Trump continues 'torn' re: U.S./China trade policy | USDA gears up for CFAP
In Today’s Updates
* Investors weigh reviving economic activity vs cost of potential resurgence in infections
* Trump again questions what to do re: China
* White House adviser: unemployment rate may pass 20%
* Oil’s 'relief rally' stalls after prices double
* Milk futures rebounding as USDA's mega purchase program begins
* USDA sends FSA office some CFAP directives
* Reports: Auctions of Chinese gov’t stockpiled corn to start soon
* GOP, White House wants to go slower on next aid package
* House Dems working on over $1 trillion CARES 2/Phase 4 package
* Some on Trump team worried about surging federal spending
* Pace of SBA loans slows
* China over weekend said it would continue to stimulate its economy
* U.S. food supply update
* Trump's meat plant executive order a paper tiger?
* FSIA inspectors will soon receive masks
* Peterson wants FEMA to aid farmers to euthanize & dispose of livestock
* Disruptive food brands get a taste of their own medicine
* Update on reopening America... and around the world
* MLB is expected to present a formal proposal to the players’ union this week
* Mike Bloomberg’s prescription for reopening
* Coronavirus update
* South Korea reports its biggest one-day increase in new infections in a month
* Spokesman denies report that VP Pence is isolating
* House Democrats introduce measure to block Trump water (WOTUS) rule
* Life insurance is suddenly tougher to get
* Dem Veepstakes: Kamala Harris emerges as early Biden VP favorite
Equities today: Asian stock indexes were mostly higher and European stocks mostly down. U.S. stock indexes are pointed toward weaker openings. "Much of the eventual improved growth and virus news is already priced into markets," said Bob Baur, chief global economist at Principal Global Investors. "Because so much future growth and uptrend potential is priced in, we expect a period of relapse and consolidation through June."
Crude oil futures are weaker, with losses of around 2% for both WTI and Brent crude. U.S. crude is around $24.25 per barrel while Brent crude is around $30.25 per barrel.
The number of active oil rigs in the U.S. hit the lowest level since 2009.
U.S. unemployment rate. Treasury Secretary Steven Mnuchin signaled Sunday that unemployment could be as high as 25% when pressed in an interview with Chris Wallace on Fox News Sunday. “We could be,” Mnuchin said. He added: “The reported numbers are probably gonna get worse before they get better.”
Kevin Hassett, White House Economic Adviser, told CBS’ Face the Nation that unemployment will “trough” in May or June with a rate north of 20%. And as to whether the jobs that Americans believe will come back in six months will actually exist, Hassett said: “Nobody knows it.”
Is the coronavirus-induced global economic downturn the worst since the Great Depression? A WSJ account notes that while this is likely to be literally true, for many, “the comparison does more to terrify than clarify.” Economists say there is likely to be a big difference between a downturn that is the worst since the Depression and conditions as bad as the Depression. Many find a scenario rivaling the Great Depression in severity and duration hard to imagine. By most estimates, the current downturn is likely to be comparable in scale and duration to recessions in the early 1980s and from 2007-09. Link for more.
As USDA starts buying dairy and meat to support farm businesses, milk futures are rebounding.
China over the weekend said it would continue to stimulate its economy to support its recovery from the pandemic. The People's Bank of China said it will use "more powerful" policies to counter the economic fallout from the coronavirus outbreak. Worries are increasing that sluggish domestic demand and a collapsing global economy will slow the potential recovery.
Remember those “murder hornets” mentioned last week? House Natural Resources Chairman Raul Grijalva (D-Ariz.) introduced a bill Friday that would give states new funding to eradicate the Asian giant hornet, or so-called “murder hornet.” The bill would direct $4 million to states each year for the next four years to eliminate the hornet and restore bee populations. The hornets, an invasive species native to Japan, was first discovered in Washington state last December.
— Update on U.S./China policy:
- U.S. to accuse China of attempts to hack research. The warning is expected to accuse Beijing of working to steal intellectual property related to coronavirus vaccines and treatment, increasing tensions that have already flared in recent months, according to the Wall Street Journal (link).
- President Trump on Friday said he is “very torn” about the Phase 1 U.S./China trade deal, despite discussions by officials in both countries about the progress to date. The president said he’d assess the effort this week.
