U.S. auto sales in states with coronavirus lockdown orders to drop 80%: analysts

(Reuters) – Vehicle sales in U.S. states that implemented lockdown orders to curb the spread of coronavirus will drop 80% or more, analysts said on Wednesday.

Auto retail sales through the week of March 22 declined 22% nationwide on a yearly basis and as much as 40% in some cities on the U.S. West Coast, according to an analysis by research firm J.D. Power based on data from dealership stores around the country.

Last week’s data did not yet fully account for various U.S. states passing so-called shelter-in-place orders at the end of last week.

“We expect to see a much broader and wider impact from these restrictions next week with sales declining 80% or more,” said Tyson Jominy, the firm’s vice president of data and analytics.

Tyson said New York in particular, a market that has so far proven rather resilient, is expected to change dramatically over the coming week.

New York on March 20 ordered the state’s roughly 19 million residents to stay at home.

But Thomas King, J.D. Power’s president of data and analytics, said car buyers will likely bounce back after an extended shutdown, which will help the auto industry recover.

The crisis is also likely to accelerate the move to online sales by auto dealerships, a business practice car retailers have been slow to embrace.

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U.S. Senate bill to grant airlines bailout to weather coronavirus

WASHINGTON/CHICAGO (Reuters) – The U.S. Senate will vote on Wednesday to give the U.S. aviation industry $58 billion in aid, half in the form of grants to cover some 750,000 employees’ paychecks, in a badly needed lifeline for an industry facing the worst travel downturn in history.

A draft text for a $2 trillion economic rescue deal seen by Reuters would offer passenger airlines $25 billion in grants and $25 billion in loans, cargo carriers another $8 billion in loans and grants, and contractors like caterers up to $3 billion in grants.

Republicans had fought what they called a give away to airlines, while unions said the cash was crucial to keep workers on the job.

“This is not a corporate bailout; it’s a rescue package for workers,” said Association of Flight Attendants Sara Nelson, who spearheaded the idea of direct payroll grants for employees ranging from janitorial staff and gate agents to mechanics and pilots.

Reuters reported Chao worked the phones late into the night talking to air carriers about what they needed to ensure they could maintain payrolls, a person briefed on call on Tuesday that lawmakers were nearing agreement on a deal for cash grants for payroll and other employee costs, after airlines made a last-minute effort to convince lawmakers they needed the cash to prevent furloughing tens of thousands of workers.

U.S. airline shares extended a Tuesday rally on hopes for cash relief and airlines could get cash assistance in as little as two weeks from passage.

Republican Senator Pat Toomey, whose party had proposed $58 billion in loans, said on Wednesday the grants were a key sticking point. He said Democrats insisted “we give away money to airlines and never get it back.”

In a win for labor, companies receiving funds cannot lay off employees before Sept. 30 or change collective bargaining agreements.

The draft bill has restrictions on stock buybacks, dividends and executive compensation, and allows the government to take equity, warrants or other compensation as part of the rescue package.

Airlines would also receive tax relief on fuel purchases and, in a move that will bring down passenger fares, a temporary suspension on ticket taxes.

As the coronavirus has spread around the world, travel demand has plummeted, with airlines drastically reducing flights and warning of more cuts to come.

Airlines keep canceling flights and slashing costs as demand falls. United Airlines (UAL.O) said Wednesday would now cut 52% of U.S. flights and overall capacity by 68%. On Tuesday, 279,018 people were screened at all U.S. airport checkpoints, down 87% over last year.

Airlines accepting loans may have to ensure certain air services in order to maintain health care and pharmaceutical supply chains, including to remote communities.

However, other consumer and environmental protections sought by many Democrats did not make it into the draft bill.

Airlines and unions won crucial support for the grants from U.S. Transportation Secretary Elaine Chao, who worked the phones late into the night, telling lawmakers and others in the administration she was concerned about the impact of job losses and a decline in the U.S. aviation sector on competition, people briefed on the matter said.

“Without grants, airlines may be forced to choose bankruptcy over federal loans, if loan conditions are too inflexible,” Chao warned in a memo seen by Reuters.

Airlines have argued that they are key to restarting the economy once the coronavirus outbreak subsides.

