The Coronavirus Outbreak

DealBook Newsletter

Jamie Dimon
Jamie DimonCredit...Jeenah Moon/Reuters

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The JPMorgan C.E.O.’s latest letter to shareholders was just published.

The letter is widely read on Wall Street, where Mr. Dimon often expounds, at length, on topics like the bank’s performance, taxes and America’s role in the world. This year’s edition was especially anticipated because it will be the first time Mr. Dimon has communicated publicly since undergoing emergency heart surgery a month ago. He returned to work — remotely — last week.

Mr. Dimon expects “a bad recession,” he wrote, “combined with some kind of financial stress similar to the global financial crisis of 2008.” JPMorgan’s “huge and powerful earnings stream” enables it to absorb losses, he wrote.

• Halting stock buybacks was “a very prudent action,” but a decision to suspend dividends would be made only “out of extreme prudence” under the bank’s most pessimistic economic scenario. “This scenario is quite severe and, we hope, unlikely,” he wrote.

Mr. Dimon wrote of a need for a “disciplined” return to work once the rate of infection slows and the health care system is under less strain. He cites the need for antibody testing that shows who is likely not to get sick again or infect anyone. That makes Mr. Dimon one of the few corporate leaders to speak publicly, if gently, about restarting the economy and “minimize the time, extent and suffering caused by the economic downturn.”

He also wrote that JPMorgan won’t ask for “regulatory relief” — but criticized what he views as poor financial regulations. Now isn’t the time to debate any wider overhaul, he wrote.

• Generally speaking, “The current pandemic is only one example of the bad planning and management that have hurt our country,” he wrote. “As we have seen in past crises of this magnitude, there will come a time when we will look back and it will be clear how we — at all levels of society, government, business, health care systems, and civic and humanitarian organizations — could have been and will be better prepared to face emergencies of this scale.”

He didn’t have much to say about his health, beyond that he appreciated the well wishes while he recuperated from heart surgery.

It’s not easy to spend $2 trillion, the U.S. government is learning. Several of the targeted aid programs begun in recent days have struggled amid heavy demand and unclear instructions. Passing the stimulus quickly is one thing, but implementing it is another.

Small businesses are having trouble applying for emergency loans. Banks have been overwhelmed by inquiries in the early days of a $349 billion program, and borrowers say that many lenders are limiting the crisis loans to a narrow subset of existing customers.

Stimulus checks for individuals could be delayed by months. Although millions of checks worth up to $1,200 per person will go out by mid-April, people without direct-deposit information on file with the I.R.S. may have to wait until August.

Airlines are balking at the conditions attached to aid. About $50 billion in funds has been set aside for the industry, but executives are wary of giving equity stakes to the government to get access to it.

The next phase of stimulus is taking shape, The Washington Post’s Jeff Stein reports. Measures under discussion could prove more politically contentious, with some Republicans — including the new White House chief of staff, Mark Meadows, and the economic adviser Larry Kudlow — opposed to large-scale spending on infrastructure, while Democrats are likely to resist tax cuts and other proposals favored by Republicans.

• As Mr. Stein describes it, the White House has been pitching “a payroll tax cut, a capital gains tax cut, creating 50-year Treasury bonds to lock in low interest rates, and a waiver that would clear businesses of liability from employees who contract the coronavirus on the job.”

The hedge fund billionaire captured Wall Street’s attention for his panicky appearance on CNBC last month, when he said, “Hell is coming.” Now, it appears he’s in much better spirits.

“I am beginning to get optimistic,” Mr. Ackman tweeted yesterday, citing what he believed to be a slowing rate of infection in New York, a potentially lower-than-expected Covid-19 fatality rate and other signs.

That newfound cheer ran up against skeptics who recalled his previous outburst a few weeks ago. (A reminder: Mr. Ackman fretted that shares in Hilton could sink to zero, then later revealed that he had bought shares in the hotel chain and generated more than $2 billion in returns on short bets.) One Twitter user pithily responded to Mr. Ackman’s newfound optimism: “Is this because you’ve gone long now?”

America’s central bank has pledged to provide billions of dollars to businesses through one of its lending programs, known as TALF. But the giant investment firm Apollo thinks the Fed can do much more.

It thinks the Fed should expand TALF to accept more types of collateral, according to a presentation prepared by Marc Rowan, an Apollo co-founder. TALF, short for Term Asset-Backed Securities Loan Facility, was last used during the 2008 crisis. It accepts only some kinds of debt assets — chiefly securitized bundles of credit card, auto loans or small business loans — that carry the highest possible credit ratings.

• The Fed should accept more types of assets, Mr. Rowan says, including other kinds of mortgages, certificates of deposit and short-term business loans known as commercial paper, across the investment-grade spectrum.

Mr. Rowan’s argument: Lending markets are more troubled than they appear, so a broader program is needed to support a wider range of players. AAA-rated borrowers will mostly stockpile funds they receive from aid programs.

Apollo says its concerns are shared by other nonbank organizations, like fellow investment firm TPG as well as insurers and retirement plans. A bipartisan group of Congress members also sent a letter to the Fed chairman, Jay Powell, last week urging him to expand TALF’s eligible assets.

• It isn’t clear how much Apollo itself stands to benefit from a change in the Fed’s program: Many of its investments wouldn’t qualify because of their credit ratings, but some of its other businesses would. Mr. Rowan argues in his presentation that he’s looking out for the economy as a whole, and that failure to act would lead to a wave of bankruptcies and layoffs.

That said, investment firms are eyeing opportunities amid the panic. One area of interest for firms like Apollo is lending to distressed companies, while others are hoping to snap up long-desired assets.

In other coronavirus news:

• President Trump is using the Defense Production Act to claim masks made by 3M for other countries, potentially inviting a backlash. (NYT)

• The coronavirus has swept through a trading floor at JPMorgan in New York, rattling workers who were asked to continue coming to the office. (WSJ)

• The pandemic is pushing European banks to the brink. (NYT)

• Yes, a tiger at the Bronx Zoo has tested positive for Covid-19. (NYT).

• No, we are not making this up: Grupo Modelo is temporarily halting the production of Corona beer. (NYT)


• Stopping share repurchases removes the biggest buyers of stocks from the market. (WSJ)

• The investment firm Silver Lake is reportedly seeking to raise at least $16 billion for its next private equity fund. (Reuters)

Politics and policy

• Prime Minister Boris Johnson of Britain was hospitalized yesterday for tests on his persistent coronavirus symptoms. (NYT)

• The White House reportedly surprised health officials by refusing to reopen Affordable Care Act health insurance markets. (Politico)


• Quibi, the short-video streaming service founded by Jeffrey Katzenberg and Meg Whitman, has opened for business. (NYT)

• How Facebook’s efforts to help small businesses might repair its reputation. Separately, the social network’s automated content moderation mistakenly threatened organizers of hand-sewn face mask campaigns. (WSJ, NYT)

Best of the rest

• Texas had one of the best-performing economies of any state. Then the coronavirus and plunging oil prices hit. (WSJ)

• The Times’s contributing opinion writer Kara Swisher and “On Tech” writer Shira Ovide will discuss Big Tech’s role in fighting the pandemic live today at 3 p.m. Eastern on Shira’s Twitter page. (@ShiraOvide)

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  • Updated April 4, 2020

    • The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

    • It seems to spread very easily from person to person, especially in homes, hospitals and other confined spaces. The pathogen can be carried on tiny respiratory droplets that fall as they are coughed or sneezed out. It may also be transmitted when we touch a contaminated surface and then touch our face.

    • Unlike the flu, there is no known treatment or vaccine, and little is known about this particular virus so far. It seems to be more lethal than the flu, but the numbers are still uncertain. And it hits the elderly and those with underlying conditions — not just those with respiratory diseases — particularly hard.

    • If the family member doesn’t need hospitalization and can be cared for at home, you should help him or her with basic needs and monitor the symptoms, while also keeping as much distance as possible, according to guidelines issued by the C.D.C. If there’s space, the sick family member should stay in a separate room and use a separate bathroom. If masks are available, both the sick person and the caregiver should wear them when the caregiver enters the room. Make sure not to share any dishes or other household items and to regularly clean surfaces like counters, doorknobs, toilets and tables. Don’t forget to wash your hands frequently.

    • Plan two weeks of meals if possible. But people should not hoard food or supplies. Despite the empty shelves, the supply chain remains strong. And remember to wipe the handle of the grocery cart with a disinfecting wipe and wash your hands as soon as you get home.

    • That’s not a good idea. Even if you’re retired, having a balanced portfolio of stocks and bonds so that your money keeps up with inflation, or even grows, makes sense. But retirees may want to think about having enough cash set aside for a year’s worth of living expenses and big payments needed over the next five years.