The Washington Post - 21.03.2020

A16 EZ RE THE WASHINGTON POST.SATURDAy, MARCH 21 , 2020

Economy & Business

econoMY

Home sales surged

before pandemic

U.S. h ome sales surged t o a
1 3-year h igh i n February, b ut the
housing market recovery is likely
to be derailed by the novel
coronavirus pandemic, which has
unleashed a wave of layoffs and
left t he e conomy teetering on the
brink o f a recession.
The strong r eport from t he
National Association o f Realtors
on Friday reflected c ontracts
signed in January and e arly
February, b efore t he highly
contagious v irus swept t hrough
the c ountry, s everely disrupting
economic activity.
Economists are expecting a
recession by t he second quarter,
but a growing number believe a
downturn i s already underway
amid dire p redictions of job losses
at r estaurants, b ars, hotels and
airlines. The government
reported on Thursday that the
number of A mericans filing
claims for unemployment
benefits increased b y the m ost

since 2012 to a 2^1 / 2 -year high last

week. Jobless claims c ould exceed

2 million next week, economists

warned.

Existing-home sales rose

6.5 p ercent to a seasonally

adjusted a nnual rate of

5.77 m illion units last month, t he

highest level since February 2007,

the NAR said. Economists polled

by Reuters had f orecast existing-

home sales would rise 0 .7 p ercent

to a rate of 5 .50 million units in

February. E xisting-home sales,

which m ake up a bout 9 0 percent

of U.S. home s ales, accelerated

7.2 percent o n a year-on-year

basis i n February.

The housing market h as

regained its f ooting as m ortgage

rates have d eclined after hitting a

soft patch beginning in the f irst

quarter of 2018 t hrough the

second quarter o f 2019.

— Reuters

InTeRnATIonAl TRADe

Consumer goods

supplier t o go private

The family that f ounded the

world’s l argest supplier of

consumer goods, L i & Fung, is

trying to take the c ompany

private in a 7.22 billion-Hong

Kong dollar (U.S. $930 million)

deal amid t he d ouble whammy of

the U.S.-China trade war and the

widening coronavirus pandemic.

A consortium of the Fung

family — w hich s tarted t he

trading b usiness more than a

century ago — a nd Singapore-

based G LP, a logistics w arehouse

operator and investor, has offered

HK$1.25 per share in the

privatization deal, s aid a

statement on Friday. T hat

represents a premium of about

150 p ercent to the stock’s last

closing price.

The structure of t he

privatization offer is such that the

Fung f amily sees no change to its

32.3 percent share of Li & Fung. It

is GLP, which operates and

manages 62 million square

meters of l ogistics p roperty

globally, that w ill take over t he

rest of the stock, n ow held by

public investors including

Vanguard Group a nd Norges

Bank.

Li & Fung — w hich d esigns,

sources and transports consumer

goods from A sia for some of t he

world’s b iggest r etailers including

Walmart and N ike — h as s een its

fortunes f all precipitously in the

last five y ears.

The Hong Kong-based

company, which listed i n 1973,

grew into a behemoth along with

China’s r ise as the f actory to t he

world. But p rofit h as been falling

as the r ise o f e-commerce

platforms such a s Alibaba cut out

the m iddleman, a nd its Western

retail clients m et w aves of store

closures.

— B loomberg News

AlSo In BUSIneSS

Union leaders representing

South Korean support w orkers

for the U.S. military

demonstrated o n Friday outside

the U.E. Embassy as a

disagreement over c ost-sharing

threatens to relegate thousands of

employees to unpaid leave next

month. The longtime allies are

embroiled i n a dispute o ver how

much each should pay to support

the r oughly 28,500 U.S. troops

stationed in South Korea.

Marlboro cigarette maker A ltria

Group’s c hief executive h as

contracted the n ovel coronavirus

and i s taking temporary m edical

leave, a regulatory filing showed

on Friday. Howard Willard, 56, i s

the l atest high-profile person t o

get the virus. C hief financial

officer William Gifford Jr. will

take over for Willard.

— From n ews services

DIGeST

INA FAssBENDER/AgENCE FRANCE-PREssE/gETTy IMAgEs

Workers in an asparagus field in Senden near Coesfeld, Germany, on

Friday. The spread of the coronavirus and the measures taken t o

combat it throughout Europe have had “a significant impact on

domestic agriculture,” according to the German Farmers’ Association.

BY THOMAS HEATH

AND TAYLOR TELFORD

U.S. markets wrapped up one

of their messiest-ever weeks Fri-

day, recording their worst finish

since the 2008 financial crisis.

The Standard & Poor’s 500 tum-

bled 15 percent from where it

began Monday, with stocks

wrenched all week in hourly

spasms as investors tried to fath-

om where the coronavirus will

eventually leave the U.S. economy.

The craziness ran right up to

the closing bell, with the S&P and

the Dow Jones industrial average

plunging more than 3 percent

minutes after the World Health

Organization warned that global

health systems were “collapsing”

under the strain of the pandemic.

