Trump closes immigration as oil crashes and Kim Jong Un could be dead Presented by U.S. Bank

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Quick Fix

One wild and crazy night — President Donald Trump, who is arguing that the pandemic is improving and states can start opening up for business, declared around 10:00 p.m. that in the light of the pandemic he would issue an executive order to halt all immigration into the U.S..

He couched it in part as an effort to protect American jobs. Not clear that stopping immigration will do anything to stop a virus that is already rampaging around the U.S. with nearly 800,000 known cases and over 40,000 documented deaths. Nor is it clear what jobs would be protected.

Around the same time as this declaration came, news began to circulate that North Korean dictator Kim Jong Un was either gravely ill or possibly brain dead. NBC’s Katy Tur posted a tweet citing sources saying Kim was brain dead but quickly deleted it, adding that she was “waiting on more info.”

A change in leadership in the world’s most dangerous country obviously has implication for markets that are already wildly choppy in the face of the virus and confusion over when re-opening might happen (and what might happen after it does) and when Congress might finally agree to pump more money into small businesses and other needed areas. But the massive action Monday came in the energy market.

Oil crashes — Monday’s collapse in oil futures was always bound to happen. There’s a huge glut of supply and not nearly enough demand. And the Trump-aided agreement to cut 10 million barrels per day simply wasn’t close to enough to balance that out. By the end of a crazy trading day it cost sellers $37.63 per barrel to get someone to take their West Texas Intermediate (WTI) crude for May 1 delivery.

This doesn’t mean that oil is actually worthless or that your gas station will pay you to fill up the tank. There were technical factors at work in the May contracts. June contracts did not drop below zero, instead hitting around $21 per barrel. But the oil market is in a brutal place and there isn’t that much more the U.S. can do about it. There will be plenty of energy sector bankruptcies and job losses in a sector that was once one of Trump’s big bragging points.

Prices bounced back some in overnight trading via Reuters: “Oil … rebounded on Tuesday, with U.S. crude turning positive after trading below $0 for the first time ever, but gains were capped amid unresolved concerns about how the market can cope with fuel demand decimated by the coronavirus pandemic.

“[WTI] crude for May delivery was up $38.73 at $1.10 a barrel … after settling down at a discount of $37.63 a barrel in the previous session. The May contract expires on Tuesday, while the June contract, which is more actively traded, jumped $1.72 cents, or 8.4%, to $22.15 a barrel.”

Via top finance Twitter voice @IvanTheK: “The WTI futures contract settles *physically*, meaning that the LONGS must take delivery (and presumably transport/store) the product from SHORTS.

"If they can't do that, either because they're just a speculator or they're a commercial player with no more capacity to place the supply, they need to close out the May contract before final settlement, either by rolling into a future month’s contract or just exiting the trade … So, while it looks weird to see a negative price, it basically means the buyer is charging the seller a premium for the extra cost of taking delivery.”

Sidebar: Ordinarily, plunging gas prices, while tough on the energy sector, would stimulate the rest of the economy through more available consumer spending. But nobody is driving anywhere or spending anything. Or not much anyway beyond short trips to the grocery store.

Oversight watch — Couple of big developments in efforts to track the $2.3 trillion rescue package as well additional lending action by the Federal Reserve. Watchdog Group Better Markets today plans to announce a website called TRACER “that will track and monitor all of the emergency actions taken by financial regulators in response to the coronavirus-crisis."

And the Committee for a Responsible for a Federal Budget announced a new COVID Money Tracker intended to “trace all significant financial actions taken by Congress, the Federal Reserve, and executive agencies and entities.” Of course, to really be able to do this, public information on exactly who is getting the money will have to be publicly released, which thus far is not the case.

A message from U.S. Bank Banks must do more and better to reverse systemic inequality. At U.S. Bank, that starts by committing $116 million to address social and economic inequities and elevating Black voices and Black-owned businesses. Because we’re small enough to care – and big enough to make a difference. Learn more.

