1 Views Here’s what you need to know: Shoppers on Wednesday in Bordeaux, France.French officials expect the new lockdown will have a severe effect on many businesses.Credit… Philippe Lopez/Agence France-Presse — Getty Images France was bracing for a fresh blow to its beleaguered economy as President Emmanuel Macron reimposed a nationwide lockdown through December to prevent an alarming surge of coronavirus cases from spiraling out of control.In a televised address on Wednesday, Mr.Macron said the virus had rapidly resurfaced “everywhere” in France, and that requiring businesses to close and people to shelter at home was the only solution to curbing the pandemic.
He pledged substantial financial support to prevent a wave of bankruptcies and layoffs from rippling through the eurozone’s second-largest economy.“You can’t have a prosperous economy when you have the virus circulating throughout the country,” he said.The new lockdown, which will begin Thursday night, would still allow essential sectors to keep operating, and it won’t be as severe as the country’s two-month nationwide quarantine earlier this year, when the entire country was shut in, Mr.
Macron said.Still, he acknowledged it would have a severe impact on businesses that have already grown cash poor because of previous restrictions to curb the virus.France is expected to report on Friday a jump in growth during the third quarter, when summer vacations helped fuel a temporary economic revival.But those figures will likely be eclipsed by the new lockdown, economists warned.
The government has calculated that 60 billion euros is lopped off economic activity for every month in which a total lockdown is active.“Macron did not want to be here,” Mujtaba Rahman, the managing director for Europe at London-based Eurasia Group, said in a note to clients ahead of the announcement.“He had hoped by now to be celebrating an economic recovery from the first lockdown.” Vulnerable sectors are likely to sink further, including retail, aviation, tourism and hospitality, which make up over 10 percent of economic activity.
In Paris alone, for example, the hotel occupancy rate had already plunged to 26 percent in September, when a new curfew was put into effect, according to MKG, a French consulting firm.That figure is likely to worsen.Bars, restaurants and nonessential businesses will close, although students will continue to go to school.
Factories, farms and construction sites will stay open, along with some public services, to limit potentially wider economic damage.Earlier Wednesday, Germany announced the closure of restaurants and bars, starting Monday.French lawmakers last week approved a fresh 100 billion euro package to bolster the country’s economy, on top of nearly 500 billion in financial aid announced during the previous lockdown.
Businesses hardest hit by the new confinement will get 10,000 euros per month, and their payrolls will effectively be nationalized so that employees who cannot work may keep their jobs.Firms that can’t pay rent will be able to obtain waivers, while small- and medium-sized businesses would get additional financial help, Mr.Macron said.Remote work will be “the go-to solution” for all companies, Mr.Macron said.“The economy must not come to a halt,” he said.Stocks on Wall Street slid on Wednesday, erasing any remaining gains for October, and European shares sank to their lowest levels in months as investors began to worry about the measures governments might take to control the coronavirus pandemic’s new wave .
The S&P 500 fell 3.53 percent Wednesday, its biggest one-day drop since June 11.The Stoxx Europe 600 index tumbled 3 percent to its lowest level since May.In Britain, the FTSE 100 index also fell more than 2 percent, to its lowest since April.France and Germany face more severe shutdowns to curb the virus’s spread after localized efforts seem to have failed.
In the United States, New Jersey’s largest city, Newark , has imposed a curfew and reinstated some limits on gatherings to control an outbreak there, while other local governments are considering similar steps.Highlighting the economic concern, oil prices fell more than 5 percent, and shares of energy producers were among the worst performing stocks in the S&P 500.Giant technology companies — which exert a large pull on the direction of market indexes — also fell sharply.
Apple and Microsoft dropped more than 4 percent, while Google’s parent, Alphabet, slid more than 5 percent.Shares of the aircraft maker Boeing fell after it reported its fourth straight quarterly loss and warned of further layoffs, while Mastercard tumbled after it reported disappointing profit and sales data, with pandemic-related travel disruptions hurting its higher-fee cross-border payments business.Traders on Wall Street had already been on edge as the presidential election approaches and lawmakers failed to reach an agreement on what economists say is an essential plan to support businesses and out-of-work Americans.Expectations that congressional Democrats and the White House would strike a spending deal before the Nov.3 election had helped lift the S&P 500 early in the month, but with those talks stalled and coronavirus cases reaching a new peak, the American economy is left to face the pandemic without the reassuring flow of federal dollars to prop up small businesses and consumer spending.With Wednesday’s decline included, the S&P 500 is now down more than 7 percent from its highest point in October.“You’ve had everybody pricing in best-case scenarios,” said William Delwiche, an investment strategist at Baird, a financial firm in Milwaukee.
“And all of the sudden those aren’t being realized.” President Emmanuel Macron of France imposed a new nationwide lockdown that will begin Thursday night and be in effect through at least Dec.1.Already, two-thirds of the population lives in areas with a 9 p.m.curfew, but cases have continued to rise.In Germany, Chancellor Angela Merkel and the heads of the federal states agreed on Wednesday to close restaurants, bars and gyms from Monday to the end of November.Schools, day care facilities and stores will stay open.
In Italy, protests have broken out in response to a monthlong increase in restrictions, which includes a 6 p.m.
closing time for bars and restaurants.“The continued spread of the virus and enactment of new measures risk slowing or reversing the bounce back in European growth in recent months, and delay the pace at which economic activity can return,” Mark Haefele, chief investment officer for UBS Global Wealth Management, wrote to clients this week.Christopher F.
Schuetze contributed reporting.The supply of crude is rising faster than some analysts had predicted it would, with producers in the United States increasing output.Credit… Nick Oxford/Reuters Oil prices dropped sharply Wednesday as mushrooming numbers of coronavirus cases in Europe and the United States threatened to head off further recovery in demand for oil or even to lead to renewed falls in consumption.Adding to traders’ concerns, the supply of crude is rising faster than some analysts had predicted.
Producers in the United States have added volume and Libya, where fighting has depressed production for months, suddenly ramped up output.“Supply is higher than people anticipated and demand is plateauing,” said Bhushan Bahree, executive director at IHS Markit, a research firm.The price of West Texas Intermediate crude, the American standard, fell about 5.7 percent to $37.33 a barrel, the lowest level since June.Brent crude, the international benchmark, dropped 5.2 percent to $39.06 a barrel.Until recently, crude prices had held their ground after recovering from their April lows when some futures prices plunged into negative territory.Now, though, worries over market fundamentals are kicking in again.New restrictions to cope with growing numbers of coronavirus cases in countries like France and Germany could lead to a drop in oil consumption there on the order of 10 percent, analysts at Rystad Energy, a Norwegian consulting firm said on Wednesday.In addition, the looming presidential election in the United States on Nov.
3 is adding volatility and uncertainty, analysts say.A victory by Joseph R.Biden Jr., for instance, could eventually lead to tighter regulation of the oil industry in the United States, while President Trump would likely push in the opposite direction if he remained in the White House.Ford earned $2.4 billion in the three months ended in September.Credit… David Zalubowski/Associated Press Ford Motor reported a big jump in profit in the third quarter after a yearslong restructuring and a rebound in sales after the pandemic shut down dealerships and factories for about two months this spring.The automaker earned $2.4 billion in the three months ended in September, up from $425 million for the same period a year earlier.While it lost money overseas, the company’s North American operations and its division that offers credit did well.But the company said it expected to break even or show a loss of up to $500 million in the fourth quarter before interest expenses and taxes are taken into account.
Ford said it would be hurt by higher costs and lower production as it introduces a fully redesigned F-150 pickup truck, a new Bronco and the Mustang Mach-E electric sport utility vehicle.Fiat Chrysler said on Wednesday that it earned 1.2 billion euros ($1.4 billion), up from a small loss a year ago, as sales of profitable trucks and sport utility vehicles recovered after a sharp drop in the spring.Revenue fell 6 percent, to 25.8 billion euros.
Fiat Chrysler has agreed to merge with Peugeot, the French company, to become the world’s fourth largest automaker.The online lender Social Finance, better known as SoFi, received tentative approval on Wednesday for a national banking charter, which would let the company hold deposits and offer consumers a broader range of financial services.
SoFi, based in San Francisco, is one of a crop of financial technology companies (often called fintechs) that compete with banks and other traditional financial providers.Its flagship products include privately refinancing student loansand offering personal loans, but it has expanded into areas like mortgage lending and stock and cryptocurrency trading accounts.This week, it began offering credit cards.
Because SoFi does not have a banking charter, it must rely on partner banks for the infrastructure for many of its products.Becoming a bank would eliminate that extra layer and allow the company to add traditional banking services like checking and savings accounts to its product mix.The Office of the Comptroller of the Currency granted SoFi preliminary approval for a charter , subject to SoFi’s compliance with additional regulatory requirements.In particular, SoFi must apply for Federal Reserve membership and obtain deposit insurance from the Federal Deposit Insurance Corporation.
Those next steps will take several months, at the least; the earliest SoFi could actually start running a bank would be some time next year.Anthony Noto, SoFi’s chief executive, called the approval “a real testament to the quality, importance and durability of our company.” Becoming a bank “is strategically important for us — we want to be able to offer our members great products at a great value, and using deposits to fund loans will meaningful lower our cost of funding,” Mr.Noto said in an interview.Several other fintechs are also looking to transform themselves into banks.Varo, a mobile-focused financial provider that calls itself a “neo-bank,” got final approval from the same regulator in July for a banking charter.And Square, the digital payments company, received conditional approval this year for a banking charter from the Federal Deposit Insurance Corporation and from Utah’s state banking regulator.SoFi pursued a national banking charter once before, in 2017, but withdrew its application after a scandal over an office culture that employees described as toxic and sexually charged led to the ouster of the company’s chief executive at the time, Mike Cagney.
Mr.Noto, a former Twitter executive, took over in 2018 .Shoppers in New York City in July.While the economy has revived considerably since the spring, it is far short of its level before the pandemic.
Credit… Hiroko Masuike/The New York Times The Commerce Department on Thursday will release its initial estimate of economic growth for the third quarter, and it’s going to show that the economy grew at its fastest rates since reliable records began after World War II.But that doesn’t mean the economy has recovered from its collapse earlier this year, and it’s important to know why.The New York Times’s Ben Casselman broke down the key elements of the report ahead of Thursday’s release.Here are some of the key factors to consider : The numbers will certainly show the economy rebounding.Economists surveyed by FactSet expect that gross domestic product — the broadest measure of goods and services produced in the United States — grew about 7 percent from the second quarter, or 30 percent on an annualized basis.
It doesn’t make sense to consider Thursday’s report in isolation.The third quarter’s record-setting growth is effectively an echo of the second quarter’s equally unprecedented contraction , when business shutdowns and stay-at-home orders led gross domestic product to fall by 9 percent.Strong growth was inevitable as the economy began to reopen.The economy is still in a hole.If G.D.P.
fell by 9 percent in the second quarter and rose by about 7 percent in the third quarter, the economy is not almost back to where it started.The big drop in output in the second quarter means that third-quarter growth is being measured against a smaller base, and the economy is still 3 to 4 percent smaller than it was before the pandemic.(For comparison, the economy shrank 4 percent during the entire Great Recession a decade ago.) Annualized figures are even more misleading.Gross domestic product in the United States is usually reported at an annual rate, meaning how much output would grow or shrink if that rate of change were sustained for a full year.But during periods of rapid change, annual rates can be confusing.In the second quarter, for example, G.D.P.fell at an annual rate of 31.4 percent.
