FREE ACCESS April 6, 2020

MorningWord 4/6/20: Turn Those Machines Back On

by Dan

On Friday after the close, the Wall Street Journal ran the following story: Anatomy of an Outbreak: How Coronavirus Swept Through JPMorgan’s Trading Floor… Amid wild trading conditions, banks don’t want everyone working from home:

Wall Street is used to making tough choices in seconds, but the coronavirus pandemic has added a dimension of life or death. Amid the wildest trading conditions in more than a decade, banks are loath to fully allow the thousands of traders and salespeople who keep the markets humming to work from home. Setups in home offices lack the multibillion-dollar technology infrastructure of the trading floor. Even slight delays in speed could cost money.

Wall Street trading has been deemed an “essential service” by New York authorities, and though the New York Stock Exchange has shut its floor, the major banks continue to have some employees report to work.

For JPMorgan, the consequences of keeping employees in the office have been swift and painful. The outbreak has rattled rank-and-file employees, who said they feel the bank took a gamble with their health to protect a prized business. The decisions were made while Chief Executive James Dimon was recovering from emergency heart surgery.

Traders and salespeople said they feel pressure to come in. Managers, many of whom have stayed in the office themselves, have reminded staff that their compensation may be tied to their performance in recent weeks.

I suspect there are similar stories to be told about JPM’s competitors and other large businesses that were deemed essential. What’s clear from reading this story is that most managers who have revenue attached to them want to keep things running as normal as possible during these trying times.

So it struck me that one of the first things I read this morning from the Jim Vandehei and Mike Allen in their morning newsletter: What top CEOs fear telling America about the coronavirus shutdown

Top CEOs, in private conversations and pleas to President Trump, are warning of economic catastrophe if America doesn’t begin planning for a phased return to work as soon as May, corporate leaders tell Axios.

Why it matters: The CEOs say massive numbers of companies, big and small, could go under if business and government don’t start urgent talks about ways groups of workers can return.

Several of these leaders told us they want to have a hard national conversation about tradeoffs involved in any widespread lockdowns beyond the middle of next month.
They know most wouldn’t return until June or later, but fear a lack of urgency on many going back sooner.
They realize it sounds callous to talk about work when people are scared of death, but believe it’s an urgent debate the nation needs. Several are debating going public with this concern, but fear the optics and timing look discordant.

As I write the S&P 500 (SPX) is up ~3.5% as news over the weekend suggested that the coronavirus (infections, hospitalizations & deaths) curve in hotspots like New York might be flattening, which if it were to become a trend would be great news that mitigation efforts are working, that the economic pain we have inflicted on our society was “worth it”. It is not a coincidence that investor sentiment is tracking new cases and deaths as efforts to halt the spread were the reason for the market decline, first as a result of the supply chain disruption in China, but then because of our own country’s lockdown.

Make no mistake, Everyone wants the economy to reopen, some before it might be deemed safe, but as the curve flattens, the calls for reopening will get louder and will sound more reasonable to even those most nervous about doing so without confidence in therapeutic drugs, antibodies and ultimately the timing of vaccines.

The former FDA commissioner under Obama and trump, who has been ahead of the curve with this pandemic, writing this Op-Ed in the WSJ on Jan 28th (Act Now to Prevent an American Epidemic) put forth his “roadmap for reopening America for Business”. He has a plan.

Over the weekend, CNN”s Jake Tapper asked the right question to trump on his tv show, what’s his plan? Whether you think CNN is Fake News, you should hope that your misinformation agents over at Fox are asking the same question of our leaders…

 

For those reading today’s missive thinking the above musings is a plan to stop the stock market’s epic decline, this has nothing to do with that, as I have written repeatedly over the last month until the health crisis is under control, and the economic damage caused by the health crisis is contained, none of us will be truly healthy, who really cares what the stock market does, it’s our lives and livelihoods that matter most, so let’s agree on a plan, as we all want to see America reopened for Business sooner than later in a manner that mitigates future outbreaks that could drive the economy to screeching halt again, which could be the knockout punch for our way of life for some time come.

The last thing we want to be doing in 2020 is crying out to “Turn those machines back on” once we have already misfired.

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