Exclusive: Coronavirus crisis could destroy far more than 25 million jobs – ILO official

GENEVA (Reuters) – The number of jobs lost around the world due to the coronavirus crisis could be “far higher” than the 25 million the International Labour Organization (ILO) estimated just a week ago, a senior ILO official said on Thursday.

The United Nations agency said on March 18 that, based on different scenarios for the impact of the pandemic on global economic growth, estimated the global ranks of jobless would rise by between 5.3 million and 24.7 million.

However, Sangheon Lee, director of the ILO’s employment policy department, told Reuters in Geneva on Thursday that the scale of temporary unemployment, lay-offs and the number of unemployment benefit claims were far higher than first expected.

“We are trying to factor in the temporary massive shock into our estimate modeling. The magnitude of fluctuation is much bigger than expected,” he said.

“We need to make downward adjustment, the projection will be much bigger, far higher than the 25 million we estimated.”

ILO’s next forecast is expected to be issued next week.

By comparison, the 2008/9 global financial crisis increased global unemployment by 22 million.

Figures released on Thursday showed the number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week.

Strict measures to contain the coronavirus pandemic brought the country to a sudden halt, unleashing a wave of layoffs that likely ended the longest employment boom in U.S. history.

Data is also pointing to a sharp jump in job losses in Western Europe despite government spending packages that include support for companies to keep workers on.

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U.S. House will have panel overseeing coronavirus aid law expenditures: Pelosi

WASHINGTON (Reuters) – U.S. House of Representatives Speaker Nancy Pelosi said on Friday the House will set up a panel to oversee expenditures under the $2.2 trillion coronavirus relief law.

Pelosi made the comment in an MSNBC interview when asked about a statement by President Donald Trump rejecting aspects of a provision in the law setting up an inspector general to audit some loans and investments.

“Congress will exercise its oversight and we will have our panel … appointed by the House, in real time to make sure we know where those funds are being expended,” Pelosi said.

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G20 leaders to inject $5 trillion into global economy to fight coronavirus

RIYADH (Reuters) – Leaders of the Group of 20 major economies pledged on Thursday to inject $5 trillion in fiscal spending into the global economy to blunt the economic impact of the coronavirus and “do whatever it takes to overcome the pandemic.”

Showing more unity than at any time since the 2008-2009 financial crisis that led to the G20’s creation, the leaders said they committed during a videoconference summit to implement and fund all necessary health measures needed to stop the virus’ spread.

In a statement containing the most conciliatory language on trade in years, the G20 leaders pledged to ensure the flow of vital medical supplies and other goods across borders and to resolve supply chain disruptions.

As many countries enact export bans on medical supplies, the G20 leaders said they would coordinate responses to avoid unnecessary interference.

“Emergency measures aimed at protecting health will be targeted, proportionate, transparent, and temporary,” they said.

The G20 leaders also expressed concern about the risks to fragile countries, notably in Africa, and populations like refugees, acknowledging the need to bolster global financial safety nets and national health systems.

“We are strongly committed to presenting a united front against this common threat,” the G20 leaders said in a joint statement following their 90-minute call.

Saudi Arabia, the current G20 chair, called the video summit amid earlier criticism of the group’s slow response to the disease. It has infected more than 470,000 people worldwide, killed more than 21,000, and is expected to trigger a global recession.

Saudi King Salman, in opening remarks, said the G20 should resume the normal flow of goods and services, including vital medical supplies, as soon as possible to help restore confidence in the global economy.

The group committed to national spending measures totaling $5 trillion — an amount equal to that pledged in 2009 — along with other large-scale liquidity, credit guarantee schemes and other economic measures.

World Health Organization Director-General Tedros Adhanom Ghebreyesus was to address the G20 to seek support for ramping up funding and production of personal protection equipment for health workers amid a global shortage.

“We have a global responsibility as humanity and especially those countries like the G20,” Tedros told a news conference in Geneva on Wednesday. “They should be able to support countries all over the world.”

