POLITICO NIGHTLY: Taking stock

By Ben White and Renuka Rayasam

Presented by

HOPE TRUMPS FEAR — A very strange thing is happening in the stock market. In the face of some of the worst economic numbers in American history, cratering energy prices and a freshly dysfunctional Congress, investors are sending stock prices higher. To many this may seem insane. And it quite possibly is insane. The Covid-19 virus has now vaporized more jobs in three weeks — almost 17 million — than the last recession did in nearly two years. The economy is likely to shrink by as much as 30 percent, or more, on an annualized basis in the second quarter. The unemployment rate right now is likely around 15 percent, well above the Great Recession high of 10 percent. It will go higher. Oil prices continue to sink. Production cuts agreed to today by the big producing nations do not appear to be nearly big enough to match plunging demand. Investors are betting that the "Great Covid-19 Recession," as Morgan Stanley dubbed it today, will be appallingly terrible but remarkably short. It is by no means a safe bet. There are several reasons Wall Street is defying the terrible economic news. One is bullish talk from the Trump administration about getting the economy running again in May. Another is a general belief that the efforts by Congress to flood the economy with cash will help ensure that, once the doors finally open again, there will be a massive surge in rehiring and a rapid snapback in economic growth. But by far the biggest reason comes courtesy of a man President Donald Trump previously savaged as a clueless dunce: Federal Reserve Chairman Jerome Powell. Fed fires another giant blast — The trigger for the stock market's gains today was a perfectly timed cannonade from the Fed. At exactly 8:30 a.m., when news of 6.6 million more unemployment claims hit the wires, the central bank said it would pump more than $2 trillion in loans to businesses of all sizes, as well as buy up the bonds of troubled city and state governments along with riskier corporate debt. Essentially, the Fed is saying it will buy up anything and everything it can to keep the coronavirus recession from dragging on or turning into a prolonged depression. The giant intervention easily overrode concern that Congress cannot agree on a deal to add more money to its already-troubled small business rescue program. Why the markets could be wrong — Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, told NBC today that the Covid-19 death toll could look more like 60,000 than previous estimates of 100,000 to 200,000. But reaching that lower figure depends largely on maintaining stringent stay-at-home social distancing practices through the end of May at least. And that could conflict with Trump's strong desire to lift restrictions in as many places as possible as soon as possible to goose the economy and his reelection campaign. Various task forces are springing up inside the White House to execute on the president's desires. But if the economy reopens too soon, the virus could rampage once again and markets could crash once more. The rapid economic snapback theory also holds that money will reach small and midsize businesses fast enough to allow them to avoid failure in the coming weeks. Analysts suggesting the market has already hit bottom and the Covid-19 threat is waning may prove correct. But the potential for a prolonged downturn remains. Welcome to POLITICO Nightly: Coronavirus Special Edition, a nightly intelligence brief from our global newsroom on the effect of the coronavirus on politics and policy, the economy and global health. We're excited to learn Radiohead is going to start streaming concerts. Reach out: rrayasam@politico.com and @renurayasam.

A message from PhRMA: In these unprecedented times, America's biopharmaceutical companies are coming together to achieve one shared goal: beating COVID-19. We are expanding our unique manufacturing capabilities and sharing available capacity to ramp up production once a successful medicine or vaccine is developed. Explore our efforts.

From the Health Desk

IMMUNE RIVER — Michel Nussenzweig is racing to answer one of the most vexing questions about the coronavirus: Does the magic bullet to treat and prevent Covid-19 exist within the blood of some patients? The answer could help researchers develop therapies and a vaccine, as well as understand if recovered patients are immune from re-infection. Nussenzweig, a Rockefeller University immunologist, had been isolating HIV antibodies, but his lab is now asking recovered Covid-19 patients to donate blood. The goal: figure out whether there are elements in the blood of survivors that can be replicated to help others beat the disease or keep them from getting it in the first place. Already, doctors are giving some critically ill patients the antibody-rich plasma of folks who have recovered. But that's a 19th-century approach that's had mixed results and is hard to do at scale. And the answer to the riddle of Covid-19 immunity may not be in the antibodies at all. Instead, it could be found in the T-cells, white blood cells that originate in bone marrow and aren't in the plasma of recovered patients. Chinese scientists said they found a surprisingly low level of antibodies in some recovered patients. Even so, Nussenzweig said that it's likely, though not certain, that recovered patients have at least short-term immunity to reinfection. "The immune system deals with most infections by developing memory," said Nussenzweig, whose mother spent decades working on a malaria vaccine.

New Jersey Gov. Phil Murphy closed all county and state parks and forests this week to try to contain the spread of coronavirus. | Getty Images

Covid-2020

'THAT WOMAN FROM MICHIGAN' — Fifteen months into her first term, Michigan's Democratic Gov. Gretchen Whitmer has been thrust into the national spotlight by a pandemic that's already claimed more than a thousand lives in her state. Half of those have been in Detroit's Wayne County. "It's like nothing we ever imagined," Whitmer tells our chief political correspondent Tim Alberta, her voice matter-of-fact. "There's no experience you can draw on to get through this. It has taken over everything. It is everything. I mean, all I talked about for three years was 'Fix the Damn Roads.' And now all I talk about is PPE, and I didn't even know what it was a month-and-a-half ago." Reared in the cradle of Michigan's back-slapping establishment, Whitmer is the quintessential insider. She spent 14 years in the state legislature's minority before becoming the governor in 2019. Her first year on the job has been rocky and riddled with defeats. But her handling of the outbreak, which has garnered ad hominem retribution from Trump and praise from Democrats, has made her a trendy choice to become Joe Biden's running mate.

TOMORROW - A VIRTUAL INTERVIEW WITH THE AMBASSADOR OF SPAIN: Spain has been hit hard by the coronavirus pandemic, suffering nearly 14,000 deaths. Join Global Translations author Ryan Heath tomorrow at 11 a.m. EDT for a virtual interview with Santiago Cabanas, Spanish ambassador to the United States, to discuss lessons on containing the pandemic, the role the European Union should play in supporting member states and how free trade could help kick-start global economic recovery. Got a question? They'll answer as many as they can at the end. REGISTER HERE TO PARTICIPATE.

Around the Nation

THE SKEPTICS — Eight governors, all Republicans, have yet to impose stay-at-home orders for everyone in their states. Surgeon General Jerome Adams has publicly pleaded with the holdouts — Arkansas, Iowa, Nebraska, North Dakota, Oklahoma, South Dakota, Utah and Wyoming — to order residents to stay home, and White House chief of staff Mark Meadows privately called them urging them to lockdown their states. Health care workers have started petitions urging South Dakota Gov. Kristi Noem and Iowa Gov. Kim Reynolds to reverse course. Arkansas Gov. Asa Hutchinson defended his decision in his Wednesday state of the state address, citing low case counts and saying that existing public gathering bans, school closures and messages on social distancing are enough to keep the virus at bay. In Iowa, Reynolds said she would institute a stay at home order when certain metrics are hit, such as elevated case counts among the elderly or in nursing homes. That will be too late, said Ali Mokdad of the University of Washington's Institute for Health Metrics and Evaluation. "Not detecting cases doesn't mean that there isn't a case," he said. "We have learned this the hard way in the United States." Mokdad's group has been modeling projected Covid deaths across the country. He is particularly worried about Florida, which has a large elderly population and was slow to order a lockdown, and other Southern states. His model paints a dark picture in holdout states, projecting 300 deaths in Nebraska, with a population of almost 2 million people — and the same number for Kansas, which has 1 million more people and where Democratic Gov. Laura Kelly did issue a stay at home order. North Dakota, which has fewer than a million people in it, could see 500 deaths, about the same number as North Carolina — which has 10 million people and where Republican Gov. Roy Cooper ordered a statewide lockdown. The model assumes all states will implement stay-at-home orders, so the picture in holdout states could be even more grim. Sioux Falls, S.D., could be an emerging hotspot. The virus is quickly spreading through the city's Minnehaha County, which has recorded nearly 300 cases and rising. Smithfield Foods announced today it was shutting down its Sioux Falls pork processing plant after 80 employees there tested positive for the virus. DIVISIONS AT 1600 — Trump's fixation on a controversial anti-malaria drug has caused a split in the White House. The latest episode of POLITICO Dispatch looks at the fissures throughout the executive branch. Listen to the latest POLITICO Dispatch podcast     The Global Fight EUROPEAN PARLIAMENT OPENS TO HOMELESS — In normal times, the EU's debating chambers in Strasbourg, France, and Brussels are home to more than 700 members of Parliament. This month they're serving as a meal center for homeless people, and the Brussels building will soon become a coronavirus testing center, our Ryan Heath writes. European Parliament President David Sassoli said more than 1,000 meals a day are being provided. The Parliament has continued its political work from home since mid-March: More than 90 percent of members have participated in online voting so far. Chinese workers and health officials wear protective white suits in Beijing as travelers from Wuhan gather to take buses to quarantine for 14 days. | Getty Images Talking to the Experts How can the country redirect food supplies from closed bulk buyers like restaurants, schools and stadiums to individual consumers who shop in grocery stores and food banks? "We really don't have a supply problem. We got plenty of food. It's just a distribution problem. We're having to readjust our mode of sales. A good example is to sell a product here in Texas it has to be labeled in English. We have warehouses of toilet paper that was made for the Mexican market that's all in Spanish. I got a waiver so we can use it. Hey, we don't need the directions in English, we know how to use it. I've got another waiver to allow restaurants and eating establishments to actually sell their products like eggs and milk and anything else they have there that they can't get rid of. A lot of the perishables that were going to the restaurant chains, instead of letting those go bad, we're directing them to area food banks." — Sid Miller, Texas agriculture commissioner "In most instances, the commercial supply chain and the retail supply chain operate separately — they largely depend on different processors, packers and distributors, and food intended for commercial settings is often packaged in large serving sizes that are inappropriate for individual consumers. So serving retail outlets with the commercial food supply chain is often easier said than done. Direct market farmers who were previously selling to restaurants and schools have some flexibility in how they reach consumers, and many have pivoted to selling their goods at farm stands, farmers markets and CSAs while still complying with public health recommendations. But many farmers don't have that kind of flexibility — their access to markets is facilitated through processors and distributors. For those farmers, we recommend that USDA step in to purchase commodities where we're seeing oversupply and distribute them to grocery stores and food banks that haven't been able to keep up with growing demand." — National Farmers Union President Rob Larew as told to trade reporter Adam Behsudi Nightly Number 77,000 — The number of new ventilators needed to meet market demand in 2019, according to the World Economic Forum last year. An estimate Wednesday by a research branch of Chinese finance news site EastMoney put the combined requirements of the U.S., Germany, Britain, France and Italy at nearly 1 million this year. New York City alone will need an additional 30,000 ventilators this month.   DON'T MISS POLITICO DISPATCH : Go behind the scenes at POLITICO and hear expert reporters unpack the most important news and updates, all in 10 minutes or less in POLITICO Dispatch, recently added to the "Covid-19 Essential Listening" section on Apple Podcasts. Learn how journalists break news, work sources and pull back the curtain to deliver critical reporting during this once in a century pandemic. Fast. Short. Daily. Subscribe to POLITICO Dispatch and start listening today.     Parting Words MASKING THE PROBLEM — When a shipment of 2 million protective masks arrived in Finland from China this week , a government body said the masks were substandard and not suitable for hospital use. Hours later, Tiina Jylhä — a tabloid celebrity, reality TV star and owner of a plastic surgery clinic in Estonia — announced that she had been cheated out of millions of euros for her role in procuring the masks. According to Jylhä, her company had signed a €5 million deal with the Finnish government to get masks from China. The money was diverted into the bank account of a Finnish businessman, Onni Sarmaste, who says Jylhä and her husband Tape Valkonen had threatened him and hired the Hells Angels biker gang to try to get the €5 million. (She denies this.) The head of the government agency trying to procure the masks admitted that corners had been cut as the country raced to get the sought after protective gear. "The big, the fast and the rich will eat everyone else. The market is very difficult," he said.   A message from PhRMA: In these unprecedented times, America's biopharmaceutical companies are coming together to achieve one shared goal: beating COVID-19. The investments we've made have prepared us to act swiftly: · Rapidly screening our vast global libraries to identify potential treatments and have 284 clinical trials underway · Dedicating our top scientists and using our investments in new technologies to speed the development of safe and effective vaccines · Sharing learnings from clinical trials in real time with governments and other companies to advance the development of additional therapies · Expanding our unique manufacturing capabilities and sharing available capacity to ramp up production once a successful medicine or vaccine is developed Explore our efforts.   Did someone forward you this email? Sign up here.   Follow us on Twitter Renuka Rayasam @renurayasam   Follow us  POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA