- The U.S. economy shrank at its fastest pace since the last recession in the first quarter as coronavirus shuttered large parts of the country, signaling the end of the longest U.S. economic expansion on record. Gross domestic product (GDP), the broadest measure of goods and services produced across the economy, contracted at a seasonally adjusted annual rate of 4.8 percent in the first three months of 2020. Consumer spending, the economy’s strength, fell at a 7.6 percent rate, the steepest drop since the second quarter of 1980. While economists are also expecting a massive drop-off in economic activity in Q2, the impact of the economic shutdown should be cushioned by stimulus packages passed by Congress to provide financial assistance to U.S. households and businesses.
- Gilead Sciences said that preliminary results of a coronavirus drug trial showed at least 50 percent of patients treated with a five-day dosage of Remdesivir improved, and more than half were discharged from the hospital within two weeks. Remdesivir has shown promise in treating SARS and MERS, which are also caused by coronaviruses. Meanwhile, Pfizer said it could have a vaccine ready for emergency use by the fall. CEO Albert Bourla said in an interview that the company could further be ready for a broader rollout by the end of the year. Pfizer is testing to ensure the vaccine is safe, with results expected as early as next month. Pfizer has partnered with German company BioNTech to test vaccine candidates in both the U.S. and Germany — testing has already begun in Germany. Testing in the U.S. could begin next week if regulators give the go-ahead
- Dr. Anthony Fauci is cited most often as the official Americans rely on for information about the coronavirus, according to a new study. Fauci, director of the National Institute of Allergy and Infectious Diseases, was cited by those surveyed at 45 percent, while participants’ “own state’s governor” was cited by 35 percent, and 20 percent said they relied on President Trump. The study was conducted by the USC Annenberg School for Communication and Journalism and the Interactive Advertising Bureau.
- Prime Minister Justin Trudeau said that public health measures are working to slow the spread of COVID-19 but cautioned that easing restrictions too fast could set back progress made. He and the provincial premiers have released “a set of common principles for restarting the Canadian economy.” The guidelines include the criteria and measures needed to be in place—without any specific timelines—before steps can be taken to begin easing up on various restrictions and allowing for businesses and schools to reopen.
- Chief Public Health Officer Dr. Theresa Tam says Canada is on track to hit between 53,196 cases and 66,835 cases and between 3,277 and 3,883 deaths by this time next week. Consistent with the first round of modelling, Tuesday’s numbers indicate that depending on the containment efforts, between 4,000 and 355,000 people in Canada could die over the course of the pandemic.
- In Spain, the President presented plans to ease the lockdown through a four-phase exit plan that will see restrictions gradually loosened. The initial phase, planned for May 11, will include the reopening of small businesses, hotels, and catering services with restrictions. French Prime Minister Edouard Philippe confirmed the planned end date of the lockdown for May 11. French citizens will once again be able to move freely up to 100 km from their homes and gather both in public and private places, but with fewer than ten people. The Swiss government today announced an acceleration of its timeline to ease restrictions, with restaurants and cultural sites to open on May 11, in addition to the previously planned opening of most stores and businesses. A ban on events with more than 1,000 people has been extended through August. Irish Prime Minister Leo Varadkar has said that the “numbers around COVID-19 just aren’t good enough” to start easing the lockdown restrictions on May 5 as had been planned. A few steps to reopen the country are expected, but most restrictions are likely to stay.
- In the United Kingdom, Foreign Secretary Dominic Raab said that the government would wait on the findings of the next Scientific Advisory Group on Emergencies review in early May before announcing any timeline for the adjustment of lockdown measures. He pointed to a recent rise in infections in Germany, which had begun lifting lockdown measures, as reason for caution.
- The South African government indicated that it expects restrictions to last another 6-8 months, with the virus peak coming in September.
- The Munich-based Ifo Institute found that many of the German companies polled are worried about their long-term future. Twenty-nine percent of the companies interviewed said they could survive for a maximum of three months if the pandemic-related restrictions were maintained for a longer period, while almost 53 percent predicted they could survive for a maximum of six months.
- British Airways yesterday announced that it would cut 12,000 jobs out of a total workforce of 42,000.
- Chinese scientists say the novel coronavirus will not be eradicated, adding to a growing consensus around the world that the pathogen will likely return in waves like the flu. “This is very likely to be an epidemic that co-exists with humans for a long time, becomes seasonal and sustained within human bodies,” said Jin Qi, director of the Institute of Pathogen Biology at China’s top medical research institute, the Chinese Academy of Medical Sciences.
- Singapore’s healthcare capacity to deal with COVID-19 will be increased significantly in the next two months, with the total number of bed spaces for those with mild symptoms doubling by end-June. “We have created more than 18,000 bed spaces for isolation and care needs with another 23,000 in the pipeline,” said Brigadier-General David Neo, director of joint operations at the Singapore Armed Forces (SAF).
