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Focus Turns to Execution of Stimulus; Brace for Ugly U.S. Jobless Claims Data; EU Leaders Set to Spar Over Debt
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Good day. With the enormous coronavirus stimulus bill approved by the Senate, attention increasingly turns to how the support will be executed. We'll get a wake-up call today on how many Americans lost jobs as the coronavirus came crashing down on payrolls when we see the weekly jobless claims data for last week. And outside the U.S., longstanding divisions among European leaders about the idea of issuing eurozone-wide debt are coming to the fore.
Now on to today’s news and analysis.
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Challenge Now Is Executing Stimulus Effort, Fed’s Bullard Says
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The St. Louis Fed leader sees the main hit to the economy coming in the second quarter. PHOTO: JONATHAN CROSBY/REUTERS
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St. Louis Fed leader James Bullard said Wednesday the U.S. now faces the challenge of putting its economic rescue efforts into action, suggesting he doesn’t see any imminent need for the Federal Reserve to do much more than what’s already on its plate. “The main challenge ahead is execution,” Mr. Bullard said in a conference call with reporters, referring to both the monetary and the fiscal responses to the crisis. He said policy makers could do more if necessary, with “everything...on the table,” but added that he isn’t sure further support programs will be necessary.
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Senate Approves Roughly $2 Trillion In Coronavirus Relief
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The Senate approved the largest economic stimulus package in recent memory, moving the estimated $2 trillion bill to the House as Congress seeks to give American families and businesses a financial shield against the ravages of the new coronavirus pandemic.
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Derby's Take: Tallying a Devastating Turn for the Labor Market
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U.S. unemployment is poised for a historic and uncertain surge, according to new research from the Federal Reserve Bank of St. Louis. As the coronavirus outbreak shutters businesses across the nation, the jobless rate by the end of June could rise to between 10.5% and 40.6% from last month's 3.5%, the bank said in a blog post this week. Read More.
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Key Developments Around the World
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The Long Run of American Job Growth Has Ended
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The great American job machine just ground to a halt. As a result of the coronavirus pandemic, more than 1 million Americans are forecast to have filed for unemployment benefits last week, marking a dramatic end to a historic national job expansion that started in 2010. Until March, U.S. employers added jobs for a record 113 straight months, causing payrolls to grow by 22 million.
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Europe Splits Over Proposed New Debt to Combat Coronavirus
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European leaders are preparing to spar Thursday over whether to issue common debt to counter economic pain from the new coronavirus and ease pressure on embattled countries like Italy, reviving memories of the region’s sovereign debt crisis nearly a decade ago.
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Canada Nearly Doubles Fiscal Package, Sees ‘Enormous’ Job Losses
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Canadian officials said the country's economy is shedding jobs at an accelerated pace, forcing the government to nearly double its original fiscal-stimulus package and cobble together another financial backstop for firms to ensure their survival during the coronavirus pandemic.
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Bank of Korea to Supply Unlimited Liquidity for Three Months
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South Korea's central bank on Thursday said it will supply an unlimited liquidity for three months from April to help stabilize financial markets. The limitless liquidity will be in place until June via weekly repurchase-agreement transactions with an expanded number of securities firms and other financial institutions, the Bank of Korea said in a statement. (Dow Jones Newswires)
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RBC Sheds Light on China’s Rebound After Coronavirus
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Royal Bank of Canada has developed a real-time analytic system augmenting state-issued reports about the economic impact of the coronavirus and that could hold clues about what the outbreak means for the global economy.
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Financial Regulation Roundup
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SBA to Oversee Vast Stimulus Lending Program
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The stimulus package moving through Congress would allocate roughly $350 billion to guarantee loans for small businesses, a provision that could test the ability of the Small Business Administration and lenders to get money quickly to affected companies.
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RBC Seeks Fire-Sale Buyers for Seized Mortgage Debt
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The Royal Bank of Canada is selling hundreds of millions of dollars worth of commercial real-estate debt seized from clients in recent days, moving to protect itself as pain spreads through the mortgage market.
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Credit Suisse Cuts Former Chief Executive’s Bonus Due to Scandal
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Credit Suisse Group said it docked around 2.2 million Swiss francs ($2.24 million) from former chief executive Tidjane Thiam’s 2019 bonus because of the “significant impact” of last year’s spying scandal on the bank’s reputation.
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8 a.m.: Bank of England releases minutes of March 19 special Monetary Policy Committee meeting and of Monetary Policy Committee meeting ended March 25
8 a.m.: Czech National Bank releases policy statement
8:30 a.m.: U.S. Commerce Department releases February advance economic indicators report
8:30 a.m.: U.S. Commerce Department releases third estimate of fourth-quarter and 2019 GDP
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8:30 a.m.: U.S. Commerce Department releases February personal income and outlays
10 a.m.: University of Michigan releases final March U.S. consumer sentiment
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Look to Japan for Potential Emergency Moves From the Fed
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The Bank of Japan created a glide path for other central banks to study the effects of quantitative easing and zero interest rates, and now with the Fed launching an unlimited bond-buying program its next steps could take it toward the form of direct price-setting that Japan now employs, Mike Bird writes at The Wall Street Journal.
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Why $2 Trillion Could Be Just the Start
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At the very least, the U.S. will need to register a clear peak in confirmed coronavirus cases, adequate hospital-bed and ventilator capacity and easy access to tests before it is really ready to open for business, Justin Lahart writes at The Wall Street Journal. "That will take time," he adds.
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The new coronavirus is taking off in the world’s poorest countries, which join the battle with even fewer weapons than developed nations, some of which have fumbled the pandemic’s early stages.
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The specter of widespread corporate defaults in the coming months has caused a massive selloff in junk bonds around the world, as many debt-laden companies face the prospect of going weeks or months with virtually no revenue.
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Oil-field services firms that supply equipment and labor to U.S. shale drillers are expected to cut 220,000 jobs this year as falling crude prices and coronavirus force companies to scale back, according to consulting firm Rystad Energy. (Dow Jones Newswires)
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Retailers are suspending and canceling clothing orders, threatening millions of factory jobs in Asia just as China shows signs of recovering from the worst of the coronavirus outbreak.
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Singapore's economy shrank at a faster-than-expected pace of 2.2% in the first quarter from a year earlier, as all three key industries of manufacturing, construction and services contracted. (DJN)
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Germany’s Ifo business-climate index fell to 86.1 points in March, below the 87.7 points of the preliminary estimate and a sign that “The German economy is in shock,” Ifo Institute President Clemens Fuest said. (DJN)
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This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London.
Send us your tips, suggestions and feedback. Write to:
Jon Hilsenrath, Michael Derby, Nell Henderson, Nick Timiraos, Jason Douglas, Paul Hannon, Harriet Torry, Kate Davidson, David Harrison, Kim Mackrael, Tom Fairless, Megumi Fujikawa, Michael Maloney, Paul Kiernan, James Glynn
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