Fox News' coronavirus denial means 'viewers will die,' media critic says

Suzanne Smalley Reporter, Yahoo News•March 24, 2020

TRUMP AND FOX ARE RESPONSIBLE FOR AMERICANS DYING FROM COVID-19

As the coronavirus threat intensified in the U.S. in late February and early March, Fox News viewers received different information than Americans who got their news from other sources. Ben Smith, a longtime reporter and editor and the media critic at the New York Times, set out to understand why. His conclusion: Fox anchors consistently downplayed and even denied the existence of the coronavirus, a failure he blamed on Fox chairman Lachlan Murdoch’s laid-back management style, in contrast to the firm hand of longtime chief Roger Ailes, who resigned in 2016.

No one with real power over the big talent was engaged enough with the network's coverage to rein in broadcasters who asserted that the virus was fake, Smith said. He believes the network's coverage of the virus, which is widely seen as a major black eye for Fox, caused unnecessary deaths.

On March 9, when 700-plus American coronavirus cases had been confirmed, Sean Hannity told Fox viewers that political enemies of President Trump were using the virus to “bludgeon Trump with this new hoax.” In an interview Tuesday with the Yahoo News podcast “Skullduggery,” Smith told hosts Michael Isikoff and Daniel Klaidman that Fox didn’t just echo the president, who consistently downplayed the virus, but went even further with comments like Hannity’s, which actually called it fake.


Asked for comment, a Fox spokeswoman pointed to a statement that condemned the “cherry picking of clips” from opinion programs as “the definition of politicizing this serious threat.” The statement also highlighted how the story has changed, saying the pandemic “has evolved considerably over the last few weeks.”

As public criticism mounted over the tone of the network’s coverage, News Corp. founder Rupert Murdoch — Lachlan Murdoch’s father — reached out to Hannity with a warning to take the virus “seriously,” Smith reported. Fox host Tucker Carlson, whose reporting on the coronavirus was more aligned with mainstream medical advice, is now the object of scorn by rivals within the network who believe he is burnishing his reputation for independence at their expense.

Fox, which remains a powerful and lucrative media outlet with a firm grip on its audience and advertising dollars, might not be punished, Smith said — other than by facing the likely “consequences ... that some of their viewers will die.”

Smith believes the knee-jerk tendency among Fox commentators to defend Trump vigorously against criticism by the mainstream media caused them to lose sight of the substance of the story itself. Internally, some people at the network took the danger of COVID-19 seriously. Smith reported that Fox News CEO Suzanne Scott was concerned enough that she took proactive steps to better sanitize the network's communal areas. Scott also installed “sanitation stations” in all bureaus and on March 2nd cancelled the network’s “upfront presentation” - an important media industry event scheduled for three weeks later. But Scott had no influence over on-air coverage, and Fox hosts dismissed the threat until mid-March, when the White House itself began taking a different view.

Coronavirus and Fox News. (Photo illustration: Yahoo News; photo: Getty Images)

Download or subscribe on iTunes: “Skullduggery” from Yahoo News

Fox would likely not have lost its way on a story this major as recently as a few years ago, Smith said. Ailes — the former Fox News chairman and trusted Murdoch confidant who died in disgrace in 2017 after several women came forward to accuse him of sexual misconduct and rape — always resisted allowing politicians to dictate Fox coverage.

Smith believes that is no longer the prevailing attitude at the network. The president is personally close to certain Fox anchors, who Smith said often do not share Ailes’s view that “the politicians worked for him and not vice versa.”

The editor of BuzzFeed from 2012 until his recent hiring by the Times, Smith is known to be an astute media observer. Like many big stories, he said, the coronavirus has put the spotlight on great work from individual reporters, outlets and even platforms themselves. Social media coverage of the virus has been spectacular, Smith said, and has been particularly valuable as a forum for doctors and epidemiologists to speak to the public directly. In January, when many people were inclined to believe the conventional wisdom that the coronavirus was overhyped, Smith said, the “voices of both epidemiologists and doctors and nurses on social media ... cut through” when nothing else did.

Oil Majors Are Preparing For $10 USD Oil

THAT MEANS WESTERN CANADIAN OIL WILL BE WORTH A LOONIE

By Nick Cunningham - Mar 23, 2020

The wave of oil industry spending cuts continues, with the majors now announcing significant reductions to spending as oil remains stuck in the $20s.  Royal Dutch Shell said on Monday that it would cut spending by 20 percent, or about $5 billion, and also suspend its share buyback plan. French oil giant Total SA and Norway’s Equinor announced similar moves.

ExxonMobil and Chevron have suggested they too would be axing their budgets, with Exxon under particular pressure. Goldman Sachs estimates that Chevron needs $50 per barrel in order to cover spending and its dividend. ExxonMobil, on the other hand, needs something like $70. 

The majors are relatively more insulated from the downturn than small and medium-sized shale drillers because they have downstream refining and petrochemical assets that have typically performed somewhat better than upstream units when prices fall. Refineries, for instance, spend less on oil during the downturn, and low prices also translate into a boost in sales of refined products. 

But the majors do not have that cushion this time around. We are in the midst of a historic meltdown – a supply crisis and a demand event with no precedent. Estimates vary, but oil consumption could be off by 10 million barrels per day (mb/d), or more. It doesn’t matter how cheap crude is, if people are not driving, flying or consuming anything aside from the bare essentials, there is no demand boost from low prices. 

On Monday, Exxon announced that it was cutting production at its Baton Rouge refinery, the company’s second largest in the U.S., because poor demand has filled up storage tanks. Exxon also cut 1,800 contractors from the site. In another example, a major closely-watched petrochemical project in Appalachia may not go forward as the market sours.

The first round of spending cuts from the oil industry is now visible, but a second round is beginning, according to a report from Goldman Sachs. 

Related: Canada Braces For Oil Cuts As Storage Nears Limit

“We see US oil production falling almost 1.4 mn bpd over five quarters post 2Q20 based on reduced drilling (i.e., before considering shut-ins of existing wells that are likely to be needed) with covered company capex down 35% [year-on-year] in 2020,” Goldman Sachs wrote in a note. 

