Week of May 8, 2020 Weekly Recap & The Week Ahead
“Being too far ahead of your time is indistinguishable from being wrong.” – Howard Marks
1. Hertz May File for Bankruptcy — Hertz may file for bankruptcy as talks with creditors go down to the wire, people familiar said. The company added FTI Consulting, a bankruptcy specialist, to its roster of advisers. Shares dropped 21% pre-market. Neiman Marcus is close to a bankruptcy deal with lenders led by PIMCO that would slash its debt load by more than half in exchange for control of the company, people familiar said. Also, JC Penney has filed for bankruptcy protection.
2. American Meat Workers Are Starting to Quit With Plants Reopening — At a JBS USA plant in Greeley, Colorado, absenteeism is running as high as 30%. Before the pandemic, it was about 13%. The company is paying about 10% of the workforce — people deemed vulnerable — to stay home. Meat plants have been at the nexus of coronavirus hot spots across America’s rural heartland. The disease spread through plants in March and April as companies struggled to adapt their workplaces to new rules dictated by the pandemic. As absenteeism persists, the U.S. is at risk of continued meat shortages and higher prices, even after President Donald Trump signed an executive order to keep plants running.
3. U.S., China Trade Chiefs to Speak on Progress in Implementing a Phase-One Deal — the planned phone call will be the first time Liu and Lighthizer speak officially about the agreement since it was signed in January, just before the global coronavirus pandemic hit the world’s two biggest economies and upended global supply chains. The deal called for Liu and Lighthizer to meet every six months, making next week’s call slightly ahead of schedule. According to the text of the agreement signed earlier this year, China has agreed to buy an additional $200 billion in U.S. goods and services over two years compared with 2017’s level.
4. U.S. Jobless Rate Surges to 14.7% in Worst-Ever Labor Reversal — employers cut an unprecedented 20.5 million jobs in April and the unemployment rate more than tripled to 14.7%.
Joblessness now stands at the most since the Great Depression era of the 1930s after the coronavirus pandemic brought the U.S. economy to a standstill. As recently as February, the rate stood at just 3.5%, the lowest level in five decades. White House adviser Kevin Hassett stated unemployment may peak “north of” 20% in May or June before the economy starts to come back from coronavirus-related shutdowns in the second half of 2020.
5. FDA Approves New Covid-19 Antigen Test — the emergency use authorization, the first ever by the FDA for a Covid-19 antigen test — was granted to San Diego-based Quidel Corp. late Friday, according to a notice from the agency. “It’s a very rapid test that could be used in a doctor’s office,” former FDA Commissioner Scott Gottlieb said Sunday on CBS’s “Face the Nation.” “Doctors now have about 40,000 of these Sophia machines already installed in their offices” where they are used to test for strep throat and flu. Each test will probably cost about $5, with results available within minutes
The week ahead — Economic data from Econoday.com:
