The Finance 202: New hope for coronavirus relief package as November jobs report highlights deep pain

“The pain of the American people is driving this, and I’m optimistic that both of those leaders will come on board,” Cassidy said on “Fox News Sunday.”

First, however, lawmakers are poised to give themselves a one-week extension before government funding runs out Friday. They had aimed to pass a year-long funding measure this week with the aid money attached. But they are still working through disputes on both, the Wall Street Journal’s Kristina Peterson reports.

The need for more economic relief is acute. The November jobs report released Friday revealed the recovery posted its weakest month since spring, as 9.8 million people employed before the pandemic are still out of work.

And more than two dozen aid programs are set to expire by the end of the year.

“Without the new aid, the end of a series of key stimulus programs threatens to push the country closer to the financial cliff,” Tony Romm reports. “Millions of Americans are set to lose unemployment benefits, access to paid sick leave and protections against evictions. Businesses no longer may be able to count on a handful of key tax credits to help their bottom lines, and state and local governments run the risk of having to return millions of dollars they had hoped to spend on the public-health crisis and the financial carnage it has wrought.”

More people left the labor force last month — about 400,000 — than the 245,000 who found jobs, per Eli Rosenberg. “The slowdown between October and November was broad, with the leisure/hospitality and retail sectors suffering badly; retail lost a net 35K jobs, the first decline since April,” Pantheon Macroeconomics chief economist Ian Shepherdson writes. “Job growth even slowed in manufacturing and construction, which are the strongest parts of the economy right now.”

It is primed to get worse. “One should anticipate rough sledding over the next 90 days in terms of hiring,” RSM chief economist Joe Brusuelas told Rosenberg. “I mean, it just screams the economy needs more fiscal aid, right now.”

Top White House economic adviser Larry Kudlow defended the strength of the recovery on Friday. But he acknowledged that “there’s still over 10 million people who are jobless, and that’s not good. That is hardship. And by the way, that should be a target of any assistance package.”

“The clock is ticking,” Sen. Warner said on CNN’s “State of the Union,” adding it would be “what I call stupidity on steroids if Congress doesn’t act, and we are going to keep at it.”

Lawmakers worked through the weekend “including a three-hour call on Sunday” to try to iron out sticking points, Peterson reports. “They include rental assistance, $160 billion in funding for state and local governments — which Democrats have long sought — and a short-term liability shield for businesses and other entities operating during the pandemic. Drafting the liability language has been the most difficult part of the negotiations, according to lawmakers and aides.”

• At least 14,741,000 cases have been reported; at least 281,000 have died. 
• States are expecting a trickle of vaccines: “Federal officials have slashed the amount of coronavirus vaccine they plan to ship to states in December because of constraints on supply, sending local officials into a scramble to adjust vaccination plans and highlighting how early promises of a vast stockpile before the end of 2020 have fallen short,” Christopher Rowland, Lena H. Sun, Isaac Stanley-Becker and Carolyn Y. Johnson report.
• Rudy Giuliani has the coronavirus: “Trump’s personal attorney and point man in his bid to overturn the results of the November election traveled to Michigan, Arizona and Georgia last week and met indoors with state legislators in an effort to persuade them to overturn President-elect Joe Biden’s victory. Videos of the appearances showed that Giuliani was not wearing a mask during the meetings,” Felicia Sonmez and Josh Dawsey report.
• The Arizona state legislature is closing as a result. The body is closing for at least a week as 15 current or future legislators were exposed to Giuliani, the Arizona Capitol Times reports. 
• Colleges are cutting tenure amid major budget woes: “Schools employed about 150,000 fewer workers in September than they did a year earlier, before the pandemic, according to the Labor Department. That is a decline of nearly 10 percent. Along the way, they are changing the centuries-old higher education power structure,” the WSJ’s Douglas Belkin reports.

• Food delivery companies prepare for post-pandemic reality: “Delivery services like DoorDash have arguably had greater leverage during the pandemic as many restaurants are more reliant on reaching customers at home, but the pendulum may swing the other direction post-pandemic,” CNN Business’s Sara Ashley reports.
• Homebound shoppers boost candle sales: “Fragrance sales declined 17 percent from January to September year over year, according to The NPD Group, which tracks sales in department stores and specialty beauty retailers. During that same period, home scent sales grew 13 percent and sales of home scent gift sets, such as a candle paired with a lotion, grew 22 percent, according to NPD,” CNBC’s Melissa Repko reports.

• Soaring metal prices hint at global recovery outlook: “Prices for copper have risen to their highest level in almost eight years. Iron ore, the main ingredient of steel, is one of the best-performing assets in 2020. Other raw materials, such as aluminum and zinc, have added roughly 15 percent since the end of September and 40 percent or more since mid-May,” the WSJ’s  Amrith Ramkumar and Joe Wallace report of a trend tied to an expected boom in manufacturing amid a recovery.
• Lufthansa will have to cut 29,000 staff by year end: “The airline and its subsidiaries, Eurowings, Swiss, Austrian and Brussels Airlines, have slashed their schedules, fleet and staff, with air travel not expected to recover to pre-pandemic levels before 2025,” Reuters’s Emma Thomasson reports.

Corporate lobbyists and foreign interests back the think tank run by Biden’s OMB pick: “In her nine years helming Washington’s leading liberal think tank, Tanden mingled with deep-pocketed donors who made their fortunes on Wall Street, in Silicon Valley and in other powerful sectors of corporate America. At formal pitches and swanky fundraisers, Tanden personally cultivated the bevy of benefactors fueling the $45 million to $50 million annual budget of the Center for American Progress,” Yeganeh Torbati and Beth Reinhard report.

“Between 2014 and 2019, the Center for American Progress received at least $33 million in donations from firms in the financial sector, private foundations primarily funded by wealth earned on Wall Street and in other investment firms, and current or former executives at financial firms such as Bain Capital, Blackstone and Evercore, according to a Washington Post analysis of CAP’s donor disclosures and some of the foundations’ public tax filings. In the same time period, CAP received between $4.9 million and $13 million from Silicon Valley companies and foundations, including Facebook and founder Mark Zuckerberg’s philanthropic organization.”

• CAP defends its model. “CAP spokesman Jesse Lee said the organization ‘retains complete control’ over its work and that all contributions come without strings attached.”
• Tanden tweets biographical video. The nominee on Friday sent out a video that could be mistaken for a campaign spot, featuring her speaking directly to camera about being raised by a single mother and their one-time reliance on food stamps: 

• Biden picks Xavier Becerra as HHS secretary: “In selecting Becerra, a 24-year member of Congress before taking the attorney general post, Biden picked someone with an unorthodox background to lead the Department of Health and Human Services,” Amy Goldstein and Seung Min Kim report. “He has also picked Rochelle Walensky, an infectious-disease specialist at Massachusetts General Hospital, for the job of director of the Centers for Disease Control and Prevention.”
• Defense bill offers framework to counter China: “The annual defense bill, which lawmakers are expected to vote on starting Tuesday, establishes a program to strengthen the United States’ posture and alliances in the Indo-Pacific region and funding for additional attack submarines that senior Pentagon officials have said are vital for countering China’s powerful maritime forces,” Karoun Demirjian reports.

The photo giant received major government backing to make covid-19 drugs: “The inspector general of the agency that brokered the deal, the U.S. International Development Finance Corp., provided his assessment last week to Sen. Elizabeth Warren (D-Mass.), who had called for the investigation after Kodak landed a potential $765 million government loan in July,” the Wall Street Journal’s Rachael Levy reports.

“In his response, the DFC’s inspector general, Anthony Zakel, said he found no evidence that employees of the agency had any conflicts of interest in the plans, nor did he find ‘any evidence of misconduct on the part of DFC officials.’ ”

It’s unclear who is behind such large and unusual activity: “More than $7 billion was pulled from the $172 billion Vanguard S&P 500 ETF on a single day this week, according to data compiled by Bloomberg, about 4 percent of the fund’s assets. But trading volumes were below the one-year average and there were no obvious outsized transactions, while the U.S. equity benchmark rose on the day — making a mass exodus less appealing,” Bloomberg News’s Claire Ballentine and Katherine Greifeld report.

