Another 6.6. million U.S. workers applied for unemployment last week including 45k in Colorado

The blistering pace of new unemployment filings in the U.S. continued last week when another 6.6 million people applied for financial support, according to numbers released Thursday morning by the U.S. Department of Labor.

It’s a figure that brings the country’s three-week total to roughly 16.8 million claims as the COVID-19 pandemic continues to wreak havoc on medical systems and the economy. Roughly 10% of U.S. workers have lost their jobs in the last three weeks, the fastest and largest decline on records that date back to 1948.

The 6,606,000 unemployment claims reported to the department of labor for last week mark a 261,000-worker decline from the week prior. Numbers for the week ending March 28 were revised upward. Almost 6.9 million Americans filed for benefits that week.

In Colorado, initial claims volume last week slowed down from the record-shattering 61,838 filed during the week ending March 28, according to statistics provided to the U.S. Department of Labor Still, the 45,494 people who filed for unemployment insurance last week is the second-highest single week total on record.

Over the last three weeks, 127,077 people have filed claims in the state. Just 102,000 people did so over the entirety of 2019, state labor economist Ryen Gedney said last week.

There is little sign that things will be getting back to normal in the near future. Many Colorado school districts have announced students will not return to the classroom this spring, and Gov. Jared Polis has extended a statewide stay-at-home order until at least April 26. At least 14 large companies have announced mass layoffs in the state this week, including ski industry giant Vail Resorts.

Some economists predict up to 20 million Americans will lose their jobs this month, a total that would set new records for national unemployment levels.

The Associated Press contributed to this report.

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Morgan Stanley CEO James Gorman recovers from COVID-19

(Reuters) – Morgan Stanley’s (MS.N) Chief Executive Officer James Gorman said he has fully recovered from the illness caused by the novel coronavirus, according to a video that was sent to the bank’s employees on Thursday.

Gorman released the 10-minute video to staff by email in which he said he had tested positive for coronavirus and had been fully cleared by doctors more than a week ago.

Gorman is currently undergoing self-isolation at home and working remotely, according to the video.

A Morgan Stanley spokesman confirmed the contents of the video, adding the development was not considered to be material because Gorman was not incapacitated at any time.

The board of Morgan Stanley was informed when he was confirmed positive for the disease, the spokesman added.

The bank had not publicly disclosed earlier that Gorman had tested positive for the respiratory disease.

Gorman said in the video he began experiencing flu-like systems in mid March. He later tested positive for the disease, but was able to continue to work from home as he was not incapacitated, he said.

The bank held daily operating committee calls since the positive coronavirus test and Gorman led every call, the spokesman added.

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May is crunch time for U.S. auto suppliers amid coronavirus shutdown

DETROIT (Reuters) – Auto parts maker Kevin Clay landed a series of new contracts from customers early this year, and was bullish on 2020 after two challenging years.

“I had the audacity or stupidity to say in January ‘I can’t imagine what could happen this year that could slow us down,’” said Clay, president and third-generation owner of Grand Rapids, Michigan-based Pridgeon & Clay, which supplies stamped steel and stainless steel parts to automakers and which has annual revenue of close to $350 million.

But now, with much of the United States at a standstill due to the coronavirus outbreak, one of the company’s two U.S. plants is idled and the other has a skeleton staff producing parts for commercial trucks. Pridgeon & Clay is juggling pressure from lenders, automakers and its own suppliers, gambling that automakers can restart North American production by mid-May before the auto parts maker’s money begins to run out.

“If we weren’t working on special deals with our suppliers, with our customers and with our banks, then the music would stop for us some time in mid-May, as it will for virtually everybody,” Clay said.

Suppliers and restructuring experts say major automakers are still paying bills, and suppliers received checks recently for goods shipped in February and March before factories shut down.

The real crunch for suppliers will come by mid-May. That is when the cash backlog runs out unless automakers are able to restart assembly lines, industry executives and consultants said.

Fiat Chrysler Automobiles NV (FCA) (FCHA.MI) (FCAU.N) and Honda Motor Co Ltd (7267.T) said this week they aim to gradually restart production in early May. General Motors Co (GM.N) and Ford Motor Co (F.N) have not set reopening dates. Some Asian and European automakers are aiming to restart U.S. production later this month.

“If the auto industry starts back up in early May, most suppliers should be able to turn the lights back on,” said Steve Wybo, a senior managing director at consultant Conway MacKenzie. “But the longer the shutdown lasts, the harder it will be for them to get the lights on.”

