Here’s what you need to know:
- AMC Theaters says it has ‘substantial doubt’ it can stay in business.
- The Fed will buy debt from some small cities and counties.
- The Trump administration plans to block Chinese airlines from flying to the United States.
- Eurozone unemployment reaches 7.3 percent.
- Getting back to business may force tough choices by working women.
AMC Theaters says it has ‘substantial doubt’ it can stay in business.
AMC Theaters, the largest theater operator in the world, said in a financial filing on Wednesday that “substantial doubt exists about our ability to continue as a going concern for a reasonable period of time” because of the disruption caused by the coronavirus pandemic.
Moviegoing has essentially ceased around the country, with most multiplexes closed since March and new releases from major studios delayed. All AMC theaters are closed worldwide.
“During this period, we are generating effectively no revenue,” the company said. It estimated that its net loss for the first quarter would be between $2.1 billion and $2.4 billion, compared to a $130.2 million loss in the same period last year.
In April, AMC took on $500 million in new debt, pushing its total to $5.3 billion, which it said would allow it to withstand closures around the world into November.
In its filing, it said it believed it had enough cash on hand to resume operations “this summer or later.” It cautioned that factors like not producing the needed revenues even when it does open, and another suspension of operations could force it to seek additional financing.
The pandemic closures came as theaters were already feeling pressured by streaming’s rising popularity. Since theaters have been shut, some studios have released new movies through video services. In April, Universal successfully rolled out “Trolls World Tour” that way, and said it planned to make more movies available to home viewers — without exclusive theatrical runs — even when theaters reopen. AMC responded by saying it would no longer book any of the studio’s films.
The Fed will buy debt from some small cities and counties.
The Federal Reserve announced on Wednesday that it will expand its municipal bond-buying program, allowing two cities or counties in each state to sell their debt to the central bank, regardless of their population.
The Fed’s program, first announced on April 9, was previously able to buy only from cities with populations of 250,000 or more and counties with populations of at least 500,000. Those larger cities and counties, along with some multistate entities, remain eligible to sell notes of up to 36 months to the central bank’s facility.
Governors of each state will also be able to designate two bond issuers whose revenues come from operating government activities — such as public transit, airports or toll facilities — to use the program.
The Fed is using its emergency lending powers, which it can tap at times of serious economic stress, to buy state and local debt as a way to keep markets functioning normally. The purchases are protected against loss by $35 billion in backing from the Treasury Department, a portion of a $454 billion pot Congress earmarked to support Fed lending programs in the $2 trillion stimulus package.
The program, which can buy up to $500 billion in municipal notes, became operational on May 26.
The Trump administration plans to block Chinese airlines from flying to the United States.
The Trump administration on Wednesday said that it planned to block Chinese airlines from flying into or out of the United States starting on June 16 after the Chinese government effectively prevented U.S. airlines from resuming service between the countries.
The dispute stems from a March 26 decision by China’s aviation regulators that limited foreign carriers to one flight per week based on the flight schedules they had in place earlier that month. But all three U.S. airlines that fly between China and the United States had stopped all service to the country by then because of the coronavirus pandemic. As a result, the Chinese government had effectively banned them from flying between the two countries. Chinese airlines, by contrast, have been flying to American cities.
Delta Air Lines and United Airlines had hoped to resume flights to China this month.
Both companies appealed to the Civil Aviation Authority of China but did not receive a response. The U.S. Transportation Department also pressed Chinese officials to allow flights by American companies during a call on May 14, arguing that China was violating a 1980 agreement that governs flights between the countries and aims to ensure that rules “equally apply to all domestic and foreign carriers” in both countries.
Tensions between the United States and China have escalated to heights not seen in the trade war as the countries scuffle over the origin of the pandemic and China’s recent move to tighten its authority over Hong Kong. With the presidential election just five months away, President Trump and his campaign team have taken a much tougher stand against the country, blaming China for allowing coronavirus to turn into a pandemic and wreck the American economy.
In mid-May, the Trump administration expanded restrictions on Huawei, the Chinese telecom firm, and blocked a government pension fund from investing in China. Last Friday, Mr. Trump announced that he was beginning the process of ending the American government’s special relationship with Hong Kong, and that he would place sanctions on officials responsible for Beijing’s rollback of liberties in the territory.
As ground zero of the pandemic, China was the first country to see aviation grind to a halt this year. In January, American and Chinese carriers operated about 325 weekly flights between the two countries. By mid-February, only 20 remained, all of them run by Chinese airlines.
Eurozone unemployment reaches 7.3 percent.
Joblessness in Europe ticked up slightly in April, the second month after most countries implemented coronavirus quarantines, as government-backed furlough programs designed to limit mass unemployment cushioned the blow of a devastating economic downturn.
But many national financial support programs are set to run out soon, making it likely that joblessness will continue to march higher in Europe over the coming months, economists said.
The eurozone unemployment rate rose to 7.3 percent from 7.1 percent in March, although it was down from 7.6 percent a year ago. Around 12 million people in the 19 countries that use the euro were registered as unemployed, a relatively low number compared with the United States, where more than 40 million people have filed claims for jobless benefits since the start of the pandemic.
European governments have vowed to spend trillions of euros to keep people partially employed and support businesses amid the coronavirus crisis. Since March, France, Germany, Denmark and other countries have effectively been paying businesses not to lay people off and to keep them on standby when their economies reopened. Around one-third of all employees in Europe participated in short-time work schemes at the end of April, according to a study by the European Trade Union Institute.