In his remarks to the group, U.S. President Donald Trump shared details of the $6 trillion in support the United States is making available through legislation and increased Federal Reserve liquidity, including $2 trillion in fiscal spending, and spoke in support of multilateral action and coordination.

“He talked about working together and sounded more supportive of multilateral coordination than ever before,” said one source who observed the meeting.

The meeting was not marred by acrimony, as was feared given the ongoing oil price war between Saudi Arabia and Russia, and a war of words between the United States and China over the origins and handling of the pandemic, said the source, who was not authorized to speak publicly.

Tedros told G20 leaders that the pandemic is “accelerating at an exponential rate” and urged them to ramp up production of protective gear for health workers and remove export bans.

“Everyone realizes that it is essential to preserve jobs, and to maintain trade flows, not disrupt the supply chains,” said one Brazilian government official with knowledge of the videoconference discussions.

No country advocated “total confinement” mainly because most of the countries in G20 are not implementing such moves, the official added.

Several participants called upon the G20 to play the same role that it played in overcoming the 2008-2009 global financial crisis, when member countries pledged to inject massive fiscal stimulus and financial liquidity into the economy, the Brazilian official said.

IMF RESOURCES

The G20 leaders also asked the International Monetary Fund and the World Bank Group “to support countries in need using all instruments to the fullest extent.”

IMF Managing Director Kristalina Georgieva plans to ask the Fund’s steering committee on Friday to consider doubling the current $50 billion in emergency financing available to help developing countries deal with the virus, a source familiar with the plans told Reuters.

To boost global liquidity, Georgieva also asked G20 leaders to back a Fund plan to allow member countries to temporarily draw on part of its $1 trillion in overall resources to boost liquidity. The IMF made a similar move in 2009 with a $250 billion allocation of Special Drawing Rights, its internal unit of currency.

Georgieva gave no specific number in her statement, but observers to the G20 meeting said an SDR allocation of up to $500 billion could be needed.

HEALTH FUNDING

On the health response, the G20 leaders committed to close the financing gap in the WHO’s response plan and strengthen its mandate as well as expand manufacturing capacity of medical supplies, strengthen capacities to respond to infectious diseases, and share clinical data.

Despite calls for cooperation, the G20 risks entanglement in an oil price war between Saudi Arabia and Russia and frictions between the United States and China over the origin of the coronavirus outbreak.

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U.S. indicts Venezuela's Maduro, a political foe, for 'narco-terrorism'

WASHINGTON (Reuters) – The U.S. government on Thursday indicted Venezuelan President Nicolas Maduro and more than a dozen other top Venezuelan officials on charges of “narco-terrorism,” the latest escalation of the Trump administration’s pressure campaign aimed at ousting the socialist leader.

The State Department offered a reward of up to $15 million for information leading to the arrest and conviction of Maduro, whose country has been convulsed by years of a deep economic crisis and political upheaval.

The indictment, a rare U.S. action against a sitting foreign head of state, marks a serious new phase against Maduro by Washington at a time when some U.S. officials have privately said President Donald Trump is increasingly frustrated with the results of his Venezuela policy.

Attorney General William Barr, announcing charges that include narco-terrorism conspiracy, corruption, and drug trafficking, accused Maduro and his associates of colluding with a dissident faction of demobilized Colombian guerrilla group, the FARC, “to flood the United States with cocaine.”

“While the Venezuelan people suffer, this cabal lines their pockets with drug money and the proceeds of their corruption,” Barr said of Maduro and the others who were indicted.

Venezuelan Foreign Minister Jorge Arreaza said the charges and rewards being offered showed the Trump administration’s “desperation” as well as its “obsession” with the South American country aimed at benefiting Trump’s 2020 re-election campaign.

Trump’s pressure on Venezuela has gone over well among Cuban Americans in South Florida, a key voting bloc in a major presidential swing state.

The U.S. government has previously lodged criminal indictments against members of Maduro’s family and inner circle. He and his allies have dismissed such allegations as a smear campaign, and argue the United States is responsible for drug trafficking, given its role as a leading consumer.

Maduro is already under U.S. sanctions and has been the target of a U.S. effort aimed at pushing him from power. He took office in 2013 after the death of his mentor President Hugo Chavez, a staunch foe of the United States.

Other Venezuelan officials whose indictments were announced on Thursday include Defense Minister Vladimir Padrino Lopez, senior socialist leader Diosdado Cabello, and the chief justice of the country’s supreme court, Maikel Jose Moreno Perez, who was charged with money laundering. The U.S. government is offering $10 million for information leading to Cabello’s arrest.

The United States and dozens of other countries have recognized opposition leader Juan Guaido as Venezuela’s legitimate president, regarding Maduro’s 2018 re-election as a sham. But Maduro has remained in power, backed by the country’s military and by Russia, China and Cuba.

U.S. officials have long accused Maduro and his associates or running a “narco-state,” saying they have used proceeds from drugs transshipped from neighboring Colombia to make up for lost revenue from a Venezuelan oil sector hit by heavy sanctions by the United States.

‘DEPLOYED COCAINE AS A WEAPON’

The indictments were unsealed in New York, Florida and Washington.

Barr dodged a reporter’s question on whether Trump, who has pressed his aides in recent months for a tougher approach on Venezuela, was briefed in advance, saying, “I don’t talk about internal deliberations.”

Maduro and his closest allies ran a “narco-terrorism partnership with the FARC for the past 20 years,” stated Geoffrey Berman, the U.S. Attorney for the Southern District of New York, who said the Venezuelan president “very deliberately deployed cocaine as a weapon.”

“The scope and magnitude of the drug trafficking alleged was made possible only because Maduro and others corrupted the institutions of Venezuela and provided political and military protection for the rampant narco-terrorism crimes described in our charges,” he added.

The U.S. Attorney for the Southern District of Florida, Ariana Fajardo Orshan, said she sees signs of Venezuelan officials’ laundered money throughout her area every day, from fancy yachts to million-dollar condos.

“This party is coming to an end,” she said.

Asked whether the U.S. government was also considering designating Venezuela a state sponsor of terrorism, which carries further sanctions, Barr said: “It’s really one step at time, so I really have nothing to say about that right now.”

CNN, citing sources familiar with the situation, reported earlier that Venezuela was expected to be named to the blacklist as soon as Thursday. But a U.S. official told Reuters such a move was not likely imminent.

Thursday’s charges altogether carry a maximum penalty of up to life in prison. Asked whether the U.S. government wants to capture Maduro dead or alive, Barr said: “We want him captured so he can face justice in U.S. court.”

Barr said the administration does “expect eventually to gain custody of these defendants.” But he offered no indication of how U.S. authorities might get their hands on Maduro, who has endured more than a year of heavy international pressure and on-again, off-again street protests as the OPEC member’s economy has continued to unravel.

Maduro’s international travel could be restricted, given Washington would be able to request that he be handed over if he visits a country that has an extradition treaty with the United States. U.S. authorities can also freeze any assets he has in the United States, though such holdings are considered unlikely.

The Justice Department said that since at least 1999, Maduro, along with Cabello and others, “acted as leaders and managers of the ‘Cartel of the Suns’.” The name, it said, refers to the sun insignias affixed to the uniforms of high-ranking Venezuelan military officials.

An indictment accused Padrino, who holds the rank of general, of using his control of the Venezuelan military to facilitate cocaine flights to the United States.

Venezuelan Vice President Tareck el-Aissami, who already faced U.S. sanctions for alleged drug trafficking, was charged with evading U.S. sanctions.

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Ackman says Pershing Square no longer has hedges on stocks

(Reuters) – William Ackman’s Pershing Square Capital Management no longer has hedges on its stock portfolio, but still has some cash to invest if equities decline further as the United States battles the coronavirus outbreak, the billionaire investor said on Saturday.

Pershing Square earned roughly $2.6 billion by hedging its stock portfolio in early March through credit protection on investment grade and high yield credit indices. Much of the money has been reinvested in stocks the firm already owns.

“Today, we are unhedged, and we no longer own any insurance”, Ackman said in a Twitter thread bit.ly/2xsAEFA, adding that he continues to believe the sooner the entire United States is shut down, the more lives will be saved and the sooner the economy will recover.

“Every day we wait, we prolong our collective misery”, Ackman said.

He told CNBC in an interview on March 18 that he thought the best approach to killing off the coronavirus was to close the borders and shut down the entire country, barring essential services, for 30 days.

The S&P 500 .SPX and the Dow Jones Industrial Average .DJI fell sharply after the interview aired.

He later said the interview was not designed to enable his firm to profit from any trades, dismissing some media speculation that he had purposely pushed markets lower to make money off his hedges.

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'This is a war and we want to survive,' says Polish retailer

WARSAW (Reuters) – Polish fashion retailers may not survive the coronavirus crisis if the government, banks and shopping mall owners do not help them bear the costs, a lobby group said on Friday, as Poland closed non-essential shops to stop the spread of the virus.

A new lobby group set up by the retail industry said it has asked the state to help pay out salaries, shopping mall owners to stop taking rents and banks to suspend loan payments. The group says it represents 100 companies and that 200,000 jobs directly depend on their survival.

“This is not even a crisis, it is difficult to name it. It is unlike anything that has happened before….This is a war and we want to survive. I do not care what the financial results will be,” Marek Piechocki, Chief Executive at Poland’s biggest fashion retailer LPP told Rzeczpospolita daily.

He said LPP, a home-grown rival to the likes of H&M and Inditex, had enough resources to continue paying salaries for the next 4-6 months. Before the crisis it had hoped to reach revenue of 10.5 billion zlotys ($2.73 billion) this year.

Tomasz Ciapala, the CEO and majority owner of Lancerto, a men’s suit maker, said that many workers in the industry are paralyzed with fear about their jobs.

“Our union comprises mostly family businesses. Most of our employees, who have been with us for a long time, are scared. This has wide social effects. Mental illness, depression, suicides – these are all side effects of joblessness,” Ciapala told a videconference on Friday.

Pawel Kaplon, a partner at Paan Capital private equity fund, has compared the functioning of fashion retailers to a large-scale restaurant which has hired suppliers and staff and bought products to prepare dishes for the next 100 days. And now has to shut down.

“We have done the cooking for the next half a year, we have payments ahead and we have nowhere to get the cash flow from,” Kaplon told the same conference.

Poland’s parliament is expected to adopt on Friday a package of legislation designed to help the economy and various industries survive the coronavirus crisis.

“The shopping malls, banks and us should participate in these costs together …as in the end each of us will win when this tsunami is over,” said Igor Klaja, the founder of popular sports wear brand 4F.

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With eye on election, Trump in high-stakes balancing act over coronavirus response

WASHINGTON, March 28 (Reuters) – President Donald Trump offered a preview of his re-election campaign playbook last year when he visited the building site of a multi-billion-dollar cracking unit in western Pennsylvania, hailed as one of the largest construction projects in the country.

To Trump, it was a pitch-perfect example of a booming economy.

Except today, the site sits largely empty, after the coronavirus outbreak forced oil company Royal Dutch Shell to halt construction. The project’s thousands of workers are now unemployed, adding to the nearly 3.6 million Americans who filed for jobless benefits in the last two weeks.

The tension between wanting to keep workers safe from infection and trying to get back to business as soon as possible illustrates the fine line Trump must walk as he floats the idea of reopening the U.S. economy in defiance of the advice of public health experts.

Seven months before he faces re-election, Trump must find a balance between trying to stop the economy from spiraling into a severe recession while appearing to act decisively to contain a still-expanding health catastrophe.

Trump has been under increasing pressure to ease back economic restrictions from his Republican base, who consistently have been less alarmed than Democrats about the virus, which has infected more than 85,000 Americans and killed more than 1,200.

A March 18-24 Reuters/Ipsos poll shows 76% of Democrats agreed that the coronavirus is a “serious threat to me and my family” compared with 63% of Republicans.

