Topline: U.S. stocks recovered some losses on Thursday and oil prices soared, though the modest gains were not enough to offset the damage done by a weeks-long sell-off.
The Dow Jones Industrial Average was up 0.8%, or 170 points. The S&P 500 gained 0.3% while the Nasdaq gained 2.3%.
Tech stocks led the way on Thursday, with Amazon up 2.8% and Microsoft up 1.6%.
At a press conference on Thursday afternoon, President Trump said he would consider for companies who receive bailouts under his administration’s proposed $1 trillion stimulus plan.
Central banks are also continuing to act in order to cushion the economic blow of the coronavirus outbreak: yesterday, the European Central Bank announced an $818 billion bond-buying program and the Federal Reserve said it will act to shore up prime money market funds.
Crucial quote: “Central banks, particularly the Fed, really are playing whack-a-mole with the financial system,” Eric Winograd, senior economist at AllianceBernstein, told CNBC. “Every day, a new area of distress pops up and every day, they’re coming up with a new program or rebooting an old program.” The Federal Reserve is taking extraordinary steps to stabilize the U.S. economy: it has cut interest rates to almost zero, said it’s prepared to inject trillions of dollars into the overnight repo market, slashed bank reserve requirements and agreed to buy short term debt from companies with good credit ratings.
Big number: The price of oil bounced 24% on Thursday, gaining back about half of its losses from Wednesday, when it reached a multi-decade low. According to reporting in the Wall Street Journalciting people familiar with the matter, the Trump administration is considering intervening in the ongoing oil-price war between Saudi Arabia and Russia.
Key background: The Dow dropped 6.3% yesterday, nearly 2,000 points, while the S&P 500 was down 5.2% and the Nasdaq slid 4.7%. It was the eighth consecutive day where the S&P 500 swung more than 4% in either direction—that level of volatility is far worse than the previous record of six days during the Great Depression, according to LPL Financial. Last night, President Donald Trump signed a coronavirus relief bill into law. The bill includes free coronavirus testing and paid sick leave, among other measures.The Trump administration is also pushing for a $1 trillion economic stimulus package.
I’m an assistant editor on Forbes’ Money team, covering markets, fintech, and blockchain. I recently completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance and the Foreign Corrupt Practices Act.
In 2008 the S&P fell half off its peak and nothing physical happened to the economy. Now we have two very physical things — supply and demand shocks. The strategy of no strategy means these two physical problems will continue until a vaccine is produced, i.e. likely not for a year or more.
On February 25th, I predicted a massive drop in the stock market due to the coronavirus. At that point it had already fallen 8% from its peak. Today, it’s 20% below its peak. I think it will fall 50% below peak.
That may be conservative. In the Great Recession, the S&P fell half from its peak and nothing physical happened to the economy. Now we have two very physical things — what economists call supply and demand shocks — happening. A growing share of the labor force is not going to work and a growing share of consumers are shunning retail outlets and all other manner of service establishments for fear of getting infected.
Let me give you my partial list of the businesses that I think will go under. I think restaurants will fail. I think coffee shops will fail. I think dry cleaners will fail. I think airlines will fail. I think cruise boat companies will fail. I think hotels will fail. I think department and boutique clothing and other retail stores will fail. I think travel agencies will fail. I think movie theaters will fail. I think universities and colleges will fail. I think theaters will fail. I think theme parks will fail. I think spas will fail. I think resorts will fail. I think convention centers will fail. I think malls will fail. I think gyms will fail. I think orchestras will fail. I think hair salons will fail. I think nail salons will fail. I think barber shops will fail. I think bars will fail. I think every business that’s not online and involves customers will fail.
What share will fail?
Ten percent is optimistic.
Let me justify my view. Containing the coronavirus requires two months at a minimum. Why two months? This is the time it’s taken China to bring new infections down to single digits. Even so, China has not lifted the lockdown of Hubei Province. Indeed, every city you enter in China is now requiring a two-week period of quarantine. China is enforcing this with technology and people. You enter into Shanghai and you’re asked where you are staying. Once you get there, the neighborhood officials, who have been electronically notified of your arrival, check on you daily to make sure you are staying inside.
