Plus, the Trump Administration is facing renewed pressure to provide more economic stimulus, the consumer price index fell by the most on record in April, and Tesla reopened its Fremont, CA plant against local county orders.
Stocks were mixed to start Tuesday with the Dow adding 9 points, or less than 0.1%. The S&P 500 fell 0.4%, and the Nasdaq slipped 0.6% lower.
Dr. Anthony Fauci is expected to issue a warning against reopening the economy too soon in a Senate hearing today. The nation’s top infectious disease official said that states skipping over the guidelines in the White House has set out risks “needless suffering and death, [and] would actually set us back on our quest to return to normal.” Fauci is expected to issue this warning to the Senate as it becomes clearer that states that have opened early—including Alabama, South Dakota, and Texas—are already seeing an uptick in confirmed coronavirus cases since easing restrictions. “The bottom line is a lot of states are now reopening activity against a backdrop that doesn’t meet the criteria that the White House set out in terms of when it would be safe to reopen,” said former FDA chief, Dr. Scott Gottlieb. “We’re going to see cases go up now that we’re reopening.”
The Trump Administration is facing renewed pressure to provide more economic stimulus as reopenings push ahead. The House is working on another round of stimulus, a piece of legislation that could top $2 trillion, and the bill could be ready for a vote as soon as Friday. However, President Trump and his allies are holding off on more coronavirus-related stimulus as his team tracks the impact of the $5 trillion that has already been poured into the economy. “What the president has said is, let’s step back for a few weeks, let’s be very considerate in what we do in the next round before we go consider spending another trillion,” said Treasury Secretary Steven Mnuchin. “But the president is determined we’ll do whatever we need to do.”
Consumer prices saw their biggest drop in history in April. The Bureau of Labor Statistics reported this morning that the index, excluding food and energy prices, slipped 0.4% last month, the steepest monthly drop since records began being kept in 1957. The overall CPI fell 0.8% in April, the most since December 2008, as gasoline prices fell 20.6% in April. While the decline in prices was broad, the biggest declines outside of gasoline were seen in apparel and transportation services, which dropped 4.7% each. One area that rose was the cost of food, which surged 2.6% compared to March, the most since 1974, as Americans stocked up at grocery stores. Prices for bread, chicken, carbonated drinks, and snacks, all posted record increases, as did household paper products. “The April consumer price data continue to underscore that the fallout from the coronavirus has a large disinflationary effect on prices due to the large demand shock, plunge in oil prices, and strong dollar,” said Oxford Economics chief U.S. economist, Gregory Daco. “The disinflationary impulse, along with the great disruption in economic and financial market activity, is a key reason why the Fed has unleashed vast new monetary policy stimulus. A surge in inflation is the least of our worries.”
Elon Musk restarted production at Tesla’s Fremont, California car plant yesterday, flouting county officials who ordered the company to stay closed and openly acknowledging he was risking arrest for himself and his employees. “Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else,” Musk said in a tweet. “If anyone is arrested, I ask that it only be me.” California Governor Gavin Newsom had sought to ease tensions, saying that he believed Tesla would be able to begin operations as soon as next week. “It would be a sad day if the Fremont police walked into Tesla and arrested Elon Musk,” said Scott Haggerty, the county supervisor for the district in Alameda where Tesla’s factory is located. “The tweets that go back and forth are unfortunate, and we need to get to the table, talk our way through this and get people back to work in a safe manner.”
Boeing CEO Dave Calhoun issued a prediction this morning that one of the major U.S. airlines will go out of business this year due to the ongoing disruption brought on by the coronavirus pandemic. “I don’t want to get too predictive on that subject, but yes, most likely,” Calhoun said in an interview with NBC’s “TODAY” show when asked if a major airline might have to fold. “You know, something will happen when September comes around. Traffic levels will not be back to 100%. They won’t even be back to 25%. Maybe by the end of the year we approach 50%. So there will definitely be adjustments that have to be made on the part of the airlines.” Calhoun said in a separate interview that Boeing will resume building its grounded 737 MAX jets this month. “The airplane is in great shape… I’m confident we will start our [assembly] line again this month,” Calhoun said in an interview with Fox Business.
Stocks We’re Watching
AgEagle Aerial Systems Inc (OTC: UAVS): AgEagle shares rocketed as much as 62% higher yesterday after the unmanned aerial vehicles and advanced aerial imagery, data collection, and analytics solutions provider announced that it had entered into a securities purchase agreement with an existing institutional shareholder for 2.4 million shares of AgEagle’s common stock and an additional 3,257,424 pretended warrants to purchase shares of common stock at a purchase price of $1.06 per share, with net proceeds from the offering to be approximately $5.91 million. “We are very please to be proceeding with this offering, which, upon closing, will materially strengthen the Company’s liquidity position and ability to execute on several strategic growth initiatives,” said AgEagle Interim CEO and CFO, Nicole Fernandez-McGovern. “Moreover, with our new CEO J. Michael Drozd, expected to be officially on board soon, this financing will help ensure that he has the financial and operational resources necessary to advance his vision for AgEagle’s future and support our cumulative efforts to achieve increased long term shareholder value for all of our shareholders.”