A French court orders Amazon to limit deliveries to essential goods.
Amazon said Wednesday that it might halt its operations in France after a court ruled that the company had failed to adequately protect warehouse workers against the threat of the coronavirus, and that it must restrict deliveries to only food, hygiene and medical products until it addressed the issue.
Amazon contested the findings of the ruling, handed down Tuesday by a civil court of first instance in Nanterre, and said it would appeal. The court gave the company a deadline of Wednesday evening to carry out the order or face a fine of 1 million euros (nearly $1.1 million) per day.
“We are perplexed by the ruling of a French court on Tuesday, made in spite of overwhelming evidence about the safety measures we’ve implemented to protect our employees,” Amazon said in a statement. “Our interpretation of the ruling suggests we might have to suspend the activities of our in-country fulfillment network in France.”
Amazon said it had provided temperature checks and masks and had enforced social distancing at its French facilities, which had received the approval of health and safety officials. The steps came after French labor inspectors visited several Amazon sites in early April and found that more action needed to be taken to ensure social distancing, and to address lack of materials such as hand sanitizers.
But several unions filed a lawsuit this month, saying Amazon had not consulted with them on plans to prevent employees from being exposed to the pandemic, which they said remained inadequate.
The Fed’s municipal bond plan could leave out cities with large black populations.
The Federal Reserve is about to jump into the market for municipal bonds in a bid to keep credit flowing to states, large counties and huge cities — but researchers at the Brookings Institution warn that the new program’s design could skip cities with large black populations.
Under the new initiative, announced April 9, the Fed will buy short-term bonds issued by states or counties with more than two million people, or cities with more than one million. A number of cities with large black populations fall below this size threshold.
“None of the thirty-five most African-American cities in America meets the Fed’s criteria for direct assistance,” the researchers, Aaron Klein and Camille Busette, wrote in an April 14 analysis. “For every 10 percent more black the city’s population, it is 10 percent less likely to qualify for the Fed’s program.”
That seems unintentional, the researchers note: The central bank has been moving at breakneck speed to roll out economic solutions as coronavirus outbreak chokes off sales tax revenue and tanks local economies. But black Americans are disproportionately affected by the coronavirus, and the way the lines are drawn could affect whether their communities benefit from funding. States can shuttle money to local governments, but politics might get in the way.
Buying local debt was bound to be fraught territory for the central bank, which has long avoided doing so partly because it entails picking winners and losers, but policymakers have been pulled into the market as needs quickly mount. They have also signaled a willingness to add to the program.
The Fed “will evaluate whether additional measures are needed to support the flow of credit and liquidity to state and local governments,” according to last week’s announcement. A start date for the program, which will buy up to $500 billion in securities, has yet to be announced. The Brookings researchers suggest that the central bank make tweaks, such as expanding to the 50 largest cities.
“It’s an easy fix, and if they don’t fix it, it’s going to have unintended consequences,” Mr. Klein said in an interview.
Stocks tumble after bleak data highlights pandemic’s economic impact.
Stocks tumbled on Wednesday as investors faced a stream of bad news about the economic damage caused by efforts to contain the coronavirus pandemic, including data that showed a historic plunge in retail sales and a slump in factory output.
The S&P 500 dropped nearly 3 percent in early trading. Stocks in Europe were also lower, and Asia had a downbeat day.
The retreat Wednesday came the day after the S&P 500 hit a one-month high. Though still far from a Feb. 19 record, stocks in the United States have been steadily climbing in recent weeks as investors have begun to focus on the prospect of an eventual rebound from the economic collapse set off by the pandemic.
But on Wednesday, they were confronted by a number of reports that highlight just how badly the economy is faring. The Commerce Department said that retail sales in March dropped 8.7 percent as consumers were forced to stay home, and the Federal Reserve said industrial production and manufacturing output in the United States fell by the most since 1946.
The German Economy Ministry said economic output in Europe’s largest economy was likely to plunge almost 10 percent from April through June.
As they reported earnings, the nation’s banks also raised more warnings about the potential for a wave of defaults on loans, saying that they are stockpiling cash in anticipation of losses. Shares of Citigroup and Bank of America tumbled after those reports.
Oil producers were also sharply lower on Wednesday, following another slump in crude oil prices. Despite last weekend’s deal between OPEC and Russia to cut production, the world oil market remains enormously oversupplied, with further falls in price possible, the International Energy Agency said on Wednesday.
The agency forecast that global demand for oil would fall about one-third this month, or 29 million barrels a day, because of the effects of the coronavirus pandemic, while supplies will remain high because of production increases during the now-ended price war between Saudi Arabia and Russia.
Prices for benchmark American crude tumbled below $20 a barrel and are down nearly 70 percent this year. Energy stocks were worst-performing part of the market, dropping more than 6 percent.
Airline stocks climbed after they and the Trump administration reached an agreement in principle over the terms of a $25 billion bailout for the industry.
U.S. retailers suffered a record decline in sales last month.
RETAIL AND FOOD SERVICES SALES
Percentage change from previous month
RETAIL AND FOOD SERVICES SALES
Percentage change from previous month
– 8.7 %
Another bleak economic reckoning from the coronavirus pandemic arrived on Wednesday: the biggest one-month plunge in U.S. retail sales in the nearly three decades of record keeping.
Grocery stores, pharmacies and other sellers of essential items experienced a surge of demand last month. But that was outweighed by a steep decline in other categories as businesses shuttered and shoppers restricted their spending.
The Commerce Department’s preliminary report showed a seasonally adjusted drop of 8.7 percent from February’s total sales, which include purchases in stores and online, auto and gasoline sales and money spent at bars and restaurants.
Spending on cars and car parts fell by more than 25 percent in March. Sales at gas stations, pushed down by low oil prices as well as reduced commuting, fell 17 percent. And sales at clothing stores fell by more than half.
Even those bleak figures do not fully capture the economic deep freeze. Most states did not issue shutdown orders to nonessential businesses until late March or early April, meaning data for the current month could be worse still.
Until now, the largest one-month downturn in retail sales came in the fall of 2008, when the financial crisis led spending to fall nearly 4 percent for two straight months.
Big banks report their profit was almost halved last quarter.
U.S. banks reporting quarterly earnings on Wednesday said they were socking away money to prepare for a wave of loan defaults by consumers and businesses over the coming months.
Goldman Sachs reported a big surge in its trading revenue, accompanied by gains in investment banking and consumer banking units, even as it set aside $937 million in additional provisions for potential virus-related losses, bringing its total allowance for future credit losses to $3.2 billion. Profit fell 46 percent for the quarter to $1.2 billion, down from $2.3 billion for the same period last year.
Citigroup, another of the country’s four largest banks, said it added to its reserves and that the move had cut into its quarterly profit. Citi earned $2.5 billion, a 46 percent drop from the same period a year ago. It added $7 billion to its reserves, bringing the total size of its pool to nearly $21 billion.
Bank of America’s quarterly profit fell to $4 billion in the first three months of 2020 from $7.3 billion during the same period a year earlier. The difference came mostly from a $3.6 billion increase in the amount of money the bank decided to set aside for bad loans this year. The total reserved by the bank during this quarter reached $4.8 billion.
PNC Financial Services Group made a similar disclosure. The regional bank said it was increasing its quarterly contribution to a reserve for loan losses by $693 million. In all, it moved $914 million to its reserves during the quarter, while earning $915 million.
Treasury rolls out a portal to help Americans gain access to their relief payments.
The Treasury Department opened a free “Get My Payment” mobile app and web portal on Wednesday that allows Americans to submit their banking information to receive their economic relief payments via direct deposit and track the status of those payments.
To get access to the system, taxpayers must provide their Social Security number, birth date and mailing address. The Treasury created the portal to get stimulus money to people more quickly than it could by mailing paper checks.
“We are pleased that more than 80 million Americans have already received their Economic Impact Payments by direct deposit in record time,” Treasury Secretary Steven Mnuchin said in a statement.
People whose banking information is not on file with the Internal Revenue Service are expected to begin receiving paper checks in the coming weeks. There has been some concern that this might be delayed because of President Trump’s request that his name appear on the checks, which required a technical change to the processing system.
