The Finance 202: Voters may not let Trump change the subject from the coronavirus pandemic to economy

Christel Deskins

That will be easier said than done. “In order to get to a discussion about the economy, there has to be a sense that the pandemic is under control,” David Winston, a pollster and strategist for congressional Republicans, tells me. “The challenge for Republicans is not so much that they […]

That will be easier said than done. “In order to get to a discussion about the economy, there has to be a sense that the pandemic is under control,” David Winston, a pollster and strategist for congressional Republicans, tells me. “The challenge for Republicans is not so much that they need to be perceived as better than Democrats on health-care issues, which historically they haven’t been, but to put a belief in place that they can get the country to a transition point” on the pandemic.

House Republicans are set today to make their own case. House Minority Leader Kevin McCarthy (R-Calif.) is debuting an agenda centered on economic recovery and tackling the pandemic — “a tacit admission by House Republicans that it’s simply not enough to oppose the Democrats’ coronavirus proposals,” Politico’s Melanie Zanona and John Bresnahan report.

Polling suggests  Republican interest in shifting the debate to the economy makes some sense: It remains the last issue on which the president displays relative strength, even as Democratic nominee Joe Biden has narrowed the gap on the matter over the summer. And despite some evidence to the contrary — a Gallup poll in August, for example, found voters ranked the economy a distant third on their list of top concerns, behind the coronavirus and “government leadership” — Winston says his research indicates that it remains a driving worry for swing voters.

More importantly, Winston says the pandemic and the economic fallout it has caused remain “largely intertwined at this point.”

Trump, since the earliest days of the pandemic, has viewed the matters as separate.

The president consistently talked down the threat posed by the virus despite understanding its danger in early February, according to an interview he gave journalist Bob Woodward at the time for Woodward’s book, “Rage,” which is out today. Trump reasoned he didn’t want to touch off a panic — including among investors.

In his final conversation with the Woodward, Trump asked the author if he thought the “the virus totally supersedes the economy,” CNN reports. When Woodward said the two were linked, Trump conceded that was true “a little bit,” before noting the stock market’s recovery.

Even now, as the national death toll climbs by hundreds a day and nears 200,000, the president is behaving as if the pandemic’s threat is long past. Trump is drawing fresh criticism from public health experts for holding an indoor rally in Nevada on Sunday night before a packed and largely unmasked crowd. The event violated the state’s ban on such large gatherings, but Trump went ahead held a large indoor event yesterday in Arizona.

In a referendum on the economy, Trump still has a tough sell.

“Hillary Clinton led Trump overall in the polls and on most issues in 2016, except for the economy,” Heather Long and Jeff Stein wrote last week. But they noted “no president has won reelection in modern history with the unemployment rate above 7.2 percent. As of August, the unemployment rate was 8.4 percent, but it is likely to fall further by Election Day.”

A plurality of voters take a more dour view of the reality. A recent Economist-YouGov poll found only roughly a quarter of respondents accurately pegged the unemployment rate as standing between 8 percent and 10 percent. A third believe it is higher than that range; only 19 percent said it is lower.

An uneven recovery is muddying the picture. The scale of the pandemic shock —  which pitched a historically lengthy economic expansion into a recession and decimated millions of jobs and businesses — would seem to drag heavily on the president’s reelection hopes. But partisan affiliations play an outsize role coloring voter perceptions of the economy even now. 

Beyond that, how undecided voters sit may indicate where they stand: nearly 30 million people remain on some sort of unemployment aid, while others have seen their personal financial situation improve and the value of their retirement accounts restored. And there is no extension of coronavirus relief legislation yet in the offing.

“It’s going to vary from person to person,” Winston says. “We’ve never come close to anything like this, so it’s hard to work through what everybody is going to be looking at specifically.”

Market movers

Wall Street rebounds after terrible week.

The Dow closed up more than 300 points: “The S&P 500 climbed 1.3 percent, or 42.57 points, to 3,383.54 and the Nasdaq Composite jumped 1.9 percent, or 203.11 points, to 11,056.65. The tech-heavy benchmark was coming off its worst week since March,” CNBCs Fred Imbert reports.

“Shares of Apple jumped 3 percent. The market has been following in the footsteps of its rally leader. Apple shares are still down 10.6 percent this month.”