However, budget revisions are not over. The slide in spending, drilling and ultimately in output could deepen as capex cuts grow more pronounced. “There is no sugar coating it, U.S. oilfield activity will collapse with oil prices well below $30 WTI,” Raymond James said on Monday. The initial round of cuts put spending at about 45 percent below 2019 levels, the bank said. “However, the declines will be far more dramatic than these initial cuts and we stress that these announcements skew towards larger cap, better hedged and capitalized operators.” 

“Total U.S. capex is likely to fall in excess of 65% with a WTI price persisting in the $20s,” the investment bank concluded. 

Rystad Energy put out a similar estimate on Monday. E&Ps are likely to cut project sanctioning by up to $131 billion, or about 68% year-on-year, according to the Oslo-based firm. “Upstream players will have to take a close look at their cost levels and investment plans to counter the financial impact of lower prices and demand. Companies have already started reducing their annual capital spending for 2020,” says Audun Martinsen, Rystad Energy’s Head of Energy Service Research.

It's anybody’s guess how low WTI and Brent go. But more than a few analysts have pointed to the potential for storage to max out as a reason why prices have more room to fall. “[N]o one can exactly be sure that production will be shut-in fast enough to not overwhelm our ability to store oil,” JBC Energy said in a note. The firm pointed to refineries cutting processing because they are running out of storage, such as Exxon’s Baton Rouge. “In such an environment, it is as possible for Brent prices to briefly go to $10 per barrel as it was back in 1986 or 1998,” JBC concluded. 

By Nick Cunningham of Oilprice.com

Prepare For The Next Wave Of Oil Bankruptcies

Alex Kimani Oilprice.com March 24, 2020

Last year, the energy industry was rocked by record bankruptcies and write-downs that did not spare even the oil majors. According to Energy and Restructuring law firm Hayes and Boone’s, a grand total of 50 energy companies filed for bankruptcy last year, including 33 oil and gas producers, 15 oilfield services companies and two midstream companies. Meanwhile, Chevron Corp., Schlumberger, and Royal Dutch Shell announced multi-billion dollar asset impairments citing unfavorable macro outlook.

And this specter of doom and gloom appears set to continue for much longer, with concerns mounting that the ax could now fall on debt-ridden oilfield services companies. North American oilfield services and drilling companies face a $32 billion wave of debt that will come due this year through 2024, a daunting prospect considering that oil prices have crashed to nearly 20-year lows.

The outlook appears particularly grim for companies in dire need of a capital infusion and those with weak credit ratings as drilling work dries up amid the oil price crash; rising COVID-19 infections and the Saudi Arabia and Russian price war that threatens to flood global markets with even more crude output.

The poor state of the oilfield services companies is clearly reflected in the sector’s favorite benchmark, the VanEck Vectors Oil Services ETF (NYSEARCA:OIH), down 72% YTD and considerably lower than the 30% plunge by the S&P 500.



Sources: CNN Money



Junk Bonds

Oilfield services and drilling companies have some of the most high risk debt, with

junk-rated companies accounting for 65% of the $32B debt tab by the sector. Of these companies, Transocean (NYSE:RIG) has $4.3B; Valaris (NYSE:VAL) has $1.8B, Nabors Industries (NYSE:NBR) owes $1.4B and Superior Energy Services (NYSE:SPN) has $1.3B of debt set to mature within the next two years as per Moody's.

Related: Oil Majors Are Preparing For $10 Oil
According to Moody’s senior analyst Sreedhar Kona, “The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets.”

The sector’s biggest investment-grade firms such as Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), Baker Hughes (NYSE:BKR) and National Oilwell Varco (NYSE:NOV) are better placed to weather the storm since they offer other services that can offset reduced drilling activity.

Default risk

Source: MarketWatch

The energy sector in general is poorly regarded by investors with energy bonds well represented in the $1.5 trillion U.S. junk-bond market. Nearly a third of junk bonds were trading at distressed ratios last week with the market expecting energy bonds to default at a 14.08% clip, nearly double the 7.66% average default rate expected for the sector.

More Bankruptcies

And with debt defaults comes the specter of even more bankruptcies.

Related: U.S. In Lockdown: The Biggest Threat To The Oil Industry Ever?
North American producers have filed for bankruptcy involving $121.7 billion in aggregate debt since 2016 when oil prices began to drop. According to Moody’s, the U.S. oil and gas industry has about $86 billion of rated debt due over the next four years, one of the highest for any sector. The oil price crash makes it especially hard for these companies to comply with their debt obligations.

Indeed, Cramer sees a new wave of bankruptcies hitting the industry. The pundit has predicted that 9-10 oil and gas companies out of the 35 he covers will go under if low energy prices persist.

Unfortunately, the current situation looks really tenuous, with neither Saudi Arabia nor Russia willing to be the first to blink in the ongoing price war.

With the Saudis holding out and flooding the market with oil, the oil glut could reach a staggering 1 billion barrels in a matter of months and $10 oil is suddenly looking like a distinct possibility. Even though the American government plans to purchase a total of 77 million barrels of oil for its strategic reserves, this can only be done at a 2 million barrels per day clip, thus leaving a massive excess of nearly 20 million barrels per day as the coronavirus continues to crush global demand.

However, predictions for negative oil prices are exaggerated. Normally, a buying opportunity presents itself whenever stocks get pulverized as badly as they have right now. But with the perfect storm of poor demand, a global pandemic and an all-out price war, trying to call a bottom on this energy market is a fool’s errand.

By Alex Kimani for Oilprice.com

More Top Reads From Oilprice.com:

Saudi Arabia And The U.S. Could Form The World’s Newest Oil Cartel

This Supermajor Is About To Slash Permian Oil Production

Saudi Arabia’s Oil Price War Is Backfiring

Fracking Giants Warn Shale Crash Will Be Faster This Time

David Wethe Bloomberg March 24, 2020

(Bloomberg) -- Two of the world’s biggest oilfield service companies are warning of a bigger shale crash than the one that hit the U.S. and Canada just five years ago.

While the decline in North American drilling rigs could approach the lows seen in 2016, the drop could be much faster this time around, Schlumberger Ltd. told analysts and investors Tuesday on a webcast hosted by Scotia Howard Weil. And as the most financially troubled oilfield service providers seek to stay afloat, there’s not much help this time around, Halliburton Co. said on the same webcast.

