchase crude oil for the Strategic Petroleum Reserve (SPR). The bill would provide $3 billion in funding for purchasing crude to place in the SPR, the lawmakers said.
Sen. John Hoeven (R-N.D.) joined with Reps. Lizzie Fletcher (D-Texas) and Michael Burgess (R-Texas) to put together the legislation. “Oil and gas producers in North Dakota and across the U.S. are vital for both our economic and national security,” Hoeven said in announcing the effort. “This legislation provides important support to our domestic energy industry at a time when they are not only challenged by the impacts of the coronavirus but also a global oil price war.” He argued that more than just the oil industry would benefit from the purchases.
— Other items of note:
- Poet, Inc., the world’s largest ethanol producer, will idle production at its bio-processing facilities in Ashton and Coon Rapids, Iowa, and in Chancellor, South Dakota and delay the start of its new plant in Shelbyville, Indiana. The four plants could produce 330 million gallons a year. “Unfortunately, plummeting fuel demand amid the coronavirus pandemic has overwhelmed markets already suffering from continued trade barriers, a foreign price war over oil and regulatory uncertainty here at home,” CEO Jeff Broin said in a statement.
- President Trump initially said he would withdraw U.S. funding for the World Health Organization (WHO) over its handling of the coronavirus pandemic. He later backtracked, saying he would simply “look at” the possibility of denying funds. Congress allocated about $123 million to the WHO for fiscal 2020. Earlier in the briefing Trump called the Geneva-based international body “very China centric.” He added that the WHO was wrong to advise against the travel restrictions that were imposed on China earlier this year. “They are always on the side of China, but we fund it,” Trump said. “So we want to look into it.” WHO officials denied that they were "China-centric" in their efforts as the pandemic unfolded. Separately, the WHO warned countries considering easing measures to fight Covid-19 that moving too quickly could lead to restrictions being reimposed.
- The acting Navy secretary, Thomas Modly, resigned after his firing of the captain of a stricken aircraft carrier developed into a public relations disaster.
- New White House press secretary. Kayleigh McEnany, President Trump’s campaign spokeswoman, was named to replace Stephanie Grisham, who held the job for nine months.
- Sen. Deb Fischer (R-Neb.) is asking USDA to expand its investigation into potential beef price-fixing to include recent discrepancies in the meat market. The recent drop in cattle prices doesn’t match the demand for beef at the retail level. “This has left many producers wondering why, yet again, they have been taking losses as packer and retailer margins have increased,” Fischer wrote in a letter (link) to USDA Secretary Sonny Perdue.
- Nearly a third of U.S. renters didn't pay their April rent during the month's first week. Link for details from the WSJ.
— Markets. The Dow on Tuesday fell 26.13 points, 0.12%, at 22,653.86. During the session, the Dow gained and lost more than 4%, its steepest intraday reversal in more than a decade. The Nasdaq lost 25.98 points, 0.33%, at 7,887.26. The S&P 500 declined 4.27 points, 0.16%, at 2,659.41.
The federal deficit reached $741 billion during the first six months of fiscal 2020 — a $50 billion increase over the same period during the previous fiscal year, according to the Congressional Budget Office (CBO). The effects of Covid-19 and the federal government's response "will become more noticeable in April," according to CBO. The U.S. Treasury Dept. will release their update Friday. The government deficit has been running nearly 15% higher than the same period in FY 2019.
Federal Reserve Chair Jerome Powell is scheduled to give an “Economic Update” tomorrow via webcast hosted by the Brookings Institution.
Reuters: China’s central bank to continue policy easing but will not follow U.S. Fed’s lead. The People’s Bank of China (PBOC) is expected to bolster its policy easing ahead but worries on debt and property risks will keep it from the steep rate cuts and quantitative easing efforts deployed by the U/S/ Federal Reserve, according to Reuters. Increased credit and lower funding costs aimed at small firms are expected from the PBOC, the report said, with a mix of tools such as their reserve requirement ratio (RRR), various lending facilities and price-based tools such as market rates and the benchmark loan prime rate (LPR). A reduction in the LPR is expected April 20 — the PBOC sets the LPR rate on the 20th of each month.