Powerscourt

By Powerscourt on 02/10/2020

Powerscourt Coronavirus Briefing – 02 October 2020

ANALYSIS

US President Donald Trump has tested positive for coronavirus and will isolate with the First Lady, the President tweeted early Friday morning. Trump’s news came shortly after researchers at Cornell University said analysis of 38 million media articles show he was the biggest source of fake news about the virus: “The president of the United States was the single largest driver of misinformation.”

President Trump is not the first world leader to contract the virus: UK Prime Minister Boris Johnson was hospitalised in April with coronavirus. Brazil’s President Jair Bolsonaro and Michel Barnier, the European Union’s chief Brexit negotiator, along with numerous celebrities, have recovered from it.

But the diagnosis of the world’s most powerful politician, and one who has allied his fortunes so closely with the idea of “beating” the virus, could be politically and economically destabilising for the US and the world as America limbers up for a national vote on November 3.

The President’s doctor said in a statement he was “well” and would continue to carry out his duties, without disclosing whether he had symptoms. Trump’s medical records show that he is overweight and at 74, he is in a high-risk category.

The timing is problematic for his campaign. A visibly sick President, or one whose recovery was in question could derail the election campaign completely and spark major constitutional challenges: even if Trump isn’t incapacitated and doesn’t develop symptoms, he would have to withdraw from the pivotal campaign arena for some time, creating a vacuum which Democratic challenger Joseph Biden would no doubt exploit.

The markets are not encouraged. US stock futures sputtered on the news, with market commentators picking up on the heightened worry about Trump’s reelection chances and general market stability.

Trump said during Tuesday’s Presidential Debate that vaccine developers could accelerate the timetable for development if it were not for the pressure from his opponents.

Now Albert Bourla, the Chief Executive of drugs giant Pfizer, whose vaccine candidate is tipped to the most likely candidate to make it to the finish line first, has hit back, warning that the politicisation of the vaccine development process had confused and unsettled the public.

In a memo to staff, widely reported, Bourla said that the development process would move at the “speed of science”. He wrote: “I was disappointed that the prevention for a deadly disease was discussed in political terms rather than scientific facts.”

Meanwhile another UK politician has been caught in a flagrant breach of COVID safety rules. Scottish National Party MP Margaret Ferrier, who represents Rutherglen and Hamilton West, is facing calls to resign after having been suspended by her party after it emerged she had travelled to Westminister to speak in the House of Commons after experiencing COVID-19 symptoms.

With politicians pressing the public to play their part in managing the transmission of the virus, an analysis by the Guardian has revealed that the patchwork of local lockdowns around the UK does not seem to be containing the infection rate. In 11 out of 16 English cities and towns where restrictions were imposed nine weeks ago, the infection rate has at least doubled, with cases in five areas of Greater Manchester rising faster than the England average in that time.

The impact that coronavirus has had on the beleaguered aviation sector was laid bare yesterday when it emerged that the leading advisers in Rolls Royce’s mammoth rights issue radically scaled back their goal amid concerns about the pandemic.

Goldman Sachs and Morgan Stanley, two of the top banks advising the board on the £5 billion fundraising, cut their exposure by up to half last week, with unnamed sources telling the FT that the near-death of the long-haul aviation market made it difficult to see how to the company can recover.

Stock futures were lower into Friday on the news of the President’s diagnosis, with apprehension ahead of key US labour market data expected later in the day.

 

WHAT ARE COMPANIES SAYING?

 

Industrials 

IAG
British Airways owner IAG announced the results of its 2.74-billion-euro (£2.5 billion) capital increase. It sold 100% of the new shares. The funds will be used to reduce debt and help IAG withstand a prolonged downturn in travel. CEO Luis Gallego said, “we’re delighted our shareholders have supported the capital raise. It strengthens IAG’s financial and strategic position”.

KLM
KLM, the Dutch arm of Air France-KLM, said it had submitted a plan to restructure operations to the Dutch state, a condition of the 3.4 billion euros (£3.1 billion) package in aid it is receiving to avoid bankruptcy amid the COVID-19 pandemic. In a statement, KLM said the plan includes agreements with all employees, would cut costs by 15%, and reduce carbon dioxide emissions by 50% by 2030. KLM is cutting its workforce by 20%, including 4,500 jobs this year.

Boeing
Boeing Co said it will move the rest of its 787 Dreamliner production to South Carolina in 2021. Reuters notes this is a “cost-cutting strategy that raises questions over the future its giant Everett plant north of Seattle.” Boeing said the single site would improve operational efficiency.

Rolls-Royce
Rolls-Royce plans to raise a total of 5 billion pounds ($6.5 billion), including 2 billion from shareholders, to cope with a “worst case scenario”. “This is a comprehensive package which will take any liquidity questions off the table through this crisis… We wanted this package to provide sufficient headroom even through our worst case scenario” CEO Warren East told reporters on a call.

Ryanair
Ryanair will close its bases in the southern Irish airports of Shannon and Cork for the winter season if the government fails to fully adopt EU travel rules due to be finalised this month. “If the Irish Government does not fully adopt the EU travel regulations permitting unrestricted air travel to/from those regions of Europe that are Green or Amber from Oct 13, then regrettably the Cork and Shannon bases will close on Oct 26 and will not reopen until April 1 2021, at the earliest,” said Eddie Wilson, chief executive of Ryanair’s main airlines business. In numbers released today, September traffic was down 64% to 5.1 million guests due to COVID-19 restrictions.

 

Financials & Real Estate 

Draper Esprit
London-based venture capital firm Draper Esprit said it plans to raise 100 million pounds ($128.89 million) in equity to invest in digital transition opportunities brought on by the COVID-19 pandemic. The company, which invests in technology firms across Europe, said it was offering shares at 555 pence each, a 1.3% premium to the stock’s closing price on Thursday.

 

Retail & Consumer 

Amazon
Amazon says close to 20,000 of its staff have tested positive for coronavirus or are presumed to have had Covid-19. It said that following a study of all of its nearly 1.4m Amazon and Whole Foods frontline workers in the US between March and mid-September, it had found 19,816 were positive or presumed positive. An Amazon spokesperson said that the numbers refer to Amazon and Whole Foods warehouse and cashier staff, not delivery drivers, who are contractors.

Gap
Gap said it will virtually hire seasonal staff for the busy holiday months to help the apparel retailer fulfill online orders and man its customer contact centers as consumers shop heavily online due to the pandemic. The company said to make its hiring process safe and easy, it will allow candidates to apply online for any role in three minutes or less.

H&M
H&M, the world’s second biggest fashion retailer, plans to close hundreds of stores next year as the coronavirus crisis drives more shoppers online. It will aim to cut its network of shops by a net 250 next year, representing 5% of its current network. Chief Executive Helena Helmersson said: “Although the challenges are far from over, we believe that the worst is behind us and we are well placed to come out of the crisis stronger.”

 

IN THE NEWS

Goldman and Morgan Stanley scaled back underwriting on Rolls-Royce cash call Financial Times

Pfizer chief hits out at politicisation of Covid-19 vaccine Financial Times

Donald Trump and wife Melania test positive for coronavirus- The Times

UK events industry warns of 90,000 COVID job losses Reuters

Covid cases doubled under most local lockdowns in England – The Guardian




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