U.S. airports, whose concourses have been nearly empty, are set to receive $10 billion in grants in the draft text.

The government will also provide $25 billion in grants for U.S. transit systems and $1 billion for U.S. passenger railroad Amtrak, that have seen ridership fall dramatically as states ordered tens of millions of Americans to stay home and avoid non-essential travel.

Boeing Co (BA.N) could receive government loans under a $17 billion fund set aside for direct national security-related loans, Toomey said, adding that many companies could qualify. Boeing could also qualify under the broader $454 billion loan program.

“It is not meant to be exclusively for Boeing… You should not think of it as a Boeing allocation,” Toomey said.

Boeing had sought at least $60 billion in government loan guarantees for itself and the entire aerospace manufacturing sector. Boeing did not immediately comment on Wednesday.

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Senate bill set to give aviation sector up to $33 billion bailout: sources

WASHINGTON/CHICAGO (Reuters) – A compromise $2 trillion economic rescue package that will be voted on by the U.S. Senate on Wednesday is set to give passenger airlines about $25 billion in grants, and up to another $8 billion for cargo carriers and airport contractors like caterers, three people briefed on the negotiations said.

Reuters reported Chao worked the phones late into the night talking to air carriers about what they needed to ensure they could maintain payrolls, a person briefed on call on Tuesday that lawmakers were nearing agreement on a deal for cash grants for payroll and other airline employee costs, after airlines made a last-minute effort to convince lawmakers they needed the cash to prevent the layoff of tens of thousands of workers.

The aid package is expected to include a further $29 billion in loans for airlines, and the government could receive equity, warrants or other compensation as part of the rescue package. U.S. airports are set to receive $10 billion in grants under the agreement.

The final text is still being drafted but will include restrictions on stock buybacks, dividends and executive compensation.

Senate Republicans on Sunday rejected any grants for airlines and instead proposed $58 billion in loans for airlines. Major airlines sounded the alarm and emphasized in recent days that without grants, they had short-term plans to quickly furlough tens of thousands of workers as travel demand collapses amid the coronavirus pandemic.

On Sunday, the carriers promised not to lay off workers through Aug. 31 if they won grants.

Sara Nelson, president of the Association of Flight Attendants said on Twitter it was a “HUGE fight but we WON on this – We got the deal structured around maintaining payroll, no (involuntary) furloughs.”

Airlines and airline unions won crucial support from U.S. Transportation Secretary Elaine Chao, who spoke to lawmakers and others in the administration about the crisis.

In a memo Chao had drafted that was seen by Reuters, she noted that airlines employ 750,000 U.S. workers. She was worried about a dramatic decline in the U.S. aviation sector that could reduce competition, and the potential loss of hundreds of thousands of jobs, people briefed on the matter said.

“Without grant assistance, U.S. airlines have warned that they may be forced to furlough employees or declare bankruptcy,” Chao’s memo warned. “Without grants, airlines may be forced to choose bankruptcy over federal loans, if loan conditions are too inflexible.”

Chao worked the phones late into the night talking to air carriers about what they needed to ensure they could maintain payrolls, said a person briefed on call.

The government will also provide significant funding to Amtrak and U.S. transit systems that have both seen ridership fall dramatically as states order tens of millions of Americans to stay home and avoid non-essential travel.

Boeing Co (BA.N) could also receive government loans or loan guarantees under the bill, but it was not clear if they would tap $17 billion in loan funding set aside for national security-related loans that were part of the Republican bill released on Sunday. Boeing had sought at least $60 billion in government loan guarantees for itself and the entire aerospace manufacturing sector.

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Futures rise as Washington reaches deal on $2 trillion aid package

(Reuters) – U.S. stock index futures rose on Wednesday, putting Wall Street on course to extend its massive bounce from the previous session, as Washington reached a deal on a $2 trillion stimulus package to help ease some economic pain from the coronavirus pandemic.

The Senate will vote on the bill later on Wednesday and the House of Representatives is expected to follow soon after.

At 05:24 a.m. EDT, Dow e-minis 1YMcv1 were up 741 points, or 3.6%, S&P 500 e-minis EScv1 were up 54 points, or 2.21% and Nasdaq 100 e-minis NQcv1 were up 187 points, or 2.48%.

