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What Floyd verdict means for corporate America — At first glance it may seem crass to talk about the guilty verdicts in the George Floyd case in terms of what they means for big business. And it is to a degree. We do not in any way diminish the immense social and political importance of Derek Chauvin being found guilty of Floyd’s murder.
But it was interesting to see the Business Roundtable quickly release a statement in support of the verdict: “Today’s verdict confirms that George Floyd was the victim of a senseless crime. Though today’s verdict is a step toward justice in this case, unarmed Black men and women continue to die in encounters with the police. To ensure true justice and healing, our country needs to take steps to address its long history of racial inequity in law enforcement.”
Had the verdict gone the other way, big business groups and CEOs would have found themselves under pressure to weigh in for peace and calm while possibly chastising the ruling. Corporate CEOs know the terrain is going to get increasingly complex as the year goes on, bans on contributions in the wake of the insurrection expire and the 2022 campaign approaches.
Big business is under attack on the right for weighing in on political issues like the Georgia state voting restrictions. On the left, they face heavy pressure to accept higher tax rates to pay for infrastructure. And they have to manage multiple stakeholder groups including employees eager to see stronger positions on social justice issues and consumers who might be offended by such statements.
And many will have to decide how hard to push for a GOP congress in the midterms without being seen as backing Trump-wing Republicans. It’s an excruciating position for many executives and something to watch closely the next several months.
GOOD WEDNESDAY MORNING — Second vax dose for MM this morning. Feel very blessed. Please, if you can, get those jabs. Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.
INFLATION WATCH — Via Ed Yardeni: “Sometimes, too much of a good thing is too much of a good thing. Children learn that lesson early when they don’t feel so good after eating too many cookies. Our political leaders seem to have forgotten it if they learned it at all. … They’ve been on a sugar high since the start of the pandemic if not well before this event. …
“The economy and the financial markets are hot. More policy stimulus increases the risk that they will be red hot, resulting in much higher consumer price inflation and many more speculative excesses. Already, the labor market is so tight, especially for skilled workers, that there may not be enough of them to staff more fiscal spending programs, especially on infrastructure.”
GOP ROLLS OUT COUNTER TO BIDEN PLAN — Our Tanya Snyder, Marianne LeVine, and Burgess Everett: “Republican senators … discussed a counterproposal to President Joe Biden’s infrastructure plan, likely coming in at $600 billion to $800 billion and paid for with user fees and unspent Covid relief money. …
“Two people who attended Tuesday’s GOP lunch said the plan … would cost roughly $600 billion to $800 billion, depending how many years the plan lasted. One of the sources was more specific, putting the plan estimate between $550 billion and $880 billion. The latter number would be for an eight-year plan, the same duration as Biden’s $2.2 trillion proposal.
LAST MINUTE PPP REVAMP — Our Zachary Warmbrodt: “A bipartisan group of senators … unveiled plans to offer more emergency pandemic relief to the country's tiniest employers, a last-minute revamp of Washington's nearly $1 trillion small business rescue that is close to exhausting its funding.
“The bill introduced by Senate Small Business Chair Ben Cardin (D-Md.) would allow thousands of self-employed Americans to qualify for more aid under the massive Paycheck Protection Program, which offers government-backed loans that can be forgiven if businesses maintain payroll.”
CORPORATE AMERICA FACES DIVERSITY PRESSURE — Our Lorraine Woellert, Catherine Boudreau and Kellie Mejdrich: “U.S. companies are coming under intense pressure to diversify their executive ranks, with shareholders more than doubling their formal demands for audits and increased scrutiny on hiring and promotions.
“But even as the Derek Chauvin murder trial grips the nation and race rises to the top of the social and legislative agenda, some executives who publicly praise the power of workforce diversity are pushing back against efforts to make their own hiring more transparent.
“Amazon, JPMorgan, Johnson & Johnson and other household-name companies are fighting shareholder proposals to put diversity questions up for a vote. An effort by Nasdaq to require diversity reporting has been mired at the Securities and Exchange Commission”
STOCKS CLOSE LOWER, LED BY BANKS AND TECH — AP’s Damian J. Troise and Alex Veiga: “Stocks fell for the second straight day Tuesday, giving up more of their recent gains as Wall Street shifts its focus on a busy week of corporate earnings reports.
