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🎙“If you look in your dictionary you will find: Titans — a race of people vainly striving to overcome the forces of nature. Could anything be more unfortunate than such a name, anything more significant?” - See who said it and why it matters at the bottom.
Illustration: Sarah Grillo/Axios
The coronavirus pandemic will bring about the worst economic downturn since the Great Depression, the IMF predicted Tuesday in its latest World Economic Outlook — and that is its optimistic outlook.
Why it matters: The organization's baseline expectation is for a recession "far worse" than the 2008 financial crisis, with global GDP contracting by 3% this year. That's a drastic downgrade from its forecast of 6.3% growth in January, and 30 times worse than the economic decline in 2008.
The big picture: Global GDP is expected to face a cumulative loss of about $9 trillion — larger than the economies of Japan and Germany combined. That is what happens in the IMF's rosy scenario in which the coronavirus is contained quickly and the world swiftly resumes economic activity.
Where it stands: The IMF is recommending coordinated fiscal stimulus, a moratorium on debt payment and debt restructurings, and additional financing and grants for the world's poorest countries.
What to watch: Finance ministers and central bank leaders from the G7 nations met again Tuesday and again announced no new coordinated measures to bolster the global economy at large.
President Trump announced the U.S. would halt funding to the World Health Organization for 60 to 90 days over its handing of the coronavirus pandemic. (Axios)
California Gov. Gavin Newsom laid out a proposed set of rules for states when they restart their economies that includes restaurant workers wearing gloves and masks, staggered school schedules, and continued bans on concerts and sporting events. (Bloomberg)
Small businesses in Texas, California and in the construction sector have gotten the biggest chunks of money set aside for small businesses, according to documents released by the SBA Tuesday. (Axios)
The Dow and S&P 500 neared five-week highs and the Nasdaq gained 4% Tuesday, rising out of a bear market. (MarketWatch)
Illustration: Aïda Amer/Axios
As the U.S. embraces President Trump's "America First" mantra and steps away from its traditional global leadership role, China is aggressively looking to fill the void but has so far come up short, Axios' Bethany Allen-Ebrahimian and I write.
Why it matters: The coronavirus pandemic desperately needs a united global response, but the U.S. and China are instead upping the ante in a battle for global supremacy that could leave both countries in a worse position.
The big picture: By mid-March, with its coronavirus epidemic largely under control, plenty of cash on hand, and the U.S. having woefully mishandled its response, China seemed poised to gallop ahead on the world stage.
Yes, but: While the Trump administration has dropped the ball, "the Federal Reserve has made a breathtaking expansion as basically central banker to the world," Kori Schake, director of foreign and defense policy studies at the conservative American Enterprise Institute, said during a recent media call.
"This crisis has shored up and spotlighted the strength of the dollar," Joshua Meltzer, a senior fellow at Brookings Institution, tells Axios.
What to watch: China could still draw more of the world into its orbit as COVID-19 is likely to decimate economies in much of Africa, Latin America, the Middle East and the Indian subcontinent, which already receive economic assistance from Beijing and will be looking for more.
The bottom line: China and the U.S. have stumbled but both still have powerful incentives to help dig the world out of its economic hole.
Earnings from big banks were expectedly awful on Tuesday, but much more important than JPMorgan's 69% profit drop or Wells Fargo's $0.01 earnings per share in the first quarter, were details about their cash holdings.
What we learned: JPMorgan, the largest U.S. bank, added $8.3 billion to its reserves last quarter, more than five times what it held in the same quarter last year, and Wells Fargo set aside $4 billion, an increase of $3.1 billion.
Why it matters: The holdings suggest the banks are doing more than preparing for “the likelihood of a fairly severe recession” as JPMorgan CEO Jamie Dimon put it.
Be smart: The banks are quite literally exchanging their profits for the cash to ride out the pandemic and protect against losses on loans to customers, Flitter adds.
The intrigue: Many of the bank's high-income customers appear to be taking similar action. Deposits rose 23% at JPMorgan during the quarter, and grew in every line of business. Wells Fargo saw deposits rise by 4% to $1.4 trillion.
U.S. cruise line stocks popped on Tuesday after Carnival CEO Arnold Donald said in an interview that customers are already booking trips for 2021.
Flashback: The comments mirrored what Donald told me in an interview last month for "Axios on HBO" that the company had interest from potential customers until it shut down operations.
The intrigue: Carnival's stock has risen 30% so far this month.
But, but, but: Carnival's stock price is down 75% since the beginning of the year.
Quote: "If you look in your dictionary you will find: Titans — a race of people vainly striving to overcome the forces of nature. Could anything be more unfortunate than such a name, anything more significant?"
Why it matters: On the morning of April 15, 1912, the RMS Titanic sank near Newfoundland, losing more than 1,500 passengers.