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“Historic yet insufficient”
Major oil-producing nations agreed yesterday to cut output nearly 10 million barrels per day, starting in May and running into 2022. The deal effectively ends the price war between Saudi Arabia and Russia, which flooded the world with crude over the past month.
An unusually broad coalition came together on the deal, brokered by President Trump. Low oil prices have battered debt-laden U.S. energy companies, putting the president in the unfamiliar position of coordinating with the OPEC cartel instead of criticizing it. “This will save hundreds of thousands of energy jobs in the United States,” Mr. Trump tweeted.
Prices barely budged. An uptick after the deal was announced faded, and never threatened to put much of a dent in the decline recorded in recent weeks. The price of West Texas Intermediate crude, the American benchmark, has fallen more than 60 percent this year.
Demand has fallen faster than the proposed cuts, making the production deal “historic yet insufficient” according to analysts at Goldman Sachs. They estimate that coronavirus shutdowns will depress oil demand by 19 million barrels per day in April and May, leaving the market oversupplied even after the cuts. Factoring in patchy compliance — always a feature of these deals — they are sticking with their 2020 price forecast of $20 per barrel for W.T.I. crude.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut and Jason Karaian in London.
“It’s the biggest decision I’ve ever had to make”
Two weeks ago, President Trump said he wanted the U.S. economy “opened up and just raring to go by Easter.” But infections and deaths have yet to peak, and that deadline was scrapped. But deciding when the country will reopen will be the most pivotal decision of his presidency, Mr. Trump has said.
The president is getting conflicting advice, according to in-depth reports from The Times. Peter Baker, Zolan Kanno-Youngs and Alan Rappeport set the scene:
“The phone calls from his business friends compete against the television images of overwhelmed hospitals. The public health experts tell him what he is doing is working, so he should not let up yet. The economic advisers and others in his White House tell him what he has done has worked, so he should begin to figure out how to ease up. Tens of thousands more could die. Millions more could lose their jobs.”
• Those “business friends” include Michael Corbat of Citigroup, Brian Moynihan of Bank of America, Steve Schwarzman of Blackstone and the investors Paul Tudor Jones and Nelson Peltz.
Medical experts are pushing back on a quick reopening of the economy, according to Eric Lipton, David E. Sanger, Maggie Haberman, Michael D. Shear, Mark Mazzetti and Julian E. Barnes. (That’s a lot of bylines, which means this deeply researched report is well worth your time.)
• Emails from public health professionals both inside and outside the government reveal unheeded calls for aggressive action to slow the spread of the virus weeks before lockdowns were announced. (The group called itself “Red Dawn,” a reference to the 1984 movie about a band of Americans trying to save the country after a foreign invasion.)
How will we know when it’s safe to reopen? The New York Times Magazine convened a panel of five experts from different fields to discuss.
Joe Biden weighs in. “An effective plan to beat the virus is the ultimate answer to how we get our economy back on track,” the likely Democratic presidential candidate writes in an Op-Ed for The Times. “So we should stop thinking of the health and economic responses as separate.”
An unexpected sequel
In late February, Bob Iger announced that he would step down as Disney’s C.E.O. and pass the reins to Bob Chapek, the head of the group’s theme parks and cruises. As the coronavirus ravaged its business, Mr. Iger, now Disney’s executive chairman, has “effectively returned to running the company,” reports Ben Smith of The Times.
Disney could be losing as much as $30 million a day, according to analyst estimates. It is furloughing tens of thousands of workers at its resorts. ESPN doesn’t have any sports to show. Film and television production has ground to a halt.
• A bumper opening for the Disney Plus streaming service — it signed up 50 million users in just five months — won’t be enough to offset the declines in other parts of the company.
Mr. Iger’s contract runs through the end of 2021, and he planned to “direct Disney’s creative endeavors” while ceding other responsibilities to Mr. Chapek. That’s now in doubt, reopening Disney’s fraught succession planning just as it seemed settled. As Mr. Iger told Ben:
“A crisis of this magnitude, and its impact on Disney, would necessarily result in my actively helping Bob [Chapek] and the company contend with it, particularly since I ran the company for 15 years!”
The week ahead
🏦 America’s biggest banks are all scheduled to report their latest earnings: JPMorgan and Wells Fargo on Tuesday; Bank of America, Citigroup and Goldman Sachs on Wednesday; and Morgan Stanley on Thursday. It’s going to be ugly.
💊 Quarterly earnings from Johnson & Johnson (Tuesday) and Abbott Laboratories (Thursday) will be closely watched for news of progress on coronavirus therapies and testing.
💰 BlackRock is to report its earnings on Thursday, revealing the extent of asset outflows during the market turmoil.
📉 On Thursday, another grim reading for initial unemployment claims will add to the 17 million Americans who have filed over the previous three weeks.
🇨🇳 China reports first quarter G.D.P. on Friday, widely expected to show its first contraction in more than 40 years.
The speed read
• PayPal and Intuit have won approval to distribute emergency loans to small businesses. (CNBC)
• Macy’s has hired Lazard to explore rescue financing options. (Reuters)
• In the era of social distancing, deal makers are conducting due diligence via drone. (Bloomberg)
Politics and policy
• The Trump administration has backed off tougher rules on food stamps, at least for now. (NYT)
• Lawmakers who have long lobbied for the U.S. to be tougher on China are using the pandemic to press for punitive measures. (NYT)
• Apple and Google are teaming up on a smartphone feature that enables users to track infected people they’ve come close to. (NYT)
• Can you run a continent via Zoom? (The Economist)
• How to prevent “Zoombombing” in a few easy steps. (NYT)
Best of the rest
• Big Business promised a gentler form of capitalism. It’s not happening during the pandemic. (NYT)
• Will Burning Man be the same in virtual form? (NYT)
• “This is what it will take to get us back outside” (MIT Tech Review)
Thanks for reading! We’ll see you tomorrow.
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