  • Tesla swung back amid a tech rebound: Shares jumped 12.58 percent, and Goldman Sachs said demand is picking up in China, CNBCs Pippa Stevens reports. “Still, the firm has a neutral rating on shares of the Elon Musk-led company, and a 12-month price target of $295.”

Tech leads crisis-driven M&A boom: “Global M&A volumes are approaching $2 trillion for 2020, with technology making up almost a fifth of the total after mammoth deals such as SoftBank’s $40 billion sale of chipmaker Arm,” Reuters reports.

“Such waves are characteristic after downturns, but Refinitiv data shows 2020’s $1.97 trillion total of deals announced so far exceeds $1.26 trillion and $1.6 trillion during the same period in 2009 and 2010 respectively, after the 2008 financial crisis.”

  • SoftBanks Masayoshi Son has cash burning a hole in his pocket: “Over the past six months, technology investor SoftBank Group Corp. has signed more than $90 billion in deals to sell some of its most valuable holdings,” the Wall Street Journal’s Phred Dvorak reports. The Japanese conglomerate “has committed to spend about half the sum to buy back its own shares and pay down debt … but given the propensity of SoftBank and its ebullient founder Son for making bold bets, analysts and investors suspect some type of deal could be in the offing.”

Powell’s Fed tests its limits. 

The central bank has grown its balance sheet by $3 trillion as its pandemic response pushes it into new territory. The Fed’s moves test “how far its tools can go and how inclusive they can be,” Rachel Siegel reports. “The central bank was quick to bring interest rates to zero, backstop credit markets and buy up corporate debt — but those policies often sidestep Americans who don’t hold investments. A lending program for small and mid-sized businesses has seen little uptake, raising doubts about the Fed’s ability to directly help companies fighting for survival. And as the pandemic widens longstanding racial and economic gaps, the Fed is facing urgent questions over how it can steer a recovery that lifts all Americans.”

Latest on the federal pandemic response

States are trying to plug the gaps in unemployment benefits.

The Trump administration’s $300 a week has some tight requirements: “The Lost Wages Assistance program, which increases jobless aid by $300 a week, is only available to workers who collect at least $100 a week in unemployment benefits from their state or other programs,” CNBC’s Greg Iacurci reports.

“That restriction leaves out thousands of workers who get a lesser benefit, and who are arguably the Americans who most need the extra aid, experts said. Some states, such as Arkansas, Idaho, Rhode Island and West Virginia, seem to be trying to extend financial assistance to these unemployed workers through various means.”

A federal watchdog is looking into the Kodak loan: “The newly named inspector general of the U.S. International Development Finance Corp., a federal agency charged with making loans to businesses in connection with the pandemic, told Sen. Elizabeth Warren (D-Mass.) last Thursday that his office was opening a review of the loan, according to a spokeswoman for Warren, who had called for further investigation,” WSJ’s Rachael Levy reports.

“The inquiry is the latest known government probe of the planned transaction. The Securities and Exchange Commission began an investigation into how the onetime photography giant disclosed the loan, while several Democratic-led congressional committees have announced a probe of the agreement. In addition, Kodak has said it would conduct an internal review …”

Coronavirus fallout

More cities and states are opening bars and restaurants. 

But a Post analysis shows opening bars especially is very risky: “States that have reopened bars experienced a doubling in the rate of coronavirus cases three weeks after the opening of doors, on average,” Rachel Weiner, Chris Alcantara and Andrew Ba Tran report.

“The Post analysis — using data provided by SafeGraph, a company that aggregates cellphone location information — found a statistically significant national relationship between foot traffic to bars one week after they reopened and an increase in cases three weeks later. The analysis of the cellphone data suggests there is not as strong a relationship between the reopening of restaurants and a rise in cases, nor with bar foot traffic and cases over time, except for a handful of states. But like with so much in the pandemic, easy answers can prove elusive.”

More from the U.S.:

  • Judge rules Pennsylvania’s lockdown is “unconstitutional”: “The state’s limits on gatherings and closure of nonessential businesses violated the First Amendment and the due process and equal protection clauses of the 14th Amendment, according to a 66-page opinion by U.S. District Judge William Stickman IV, a Trump appointee. The governor’s office confirmed it will appeal the decision,” Meryl Kornfield reports. Trump seized on the ruling.
  • Senior HHS official warned of armed insurrection after the election: “Michael R. Caputo, the assistant secretary of public affairs at the Department of Health and Human Services, accused the Centers for Disease Control and Prevention of harboring a ‘resistance unit’ determined to undermine Trump, even if that opposition bolsters the Covid-19 death toll,” the New York Times’s Sharon LaFraniere reports.
  • State Medicaid rolls are swelling: “By the most recent count, the roster of Nevadans on Medicaid has climbed from fewer than 644,000 in February … to about 731,000 through August. That 13.5 percent increase places Nevada among at least three states, along with Kentucky and Minnesota …,” Amy Goldstein reports.
  • Midwestern universities are canceling spring break: “At Kansas State University, the University of Iowa, Iowa State University and the University of Northern Iowa, the start of the spring semester will be delayed until late January, with no major breaks taking place until classes conclude in May. The University of Nebraska is weighing plans to follow suit,” Antonia Farzan reports.
  • Macy’s Thanksgiving Day parade will go on but will look very different: “The parade will still air across the country on NBC on Thanksgiving morning, but the pandemic forced Macy’s to ‘reimagine’ the event. It will forgo the traditional 2.5-mile route and reduce by 75 percent the number of parade participants, who will be socially distanced during performances and required to wear face coverings,” CNN Business’s Frank Pallotta reports.

From the corporate front:

The fate of two businesses in the same Cleveland office tower highlight how the bailout has left small operations behind. ProPublica’s Lydia DePillis, Justin Elliott and Paul Kiel tell the tale: Girish Patel received a PPP loan but is struggling to keep his newsstand in Erieview Tower afloat. Thirty stories above, aerospace company TransDigm has fared much differently: Taking advantage of the Fed’s moves to shore up the bond market, it has borrowed $1.5 billion in two bond offerings, and it stands to collect “tens of millions in direct aid” through tax cuts from the Cares Act. 

“The effects of the federal help have been unevenly felt,” the ProPublica team writes. “By bolstering a bond market that had been in freefall, the federal government offered its largest, most rapid and least encumbered relief to large businesses that already had robust cash reserves. This intervention required no application process. Nothing protected rank-and-file employees from simply being laid off, and the prime beneficiaries have been shareholders and bondholders as the stock market has soared to new heights.”

  • Delta to use frequent-flier program to raise $6.5 billion: “The carrier has raised $16.5 billion since the start of the pandemic, but Delta is still bleeding about $27 million in cash a day, CFO Paul Jacobson said last week,” WSJs Alison Sider reports.
  • JPMorgan found that productivity fell for staff working at home: “Work output was particularly affected on Mondays and Fridays, according to findings discussed by CEO Jamie Dimon in a private meeting with Keefe, Bruyette & Woods analysts,” Bloomberg Newss Michelle F. Davis reports. KBW said the decline “has impacted younger employees,” but a bank spokesman later told Bloomberg News that the decline is more general.
  • Apples September event will have no crowds: “CEO Tim Cook will continue with the cadence of a keynote event, but via web stream, and instead of featuring a new flagship iPhone, the company is expected to reveal its latest watch and an updated iPad,” WSJs Tim Higgins reports.

Around the world:

  • Economic devastation from the pandemic is worse than the financial crisis, report finds: “Nations in the Group of 20 — which includes China, Brazil, India, the United States and the European Union — saw an unprecedented 6.9 percent decline in growth between April and June of this year. By contrast, the same economies took a dip of 1.9 percent during the first quarter of 2009, which marked the apex of the global financial crisis,” Antonia Farzan writes of a new OECD report.
  • Airbus CEO warns of compulsory layoffs: “The warning in a letter to its 130,000 staff from CEO Guillaume Faury, seen by Reuters, marks a more pessimistic tone from the planemaker, which had previously said only that it could not rule out compulsory measures,” Reuters reports.

When superpowers collide

TikTok proposes to add new U.S. headquarters and 20,000 jobs.

The short-form video app is trying to win over Trump: While Treasury Secretary Steven Mnuchin didnt go into detail about the proposal during a CNBC interview on Monday, “the proposed arrangement would allow its parent company, ByteDance, to retain ownership but outsource management of data to Oracle’s cloud-computing operations,” Jay Greene reports.

“If a deal along that structure wins administration approval, it would represent a significant step back from what the president demanded when he first threatened to ban the app in the United States in July. At the time, Trump pushed to force the sale of TikTok’s U.S. operations to an American company.”

  • Why Walmart still wants in on the deal: “A relationship with TikTok could supercharge the world’s largest retailer’s battle against Inc in e-commerce and online advertising. But transforming TikTok from a platform … into a shopping powerhouse will be a challenge for the Bentonville, Arkansas-based company, analysts say,” according to Reuters.
  • Alphabet is launching a possible TikTok competitor: “YouTube is rolling out its version of social media rival TikTok, a new short-form video service called Shorts, enabled within its video-sharing platform,” Reuters reports. Shorts will be tested in India, where TikTok remains banned, before YouTube expands it in the coming months.

Pocket change

Exxon doubled down on oil and gas at the worst possible time.

The oil giant stuck with its traditional business while its rivals pivoted : “Just seven years ago, Exxon was the biggest U.S. company by market capitalization. It has since lost roughly 60 percent of its value, with its market cap now at around $160 billion, after the pandemic crushed demand for fossil fuels,” WSJs Christopher M. Matthews reports.

“While rivals have begun to pivot to renewable energy, it is standing pat. Investors are fleeing and workers are grumbling about the direction of a company some see as out of touch and stubborn. … Exxon believes the world’s growing population will need fossil fuels for decades to come and that the company’s bet on additional production will yield profits in the long run.”

Steve Cohen reaches deal to buy the Mets. “Cohen, a billionaire hedge fund mogul from Long Island, has agreed to purchase the Mets from Saul Katz and Fred Wilpon, the team announced on Monday,” the NYT’s David Waldstein reports. “The deal gives Cohen a 95 percent stake in the team, with a total valuation of about $2.4 billion, according to two people with direct knowledge of the deal who requested anonymity because the figure had not been made public. Katz and Wilpon will retain 5 percent of the team.”

  • The deal puts Cohen’s rocky business record back in the spotlight. “His previous fund, SAC Capital Advisors, was subject to a series of insider trading investigations beginning after 2009. Cohen was never charged with wrongdoing, but his firm ultimately paid nearly $2 billion in fines, and he agreed not to manage outside money for two years. His new fund, Point72 Asset Management, has been accused of hostility to women.”

Anthony Weiner weathered the tabloid heat. Now, he wants to remake your kitchen: “The former congressman and New York mayoral candidate has a new gig: He’s the chief executive of a Brooklyn-based countertop company,” the New York Times reports. “In an email blast Monday morning, Weiner pitched IceStone, which he took over in May, as a business offering an ‘unlimited array of different colors we can use in our recycled glass creations.’”

The regulators

The Fed is preparing to reprimand Citigroup.

The banks shares dropped more than 5 percent based on the news: Federal regulators are preparing to reprimand the bank “for failing to improve its risk-management systems — an expansive set of technology and procedures designed to detect problematic transactions, risky trades and anything else that could harm the bank,” WSJs David Benoit and Ben Eisen report.

“The expected rebuke from the Office of the Comptroller of the Currency and the Federal Reserve accelerated planning for Chief Executive Michael Corbat’s retirement. Regulators didn’t ask Corbat to step down. … Rather, he came to believe that an expensive, multiyear systems overhaul designed to address regulators’ concerns was best left in the hands of his successor, Jane Fraser.” The exact punishment coming is not clear.

Better Markets and Sen. Sherrod Brown (D-Ohio) host webinar on deregulation. On the anniversary of the Lehman Brothers collapse in 2008, Brown and Better Markets president Dennis Kelleher will discuss the state of the Trump administration’s efforts to roll back restrictions on the financial industry. The event begins at 2:30 p.m. today and is open to the public. Register here.

Chart topper

From economist Megan Greene:


  • The Feds Federal Open Market Committee (FOMC) begins its two-day August meeting
  • The Senate Judiciary Committees antitrust subcommittee holds a hearing on whether Google harmed competition in online advertising
  • FedEx, Adobe and Cracker Barrel Old Country Store are among the notable companies reporting their earnings
  • Fed Chair Jerome H. Powell is expected to meet the press after the FOMC meeting
  • The House Financial Services Committee holds a virtual hearing on Fannie Mae and Freddie Macs response to the coronavirus. Federal Housing Finance Agency Director Mark A. Calabria is expected to testify.
  • The Labor Department reports the latest weekly jobless claims
  • A Financial Services investor protection subcommittee holds a virtual hearing on insider trading and corporate integrity during the coronavirus pandemic
  • A House Ways and Means trade subcommittee holds a virtual hearing on enforcing the ban on imports produced by forced labor in Xinjiang, China

The funnies

Bull session

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