STRONG STARTING POSITION

Many larger auto suppliers were in better shape financially when the coronavirus shutdowns came than they were when the 2008-2009 financial crisis hit.

But Laurie Harbour, CEO of Harbour Results Inc, a manufacturing consulting firm that works with suppliers, said she is concerned about smaller companies farther down the supply chain.

“If you weren’t strong going into 2020, your challenges are going to be significant for the balance of the year to get yourself back up to speed.”

Suppliers like Bob Roth are counting on a return to work by May.

In March, Roth and his staff at RoMan Manufacturing took swift action as the COVID-19 crisis intensified. The Wyoming, Michigan, maker of transformers for automotive and other industries is classed as an essential business, so it remains busy as demand for robots that use their transformers remains high.

But staying open has come at a cost. Roth, co-owner and CEO of RoMan, had to raise pay for many of his 150 workers by $7 an hour to compete against enhanced unemployment benefits included in the recently passed federal relief package.

He is also providing health insurance to workers staying at home to take care of their children or cope with other health issues.

One of Roth’s critical suppliers in Pennsylvania is under lockdown due to the COVID-19 pandemic. Roth has just four to six weeks’ supply of that product and his team has figured out a way to make it in-house. But the part would cost $50 versus the $10 he pays his supplier – money he cannot recoup from customers.

“We’re willing to take the margin hit now to keep the business moving forward,” Roth said. “But at some point in time, we won’t be able to support higher wages or healthcare benefits for people who aren’t working.”

‘WATCHING OUR SUPPLY BASE CAREFULLY’

The global auto supply chain is robust, but automakers can still rely on a single supplier for a key part. Automakers and big top-tier suppliers will need to use some of their cash to prop up small but critical suppliers, industry executives and consultants said.

Last week transmission maker Delphi Technologies Plc (DLPH.N) identified up to 40 suppliers now experiencing financial difficulties, CEO Rick Dauch said.

“In two cases we’ve gone in and given them some financial assistance, either by buying their raw materials for them or expediting payment to them so they can pay their bills,” Dauch said.

BorgWarner Inc (BWA.N) last week threatened to walk away from a $951 million deal to buy Delphi, after Delphi tapped its $500 million revolving credit facility to help weather the pandemic without its acquirer’s approval.

Scott Turpin, CEO of North America for Aisin Seiki Co Ltd (7259.T), the world’s largest transmission maker, said one of his main concerns is how well suppliers farther down the chain conserve cash.

“Unfortunately there will be some suppliers that cannot survive this,” Turpin said. “So we’ve all got to watch that very closely.”

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Cash-strapped Virgin Australia grounds almost all domestic flights amid virus crisis

SYDNEY (Reuters) – Virgin Australia Holdings Ltd (VAH.AX) said on Thursday it would ground all domestic flights, except a single daily Sydney-Melbourne service through June 15, as it continues to seek government aid to weather the coronavirus crisis.

Australia’s second-biggest airline has asked the government for a A$1.4 billion loan that could be converted to equity in certain circumstances.

To date such aid has not been forthcoming and ministers have said that any help is likely to be on an industry-wide basis rather than specific to Virgin.

Virgin is in a financially weaker position than its larger rival Qantas Airways Ltd (QAN.AX) and lacks an investment grade credit rating.

“As a result of government restrictions, less people are travelling and we have made changes to our schedules to reflect this,” Virgin said of the latest capacity reduction.

Virgin had already cut all international flights except government rescue charters, put most of its workforce on leave and permanently cut all pilots at low-cost arm Tigerair Australia and all crew based in New Zealand.

It will continue local and international cargo flights, the airline said.

Virgin’s shares are tightly controlled by a group of foreign airlines including Singapore Airlines Ltd (SIAL.SI), Etihad Airways and Chinese conglomerate HNA Group that have also seen a sharp deterioration in revenues due to the coronavirus crisis.

The Australian government has already announced some aid to the broader airline industry, including refunding and waiving charges such as domestic air traffic control fees worth A$715 million and A$198 million in support for regional aviation.

The novel coronavirus has infected about 1.5 million people globally, while over 87,000 have died, disrupting lives and businesses as governments impose lockdowns to curb the outbreak.

For an interactive graphic tracking the global spread of the virus: open tmsnrt.rs/3aIRuz7 in an external browser.

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BlackRock will not layoff employees due to COVID-19 pandemic: CEO

(Reuters) – BlackRock Inc (BLK.N), the world’s largest asset manager, will not layoff any employees during the year due to the coronavirus outbreak, Chief Executive Officer Larry Fink said on Wednesday.