- U.S./China trade policy: start all over again? Scott Kennedy, a senior adviser at the Center for Strategic and International Studies, writes (link) that the best but least likely option is for the Trump administration to admit purchase commitments was a mistake and reconsider its approach.
- President Trump and American computer chip makers are exploring new semiconductor plants in the U.S. to reduce dependence on Asia, especially China. Link to WSJ article. Officials are discussing new foundries with Intel and Taiwan Semiconductor, and are interested in helping Samsung Electronics expand operations. "This is more important than ever, given the uncertainty created by the current geopolitical environment," Intel CEO Bob Swan wrote in a letter to the U.S. Department of Defense.
- Auctions of Chinese gov’t stockpiled corn to start soon. JCI notes that rumors said auctions of Chinese gov’t stockpiled corn stocks will start on May 21, with a total of around 56.697 million MT to be put for auctions and 3 million MT for each week. Enterprises that bid 2014 crops should have stale grain processing qualifications. Rumors also said the National Grain Trade Center will rotate out as much as 8 million MT of reserved corn on May 15, prior to the official start of gov’t stockpiling con auctions, with the upset price at RMB1,980/MT. JCI notes that China in Nov 2015 rotated out about 20 million MT of gov’t stockpiling corn for sales, again rotated in some quantities in 2016 and once again rotated out some volume at the end of 2019.
Regarding recent Chinese purchases of U.S. grain, JCI wrote: “In May, over one million MT of U.S. grain will arrive in Chinese major ports. Besides, new wheat harvest will begin in N China in one month. Those factors expect to relieve corn supply tightness in part China. Yet, If China further places large orders of U.S. grain in the future, its impact on Chinese corn market will be huge.”
— Update on likely next aid package — Phase 4/CARES 2:
- GOP, White House wants to go slower on next aid package. Kevin Hassett, White House Economic Adviser, told CNN's State of the Union that another stimulus package right now is “premature.... We think that we have a little moment, the luxury of a moment, to learn about what's going on, so that the next step that we take can be prudent.”
- House Democrats are pushing to complete their next coronavirus aid proposal this week. Democrats are hoping to release a bill that would include at least $800 billion in funding for state and local governments, with the entire package expected to be over $1 trillion. “We put a marker down that follows the lead of other bipartisan legislation that has been passed with increased funding because we have not done enough testing, with increased assistance to state and local governments because their outlays of money for the coronavirus and their loss of revenue continued to grow,” Speaker Nancy Pelosi (D-Calif.) told C-SPAN on Friday. Pelosi reiterated the three pillars of the looming Democratic proposal: funding for those on the front lines, testing and relief to Americans in some form, including direct payments. Democrats are set to propose giving most Americans monthly $2,000 relief checks during the course of the pandemic, with Pelosi giving the idea her stamp of approval during a conference call with Democrats last week.
Wait... there's more. The Democratic measure will have an extension of unemployment insurance and SNAP, and money for the Postal Service. Meanwhile, Democrats from dry Western states see an opening in the next stimulus bill to secure new funding for water infrastructure projects in major agricultural regions like California’s Central Valley. In a letter (link) to House leaders on Friday, House Ag member T.J. Cox (D-Calif.) and other members noted that Western agriculture is largely dependent on water supplied by the Bureau of Reclamation’s water projects. The agency’s facilities supply drinking water for 31 million people and irrigation water for 10 million acres of farmland, which accounts for 60% of U.S. vegetable production and one quarter of fresh fruits and nuts, they wrote.
- Some on Trump team, but not Trump, reportedly worried about surging federal spending. Six administration officials and four external advisers said that some senior Trump administration officials are becoming more concerned with the soaring federal spending to offset the economic turmoil of the coronavirus pandemic, and that they are weighing measures such as automatic spending cuts when the economy improves or prepaying Social Security benefits to workers before they're eligible. But officials say these concerns, which are held by traditional conservatives such as White House chief of staff Mark Meadows and Russ Vought, acting director of the Office of Management and Budget, are not likely to find a receptive audience in President Donald Trump. Link to WaPo item.
