A Big Bet That May Not Be Enough
• UniCredit reckons that the eurozone economy will shrink 0.2 percent in the first quarter and around 1 percent in the second.
• Both sets of analysts expect an equally sharp rebound in the second half of the year, resulting in annual average growth of 0.4 percent in the U.S. and 0.1 percent in the eurozone.
• Indeed, Deutsche Bank argues, the steeper the fall in the short term — driven by travel bans, business closings and the like — the stronger the recovery. The U.S. recession after the 1918 flu pandemic lasted for seven months, around half the average for recessions over the past century or so.
At some point, it’s all about confidence. “While our anxiety is likely to skyrocket over the next several days, I expect that by the end of this coming week, things will have finally reached a climax,” writes Peter Atwater of Financial Insyghts. “It will be messy, but you shouldn’t be afraid of it, nor expect it to continue.” He has tracked the role of consumer confidence through many crises, and his sober, clear-eyed analysis is worth reading.
Airlines and hospitality companies are hurting
Airlines, hotels and restaurants are suffering mightily from travel bans, government closings and more — and some in those industries are warning of dire consequences.
Airlines have warned that their industry faces a mortal threat, citing the U.S. clampdown on travel from Europe, which was extended to Britain and Ireland today. The parent company of British Airways said this morning that it planned to cut its flight capacity for April and May by 75 percent, compared with the same time last year. The C.E.O. of United Airlines, Oscar Munoz, warned that the pain could extend into the summer.
• The Centre for Aviation issued a stark warning: “By the end of May 2020, most airlines in the world will be bankrupt” — unless governments around the world coordinate to help save the industry. Airlines worldwide have been asking for just that.
New York City will close its bars and restaurants, except for takeout and delivery. Data from the reservation service OpenTable noted that the number of bookings on its platform worldwide fell as much as 40 percent year-on-year last week, with bookings in New York City falling 64 percent on Saturday alone.
“This is worse than 9/11,” said John Lam, the C.E.O. of a New York hotel developer.
How other businesses are faring (hint: not well)
The travel and hospitality industries aren’t the only ones in pain, as a drop in consumer spending hits a variety of businesses.
“This week, it has all gone to hell,” Kalena Masching, a real estate agent, told the NYT after her sales slowed down. The NYT notes that measures of consumer sentiment fell sharply in early March, and indexes of business conditions have cratered. Retailers across the country are closing stores, including Apple, Glossier and Patagonia.
The biggest U.S. banks are halting stock buybacks to preserve capital, which will instead go to help consumers and business clients. Bank of America’s C.E.O., Brian Moynihan, told “Face the Nation” on CBS that customers with cash flow or payment problems should “call us, and we’ll make it right.” Elsewhere in the financial world, hedge fund managers like Ray Dalio of Bridgewater are staring at deep losses.
What happened to a hand-sanitizer hoarder
One of the NYT’s most-read stories last week was Jack Nicas’s profile of an Amazon merchant, Matt Colvin, who stockpiled 17,700 bottles of hand sanitizer with the idea of flipping them at huge profits. It didn’t work out quite as he had planned.
The Amazon merchant was one of many who tried to profit from frenzied buying of coronavirus-related supplies, with prices for items like N95 face masks soaring at first. Then, e-commerce platforms cracked down: Amazon canceled thousands of such listings, while eBay blocked all U.S. sales of sanitizer and face masks. The attorney general in Mr. Colvin’s home state, Tennessee, sent investigators to his home to look into the suspected price-gouging.
Mr. Colvin has since changed his tune, donating most of his supply. He told the NYT that he had received death threats and that he regretted his actions.
More coronavirus news:
• LVMH Moët Hennessy Louis Vuitton said that it would use its perfume and cosmetics factories to make hand sanitizer gel for the French authorities. (Business Insider)
• How President Trump oversold efforts by a Google site to help direct Americans to testing centers. (NYT)
• German officials said that the U.S. offered a “large sum” to gain access to a biotech companies’ experimental vaccine. (NYT)
In the darkness, moments of joy
Let’s remember that there are happier moments in these tough times.
Italians broke into song from their balconies and windows, as they were stuck at home during a national quarantine. “It’s not like we’re maestros,” one Italian told the NYT, but “it’s a moment of joy in this moment of anxiety.”
In some European countries, citizens confined to their homes applauded medical workers for their efforts en masse at 10 p.m. local time on Saturday.
The speed read
• Aston Martin was forced to sign a bigger rescue deal with investors after its stock price plunged last week. (FT)
• Impossible Foods, the maker of plant-based protein, raised about $500 million in new funding. (Reuters)
Politics and policy
• Joe Biden and Bernie Sanders clashed over health care policies at last night’s Democratic presidential debate. (NYT)
• Lawmakers in the U.S. are debating whether to lift some tariffs. (NYT)
• Social media companies are doing a better job of fighting misinformation about the coronavirus than they are for fake political news. (NYT)
• That said, researchers say that Twitter’s efforts to clean up its platform have stalled. (WSJ)
Best of the rest
• Bill Gates stepped down from the boards of Microsoft and Berkshire Hathaway to focus more on philanthropy. He’ll be replaced on Berkshire’s board by Ken Chenault, a former American Express C.E.O. (CNN)
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