Investors cheered plans by both companies to significantly slash spending. Halliburton soared as much as 33% for a history-beating advance, while Schlumberger climbed 11%.

“Wall Street is shut to the industry,” Lance Loeffler, chief financial officer at Houston-based Halliburton, said during the webcast. “There is no more lifeline. Financial markets aren’t lending their support.”

Halliburton, which generates most of its business in the U.S. and Canada and leads the world in fracking, is planning for the possibility that nearly two thirds of rigs in the region could be shut down by the final three months of the year. Schlumberger, the world’s biggest overall oilfield services provider, said it’s slashing its own spending by as much as 30% in 2020.

North America, which has been roiled by contractions in the past, may see a sharper, more abrupt cut in drilling before the end of the second quarter, Chief Executive Officer Olivier Le Peuch said on the call.

“We’re acting sharply and decisively in this context,” he said. “It will reach in a matter of weeks the trough, where it took a year or six months to reach a trough last time.”

While changes to rig activity generally lag the movement of oil prices by several months, shale explorers have wasted no time cutting where they can. Oil drilling in the Permian Basin of West Texas and New Mexico, home to the world’s biggest shale patch, plunged to its lowest level since the nadir of the last crude-market slump in early 2016.

At its worst, the U.S. rig count could see a 70% drop over a six-month period, eclipsing the greater than 60% cut in 1986, according to Raymond James.

“We believe OFS companies and investors need to prepare themselves for activity to fall at an unprecedented rate,” Praveen Narra, an analyst at Raymond James, wrote Monday in a note to investors. “We believe that E&Ps attention to free cash flow, as well as several with credit issues, will force spending reductions that are far more drastic than in previous downcycles.”

©2020 Bloomberg L.P.

Related: Oil Majors Are Preparing For $10 Oil

In Rare Step, Oil-Sands Giant Shuts Output to Weather Rout

Robert Tuttle Bloomberg March 24, 2020

View photos

(Bloomberg) -- Record low prices for heavy Canadian crude have prompted one of the biggest operators in the oil sands to take the rare step of shutting production.

Motivated by the “extremely low” prices, Suncor Energy Inc. announced on Tuesday that it will shut in one of its two so-called trains at its two-year-old, 194,000 barrel a day Fort Hills oil sands mine. The company also is delaying the start up of its MacKay River oil sands wells to May, after operations were halted in December because of a malfunction and fire.

The move comes as the coronavirus pandemic slashes worldwide oil demand just as Saudi Arabia ramps up oil production in a price war with Russia, sending global oil benchmarks to the lowest prices in almost two decades. Western Canadian Select, the oil-sands benchmark, fell to $8.54 a barrel, which will be a record low if it settles at this price, data compiled by Bloomberg show. The value of the bitumen itself, excluding the light condensate that’s added so the heavy crude can be pumped through pipelines, was valued at just $3.83 a barrel.

Oil sands wells and mines are built for billions of dollars to last for decades. They are rarely shut because many of their operating costs are fixed and, for the wells, leaving the reservoirs cold for an extended period of time could cause damage. Suncor and its partners Total SA and Teck Resources Ltd. agreed to operate the single processing stream at Fort Hills at full utilization to increase cash flow amid the low prices for bitumen.

The guidance for Suncor’s share of Fort Hills bitumen production in 2020 was reduced to between 55,000 to 65,000 barrels a day from between 85,000 to 95,000 barrels a day, the company said in its release.

The use of one train at the mine “will increase cash flow, particularly when bitumen prices are extremely low, as we are able to significantly reduce variable costs,” the company said. “Unit costs for the remaining production will be higher because of this decision as a result of fixed costs being covered by lower volumes.”

©2020 Bloomberg L.P.

Related: Oil Majors Are Preparing For $10 Oil

Monster Job Losses Force Canada to Confront Scale of Crisis

Shelly Hagan and Kait Bolongaro Bloomberg March 23, 2020


(Bloomberg) -- The historic response to Canada’s economic crisis by Justin Trudeau’s government is only just beginning.

A half-million jobless claims filed last week, representing 2.5% of the labor force, is a shocking signal of how deep a rut Canada’s economy is in as entire industries shut down in response to the coronavirus pandemic. The new worry is Covid-19 could spread through remote barracks-like camps that house oil workers, adding another blow to a key sector.

The sudden rise in layoffs suggests that even after unveiling plans to inject hundreds of billions in direct aid and liquidity into the economy, Trudeau and other policy makers will need to do more. Another interest rate cut by the Bank of Canada and a bailout of the airline industry and energy sector could materialize in coming days.

The tourism industry is the first outright casualty as Canada instructs citizens to practice “social distancing.” The world’s longest undefended border is now closed to non-essential traffic and Trudeau is girding citizens for a long haul before the nation emerges from the crisis.

“It has been like an atomic bomb,” said Mandy Farmer, who took over what is now an eight-hotel, 750-bed chain in British Columbia from her father. “The travel industry is completely dead here. There is no business on the books.”

All-Out Push

In less than three weeks, both the Bank of Canada and Trudeau’s governing Liberal Party have pushed out a series of measures to aid businesses and individuals who face serious financial pressures from the halt in economic activity. But so far it doesn’t appear to be enough as Canada barrels toward a recession.

“There are going to be large contractions in economic activity. That’s unavoidable when you’re shutting down portions of the economy,” Beata Caranci, chief economist at Toronto-Dominion Bank, said in an interview. “We’re presuming we get back into business operations -- not maybe normal but just a resumption of activity -- by late April or May. If that doesn’t happen, we have a different story.”

The Bank of Canada has cut interest rates by a full percentage point this month and announced a slew of programs designed to prevent clogs in the financial system’s plumbing.

On the fiscal side, Trudeau unveiled an aid package Wednesday worth C$82 billion ($57 billion), or 3% of Canada’s economy, in an effort to soften the blow. Both the central bank and the government have repeatedly said they’re able and willing to do more.

The oil sector is a high priority, with the industry also grappling with a global price war sparked by the breakdown of talks between Russia, Saudi Arabia and other OPEC+ producers. The price of a barrel of heavy Alberta crude hit the lowest on record this week.