What happens when China’s new infection rate goes to zero? Will it lift its restrictions? Hard to say. If I’m President Xi and have gone to such lengths to eliminate the problem, I don’t want to run the risk that someone has a four-week incubation period or has slipped across the border carrying the virus and all hell breaks out again. In short, it may be a long time before China returns to something close to normal. Even then, foreigners arriving in China will surely need to spend two weeks in confinement before being let loose on the streets.
We don’t know China’s end game. But we’re pretty sure it has one. The US has no end game. Yes, the president has finally gotten serious about bringing testing on line. But it can take two weeks for infected people to show symptoms. Indeed, 1% will first show symptoms after two weeks. Suppose Joe Blow contracts the virus today. Say ten days later he starts feeling symptoms but he waits another five days to get tested. Then it takes two days to get results at which point he self quarantines or heads to the hospital. Now he’s had 17 days to infect a motherload of people either directly or indirectly. Maybe Joe works in a nursing home. We’ve seen the damage one person with coronavirus can do to a nursing home. The Life Care Center in Kirkland, Washington had 120 residents. In recent weeks, 26 have died. Another 24 are definitely infected. And many of the Center’s staff have symptoms, but, as of two days ago, have yet to be tested.
Okay, back to Joe. He gets tested on day 15. But on day 14 he infects Jane Doe who also takes 15 days before going into quarantine, but infects Jack, Jill, and Sandy on day 14. You see where I’m going. Our voluntary (we or our docs decide) testing system does nothing to keep the coronavirus infection from rolling along for months if not years.
Here’s a policy that would actually save lives and the economy. Quarantine the entire country for two weeks. Italy is doing this, although no one knows its duration. At the end of two weeks, test everyone — all 327.2 million people plus any visitors and continue testing everyone once a week for months. Anyone who tested positive would, of course, be quarantined or hospitalized. We would also reopen the borders, but test everyone coming into the country. This is a policy that would a) stop the spread of the infection in its tracks and b) limit the renewed spread of the infection once the quarantine is lifted.
Could we produce hundreds of millions of tests? Yes. During WWII, we built cargo ships in four days. Can we put everyone under quarantine for two weeks? Yes, the president has this authority. Can we require weekly testing. Again, the answer is yes.
Will our president do this? Clearly not. According to him, the “foreign” virus is going to disappear on its own and in short order. President Trump is, himself, possibly infected by way of an aide to Brazil’s president. But, thus far, he has chosen not to get tested. In the meantime, he may have infected or be infecting his top aides as well as his family. And members of his administration may have infected or be infecting much, if not most of Congress. Beyond jeopardizing so many people, the president is setting the worst possible example.
The strategy of no strategy means the two physical problems hammering the economy will continue until a vaccine is produced, i.e. likely not for a year or more. How many retail and service establishments can survive that long without customers, while retaining their employees? Not many. Hence, we can expect a massive wave of layoffs and bankruptcies starting next week.
There are two other reasons to expect a 50% from peak decline in the stock market. First, the market was perceived by many to be overpriced to begin with. Second, corporate America is dramatically over leveraged. To quote the Fed, “The ratio of debt to assets for all publicly traded non-financial companies has hit its highest level in two decades, and the leverage ratio among debt-heavy firms is near a historical high.” The higher the leverage ratio, the larger the percentage decline in stock values for a given percentage reduction in profits.
Moreover, over half of corporate debt is rated BBB compared to roughly 25% in 2008. This means that a large share of corporate America faces solvency risk. Here’s the BBB rating description: “A BBB rating reflects an opinion that the issuer has the current capacity to meet its debt obligations but faces more solvency risk.”
There’s more, but you get the picture. I hope I’m wrong, but I fear an even bigger drop in the market is coming.