That makes it sound as if the economy shrank by nearly one-third, when in fact it shrank by a bit less than a tenth.To avoid confusion, The Times plans to emphasize simple, nonannual percentage changes from both the second quarter and the fourth quarter of last year, before the pandemic began.(We gave a more detailed explanation of this decision before the second-quarter report in July.) If the sale of Tiffany & Company is approved, it would end an increasingly bitter legal battle between the luxury jewelry retailer and its acquirer, LVMH Moët Hennessy Louis Vuitton.
Credit… Michel Euler/Associated Press Tiffany & Company is close to an agreement to cut the price of its sale to the French conglomerate LVMH Moët Hennessy Louis Vuitton, three people with knowledge of the talks said on Wednesday.The potential settlement would end a dispute between the companies and seal one of the luxury world’s largest deals.
Tiffany and LVMH have discussed a revised price of $131.50 a share, down from $135, the people said.That would bring the sale to just under $16 billion, or about $400 million less than before.Directors of Tiffany are scheduled to meet later on Wednesday to vote on the proposal, one of these people said.LVMH agreed to buy Tiffany in November 2019, intent on adding the company’s diamond rings and robin’s egg blue boxes to a stable of brands that includes Louis Vuitton, Dior and Givenchy.
The acquisition would give LVMH a bigger foothold in the United States, executives said at the time, as well as expose Tiffany to more shoppers in Europe and China.The move also promised to cement the status of Bernard Arnault, the LVMH chairman and chief executive, as the top deal maker in the luxury business.But the French luxury giant grew increasingly nervous about the transaction, its biggest ever, as the pandemic devastated the retail industry.Tiffany’s sales fell by nearly 40 percent in the six months to July, and it recorded a loss of more than $30 million.The company’s shares fell far below the deal price, as investors doubted LVMH’s resolve in going through with the takeover.
A deadline to complete the deal in August was delayed by three months and then, in September, LVMH threatened to abandon the takeover altogether, accusing Tiffany of poor financial performance and breaches of the acquisition agreement.
Also, and unusually, LVMH said that the French government had asked it to pause the takeover because of the United States’s trade battle with France.Tiffany sued LVMH in a Delaware court to compel the company to complete the deal.After more legal wrangling about the timing of the trial, it was scheduled for early January.Now, that might not be needed.News of the potential revision to the deal was reported earlier by The Wall Street Journal .Grounded Boeing 737 Max airliners at Boeing Field in Seattle in July.Boeing is dealing with crises caused by the grounding and the pandemic.
Credit… Lindsey Wasson/Reuters Boeing said on Wednesday that it planned to slash another 7,000 jobs through the end of next year, building on a much larger cut announced this spring .In all, the company expects to end 2021 with about 130,000 employees, nearly 19 percent fewer than at the start of this year.“As we align to market realities, our business units and functions are carefully making staffing decisions to prioritize natural attrition and stability in order to limit the impact on our people and our company,” Dave Calhoun, Boeing’s president and chief executive, said in a note to employees on Wednesday.
News of the job cuts comes as Boeing reported a $466 million loss in the three months through September, on revenue of more than $14 billion.Revenue from its commercial airplane business fell about 56 percent from the same quarter last year as Boeing dealt with crises caused by the pandemic and the grounding of the 737 Max in March 2019 after 346 people were killed in two fatal crashes.The Max could return to the skies in the coming months, after making significant progress among global regulators .Boeing said it has completed about 1,400 test and check flights aboard the plane, a workhorse of its fleet, as it prepares for the recertification.
The company’s Max backlog has fallen by more than 1,000 orders this year because of cancellations and stricter accounting that weighs the diminishing odds that an order will be fulfilled.Over all, the company has more than 4,300 commercial planes in its backlog, which it values at $313 billion.Boeing said it expected it would take about three years for airline passenger traffic to recover to the numbers seen in 2019.Foot traffic at federal airport checkpoints on Tuesday was down about 66 percent compared with a year ago, according to the Transportation Security Administration.
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