The country’s airline industry may need billions in aid to stay afloat. The Canadian government is also trying to help the struggling manufacturing sector, with Trudeau announcing plans to help factories shift gears to begin making desperately-needed medical supplies.

“You may see an expansion in possible financial support for business,” Brett House, deputy chief economist at Bank of Nova Scotia, said by email.

“There is no one silver bullet,” Trudeau told reporters outside his residence Sunday morning, where he made televised remarks for the seventh consecutive day. “It is likely to take months before we’re fully through this.”

Toronto -- Canada’s biggest city -- recorded its first death from Covid-19 on the weekend, bringing the national toll to 20. As of Sunday night, there were 1,430 confirmed cases of the virus across the contry.

Monetary Arsenal

In addition to lowering interest rates to 0.75%, the Bank of Canada has injected cash into the financial markets by launching a series of new facilities to acquire securities from banks -- tools they can continue to use even after they bring borrowing costs to near zero.

“They also have the option in the future to continue to expand asset purchases and to enlarge credit facilities on more generous terms,” House said. “Monetary policy is never completely out of options.”

For business owners like Farmer, the third-generation British Columbia hotelier, the speed of the collapse has been unbelievable. She hasn’t been ordered to shut down completely yet but has begun laying off her 250 staff and said a 50% reduction in her workforce is possible.

“I am fighting right now to have a company for these people to come back to. All of our efforts are on cash flow,” the owner of Accent Inns and Hotel Zed said by phone.

Farmer’s biggest ask from the federal and provincial governments is to move quickly to provide her employees with unemployment benefits and potentially defer her property taxes.

“I’m so scared my bank will not help me through this,” she said, even though she says she runs a tight financial ship. “In the good times they tell you they’re your partner, and in the bad times they’ll call your loans.”

©2020 Bloomberg L.P.

Canada’s Economic Heartland Shuts Down in Effort to Slow Virus

Sandrine Rastello Bloomberg March 23, 2020

(Bloomberg) -- Canada’s economic heartland is shutting down as Ontario and Quebec step up efforts to slow down the coronavirus outbreak.

The two provinces, which together account for about 57% of the country’s economy, have ordered non-essential businesses to close by the end of Tuesday. The order is set to run for two weeks in Ontario and three in Quebec.

“We’re entering a new, more critical stage and it’s time to add measures to limit contagion,” Quebec Premier Francois Legault told reporters Monday.

The drastic measures reflect policy makers’ concerns over the escalation of cases, which some people make worse by continuing to go out and mingle. Canada had 1,432 confirmed cases of coronavirus as on Monday morning; the number has more than doubled since March 18.

While many companies had already announced plans to suspend operations, the additional closures are set to deepen an economic contraction that economists estimate will be between 10% and 24% in the second quarter, on an annualized basis.

Governments and the central bank are multiplying measures to cushion the blow. Prime Minister Justin Trudeau announced an C$82 billion ($56.5 billion) aid package last week. On Monday British Columbia, which has about as many virus cases as Ontario, said it would offer C$5 billion in tax relief and other support for businesses and individuals.

Ontario Premier Doug Ford said a list of businesses allowed to stay open will be shared Tuesday. Quebec’s list included banks, telecommunications, media, essential transportation and providers of drugs and groceries. Mining and metals companies are deemed essential in Quebec, but must reduce their activity to a minimum.

The premiers, along with Trudeau, have urged people to pay heed to social isolation guidelines that still aren’t respected across the board. Canada has so far stopped short of mandatory confinement of people in their homes.

”Enough is enough,” Trudeau told reporters outside his residence in Ottawa on Monday. “Go home and stay home. This is what we all need to be doing.”

©2020 Bloomberg L.P.

The giant hole in Trump’s back-to-work plan

Rick Newman Senior Columnist Yahoo Finance March 24, 2020

Trump administration may reopen some businesses late this week

President Trump is trying to bully a virus. A virus is a microscopic organism. It doesn’t have ears enabling it to hear, or emotions allowing it to feel intimidated. The bullying won’t work.

But expect Trump to keep insisting he’s going to reopen the economy, virus be damned. Trump is obviously frustrated as he watches the stock market plunge and businesses shut down as everybody stays home to combat the coronavirus pandemic. A recession has undoubtedly arrived, and it’s a doozy. Perhaps most alarming to Trump are his darkening reelection odds, since incumbent presidents running for reelection typically get walloped when the economy’s in a funk.

Trump’s reaction to all this is a new idea to encourage businesses to reopen, even as the coronavirus outbreak worsens and more people get sick and die. The new refrain in Trumpland: “We cannot let the cure be worse than the problem itself,” as Trump said during his coronavirus propaganda session from the White House on March 23. “America will, again, and soon, be open for business. A lot sooner than three or four months,” Trump insisted. He later added he’d like to see businesses reopen by Easter, which is April 12.

Everybody understands Trump’s impatience. Millions of Americans are sitting idly at home as their incomes dry up and their retirement plans sink. But Trump’s plan is impossible until one crucial thing is in place: widespread testing for coronavirus, including multiple tests for every working person in the Untied States.

Testing is key because it would help determine, on a running basis, who’s healthy and able to move about without infecting others. The entire reason for stay-at home orders in places like New York, Illinois and California—and almost assuredly, more states to come—is that we can’t know who’s a spreader. There aren’t enough tests. So the policy now is to basically assume everybody’s a spreader, and therefore keep everybody home.

The biggest failure of the U.S. response to coronavirus is a huge lag in testing. President Trump has repeatedly misspoken on this, saying on March 6, for instance, that “anybody that needs a test gets a test.” That’s not remotely true, even now. An AP investigation found a series of blunders from the White House on down that impeded testing, beginning in January. The U.S. testing rate is improving, but as of March 20, the United States ranked 10th in the world with 314 coronavirus tests per million people. The testing rate in South Korea, which seems to have contained the virus, is 6,148 tests per million, or 20 times higher than the U.S. rate.
First, universal testing

Trump has some control over the rollout of testing. He could use emergency powers to nationalize the production and distribution of testing components. Physician Ezekiel Emanuel of the University of Pennsylvania argues that Trump should set up a national testing network with thousands of sites using the U.S. military, the National Guard and a new federal corps of recently unemployed workers, while moving all testing out of overburdened hospitals and clinics. Regular samplings of the population in high-infection areas would help gauge the spread of the virus. And far better data from widespread testing would allow states and cities to ease restrictions on doing business as the virus ebbed, and to target restrictions when they identified hotspots.