I am a professor of economics at Boston University, a Fellow of the American Academy, a Research Associate of the NBER, and President of Economic Security Planning, Inc. — a company that markets personal financial planning tools at maxifi.com, maximizemysocialsecurity.com, analyzemydivorccesettlement.com, and economicsecurityplanning.com. Recent books: Get What’s Yours – The Secrets to Maxing Out Your Social Security Benefits (a NY Times Best Seller with Phil Moeller and Paul Solman), The Economic Consequences of the Vickers Commission, The Clash of Generations (with Scott Burns), Jimmy Stewart Is Dead, and Spend ‘Til the End. Follow me on twitter @kotlikoff, Circle me on Google , check out my website, kotlikoff.net, and ask me Social Security questions by clicking Ask Larry at the bottom of http://www.maximizemysocialsecurity.com.
On Monday, Italy placed its 60 million residents under lockdown, as the number of cases of the COVID-19 virus throughout the country continues to rise.
In less than a month, Italy has gone from having only three cases of the coronavirus to having the highest number of cases and deaths outside of China, with 463 deaths and at least 9, 172 of people infected throughout all 20 regions of the country. The number of cases rose by 50% on March 8 alone. Italy also faces an above average mortality rate of 4%.
“We all must give something up for the good of Italy,” Italian Prime Minister Giuseppe Conte said in a televised address on Monday while announcing the nationwide lockdown. “There is no more time.”
The nationwide lockdown is expected to have major economic repercussions on the country, where growth was already stagnating. While the government has not specified exactly how long the ban will last, it says it will remain in place until April 3.
Keep up to date with our daily coronavirus newsletter by clicking here.
Here is how the virus spread across the country — and why it is so much worse in Italy than any other European country:
How did coronavirus start spreading in Italy?
Officially it began in Feb. 20, when a 38-year-old man checked himself into a local hospital in the town of Codogno in Lombardy. He tested positive with the virus, becoming the first recorded patient with the COVID-19 virus in Italy.
Yet some health officials believe that the virus arrived in Italy long before the first case was discovered. “The virus had probably been circulating for quite some time,” Flavia Riccardo, a researcher in the Department of Infectious Diseases at the Italian National Institute of Health tells TIME. “This happened right when we were having our peak of influenza and people were presenting with influenza symptoms.”
Before the first case was reported, there was an unusually high number of pneumonia cases recorded at a hospital in Codogno in northern Italy, the head of the emergency ward Stefano Paglia told the newspaper La Repubblica, suggesting it is possible patients with the virus were treated as if they had a seasonal flu. Health facilities hosting these patients could have become sites for infection, helping proliferate the spread of the virus.
The northern regions of Lombardy, Veneto and Emilia-Romagna, have been most affected by the outbreak. 85% of infected patients are in the region which is home to 92% of deaths so far. But the virus has been confirmed in all 20 regions of the country.
Why does Italy have such a high number of cases and deaths?
Because the virus spread undetected, some officials believe this is the reason for such a high number of cases in the country. “This started unnoticed which means by the time we realized it, there were a lot of transmission chains happening,” Riccardo says, noting that this may be why Italy has seen such a high number of cases.
Some officials also believe Italy, which has already tested over 42, 000 people, may have a higher number of cases as a result of performing more rigorous tests than their European counterparts.
Italy, however, is also reporting an above average mortality rate at 4%. The average age of coronavirus patients who have died because of the virus in Italy is 81, according to the National Health Institute. Italy, which has one the world’s oldest populations, could be facing a higher mortality rate as a result of its above-average elderly population. “Italy is the oldest country in the oldest continent in the world,” says Lorenzo Casani, the health director of a clinic for elderly people in Lombardy told TIME. “We have a lot of people over 65.”
Casani also suggests the mortality rate might be higher than average because Italy is testing only the critical cases. “We are not doing enough,” he said.
Casani says that pollution in northern Italy could be a factor in higher death rates. According to a report by the Swiss air monitoring platform IQAir, 24 of Europe’s 100 most polluted cities are in Italy. “Studies have shown a high correlation between mortality rates from viral respiratory conditions and pollution,” Casani says. “This could be a factor.”