The company will also pay full-time wages to support staff, such as cafeteria and maintenance workers, even if they cannot come to work, Fink wrote in a LinkedIn post.

He said more than 90% of the asset manager’s employees were working remotely.

BlackRock had about 16,200 employees as of Dec. 31, according to its annual filing.

Other major financial institutions, including top U.S. banks Citigroup (C.N) and Morgan Stanley (MS.N), have also assured their employees that there will not be any layoffs at those institutions because of the pandemic.

(This story adds dropped word in third paragraph.)

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Limits for deferred loan payments waived: MAS

Certain limits for deferred payments on mortgages and consumer loans will be waived to help borrowers tide over the economic slump.

The Monetary Authority of Singapore (MAS) clarified yesterday that the total debt servicing ratio (TDSR) will not apply to deferment of mortgage repayments for residential, commercial, or industrial properties, refinancing of owner-occupied residential mortgages, and unsecured credit facilities such as credit cards and personal loans.

Mortgage equity withdrawal loans (MWLs) will also not be subjected to TDSR, if the loan-to-value (LTV) ratio does not exceed 50 per cent.

TDSR caps the amount buyers can borrow for a property loan.

Typically, borrowers’ monthly repayment for all debts must not exceed 60 per cent of their monthly income. This includes mortgages, credit card bills, car loans and personal loans.

LTV refers to the loan amount as a percentage of the property’s value.

MAS said borrowers will be exempt from TDSR limitations when they apply to defer either their principal payment or both principal and interest payments for their home loans.

Interest will accrue only on the deferred principal amount.

This relief applies to home loans and MWLs, including those under debt reduction plans, and extends to both owner-occupied (Housing Board and private) and investment properties.

The loan deferment measures were announced by MAS last week as part of an industry-wide package aimed at heading off a wave of delinquencies and bankruptcies amid the coronavirus-induced economic downturn.

SUPPORT ON BROADER SCALE

The Government and MAS are offering support at a broader scale. So I don’t think any more specific support is likely for the property market at this time.

MR DESMOND SIM, South-east Asia head of research at CBRE.

MAS said the clarification was in response to queries from the public and media on its guidelines for deferment of secured loans and mortgage payments, and will help individuals and businesses explore options to meet their cash flow needs.

Property consultants believe MAS’ latest statement has helped remove any doubts about the relief package announced last week.

Mr Desmond Sim, South-east Asia head of research at CBRE, said: “MAS and banks are offering a helping hand to those who may find it hard to repay their debts in these difficult times.”

Borrowers will have to apply for this loan relief, and it does not change the overall framework that ensures prudent lending and borrowing in the property market, noted Mr Sim.

“The Government and MAS are offering support at a broader scale. So I don’t think any more specific support is likely for the property market at this time,” he said.

In its statement yesterday, MAS said payment deferments to individuals with commercial or industrial property loans are also not subject to TDSR.

TDSR and LTV limit relief for loan refinancing of owner-occupied residential properties will help borrowers with fixed-rate mortgage packages that are out of the lock-in period, MAS said.

It also clarified that since March 2017, borrowers who take up MWLs secured on their existing private residential or non-residential properties have not been subject to TDSR, if the LTV ratio does not exceed 50 per cent.

TDSR requirements will also not apply to unsecured credit facilities, such as personal loans and credit cards.

Minimum income requirements for unsecured credit facilities, however, remain, as does the industry-wide borrowing limit, placed to promote financial prudence and discourage excessive debt accumulation.

MAS also clarified that small and medium-sized enterprises (SMEs) are not subject to TDSR when they apply for payment deferments on their secured property loans as part of the financial industry’s relief package for SMEs announced last week.

To facilitate the provision of credit to businesses, MAS’ current rules allow them to take up MWLs secured on residential or non-residential properties without being subject to TDSR and LTV limits.

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Wall Street recovers ground as Sanders gives health insurers a boost

(Reuters) – U.S. stock markets rose on Wednesday on hopes the coronavirus outbreak in the United States was close to its peak, with health insurers boosted by Democratic presidential candidate Bernie Sanders suspending his campaign.

After the worst March for decades, the past two weeks has seen Wall Street’s main markets recover some poise, although its main indicator of future volatility remains historically high.

UnitedHealth Group Inc (UNH.N), Anthem (ANTM.N) and Cigna (CI.N) jumped between 5.5% and 8%, as the healthcare index .SPXHC provided one of the biggest boosts among the 11 major S&P 500 .SPX sectors.