Many workers at the Shell site in Potter Township, 40 miles (65 km) east of Pittsburgh, live paycheck-to-paycheck and are eager to work. But some are concerned about Trump’s suggestions that the U.S. economy could be re-opened by Easter on April 12.

“If they called me and said come back to work Monday, I would not go. Not until I feel it’s safe for me and the other workers,” said Jonathan Sailers, a 34-year-old union insulator who wraps pipes at the site.

For a graphic on calendar of each state’s Democratic nominating contest and its allocated delegates, please click tmsnrt.rs/37bDD2f

BOTTOM LINE

Prior to the outbreak, a soaring stock market and strong employment stood at the heart of Trump’s message that he should be re-elected in November, with the president even suggesting that even if voters didn’t like him, he helped their bottom line.

For the moment, that argument has evaporated.

Trump’s campaign says he is focused both on safeguarding the health and safety of Americans and getting the economy humming again.

“The president is correct that our nation was not built to be completely turned off for long periods of time and that such dormancy would cause a great many long-lasting problems,” said Trump spokesman Tim Murtaugh.

Chris Wilson, a Republican pollster, said the coronavirus crisis is actually an opportunity for Trump but he must handle it correctly.

“If we wind up coming through this relatively intact, I think Trump will get a huge amount of credit from voters,” Wilson said.

Trump has already seen a bump in his approval ratings, by 4% to 44% since the health crisis, according to the Reuters/Ipsos poll. But the rise is modest for a president confronting a national crisis: Former President George W. Bush’s approval rating shot up by 39 points to 90% in the days following the Sept. 11, 2001, attacks, according to Gallup polling service.

The numbers have also climbed as Trump took the outbreak increasingly seriously, appearing on television and warning people to stay home, after at first playing down the threat.

If he flips that message, strategists and experts say, he runs the risk of losing supporters, particularly if the death toll continues to grow.

“There’s normally a rallying effect around the president in the early days of the crisis, and Trump’s clearly benefiting from that,” said Alex Conant, a former top aide to Republican Senator Marco Rubio, a 2016 presidential candidate.

Delegate tracker and results tmsnrt.rs/2wfM3Yz

“As days turn into weeks and months, the president’s polling position could weaken if people think the country is losing the fight.”

Shell says it has no timeline for restarting construction at the Potter Township site.

In the meantime, workers are struggling to pay their bills, said Ken Broadbent, business manager for a Pittsburgh-based steamfitters union that supplied the project with hundreds of workers.

“It’s still way too early,” he said. “We just don’t know how long this will last. The longer it lasts, the more it’s going to hurt.”

For a graphic on where the candidates stand on key issues, please click tmsnrt.rs/2ughVeT

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Bank of America capital levels allow operational focus during crisis: CEO

(Reuters) – Bank of America Corp (BAC.N) is better positioned to focus on operations rather than financial risk during the coronavirus outbreak, thanks to regulatory safeguards put in place after the financial crisis in 2008, Chief Executive Brian Moynihan said on Friday.

“What’s different this time is clearly our capital liquidity,” Moynihan said in a CNBC interview. “Everything that changed has led the banking industry be in a great condition to service clients continuously for the last few weeks as this thing has hit.”

The second largest U.S. bank by assets has extended more than $50 billion in loans this so far month to commercial clients looking for cash to survive the coronavirus recession. The retail division has fielded more than 150,000 requests to defer payments on mortgages and auto loans. Many requests are managed digitally, he said.

The bank has also been hiring and reallocating employees to the consumer bank to help manage a surge in requests related to the pandemic, according to a memo seen by Reuters. So far this month the Charlotte-based bank has hired 2,000 people and shifted 3,000 internal employees to support its consumer bank.

Bank of America followed its peers like Morgan Stanley (MS.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) in reassuring employees that they would not be immediately hit by layoffs as a result of the pandemic. In the memo sent to employees on Friday, the bank said it “will not do layoffs or job reductions in 2020 due to coronavirus impacts.”

“We don’t want our teammates to worry about their jobs during a time like this,” Moynihan said.

(Corrects second-last paragraph to reflect that Wells Fargo did not suspend layoffs through 2020)

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U.S. consumer spending increases moderately in February

WASHINGTON (Reuters) – U.S. consumer spending rose moderately in February and momentum is set to fade rapidly in the coming months, with the coronavirus pandemic upending life for Americans.

The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.2% last month as households spent more on electricity and gas, offsetting decreases in outlays on motor vehicles and parts as well as recreational goods.

Last month’s increase matched the gain in January and was in line with economists’ expectations.

The United States now has the most coronavirus cases in the world, with more than 82,000. Governors in more than half of the nation’s 50 states have ordered residents to stay mostly indoors, affecting more than 100 million people.

Restaurants and bars have been shuttered and airline travel severely curtailed, which economists say will greatly offset any boost to consumer spending from grocery purchases following a wave of panic buying as Americans prepared to hunker down.

When adjusted for inflation, consumer spending edged up 0.1% in February, matching January’s rise.

With “social distancing” measures to contain the virus throwing millions out of work and severely curtailing discretionary spending, economists are predicting a moderate decline in consumer spending in the first quarter, which would give way to a sharper contraction in the second quarter.

Consumer spending grew at an annualized rate of 1.8% in the fourth quarter, slowing from the brisk 3.2% pace logged in the July-September period.

Labor market strength, which was driving a steady pace of wage growth, was the economy’s main pillar of support. In February, personal income increased 0.6% after rising by the same margin in January.

Income was boosted by higher wages and government payments to farmers caught in the U.S.-China trade war.

Inflation remained muted in February. Consumer prices as measured by the personal consumption expenditures (PCE) price index edged up 0.1% after rising by the same margin in January. In the 12 months through February, the PCE price index rose 1.8%, matching the year-on-year gain in January.

Excluding the volatile food and energy components, the PCE price index gained 0.2% in February after nudging up 0.2% in January. That lifted the annual increase in the so-called core PCE price index to 1.8% in February from 1.7% January.

The core PCE index is the Fed’s preferred inflation measure. It missed the central bank’s 2% target in 2019.

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In virus-hit France the doctor will see you now – virtually

PARIS (Reuters) – The doctor’s surgery in Paris where Tura Milo works has closed its door to patients because of the coronavirus but the general practitioner is still doing her consultations, only now by video conference.

“How many days have you had a fever for?” she asked a 31-year-old patient suspected of having the virus. The doctor could see the patient in a window on her computer screen, while the patient filmed himself using a webcam at home.

The doctor diagnosed a mild case of coronavirus, gave the patient an online prescription for medicine to relieve the symptoms, and advised him to limit contact with his boyfriend to avoid transmitting the virus.

“Surprisingly, the patients got used to it very quickly,” Milo said of the virtual consultations, which she conducts from her surgery in the French capital’s upscale 6th district.

She estimated that between 30% and 50% of her online appointments are about coronavirus-related complaints.

Heightened anxiety among patients about the virus, coupled with worries that seeing a doctor in person could expose people to infection, has in France driven a surge in the use of online medical consultations.

Since the outbreak took hold in France, the number of consultations taking place on one platform, called Doctolib, has increased 100 times, and the number of doctors using the site has risen tenfold, according to Doctolib co-founder and chief executive Stanislas Niox-Chateau.

“And that is going up hour-by-hour,” he told Reuters in an interview.

A total of 1,696 people have so far died from coronavirus in France, according to an official tally released on Thursday, and the number of recorded cases of infection is at 29,155.

The French government has told people to stay at home and avoid all but essential trips. Visits to the doctor are on the list of permitted activities, but many some worry they could pick up the infection in the doctor’s surgery.

Doctolib, founded in 2013, usually charges doctors a 79 euro ($87) per month fee for using the site, but it decided to waive that at the start of the outbreak.

Doctolib, which is not listed, said last year a funding round in which it raised 150 million euros from investors gave the firm a valuation of around 1 billion euros.

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