Was the Italian government prepared for the outbreak?
The outbreak in Italy has come as a surprise to some, given the stringent measures Italy imposed to protect itself from the virus. A month before the first case was reported, the Italian Health Ministry created a task force to manage coronavirus. Italy was the first European Union country to ban flights to and from China.
The travel ban, however, may have encouraged travellers to come in on connecting flights without disclosing their country of departure. Some experts also believe the virus could have entered the country before the government took action, spreading undetected throughout the country.
How is the government responding now?
The Italian government has taken the biggest steps outside of China to curb the spread of the disease.
Under the new lockdown legislation, people can be issued fines for traveling within or outside the country without a permit, though foreigners still can travel to Italy. All public events are banned and schools have been cancelled throughout the country. Public spaces, such as gyms, theatres and cinemas, have also been closed by the government. Individuals who defy the lockdown could face up to three months in jail or a fine of $234. The new rules prohibit inmates from having visitors or day releases, which set off protests at 27 prisons throughout the country.
Why Overreacting to the Threat of the Coronavirus May Be Rational
The problem with COVID-19 is that it’s unclear what to do.
Many have applauded Italy’s actions. In a tweet, the Director-General of the World Health Organization commended Italy for its “bold, courageous steps” and for “making genuine sacrifices.”
The government & the people of 🇮🇹 are taking bold, courageous steps aimed at slowing the spread of the #coronavirus & protecting their country & 🌍. They are making genuine sacrifices. @WHO stands in solidarity with 🇮🇹 & is here to continue supporting you.https://t.co/Y2rkgUihtA
Some infectious disease and public health experts, however, have concerns about the effectiveness of the lockdown.
“These measures will probably have a short-term impact,” John Edmunds, a professor at the London School of Hygiene & Tropical Medicine told Reuters, noting that the measures were “almost certainly unsustainable.” He added, “if they can’t be sustained for the long term, all they are likely to do is delay the epidemic for a while.”
How is the Italian healthcare system handling it?
Italy’s current national health service, known as Servizio Sanitario Nazionale (SSN), provides free universal care to patients yet remains under-funded. Investments in public healthcare make up only 6.8% of the country’s gross domestic product (GDP), which is lower than other countries in the European Union including France and Germany.
“The continuous cuts—to care and to research—are obviously a problem right now,” Casani says. “We were not prepared. We do not have enough doctors for the people. We do not have an organized plan for pandemics.”
With the number of coronavirus cases on the rise, the Italian health ministry has doubled the number of hospital beds in infectious disease wards. The Governor of Lombardy Attilio Fontana has requested that universities grant degrees earlier this school year in order to increase the number of nurses in Italy. Yet some health officials fear these efforts will not be enough.
“Right now in Lombardy, we do not have free beds in intensive care units,” Casani says. He added that doctors “have to make this horrible choice and decide who is going to survive and who is not going to survive…who is going to get a monitor, a respirator and the attention they need.”
What impact will the lockdown have on the Italian economy?
The lockdown could push Italy into a recession. Berenberg bank, which before the outbreak estimated that Italy’s GDP would contract by 0.3%, now forecasts it will fall by 1.2% this year.
Conte said on March 9 that the government would deploy a “massive shock therapy” in order to protect the economy. Italy’s Deputy Economy Minister, Laura Castelli said in an interview with Rai Radio 1 today that “mortgages, taxes, everything is suspended” as a result of the lockdown. The government has also created a support package of $8.5 billion for families and businesses affected by virus.
Italy’s Deputy Economy Minister, Laura Castelli @LaCastelliM5s from the Five Star Movement saying decree tomorrow will suspend mortgages and taxes:
“ Mortgages suspended? Mortgages, taxes, everything is suspended.
But we need to look at the situation of the municipalities” https://t.co/fR6vwMl9T0
Some experts are concerned about the long-term implications of this spending.
