☀️ Morning! Courtenay Brown here, filling in for Dion who's enjoying one of the mental health days Axios is giving each of its employees.
Illustration: Eniola Odetunde/Axios
Today's jobs report will be horrific. It will catch the eye of even the most casual economic data watcher, but don’t be surprised if the stock market shrugs.
Why it matters: Grim economic news hasn't derailed the market's comeback. The stark difference between what's happening in the coronavirus-hit economy vs. the stock market has never been more on display.
Driving the news: The tech-heavy Nasdaq erased all its losses for the year. It's rallied 30% since late March, while the S&P 500 has risen 23% since then (though it's still lower on the year).
What's going on: There are a slew of reasons for the cheery stock market in some of the most depressing times — my colleague Felix Salmon lists them here.
What they're saying: "The market has too quickly celebrated 'success' on the health care front, without fully appreciating how hard it is to turn the economy back on," Scott Clemons, who's been a strategist at investment firm Brown Brothers Harriman for the past 30 years, tells Axios.
Between the lines: This disconnect is common. Take the last recession, when "the labor market didn't start to show signs of improvement until the end of 2009, at which point the market was already up 44%," Clemons notes.
The bottom line: The worst may be over for the stock market (for now). The economic bloodletting will be here for a while longer.
The unemployment rate was 3.5% in February — a 50-year low — before the pandemic hit the U.S. labor market.
What to watch: You're only counted as unemployed if you're actively looking for work. But many Americans aren't looking for work because of state-imposed lockdowns. That dynamic may warp the unemployment rate.
Fed funds futures for the first time priced in the possibility of the Fed moving interest rates below zero by year-end — something Fed chair Jerome Powell has resisted. (Reuters)
Neiman Marcus is the latest major retailer to file for bankruptcy this week, following J. Crew on Monday. (WSJ)
Bankrupt small hospitals want access to PPP loans. They are suing the Small Business Administration and courts are starting to take their side. (Axios)
Early numbers show how the coronavirus is devastating states' revenue streams. See the chart. (Axios)
Illustration: Aïda Amer/Axios
Axios business managing editor Jennifer A. Kingson writes: Companies that fail their "say-on-pay" votes — in which shareholders give a thumbs-up or thumbs-down on the compensation of the C-suite — tend to perform worse than the market and their peers, research from Morgan Stanley finds.
Why it matters: "Say-on-pay failures should be taken as a meaningful red flag for investors," the firm says, noting that there's increased scrutiny of CEO pay this year as COVID-19 forces mass layoffs and furloughs.
Where it stands: Public companies are required to hold say-on-pay votes at least once every three years, per rules ushered in by the Dodd-Frank Act and approved by the SEC in 2011.
Details: Among companies that failed their say-on-pay votes in 2019 — like Netflix and Williams Sonoma — many haven't yet had their 2020 annual meetings, where such votes are taken.
Go deeper. Beware of bloated executive pay
Americans pulled back on revolving credit — namely their credit card use — as states began to impose shelter-in-place orders, new data from the Fed shows.
Why it matters: It’s the latest indication of how the coronavirus is changing consumer behavior.
This data is closely watched. How much consumers borrow is an indication of how much they'll spend — a key driver of economic growth.
Thanks for reading. Dion will be back here to greet you on Monday morning! 👋