A sign indicates a closed business Saturday, March 21, 2020, in downtown Surfside, Fla. Miami-Dade County's mayor on Thursday ordered all beaches, parks and "non-essential" commercial and retail businesses closed because of the coronavirus pandemic. (AP Photo/Wilfredo Lee)

Trump isn’t doing any of this. Instead, he’s relying on private industry to work it out, with encouragement and occasional assistance from the federal government. The private sector will get the job done, eventually, but not as quickly as would happen with the full mobilization of the government. Those lost days and weeks will only be more time that businesses remain shuttered and the recession deepens.

Trump has hinted that he might ease federal guidelines once the 15-day social-distancing window he established in mid-March expires on March 31. But Trump can’t control what states and cities do, and it’s wishful thinking to imagine he could single-handedly order or coax significant numbers of people back to work.

The biggest concern in places like New York City, Chicago and San Francisco is a skyrocketing infection rate that leaves hospitals overwhelmed with more sick and dying patients than they have room for. Ordering people back to work before the virus is contained would only worsen that problem. Hospitals will catch up, as more protective equipment and ventilators become available. But higher infection rates could also sicken more medical caregivers, essentially reducing capacity. No sensible mayor or governor is going to knowingly swamp the local health care system by prematurely letting people back to work, even if allied with Trump.

So American workers are going to be off the job a lot longer than Trump—or anybody—wants. Demanding an economic recovery won’t work. Extremely aggressive public-health measures might.

Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: rickjnewman@yahoo.com. Encrypted communication available. Click here to get Rick’s stories by email.

Covid Report: A Trump-Touted Malaria Drug Flops In Coronavirus Treatment
A man died and his wife is in critical condition after the couple ingested chloroquine phosphate. This compound is commonly used at aquariums to clean fish tanks.
SNAKE OIL SALESMAN TRUMP PROMOTES FISH TANK CLEANER TO COMBAT COVID-19
 
ALLISON GATLIN 03/24/2020 @IBD_AG

A decades-old malaria drug touted by President Donald Trump as a potential coronavirus treatment has failed to impress in an early-stage study

The study, performed in China, followed 30 patients with mild symptoms. It investigated hydroxychloroquine, a cousin of chloroquine. Both can treat malaria, lupus and rheumatoid arthritis. In recent days, Trump has reiterated his positive views on their potential in coronavirus treatment.

But the drug didn't pan out in the study, Evercore ISI analyst Umer Raffat said in a note to clients. He described the results as "far from positive." Of three key measures, just one favored the use of the malaria drugs in coronavirus treatment.

"It really puzzles me why we're seeing inaccurate characterizations of clinical data," Raffat said. "In my honest opinion, having an honest discussion around emerging clinical data would actually help the progress."

Still, generic pharmaceutical companies Teva Pharmaceutical (TEVA) and Mylan (MYL), which are increasing production of hydroxychloroquine tablets for potential coronavirus treatment, notched gains Tuesday.

On the stock market today, Teva stock jumped 8.4%, to 8.12. Shares of Mylan reversed an earlier rise and declined 3.8%, to 15.14, at the closing bell. Pharma giants Novartis (NVS), Sanofi (SNY) and Bayer (BAYRY) also pledged to ramp production of the malaria drugs. Shares of all three also popped.

Researchers saw the potential for chloroquine in coronavirus treatment in February, SVB Leerink analyst Ami Fadia said in his report to clients. Hydroxychloroquine is a related drug with less severe side effects, allowing for higher doses and fewer interactions with other drugs.

This could be key in coronavirus treatment. To date, the new form of coronavirus, dubbed Covid-19, has infected more than 416,000 people worldwide. That includes nearly 19,000 deaths. More than 108,000 people have recovered, according to Worldometers.
Covid-19 Study Doesn't Bode Well

The hydroxychloroquine study examined virological clearance — the medicine's ability to lower how much of the virus remains in the body. After a week, the placebo cleared 93% of the virus vs. 87% clearance for those who received hydroxychloroquine, Raffat said.

Further, patients' temperatures normalized on the same day for both groups.

Only radiological progression measured by CT scan favored hydroxychloroquine in coronavirus treatment. But the data are hard to interpret due to the small number of patients, Raffat said. He questioned the dosage and patients' baseline viral loads. That information wasn't disclosed.

"Parsing through the emerging data for these important drives of success can help define what an effective treatment window and optimal candidate looks like," he said.
Pharma Companies Ramp Production

Regardless, Trump's endorsement has spurred pharma companies to ramp production of these old malaria drugs to use in coronavirus treatment. The market for hydroxychloroquine pills is worth around $450 million, SVB Leerink's Fadia said.

Fadia doesn't expect hydroxychloroquine in coronavirus treatment to be a huge moneymaker for generic pharmaceutical companies.

"But the efforts by these companies to step in to help combat the Covid-19 pandemic would be a good reminder for various constituents of the important role generic companies play in the health care system," she said.

Prescriptions are increasing and were 20% above normal for the week ending March 13, she said. The Lupus Foundation of America urged drug manufacturers on Monday to ensure they produce enough chloroquine and hydroxychloroquine to continue reaching lupus patients.

"Unfortunately, there are already verified reports across the country of pharmacies having major shortages of these vital drugs," the foundation said in a written statement. This is problematic for some lupus patients who don't have alternative medications.

Banner Health, a hospital system in Arizona, also cautioned against self-medicating for coronavirus treatment. A man died and his wife is in critical condition after the couple ingested chloroquine phosphate. This compound is commonly used at aquariums to clean fish tanks.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

Boeing Shuts Down Assembly Lines In Response To Pandemic

FreightWaves Benzinga March 23, 2020


Boeing Co. (NYSE: BA) said Monday it is shutting down production for two weeks at its aircraft manufacturing plants in northwest Washington to protect the health of employees and their families as the coronavirus pandemic continues to spread in the U.S.