“The S&P 500 fell 0.7 percent. The benchmark index has now lost nearly all of its gain from last week. Apple fell 1.3 percent as part of a broad slide in technology companies. Banks also accounted for a big share of the selling, which came as bond yields fell, reversing course after moving higher on Monday.”
But the stumble lacks an easy explanation for Wall Street pundits — Bloomberg’s Vildana Hajric and Claire Ballentine: “Up four weeks and six of the last seven, U.S. stocks are doing something they haven’t done since March: fall on consecutive days.
"For the first time in a long time, Wall Street pundits found themselves trying to explain a weak market. Covid-19 cases are surging around the world. Anxiety is swirling that new lockdowns could be afoot. Tension is rising between the U.S. and Russia. Already stretched technical indicators are finally giving way.”
THE COVID RISK TO MARKETS ISN’T OVER YET — WSJ’s Mike Bird: “The surge in Covid-19 infections in India threatens to overwhelm the country’s healthcare system, prompting a lockdown in New Delhi, which may be followed elsewhere. That’s now being reflected in financial markets: Indian equities are hurting again."
POWELL WON’T ALLOW ‘SUBSTANTIAL’ OVERSHOOT OF INFLATION TARGET — Reuters’ Ann Saphir: “The U.S. economy is going to temporarily see "a little higher" inflation this year as the recovery strengthens and supply constraints push up prices in some sectors, but the Federal Reserve is committed to limiting any overshoot, Fed Chair Jerome Powell said in an April 8 letter to Senator Rick Scott.
“‘We do not seek inflation that substantially exceeds 2 percent, nor do we seek inflation above 2 percent for a prolonged period,’ Powell said in a five-page response to a March 24 letter in which the Florida Republican raised concerns about rising inflation and the U.S. central bank's bond-buying program.
WARREN INVITES BILLIONAIRE RIVAL TO TESTIFY ON WEALTH TAX — CNN’s Matt Egan: “Democratic Senator Elizabeth Warren wants Leon Cooperman to testify on her proposed wealth tax, which the billionaire has slammed as ‘foolish.’ Warren invited Cooperman, with whom she has repeatedly clashed, to appear at an April 27 hearing on creating a fairer tax system.
“‘As we move expeditiously toward consideration of changes to our rigged tax code so that the wealthy pay their fair share, I believe you should be afforded the chance to present your perspective directly to Congress,’ Warren wrote in a letter sent to Cooperman Monday.”
GOLDMAN SAYS BLACK EMPLOYEES COMPRISE 6.8 PERCENT OF ITS U.S. WORKFORCE — Reuters: “Black employees represent 6.8 percent of Goldman Sachs Group Inc's workforce in the United States and make up a little more than 3 percent of its senior executive team, the bank said in its 2020 sustainability report on Tuesday.
"Black men and women represented 6.6 percent of the company's U.S. workforce in 2019. Goldman, which had previously revealed only percentage figures, released headcount numbers based on ethnicities and race across job categories for the first time.”
POVERTY RATE ROSE TO PANDEMIC HIGH AHEAD OF NEW STIMULUS — Bloomberg’s Alexandre Tanzi: “The U.S. poverty rate rose to 11.7 percent in March, the highest level yet during the pandemic following an increase in the latter part of last year as many government benefits expired, a study showed.
“The March 2021 estimates indicate that without additional aid many in the U.S. continued to suffer from the economic impacts from Covid-19, according to research released Tuesday by economists Jeehoon Han, from Zhejiang University, Bruce Meyer, from the University of Chicago, and James Sullivan of the University of Notre Dame. The projections didn’t capture benefits provided by the American Rescue Plan signed last month.”
REGULATOR BARS FORMER GOLDMAN ANALYST FOR INSIDER TRADING — WSJ’s Allison Prang: “A Goldman Sachs & Co. analyst has been barred from the broker-dealer industry by the Financial Industry Regulatory Authority for insider trading, the regulator said Tuesday.
"Brian Maguire, formerly an analyst at Goldman, bought shares in two different companies — once last April and once last June — after finding out through internal emails that another analyst was upgrading his recommendation on those firms to ‘buy’ from ‘neutral,’ Finra said.”
- Mark McQuillian @mcqdc
- Ben White @morningmoneyben
- Aubree Eliza Weaver @aubreeeweaver
- Victoria Guida @vtg2
- Katy O'Donnell @katyodonnell_
- Zachary Warmbrodt @Zachary
- Kellie Mejdrich @kelmej
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