Before the coronavirus outbreak, Italy was already struggling with a public debt that is at 134% of the country’s GDP. In the Europe Union, countries are not supposed to have debt that is higher than 60% of their country’s GDP. “With the increased spending that comes with having to support people and businesses, the deficit might explode,” says Pepijn Bergsen, a Europe Research Fellow at Chatham House.
An economic slowdown in Italy, a country in the Eurozone, will have impacts on the rest of the continent.
“It is likely there will be a Eurozone wide recession this year,” Bergsen says, citing both an Italian recession and potential future lockdowns in other European Union countries as contributing factors. “It will be difficult for authorities to come up with any measures that would avoid a recession.”
On Wednesday night, Trump finally took the coronavirus COVID-19 seriously. He banned all travel to EU countries for 30 days.
The disease may seem benign to some. Around 95% or more of the people who get it will survive and symptoms are generally mild and far from scary. But what is scary is how fast it spreads. And there are too many unknowns about the disease to find comfort in the fact that less than 1,000 people have it.
China went from 1,000 patients to 80,000 in a matter of roughly six weeks, mostly all of it in a self contained, quarantined state called Hubei.
Italy went from around 20 cases two and half weeks ago to over 12,000. It is now the Hubei of the Western world.
Travel bans on China helped mitigate spread from travelers coming to the U.S. from there. All early cases last month were from China travelers. They have since healed.
The U.S. was caught flat footed by Europe, cruises, and European business travelers at major conferences. The U.S. is now playing catch-up in the mitigation phase.
Trump reiterated what the World Health Organization said this week, calling the coronavirus a global pandemic.
We are probably one sick politician, or one more circuit-breaker on the Dow away from declaring a national emergency, forcing the NYSE to close.
“When people don’t want to go out to crowded events you start to wonder if fear begets more fear. We are seeing a lot of that now,” says Patrick Healey, founder and president of Caliber Financial Partners in Jersey City, N.J. “Until you see fewer cases in Europe, I’d be worried. The threat of spread is greater there than it was in China,” he says, citing France, Spain, Germany and the U.K.’s slow response to the crisis.
Cutting The Tail
Italy was about two weeks too late, but at least they are doing something to save Europe. They shut themselves off. This is literally a “stop the world I want to get off” moment. Italy took the China approach. They put themselves on lockdown.
The U.S. has two fairly solid case studies with how to respond to COVID-19. One is the China path of lockdowns and forced quarantining, coupled with massive stimulus.
The other model is South Korea’s massive free testing and treatment, which also corralled the disease and kept infection rates low. Mortality rates are even lower at just under 1%.
A hybrid model of both seems to be best: lockdown clusters of the virus. Test like crazy.
China is healing. It’s already got its stimulus plan lined up.
“The China approach has worked. It’s been a draconian clampdown and takes away quarterly growth,” says Philipp Carlsson-Szlezak, chief economist for Boston Consulting Group in New York. “The high frequency data in China, the proxies for movement for goods and people, all of those see a nice pick up. And the infection rate curve of new cases in South Korea has bent downward. Just hope we don’t see any worsening outbreaks.”
By slowing the spread of the virus, which includes potential spreaders who came from high risk countries like Italy, China, South Korea and Iran, buys healthcare officials time. It keeps hospitals from being overwhelmed, which is what is happening now in Italy as cases rise, Italy still seems to be fine with ICU bed capacity at hospitals.
A nearly three month lockdown of Hubei, the epicenter province, means Hubei now officially has fewer infections than Italy. The number of new patients in China’s “ground zero” has slowed to double digits, instead of thousands three to four weeks ago.
Eventually, South Korea may also be forced to implement a version of the lockdown model to stop the spread of infection after someone working in a call center tested positive for the disease.
Without any firm facts on transmission, the risk of spreading the disease without showing signs of it are high.
As a result, China has maintained strict control of peoples movements in major cities. The South Korea testing model is harder for China due to its massive, urban population, which is why it is so important to keep those cities fairly inoculated.
From on the ground accounts in Beijing, that inoculation requires school closures, no movies, no malls, no non-essential businesses open and most bank branches closed.