— Update on implementation of CARES 1, including CFAP:
- FSA starting to issue some guidance on CFAP. USDA’s Farm Service Agency (FSA) has started the process of preparing state and county offices for the coming Coronavirus Food Assistance Program (CFAP), alerting offices that they may be dealing with producers that have never dealt with the agency previously. For those growers, FSA offices will need to collect several forms relative to verifying eligibility for CFAP payments, including farm income certifications. On the key topic of pay caps, FSA said details on that will be issued in the handbook which will cover operation of the program. The final rule was sent to the Office of Management and Budget (OMB) May 5 and it still is listed as being under review.
- Pace of SBA loans slows. The initial $349 billion for the Paycheck Protection Program ran out in 13 days, finishing at a clip of more than $30 billion per weekday. The additional $320 billion for the initiative, relaunched on April 27, reached $175.7 billion in approvals in five days, but the Small Business Administration has reported only $11 billion processed since then -- a daily pace of $2.3 billion.
- Watchdog panel misses first deadline. The Congressional Oversight Commission, responsible for overseeing $500 billion in corporate aid, missed its first public disclosure deadline Friday as the group waits for Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.) to appoint a chairperson.
— U.S. food supply/industry update:
- Trump's meat plant executive order a paper tiger? President Trump’s April 28 executive order was reported as requiring meat plants to stay open, yet Dennis Aftergut, Renne Public Law Group, says the president does not have the authority to compel owners to operate plants they had closed because of Covid-19. The order merely delegates to the Agriculture secretary the authority to encourage plants to follow federal guidelines and prioritize federal contracts.
- An Iowa pork plant illustrates the fraught politics of reopening meat-processing facilities. A New York Times article (link) writes, “After President Trump’s executive order, meat plants are reopening. Can they do so without endangering their low-wage workers and their communities?” The item adds, “Workers and their advocates say Tyson’s actions — and recent federal safety guidelines — have come far too late. They point to lapses that Tyson made in the first three weeks of April, as the virus tore largely unimpeded through the Waterloo plant. As high-level executives lobbied the White House to help protect Tyson from lawsuits, the company was failing to provide adequate safety equipment to Waterloo workers and refusing the requests of local officials to close the plant, according to more than two dozen interviews with plant employees, immigrant-rights advocates, doctors, lawyers and government officials.” More than 1,000 workers at Tyson’s Waterloo factory have been infected by the coronavirus.
Protective panels between seats in the plant’s cafeteria. An executive said Tyson had made the best safety decisions it could but acknowledged it might have done more.
- Inspectors at USDA's Food Safety Inspection Service (FSIS) will soon receive masks from their agency for the first time after the agency procured 30,000, according to reports. The announcement came after dozens of food processing plants were forced to close or reduce hours as coronavirus hotspots developed among their ranks, and President Trump signed an executive order seeking to compel all of them to reopen. The FSIS inspectors, who work side-by-side with plant employees, have to this point had to bring their own masks or rely on the private establishments where they report to supply them. To date, at least 140 employees have tested positive for Covid-19 and two have died from related symptoms. Link to more on this topic via Government Executive.
- House Ag Chairman Collin Peterson (D-Minn.) wants FEMA to help farmers euthanize and dispose of livestock by reimbursing their “depopulation” costs under Category B of the agency’s public assistance program. Peterson and other lawmakers said FEMA “has been a valued federal partner in responding to animal losses due to other natural disasters, and we should treat Covid-19 no differently,” they wrote to the agency (link).
- Disruptive food brands get a taste of their own medicine. Supermarkets are giving more shelf space to big-name products and funding is drying up for food and drink entrepreneurs. Link to WSJ article.
- How the pandemic has imperiled the empire of Napa’s top grape-grower. Link to NYT account for details.
- Katie Fitzgerald, COO of Feeding America, discusses food security during the coronavirus crisis. Link for more.
— Update on reopening America... and around the world:
- Mike Bloomberg’s prescription for reopening. The billionaire lays out how the government can help companies start up again in a Bloomberg Opinion piece. ICompanies should be shielded from lawsuits if they meet certain criteria, including providing workers with protective equipment, imposing social-distancing and offering flexible sick leave. Otherwise, Bloomberg writes, “these suits could impose a significant economic cost, create uncertainty for businesses, impede needed investment and potentially cause production bottlenecks.” Congress should expand unemployment insurance for workers at high risk for Covid-19 and let companies offer tax-free “hazard pay” for those who must be at work, Bloomberg writes.