Sanders’ embrace of a Medicare for all healthcare policy would have essentially abolished private insurance and had cast a shadow on healthcare stocks for months.

The news added to early gains after President Donald Trump said the United States might be getting to the top of the “curve” in relation to the outbreak, even as New York and several other states posted their highest number of daily virus-related fatalities.

“The general trend is that it’s gradually getting better. Flattening of the curve is very minor, but it’s enough for an inkling of hope,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The benchmark S&P 500 is still down nearly 20% from its record high in mid-February, despite big gains early this week, as measures to contain the virus brought the U.S. economy to a virtual halt.

Tesla Inc (TSLA.O) and Boeing Co (BA.N) supplier Spirit AeroSystems (SPR.N) became the latest companies to furlough workers.

Spirit’s shares jumped over 12%, while Tesla rose about 1%.

Top U.S. Democrats in Congress said on Wednesday they would back the Trump administration’s request for $250 billion more in aid for small businesses if it includes additional money for hospitals, local governments and food assistance.

The package would add to the $2.3 trillion in stimulus already approved and meant to make up for the wages and incomes lost after Americans were ordered to stay home.

Early gains were led by the energy index .SPNY, which rose over 3%, as oil stocks tracked crude prices higher and risk appetite was boosted by the prospect of more fiscal stimulus.

At 1:36 p.m. ET the Dow Jones Industrial Average .DJI was up 461.49 points, or 2.04%, at 23,115.35, the S&P 500 .SPX was up 53.53 points, or 2.01%, at 2,712.94 and the Nasdaq Composite .IXIC was up 133.60 points, or 1.69%, at 8,020.86.

Corporate earnings season starts next week with the major Wall Street banks, and companies are expected to outline more drastic measures to bolster dwindling cash reserves.

“Investors are bracing themselves for a terrible earnings season and are going to try to look for clues on what businesses will see more normalized operations,” said Yung-Yu Ma, chief strategy officer at BMO Wealth Management in Portland.

Advancing issues outnumbered decliners by a 5.52-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 4.18-to-1 ratio on the Nasdaq.

The S&P index recorded 2 new 52-week highs and no new lows, while the Nasdaq recorded 3 new highs and 15 new lows.

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UOB CEO's 2019 pay up 1.8% to $10.8 million; bank to defer AGM

SINGAPORE (THE BUSINESS TIMES) – UOB is due to defer its annual general meeting, which was slated originally for April 30, given the restrictions of mass gatherings due to the virus outbreak, The Business Times understands.

At the shareholders’ meeting, investors were due to approve a final dividend payout of 55 Singapore cents per share, and a special dividend of 20 Singapore cents per share.

With this, all three local banks have deferred their AGMs.

The bank’s latest annual report on Wednesday (April 8) showed that chief executive officer Wee Ee Cheong recorded a 1.8 per cent increase in 2019 total salary to $10.75 million, up from $10.56 million a year ago.

His base salary was unchanged at $1.2 million, with the remaining captured in bonus. As was the case in 2018, 60 per cent of the variable pay due to Mr Wee would be deferred and vested over three years. Of the deferred variable pay, 40 per cent would be issued in deferred cash, while the remaining 60 per cent would be in the form of share-linked units.

The bank has also deferred the adoption of a revised directors’ fee structure. Under a review done in 2019, the appointed consultant Aon Hewitt assessed that the UOB directors’ fees were “below market” and did not commensurate with their enlarged responsibilities. The recommendation to raise the directors’ fees was approved by the board in 2019.

“However, in view of the challenging environment exacerbated by the Covid-19 outbreak and in anticipation of difficult times ahead, our board has decided to defer the adoption of the revised directors’ fee structure.”

UOB board chairman Wong Kan Seng was paid a total of $907,000.

As a comparison, DBS chairman Peter Seah was paid directors’ fees of $1.33 million, as well as a share-based remuneration of $571,200. Taken together with the value of the service of a car and driver for Mr Seah – amounting to $69,552 – Mr Seah received a total remuneration of $1.97 million for 2019.

In the annual report, Mr Wee, who is also deputy chairman of UOB, said that this era is “marked by immense change”.

“Uncertainty and volatility shape markets, diverse and divergent economic and political beliefs challenge international relations, while advances in technology propel how businesses are run and lives led. At the moment, many countries are grappling with the impact of Covid-19 which is affecting global growth over the near term,” he wrote in his report.