Businesses close at 6pm to get sprayed with disinfectant. Street fumigation takes place regularly. Building sterilization takes place several times a day.
Italy is doing exactly this now. Spraying public spaces, primarily.
In China, face masks must always be worn or else you can’t ride in taxis, take public transportation, or enter any business. Temperature readings are mandatory upon entering an office building. People with slight temps get sent straight to quarantine, according to sources there.
Entire neighborhoods are blocked off to non-residents, with security personnel patrolling to check for proof of residence.
Apartments housing someone with the coronavirus are forced into quarantine. No one can leave.
Beijing has under 200 cases today. Shanghai has under 30, according to Johns Hopkins University data.
“We just can’t impose a China style quarantine, but corporations can impose a work from home policy. You can cut off work travel and that is already happening,” says Brendan Ahern, CIO of KraneShares, who is working from home on Thursday. “Corporations here are acting pretty quickly.”
NBA has canceled its entire season. The NHL put the rest of its season on hold. Major League Baseball is thinking of postponing opening day. The BNP Paribas Tennis Open was canceled, scheduled for this week in Indian Wells. Coachella, the outdoor indie rock event, was postponed. Broadway has postponed shows for a month. Private colleges are sending kids home for the semester. Princess Cruises isn’t setting a course for adventure for the next 60 days.
If the U.S. is dragged reluctantly into a South Korea/China lockdown model, it would usher in a further drop in economic activity. Mega stimulus will be only thing keeping it alive.
It is unclear if Republicans and Democrats can work together on this, as some may see a destroyed economy as a way to finally get rid of Trump in 2021.
“You’ll have the market constantly repricing and mispring,” says Nancy Perez, a portfolio manager at wealth management firm Boston Private in Miami. “Both political parties will have to take this on. No party wants to be blamed for not doing something.”
To offset the drag, fiscal stimulus is necessary to make sure companies can meet payroll and rollover debts, preferably at no interest directly from the Fed.
Disaster relief legislation from Congress can draw on the unlimited checkbook of the Fed to help keep individual, corporate, and even municipal bankruptcies from soaring.
“I’m looking at dozens of companies in the S&P 500 right now that can literally go bankrupt if the government doesn’t act together on this,” CNBC star Jim Cramer said on Squawk Box this morning. “The government should not be collecting any cash right now.”
Quarantining a city like New York would represent a significant tax on all business activity. Administration talk of a payroll tax cut is not enough. Bold tax cuts and deferments would be best. For Cramer, a tax holiday for six months or longer is even better.
In the first 8 days of the month, China has:
Required banks to provide a grace period for the virus-hit small and medium sized enterprises (SME) immediately upon application in repaying the principal and interest of their outstanding loans until June 30.
Waived penalty interest
Banks are providing special loan quotas for firms in Hubei, and lowering the financing costs for SMEs.
The Politburo called for accelerating the investment on “new infrastructure”, including 5G networks and data centers
Beijing waived social security taxes for SMEs for five months retroactive to February 1.
Phases Of A Pandemic
According to the Center for Disease Control’s “Pandemic Influenza Plan,” updated in 2017, there are four distinct pandemic stages in terms of caseloads — initiation, acceleration, deceleration and preparation for the next wave.
Europe and the U.S. are now in the acceleration stage.
Hubei is in the deceleration phase, but this comes following two months of lockdown.
Self-protective quarantine, lockdowns of outbreak clusters and testing are the best precautionary approach to pandemic outbreaks, writes Nassim Nicholas Taleb, famous “black swan” forecaster and author of the book Skin in the Game.
Taleb and colleagues from New York University and the New England Complex Systems Institute wrote in a note published recently that cutting mobility in the early stages of an outbreak, especially when little is known about the pathogen, are essential.
“It will cost something to reduce mobility in the short term, but to fail do so will eventually cost everything,” they wrote.
Earlier this week, a shutdown announcement posted outside a hospital in Hubei province’s capital city of Wuhan, touted the treatment of more than 1,700 patients since February 2 without a single fatality.