- Apple said Friday it will start to reopen U.S. stores this week. The stores, Apple said, will have temperature checks and will limit the number of customers inside the store at once.
- Effects of Covid-19 on shopping malls. Initial results will be seen today as Simon Property Group, the biggest U.S. mall operator, reports first quarter figures, followed by the earnings of rival Macerich tomorrow. Their outlooks for the next few months will be more closely watched than ever before, with malls slowly beginning to reopen and tenants that have either gone out of business or are nearing the edge. Mall operators collected only 15% of April rent and trends are looking worse for May, according to CenterSquare Investment Management.
- MLB is expected to present a formal proposal to the players’ union this week that will outline the league’s idea for how to stage a season in 2020, the WSJ reported. The basic outline involves playing roughly 80 games — about half as many as usual — beginning in early July, following a second spring training in June. Games would be held without fans in as many MLB stadiums as allowed by local governments. Other teams would relocate, perhaps to their spring training facilities in Arizona or Florida. Anybody entering Canada is currently subject to a mandatory 14-day quarantine, making the Toronto Blue Jays a candidate to find a new home, at least at first.
- U.S. government is developing rules for reopening nursing homes. Health regulators are proposing steps that would allow visitors to return to facilities that have been hit hard by the pandemic.
- Ventilators needed? Large numbers of Covid-19 patients arrive at hospitals with blood-oxygen levels so low they should be unconscious or on the verge of organ failure. Instead they are awake, not struggling to breathe. Now, instead of rushing to put such patients on ventilators, some doctors are holding off on the invasive treatment, believing many of them will be fine without them, according to a WSJ account.
- A swath of manufacturing won’t resume production even as states ease coronavirus-driven restrictions. Factory furloughs across the U.S. are becoming permanent shutdowns, the Wall Street Journal reports (link), in a sign that the pandemic’s heavy damage to the industrial economy won’t be repaired quickly. Makers of dishware in North Carolina, furniture foam in Oregon and cutting boards in Michigan are among companies that have shut factories, and boat-and-motorcycle-maker Polaris Inc. and tire maker Goodyear Tire & Rubber Co. also plan to close U.S. plants. “The shutdowns will further erode an industrial base that has been shrinking as a share of the overall U.S. economy for decades and likely will help redraw the country’s distribution maps,” the article notes. Factories have raised output in recent years through automation, “but manufacturers’ capital spending since the pandemic has cratered, and plants that haven’t invested are less likely to rapidly resume operations.”
- Italian Prime Minister Giuseppe Conte said over the weekend Italy could ease its lockdown measures earlier than planned if the outbreak remains under control.
The most populous state in Australia will let restaurants, playground and outdoor pools resume operations on Friday, the region’s premier said Sunday.
In England, British Prime Minister Boris Johnson announced the first steps in the country's path toward reopening, four weeks after leaving a hospital where he was dealing with Covid-19. "This is not the time simply to end the lockdown this week,'' Johnson said. "Instead we are taking the first careful steps to modify our measures."
Turkey has the ninth-highest number of confirmed Covid-19 cases worldwide. But the country has managed to limit the spread of the virus over the past month and so is moving to ease its lockdown. The government has already lifted travel bans in some provinces.
- Car sales in China in April rose by 4.4% year-on-year, to 2.07 million, the first increase in almost two years. Demand in the world’s largest car market has been muted since mid-2018 amid the rollback in tax breaks and trade tensions with America. The industry had hoped for a stronger recovery since sales fell by 79% in February and by 43% in March during the Covid-19 outbreak.
— Coronavirus update:
• 4,118,783 confirmed cases world-wide, and 282,947 deaths
• 17,876 new U.S. cases since yesterday
• 1,329,799 total confirmed cases in the U.S. so far
• 673 new deaths in the U.S. since yesterday
• 79,528 total U.S. deaths so far
• Over 8,709,630 tests conducted in the U.S.
