Jul 20, 2020

Analysis | The Finance 202: Trump’s polling lead on the economy has all but evaporated

Tory Newmyer

And Joe Biden is also closing the gap on this issue: Trump has the edge on the former vice president when Americans were asked which candidate they trust more to lead on the economy. But it's now effectively a head-to-head match up  – 47 percent to 45 percent – versus an eight-point deficit in late March.

Other recent polls show Trump faring worse on the question.

A Quinnipiac University poll last week found he is underwater on his economic leadership, with just 44 percent approving and 53 percent disapproving, an eight-point drop from June and his worst result on the question since August 2017. The RealClearPolitics average shows voters evenly split on the matter. Meanwhile, half of voters in the Quinnipiac poll trust Biden more on the economy, giving him a five-point lead over Trump. And a Fox News poll showed Biden enjoys a one-point lead over the president on the question.
Presented with the results of the Fox News poll in an interview with the network’s Chris Wallace, Trump dismissed them as “fake polls. They were fake in 2016 and now they're even more fake.”

The economic downturn no doubt is weighing on Trump’s numbers. The pandemic itself looms larger.

The president “trails Biden by more than 2 to 1 among those adults who say they approve of Trump’s handling of the economy but disapprove of the way he has dealt with the coronavirus,” Dan Balz and Scott Clement note. They write that Trump’s chances of reelection now turn on his ability to turn out his base while “convincing a broader swath of a largely skeptical public that he is dealing effectively with the pandemic.”
Before the coronavirus arrived in the United States, sending a historically lengthy economic expansion into a recession, Trump was planning to run for reelection on his economic record. He boasted to Wallace that he has “always led on the economy by a lot… I built the greatest economy in history; I'm now doing it again.”
Now he's trying to pitch voters that he can be the one to turn it around. Trump has touted the May and June jobs reports that showed surprising rebounds, though the official unemployment rate stands at 11.1 percent. The Congressional Budget Office, among others, predicts it will remain in double-digits through the end of the year. And in his Fox interview, the president pointed to the stock market, which has rallied strongly from March lows despite the suffering in the broader economy.
But the president has mostly abandoned his economic message in favor of one focused on stoking the cultural grievances of his base and promising to restore order in cities he frames as overrun by anarchists and violent lawbreakers.

Trump’s economic decision-making arguably has never been more consequential.

The battered economy is arriving at a crossroads. Republican congressional leaders are heading to the White House today to start negotiations on a fifth economic relief package.
Trump on Fox accused Democratic governors of pushing to extend economic shutdowns “because they think that’s good for elections.” But Democrats on Capitol Hill have been pushing for more stimulus to help prop up the economy, passing a roughly $3 trillion package in May that Trump threatened to veto.
Senate Majority Leader Mitch McConnell (R-Ky.), on the other hand, is “expected to introduce an approximately $1 trillion stimulus bill in coming days that will include a limited extension of the federal unemployment benefits approved by Congress in March,” Erica Werner and Jeff Stein report. Those benefits will start expiring this week, and their fate figures to be a major point of contention in the upcoming talks. “Senior White House officials have in recent days sought to limit the extension while also denying they are seeking to end federal unemployment benefits,” they report.
The bill is also not expected to include new aid to states and cities, “a demand sought by Democrats that even numerous Republicans and White House officials had appeared open to pursuing, according to someone briefed on the initial plans,” per Erica and Jeff.

Market movers

Busy earnings week will offer insight into pandemic-ravaged economy. 

Second-quarter earnings expected to show 44 percent drop. “That compares with a 14.9% decline in the first quarter. The 44% decline, if manifested, would reflect the S&P 500’s largest year-over-year drop in earnings since the fourth quarter of 2008,” the Wall Street Journal's Dave Sebastian reports
Among the sectors with the biggest declines in revenue in the first quarter were energy and bricks-and-mortar retail—with some high-profile bankruptcies—and supply-chain dependent industries such as automotive and industrial goods, according to a Dow Jones Newswires analysis. Airlines, hotels, restaurants and cruise lines also suffered.”
Futures slide. Stock futures declined early Monday, giving back earlier gains as investors tried to build on last week’s solid performance. Dow Jones Industrial Average futures pointed to a loss of about 50 points at the open. S&P 500 futures and Nasdaq-100 futures also traded lower," CNBC's Fred Imbert reports.
“Last week, the S&P 500 and Dow rose 1.3% and 2.3%, respectively, for their third straight weekly advances. Those gains came as investors flocked into more beaten-up value names amid positive vaccine trial news from Moderna and a partnership between Pfizer and BioNTech.”