“If a general return to work occurs this week and new infections do not spike, Chinese markets could quickly be on the mend,” thinks Vladimir Signorelli, head of Bretton Woods Research in Long Valley, New Jersey.
Indeed, they are doing better than the U.S. The S&P 500 is down 23.2%. The CSI-300 Index in Shanghai is down 8.3%.
Should new cases balloon out in Shanghai and Beijing, it would be a huge blow to containment efforts and worsen the global economic outlook. Investors would then calculate similar re-occurring outbreaks in Europe and then in the U.S. once they get cleared of the one they are dealing with now, possibly taking them well into the summer.
“We may have a couple quarters of negative growth and a technical recession because of demand destruction,” says Perez. “Prepare for the volatility.”
Says BCG’s Carlsson-Szlezak, “If we are still dealing with this until the summer, with China-style quarantine measures in effect in places like New York, it will have a massive impact on the economy,” he says. “How massive? We don’t know.”
I’ve spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big emerging markets exclusively for Forbes. My work has appeared in The Boston Globe, The Nation, Salon and USA Today. Occasional BBC guest. Former holder of the FINRA Series 7 and 66. Doesn’t follow the herd.
The Dow fell more than 12% in total last week. Peter Kraus, chairman and CEO of Aperture Investors, and Liz Young, director of market strategy at BNY Mellon Investment Management, join “Squawk Box” to discuss the week ahead in the markets as investors brace for more turbulence.
Topline: As the coronavirus pandemic wipes out markets, closes schools and colleges, suspends major conferences, sports leagues and cultural events as well as upends the travel industry, businesses losing out on cash flow have started laying off workers.
Here’s who’s axed staff so far:
Norwegian Air said Thursday that it would temporarily lay off up to 50% of its workforce (and suspend 4,000 flights) due to the pandemic.
50 employees of music and culture festival South By Southwest were let go after this year’s event was canceled, the Washington Post reported.
The Port of Los Angeles let go of 145 drivers after ships from China stopped arriving.
Christie Lights, an Orlando, Florida, based stage lighting company, laid off 100 employees.
HMSHost, a Seattle, Washington, global restaurant-services provider said it would lay off 200 people and an area corporate shuttle service would lay off 75, HuffPost reported, while an area hotel chain eliminated an entire department, according to the Post.
Travel agencies in Los Angeles, California, along with Atlanta, Georgia, had to let employees go as the pandemic battered their industry.
Aid workers in Las Vegas are reportedly seeing a surge in requests for food assistance and other help as events and trade shows get canceled.
What to watch for: If any U.S. airlines end up laying off workers. Delta Airlines said Tuesday it was cutting flights and freezing hiring. American Airlines is also cutting flights, and delaying trainings for new flight attendants and pilots. Reuters reported Thursday that jobless claims are down for the week, but coronavirus-related layoffs are likely on the horizon.
Big number: 2,352 points. That’s how far the Dow Jones Industrial Average plummeted Thursday, which is a 10% drop. The S&P 500 fell 9.5%, while the Nasdaq Composite sank 9.4%.
Key background: There are now more than 1,300 reported coronavirus cases in the U.S. and at least 38 deaths, according to data from Johns Hopkins University. Worldwide cases now amount to almost 128,000 infected and more than 4,700 dead. Meanwhile, Congress is in conflicted talks over a coronavirus relief bill that may not pass this week, while New York and other state governments begin to implement bans on large gatherings to stem the spread of disease. Cancelations of concerts, sports leagues, festivals, religious gatherings and other large events have impacted millions of people. At least 135 colleges have so far canceled in-person classes. On Wednesday night, President Trump announced a 30 day travel ban from Europe (excluding the U.K. and Ireland) that sent airlines and travelers scrambling to adjust.
I’m a New York-based journalist covering breaking news at Forbes. I hold a master’s degree from Columbia University’s Graduate School of Journalism. Previous bylines: Gotham Gazette, Bklyner, Thrillist, Task & Purpose and xoJane.