- South Korea is back on the defensive, with more than 50 cases linked to Seoul’s nightclubs and bars, which have now been ordered closed. According to the John Hopkins University data dashboard, South Korea reported 10,874 confirmed cases and 256 deaths as of Sunday morning.
- There is good news on the spread of the virus in Europe, with Spain recording its lowest death toll in almost two months while Germany saw the smallest number of new cases in almost a week.
- Pence's office says the vice president is 'not in quarantine' following reports that he is self-isolating after his spokeswoman tested positive for coronavirus. Pence's office refuted reports that the vice president is self-isolating and said he plans to be at the White House on Monday.
- Three U.S. health chiefs enter self-quarantines. CDC Director Robert Redfield and Anthony Fauci, the government’s top infectious disease expert, on Saturday evening disclosed plans to isolate over the next two weeks after ‘low-risk’ contact with an infected person. Fauci, director of the National Institute of Allergy and Infectious Diseases, has tested negative and will continue to be tested regularly, the institute said. Fauci will stay at home and telework but will go to the White House if called and take every precaution, the institute said. Redfield will be "teleworking for the next two weeks" after it was determined he had a "low risk exposure" to a person at the White House, the CDC said. The statement said he felt fine and has no symptoms. A day earlier, FDA Commissioner Stephen Hahn began two weeks of self-quarantine after coming in contact with Vice President Mike Pence's press secretary Katie Miller, who tested positive for Covid-19 on Friday.
All three are scheduled to testify at a Senate hearing on Tuesday. Senate Health Committee Chairman Lamar Alexander (R-Tenn.) said the White House will allow Redfield and Hahn to testify by videoconference. The statement was issued before Fauci's quarantine was announced.
- New York state is instituting new rules for nursing homes in an effort to protect what Gov. Andrew Cuomo called "a congregation of vulnerable people.’’ Nursing homes that can’t provide a prescribed level of care for patients for any reason will have to transfer them to another facility or contact the state department of health, Cuomo announced at his Sunday news briefing. In addition, nursing homes that can’t treat coronavirus-positive residents will have to do the same. Cuomo also said nursing home staffs will be required to get tested for the virus twice a week, and hospitals won’t be allowed to discharge patients to those facilities unless they have tested negative for Covid-19. According to the Associated Press, New York has had one-fifth of the nation's coronavirus-related deaths in nursing homes — 5,300 out of 26,000.
- EPA watchdog to review Covid-19 response. EPA's Office of Inspector General said in a notice released on Friday it plans to review the agency's response to the coronavirus pandemic. The watchdog will look for "topics for potential audits and evaluations," indicating it will not review every aspect of EPA's response.
OTHER ITEMS OF NOTE
- House Democrats introduce measure to block Trump water (WOTUS) rule. House Democrats introduced legislation Friday that would prevent the Trump administration from redefining the water bodies and wetlands subject to federal regulation under the Clean Water Act. The Clean Water for All Act would overturn the Trump administration’s Navigable Waters Protection Rule (replacement for the prior Waters of the U.S./WOTUS rule). The bill was introduced by Transportation and Infrastructure Chairman Peter DeFazio (D-Ore.) and Rep. Grace Napolitano (D-Calif.), the chairwoman of the Water and Environment Subcommittee. Meanwhile, ranchers in New Mexico, Oregon, and Washington state want no federal control of any body of water that crosses their lands. They’ve asked the Pacific Legal Foundation, a conservative nonprofit legal firm, to sue on their behalf to fix what they see as lingering “federal overreach” problems with the most recent definition of WOTUS.
- Life insurance is suddenly tougher to get. "U.S. insurers are doing the once unthinkable, turning away business from some Americans who want a life-insurance policy," the Wall Street Journal reports (link). Reason: "A collapse in interest rates tied to the spread of the new coronavirus and an expectation from insurers that rates won’t rebound significantly anytime soon."
- Dem Veepstakes: Kamala Harris emerges as early Biden VP favorite. Politico reports (link) that “Kamala Harris was written off as a possible vice presidential pick for Joe Biden last year after a cutting debate performance where she seemed to suggest he was racially insensitive. Now, Harris is not only in top contention, but Biden aides, surrogates and major donors see her as the best fit at the onset of the process — at least on paper — to join him atop the Democratic ticket.”