Wall Street’s meltdown over

the past month has erased all of

the stock market g ains since Don-

ald Trump entered the White

House. On Feb. 12, the Dow

peaked at 29,551.42 — a 49 per-

cent jump from its close on

Trump’s Inauguration Day in Jan-

uary 2017. But within a span of

weeks it has lost a third of its value

as the coronavirus crisis has

played out. On Friday, it lost an

additional 913.21 points, roughly

4.6 percent, to close at 19,173.98.

The S&P finished at 2,304.92,

down 4.3 percent, while the tech-

heavy Nasdaq composite slid

3.8 percent to close at 6,879.52.

Investors remain in the same

fog they have inhabited since

markets began their swift drop in

February, after the S&P 500 and

Dow hit all-time highs. All three

indexes are now in a bear-market

decline of at l east 20 percent from

their highs. The Dow and S&P

have erased more than 30 percent

in a month.

“We had years of low volatility

and rising markets, and this virus

crisis made it all come to an end at

once,” said Kathy Jones, chief

fixed-income strategist at the

Schwab Center for Financial Re-

search. “There is no endpoint in

sight, and that’s causing a degree

of panic because people are say-

ing, ‘I just need to hold some cash.’

There will be more turmoil, but

we flushed out a lot of the people

who were leveraged. A lot of good

things are happening to restore

liquidity and order to markets.”

Markets lurched all week, but

nothing signified the chaos like

oil prices, which dropped below

$20 a barrel for part of the day

Friday — a mark not seen in years.

Oil prices are so low that the

industry may go through a gener-

ational restructuring. Prices need

to be at least in the $50-a-barrel

range for companies and produc-

ing states to make a profit.

Oil prices saw their worst and

best percentage changes in back-

to-back days Wednesday and

Thursday as a Saudi-Russian feud

resets markets. The federal gov-

ernment said it might jump in,

ordering millions of barrels of oil

purchases for the nation’s Strate-

gic Petroleum Reserve to help

soak up excess supply and protect

prices.

Governments and central

banks have unleashed a torrent of

measures to relieve the economic

stranglehold of the coronavirus.

But those moves have yet to calm

investors and institutions that

have been unloading assets from

stocks to bonds to gold to meet

cash obligations.

“People feel like a battered box-

er, unsure of how to respond to a

flurry of economic punches,” said

Sam Stovall of CFRA Research.

“The good news out of this bad

news is the volatility looks like it is

coming to a crescendo. Only two

other periods in the past half-cen-

tury have seen a high level of

volatility. History tells us the

worst may be behind us.”

The Federal Reserve rolled out

eight emergency actions this

week, establishing a special back-

stop for money-market mutual

funds (typically a risk-free place

for investors to store cash), slash-

ing interest rates to zero and

restarting the crisis-era bond-

buying program known as “quan-

titative easing.”

The central bank also an-

nounced plans to buy short-term

business loans known as com-

mercial paper, ramped up “swap

lines” with foreign central banks

to ensure other nations have

enough dollars, allowed banks to

borrow money from the Fed at a

0.25 percent interest rate and an-

nounced loans for primary deal-

ers of U.S. Treasury bonds.

Treasury Secretary Steven

Mnuchin announced Friday that

the administration had moved

back the Internal Revenue Ser-

vice tax-filing deadline from April

15 to July 15 because of the wide-

spread disruption caused by the

outbreak. Mnuchin made the an-

nouncement on Twitter, citing

President Trump’s directive.

Signs of progress in the war

against covid-19 stoked some pos-

itive feelings on Wall Street. The

U.S. dollar, which had skyrocket-

ed as worried investors rushed to

secure greenbacks, weakened

against other currencies.

Investors also seemed to em-

brace the increasingly stringent

measures being used to combat

the spread of the virus.

“These massive shutdowns in

California, New York and else-

where are going to take a toll,”

said Ivan Feinseth of Tigress Fi-

nancial Partners. “But stocks will

come back. I believe in the human

spirit and resiliency of people and

of markets.”

[email protected]

[email protected]

U.S. markets sink again to conclude

worst week since 2008 financial crisis

Oil prices dipped below $20 a barrel on Friday in a further sign of the virus-related turmoil

LUCAs JACKsON/REUTERs

Traders take a break on Wall Street outside the New York Stock Exchange on Friday at the end of another stomach-churning week.

○

DoW 19,173.

DOWN 913.21, 4.6% ○

nASDAQ 6,879.

DOWN 271.06, 3.8% ○

S&P 500 2,304.

DOWN 104.47, 4.3% ○

GolD $1,488.

UP $5.80, 0.4% ○

cRUDe oIl $22.

