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| How Bad Will the Economy Get? Companies Will Provide Clues | How Bad Will the Economy Get? Companies Will Provide Clues |
| (4 days later) | |
| The coronavirus pandemic has pushed the economy into a slowdown of unknown severity. It could be a long, drawn-out recession, or a sharp dip followed by a swift recovery. | The coronavirus pandemic has pushed the economy into a slowdown of unknown severity. It could be a long, drawn-out recession, or a sharp dip followed by a swift recovery. |
| The stock market, which has soared 23 percent from its low, is signaling that many investors expect a quick rebound. | The stock market, which has soared 23 percent from its low, is signaling that many investors expect a quick rebound. |
| But that optimism will be tested over the coming weeks when large companies report their quarterly financial results for the first three months of the year and predict the pandemic’s effect on their business. | But that optimism will be tested over the coming weeks when large companies report their quarterly financial results for the first three months of the year and predict the pandemic’s effect on their business. |
| “Earnings season,” as it’s known on Wall Street, usually fascinates only professional investors. And corporate executives, always reluctant to discuss problems, may be even less forthcoming about them now. But with millions of jobs on the line and businesses shuttering every day, this deluge of company information, and any light it sheds, will take on a new importance. | “Earnings season,” as it’s known on Wall Street, usually fascinates only professional investors. And corporate executives, always reluctant to discuss problems, may be even less forthcoming about them now. But with millions of jobs on the line and businesses shuttering every day, this deluge of company information, and any light it sheds, will take on a new importance. |
| Here’s what to expect. | Here’s what to expect. |
| Investors are already anticipating several epicenters of economic pain. Oil companies, airlines, hotels, restaurants, retailers and automakers will report steep losses and issue forecasts for the coming months. Ford Motor, for example, said on Monday that it would lose $600 million in the first quarter — not counting some expenses like interest and taxes — down from a $2.4 billion profit in the first three months of 2019. | Investors are already anticipating several epicenters of economic pain. Oil companies, airlines, hotels, restaurants, retailers and automakers will report steep losses and issue forecasts for the coming months. Ford Motor, for example, said on Monday that it would lose $600 million in the first quarter — not counting some expenses like interest and taxes — down from a $2.4 billion profit in the first three months of 2019. |
| Companies in these sectors are furloughing or laying off employees. It’s here that government aid could prove decisive — and executives, speaking on publicly accessible earnings calls, may reveal whether they will apply for assistance from the Treasury Department and the Federal Reserve, and how much. | Companies in these sectors are furloughing or laying off employees. It’s here that government aid could prove decisive — and executives, speaking on publicly accessible earnings calls, may reveal whether they will apply for assistance from the Treasury Department and the Federal Reserve, and how much. |
| Some companies may be hesitant to take a big bailout. Giving the government stock in return for its financial support could rattle shareholders, who might fear that the government stake would reduce their ownership share of the company. But companies that spurn the government’s help or take too little may later regret it if their fortunes deteriorate further. Executives at Boeing, for example, have sent mixed messages about whether it needs help from the government. The aerospace giant was already in trouble before the pandemic because of the grounding of the 737 Max. | Some companies may be hesitant to take a big bailout. Giving the government stock in return for its financial support could rattle shareholders, who might fear that the government stake would reduce their ownership share of the company. But companies that spurn the government’s help or take too little may later regret it if their fortunes deteriorate further. Executives at Boeing, for example, have sent mixed messages about whether it needs help from the government. The aerospace giant was already in trouble before the pandemic because of the grounding of the 737 Max. |
| And while accepting a government bailout could help, there is no guarantee that executives will maintain hiring at pre-pandemic levels. Some types of aid might come with commitments to keep people employed, but only until the end of September. United Airlines, for example, has suggested that layoffs may come after September if the economy stays in a deep funk. | And while accepting a government bailout could help, there is no guarantee that executives will maintain hiring at pre-pandemic levels. Some types of aid might come with commitments to keep people employed, but only until the end of September. United Airlines, for example, has suggested that layoffs may come after September if the economy stays in a deep funk. |
| What to watch for: Clarity from Boeing on whether it will seek government assistance and be willing to give equity or something else to the government in exchange. | What to watch for: Clarity from Boeing on whether it will seek government assistance and be willing to give equity or something else to the government in exchange. |
| If earnings disappoint investors and management’s forecasts are worse than expected or disconcertingly vague, share prices could plunge back toward their recent lows. That would add to the gloom about the economy and cast doubts on the government’s ability to revive the economy. | If earnings disappoint investors and management’s forecasts are worse than expected or disconcertingly vague, share prices could plunge back toward their recent lows. That would add to the gloom about the economy and cast doubts on the government’s ability to revive the economy. |
| But some investors believe earnings season could provide evidence that a swift recovery is possible. “We are viewing this as very much transitory,” said Timothy Fidler, who helps manage money at Ariel Investments, “a deep, unprecedented shock, but one that will cure itself — and cure itself pretty rapidly.” | But some investors believe earnings season could provide evidence that a swift recovery is possible. “We are viewing this as very much transitory,” said Timothy Fidler, who helps manage money at Ariel Investments, “a deep, unprecedented shock, but one that will cure itself — and cure itself pretty rapidly.” |
| Such bullishness from investors might seem irrationally exuberant when states like New York are still reporting hundreds of deaths a day. But traders make money when they accurately predict the future. And sometimes, their optimism can also help lift the economy. That’s because when corporate executives see stocks surge and borrowing costs plunge, they might be less likely to cut back on spending and hiring as much as when stocks are slumping. | Such bullishness from investors might seem irrationally exuberant when states like New York are still reporting hundreds of deaths a day. But traders make money when they accurately predict the future. And sometimes, their optimism can also help lift the economy. That’s because when corporate executives see stocks surge and borrowing costs plunge, they might be less likely to cut back on spending and hiring as much as when stocks are slumping. |
| What to watch for: If stocks sell off steeply, look to see which big companies reported that day and what their executives said. | What to watch for: If stocks sell off steeply, look to see which big companies reported that day and what their executives said. |
| This week, the six largest U.S. banks report their earnings. Banks play a crucial role in the economy because they help finance spending by companies and individuals. In the past few weeks, they have already lent billions to companies that drew down credit lines to ensure they had sufficient cash. | This week, the six largest U.S. banks report their earnings. Banks play a crucial role in the economy because they help finance spending by companies and individuals. In the past few weeks, they have already lent billions to companies that drew down credit lines to ensure they had sufficient cash. |
| If bank executives fear that a recession will make it harder for borrowers to pay back loans, they will not lend as much money in the coming months, which would, in turn, further weaken the economy. On Tuesday, JPMorgan Chase said that it set aside $8 billion in anticipation of loan losses to come, and Wells Fargo $4 billion. | If bank executives fear that a recession will make it harder for borrowers to pay back loans, they will not lend as much money in the coming months, which would, in turn, further weaken the economy. On Tuesday, JPMorgan Chase said that it set aside $8 billion in anticipation of loan losses to come, and Wells Fargo $4 billion. |
| One worrying sign: Bank stocks are down by over a third this year, versus a 14.5 percent drop for the S&P 500. That means investors expect the sector will be hit harder than others. | One worrying sign: Bank stocks are down by over a third this year, versus a 14.5 percent drop for the S&P 500. That means investors expect the sector will be hit harder than others. |
| Updated June 5, 2020 | Updated June 5, 2020 |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. | Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| It is important that the banks stay healthy because the federal government is relying on them as a middleman to get potentially trillions of dollars of aid to companies and individuals. | It is important that the banks stay healthy because the federal government is relying on them as a middleman to get potentially trillions of dollars of aid to companies and individuals. |
| What to watch for: Comments from bank executives that they are going to be more cautious about making loans. | What to watch for: Comments from bank executives that they are going to be more cautious about making loans. |
| It’s no surprise that the virtual lockdown of large swaths of the American population has delivered a big blow to the economy, which is driven by consumer spending. But investors are intensely interested in whether traditional retailers and restaurants will be able to survive and adapt to potentially huge changes in consumers’ spending priorities. | It’s no surprise that the virtual lockdown of large swaths of the American population has delivered a big blow to the economy, which is driven by consumer spending. But investors are intensely interested in whether traditional retailers and restaurants will be able to survive and adapt to potentially huge changes in consumers’ spending priorities. |
| Some companies will offer important insights about what Americans are spending on and what they are not. For instance, the Walt Disney Company has been keen to highlight surging subscriptions for its Disney Plus streaming service, which have already topped 50 million worldwide in a few months. But it is not clear that the growth of that service can offset the collapse of key money makers such as theme parks, cruise ships, ESPN and movies. Some analysts, such as those at JPMorgan, see “only some lingering impact to attendance at the parks” because of the outbreak. | Some companies will offer important insights about what Americans are spending on and what they are not. For instance, the Walt Disney Company has been keen to highlight surging subscriptions for its Disney Plus streaming service, which have already topped 50 million worldwide in a few months. But it is not clear that the growth of that service can offset the collapse of key money makers such as theme parks, cruise ships, ESPN and movies. Some analysts, such as those at JPMorgan, see “only some lingering impact to attendance at the parks” because of the outbreak. |
| Of course, there will be outright winners. Share prices for Netflix, Amazon and Clorox, the maker of disinfecting wipes and bleach, are all up by more than 15 percent this year. | Of course, there will be outright winners. Share prices for Netflix, Amazon and Clorox, the maker of disinfecting wipes and bleach, are all up by more than 15 percent this year. |
| But it might take time to tell whether others will do well. And even in industries that are hammered by the outbreak, some companies might do better than others. In the restaurant industry, for example, some chains are more likely to thrive when most diners are not leaving home much or at all. Chains with an established takeout and delivery business, such as Domino’s and Papa John’s, are growing fast with the help of online ordering, while other fast-food companies that are heavily dependent on business from commuters, like Dunkin’ Brands, might struggle. They may need to change how they do business if many people keep working from home for months. | But it might take time to tell whether others will do well. And even in industries that are hammered by the outbreak, some companies might do better than others. In the restaurant industry, for example, some chains are more likely to thrive when most diners are not leaving home much or at all. Chains with an established takeout and delivery business, such as Domino’s and Papa John’s, are growing fast with the help of online ordering, while other fast-food companies that are heavily dependent on business from commuters, like Dunkin’ Brands, might struggle. They may need to change how they do business if many people keep working from home for months. |
| What to watch for: Comments that corporate executives make about how consumer behavior is changing, and whether those changes could outlast the pandemic. | What to watch for: Comments that corporate executives make about how consumer behavior is changing, and whether those changes could outlast the pandemic. |