- The postponed Tokyo 2020 Olympics will be cancelled if the coronavirus pandemic is not brought under control by next year. Meanwhile, some hospitals in Japan are saving their limited ICU capacity for an increasing number of critically-ill patients and improvising makeshift gear to protect front-line medical staff.
- According to the New York Times, Argentina has withdrawn from trade negotiations with South American trade bloc Mercosur citing a desire to focus on “the growing economic crisis at home.”
- Business organizations and the Mexican government met to plan the reactivation of production chains affected by the coronavirus epidemic. Spokesmen for companies like Bimbo, Nestlé and Whirlpool said that they have trouble paying VAT (value added tax). However, the government continues to deny the possibility of helping companies through tax breaks. Businessmen proposed to reestablish the investment environment based on dialogue between the public and private sectors, build a new competitiveness in the country, and implement a Mexican added value in exports.
- Business and government continue to clash, with President Andrés Manuel López Obrador describing the agreement with the Inter-American Development Bank and business organizations as “an act of corruption,” saying he doesn’t “like the way they reached an agreement.” On the business side, the Mexican Employers Federation criticized López Obrador, saying “he neither helps nor lets others help. But he does lie.”
- The United States government launched an investigation against the Mexican oil companies Libre Abordo and Schlager for doing business with the Venezuelan government, which has been sanctioned by the Trump administration. The United States government informed the Mexican government of the possibility that those companies are fakes.
- Experts believe there will be several peaks of COVID-19 at different moments in Brazil due to differences between lockdown approaches in cities and population density. Although President Bolsonaro is openly against locking down the country, confinement laws are determined by local governments.
- Brazil’s latest data shows 71,886 confirmed COVID-19 cases, a mortality rate of 6.8 percent, and more than 5,000 deaths related to COVID-19. Fifty percent of cases are concentrated in the Southeast, where São Paulo and Rio de Janeiro are located. However, due to the lack of infrastructure, the Amazonas state was the first to experience overwhelmed funeral services, such as morgues and cemeteries. Medical officials have warned the same could happen in São Paulo and Rio de Janeiro in the coming days.
- The Pro-Brasil Program launched this week. The program plans to invest BRL 30 billion in infrastructure over the next three years. However, Economy Minister Paulo Guedes doesn’t appear to be part of the plan. According to POLITICO, “Guedes was nowhere to be seen, stirring questions in Brasilia about President Jair Bolsonaro’s commitment to fiscal discipline and boosting private investment over public spending.”
- So far, Brazil has spent more than BRL 300 billion to fight the pandemic.
- Since April 9, 44.3 million workers have received BRL 31.3 billion.
- BRL 13.6 billion will be allocated to the program for small and medium-sized companies.
- The Ministry of Tourism will facilitate access to funds for micro, small and medium-sized entrepreneurs. The total credit available will be BRL 381 million.
- On April 28, the National Health Surveillance Agency approved rapid testing in pharmacies and drugstores. The Ministry of Health predicted it will receive 23.9 million to 46.2 million tests, either through direct purchases or through donations. Three million tests have already arrived in Brazil.
BUSINESS RESPONSES TO CORONAVIRUS
Below are summaries of interesting business responses to COVID-19 in recent days.
- Mattel launched a “Thank You Heroes” line of collectible action figures of doctors, nurses, EMTs, and delivery drivers. A portion of the proceeds will go to The Entertainment Industry Foundation’s First-Responders-First Initiative to provide essential items to first responders and healthcare workers. Click here to read the article.
- Quest Diagnostics is rolling out an antibody test that consumers can order online. The test can be purchased online for $119 at GetQuestTest.com. Once customers fill out the questionnaire, a physician will review it and refer them to one of the 2,200 locations across the country for a blood test. Click here to read the article.
- Twitter is allowing developers and researchers to study the public conversation around COVID-19 in real time with an update to its API platform. The new COVID-19 endpoint will allow approved developers to access COVID-19 and coronavirus-related tweets across languages, resulting in a data set that will include tens of millions of tweets daily. The data can be used to research a range of topics related to the coronavirus pandemic. Click here to read the article.
- Honeywell announced plans to temporarily shift its manufacturing operations at two of its facilities to produce and donate hand sanitizer to government agencies. Over the next two months, the company’s Muskegon, Michigan, and Seelze, Germany sites will manufacture the sanitizer to help meet demands. Click here to read the article.
- Verizon partnered with iHeartMedia—along with T-Mobile and AT&T—to donate tens of thousands of phone chargers to hospitals across the U.S. hit hardest by COVID-19. Click here to read the article.
- Companies recently announcing plans to reopen include:
- Best Buy will allow customers to schedule in-store consultations in about 200 of its U.S. stores starting in May. Click here to read article.
- Google CEO told employees that a return to the office will not happen until at least June 1. Click here to read the article.
- Simon Property Group is reopening 49 of its malls and outlet centers Friday through Monday. Click here to read the article.
- Starbucks announced that 90 percent of their company-run U.S. stores will be open by early June. Click here to read the article.
Traditional and Social Media Updates
- Facebook and Instagram are looking to celebrate the class of 2020, who are missing out on their graduation ceremonies due to the coronavirus pandemic, with the help of some serious star power. Oprah Winfrey will be giving the commencement address, and Awkwafina, Jennifer Garner, Lil Nas X and Simone Biles will all give speeches. Miley Cyrus is set to perform.
- YouTube will introduce fact-checking panels next to dubious claims for users in the United States. The feature has been live in India and Brazil since last year.
- Instagram made a move to help nonprofits benefit from the 70 percent jump in people using Instagram Live over this past month by extending its Donation sticker to the livestreaming feature.
Broadcast Viewership Rises
- Fox News finished April with the largest monthly audience in network history in prime time and the second-largest monthly audience in total day, only behind April 2003 Iraq War coverage.
- CNN more than doubled its audience vs. April 2019 (albeit starting from a much smaller point than its competitors), rising by 150 percent in total viewers in both prime time and total day. Viewership among adults 25-54 grew by 180 percent for the full day and by 193 percent in prime time.
- 80 percent of local news outlets are ineligible for the Paycheck Protect Program (PPP) because they belong to conglomerates that employ more than 1,000 people.
- Gannett made layoffs; however, the move is not due to economic implications from COVID-19, rather its merger with GateHouse. The Austin Statesman, Bergen Record (NJ) and others were impacted.
INSIGHTS & INTEL:
CENTRAL BANKS LOOK TO PROVIDE MONETARY STIMULUS
The Federal Reserve has guided U.S. monetary policy into uncharted territory in recent weeks. It lowered interest rates to near-zero levels and committed trillions of dollars in asset purchases and Treasury-backed stimulus measures. Chairman Jerome Powell signaled again today that America’s central bank will do whatever it takes to keep the U.S. economy and financial system afloat.
Here are insights from today’s policy meeting and Chairman Powell’s virtual press conference – where he walked a delicate balance between shoring up confidence in policy responses to the crisis without sounding overly optimistic:
- The central bank held rates steady, as expected, and signaled it would stick with an ultra-loose monetary policy amid expectations for a sharp Q2 contraction in economic growth. But with an already swollen balance sheet – now at $6.6 trillion – and interest rates as low as they can go, what else can the Fed do? Some analysts argue it could still provide additional monetary support in the weeks and months ahead by expanding its purchases of municipal bonds to include lower-population cities and counties.
- Powell said a particularly unfortunate impact of the crisis is that it is weighing heaviest on low-income and minority workers in the U.S. just as they were experiencing better employment conditions and rising wages.
- The Fed chairman said he is not concerned about volatility as equity and credit markets try to price out the path of the pandemic. He said the Fed’s main concern is to ensure that markets function properly, and credit and liquidity continues to flow through the economy.
- Powell has often said the United States needs to get fiscal policy in order by reducing deficits and the national debt, but now needs to use its “great financial might” to keep the economy going. “This is not the time to act on those concerns,” he said. Analysts immediately interpreted this as a message to Congress that more fiscal stimulus will be necessary.
Investors will also be watching the European Central Bank (ECB) when it meets on Thursday. The ECB has injected €750 billion ($812.5 billion) into its Pandemic Emergency Purchase Program and is on track to buy a total of €1.1 trillion in net assets this year. Borrowing by European businesses surged in March, according to the ECB’s lending survey, while household demand for loans has dropped sharply. Some analysts are looking for the ECB to follow the lead of the Federal Reserve by adding junk-rated company debt to its stimulus programs and boosting its asset purchases.
SPOTLIGHT: DOES ESG STILL MATTER?
A question has come up: Does ESG still matter in a pandemic? Faced with tough economics and massive uncertainty, will companies walk away from their commitments to creating a better future for us all?
In fact, ESG remains extremely relevant during our current crisis. As The New York Times outlined in a series of opinion pieces on April 17 entitled “The America We Need,” we’re seeing increased focus and scrutiny around how all economic actors should unite to build a more resilient and equitable world. Companies have a critical role to play here. How so?
To answer this question, it’s useful to review what ESG really means — a set of environmental, social and government standards for a company’s operations that investors use as vetting criteria for investments.
In Weber Shandwick’s lasted Purpose Decoded blog post, we define ESG and put forth several considerations to keep in mind as you tell your ESG story to stakeholders. Read the full post here.
- Techonomy East: The in-person event, initially scheduled for May 19-20 in New York City, will now take place as a free online interactive conference on June 15-19 with the originally planned speakers as well as new voices. Techonomy is also now hosting weekly online interactive roundtables every Friday.
- Film Festivals: Considering recent film festival cancellations, the Cannes, Sundance, and Tribeca film festivals are collaborating to produce a 10-day virtual event, hosted on YouTube, beginning May 29.
- Soccer in France: The Ligue 1 and Ligue 2 soccer seasons are now over, as the French Prime Minister announced that no sporting events will take place until at least September.
For more information about how we are helping clients solve in this uncertain time, please contact: