Balancing Lives With Livelihoods as Major Economies Look to Reopen

(Bloomberg) --

A miserable April for the global economy is coming to a close this week. But it’s hard to overstate that — with the Covid-19 pandemic still spreading across the U.S. and other major economies — it’s what happens in May that will really help to define both the shape of any recovery and some of the long-term legacies of this crisis.

Here are three thoughts to shepherd in the final Monday of April 2020:

• Some of the American states least affected by the spread of the coronavirus have started to reopen. The question that is likely to be answered in the coming weeks is whether that is happening too soon. Beyond the loss of life it would entail, nothing would be worse for the U.S. economy than a spread of the virus into the states now slowly relaxing efforts to contain it. That would immediately change the calculus for other states and drag out any recovery. Not knowing whose word on safety to trust, consumers would retrench even more.
• The worst for manufacturing in Europe and the U.S. may be behind us. The gradual reopening of the German economy and for hard-hit Italy to allow a resumption of work by export-focused manufacturing companies are both encouraging for Europe. In the U.S. there are some tentative signs of a return to work for major industrial employers, and the auto industry’s strong transatlantic links look ready to restart soon. Volkswagen announced last week that workers at its sprawling plant in Chattanooga, Tennessee, would start to return to work in phases on May 3. That doesn’t mean there won’t be turbulence ahead: The CEO of Airbus, the French planemaker that says its supply chain supports 275,000 jobs in 40 American states, said the challenges ahead “threaten the very existence of our company.”
• The economic carnage in the U.S. isn’t over. A Labor Department report on Thursday may show that some 3.5 million American workers filed first-time claims for unemployment benefits last week. Such a wave will take the total number of American workers to have lost their jobs in the past six weeks to 30 million. The population of Texas is 29 million people.

Charting the Trade Turmoil

It turns out avocado toast and guacamole are proving to be stay-at-home favorites. A box of Hass avocados from the state of Michoacan, Mexico’s biggest producer, cost about 480 pesos ($19) on April 24, according to the government. That’s up about 60% from 300 in early March.

Today’s Must Reads

• Slow return | Factory doors are reopening after nations from Denmark to Germany began easing restrictions on public life, with Italy, France and Spain to follow. But it won’t be a sudden return to business as usual.
• Recover and survive | Companies from Taiwan to France says that while their supplier networks scrambled initially with first-quarter disruptions, they’re adapting to the coronavirus economy.
• Empty bread basket | For the first time in a decade, the world risks being cut off from Russian wheat at a time when some key buyers are rushing to import it.
• Lean times | Slaughterhouse shutdowns from Brazil to Canada are leaving the U.S. close to meat shortages as the coronavirus hits more workers on the front lines of food production.
• Stung by Bezos | Quebec’s nationalist government is embarking on an uphill battle to chip away at Amazon’s dominance and encourage consumers to shop online from local retailers.
• On the march | The Pentagon plans to invest $133 million to make more N95 masks over the next three months, with contracts going to 3M, Owens & Minor and Honeywell.
• Anchored down | A narrow waterway off Singapore has become even more congested as oil-laden tankers wait out a slump in global fuel consumption that’s crimped demand and boosted the use of ships to store cargoes.

With the COVID-19 pandemic touching all facets of daily life, CEOs are juggling multiple top-level demands. Hear from Unilever CEO Alan Jope and Edelman founder and CEO Richard Edelman about how they're looking after their companies, employees, and customers during this time of uncertainty. Register for Bloomberg Breakaway's virtual CEO town hall on May 1 here.

Bloomberg Analysis

• Demand evaporation | The average U.S. contractual truckload revenue-per-mile fell in March; with the decline in freight activity in April and uncertainty over the length and magnitude of a virus-related recession should delay any near-term rate recovery.
• Providing support | The European Central Bank is unlikely to allow rising yields to tip Italy into a sovereign debt crisis and may have to change some rules that govern asset purchases to prevent that. 
• Use the AHOY function to track global commodities trade flows.
• See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
• Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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