What Will Fill a $4 Trillion Hole in the Economy?

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Senate Democrats blocked a $1.8 trillion stimulus plan on Sunday, preventing the largest such bill in American history from advancing in the chamber. It was an “eerie echo” of 2008, the NYT reports, when House Republicans initially blocked a Wall Street bailout bill.

Negotiations continue, as the market falls (again). Democrats are pushing for more protections of unemployed workers and stricter conditions attached to corporate rescue funds. Senator Elizabeth Warren called a $500 billion fund to bail out airlines and other unspecified sectors a “slush fund.”

• Despite the rancor, senators from both sides suggested that an agreement was close, with another vote likely later today. Then it will take time to reconcile a Senate agreement with a House bill.

A new analysis by the hedge fund Bridgewater Associates estimates that American corporate revenue could fall by $4 trillion — yes, trillion — which the report says is “consistent with about two months of significant lockdown and a gradual recovery.”

Most economists agree that a coronavirus-induced recession has probably already begun and that its scale will be devastating.

You’ve probably seen the chart about “flattening the curve.” The economist Richard Baldwin has added some lines to illustrate how policies to limit the spread of the virus also make the subsequent recession worse.

• As the NYT’s Jim Tankersley put it, “The American economy has stopped working. We’re going to try turning it off and back on again.”

One of the scariest forecasts to date comes from the president of the St. Louis Fed, James Bullard, who told Bloomberg that G.D.P. growth in the U.S. could drop by 50 percent in the second quarter, pushing the unemployment rate up to 30 percent. It’s currently at 3.5 percent.

• Morgan Stanley thinks that second-quarter growth will fall by 30 percent; Goldman Sachs says 24 percent; and JPMorgan Chase — for now — is “only” at 14 percent.

Will the cure be worse than the disease? Speaking of Goldman, both Lloyd Blankfein, its former C.E.O., and Gary Cohn, its former president (and former economic adviser to President Trump), posted concerns on Twitter about when businesses would be allowed to return to something resembling normal. Late last night, Mr. Trump tweeted, “WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF,” and suggested that current measures to contain the outbreak would be re-evaluated in 15 days, setting up a showdown between epidemiology and economics when that time comes.

Though President Trump has said that he could invoke the Defense Production Act to commandeer supply chains to produce products needed to fight the virus, he has yet to do so. That has left government officials and business leaders in the dark about how to coordinate, accordin
g to the NYT.

“There is still widespread confusion about how much and what exactly each firm is supposed to produce,” the NYT reports. “Corporate executives say they face a bewildering number of requests from dozens of nations around the world, along with governors and mayors around the country, for scarce supplies. The White House has not said who will set the priority list for deliveries.”

• That has led to a flurry of announcements from companies — Apple and Facebook are donating face masks; 3M and Honeywell committed to producing more N95 respirators; and car companies like Ford, G.M. and Tesla are studying how to convert factories into ventilator plants — but, critics argue, no coordination.

• Governors like Andrew Cuomo of New York and J.B. Pritzker of Illinois have complained that they are effectively bidding against each other for equipment.

The Japanese conglomerate announced today that it planned to sell up to $41 billion of assets to help pay for a buyback that the activist investor Elliott Management has called for. At the same time, it faces potential showdowns with Apollo Global Management and WeWork.

SoftBank said it would sell assets over the next year to fund both a stock buyback of up to $18 billion and to pay down debt. The company says it will end up repurchasing 45 percent of its outstanding shares.

The announcement raises several questions: What assets will SoftBank sell? (A portion of its 25 percent stake in Alibaba of China, which is worth $122 billion, looks like a prime candidate.) And if the Japanese company looks like a forced seller, what sort of prices can it fetch?

Softbank’s $170 billion debt load may have made it a target for Apollo, which the FT reports has bet against the company’s bonds.

Meanwhile, SoftBank faces pushback from WeWork over its potential decision not to buy up $3 billion of the co-working company’s stock. A committee of WeWork’s board said that such a move would be “completely unethical, especially given the current environment” and that SoftBank’s excuses were “inappropriate and dishonest.”

For the first time in its 228-year history, the New York Stock Exchange — despite a deep clean — will open today without anyone on the trading floor.

Does it matter? The vast majority of trading already takes place electronically, so perhaps the biggest thing to change is that we won’t have photographs of traders at the “Big Board” with their heads in their hands to illustrate stories about market turmoil.

• Specialist dealers are particularly in demand during periods of volatility, and they have the power to place special orders during the closing auction that sets stocks’ final prices for the day. Now, all orders will be routed the same way.

• “How South Korea Solved Its Acute Hospital-Bed Shortage” (WSJ)

A final note: Our thoughts are with David Lat, an old DealBook friend and the founder of the popular legal blog Above the Law, who has publicly detailed his battle with Covid-19. Join us in wishing David a speedy recovery.

We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.

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