The Treasury has insisted there will be no delays and that checks will start being sent later this week — ahead of schedule.
U.S. airlines agree to the terms of a $25 billion bailout.
The Trump administration has reached an agreement in principle with major airline companies over the terms of a $25 billion bailout to prop up an industry that has been hobbled by the coronavirus pandemic.
The terms of the agreement were not disclosed on Tuesday. The Treasury Department said that Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines would be participating in the payroll support program, which was created as part of the economic stabilization package that Congress passed last month.
“We welcome the news that a number of major airlines intend to participate in the Payroll Support Program,” Treasury Secretary Steven Mnuchin said in a statement, saying the agreement would “support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers.”
American Airlines said it would receive $5.8 billion as part of the deal, with more than $4 billion in grants and the remaining $1.7 billion as a low-interest loan. The funds are intended to be used to pay employees, and the airlines that take them are prohibited from major staffing or pay cuts through September.
Southwest Airlines said it expected to receive $3.2 billion, about $1 billion of which would come in the form of a low-interest loan with a 10-year term. That loan is expected to include about 2.6 million warrants issued to the agency.
Alaska Airlines said it and its sister airline, Horizon Air, would receive $992 million, of which $267 million would be a loan. In exchange, the Treasury would receive the right to buy almost $27 million in nonvoting shares.
The administration has been haggling with the airlines over the terms of the bailout, with Mr. Mnuchin pushing the airlines to agree to repay 30 percent of the money over five years. The Treasury also has been seeking warrants to purchase stock in the companies that take money. Airlines have complained that the Treasury was effectively turning the grants into loans by requiring repayment.
What is President Trump’s ‘Opening the Country’ council?
For days, President Trump suggested he would convene a group of business leaders to give him advice on reopening the economy. Some executives were reportedly reluctant to be associated with the president’s actions on such a momentous decision.
On Tuesday, the president read a long list of names at a news briefing and, later, the White House published the details of 17 “Great American Economic Revival Industry Groups” comprising more than 200 executives.
It’s not clear how exactly these executives will be involved in helping the White House, and one person on the list told The New York Times that no request was made to join the group and that there was no advance notice of the announcement.
On Wednesday, Mr. Trump was scheduled to speak with all the various industry groups in phone calls scheduled throughout the day.
On the list are chief executives like Jeff Bezos of Amazon, Tim Cook of Apple, Jamie Dimon of JPMorgan Chase and Mark Zuckerberg of Facebook. Some companies have multiple representatives: Blackstone has Steve Schwarzman and Jon Gray; Oracle has both Larry Ellison and Safra Catz; and from Home Depot, the chief executive, Craig Menear, as well as two co-founders, Ken Langone and Bernie Marcus.
The roster also includes a handful of labor leaders and more than a dozen professional sports league commissioners and team owners. “Thought leaders” include Condoleezza Rice, the former secretary of state, and the economist Art Laffer.
Catch up: Here’s what else is happening.
The retailer Best Buy said that it would furlough 51,000 hourly store employees, including nearly all of its part-time staff, beginning Sunday. The company, which has 125,000 employees over all, said it would keep most of its full-time store and field staff on its payroll, but it added that some corporate employees were taking part in voluntary furloughs and pay reductions.
The International Monetary Fund projected that the global economy would contract by 3 percent in 2020. That would be its worst downturn since the Great Depression — and an extraordinary reversal from earlier this year, when the fund forecast that the world economy would outpace 2019 and grow by 3.3 percent.
Airbnb announced commitments for a $1 billion loan Tuesday evening, one week after the home rental start-up, which has seen its business pummeled during the pandemic, raised an additional $1 billion in new funding from private equity investors.
Reporting was contributed by Jeanna Smialek, Sapna Maheshwari, Ben Casselman, Mary Williams Walsh, Liz Alderman, Stanley Reed, Jason Karaian, Joe Gose, Erin Griffith, Vindu Goel, Alan Rappeport, Niraj Chokshi, Amie Tsang, Carlos Tejada and Mike Ives.