Good morning! The overwhelming majority of you think we are headed for a recession. And have pretty strong opinions about it too. Thanks for sharing.
Situational Awareness: Fed fund futures prices show traders now see an 89% likelihood the Fed will cut U.S. interest rates 75 basis points, to 0.25%-0.50%, at its meeting next week, and an 11% chance it cuts rates all the way to 0%-0.25%.
🎙“He told us he was going to take crime out of the streets. He did. He took it into the damn White House.” - See who said it and why it matters at the bottom.
U.S. Surgeon General Jerome Adams looks on as President Donald Trump speaks during a press briefing with the White House Coronavirus Task Force. Photo: Drew Angerer/Getty Images.
As the Trump administration mulls its plan to battle the impact of COVID-19 on the U.S. economy, scant attention has been given to a major source of potential stimulus: reining in its tariffs on China.
Why it matters: U.S. tariffs increase costs for American companies that import Chinese goods, and with fewer customers making purchases as the COVID-19 outbreak slows demand, the trade war "is going to be a bigger drag on the economy," Chad P. Bown, a senior fellow at the Peterson Institute for International Economics (PIIE), tells Axios.
The big picture: President Trump's trade war sent the U.S. manufacturing and transportation industries into a recession in 2019, and the coronavirus outbreak this year has further damaged global trade.
Background: The Trump administration has provided tariff exceptions for certain medical products like masks and gloves, but Treasury Secretary Steven Mnuchin told a House committee last week the White House was "not considering" removing Chinese tariffs but would "look at all the options that we think are important to help."
What we're hearing: "Given how slow publicly they’ve been to just react to ... the public health problems with the coronavirus, I’m not optimistic that they’re going to see the linkages to the trade war and make the connection," Bown says.
Between the lines: Aditya Bhave, senior global economist at Bank of America Securities, pointed out in a recent note to clients that the impact of uncertainty shocks, like the trade war, "tend to be lagged, large and long lasting."
Another group that would be greatly helped by a rollback in tariffs is farmers and the U.S. agriculture sector, which last year saw farm debt rise to record levels and bankruptcies increase 20%.
Flashback: Trump has provided $28 billion in bailout funding for farmers and last year 40% of U.S. farm income came from trade assistance. That funding has expired.
Reality check: "Most observers believed that the ag sector was hurt and would need an extraordinary year to make up for that. I don’t think they’re going to see it," Mary Lovely, a senior fellow at PIIE and economics professor at Syracuse, tells Axios.
The Bank of England cut its policy rate by 50 basis points, to 0.25%, in a surprise move ahead of its March 26 policy meeting. (Bloomberg)
The CDC warned that many Americans will be exposed to COVID-19 over the next year and recommended people over 60 and those with chronic medical conditions to stock up on groceries and medications. (CNBC)
ECB President Christine Lagarde demanded fiscal spending from eurozone leaders during an emergency call, saying without it Europe “will see a scenario that will remind many of us of the 2008 Great Financial Crisis." (Bloomberg)
Trump’s push to suspend U.S. payroll taxes fell flat with both Democrats and Republicans, as Congress is set to leave Washington soon for a scheduled weeklong break. (WSJ)
As confirmed cases of COVID-19 topped 119,000 globally and rose to 1,039 in the U.S., data show worry is beginning to grow.
What's happening: Only about 26% of Americans currently say they are "very concerned" about a coronavirus epidemic in the U.S., but that number is rising steadily, a new survey from CivicScience provided first to Axios shows.
The big picture: "Concern is high and more preventative actions like cancelling travel plans or stocking up on disinfectants are underway, but we’re not yet seeing people hunkering down in their homes and stocking up on food and other necessities," CivicScience analysts say in the report.
Wells Fargo is facing bipartisan anger over its fake accounts scandal and CEO Charlie Scharf spent four hours in front of Congress on Tuesday pitching a new vision of the bank, with the worst behind it, Axios' Courtenay Brown reports.
What they're saying: "We have not yet re-earned the trust we would like the Wells Fargo name to represent," Scharf told the House Financial Services Committee — an acknowledgement of ongoing mismanagement after a snowball of customer abuse scandals.
The big picture: His testimony came after Democrats released a report last week — with previously unseen emails — that showed Wells Fargo executives were lax in complying with regulators' demands.
Ahead of this week's hearings, Wells Fargo attempted to get in front of a number of top complaints about big banks, like low worker pay and high overdraft fees.
But those moves did little to assuage lawmakers — Democrats in particular — who expressed concern about the lasting impact of Wells Fargo's misdeeds.
BlackRock, Morgan Stanley and Barclays have all undertaken "deep cleaning" procedures at various offices in the New York City area after traders at the firms tested positive for COVID-19.
What's next: Following the media reports from Bloomberg, Reuters and CNBC, employees at other financial institutions told Axios that some employees have been told to work from home, but the trading staff is still being asked to come into the office.
Quote: “He told us he was going to take crime out of the streets. He did. He took it into the damn White House.”
Why it matters: Ralph David Abernathy, an American civil rights activist and Baptist minister who together with his mentee Rev. Dr. Martin Luther King Jr. co-founded the Southern Christian Leadership Conference, said the above quote about Richard Nixon.