DOWN $2.79, 11.1% ○

10-YeAR TReASURY

UP $28.00 PER $1,000, 0.86% yIELD

cURRencIeS

$1=110.93 y EN, 0.94 EUROs

BY JACOB BOGAGE

Walmart plans to dole out
$545 million in early and special
bonuses — a s much as $300 a pop
— to reward workers who are
operating in overdrive to keep
shelves stocked amid the corona-
virus pandemic. It also plans to
hire another 150,000 hourly em-
ployees.
Full-time hourly workers hired
by March 1 will receive $300 and
part-time hourly workers will get
$150 on April 2, the company said
in a statement. Those extra pay-
ments add up to $365 million,
which will be supplemented by
another $180 million in early
first-quarter bonuses for store,
club and supply-chain employees.
Walmart, which just paid
fourth-quarter bonuses on Thurs-
day, is issuing the first-quarter
payouts as though it had reached
sales goals for the three-month
period ending in April. Employ-
ees are set to see heartier pay
stubs in April and May.
“ We w ant to reward our associ-
ates for their hard work and
recognize them for the work that
is in front of us,” chief executive
Doug McMillon said in a state-
ment.
Many large retailers, including
Macy’s, Nordstrom and Apple
have closed their brick-and-mor-
tar locations as consumers follow
“social distancing” protocols to
stem the virus’s spread. Walmart
has stayed open, though at re-
duced hours, to allow staff to
replenish inventory and do more
extensive cleaning. Business has
been brisk as shoppers pile clean-
ing supplies, toilet paper, food
and other essentials into their
carts.
On Wednesday, the company
announced U.S. stores would
open from 7 a.m., to 8:30 p.m. It
designated a special shopping
hour for customers older than 60
— who are at an elevated risk if
they contract the virus — on
Tuesday mornings beginning on
March 24. They will be allowed to
shop an hour before the location’s
designated opening time.
It also set buying limits on
paper products, milk, eggs, clean-
ing supplies, hand sanitizer, wa-
ter, diapers, wipes, formula and
baby food.
That’s little respite for many
employees, though, who in some
cases have been working through
the night to sanitize the stores
and restock shelves. Reinforce-
ments may be on the way with the
planned 150,000 new hires. Wal-
mart said it would cut its two-
week hiring process down to
24 hours through an online por-
tal. It contacted “industry groups
representing restaurants and
hospitality,” according to the
company’s statement, to offer em-
ployment opportunities to work-
ers that lost their jobs because of
the covid-19 crisis.
Travel and hospitality sectors
are beginning to see large-scale
job casualties as demand for air-
fare and lodging craters. Manu-
facturing has been hit hard, too,
with major automakers idling
North American plants.
[email protected]

Walmart

is planning

cash bonuses,

hiring spree

BY JACOB BOGAGE

The price of gasoline dropped

below $2 a gallon in 19 states

Friday, according to AAA, as more

Americans avoided venturing out

of their homes because of the

spread of the novel coronavirus,

further driving down declining oil

prices.

Nearly the entire South, plus a

handful of states in the Midwest,

can find gas at less than $2. At the

majority of gas stations across the

country — 51 percent of all fuel

providers — motorists can find a

gallon of gas on sale for $1.99 or

less, a ccording t o AAA figures. T he

average gallon of gasoline nation-

wide costs $2.17, the cheapest it

has b een since December 2016.

“With more people working

from home, demand is going to

decrease, and with demand de-

creasing, prices are going to de-

crease,” AAA spokeswoman Jea-

nette Casselano said in a phone

interview.

Crude o il prices, which make up

the m ajority of t he c ost of gasoline,

began declining worldwide al-

most immediately after the new

year in response to c oronavirus

fears. By the start of February,

crude was selling at $50 a barrel,

down $10 from the start of 2 020.

But prices toppled in March as

the coronavirus spread and mem-

bers of the Organization of the

Petroleum Exporting Countries

and Russia, called OPEC Plus,

could not agree on production

cuts. Instead, Saudi Arabia chose

to flood the market with crude,

setting off a price war with Russia.

Saudi Aramco, the state-run oil

company, said it planned to pump

12.3 million barrels of oil a day in

April.

Crude closed at $22.43 a barrel

Friday.

That dramatic increase in sup-

ply met the lack of global demand

and tanked prices, something fi-

nally starting to emerge at the

pump. Gas prices on Friday were

down 27 cents a gallon since the

start of March, AAA reported, and

are e xpected to go l ower.

Even as supply increased, de-

mand for oil has, too, week over

week since the start of the year,

according to AAA. Next week, ex-

perts expect demand to drop for

the first time, which will dent the

value of fuel even more.

But consumers aren’t expected

to see much cost savings specifical-

ly because of that drop in demand.

If more people are working from

home, or choosing not to leave the

house because of health concerns,

they have n o reason to f ill u p.

“People love savings at the

pump. You feel like y ou’re getting a

great d eal,” C asselano s aid. “ But a t

a time when everyone is working

from home, consumers aren’t nec-

essarily reaping t he benefits.”

[email protected]

Gas prices

have fallen

below $

in 1 9 states

The drop is expected to

continue, but consumers

won’t reap big benefits

“People feel like a

battered boxer, unsure

of how to respond to a

flurry of economic

punches.”

Sam Stovall, CFRA Research