“It’s all leading to a theory that a major holder of the fund executed a large over-the-counter trade.”

Investors can now make bets on water scarcity. “Water is joining gold, oil and other commodities traded on Wall Street, highlighting worries that the life-sustaining natural resource may become scarce across more of the world,” Bloomberg’s Kim Chapman reports. 

“Farmers, hedge funds and municipalities alike will be able to hedge against — or bet on — potential water scarcity starting this week, when CME Group Inc. launches contracts linked to the $1.1 billion California spot water market. According to Chicago-based CME, the futures will help water users manage risk and better align supply and demand.”

Both of Sarbanes-Oxley’s co-authors have now passed: “Sarbanes, who as a young Maryland congressman drafted and introduced the first article of impeachment against President Richard M. Nixon and as a five-term U.S. senator tightened the regulation of corporate accounting practices after corruption scandals at Enron and other businesses, died Dec. 6 in Baltimore. He was 87,” Bart Barnes writes in the Post’s obit.

“As chairman, he wrote with Rep. Michael G. Oxley (R-Ohio) the 2002 Sarbanes-Oxley Act, which was intended to ensure that publicly held businesses disclose to potential investors an accurate and complete portrayal of their financial condition … The Sarbanes-Oxley law gave prosecutors new tools to enforce laws against business executives who mislead and defraud investors, and it was among the most far-reaching legislation regarding securities since the Great Depression.”

New York’s rein as the financial hub may take a hit: “Executives have been scouting office locations in South Florida, speaking with local officials and exploring tax advantages as they consider creating a base there for its asset management arm …,” Bloomberg News’s Sridhar Natarajan reports.

“The bank’s success in operating remotely during the pandemic has persuaded members of the leadership team that they can move more roles out of the New York area to save money. Goldman may yet decide against centering asset management in Florida, where it would join a growing list of firms seeking tax and lifestyle advantages. It also may opt for another destination like Dallas, where it has been accelerating its expansion …”

Mastercard investigates Pornhub for allegations of child abuse: “The credit card company is investigating allegations against Pornhub.com, after a New York Times column on Friday accused the porn site of hosting videos on its platform that depict child abuse and nonconsensual sexual behavior,” CNN Business’s Jazmin Goodwin reports.

“The credit card company, which accepts payments on the website, said on Sunday it has ‘zero tolerance for illegal activity’ on its network and that it works closely with law enforcement and organizations such as the National and International Center for Missing and Exploited Children to detect and prevent those types of transactions … Pornhub denied the allegations, stating that any assertion it allows child sex abuse material (CSAM) on its platform is ‘irresponsible and flagrantly untrue.’ ”

Black millennials fueled a home-buying surge for African Americans: “A November National Association of Realtors analysis showed 5 percent of Americans who bought homes during the first three quarters of 2020 were Black, only one percentage point higher than 2019. Yet Census data shows this cohort raised the home ownership rate for all Black Americans by more than two percentage points over the same time frame,” CNN Business’s Chauncey Alcorn reports.

“The increase followed a 3 percent rise in Black home ownership in 2019, census data shows, and came despite this year’s pandemic-fueled economic upheaval for many African Americans. The National Association of Realtors and the National Association of Real Estate Brokers both say first-time Black Millennial buyers made the bulk of African Americans’ home purchases in 2020, as many fled apartments in major cities and purchased homes in suburbs.”

The pandemic has had little impact on the net worth of billionaires: 

• Casey’s General Stores is among the notable companies reporting its earnings, per Kiplinger

• The Labor Department reports weekly jobless claims
• Costco, Dave & Buster’s, Lululemon Athletica and Oracle are among the notable companies reporting their earnings
• The Senate Small Business Committee holds a hearing on the future of PPP
• A Senate Commerce Committee subcommittee holds a hearing on the logistics of vaccine distribution, featuring testimony from top FedEx and UPS officials