“Storms will pass. We will stay the course.”

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Wall Street volatility raises fears of another selloff

(Reuters) – The evaporation of a rally on Wall Street in the closing minutes of Tuesday’s session shows that many investors fear the U.S. stock market is in danger of a renewed tumble due to uncertainty surrounding the coronavirus pandemic.

Fueled by early signs of the outbreak plateauing in some U.S. hot spots, including New York State, the S&P 500 traded up as much as 3.5% during the session, only to lose ground sharply late in the day to finish down 0.16%. The index, however, remains up 19% from its March 23 low.

Much of Wall Street’s recent recovery has been thanks to a $2 trillion package aimed at stimulating the economy as much of the country hibernates to slow the spread of the coronavirus.

Still, many investors remained skeptical that Wall Street’s recent rise represents the start of a sustained recovery.

The S&P 500 is still down more than 20% from its Feb. 19 record high. However, most of the index’s constituents are worse off. The median change in the S&P 500 since Feb. 19 is a decline of 26%. The index’s largest components have mostly outperformed, including Microsoft (MSFT.O) and Amazon (AMZN.O).

Graphic: Largest companies outperform S&P 500 here

Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis, is among many investors skeptical about the sturdiness of the recent rally.

“You’re still vulnerable. Let’s say the virus news turns worse. The market’s not going to like it. Or the government can’t get fiscal stimulus into the hands of businesses quick enough, that’s going to be a problem,” Wren warned.

With Saudi Arabia and Russia disagreeing about output cuts in the face of a swelling oil glut, the energy sector remains down 40% from Feb. 19.

Graphic: S&P 500 sector declines since Feb. 19 here

Consumer staples has been the S&P 500’s best-performing sector, down about 10% since Feb. 19, steadied by a 10% gain in bleach maker Clorox (CLX.N).

Wall Street’s 10 most valuable companies have lost a combined %1 trillion in market capitalization since Feb. 19, although one of them, Walmart (WMT.N), has actually increased its value by $12 billion as consumers staying home from work and school stock up on food and household goods.

Graphic: Market cap losses since Feb. 19 here

Shares of Regeneron Pharmaceuticals (REGN.O) and Gilead Sciences (GILD.O), both working on coronavirus treatment drugs, have been among the S&P 500’s top performers since Feb. 19, up 25% and 11%, respectively. Citrix Systems (CTXS.O), which sells software helping organizations work online, has surged 19% in that time.

Graphic: A few stocks have gained since the S&P 500’s Feb high here

LPL Financial said in a research note that Wall Street remained vulnerable as investors await solid indications that the outbreak is not becoming worse.

“We continue to watch for signs of a peak in new cases in the United States, which would allow investors to start thinking about a resumption of economic activity and a potentially powerful economic rebound in the second half of this year. In the meantime, stocks may revisit the March lows,” LPL Financial wrote.

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Pandemic to wipe out 6.7% of working hours worldwide in second quarter: ILO

GENEVA (Reuters) – The COVID-19 pandemic is expected to wipe out 6.7% of working hours globally in the second quarter of this year, equivalent to the labour of 195 million full-time workers, the International Labour Organization (ILO) said on Tuesday.

More than four out of five people in the global workforce live in places hit by full or partial workplace closures, it said in a report on the “worsening crisis with devastating effects” on the world of work.

It urged countries to take steps to keep people connected to jobs they are no longer able to do, so that fewer of them will end up unemployed.

“We clearly need and we are seeing it around world on an individualised national basis, efforts to stimulate economic activity through expansive fiscal and accommodating monetary policies – this is absolute essential,” ILO director-general Guy Ryder told a news conference.

He listed initiatives such as partial unemployment, technical unemployment and short working time measures that keep workers tied to their jobs.

“I think we have seen in a number of countries very appropriate reactions which enable companies to benefit from public support but at the same time take their responsibilities in retaining their employees and keeping them connected to the company involved and to the labour market,” Ryder said.

The Asia-Pacific region accounts for 125 million of the overall decline of 195 million in full-time job equivalents in the second quarter, although Chinese companies are getting back to work after a long lockdown to halt the virus spread, the report said.

The U.N. agency gave no precise projection for the number of people to be made jobless by the crisis, though it said it would be “significantly higher” than the 25 million it forecast just last month. At the start of this year, 190 million workers were unemployed around the world.

The four sectors hardest-hit worldwide are accommodation and food services, manufacturing, retail, and business services and administrative activities, the report said.

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