SPDR S&P 500 ETFs (SPY.P) were up 2.61%.

The S&P 500 index .SPX closed up 9.38% at 2,447.33​ on Tuesday.

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'Very close:' $2 trillion coronavirus aid deal takes shape in U.S. Congress

WASHINGTON (Reuters) – Senior Democrats and Republicans in the divided U.S. Congress said on Tuesday they were close to a deal on a $2 trillion stimulus package to limit the coronavirus pandemic’s economic toll, but it was unclear when they would be ready to vote on a bill.

“We are very close,” Senate Majority Leader Mitch McConnell said, as the chamber opened its session on Tuesday morning.

The Republican-led chamber’s top Democrat, Chuck Schumer, said on the Senate floor that “of the few outstanding issues I don’t see any that can’t be overcome within the next few hours.”

The $2 trillion package includes a proposed $500 billion fund to help hard-hit industries and a comparable amount to send direct payments of up to $3,000 to millions of U.S. families, as well as $350 billion for small-business loans, $250 billion for expanded unemployment aid and at least $75 billion for hospitals.

It aims to stem the heavy economic impact of a pandemic that has killed more than 660 people in the United States and sickened more than 50,000, shuttered thousands of businesses, thrown millions out of work and led state governors to order about 100 million people – nearly a third of the nation’s population – to stay at home.

A few issues, such as assistance to states, remained unresolved as of early afternoon, according to a senior administration official who spoke on condition of anonymity. It was unclear when the Senate would be able to vote on the deal.

House of Representatives Speaker Nancy Pelosi, the top Democrat in Congress, said the sides had agreed to more oversight provisions for the proposed $500 billion to help hard-hit industries, resolving a key sticking point.

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The latest version would increase unemployment benefits by up to $600 per week, ensuring that many who lose their jobs would not see a drop in income, according to a Democratic aide. Jobless benefits currently pay workers a fraction of their salaries.

The bill calls for an inspector general and a bipartisan congressional panel to monitor the industrial aid, sources said.

Treasury Secretary Steven Mnuchin would have to tell lawmakers about what companies were tapping the aid, according to the administration official. Companies would face restrictions on stock buybacks and executive pay.

Lawmakers were also nearing an agreement to include $32 billion in grants to passenger and cargo airlines, sources said. They would have to choose between accepting grants or loans but could not receive both.

Democrats have twice blocked attempts to advance the bill, saying it did not provide enough money for states and hospitals, lacked sufficient aid for unemployed Americans and did not include adequate supervision of a massive fund to aid big businesses.

Wall Street bounced from three-year lows on Tuesday on hopes the Senate might be close to ending its standoff.

President Donald Trump, seeking re-election on Nov. 3, has said he may try to restart the economy more quickly by easing a public-health clampdown that aims to slow the spread of the virus. State officials have warned that step could mean more deaths.

‘ALL OF THE NONSENSE’

Republicans, Democrats and top Trump aides have negotiated for days over the package, which would be the third and by far largest passed to address the crisis if it is backed by the Senate and the Democratic-led House and signed by the Republican president.

Pelosi said on MSNBC that the House could unanimously pass the legislation once it clears the Senate, but might also try to change it. This would lead to further delays and possibly require that chamber to return to Washington.

“We have some additions that we think would be very helpful to America’s workers,” she said.

The money at stake in the stimulus legislation amounts to more than what the U.S. government spends on national defense, scientific research, highway construction and other discretionary programs.

“Congress must approve the deal, without all of the nonsense, today. The longer it takes, the harder it will be to start up our economy,” Trump wrote on Twitter on Tuesday.

Pelosi has introduced her own $2.5 trillion counterproposal that also includes $4 billion to allow states to conduct the November presidential and congressional elections by mail. Multiple states postponed their presidential nominating primaries due to the pandemic.

Pelosi’s legislation would likely be irrelevant if a bipartisan deal is forged in the Senate.

Republicans normally hold a slim 53-47 majority in the Senate, meaning they need Democratic support to garner the 60 votes required to advance most legislation.