Coronavirus fallout

From the U.S.:

  • Trump again defends handling of the virus: “[Trump] said in an interview aired Sunday that the rising number of U.S. deaths from the coronavirus ‘is what it is,’ defended his fumbled management of the pandemic with a barrage of dubious and false claims, and revealed his lack of understanding about the fundamental science of how the virus spreads and infects people,” Philip Rucker and Felicia Sonmez report.
  • L.A. Mayor Eric Garcetti says city is “on the brink” of another stay-home order: The Democratic mayor "said on CNN’s ‘State of the Union’ that the city reopened too quickly and called for patience as businesses close again. In the past week, Los Angeles County has reported its highest number of coronavirus hospitalizations since the pandemic began,” Derek Hawkins, Felicia Sonmez and Hannah Knowles report.
  • Some companies received both PPP loans and government contracts: “The issue is on the radar of government auditors and watchdog groups … Florida was among the top recipients of PPP funds, with loans going to more than 393,000 firms including government road contractors,” the Wall Street Journal's Ryan Tracy reports.
  • Corporate lobbyists jockey for favors in the next relief package. “Airlines, hotels and restaurants. Military contractors and banks. Even Broadway actors. These are just a few of the special interests already maneuvering to get a piece of the next coronavirus relief package about to be taken up by Congress,” the New York Times's Eric Lipton reports. “The U.S. Chamber of Commerce, the single biggest spender on lobbying, sent out an 18-page wish list of actions it wanted Congress to take as part of the next bailout.”

From the corporate front:

  • Companies lose hope for quick rebound: “Delta Air Lines Inc. curtailed plans to add more summer flights and said it doesn’t expect business flying to recover to pre-pandemic levels. Chipotle Mexican Grill Inc. is adding staff and changing operations to accommodate more to-go business. Vox Media, the publisher of New York magazine and several news websites, said it would lay off 6 percent of its workforce as the company confronts a prolonged drought for its lucrative events business,” the WSJ's Chip Cutter and Doug Cameron report. “Executives who were bracing for a monthslong disruption are now thinking in terms of years."
  • Delta will require mask-less customers to undergo screening: The rule, which goes into effect [today], appears to serve as the strictest enforcement mechanism yet for the airline’s requirement on face coverings, which had gone loosely enforced for months by Delta and many other companies,” Teo Armus reports.
  • Mall owners are trying to save retailers: In one of its latest deals, Simon [Property Group,], which is the biggest U.S. mall owner by the number of malls it operates, has teamed up with the apparel-licensing firm Authentic Brands Group to supply financing to carry Brooks Brothers through bankruptcy,” CNBC's Lauren Thomas reports. Mall owners have also explored boosting Lucky Brand and JC Penney.

Around the world:

  • Bahamas ban commercial flights from the U.S.: The Bahamas will close its borders to most visitors from the United States starting Wednesday, Prime Minister Hubert Minnis said. While commercial flights from Canada, Britain and the European Union will still be allowed to land, all visitors must show proof that they tested negative for covid-19 at an accredited lab in the past 10 days,” Antonia Farzan reports.
  • Australia warns its lockdown might not lift for weeks: Australia’s Acting Chief Medical Officer Paul Kelly made that announcement as roughly 5 million people remain on lockdown, Antonia Farzan reports. Kelly said it will likely take at least two weeks to see how stay-at-home measures and mandatory mask requirements are doing.
  • Pakistani officials are worried an upcoming holiday could cause a spike in cases: “Two weeks from now, the nation will celebrate Eid al-Adha, a different Muslim holiday of sacrifice, which draws millions to crowded livestock fairs, shopping bazaars, mosques, family gatherings and ritual animal slaughtering,” Shaiq Hussain and Pamela Constable report from Islamabad.

When superpowers collide

TikTok eyes possible London HQ as potential U.S. ban lingers.

All of this comes down to its efforts to distance itself from China: “TikTok has been in discussions with the UK government over the past few months to locate its headquarters in London, a source familiar with the matter said, as part of a strategy to distance itself from its Chinese ownership,” Reuters's Echo Wang reports.
“London is among one of several locations the company is considering, but no decisions have been made … It was not immediately clear what other locations are under consideration. But it has hired aggressively in California this year, including poaching Kevin Mayer, a former Walt Disney Co executive, to be TikTok’s chief executive. He is based in the United States.”

Pocket change

Twitter hack revives concerns over its data security.