GOOD TUESDAY MORNING — Tuesday, for real? That’s it? Oy. Email me at [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at [email protected] and follow her on Twitter @AubreeEWeaver.

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Driving the Day

JOIN ME WEDNESDAY — Our next POLITICO Morning Money Virtual Briefing will take place on WEDNESDAY (they are usually on Tuesdays) April 22. I’ll speak with Univ. of Chicago economist and former Obama CEA Chair Austan Goolsbee about the virus’s impact on the economy, current re-opening plans and the path forward. Please tune in and tweet me questions hashtagged #AskPOLITICO. Sign up here. … And catch my latest U.S. Politics in 60 Second for GZERO Media here.

STILL NO DEAL ON FUNDING — From the “try and make Morning Money Ben crazy” files, our Burgess Everett, Heather Caygle, and Marianne LeVine: “The Senate broke on Monday afternoon with no deal to replenish an empty relief fund for small businesses, though the Senate scheduled a Tuesday session in case negotiators complete a deal in the next 24 hours. … The Senate will next convene at 4 p.m. on Tuesday.

“While Democrats and the Trump administration say they have nearly clinched a deal to provide roughly $300 billion in new money for the exhausted Paycheck Protection Program, there is still a fight behind the scenes on several key components. … The package also includes language singling out $60 billion of the Paycheck Protection Program's aid for small businesses to those businesses without access to large financial institutions — a key demand from Democrats.”

DEAL COULD PROVIDE FUNDING FOR … TWO DAYS — Our Zachary Warmbrodt: “Lawmakers are nearing a deal to restart an emergency small business loan program that exhausted its funding last week — but it may only buy a few days before the program screeches to a halt once again.

“Lenders are warning their customers that they might not be able to secure loans even if Congress provides an additional $300 billion as soon as this week. Banking industry representatives say the program has a burn rate of $50 billion per day and needs closer to $1 trillion to meet demand, with hundreds of thousands of applications pending.”

HOW MUCH DOES SMALL BUSINESS NEED? — Via Goldman Sachs: “Using data from the Census on firm size by employee count and industry and IRS data on business expenses, we estimate that 8 weeks of expenses eligible for PPP loan forgiveness amounts to be about $750bn”

Coronavirus effects

RESTAURANTS WANT THEIR OWN BAILOUT — Our Ian Kullgren: “Restaurants say their industry needs its own targeted recovery fund because the bailout package Congress passed last month is making it more attractive for their staff to draw unemployment benefits than to continue working.

“The new Paycheck Protection Program waives repayment of small business loans if the borrower uses 75 percent of the money to maintain payroll, a measure intended to reduce layoffs. But with the expanded unemployment benefits included in the stimulus bill, some workers can as much as double their weekly checks if they stay unemployed.”

BIG BANKS GET SUED BY SMALL BUSINESSES — Our Victoria Guida: “Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo are being sued by small business owners, who claim the big lenders unfairly favored companies seeking higher loan amounts under the government-backed Paycheck Protection Program.

“Each bank ‘concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money,’ according to language appearing in all four of the class-action lawsuits, filed Sunday in the U.S. District Court for the Central District of California.”

MORTGAGE PROBLEMS MOUNT — Via Cowen’s Jaret Seiberg: “The Mortgage Bankers Association said … that forbearance rates on mortgages hits 5.95%, which is a 60% increase from the prior week.

"We believe this boosts the prospects for a Federal Reserve liquidity facility for servicers. Key will be whether these data keep rising over the next two weeks. … As long as the facility is stood up prior to the week of May 11, we believe it could provide the cash servicers need to make payments due in the middle of the month.”

SHAKE SHACK GIVES IT BACK — Our Zachary Warmbrodt: “Shake Shack plans to return a $10 million loan it received under an emergency small business rescue program, amid a growing backlash against big businesses that got the money before $350 billion in funding lapsed last week.