Assembly lines will gradually reduce work levels through Wednesday and then close for 14 days, during which time the company will conduct deep cleaning and establish rigorous criteria for return to work.

2020 was already shaping up as a difficult year for Boeing, which stopped production of the troubled 737 MAX production line in January while waiting for safety regulators to approve its return to service following two deadly crashes in 2018 and 2019. Boeing has designed software fixes for the anti-stall system blamed for contributing to the accidents by pitching the nose sharply downward and is correcting other safety issues found in subsequent audits. Company officials had indicated they expected to get the green light to proceed by early summer.

The aerospace manufacturing industry, including Boeing, is seeking $60 billion from the federal government as part of a $1.6 trillion emergency economic package for businesses and workers. But a deal fell apart Sunday night over differences on what types of conditions should be placed on large corporations for aid.

Boeing's production delay means it will take longer for airlines to receive scheduled deliveries, but with the aviation market cratering because of COVID-19, lack of capacity will be the least of airlines' concerns once the spread is contained and economic activity resumes. Experts forecast travel demand will return slowly and that it could take a couple of years for airlines to get back to last year's traffic level.

Boeing employs nearly 66,000 people in Washington, where it makes the 737, 747-8 and 747-8 freighters, the 767 and 767 freighter, the 777, and the 787. The shutdown will also push back development of the 777X, the next-generation of the wide-body plane that Boeing intended to start delivering next year. Suppliers will also be hurt by Boeing's decision because Boeing will not accept any shipments during the shutdown.

General Electric Company (NYSE: GE) aviation arm, which manufactures engines, said it will cut its U.S. workforce by 10%. GE also said that there will be a temporary lack of work impacting about 50% of its U.S. maintenance, repair and overhaul employees for 90 days.

The aerospace giant's announcement made no mention of its Charleston, South Carolina, plant, where the 787 Dreamliner is also produced.

Boeing said employees in Everett and Renton will receive pay for the initial 10 working days of the suspension — double the company policy, which will provide coverage for the two-week period. Other employees will continue to work from home.

The company said it will restart production in an orderly fashion when the suspension is lifted. Critical distribution of parts to support airline, government and maintenance shop customers will continue.

"We continue to work closely with public health officials, and we're in contact with our customers, suppliers and other stakeholders who are affected by this temporary suspension. We regret the difficulty this will cause them, as well as our employees, but it's vital to maintain health and safety for all those who support our products and services, and to assist in the national effort to combat the spread of COVID-19," Boeing CEO David Calhoun said in a statement.

Meanwhile, Boeing's European rival Airbus, resumed partial production at plants in France and Spain after a four-day pause to sterilize equipment and develop efficient work protocols while practicing social distancing. The manufacturer said work stations will only reopen if they comply with new hygiene standards and safety measures, which are being implemented at all sites without full interruption.

Boeing sharply lagged Airbus in deliveries and orders last year due to the MAX crisis and is likely to lose even more ground this year.

In February, the Airbus assembly line in Tianjin, China, reopened following a temporary production stoppage related to mass quarantines in that country. Airbus said the plant is operating at normal levels now.

Airbus said it is canceling a planned dividend payment and lining up $16 billion in new credit to help keep its doors open.

Over the weekend, Airbus used an A330-800 test plane to transport about 2 million protective masks from Tianjin back to Europe to help protect people in France and Spain. Additional flights are planned to take place in the coming days, Airbus said.

Major truck and auto manufacturers are also temporarily closing plants because of the health risk associated with the coronavirus.

In related news, Canadian airline Transat A.T. announced it has temporarily laid off 3,600 people, about 70% of its workforce, in Canada due to the lack of business. Last week, the company said it was shutting down flight operations through the end of April.

Air Canada is laying off 3,600 flight attendants and 1,549 flight attendants at low-cost subsidiary Rouge, about 60% of its cabin crews, according to a post from the Canadian Union of Public Employees. The layoffs are effective until April 30, at the earliest. Air Canada is suspending most international and U.S. flights at the end of the month.

See more from Benzinga
US Will Raise Import Tariffs On EU Aircraft In March
After Years Of High Growth, Daseke Finds Itself In Need Of A Tune-Up
Boeing, Airbus Conversion Programs Win Orders For Small Freighters

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Boeing CEO Touts 'Plenty' Of Alternatives To Massive Taxpayer Bailout
GILLIAN RICH 03/24/2020

Boeing (BA) CEO David Calhoun said Tuesday that the aerospace giant could survive without a taxpayer bailout and wouldn't accept government help if an equity stake was mandated. Boeing stock rose.

Calhoun said that Boeing has $15 billion in liquidity, which it could use to get through the coronavirus crisis. The company recently drew down the full amount of a $13.8 billion loan and has suspended its dividend to preserve cash as well as enacted cost controls.

"If there is no government support and the credit markets don't reopen, it will be fairly quick, but we can still make it to the other side," Calhoun told CNBC when asked about the cash burn rate. "Now if this goes on for eight months, probably not."

Boeing is asking Congress for a $60 billion package for the overall aerospace manufacturing sector to "maintain the health of the supply chain." But it was unclear how much Boeing would receive vs. its smaller suppliers.

While Boeing said it could survive without a taxpayer bailout, the government aid would "keep our industry and people warm so when the recovery comes we're ready to go," Calhoun told CNBC.

But instead of a government equity stake like the Treasury Department took in banks during the 2008 financial crisis, Boeing wants access to taxpayer-funded loans.

"I don't have a need for an equity stake," Calhoun told Fox Business. "If they forced it, we'd just look at all the other options, and we have got plenty."

Boeing Stock Climbs Despite Cash Concerns

Shares soared 21% to close at 127.68 on the stock market today as the Dow Jones jumped on reports that Congress was near a deal for a Covid-19 stimulus package. Boeing stock is still well below its 50-day and 200-day lines and has weak IBD Composite Rating and Relative Strength Rating.

Top Boeing 737 Max supplier Spirit AeroSystems (SPR) jumped 20.7%. Jet-engine supplier General Electric (GE) climbed 14.7%.

Cash flow has been a growing issue at Boeing as collapsing travel demand has caused airlines to defer orders, while the grounded 737 Max has been an added pressure.