But the coronavirus has affected their ranks, giving Democrats more leverage. Republican Senator Rand Paul has tested positive for the coronavirus and four other Republicans are also unable to vote because they were exposed to Paul or others with the virus.

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Wall Street jumps on hopes of $2 trillion stimulus

(Reuters) – Wall Street jumped at the open on Tuesday as signs that Washington was nearing a deal on a $2 trillion economic rescue package gave a shot of optimism to markets reeling under the biggest selloff since the global financial crisis.

The Dow Jones Industrial Average .DJI rose 1,130.26 points, or 6.08%, at the open to 19,722.19. The S&P 500 .SPX opened higher by 107.04 points, or 4.78%, at 2,344.44. The Nasdaq Composite .IXIC gained 335.47 points, or 4.89%, to 7,196.15 at the opening bell.

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U.S. industries scramble for exemptions as state shutdown orders grow

WASHINGTON (Reuters) – As several more U.S. states moved to impose stay-at-home orders to limit the spread of the coronavirus, industries from steelmakers to auto dealerships were scrambling for exemptions that would allow them to remain open.

A patchwork of state and local authorities are imposing business closures. While many manufacturing firms were declared “essential” and were being allowed to stay open, some suppliers were not.

The stay-at-home orders are designed to stop the spread of the highly contagious virus, which has infected over 40,000 Americans in recent weeks and killed over 500.

The manufacturing-heavy states of Ohio, Indiana, Pennsylvania and Michigan imposed stay-at-home orders on Monday, joining states such as New York, California, Illinois, Delaware and Maryland.

“What we do now will slow this invader,” Ohio Governor Mike DeWine said Sunday. “It will slow this invader so our healthcare system … will have time to treat casualties.”

The National Association of Manufacturers has urged states to declare all manufacturing facilities and supply chains as part of the “essential infrastructure” and “essential businesses,” allowing them to stay open under guidance here provided by the federal Cybersecurity and Infrastructure Security Agency (CISA), part of the Department of Homeland Security.

As the virus halts physical commerce, keeping operations open provides companies a better chance of staying in business than waiting for a government handout, said Gary Hufbauer, a non-resident senior fellow at the Peterson Institute for International Economics.

“Cash flow and survival are the key words here,” said Hufbauer. “As the shutdown continues, more and more firms will seek to be designated ‘essential.’”

Several letters to state and local officials from industry groups did not address how worker safety would be maintained for firms granted exemptions.

According to the CISA guidance, working remotely is encouraged, but when that is not possible, the agency recommends following guidance from the U.S. Centers for Disease Control and Prevention for social distancing, and off-setting shift hours to separate staff.

“These steps can preserve the workforce and allow operations to continue,” the agency said.

Industry may get an opening as President Donald Trump voiced a desire on Monday to avoid a complete shutdown of the U.S. economy, Hufbauer said.

Trump said he was considering ways to restart the economy in the coming weeks and wanted to avoid the pandemic becoming “a long-lasting financial problem”

Pennsylvania imposed a stay-at-home order in seven counties, mainly in the Philadelphia and Pittsburgh areas on Monday evening. Steel mills are allowed to operate, but not some critical suppliers such as metal fabricators and producers of limestone used in blast furnaces.

“Without the continued operation of these businesses, steel mills will not be able to continue their physical operations in Pennsylvania and elsewhere,” Tom Gibson, president of the American Iron And Steel Institute, wrote in a letter to Pennsylvania Governor Tom Wolf.

As of late Monday afternoon, those metal fabricators were not on a list here of the types of businesses that could stay open from Wolf’s office.

“We are issuing these orders because Pennsylvanians’ health and safety remains our highest priority,” Wolf said in a statement.

Pennlive.com reported here that 10,000 businesses in Pennsylvania were seeking exemptions from the order.

The Aluminum Association called on local state and federal agencies to ensure that industry operations and employees are designated as “essential” and exempted from any “shelter in place” orders.

Groups representing the ports, chemical industry and hazardous waste transport also urged officials to keep them open as essential businesses

Auto dealerships, which repair vehicles and perform warranty and recall work, also should stay open, to “ensure that our nation’s motor vehicle fleet remains as safe and operational as possible” two automotive trade groups said in a letter here to Trump.

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