ECONOMY

The Reopenings Are Here

This week, many Americans will realize they can’t just end a conversation by clicking a red button. A handful states are allowing nonessential businesses to open for the first time in weeks. 

Where things stand

Georgia, which already allowed businesses including gyms and hair salons to reopen on Friday, is extending that privilege to movie theaters and restaurants for dine-in service today. Tennessee is also letting people eat at restaurants today, and retail stores can open on Wednesday. 

States including Montana, Colorado, and Minnesota are kicking off phased reopenings today, while stay-at-home restrictions expire for several other states this Thursday, April 30. Starting next Monday, “Almost every business in the state of Missouri will be able to open their doors," the governor said. 

This will not be business as usual. Let’s use Georgia’s restaurant restrictions as an example:

• At least six feet in between tables and bar seats
• 10 patrons per 500 sq. ft. of space
• No more than six people per party, no presetting of tables, and no salad bar

Is this...a good idea? 

On the one hand you have an economy that’s deteriorating at a thunderous pace. 26 million Americans have filed for unemployment claims in the last five weeks, wiping out all of the job gains since the Great Recession. Business lobbying groups and some lawmakers are desperate to get people back to work.

Others, including many public health experts and big-city mayors, say these reopening plans are dangerous, arguing states don’t yet have the testing or contact tracing capabilities to prevent further outbreaks. Those outbreaks could force more shutdowns, so we end up in a maddening revolving door of self-isolation. 

The big, final question: If you reopen, will they come? It’s not clear whether a nervous public—given the opportunity—will resume going to restaurants, bars, and gyms. This week will tell us a lot. 

COVID-19

Snapshots From the Coronavirus Economy

Travel: Time to strike this word from the dictionary? Spending on travel this month fell 99% annually for Discover credit card holders. Over at AmEx, travel/leisure spend is down 95%.

Fitness: Last week, Peloton reported its largest streamed class ever with more than 23,000 participants. After a bumpy IPO last September, the at-home fitness company's stock is up over 60% since mid-March.  

Shopping: Online marketplace Etsy is trading near all-time highs while sellers pivot from craft quilts to face masks. 50,000 sellers have sold at least one mask on the platform, and 10,000 sellers have sold 100 or more, per the FT. 

Space: NASA is asking the Elon Musk posse to enjoy the May 27 launch of SpaceX’s first crewed mission from home instead of trekking to Florida. This will be NASA’s first crewed launch from U.S. soil in nearly a decade. 

Entertainment: A record 12.3 million concurrent players logged on to Fortnite to watch a Godzilla-sized Travis Scott perform a concert amid psychedelic explosions. Headphones on. 

AVIATION

Boeing Is Taking the "No Shaking Hands" Rule to the Next Level

Boeing has walked away from a $4.2 billion deal with Embraer, accusing the Brazilian aircraft manufacturer of failing to meet the fine print. 

• The deal: Boeing would've taken an 80% stake in Embraer’s commercial jet arm and gained access to engineering talent to build mid-size planes to stand up against Airbus. 

Embraer’s accusing Boeing of calling in with food poisoning just before the exam starts. It says Boeing repeatedly violated the agreement and is backing out because of financial strain from 737 Max groundings and *gestures at everything.*

• Boeing needs at least $30 billion in external financing to limp through 2020, per Moody’s. It’s secured about half that with a loan but is still figuring out the rest.
• Not paying $4+ billion for a slice of Embraer, a company that's now worth $1.1 billion, might be a good start. 

Boeing hasn’t detailed what conditions Embraer reportedly violated, and Embraer plans to talk to someone’s manager and make Boeing pay damages and a termination fee up to $100 million.

Big picture: Add this to the list of corporate deals crumbling in a pandemic economy.

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INVESTING

United We Stand, Dividend We Fall

Dividends are like pre-cut fruit—they’re one of the first things to go when you’re faced with a cash crunch. 

As of last Friday, nine S&P companies (including bruised cruise operator Carnival Corp.) had suspended dividends in April, and a few others are reducing payouts, Barron’s reports. 

• Dividends are one of the perks you can get by owning a company’s stock. Many corporations distribute them to shareholders each quarter.
• Dividends can be remarkably lucrative for investors. In the 30 years until this March, the compounding effects of reinvested dividends would’ve accounted for almost half the return of an S&P 500 index fund, per Bloomberg. 

Big picture: After rising every year in the 2010’s, aggregate S&P dividends will fall 23% to $398 billion in 2020, Goldman Sachs projects. 

Looking ahead...all eyes on the energy sector, which is still shell-shocked from oil prices’ crazy ride into negative territory last week. ExxonMobil and Chevron are reporting earnings this Friday, and they have two of the top three dividend yields in the Dow. 

CALENDAR

The Week Ahead

Lots of earnings reports this week will show us the extent of the coronavirus damage in March. Make sure you're prepared for all the jargon with our guide to quarterly earnings.

Monday: SXSW virtual film festival launches on Amazon Prime Video 

Tuesday: Earnings (Alphabet, Starbucks, Caterpillar, Merck, Pfizer, UPS, PepsiCo, Southwest, UBS, AMD)

Wednesday: Q1 GDP; Fed meeting announcement; earnings (Boeing, Microsoft, Airbus, Facebook, Tesla, Qualcomm, GlaxoSmithKline, Mastercard, Anthem, Humana, Northrop Grumman, eBay, GE)

Thursday: Earnings (Amazon, Apple, Comcast, Gilead Sciences, Twitter, McDonald’s, MGM Resorts, Shell, Dunkin Brands, Cigna, Kraft Heinz, Kellogg, Molson Coors)

Friday: Take it away, Justin

Jive Records

It's gonna be May; oil supply cuts officially go into effect; ISM manufacturing survey; earnings (ExxonMobil, Chevron, Clorox, Honeywell)

POKER TOURNAMENT

Are You Doing Anything Saturday?

Thought so. If you're looking for a fun time and way to support frontline workers, sign up for Chipping in for COVID, Morning Brew's charity poker tournament. 

We left you hanging a little bit at the top so here are a few more details:

• The qualifying round will begin Saturday afternoon.
• The top players from Saturday will get to play in the final round Sunday with loads of business legends. This might be your only chance to say you beat the former COO of Twitter at hold 'em. 

How to get started: While any and all donations are welcome to the cause, $100 will get you a seat at the poker table. . 

WHAT ELSE IS BREWING

• U.K. Prime Minister Boris Johnson is going back to work today. He had been in the ICU a few weeks ago with coronavirus.
• Italy, Spain, and France are taking measures to ease lockdown restrictions. Spanish children were allowed out of their homes for the first time in more than six weeks.
• The NBA will allow teams to open practice facilities this Friday provided that doesn’t conflict with local restrictions, ESPN reports.
• Kanye West’s stake in Yeezy does, in fact, make him a billionaire, Forbes confirms.
• The Bill & Melinda Gates Foundation will give its "total attention" to the coronavirus pandemic, Bill told the FT.

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BEYOND CROSSWORD

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