The company is burning a lot of that cash by continuing to pay its suppliers and employees. But its revenue stream is slowing to a trickle. The 737 Max is still grounded and airlines are now deferring orders since the virus has brought global travel to a near standstill.

Spirit AeroSystems said Tuesday it would suspend Boeing production March 25 until April 8. That comes as Boeing shutters its production facilities in the Puget Sound area for the next two weeks. During that time, the company will perform additional deep cleaning activities at impacted sites.

Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more.

Boeing CFO says aerospace industry needs credit urgently, markets closed to new debt

By Eric M. Johnson, David Shepardson and Tim Hepher Reuters March 24, 2020


FILE PHOTO: The Boeing logo is displayed on a screen, at the NYSE in New YorkMore

By Eric M. Johnson, David Shepardson and Tim Hepher

SEATTLE/WASHINGTON/PARIS (Reuters) - Boeing Co's chief financial officer said on Tuesday the U.S. aerospace industry urgently needs credit to cope with the coronavirus pandemic but "markets essentially are closed" to new debt.

Greg Smith also stressed the strategic value of a $4.2 billion deal to acquire the commercial planemaking arm of Embraer , driving up shares in the Brazilian group.

The comments on credit in an interview with Reuters appeared to underscore the U.S. planemaker's opposition to granting equity as part of an industry-wide government bailout deal.

U.S. lawmakers have said they could demand stock or equity-based instruments like warrants or options as a condition of government loans.

"Having access to the credit markets is really important for us right now," Boeing CFO Greg Smith said when asked whether Boeing could issue such instruments in return for support.

Chief Executive Dave Calhoun told Fox Business earlier on Tuesday that Boeing could "take a different course" if lawmakers "attach too many things" to a stimulus package.

Boeing has sought $60 billion in U.S. government loans or loan guarantees for itself and the aerospace industry.

Congress was expected reach agreement on a stimulus and rescue package worth up to $2 trillion to respond to economic damage from the coronavirus pandemic as soon as Tuesday.

Smith said Boeing, which drew down a $13.8 credit line it took in February but has a further $9.6 billion in reserve, was not in discussions to add new commercial debt facilities.

"Not right now. The markets essentially are closed," Smith said. "I mean, there's really not much opportunity to raise any additional debt. That's one of the challenges."

Rating agency Fitch Ratings meanwhile downgraded Boeing to 'BBB' from 'A-', citing the rapid escalation of the pandemic and its effect on Boeing's aviation markets and operations.

Despite such immediate pressures, Smith said Boeing was beginning to see signs of a recovery in China, echoing comments by Airbus Chief Executive Guillaume Faury on Monday.

Smith also said a tie-up with Brazil planemaker Embraer remained strategically important to the company.

“As you know it’s in the middle of regulatory approval and so we are continuing to monitor that and working closely with the Embraer team," Smith said.

"Strategically, it’s still a great partnership and we have to get through the regulatory hurdles and we’ll see how long that takes. But it still remains a priority for us.”

Shares in Embraer soared as much as 37% on his comments. In later trading they were up 24%.

Smith's comments were the first by a senior Boeing executive since market turmoil raised uncertainty over the deal last week, because of an apparent mismatch between Embraer's market value and the price that Boeing is due to pay for control of its commercial aircraft unit.

The tie-up has also been held up by delays in winning European Union approval.

(Reporting by Eric M. Johnson in Seattle, Tim Hepher in Paris, and David Shepardson in Washington; Editing by Steve Orlofsky)

Bombardier halts most operations in Canada due to coronavirus

Reuters March 24, 2020

FILE PHOTO: Bombardier's logo is seen on the building of the company's service centre at Biggin HillMore


(Reuters) - Bombardier pulled its 2020 outlook on Tuesday and said it would stop work at most of its Canadian operations until April 26 to help slow the spread of the coronavirus pandemic.

The suspension includes aircraft and rail production in the provinces of Quebec and Ontario, the Canadian company said.

The Ontario plant does final assembly for the Global 5500, 6500 and 7500 business jets. Ontario's premier announced a two-week shutdown of non-essential businesses starting Tuesday, while Quebec's order will last until April 13.

Bombardier confirmed it was placing 12,400 of its employees on furlough, which makes up 70% of the company's Canadian workforce. The company's chief executive and senior leadership team will forgo pay for the furloughed period.

"We expect the company's current cash position should help it face this crisis although we acknowledge that the operations shutdown will have an impact on cash flows in the short term," Desjardins analyst Benoit Poirier said in a client note.

The planemaker also said it was cutting all discretionary spending and was pursuing additional measures to enhance liquidity. It added that production would be temporarily halted at all of its Northern Ireland sites until April 20.

Reuters had reported on Monday that Bombardier would suspend Canadian production of its corporate jets to comply with restrictions imposed by provincial governments.

The deadly coronavirus outbreak has spread to almost all countries of the world, prompting large-scale lockdowns and virtually wiping out demand for air travel.

Some of the workers at Bombardier's plant in Toronto were sent home after a contractor tested positive for the novel coronavirus called COVID-19, the union's acting plant chair Bill Bell said in an interview on Monday.

(Reporting by Sanjana Shivdas in Bengaluru and Allison Lampert; Editing by Anil D'Silva and Maju Samuel)

Bombardier planning furloughs in Wichita 

Bombardier confirmed on Tuesday a "small number" of furloughs in Wichita due to the impact of COVID-19 on the manufacturer's global operations.

By Daniel McCoy – Reporter, Wichita Business Journal
3/24/2020

There is help for Kansas businesses hurting from COVID-19. For small businesses, go to the Small Business Administration website. For those in the hospitality industry, go to the Kansas HIRE Fund site.

Bombardier Inc. is planning furloughs to its Wichita workforce due to the impact of COVID-19 on its global operations.

The company announced Tuesday that it is suspending operations in its home country of Canada to comply with government-issued recommendations there, meaning the business jet maker will have to align work done in Wichita accordingly.

Company spokesperson Louise Solomita said in an email to the WBJ that its local service center will remain operational but that a “small number” of employees involved in other functions will be furloughed.

Bombardier employs around 1,500 people in Wichita, where the city is home to production of its low-volume Learjet model that has averaged around 12 aircraft built a year.

The company has also recently started performing interior installations on certain Global business jets, all of which are manufactured in Canada.

Bombardier declined to detail how many local workers would be impacted, saying that it could not provide that total without first contacting each employee individually.

“The impact of these furloughs in Wichita will be much smaller than in our Canadian operations,” Solomita said. “Bombardier Aviation’s worldwide aftermarket service and support network will continue to be operational (and we have) implemented strict screening, disinfection, distancing and hygiene measures to safeguard our employees, customers and suppliers.”

The site-specific furloughs for Bombardier will be implement in the next few days and last until April 27.

In Wichita, nearby business jet competitor, Textron Aviation — part of Textron Inc. (NYSE: TXT) — announced four-week furloughs last week due to the virus that are expected to impact most of its roughly 9,000 local workers.

Those furloughs are being staggered over the next two months.


BACKGROUNDER
Bombardier and ThyssenKrupp: A Tale of Two Industrial Calamities
Chris Bryant
Bloomberg January 22, 2020



(Bloomberg Opinion) -- Canadian transportation champion Bombardier Inc. is running out of road. Its shares lost more than one-third of their already much diminished value last week after another disastrous profit warning.

The trains and private jet manufacturer may be forced to exit its commercial aerospace joint venture with Airbus SE because of a shortage of cash; a writedown looms when the group reports 2019 results next month. In the meantime, it’s looking at ways to accelerate repayment of its $10 billion debt pile, which suggests a breakup might be on the cards. Bombardier has held talks about a combination of its rail businesses with French rival Alstom SA, Bloomberg reported on Tuesday, adding that this is one of several options being considered.

On the other side of the Atlantic another storied industrial conglomerate, ThyssenKrupp AG, is suffering a comparable crisis. The German steel and car-parts maker has put its prized elevator division up for sale to help with its massive debt and pension liabilities.

When their respective restructurings are completed, these vast and politically important employers will be shadows of their former selves. ThyssenKrupp has already been booted from Germany’s benchmark Dax index, while Bombardier’s on the cusp of becoming a penny stock (again).

So how did they get into such a mess and why haven’t they managed to extricate themselves, despite years of restructuring and several false dawns? In both cases, hubris, shoddy governance and poor project management have played a role in their downfall.

The fate of the two companies was sealed around a decade ago when they bet the farm on high-risk growth strategies — and lost. Bombardier signed off on the C-Series, an ambitious attempt to break Airbus and Boeing Co.’s lock on the commercial aerospace market. The small, fuel-efficient jet won rave reviews but orders were disappointing and delays caused costs to balloon to about $6 billion and debt to pile up. Bombardier made things worse by trying to bring several new business jets to market at the same time. Weak sales forced it to abandon development of the Learjet 85 — resulting in a $2.5 billion writedown — and to cede control of the C-Series to Airbus for the humiliating sum of one Canadian dollar.

ThyssenKrupp’s original sin was sinking about 12 billion euros ($13.3 billion) into a pair of steel plants in Brazil and the U.S. to try to keep pace with the acquisitive ArcelorMittal SA. Poor construction work and a faulty business plan led to massive losses from which ThyssenKrupp has never really recovered.

Woeful governance had a hand in both corporate disasters. Bombardier has a dual-share structure that gives the founding Bombardier-Beaudoin families majority voting control even though they own a much smaller fraction of the share capital. Pierre Beaudoin served as chief executive officer from 2008 until 2015 — during which time his father, Laurent, remained chairman — but he didn’t do a very good job. Pierre is now the chairman.

ThyssenKrupp’s anchor shareholder, the Krupp Foundation, presided over a management culture that prized fealty and the preservation of corporate perks, including the company’s hunting grounds, but failed to prevent compliance breaches. Recent boardroom fireworks at the German giant (two chief executives and a chairman have departed in quick succession) suggest it remains dysfunctional.

In their attempt to stop the rot, ThyssenKrupp and Bombardier have followed a similar script. Scrap the dividend, sell underperforming assets, slash thousands of jobs and cut costs. But the cash flow needed to cut debt has never consistently materialized and things have got worse.

In 2019 ThyssenKrupp burned through 1.1 billion euros of cash and it expects to consume even more in 2020, risking a breach of banking covenants. Bombardier burned about $1.2 billion in cash last year, far in excess of the roughly break-even target it set at the start of the year.

A problem for both companies has been estimating the cost and completion date of large projects. It’s one reason why ThyssenKrupp’s industrial plant construction unit — once a decent source of cash flow from large customer prepayments — has become a bottomless money pit (the unit is now up for sale). At Bombardier, several high-profile train projects have run late and over budget. Bombardier must pay penalties for late delivery.

Judging by their balance sheets, both companies appear to be in trouble. ThyssenKrupp has just 2.2 billion euros in net assets, while Bombardier’s liabilities far exceed its reported assets.

However, unlike Bombardier’s, ThyssenKrupp’s bonds still trade well above par and its 7.4 billion euros market capitalization is almost four times that of the Canadian company. That’s because ThyssenKrupp still has something of value to sell: The elevators unit could fetch more than 15 billion euros if management decides to part with all of it (the sale process is ongoing and ThyssenKrupp might opt to keep a majority stake).

Bombardier doesn’t face an immediate cash crunch thanks to the proceeds of recent asset sales and no big debt maturities this year. But having already offloaded its ageing Q400 turboprop aircraft line and its Belfast wing factory, it’s not exactly overburdened with stuff to sell to meet future liabilities.

Neither of Bombardier’s two remaining core divisions, trains and private jets, is worth as much as ThyssenKrupp’s elevators. In 2015 Bombardier sold a 30% stake in its rail division to the Quebec public pension fund, valuing the whole unit at $5 billion. The business aviation division would probably fetch more.

For both businesses, the difficulty with flogging more silverware is that what’s left over probably won’t generate much profit.

The moral of these twin corporate calamities is simple: If tens of thousands of people depend on you for employment, don’t bite off more than you can chew. And make sure the higher-ups know what’s going on.

To contact the author of this story: Chris Bryant at cbryant32@bloomberg.net

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.

©2020 Bloomberg L.P.