The Week in Business: Coronavirus Sends Markets Into a Panic
I coughed on the subway the other day and almost caused a stampede. Which is a fitting metaphor for the stock market this past week, except that the stampede really happened. Given the extraordinary circumstances, we’re dedicating most of today’s newsletter to the economic effects of the coronavirus outbreak so far, along with the usual top stories in business and tech for the week ahead. Stay safe, everyone. — Charlotte Cowles
What’s Up? (March 1-7)
Coronavirus Hits Home
As new coronavirus cases fanned across the United States, the Federal Reserve announced a surprise interest rate cut in a sudden attempt to curb the economic fallout. It’s the first emergency cut (and the biggest) that the Fed has made since the 2008 financial crisis. Jerome H. Powell, the Fed chair, said that he was ready to take further action to bolster the economy if the markets kept nose-diving, and investors are expecting another cut later this month. But rates are already so low that the central bank is running out of room to slash them if things get worse. And the real problem is, fiscal policy cannot do much if factories are closed, workers are quarantined and consumers are scared to leave their homes.
The Buck Doesn’t Stop There
Containment costs money, and Congress rushed to pass an $8.3 billion bipartisan spending bill to fight the virus on Thursday. The funds will be used to expand health care access to the elderly, who are dying at a higher rate from the illness, and to help provide medical supplies for state and local health agencies — like testing kits, which are still disturbingly scarce. The Centers for Disease Control and Prevention has yet to make them widely available in all areas, and they can take days to process. It is also unclear how affordable they will be for people without health insurance.
Businesses Hunker Down
Many industries will feel the squeeze as the coronavirus disrupts trade routes, production and consumer spending around the globe. But some are already hurting more than others — particularly airlines. An aviation trade group said the virus could wipe out $63 billion to $113 billion in worldwide airline revenue this year. One company that certainly did not need another hit was Boeing, which was already a disaster before the outbreak, although its new chief executive is promising to overhaul the company’s problematic culture.
What’s Next? (March 8-14)
Bloomberg’s Out, but His Billions Are Not
Mike Bloomberg may have dropped out of the Democratic presidential race, but his multimillion-dollar campaign operation isn’t just packing up and going home. Instead, the billionaire businessman is morphing his well-funded team into an anti-Trump machine focused on six battleground states, and redirecting his money to back Democrats across the board — including congressional candidates and former Vice President Joseph R. Biden Jr., who now holds a narrow lead in delegates over Senator Bernie Sanders. (As Mr. Biden’s comeback solidified, Wall Street donors rallied around him, too.) Mr. Bloomberg is also continuing to throw money at his vast digital ad agency, which aims to outpace and out-target Mr. Trump’s.
Taking Tech Companies to Task
Legally, tech companies are pretty much unaccountable for photos that are traded on their platforms, even when sharing those images — particularly those depicting child sexual abuse — is a crime. But that could soon change. A new bipartisan bill, introduced on Thursday, could take the step of removing legal protections for tech companies that fail to police online child sexual abuse material, commonly referred to as child pornography. Despite strong support in Congress, the legislation faces criticism from tech companies, which say its requirements are too broad and incompatible with their encryption services.
More Scandal in Car Country
The former president of the United Automobile Workers union has been indicted on charges he embezzled money and misused it for exactly what you would expect — golf outings, cigars and fancy dinners. The criminal filing is part of a larger investigation into the troubled organization, which has already seen more than a dozen officials ensnared in the corruption inquiry stretching back over a decade. (One man used funds that were designated for a union training program to buy a Ferrari.) A federal prosecutor argued that the latest findings could justify a federal takeover of the union, although its new president insists that he is cleaning things up.
What Else?
Jamie Dimon, the longtime chairman and chief executive of JPMorgan Chase, had emergency heart surgery on Thursday. A memo sent to employees said that the procedure was successful and that the bank would be run by two senior executives while he is recovering. And Facebook — which normally takes a strictly hands-off approach to political content — removed a series of ads financed by Mr. Trump’s re-election campaign that featured misleading information about the 2020 census. Ready to really get out of here? You can still buy two seats on a trip to the International Space Station. They cost $55 million each.
Was this newsletter forwarded to you? Sign up here.