“As the recovery is likely going to last for quite some time, unemployment is set to rise significantly, although short-time work will help output to recover more quickly once demand returns,” Bert Colijn, the senior eurozone economist at ING bank, wrote in a note to clients.
Getting back to business may force tough choices by working women.
As the pandemic upends work and home life, women have carried an outsized share of the burden, more likely to lose a job and more likely to shoulder the load of closed schools and day care. For many working mothers, the gradual reopening of the economy won’t solve their problems, but compound them, writes The New York Times’s Patricia Cohen and Tiffany Hsu.
If parents are called back to the workplace before day care and other support for family needs is available, they may need to limit their hours or leave the labor force altogether. And such choices are far more likely to face women than men.
Parents in the United States have nearly doubled the time they were spending on education and household tasks before the coronavirus outbreak, to 59 hours per week from 30, with mothers spending 15 hours more on average than fathers, according to a report from Boston Consulting Group.
The inequities that existed before are now “on steroids,” said Claudia Goldin, an economics professor at Harvard University. Since workplaces tend to reward hours logged, she said, women are at a further disadvantage. “As work opens up, husbands have an edge,” Ms. Goldin said, and if the husband works more, his wife is going to have to work less.
Wall Street continues to rally along with global markets.
Stocks rose again Wednesday, Wall Street’s third-day of gains this week, as investors continued to zero in on prospects for the economy as they looked past other risks.
The S&P 500 climbed more than 1 percent. Stocks in Europe were sharply higher.
On Wednesday, a private report on payrolls that showed job cuts may be slowing helped lift shares in the United States. Business payrolls fell by 2.76 million last month, the ADP Research Institute said. The government will release official payroll figures for May at the end of this week.
Investors have looked past a number of risks — from economic damage caused by the coronavirus pandemic, to rising tension between the United States and China, to the growing unrest in the United States — to bid stocks higher for weeks, as they cheered steps from the Federal Reserve and fiscal spending by Washington meant to help minimize damage from the pandemic.
Since March 23, when the Federal Reserve signaled its willingness to do whatever it took to stabilize financial markets, the S&P 500 has soared more than 37 percent. It is now less than 10 percent below its pre-pandemic high.
Office towers are still going up, but who will fill them?
Before the pandemic shut down businesses, a robust economy had powered a building boom, sending office towers skyward in urban areas across the United States. The coronavirus outbreak, though, has scrambled plans and sent jitters through the real estate industry.
Skyscrapers scheduled to open this year will remake skylines in cities like Milwaukee, Nashville and Salt Lake City. Office vacancy rates, following a decade-long trend, had shrunk to 9.7 percent at the end of the third quarter of 2019, compared with 13 percent in the third quarter of 2010, according to Deloitte.
Developers were confident that the demand would remain strong. But the pandemic darkened the picture.
“There is a pause occurring as companies more broadly consider their real estate needs,” said Jim Berry, Deloitte’s U.S. real estate sector leader.
If the economic pain drags on, there could be long-lasting changes to the way people work and how tenants want offices to be reimagined, said Joseph L. Pagliari Jr., clinical professor of real estate at the University of Chicago’s Booth School of Business.
E-bikes are having their moment in the pandemic.
Electric bikes, the battery-powered two-wheelers, have become a compelling alternative for commuters who are being discouraged from taking public transportation and Ubers. For others, the bikes provide much-needed fresh air after months of confinement.
So it’s no surprise that e-bikes are now as difficult to buy as a bottle of hand sanitizer was a few weeks ago. In March, sales of e-bikes jumped 85 percent from a year earlier, according to the NPD Group, a research firm. Amazon, Walmart and Specialized are sold out of most models. Even smaller brands like Ride1Up and VanMoof have waiting lists.
“I was convinced that e-bikes would completely change cities all over the world in the next 10 years, but it seems like because of this crisis, suddenly it’s all happening in the next three or four months,” said Taco Carlier, the chief executive of VanMoof, which is based in Amsterdam.
If you are contemplating an e-bike purchase, there are trade-offs to consider, writes Brian Chen. For one, the battery packs and motors add bulk. For another, these ostentatious bikes may lure thieves.
Catch up: Here’s what else is happening.
Sales at Campbell Soup Co. rose 17 percent in the three months that ended in April, driven by a “broad-based” increase in demand for canned goods and comfort food during pandemic lockdowns, the company said Wednesday.
Toyota Motor said it sold 165,000 cars in May, a 26 percent decline from a year ago. But the total was higher than its revised sales target, which called for May sales of 125,000 cars and light trucks. “Retail is recovering quicker than anticipated,” the automaker said in a statement.
Lyft told investors that its business was beginning to recover from a steep downturn caused by the coronavirus pandemic. The ride-hailing company said in a regulatory filing that rides on its platform had increased 26 percent in May from the previous month. Despite the modest recovery, rides were still down 70 percent when compared with the same month a year ago, Lyft said. It added that it expected to lose no more than $325 million in the second quarter of the year.
Zoom, the videoconferencing company that has surged in popularity during the pandemic, said that its revenue soared to $328.2 million in the quarter that ended April 30, a 169 percent jump over the same period last year. Zoom said it had about 265,400 customers with more than 10 employees at the end of the quarter, a year-over-year increase of 354 percent. “The Covid-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom,” said Eric S. Yuan, the founder and chief executive of Zoom.
Reporting was contributed by Jeanna Smialek, Niraj Chokshi, Connor Ennis, Patricia Cohen, Tiffany Hsu, Liz Alderman, Mohammed Hadi, Brian X. Chen, Kevin Williams, Neal E. Boudette, Kate Conger, Rich Barbieri and Gregory Schmidt.