By Powerscourt on 11/04/2020
The coronavirus pandemic hit several grim milestones on Friday, including a global death toll of 100,000 and a UK 24 hour fatality rate of just under 1,000, worse than a single day in Spain or Italy.
But with clear signs that London and New York may be approaching the plateau, and Spain and Italy preparing to relax some restrictions, the emphasis is shifting towards the so-called exit strategy: how to get people back to business.
Officials around the world are openly gaming the trade-off between shielding populations from the virus itself and the long-term economic consequences of keeping economies in the deep freeze.
President Trump on Friday said the decision about when to relax social distancing guidelines was “the biggest decision I’ll ever make”. His comments come against a background of bleak economic data: US Labor Department data showed nearly 17 million Americans have applied for unemployment benefit since mid-March. The UK is wrestling with a similar dilemma: a report in the Daily Telegraph cited an average forecast drawn from seven economists of a 14% drop in UK GDP over the next quarter, and suggested up to 150,000 avoidable deaths may occur as a result of the lockdown.
But the WHO insists that relaxing restrictions too quickly risks a “deadly resurgence”, lockdown remains the policy in most Western economies.
Most global indices closed up Friday, with oil producing nations edging close to an agreement on a sweeping cut to oil production to match slumping global demand. But equity strategists around the world think the roughly 25% recovery in equity values since mid-March lows may be a bear market rally, to be followed by deeper falls when asset values catch up with the “real” economy.
There were a couple of more cheerful notes ahead of the long Easter weekend. Gilead Science, a US drug maker, released encouraging early stage trial data from its antiviral drug ‘Remdesivir’, a potential treatment. The UK Prime Minister Boris Johnson is recovering in hospital. The Sun reports he is doing Sudoku puzzles and watching movies on an iPad including Withnail and I, a cult British comedy with a lot of boozing, described by one critic as “a devastating portrayal of that terrifying moment when adulthood finally catches up with you.”
We will continue to publish this wrap over the Easter weekend, albeit there will be much less news
WHAT ARE COMPANIES SAYING?
Consumer and Retail
The boss of supermarket chain Iceland has condemned the panic buying seen across its UK stores, particularly through winding queues outside the stores, a lack of online shopping slots and two of its delivery vans being torched. In an interview with The Times, Richard Walker remarked: “The really crazy thing is that we used to spend all of our time planning how to get more people into our stores and how to sell them more. Within the space of a week, it was all about how to stop people panic buying, limiting the amount they could buy and making sure everyone got served.”
Travel & Leisure
On the Beach
Travel companies must radically rethink their business models after the coronavirus crisis as they face paying out billions in refunds to customers due to the near-total shutdown in global travel, the chief executive of On the Beach has said. Simon Cooper, head of the online travel agent, warned that tour operators and airlines would have to stop using cash deposits for future bookings to support their operations after the pandemic prompted mass refund claims. “It’s painful enough being in an environment of zero revenue without being in an environment of zero revenue and having to pay money out,” he said. Instead, he said that customer money should be put in a ringfenced account that would not be used to meet day-to-day running costs. On the Beach does not pre-book inventory such as hotels and keeps customer money in a trust account until they travel, so does not face the same challenge.
Energy companies should not be “screaming for a bailout” from the UK government as the sector is in a better position to weather the coronavirus crisis than the “vast majority” of industries, according to one of Britain’s biggest power suppliers. Keith Anderson, chief executive of ScottishPower, said bad debts arising from customers struggling to pay their bills during the pandemic could later be recovered via an existing mechanism that spreads the costs of missed payments among customers.
Plans to turn the redundant Airbus A380 superjumbo assembly line in Toulouse into a production hall for the company’s fast-growing A321 model have been shelved. Days after Airbus announced that it was cutting production by a third to combat cancelled or deferred aircraft deliveries, it has been confirmed that the A321 line, due to go into production in 2022, has been “paused”. The A321 is a stretched and longer-range version of the A320 workhorse of the short-haul airlines. It had become of interest to carriers such as Easyjet that want to optimise the number of passengers being flown and to airlines that want a smaller jet for the long-haul route between Europe and the eastern United States.
Gilead Sciences Inc.’s experimental drug for patients with severe Covid-19 infections showed promise in an early analysis, raising tentative hope that the first treatment for the novel virus may be on the horizon. All of the 53 trial patients received remdesivir for up to 10 days on a compassionate use basis, a program that allows people to use unapproved medicines when no other treatment options are available. Over 18 days, 68% of the patients improved, with 17 of the 30 patients on mechanical ventilation being able to get off the breathing device. Almost half of the patients studied were ultimately discharged, while 13% died. Mortality was highest among those who were on a ventilator, with 18% of them dying.
Thermo Fisher, the US scientific equipment maker, will be able to supply all the coronavirus tests needed to ramp up screening in the UK to 100,000 a day, said the company’s chief operating officer, as the government opened the “biggest diagnostic lab network in British history”. Mark Stevenson on Thursday told the BBC’s Today programme the company had agreed with the government to supply “more than 100,000 tests per day” and would scale up its manufacturing capacity to enable the kits to be manufactured in the UK. Government ministers have come under heavy criticism for failing to roll out testing quickly enough, which they have blamed in part on lab capacity, as well as shortages of essential supplies, such as swabs and chemical reagents.
Financials & Real Estate
Bovis Homes, one of the UK’s largest housebuilders, One of the UK’s biggest housebuilders is to trial prototype social distancing technology to help protect workers on its sites from coronavirus. The technology, being developed by Blyth-based manufacturer Tharsus, could represent a major boost to the Government’s attempts to keep building sites open. Bovis Homes has closed virtually all its sites following the outbreak, although it is aiming for a restart by the end of April. Greg Fitzgerald, the chief executive, is working on the basis that social distancing measures could be in place for 12 months. He said Bovis was in talks with Tharsus over using the GPS-based technology, which alerts workers if they move too near to their colleagues.
The Co-operative bank is among four banks to have been added to the government’s emergency coronavirus lending scheme after criticism that it is failing to help companies reeling from the economic fallout of the pandemic. The Co-operative Bank, Cynergy Bank, Oak North and Starling will be able to access the business interruption loan scheme, which provides a state guarantee to lenders that support small companies in urgent need of credit. Some of Britain’s largest non-bank lenders, including Funding Circle, Iwoca and Market Finance, which together have provided loans worth billions of pounds to small companies, are hoping to be approved to join the programme next week.
Apple and Google are collaborating to launch a system “to assist in enabling contact tracing”, whereby apps can notify smartphone users if they have come into proximity with people infected by Covid-19. The rare collaboration, announced on Friday morning, comes as demand has grown for tech-based crisis solutions that preserve user privacy. The hope is that aggressive contact tracing can allow cities to emerge from “shelter at home” mandates while still containing the outbreak. “Contact tracing makes it possible to combat the spread of the Covid-19 virus by alerting participants of possible exposure to someone who they have recently been in contact with, and who has subsequently been positively diagnosed as having the virus,” Apple said in one of the technical documents it released.
Royal Mail is facing a burgeoning industrial crisis after the postal monopoly angered staff by snubbing a request to have a day off over Easter. Tensions between the former FTSE 100 company and more than 140,000 staff have gone from bad to worse as the coronavirus pandemic has gripped the nation. Unions claim around a fifth of workers – roughly 26,000 people – are currently off work or self-isolating, with the company accused of putting “profits before safety”. Staff have complained of a shortage of personal protection equipment such as hand sanitiser, gloves and masks.
Allan & Overy
Allan & Overy became the latest law firm to signal it will cut salaries for partners in a bid to save costs across the firm. The firm said yesterday that it was taking measures including making “adjustments to the phasing of profit distribution to partners, increasing partner capital levels, deferring certain investments and recruitment and cancelling events”. Freshfields Bruckhaus Deringer and Linklaters, its “magic circle” rivals, have also told their full equity partners that earnings for the fourth quarter of last year will not be paid. Analysts predict that large practices will recover relatively quickly once global lockdowns are lifted, because “businesses will always need lawyers”.
IN THE NEWS
Opec pushes for deal to reduce oil production – The Times
Social distancing measures may need to remain in place ‘indefinitely’, government experts believe – Daily Telegraph
Coronavirus: ‘Deadly resurgence’ if curbs lifted too early, WHO warns – BBC News
Aircraft emissions fall sharply as pandemic grounds flights – Financial Times
Coronavirus: Boris Johnson taking short walks as care continues – BBC News