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🎙“You don't have to become something you're not to be better than you were.” - See who said it and why it matters at the bottom.

1 big thing: Production cuts won't stop the oil industry's fall
Data: Investing.com; Chart: Axios Visuals

Oil prices rose after news of a production cut agreement between the world's largest producers, but experts warn the move will not be enough to sustainably hold up prices or change the industry's bleak trajectory.

Driving the news: Crude futures jumped about 5% to near $25 a barrel for WTI crude after the OPEC+ alliance agreed to a 10 million barrels-per-day production cut beginning in May that ended a price war between Saudi Arabia and Russia.

  • However, the COVID-19 outbreak has slammed demand to that point that experts believe a cut of 20 million to 30 million barrels per day will be needed to offset the loss in the roughly 100 million barrel-per-day market.

Why it matters: With oil prices expected to continue their fall, a tidal wave of bankruptcies, defaults and closures of U.S. oil and gas companies is likely in the coming weeks and months that will weigh on bond and equity markets as well as the broader economy.

What's happening: Almost 40% of oil and natural gas producers face insolvency within the year if WTI crude prices remain near $30 a barrel, according to a new survey from the Kansas City Fed.

  • Even if oil prices rise to $40 a barrel — a nearly 40% jump from their current level — the percentage of firms expected to fall into insolvency only declines to 36%.
  • The Kansas City Fed's survey mirrored results from the Dallas Fed last month.

Word on the street: "I don't know of any companies that can operate profitably at [$40 per barrel]," said one respondent to the Kansas City Fed's survey.

Yes, but: "Oil majors proved resilient to extreme price volatility during the last oil price crash and they have already announced similar measures to protect their cash flows during the current crisis," Moody's Investors Service said in a recent note.

Be smart: Energy companies are the biggest issuers of junk bonds, accounting for more than 11% of the U.S. high yield market.

  • Even though the Fed has moved into purchases of some high yield bonds, much of the energy sector is highly levered and unlikely to meet standards for rescue from the central bank's ever-expanding world of asset purchases.

What to watch: Goldman Sachs analysts said they expect WTI crude prices will fall to $20 a barrel as downside risks overwhelm the near-term boost to sentiment.

  • “Ultimately, the size of the demand shock is simply too large for a coordinated supply cut, setting the stage for a severe rebalancing."
2. Catch up quick

Boeing has hired Lazard and Evercore to help it analyze government aid and potential funding from the private market, as the company may need to raise as much as $20 billion more this year. (WSJ)

Bookings for 2021 cruises have risen 40% compared to 2019 on CruiseCompete.com in the last 45 days. (LA Times)

As Silicon Valley startups lay off workers, tech giants like Apple, Google and Amazon are aggressively pursuing software engineers, data scientists and product designers, with Facebook expected to hire more than 10,000 people this year for critical roles product and engineering teams. (WSJ)

A lack of new funding for the coronavirus outbreak has put the U.S. Postal Service on the brink of failure and made it more vital than ever. (Bloomberg Businessweek)

3. Steepest sentiment drop ever is still too optimistic
Data: University of Michigan; Chart: Axios Visuals

U.S. consumer sentiment suffered a record decline in April, according to the latest poll from the University of Michigan, but respondents are still irrationally confident about the future, the survey's director says.

What happened: The survey's gauge of preliminary consumer sentiment sank 18 points to 71, its lowest since 2011.

  • A measure of current conditions plunged by more than 31 index-points, nearly twice the previous record, while a measure of future expectations dropped by just under 10 points.

What they're saying: "[A]nticipating a quick and sustained economic expansion is likely to be a failed expectation, resulting in a renewed and deeper slump in confidence," Richard Curtin, Michigan's surveys of consumers chief economist, said in a statement.

  • "Consumers need to be prepared for a longer and deeper recession rather than the now discredited message that pent-up demand will spark a quick, robust, and sustained economic recovery."
  • "Continued declines in the seven-day average Sentiment Index can be expected in the weeks ahead (see the featured chart). Sharp additional declines may occur when consumers adjust their views to a slower expected pace of the economic recovery."
4. Where the next economic crisis will hit

Illustration: Eniola Odetunde/Axios

America's economic crisis soon may expand to its states, cities, and towns, Axios' Stef Kight and Dan Primack report.

The big picture: State and local tax revenue are both falling, particularly in areas heavily reliant on sales taxes, while spending is up due to added unemployment and medical obligations.

Just look at Arizona, which is near the middle of the pack when it comes to sales tax as a percentage of total state revenue. It had been projecting a $1 billion surplus by the end of its fiscal year in June, but that's since flipped to a $1.1 billion deficit.

  • Arizona has a relatively large rainy day fund, but it's not enough to cover the tax shortfall.

The most critical cases may be Florida and Louisiana, which both are in the top 10 for sales tax dependency and have rainy day funds that represent less than 5% of annual expenditures.

  • Both have been hit hard by the coronavirus. Louisiana is believed to have peaked last week, but Florida isn't expected to peak for a couple more weeks.
  • They also have large tourism and oil industries and are at particular risk for hurricanes — opening the possibility of simultaneous state emergencies.
  • "There's no playbook," Louisiana State Treasurer John Schroder tells Axios. Past state emergencies and budget crises have been regional "and then the rest of the country comes in to the rescue. That ain't going to be happening this time."

There also will be shortfalls in cities, counties, and towns — many of which haven't yet debated or approved fiscal 2021 budgets because of bylaws that didn't anticipate governance-via-Zoom. Bankruptcies are a very real possibility.

Go deeper.

5. More parents and young people are ordering delivery

Reproduced from CivicScience; Chart: Axios Visuals

More Americans are ordering delivery as restaurants close due to the COVID-19 outbreak and shelter-in-place orders made more people reluctant to leave the house.

What's happening: The number of people ordering food from restaurants has steadily increased but is largely staying consistent among age and income groups, new data from CivicScience shows.

  • This week, 22% of U.S. adults say they had food delivered, up from 19% the week before.
  • Younger and richer Americans continue to favor ordering delivery while their older and poorer cohort has not increased their buys to any significant degree.

Why it matters: The pandemic is expected to change long-term behaviors for consumers and delivery had already become a significant revenue generator for many restaurants around the U.S.

Watch this space: Parents are one of the fastest-growing segments of people increasing their delivery orders.

  • Between February and March, the percentage of parents using delivery apps increased from 16% to 20%, while non-parents saw their share increase from 27% to 28%, CivicScience noted.

Quote: “You don't have to become something you're not to be better than you were.”

Why it matters: Sidney Poitier won an Academy Award for his performance in "Lilies in the Field" (1963) on April 13, 1964, becoming the first black actor to win the Oscar for Best Actor.

Fun fact: Poitier was knighted by Queen Elizabeth II in 1974. However, because he was not a Bahamian citizen at the time, the award was honorary, meaning he is not known as "Sir Sidney Poitier."

Editor's note: The top story has been updated to reflect that a percentage of oil and gas firms are expected to fall into insolvency (not solvency).