“The burger chain was just one of several large restaurant operators and publicly traded companies that secured tens of millions of dollars … Other chains that reported receiving the loans include Potbelly, Ruth's Hospitality Group, Taco Cabana and J. Alexander's. The disclosures infuriated small business owners who were unable to get loans in time.”

NY FED PROMISES DISCLOSURE — Via Victoria: “The New York Federal Reserve … announced that it would publicly release information about the central bank's emergency loans to large businesses once its corporate program begins operating, although it's still not clear how detailed or frequent that data will be.

“The Fed's corporate credit facilities, under which it will buy bonds issued by large companies, are still in the process of being designed. But the central bank said in new answers to frequently asked questions that it would disclose information ‘regarding participants, transaction amounts, costs, revenues and other fees.’”

Also, ICYMI, Victoria wrote about how Fed Chair Jay Powell has gone from Trump’s goat to his potential savior: “The Fed chief’s dogged refusal to stay out of the political fray by ignoring Trump’s taunts, as well as his good relationships with lawmakers from both parties, has put him in a unique position to shepherd the economic rescue in a nonpartisan way.”

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Markets

WALL STREET DROPS — Reuters’ Noel Randewich: “Wall Street tumbled on Monday after U.S. crude futures turned negative for the first time in history, underscoring the chaos the coronavirus outbreak has unleashed on the global economy.”

COVID HASN’T DIMISHINED ALLURE OF BIG TECH STOCKS — WSJ’s Caitlin McCabe: “The FANG trade hasn’t lost its bite. Big technology stocks are again charging to new heights and propelling the broader stock market, which is swiftly rebounding after a punishing selloff.”

CAN INVESTORS TRUST THE MARKET RALLY? — NYT’s Matt Phillips: “Less than a month ago, the stock market was in free fall, as a torrent of bad news about the coronavirus pandemic and its economic fallout drove investors to dump stocks.

“Just as swiftly, the market has rebounded, even as millions of people lose their jobs every week and the country is destined for a recession. Can the rally be trusted? The word on Wall Street is a tentative yes.”

Fly Around

IN RACE FOR SMALL BUSINESS LOANS, WINNING HINGED ON WHERE FIRMS BANK — WSJ’s Ruth Simon and Peter Rudegeair: “The small businesses that received aid under the federal government’s $350 billion rescue program weren’t always the ones with the greatest needs or the best chances to survive the coronavirus pandemic. Whether a firm made the cut often came down to how and where it banked.

“Some recipients were publicly traded companies that already had significant loans with big banks. Others were customers of community banks that had long made loans through the Small Business Administration, which is guaranteeing loans made through the government program. Thousands more that lacked the right ties weren’t approved.”

BUSINESS GROUPS WELCOME LIMITED DELAYS IN U.S. TARIFFS — Reuters: “U.S. retailers and other business groups … welcomed a move by the Trump administration to allow importers to defer for three months any tariff payments they owe the government, but said they needed more tariff relief to deal with the pandemic. …

“Trump on Sunday signed an executive order allowing deferral of payments of some tariffs. But the move does not extend to importers of goods caught up in several trade conflicts, such as solar panels, steel, aluminum and a range of Chinese products”

For Your Radar

TRANSITIONS — Via White House nomination announcement: “Tony E. Sayegh Jr., of New York, to be a Member of the President’s Advisory Committee on the Arts of the John F. Kennedy Center for the Performing Arts.”

NEW FROM CITI — Per release: “Citi announced … that Citi and the Citi Foundation have committed over $65 million to date in support of COVID-19-related community relief efforts around the world, including nearly $36 million in charitable contributions from Citi and nearly $30 million in grants from the Citi Foundation”

NEW ON THE PODS — Rob Blackwell has a new podcast for the Promontory Interfinancial Network and he spoke with Mark Cuban about the billionaire's plans to fix the PPP program.

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