“Prices are too high” is far from synonymous with “the next move will be downward.” Things can be overpriced and stay that way for a long time . . . or become far more so.” – Howard Marks

1. New Jersey, Connecticut Moves Toward Reopening — Retail businesses will be allowed to offer curbside pickup starting May 18, and restrictions will lift on non-essential construction work, Governor Murphy stated. Also, Connecticut will begin to reopen May 20 and test 42,000 a week. Connecticut Governor Ned Lamont said the chief executives of some large companies have told him that telecommuting could help them save money by cutting office space by as much as 30%, signaling what may be a national shift by businesses.
2. Fed Chairman Powell Warns of Broad Virus Danger, Discourages Negative Rates — Federal Reserve Chair Jerome Powell stated The U.S. economy faces unprecedented risks from the coronavirus if fiscal and monetary policy makers don’t rise to the challenge. Powell and his colleagues on the policy-setting Federal Open Market Committee have taken dramatic measures to shelter the U.S. economy during the coronavirus pandemic. They have cut their benchmark interest rate to nearly zero, engaged in open-ended bond buying and begun rolling out emergency lending programs as U.S. unemployment has soared to levels not seen since the 1930s Great Depression. Powell acknowledged the negative rate speculation but said such a move was not being considered, though he stopped short of completely ruling the tool out as an option in the future.
3. U.S. Jobless Claims Climbs to 2.98 Million Brings Virus Sum to 36.5 Million — Initial jobless claims in state programs totaled 2.98 million in the week ended May 9, Labor Department figures showed Thursday, following 3.18 million the prior week. With the latest numbers, a total of 36.5 million applications for unemployment insurance have been filed since the virus began shutting down businesses in mid-March. Connecticut reported a surge to about 298,700 from 36,100 the prior week — dwarfing any other state change.
4. Retail Sales Crater by a Record 16.4% as Spending Slumps Amid Coronavirus Lockdowns — revenue at retailers and restaurants fell 16.4% from the prior month, almost double the 8.3% drop in March which was previously the worst in data back to 1992, according to a Commerce Department report. With the coronavirus pandemic keeping most Americans stuck at home and unemployment the highest since the Great Depression era, people sharply reduced their spending in the month. The retail sales report, meantime, showed all but one of 13 major categories decreased, led by a 78.8% drop at clothing stores and a 60.6% decline at electronics and appliance outlets. The only category to record a gain was nonstore sales — including online sellers such as Amazon.com — which increased 8.4%.
5. Trump Administration Moves to Cut Huawei Off From Global Chip Suppliers — the Trump administration moved to block shipments of semiconductors to Huawei Technologies from global chipmakers, in an action that could ramp up tensions with China. The rule change is a blow to Huawei, the world’s no. 2 smartphone maker, as well as to Taiwan’s TSMC, a major producer of chips for Huawei’s HiSilicon unit as well as mobile phone rivals Apple and Qualcomm. The United States is trying to convince allies to exclude Huawei gear from next-generation 5G networks on grounds its equipment could be used by China for spying.

The week ahead — Economic data from Econoday.com:

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