The hack targeted some of the platform's highest-profile users: “The hack last week that exposed Twitter's longstanding security issues started with a process familiar to almost every internet user: the password reset,” the WSJ's Robert McMillan and Euirim Choi report.
“In part by manipulating Twitter employees via a technique known as social engineering, hackers were able to change the passwords on 45 accounts without the owners being aware, according to the company, security experts and a business associate of the hacker. The hourslong attack enabled the hackers to control accounts of prominent figures, including former vice president and current presumptive Democratic Party presidential candidate Joe Biden and Tesla Inc. Chief Executive Elon Musk, to perpetrate a cryptocurrency scam.”
  • This the not the first time Twitter has had a major breach: “The incident on Wednesday was the third major security issue linked to insider access to Twitter systems since the company entered into a 2011 consent decree with the Federal Trade Commission over weaknesses in its security practices.”
Disney slashed ad spending on Facebook amid boycott: “Walt Disney Co. has dramatically slashed its advertising spending on Facebook Inc., … the latest setback for the tech giant as it faces a boycott from companies upset with its handling of hate speech and divisive content,” the WSJ's Suzanne Vranica reports.
“Disney was Facebook’s top U.S. advertiser for the first six months of 2020, research firm Pathmatics Inc. estimates. It joins hundreds of other companies that have paused spending, including Unilever PLC, Starbucks Corp., Ford Motor Co., Verizon Communication Inc. and many small marketers.”
Automakers charge ahead with electric-vehicle plans: “Pressure is building on General Motors Co., Volkswagen and other major auto makers to deliver on their electric-vehicle plans, as investor enthusiasm for the technology has grown in recent months,” the WSJ's Ben Foldy reports.
“Despite some coronavirus-related setbacks, car companies in the coming months are expected to unleash a wave of new plug-in models in an effort to catch up with Tesla Inc. and meet governments’ tightening restrictions on how much vehicles can pollute. While there have been some delays and cancellations tied to the health crisis, executives say that longer-term trends make continued investment in this technology a necessity and that the influx will help reduce their more-than-a-century-long reliance on selling gasoline-powered vehicles.”

Campaign 2020

Barney Frank: Biden shouldn't pick Warren for Treasury. 

The former Democratic congressman said it would be a "mistake." “Frank, who worked with the Massachusetts Senator on the sweeping Dodd-Frank financial reform law that turns 10 years old this week, cautioned against a Secretary Warren because of how reviled she is on Wall Street,” CNN's Matt Egan reports.
“'The financial institutions are very negative about her, unfairly in the degree they are,' Frank said. 'If you have someone who is that much opposed by the people being regulated, it doesn't work smoothly.' Frank currently sits on the board of directors at Signature Bank, a $6 billion New York-based commercial bank… 'If she's not vice president, I'd rather see her retain the power of legislation in the Senate,' said Frank, who added that he's ‘very confident’ Biden will defeat Trump.”


  • GNC Holdings, Lands End and Halliburton are among the notable companies reporting their earnings, per Yahoo Finance.
  • Top pharma officials are set to testify in front of a House subcommittee about the efforts to develop a covid-19 vaccine — companies represented include Moderna, Pfizer, Johnson & Johnson, Merck and AstraZeneca.
  • Better Markets, a think tank advocating stricter financial regulation, holds a virtual event from 1 p.m.-5 p.m. looking back at the Dodd-Frank Act on its tenth anniversary. Former President Barack Obama will give opening remarks. 
  • Maryland Gov. Larry Hogan and former FDA Commissioner Scott Gottlieb headline a covid-related webinar for the American Enterprise Institute
  • United Airlines, Coca-Cola, TD Ameritrade, Harley-Davidson, Philip Morris International, Capital One Financial, Snap, Texas Instruments, Raytheon and Lockheed Martin are among the notable companies reporting their earnings
  • The Senate Foreign Relations Committee holds a hearing on competition with China
  • The House Small Business Committee Subcommittee on Investigations holds a hearing on the Small Business Administration's technology
  • Biogen, Discover Financial Services, Las Vegas Sands, Whirlpool, Chipotle Mexican Grill and Spirit Airlines are among the notable companies reporting their earnings
  • The Labor Department releases the latest numbers on weekly jobless claims
  • The House Financial Services Committee holds a hearing on the Heroes Act, Democrats' sweeping proposal for the next phase of coronavirus relief
  • The Senate Small Business Committee holds a hearing on minority small businesses' access to capital during covid
  • Amazon, AT&T, Southwest Airlines, Hershey, Intel, Alaska Air Group, Union Pacific, Tractor Supply Co., Aaron's and Scholastic are among the notable companies reporting their earnings. (Amazon CEO Jeff Bezos owns The Washington Post)
  • The National Association of Realtors releases new-home sales data for June
  • Verizon, American Express, Bloomin' Brands, Goodyear Tire & Rubber, Honeywell International and Lear Corp. are among the notable companies reporting their earnings

The funnies

Bull session

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