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Canadian government to buy surplus food
Canada will buy “large quantities” of surplus food that are at risk of spoiling as the government tries to protect farmers and producers from the economic crises caused by the coronavirus pandemic.
The C $ 50m (US $ 35m) food purchase program comes as part of C $ 252m (US $ 179m) in new funds for farmers and food processors announced by Prime Minister Justin Trudeau.
“Some producers have no choice but to throw away their product,” Trudeau said, as the closure of hotels and restaurants has led to overproduction of some items, such as milk, butter and potatoes. Trudeau said “much of that surplus” will be bought by the government, which will then work to redistribute it to programs for those in need.
Funding did not reach the Cdn $ 2.6 billion required by the Canadian Federation of Agriculture to assist the sector. Several meat processing plants in Canada have been affected by Covid-19 outbreaks among staff. President Donald Trump was criticized last week for moving to force American plants to remain open.
Trudeau said Canadian food processors would receive C $ 77 million to buy protective equipment, adapt their facilities and increase national processing capacity. Meanwhile, farmers would benefit from a C $ 125 million fund to help them keep livestock and pigs on their farms if there were not enough capacity to process the animals, he said.
Canada is one of the world’s largest food producers, and Trudeau said the government is working to safeguard exports, especially to the United States, as the pandemic disrupts trade routes. Canada’s food exports increased 12.1 percent in March, although this was due in part to the lifting of rail blocks.
Heath Canada has confirmed 61,159 cases of Covid-19. The death toll rose to 3,915 as some regions have begun reopening stores and facilitating other closure measures.
US Household Debt Rises to Record Levels
By James Politi in Washington
US household debt rose to a record level of $ 14.3bn in the first quarter of 2020, the Federal Reserve Bank of New York reported Tuesday, highlighting the financial exposure of many American individuals and families to the economic crisis. due to the coronavirus pandemic.
The quarterly report of the New York Fed showed that the levels of household debt in the US. USA They increased by $ 155 billion during the first three months of the year, largely due to higher mortgage debt.
In addition to housing, student loans increased by $ 27 billion during the quarter, while auto loans increased by $ 15 billion. However, the value of credit card balances decreased by $ 39 billion as Americans reduced their spending during the coronavirus pandemic.
The $ 14.3tn debt level is $ 1.6tn higher than the $ 12.68tn peak reached at the height of the financial crisis in the third quarter of 2008, raising the question of whether the United States is about to be hit by a wave of future defaults. months since Americans can’t make their payments.
Delinquency rates remained essentially unchanged in late March compared to the previous three months, but Fed officials warned that much of the Covid-19 impact was yet to come.
Andrew Haughwout, senior vice president of the New York Fed, said:
It is essential to note that the latest report reflects a time when many of the economic effects of the COVID-19 pandemic were just beginning to be felt.
We see a larger-than-expected decline in credit card balances based on past seasonal patterns, but it’s too early to confidently assess their connection to the pandemic.
We will continue to monitor these developments and the overall state of household balance sheets closely as key data updates and the economic situation evolves.
In the last quarter of 2019, household debt reached $ 14.2bn, having increased by $ 193 billion compared to the third quarter of last year.
Norwegian Cruise Line signals ‘substantial doubts’ about its business
Norwegian Cruise Line raised concerns on Tuesday about its ability to continue operating its business and warned that it may need to file for bankruptcy as it sought to raise around $ 2 billion to defend against the impact of the cornavirus blockade on the travel industry.
The company’s shares fell 22 percent after the company said in a presentation to the Securities and Exchange Commission that “as a result of the impact of the Covid-19 pandemic, our financial statements contain a statement of substantial doubt about the company’s ability to continue as a going concern. “
The Miami-based cruise operator also announced $ 1.6 billion in proposed stock and bond offerings and a $ 400 million investment from a subsidiary of buying firm L Catterton.
Norwegian warned that if it were unable to meet its liquidity needs through loans, “it may be necessary for us to reorganize our company in its entirety, including through bankruptcy, and our shareholders could lose their investment in our common shares.”
Norwegian said it sees “significant softness in short-term demand and high write-offs” and that as of April 24, early bookings for the rest of the year were “significantly lower than the previous year with prices mid-one digit”. However, the company said reserve trends point to demand in the medium and long term, “with the 2021 reserved position slightly lower compared to the same period last year at a price that has dropped by mid-digit. compared to the previous year. ”
Norwegian has identified nearly $ 515 million in capital spending reductions and previously said it expects a quarterly loss for the quarter ended March 31.
United Airlines to cut more than 3,400 jobs
Claire Bushey in Chicago
United Airlines plans to fire more than 3,400 administrative and administrative employees and reorganize its pilot ranks as soon as restrictions on government aid expire this fall.
As the coronavirus pandemic paralyzes demand for air travel, the drop will bring a 30 percent “shift” among the approximately 13,000 pilots flying to the Chicago airline, with some suspended and others reassigned to new centers to accommodate a altered flight schedule. Meanwhile, a four-day work week for the company’s 11,500 administrative and administrative employees begins May 16.
“Government travel restrictions, orders to stay home, and the lack of a medical solution for Covid-19 have brought travel bookings and demand to essentially zero,” said Kate Gebo, executive vice president of human resources at a memorandum to employees. “This forces us to accept the fact that our airline, and our entire workforce, will have to be smaller than it is today.”
Gebo said employees should consider a voluntary layoff package that offers employees ongoing medical benefits and travel privileges, but in a “significant change” from the usual policy, with no cash payment.
United will receive $ 5 billion from the US government. The US, which prevents airlines from firing or suspending workers until September 30. JPMorgan Chase analyst Jamie Baker said in a note: “We have recognized for some time that October 1 is likely to emerge as one of the darkest days in history for the aerial workforce.”
The US service sector USA Collapses for the first time since 2009
The US service sector USA It contracted for the first time in more than a decade last month, as restaurants, retailers, and other companies were forced to close amid the coronavirus outbreak.
Economic activity in the vast non-manufacturing sector fell to a reading of 41.8 in April, down from 52.5 a month earlier, according to a survey by the Institute for Supply Management. The services sector was below 50, the threshold that separates growth and contraction, in December 2009, and was the weakest level recorded since March of the same year.
Economists surveyed by Thomson Reuters had expected a sharper drop to 36.8.
“Respondents are concerned about the ongoing impacts of coronavirus on the supply chain, operational capacity, human resources and finances, as well as uncertain timelines for business resumption and return to normality,” said Anthony Nieves. , president of the ISM office. manufacturing companies survey committee.
Employment sub-indices and new orders showed sharp declines from March to April, while a reading of 26 for commercial activity was the lowest since the ISM survey launched in 1997. Supplier deliveries also decreased, mainly due to problems with supply related to the pandemic.
Public administration, finance and insurance were the only service industries that posted growth in April.
Turkey virus deaths may be 25% higher than official figure
John Burn-Murdoch in London and Laura Pitel in Ankara
The death toll in Turkey from the coronavirus could be up to 25% higher than the official government count, adding the country’s 83 million people to the myriad of nations that have struggled to accurately capture the impact of the pandemic.
Ankara has previously rejected suggestions that municipal data from Istanbul, the epicenter of the Covid-19 outbreak in the country, showed that there were more deaths from the disease than reported.
But an analysis of individual death records by the Financial Times raises questions about the Turkish government’s explanation for an increase in all-cause mortality in the city of nearly 16 million people.
Johnson saw no warnings before shaking hands ‘continuously’
Sebastian Payne and Jim Pickard in London
Downing Street has said that Boris Johnson did not read the advice of the government’s scientific advisory group that warned against handshakes and other human contacts.
Within minutes of a Sage meeting on March 3, the report said:
There was agreement that the government should discourage greetings such as shaking hands and hugging, given the existing evidence on the importance of hand hygiene. A public message against shaking hands has additional value as a signal about the importance of hand hygiene.
That same day, the UK Prime Minister gave the government’s daily briefing and said there was no problem shaking hands:
I am continually shaking hands. The other night I was in a hospital where I think there were actually a few coronavirus patients and I shook everyone’s hand, they will be happy to hear it. I keep shaking hands.
On Tuesday, his spokesman said he had not seen Sage’s advice on handshaking when he made those comments. Johnson also shook hands with TV presenter Philip Schofield on March 5 and boxer Anthony Joshua on March 9.
The spokesman said the documents were sent to Sage, but that they may not have ended in a formal council for the ministers.
“They are not final wise advice for ministers,” he said. “I can’t tell if he [Mr Johnson] I would have even seen that document. “
Johnson has recently recovered from a Covid-19 bout. He was diagnosed with coronavirus less than a month after giving the briefing. He spent a few nights in the intensive care unit of a London hospital in early April and was away from work for about three weeks.
Brent crude is back above $ 30 a barrel as locks ease
Brent crude, the international benchmark for oil, has risen above $ 30 a barrel for the first time since mid-April, as the cautious reopening of economies stimulates a recovery in demand.
Global demand for oil has plummeted as a result of restrictions imposed around the world to stop the spread of the coronavirus. But signs that closing outflows have already started to boost consumption have underpinned a rebound in prices.
Countries like Spain, Italy and India have tentatively eased the blockade measures this week, allowing some companies to reopen. California, the most populous state in the US The US will relax its restrictions from Friday.
Brent added 10 percent to trade at $ 30.12 a barrel when the markets opened in New York. It had dropped below $ 16 a barrel last month as oversupply, along with storage concerns, led traders to download contracts.
West Texas Intermediate, the American marker, rose 16 percent to $ 23.66 a barrel, setting it on track for its fifth consecutive day of earnings.
“The market is still vulnerable, but now one thing is clear, the bottom of the demand is behind us, and this is manifested in the oil prices that are on the rise,” said Per Magnus Nysveen of the consultancy Rystad Energy.
United States President Donald Trump, who has sought to raise prices through a push for cuts in international supply, welcomed the recovery in oil prices.
Wall Street also opened higher, with the S&P 500 adding 1 percent as operations in New York began.
Sports executives reassess business models as pandemic threatens to keep fans at home
Samuel Agini in London
High-level figures from the sports industry have highlighted the need to re-evaluate business models, as football, cricket and rugby are preparing for losses of potentially hundreds of millions of pounds due to the pandemic.
With matches still on hold and fears that stadiums will remain closed to fans when events resume, the sports industry is reviewing how it can be more sustainable.
Rick Parry, president of the English Football League, which runs the professional divisions below the Premier League, warned of a £ 200 million hole in late September.
Calling for a “full restart,” Parry said the pandemic presented an opportunity for the EFL to develop a more “sustainable” business model, referring to player salaries. At the Championship, which is England’s second-highest division after the Premier League, the clubs paid a salary of £ 795 million in the 2017/18 season, equivalent to 106% of revenue, according to Deloitte.
The EFL is studying the possibility of cost controls to limit the amount that clubs can spend, according to Mr. Parry, who also faced so-called parachute payments that the Premier League pays to clubs that are relegated to tiers. Lower. division, giving them more firepower to compete and putting pressure on other teams.
Tom Harrison, executive director of the England and Wales Cricket Board, also said the sport was facing a loss of £ 380m in the worst case.
Cricket should analyze its cost base and appeal to a broader audience, said Harrison, who rejected the view that the Hundred, a new, shorter format tournament to be launched this summer, was a “gamble.”
He said the tournament, which was delayed until 2021, attracted young adults and parents with children, and will help finance the growth of the sport.
Meanwhile, Rugby Football Union, the governing body of English rugby, could lose revenue of £ 107 million on top of the £ 15 million already lost if international matches scheduled for the fall are canceled.
Bill Sweeney, executive director of the RFU, said there was an opportunity to address the “flaws” in the game that date back to 1995 by aligning the world rugby calendar.
Foxconn’s Chinese factories return to business as usual
Kathrin Hille in Taipei
Apple vendor Foxconn saw sales stabilize in April, reflecting the return of its production mainly in China to normal seasonal levels after the coronavirus-induced disruption.
Revenue in April was NT $ 380.9bn, a 0.3 percent increase from the same month last year, Honhai Precision Industry, the group’s flagship company listed in Taiwan, said in a statement Tuesday.
In January, revenues had decreased 12 percent year-on-year, in February 18.1 percent and in March 7.7 percent.
In February, blockades imposed in many Chinese provinces to stop the coronavirus outbreak forced factories to remain closed for weeks after the Lunar New Year holiday.
Foxconn had previously said that its production in China would return to normal seasonal levels in late March.
Foxconn, the world’s largest electronics contract maker, employs approximately 1 million people, most of them in China, where the company manufactures components and assembles a myriad of electronic devices, as well as electronic products for industrial and automotive applications.
The free content for FT’s Covid-19
Gary writes:
I am applauding for the NHS and the people who work on it, as my mother did; For disproportionately black and brown migrants and low-paid workers who keep the institution running, they have done so since its inception and are now disproportionately vulnerable to both the disease and the challenges of confinement.
I applaud with pride that I live in a nation that has created and sustained this, but also with rage because not everyone has the protective gear or proof they need yet, and with the hope that someday soon they will be paid what they deserve and the investment service you need.
Here’s the rest of our free content to read on Covid-19.
Marathon Petroleum Receives $ 12.4 Billion Impairment Charge Amid Weak Fuel Demand
Derek Brower in London
Marathon Petroleum, the largest US oil refinery. The US posted a first-quarter loss of $ 9.2 billion, including an impairment charge of $ 12.4 billion, worse than a loss of $ 7 million the year before, as fuel demand began to fall amid widespread blockages by coronavirus.
The company said it would cut $ 1.4 billion, or 30 percent, from capital spending this year and cut spending by $ 950 million in response to the “Covid-19” environment. About half of the capital spending reductions would be in the company’s intermediate business, including the subsidiary MPLX.
The company also sharply reduced its prospects for refining performance in the second quarter, which it expects to be 2.1 million barrels per day, 30% less than 3 million b / d in the first quarter, as the Coronavirus blockages affected fuel demand.
“These are unprecedented times, leading us to make prudent tactical changes by 2020,” said Chief Executive Michael Hennigan.
In addition to the capital spending reductions, Marathon suspended the share buyback and said it would temporarily suspend some facilities. Analysts said this would imply reducing execution rates at refineries.
Marathon shares rose nearly 8 percent in premarket trading, after the results exceeded analyst expectations. The adjusted quarterly revenue loss of $ 106 million was well below the expected loss of $ 203 million. The adjusted loss per share of $ 0.16 was approximately half of the expected loss. Total revenue in the first quarter fell from $ 28.6 billion a year earlier to $ 24.1 billion, below expectations.
S&P 500 resilience: weakened by coronavirus
The Lex column
The FT’s Premium Business and Finance Lex column has tested companies on the S&P 500 and found that a third of them can be classified as “weak” or “vulnerable” if their annual earnings are discounted to allow for the impact of Covid- 19)
There is a greater vulnerability to the virus among the components of the first-rate US index than in the UK’s FTSE 350, although a series of major bankruptcies is unlikely.
read more here
The US trade deficit. USA It increases as exports fall more than ever
The United States’ international trade deficit soared in March with a record drop in exports as international travel and tourism collapsed and the coronavirus pandemic disrupted trade.
The trade gap in goods and services increased to $ 44.4 billion, the Commerce Department said Tuesday, from $ 39.8 billion in February.
“The falls in March exports and imports were due, in part, to the impact of Covid-19, as many companies operated at limited capacity or ceased operations entirely, and the movement of travelers across borders was restricted “said the department.
Exports fell a record 9.6 percent to $ 187.7 billion. The flow of goods such as auto parts and industrial supplies outside the US USA It fell by $ 9.2 billion, while that of services such as travel and transportation fell by $ 10.8 billion. Meanwhile, imports fell 6.2 percent to $ 232.2 billion, the biggest drop since 2009.
“A deep global recession is going to hit trade volumes, and given that the United States is a chronic deficit nation (which imports much more than we export), the result will be a much narrower trade deficit for some time,” he said. Joshua Shapiro at MFR. “Although it is hardly a sign of economic health, this will offset the massive damage to overall real GDP growth that will be caused by the evaporation of demand in the economy.”
Covid-19 global outbreak slows with number of new deaths slipping
Steve Bernard
The global Covid-19 outbreak has shown more signs of cooling, with the number of new deaths declining to their lowest level on a Monday since the end of March.
Just under 3,500 people died Monday from the disease caused by the coronavirus, health authorities reported.
In the USA In the U.S., 938 people died during the period, bringing the number of deaths there to 62,806. However, it marked the first time in a month that fewer than 1,000 people lost their lives. Globally, the number of recently confirmed Covid-19 cases increased by 76,091 on Monday, bringing the total number of infections to 3.5 million.
The UK recorded its lowest number of deaths since March 29, as 288 deaths were recorded on Monday. This brings the total to 28,447; It is expected to overtake Italy this week to become the country hardest hit in Europe by the deaths.
Russia once again registered more than 10,000 new cases in a single day. 30,257 infections were registered in the last three days alone, since the total number of cases reached 155,370.
Explore pandemic data to better understand the spread and path of disease in the live update and customizable version of FT’s Covid-19 trajectory charts.
Virgin Atlantic prepares to cut nearly a third of its workforce
Tanya Powley in London
Virgin Atlantic is preparing to cut nearly a third of its 10,000 workforce and close its London Gatwick operations as the airline pulls back to survive the coronavirus crisis.
The British airline warned on Tuesday that it would take up to three years to return to 2019 traffic levels and announced plans to cut up to 3,150 jobs.
It will depart its base at Gatwick Airport, where it has been headquartered for the past 35 years, and transfer its leisure flight to London Heathrow and maintain its base at Manchester Airport.
In an internal staff post seen by the FT, Shai Weiss, executive director of Virgin Atlantic, warned that current cost measures and support packages “are not enough.”
“If we want to safeguard our future and emerge from this crisis as a profitable business in a sustainable way, now is the time to take decisive action to reduce our costs and preserve cash,” he wrote.
The Virgin Group, which owns 51 percent of Virgin Atlantic, is racing to find new investors within the next month as the airline struggles for its survival.
He has also been in talks with the UK government for the past month during a £ 500 million bailout of commercial loans and guarantees.
America: what you will have missed
For our newly awakened readers, here is a rundown of the latest coronavirus news from Financial Times reporters around the world.
Pfizer’s first vaccine in the US USA Trials began in New York, Ohio, and Maryland. The pharmaceutical company said it could be producing millions of doses of the vaccine as soon as the end of the year, if it succeeds.
The euro slipped after Germany’s constitutional court ruled that, although legal, the European Central Bank’s debt purchases required a review of whether they were “proportionate” in pursuit of its monetary policy objective.
Government of spain He fought to maintain control of the country’s seven-week blockade on the eve of a potentially decisive parliamentary vote to extend the country’s state of alert.
BNP Paribas warned that the coronavirus could cut a fifth of its 2020 earnings, as it revealed a € 184m hit to its stock trading division, caused by companies across Europe that canceled or cut their dividends under pressure from the regulators.
Covid-19 deaths in England and Wales They have passed their peak, but only fair. Meanwhile, UK manufacturing and service activity fell to its lowest level on record, prompting analysts to predict a more severe slowdown than “anything seen in living memory.”
LendingTree Says Second Quarter Revenues Will Fall As Virus Squeezes Credit Markets
Robert Armstrong in New York
The online debt market LendingTree sees a sharp drop in income and earnings in the June quarter, as the Covid-19 shutdown squeezes the credit markets.
The company expects second-quarter revenue to be between $ 160 million and $ 175 million, down from $ 278 million in the second quarter of last year, when the growth rate was 51 percent. Adjusted ebitda (earnings before tax depreciation and amortization) is expected to drop more than half, to $ 12m- $ 18m.
The company offers quotes on mortgages, personal and small business loans, as well as insurance, and generates income when it refers a client to a lender. It released the new guide on increasing insurance and mortgage benchmarks, and also released first-quarter results, which included revenue that grew eight percent to $ 283 million.
However, credit card revenue fell 5 percent as “unsecured credit and the flow of capital in certain corners of the market” narrowed at the end of the first quarter.
The company’s shares have fallen nearly 30 percent since the coronavirus first took over the markets in late February.
Fiat Chrysler registra una pérdida de 1.700 millones de euros a medida que caen las ventas y la producción
Peter Campbell en Londres
Fiat Chrysler informó una pérdida de 1.700 millones de euros en el primer trimestre cuando el coronavirus detuvo sus fábricas y redujo sus ventas.
Las ventas de automóviles cayeron un quinto a 818,000, mientras que los ingresos cayeron un 16 por ciento a € 20,6 mil millones en los tres meses, ya que las salas de exposición y plantas en todo el mundo cerraron debido al brote. El negocio consumió 5.100 millones de euros en efectivo en el trimestre, de los cuales 3.500 millones correspondieron a capital de trabajo.
Mientras que las operaciones chinas se reiniciaron en marzo, el grupo se vio obligado a cerrar sus plantas estadounidenses, que hacen sus rentables camionetas, durante el mes. Las ganancias en su corazón de América del Norte se redujeron a la mitad a € 548 millones, y las entregas de vehículos se redujeron en 90,000 unidades a 469,000. Las otras divisiones de la compañía, en Europa, Asia y América Latina, así como la marca Maserati, cayeron en pérdida.
La compañía dijo que está “segura” de su capacidad para reiniciar las operaciones, con las fábricas en China abiertas nuevamente y algunas plantas en Europa volviendo a funcionar.
La compañía dijo:
Hemos trabajado en estrecha colaboración con todas las partes interesadas relevantes para desarrollar e implementar planes sólidos para reiniciar de manera efectiva la producción y la venta de vehículos una vez que los gobiernos en varias jurisdicciones lo permitan.
La compañía también enfatizó que sigue comprometida con su fusión con el PSA de Francia, que pretende completar a fines de este año o principios de 2021.
Los maestros exigen más pruebas y rastreo antes de que las escuelas vuelvan a abrir
Andrew Jack en Londres
Diez sindicatos de docentes en el Reino Unido e Irlanda pidieron “precaución significativa” sobre los planes para comenzar a reabrir las escuelas en ausencia de un plan más claro para garantizar el apoyo en pruebas, seguridad y salud mental a los estudiantes y al personal que regresan.
El Grupo Británico e Irlandés de Sindicatos de Docentes, un organismo paraguas que representa conjuntamente a casi 1 millón de docentes, escribió a los ministros de los dos países exigiendo la capacidad suficiente para “probar, rastrear y aislar” el coronavirus como requisito previo para la reapertura de la escuela.
Pidió medidas de higiene fuertes y equipos de protección personal, junto con un retorno gradual que probablemente comenzaría con la mayoría de los alumnos que asisten a la escuela a tiempo parcial.
Escocia cautelosa sobre la reducción de las restricciones ya que el virus podría resurgir
Mure Dickie en Edimburgo
El gobierno escocés cree que alrededor de 26,000 personas en Escocia actualmente podrían infectar a otros con el coronavirus, “demasiado alto” para considerar la epidemia bajo control.
Un documento del gobierno escocés publicado el martes dijo que si bien la tasa de reproducción de Covid-19 ahora estaba entre 0.7 y 1, lo que implica un número cada vez menor de casos, aún se necesitaba “extrema precaución” sobre cualquier alivio de las restricciones de bloqueo actuales.
El documento dio, como ejemplo, estimaciones que muestran que el resultado “más probable” de una reapertura completa de guarderías y escuelas sería “un resurgimiento del virus de tal manera que la capacidad hospitalaria en Escocia se vería abrumada en menos de dos meses”.
“El peso de la evidencia … indica que hay muy poco espacio, si es que hay alguno, para cambiar las restricciones en este momento”, escribió Nicola Sturgeon, primer ministro de Escocia, en el periódico.
BNP Paribas warns that the coronavirus could affect 2020 earnings in a fifth
David Keohane en París y Stephen Morris en Londres
BNP Paribas advirtió que el coronavirus podría reducir una quinta parte de sus ganancias de 2020, ya que reveló un golpe de 184 millones de euros a su división de comercio de acciones, causado por compañías en toda Europa que cancelaron o recortaron sus dividendos bajo la presión de los reguladores.
El banco francés dijo el martes que sus ingresos netos podrían caer del 15 al 20 por ciento este año, con la pandemia de Covid-19 que provocó una “revisión drástica del escenario macroeconómico 2020”.
“The health crisis has had a major impact on the macroeconomic outlook and has produced extreme shocks in the financial markets,” BNP said in a statement along with its quarterly earnings report.
La rival local, Société Générale, informó una sorpresiva pérdida en el primer trimestre la semana pasada después de la debilidad en el mismo negocio de renta variable.
Bruselas afirma la primacía del BCE tras la decisión judicial alemana
Mehreen Khan en Bruselas
Bruselas ha insistido en la independencia del Banco Central Europeo y la primacía de la ley de la UE después de que el tribunal constitucional de Alemania solicitó más pruebas de Frankfurt para justificar la compra masiva de bonos del gobierno.
Eric Mamer, portavoz de la Comisión Europea, respondió el martes al fallo del tribunal constitucional de Alemania, que dijo que el banco central de Alemania debería dejar de participar en la compra de bonos del BCE después de tres meses si el banco central no proporciona una evaluación del impacto de su programa de flexibilización cuantitativa antes entonces.
“A pesar del análisis de los detalles de la decisión del tribunal constitucional alemán de hoy, reafirmamos la primacía del derecho de la UE y el hecho de que las decisiones del Tribunal de Justicia de las Comunidades Europeas son vinculantes para todos los tribunales nacionales”, dijo Mamer.
La comisión siempre ha respetado la independencia del BCE en la implementación de la política monetaria. We will now study this national judgement of the German constitutional court in more detail.
New documents reveal UK government’s virus testing quandary
Clive Cookson in London
The UK government’s scientific advisors discussed last month whether a system of testing people for immunity against coronavirus could be gamed for selfish reasons, documents released on Tuesday show.
The discussion over the effectiveness of using antibody tests to establish whether immunity had been built up against Covid-19 was revealed in a paper presented to Sage, the Scientific Advisory Group for Emergencies, by its behavioural committee on April 13.
The paper warned that people who needed a positive result, for example to return to work, might deliberately seek out infection or try to buy a fake test result.
Other “possible negative behavioural consequences” of antibody testing discussed in the paper range from people with “false positive” results indulging in risky behaviour to “false negatives” refusing to return to work or suffering discrimination.
The paper is the most recent of 16 further documents showing evidence presented to Sage, which are now available online.
All but two of the papers date back to March and February, however, meaning they do not give reliable insights into Sage’s current thinking.
Pfizer begins vaccine testing in the US
Hannah Kuchler in New York
The first US participants have been dosed in Pfizer’s vaccine trial to study the effects of four different candidate drugs on hundreds of volunteers.
The US trials — conducted at sites in New York, Ohio and Maryland — follow the dosing of the first cohort in Germany last week. Albert Bourla, Pfizer’s chief executive, said it was a “unique and robust” clinical study programme.
“The short, less than four-month time frame in which we’ve been able to move from pre-clinical studies to human testing is extraordinary and further demonstrates our commitment to dedicating our best-in-class resources, from the lab to manufacturing and beyond, in the battle against Covid-19,” he said.
Pfizer is partnering with BioNTech, a Germany company, on messenger RNA vaccines, which send genetic information to a cell so it can create proteins to fight the disease.
The partners are already expanding manufacturing capacity at sites in the US, Belgium and Germany. If successful, they could produce millions of doses of vaccine by the end of 2020 and hundreds of millions of doses in 2021, they said.
Covid-19 may have come to Sweden in November, chief epidemiologist says
Richard Milne, Nordic and Baltic Correspondent
Sweden could have had its first case of coronavirus as early as November, two months before it officially arrived, according to the Scandinavian country’s chief epidemiologist.
Anders Tegnell, the Swedish state epidemiologist, told local media that it was probable that travellers from Wuhan in China came to Sweden in November or December. “It doesn’t sound at all strange but very natural,” he added.
Sweden’s first official case came in January from a 20-year-old woman returning from a trip from Wuhan, the presumed source of Covid-19.
The debate about when the pandemic first came to Europe intensified this week after a French doctor said a patient diagnosed with pneumonia on December 27 actually had coronavirus, according to a recent retest of a swab taken at the time.
Spain’s government faces political pressure on lockdown
Daniel Dombey in Madrid
Spain’s government is struggling to keep control of the country’s seven-week-old lockdown on the eve of a potentially decisive parliamentary vote.
Health ministry numbers released on Tuesday attested to the impact of the restrictions on movement, with deaths in the most recent 24-hour period at 185 – the third successive toll below 200 – and just a 0.4 per cent daily increase in the number of people with positive results for coronavirus, according to the relatively reliable PCR test.
But the leftwing coalition government is facing opposition from its political opponents and regional governments over its request to extend the state of alert, the extraordinary legal order that underpins the lockdown and gives Madrid the power to rule by decree and restrict mobility.
The cabinet was meeting on Tuesday afternoon to draft the request, which will be voted on by parliament on Wednesday. The government said that extending the state of alert was also necessary to continue special temporary leave schemes that limited a rise in unemployment by providing income to some 3.5m people.
However, the centre-right opposition People’s party said it would no longer back the state of alert now that Spain was relaxing the lockdown- a phased process the government said could take about two months. The Catalan Republican Left, a pro-independence party whose votes have been crucial for the government in the past, has added that it will now oppose the measure.
Iranian presidents hits out at US sanctions in call with Japanese PM
Najmeh Bozorgmehr in Tehran
Iran’s president Hassan Rouhani said in a telephone conversation with the prime minister of Japan that US sanctions had obstructed his country’s procurement of food and medicine during the pandemic.
“Unfortunately, the US’s illegal sanctions against the Iranian nation have intensified during the very difficult times of fighting against coronavirus and its very difficult economic consequences,” Mr Rouhani told Shinzo Abe on Tuesday. “Today, we face numerous problems even in [imports of] medical equipment and foodstuff.”
Mr Abe, according to Iranian wires, said humanitarian issues had to be the top priority during the pandemic.
The US denies creating any obstacles to Iran’s purchases of medicine and food. The Trump administration has, however, threatened to trigger fresh sanctions on Iran using a provision in the international nuclear deal that the US pulled out of two years ago.
Mr Rouhani has ratched up international lobbying against US sanctions since the beginning of outbreak, which has caused 6,340 deaths in Iran.
Banks halt dividends to focus on real economy, says ECB supervisor
Jim Brunsden in Brussels
Banks have largely halted dividend payments in response to the coronavirus pandemic, Europe’s chief banking supervisor has said.
Andrea Enria told members of the European parliament that €27bn of planned dividend payments had been “fully retained on bank balance sheets”, after supervisors told financial companies to pause discretionary payments and focus on financing the real economy.
A total of €35bn of payments had been in the pipeline at the start of the crisis, Mr Enria, the chairman of the European Central Bank’s supervisory board, said. Some dividends could not be stopped because they had already been approved by shareholder assemblies, he explained.
“The legal corporate law in the countries where this happened did not allow the banks not to pay,” he said. “In all other cases there has been very good discipline.”
Former ECB VP warns German ruling risks hitting pandemic response
A former vice-president of the European Central Bank has warned that a German court ruling calling on the central bank to justify its asset purchasing programme risks undermining the region’s monetary response to coronavirus.
The ruling delivered on Tuesday refers to the ECB’s quantitative easing programme (PSPP), which began in 2014 to try to halt a slide in inflation, and does not refer to actions taken to help the economy through the coronavirus pandemic.
But Vitor Constâncio, who was a senior official at the ECB during the eurozone crisis, said the judgment risks hitting the pandemic response (PEPP) and tying it up in more German court cases.
The central bank has vastly expanded its purchases this year in an effort to stop the coronavirus pandemic spiralling into a wider debt crisis.
Euro slides following German court ruling
The euro and German government bonds sold off after Germany’s constitutional court ruled that the European Central Bank’s debt purchases were legal but called for a review into whether they were “proportionate” in pursuit of its monetary policy objective.
Analysts and economists had marked out today’s ruling as a potential ‘black swan’ event for markets.
While it does not cover the central bank’s response to the coronavirus pandemic, a definitive ruling against the ECB could have triggered a serious crisis in eurozone monetary policy.
The single currency fell 0.7 per cent against the US dollar to $1.0835, having wavered in choppy trading following the release of the minutes as traders gauged the implications of the ruling.
German 10-year bund yields rose 0.03 percentage points as investors moved out of the debt, while the decision also dented a rally in eurozone stocks. Germany’s Dax was recently 0.8 per cent higher, having opened up more than 1.5 per cent.
Helen Thompson, professor of political economy at the University of Cambridge, said the ruling presents a political problem.
UK government scientist reports wave of imported infections
Camilla Hodgson in London
A wave of imported Covid-19 infections flowed into the UK in early March as people returned from European countries that were already experiencing significant outbreaks, the government’s top scientist has said.
Patrick Vallance, the government’s chief scientific adviser, told the House of Commons health and social care committee:
It looks like early in March the UK got many different imports of the virus from different places, particularly from European countries… such as Spain and Italy.
Those cases “seeded right across the country,” he said.
On March 23, the government’s top advisers on the pandemic said in written evidence to ministers that there had been a “major import to the UK” of cases from “locations with large epidemics and high travel volumes, notably Italy and other parts of Europe”.
However, the UK’s borders remained – and remain – open.
Only 273 passengers who arrived into the country from Spain, China, Italy, the US, Iran, Turkey and France were taken to government quarantine centres from the start of the year until March 23.
UK coronavirus deaths passed their peak — but only just
Chris Giles in London
Deaths in England and Wales linked to the coronavirus outbreak passed their peak, but only just, according to figures from the Office for National Statistics based on registrations recorded up to April 24.
The latest official figures of total deaths, directly or indirectly linked to the Covid-19, suggest that there have now been 42,140 more deaths than normal for this time of year recorded across the UK since coronavirus took hold in mid March.
The figure is 47 per cent higher than the government’s daily total of 28,734 announced on Monday and reflects data on deaths that occurred only up to about April 20.
The government’s figures count deaths from people who have tested positive, while the ONS figures count all deaths compared with the seasonal average, reflecting a high number of deaths in the community and in care homes of people who were never tested for the disease.
For registrations in the week ending April 24, there were 7,911 deaths in care homes, a record number for a single week and 595 higher than the previous week. While it is not certain the epidemic has peaked in care homes, the official figures confirmed that it has in hospitals with 8,243 death registrations, 1,191 lower than the week before.
In London, half of all deaths in that week had Covid-19 mentioned on the death certificate.
World’s largest diamond miner temporarily closes two mines in Russia
Henry Foy in Moscow
Russia’s Alrosa, the world’s biggest diamond miner by volume, will temporarily shutter two mines later this month as the coronavirus pandemic reduces demand for the precious stones.
Alrosa said it would suspend operations at the Aikhal underground mine and Zarya open pit in Russia’s far east from May 15 for four and seven months respectively, “due to the decrease in demand and sales for diamonds, as the major consuming economies are struggling with economic headwinds caused by the global spread of Covid-2019 virus”.
“A change to the 2020 production plan will be considered at the company’s Board meeting in May. The Company intends to recommence production at suspended assets as the market situation improves,” Alrosa said in a statement.
The two mines together produced 2.6m carats in 2019, 7 per cent of Alrosa’s total output of 38.5m carats.
Some of the two mines’ 682 staff would be involved in maintenance work, some would be transferred to other assets and some would be laid off, the company added.
UK business activity plunges to record low
The coronavirus blockade has driven manufacturing and service activity in the UK to drop to the lowest level on record, leading analysts to predict a slower more severe than “anything seen in living memory.”
The latest IHS Markit/Cips composite purchasing managers’ index for the UK, a measure of economic performance in manufacturing and services, fell to 13.8 in April, the lowest since the survey began more than two decades ago.
“April’s PMI data highlights that the downturn in the UK economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory,” said Tim Moore, economics director at IHS Markit.
Just one-in-five service providers managed to avoid a drop in business activity since March, and those hardest hit by social distancing measures and travel restrictions often reported complete stoppages of business operations.
The reading is down from 36 in March, but slightly higher than the early estimates of 12.9. A score below 50 indicates the majority of businesses reporting a deterioration compared to the previous month.
Nearly 80 per cent of survey respondents reported a drop in business activity during April, almost double the survey-record set in March, according to the survey.
Prior to the last two months, the survey’s record low was 40.1 in November 2008.
German court rules ECB’s debt purchases were legal but calls for review
Martin Arnold in Frankfurt
Germany’s constitutional court ruled on Tuesday that the European Central Bank’s vast purchases of public sector debt were legal, but called for it to review if they were “proportionate” in pursuit of its monetary policy objective.
The court ordered the German government and parliament to ensure that the ECB carries out a “proportionality assessment” of its government debt purchases to ensure that their “economic and fiscal policy effects” do not outweigh its monetary policy objectives.
While most observers had expected the court in Karlsruhe to grudgingly accept that the ECB’s purchases of government debt were legal, some still feared it could rule against them, which could have triggered a serious crisis in eurozone monetary policy.
The court said in a decision published on its website that it “did not find a violation of the prohibition of monetary financing of member state budgets”.
It added: “The decision published today does not concern any financial assistance measures taken by the European Union or the ECB in the context of the current coronavirus crisis.”
However, it said that Germany’s central bank would no longer be allowed to participate in public sector bond purchases if the ECB had not shown that its policy was not disproportionate within a three month transitional period.
The ECB has bought more than €2.2tn of public sector debt since launching its quantitative easing (QE) programme in 2014 to try and halt a slide in inflation. This year it has vastly expanded its purchases to stop the coronavirus pandemic spiralling into a wider debt crisis.
Delays in government loan support for most pubs threaten their survival
Alice Hancock in London
Three-quarters of UK pubs and breweries are still waiting for loan support from the government, prompting the British Beer & Pub Association to warn that many pubs will not survive the lockdown period unless immediate financing becomes available.
According to the BBPA’s survey, more than half of pubs have also not received grants they were eligible for. The BBPA said it was a “postcode lottery” as to which pubs had been successful with the lowest rates of payouts in the cities of Manchester, Birmingham and Brighton. Only 11 per cent of the 418 pubs in Birmingham had received the grants they were due.
“If the Government doesn’t take decisive action now to both widen and speed up the delivery of grant payments and their loans, then pubs and breweries are at real risk of not surviving the lockdown and jobs will be lost across the UK,” said Emma McClarkin, chief executive of the BBPA.
The BBPA said it welcomed the government’s ‘Bounce Back Loan’ scheme, which offers loans to small businesses backed 100 per cent by the government. Applications for these loans reached more than 100,000 on Monday, the first day they were available.
India to begin repatriating stranded citizens
Amy Kazmin in New Delhi
India will begin repatriating hundreds of thousands of its citizens stranded abroad from Thursday, nearly seven weeks after its ban on all incoming passenger flights left millions of Indian migrant workers, students and holidaymakers stranded overseas.
In an official announcement, New Delhi said it would use aircraft and naval ships to begin ferrying home citizens “stranded abroad on compelling grounds in a phased manner”.
The moves follow an intense clamour by stranded Indians – and in some cases the host governments – for assistance in getting back to their home country.
Much of India’s early repatriation effort was expected to focus on countries in the Gulf, where many migrant workers have lost jobs. So far, about 200,000 have applied for repatriation from the UAE, where an estimated 2m Indian citizens reside.
Indian naval ships are also being dispatched to the Maldives, where Indian citizens play a critical role in the archipelego’s tourism industry, which has been battered by the coronavirus.
Citizens will have to pay for the transport services, and only those with no symptoms of coronavirus will be allowed to travel. On arrival in India, they will be quarantined for two weeks either in a hospital, or another institutional quarantine facility, as directed by their own state governments.
UK National Lottery licence contest delayed
Alice Hancock in London
The competition for the UK’s new National Lottery licence has been delayed due to coronavirus.
The Gambling Commission, which runs the competition for the licence, said that lockdown had created too much uncertainty for the contest to launch on May 7 as expected. It told potential bidders that an update on the timetable would be provided in late May.
The National Lottery licence is among the government’s most lucrative contracts. The current holder of the licence, Camelot, generated sales of £7.2bn in the year to the end of March last year.
Sir Richard Branson’s Virgin had intended to make a bid for the lottery but pulled out last week citing a need to focus resources on other parts of the Virgin Group. Sir Richard is currently seeking new investors to save Virgin Atlantic, in which he holds a 51 per cent stake, after the government refused to support its initial submission for a bailout of the airline.
This is the fourth time the competition for a new licence holder has been run. Bidders that have registered an interest include the Czech lottery operator Sazka, Richard Desmond, the owner of the Express newspapers, and Camelot, which is owned by the Ontario Teachers Pension Plan.
Starmer calls for revamp to furlough scheme
Jim Pickard
Keir Starmer has urged the government to revamp its centrepiece furlough scheme to include part-time work and to let some sectors continue to receive support even after its current end date in June.
The Labour leader said ministers should “urgently” adapt the existing programme, which will cost about £40bn, ahead of the imminent easing of Britain’s coronavirus lockdown.
Under the “job retention scheme” the government covers 80 per cent of the wages of workers who are staying at home and not working at all, up to a cap of £2,500 a month.
Sir Keir, launching his proposals for a “national consensus” on ending the lockdown, said: “Ministers should urgently make the existing furlough more flexible to manage people’s gradual return to full and part-time work.”
He told the Radio 4 Today programme that he was urging chancellor Rishi Sunak to allow companies to keep some workers “semi-furloughed” so they can gradually return to business.
Hong Kong to reopen bars, cinemas, gyms and salons
Nicolle Liu in Hong Kong
Hong Kong is set to relax its social distancing measures after reporting no local coronavirus infections for more than two weeks.
Gyms, beauty parlours, cinemas, bars and other entertainment venues will be allowed to be reopen on Friday under special hygiene requirements, said chief executive of the territory Carrie Lam. However, “high-risk” spots such as karaoke rooms and nightclubs must remain shut for another 14 days, she added.
The limit on public gatherings will be expanded from four to eight people, Ms Lam told the media. Students will return to classrooms starting from May 27 in stages, starting from high-school then followed by primary school pupils in June.
The government also revealed plans to distribute masks to all citizens, including reusable masks as well as disposable ones.
The territory reported its 16th consecutive day without any new local cases of coronavirus infections on Tuesday, keeping the overall tally of cases at 1,041 and fatalities at four people.
Russia records over 10,000 daily cases for the third day running
Henry Foy in Moscow
Russia recorded more than 10,000 new coronavirus cases for the third consecutive day on Tuesday, cementing its position as the world’s second fastest growing outbreak after the US.
Russia’s prime minister Mikhail Mishustin, who temporarily stepped down on Thursday night after testing positive for coronavirus, is “undergoing treatment as planned” in a state hospital and feels “generally normal,” his spokesman told local newswire Interfax on Tuesday morning.
Government officials have warned that if citizens do not adhere to the rules of a lockdown imposed until May 11 and cases continue to rise, they will be forced to extend the quarantine measures.
Another 10,102 new cases reported on Tuesday took the country’s total number of infections to 155,370, as the death toll from Covid-19 rose by 95 to 1,451.
What you may have missed
Volkswagen says the cost of crucial car components has risen sharply because of the coronavirus outbreak, putting further pressure on profits as the industry enters deep recession.
Some of the world’s largest hedge funds are raising their bets on gold, forecasting that central banks’ unprecedented responses to the crisis will lead to devaluations of major currencies.
Argentina’s economy minister has raised the stakes with the country’s bondholders by suggesting his government would consider defaulting on $65bn of foreign debt unless investors engaged in negotiations to alleviate its financial burden.
Australia expects the shock caused by the Covid-19 lockdown to dwarf the impact of the global financial crisis, with the economy set to shrink by 10 per cent in the second quarter.
India has recorded another surge in coronavirus cases, with 3,890 confirmed on Monday. The capital, New Delhi, has imposed a 70 per cent “coronavirus cess fee” on alcoholic beverages, after liquor stores were mobbed by desperate customers on Monday, the first day of spirits sales after a six-week long, nationwide prohibition.
French energy major Total has kept its dividend stable despite a sharp fall in first quarter profit on falling oil prices and a drop in demand.
California governor Gavin Newsom said that he would begin to relax lockdown restrictions for certain businesses from the end of the week.
A staff report by the Federal Reserve Bank of New York has found a correlation between deaths from the influenza pandemic in 1918-1920 and extremist voting in Germany in 1932 and 1933.
Business activity slides in the UAE
Simeon Kerr in Dubai
The economic contraction in the United Arab Emirates accelerated in April amid tight lockdown measures seeking to stem the spread of coronavirus.
The Gulf state’s non-oil sector faced “steep falls in activity, new business and export sales,” according to new purchasing managers’ index data released by IHS Markit on Tuesday. As companies sought to lower expenses, there were drops in employment, wage cuts and weaker purchases.
The index fell for the sixth consecutive month to 44.1 in April from 45.2 in March – a record low for the second successive month. A level of 50 signals neutral business activity.
The UAE late last month eased restrictions on movement, including a 24-hour curfew in the region’s commercial and tourism hub of Dubai, as the holy fasting month of Ramadan began. Shopping centres and restaurants have been allowed to reopen at reduced capacity if they maintain social distancing protocols. The UAE has registered 14,730 cases with 137 deaths.
Sales at world’s largest tuna producer rise as shoppers stock up
John Reed in Bangkok
Thai Union, the world’s largest producer of tuna fish, has reported its best first-quarter sales in three years as shoppers facing lockdowns worldwide stocked up on canned goods.
The Bangkok-listed company, whose brands include John West, Chicken of the Sea, King Oscar, and Petit Navire, reported first-quarter sales of Bt31.1bn ($960m) – a 5.9 per cent jump on a year ago. The company said its sales volume jumped nearly 25 per cent to 99,599 tonnes “as consumers around the world stocked up on shelf-stable products in response to Covid-19”.
The Thai company, which is also one of the world’s biggest seafood producers and majority owns the Red Lobster restaurant chain, said that its sales of frozen and chilled seafood dropped in volume by only 1 per cent to 61,179 tonnes. However, seafood sales fell 5 per cent because of the impact of the coronavirus pandemic on the hospitality and food and beverage industries.
Thai Union said its net profit in January to March was 20 per cent lower than a year ago, mainly because of the impact of the virus on its strategic investments, and foreign exchange loss.
Among other companies that produce cupboard staples being snapped up for lockdowns, Kraft Heinz and Kellogg’s both reported surges in their first-quarter sales.
European corporate news round-up
Low-cost carrier Ryanair said that its passenger traffic fell 99.6 per cent to about 40,000 people in April and that it expected “minimal traffic” in the months of May and June as European governments continue to restrict travel. Competitor Wizz Air said that it carried a total of about 78,000 passengers in the same month compared with 3.3m a year earlier.
BATM Advanced Communications, an Israeli technology company, announced that its subsidiary has launched antibody testing kits for Covid-19 and it has begun sales to European customers.
Scandinavian airline SAS said that it had signed a SKr3.3bn ($366m) three-year revolving credit facility agreement, 90 per cent guaranteed by the Swedish and Danish states.
Hugo Boss warned that sales over the second quarter will collapse by at least 50 per cent as the vast majority of its retail stores in Europe and the Americas are closed due to coronavirus lockdowns while sales in China are picking up only slowly.
German meal-kit provider HelloFresh revised upwards its financial guidance for the year, after reporting a 68 per cent growth in active customers in the first quarter on a year-on-year basis, as consumers turned to home cooking during lockdowns.
Danish jeweller Pandora said that sales to customers had improved to be only about 55 per cent lower than last year at the end of April due to strong online sales and a gradual reopening of physical stores, after falling by as much as 70 per cent.
Total keeps its dividend stable despite coronavirus
David Keohane in Paris
French energy major Total has kept its dividend stable despite a sharp fall in first quarter profit on falling oil prices and falling demand due to the economic impact of the coronavirus outbreak
Total saw its net adjusted profit fall by 35 per cent in the first quarter compared with the same period last year, to $1.78bn.
Oil companies are being hit by falling energy prices and collapsing demand for both fuel and chemicals as governments impose lockdowns and travel bans to stem the spread of coronavirus.
Total’s decision to keep its dividend stable is at odds with Royal Dutch Shell which at the end of April cut its dividend for the first time since the second world war.
As it grapples with the impact of the crisis, Total also further slashed at costs and investments.
The group cut net investment for this year by a quarter to €14bn, increasing the 20 per cent cut it made in March to 25 per cent. The 2020 cost savings plan was also increased by “at least one billion”.
Slight increase in daily cases in Germany
Guy Chazan in Berlin
Germany reported 685 new coronavirus cases on Monday, a slight increase on the day before, and also saw an uptick in recorded deaths from the disease.
According to official data from the Robert Koch Institute in Berlin, the number of people who died of Covid-19 over the past 24 hours rose by 139 to 6,831.
The total number of detected infections increased to 163,860, though about 135,100 of them have already made a full recovery.
Global stocks rebound
European stocks were on track to rebound on Tuesday, following strong gains in Asia and late in the session on Wall Street.
Futures trade pointed to gains of about 1.5 per cent for the major markets across Europe, which would go some way to wiping out Monday’s sharp losses.
The turnround in investor sentiment follows a recovery in the price of oil as concerns over global storage capacity eased ahead of weekly industry data. US gauge WTI was recently 8 per cent higher at $22 per barrel, while Brent crude rose 5.4 per cent to $28.66.
Jim Reid, a strategist at Deutsche Bank, said the rally on Wall Street also followed California recording the fewest Covid-19 deaths since early April and possibly opening some businesses as soon as this week.
“The bounce back overshadowed the US/China story as various news items over the last few days have all pointed to a further escalation in tensions,” he said.
Hugo Boss expects second-quarter sales to drop by 50%
Olaf Storbeck in Frankfurt
Hugo Boss has warned that sales over the second quarter will collapse by at least 50 per cent as the vast majority of its retail stores in Europe and the Americas are still closed due to coronavirus lockdowns while sales in China are picking up only slowly.
Between January and March, currency-adjusted sales at the German fashion house sales fell 17 per cent year on year to €555m, and the company suffered an operating loss of €14m, compared with an operating profit of €57m a year earlier.
“The company is confident that from the third quarter on, the retail environment will gradually improve,” Hugo Boss said in a statement.
In China, where all shops reopened at the end of March, sales in April were 15 to 20 per cent lower than a year earlier. “Hugo Boss expects that consumer behaviour and store traffic will continue to improve gradually in this strategically important market,” the company said.
The fashion house was struggling even before the outbreak of the pandemic and warned on profits twice in late 2019, citing macroeconomic uncertainties as well as the political unrest in Hong Kong, which dented sales in the area.
Over the past three months, shares in Hugo Boss fell 44 per cent to the lowest level in more than a decade. The company has embarked on a €600m cost-cutting programme as it is scrambling to safeguard its liquidity, and among other things is cutting its 2020 investment budget by a third.
Singapore retail sales post biggest drop since 1998
Mercedes Ruehl in Singapore
Singapore retail sales have fallen by the sharpest rate in more than two decades after the coronavirus outbreak crisis curbed consumer spending in the Asian city-state.
Retail sales fell 13.3 per cent year on year, the most since 1998, according to data from the Singapore Department of Statistics.
Singapore’s economy is headed for its worst ever contraction after the government slashed its 2020 growth forecast in March and warned of a fall in gross domestic product for the full year due to the coronavirus pandemic.
Tuesday’s retail sales data followed manufacturing data released on Monday that showed activity at an 11-year low. The purchasing managers’ index (PMI) was 44.7 for April, the weakest reading since 2008 and the third straight month of declines. A reading below 50 signals contraction.
Singapore has reported that more than 18,000 have been infected with the virus, the highest number of cases in Asia after China and India. The government put in place strict social distancing measures, called a “circuit-breaker”, on April 7 to curb the virus’s spread.
French mortality surged before lockdown bore fruit
Victor Mallet in Paris
Mortality across France rose sharply as a result of the coronavirus pandemic and peaked three weeks after the country’s confinement measures began in mid-March, according to the latest data from Insee, the national statistics institute.
Registered deaths between March 1 and April 20 reached 109,831, up more than 23,000 or 27 per cent compared with the same period last year, and up nearly 15,000 or 16 per cent from 2018.
General mortality is an imperfect measure of the additional toll from Covid-19, but the increase over last year closely matches the government’s official total of 25,201 coronavirus deaths in hospitals and care homes from March 1 until today this year. An influenza epidemic in early 2018 caused thousands of deaths in that year.
Meanwhile, the health ministry announced on Monday that a further 306 people had died from Covid-19 in the previous 24 hours, although the number of patients in intensive care continued its slow decline. The nationwide lockdown is due to be eased on May 11.
UK should consider border controls, say independent scientists
Camilla Hodgson in London
The UK should consider imposing border controls and prepare for a worst-case scenario that does not rely on an effective vaccine for Covid-19, an independent group of scientists said on Monday.
The group of experts, including former government advisers, has been set up to outline recommendations for ministers amid a push for greater transparency from the government’s influential Scientific Advisory Group for Emergencies (Sage).
Following two-and-a-half hours of deliberations, the independent group of 12 scientists made a series of recommendations, including the publication of more precise data and the immediate rollout of a border control policy to prevent imported cases of infection.
“There are countries that appear to have taken effective advantage of their island status, like New Zealand,” said Gabriel Scally, president of the Royal Society of Medicine’s epidemiology and public health section. But the UK had not and was one of the few remaining countries that still had open borders, which “places us in sudden jeopardy”, he said.
read more here.
Duterte apologises to big business groups after their help with Covid-19
John Reed in Bangkok
President Rodrigo Duterte has apologised to two powerful companies he attacked in the past for his “hurting words”, and thanked them for their help in fighting Covid-19, marking a truce in a dispute that rattled investor confidence in the south-east Asian nation.
The Philippine leader apologised to the Ayala family, controlling shareholders of the country’s largest conglomerate, and to Manny Pangilinan, chief executive of First Pacific group — two companies Mr Duterte has targeted with verbal abuse and legal threats in recent months.
“I can promise you that I’ll be nice and if you want to see me, we can talk,” Mr Duterte said in a speech on Monday evening, in remarks quoted by the Manila Times. “And I am no longer snooty… the Covid humbled me.”
The Philippines’ family conglomerates such as Ayala Corp, which the populist president has branded as “tycoons”, have stepped up with emergency food aid, donations to hospitals and health workers, and other emergency supplies as the country struggles with one of south-east Asia’s highest coronavirus caseloads.
Jaime Augusto Zobel de Ayala, the company’s chief executive, and his brother Fernando Zobel de Ayala, its president and chief operating officer, said on Tuesday that they were “grateful” for Mr Duterte’s remarks.
“We have always believed in building a strong partnership between the private and public sectors in addressing our country’s problems and in investing in the country to create jobs and improve the lives of Filipinos,” they said.
Ayala’s share price surged by 7 per cent early on Tuesday afternoon and First Pacific’s by 6 per cent, with the overall market up about 2 per cent.
India’s capital imposes coronavirus tax on alcohol after crowds rush to stock up
Amy Kazmin in New Delhi
India’s capital city, New Delhi, has imposed a 70 percent “coronavirus cess fee” on alcoholic beverages, after liquor stores were mobbed by desperate customers on Monday, the first day of spirits sales after a six-week long, nationwide prohibition.
Prime Minister Narendra Modi’s government banned the sales of alcoholic beverages anywhere in India in late March, as part of its lockdown to stop the spread of coronavirus.
But the prohibition on the sale of any beer, wine and spirits put huge pressure on the finances of India’s state governments, which typically derive between 15 to 30 percent of their revenues from excise duties on alcoholic beverages.
As it now starts easing restrictions to restart the stalled economy, Mr Modi’s government has lifted prohibition, permitting states to resume alcohol sales. Monday — the first day — saw massive crowds and serpentine queues at liquor shops across India, as desperate customers struggled to stock up.
Many liquor shops in New Delhi suspended sales early on Monday, as a result of the unruly crowds.
In response, New Delhi’s state government issued a late night notice, imposing a “coronavirus cess fee” of 70 percent on top of the maximum retail price. It hopes the fee will help it generate additional revenues, while perhaps also reducing crowds.
Arvind Kejriwal, chief minister of Delhi, said that the city had collected only 10 percent of its usual revenues in April.
Other states are considering whether they should follow suit and increase alcohol cess and excise duties on liquor to replenish their empty coffers, which have been drained by unexpected costs associated with the impact of coronavirus.
UK new car sales drop 97% in April
Peter Campbell in London
UK new car sales fell by 97 per cent during April, putting Britain’s motor industry on track for the worst year in almost three decades.
Preliminary figures released on Tuesday by the Society of Motor Manufacturers and Traders show around 4,000 cars registered during the month — the lowest monthly number since 1946.
Full figures for the month are due to be released at 9am.
The latest figures put the UK on track for annual car sales of 1.68m, which would be the worst year since 1992, and far below the 2.3m new cars sold during 2019.
April’s drop is comparable to Spain and Italy, which also witnessed near-100 per cent falls in their markets, as factories and dealerships were closed during the month and consumers told to stay at home.
Japan’s health system exposed as empty hospitals reject Covid-19 patients
Robin Harding, Kana Inagaki and Leo Lewis in Tokyo
Fumiue Harada thought his job was done when he sent a dehydrated 81-year-old off to the local hospital. Then a colleague called: the patient’s CT scan showed a risk of Covid-19 and they needed to get him to a specialised hospital immediately.
So began Dr Harada’s marathon search for a hospital willing to accept a suspected case of coronavirus. “It took seven hours but I eventually found a hospital that would take him 40km away,” said Dr Harada, who runs a primary care clinic in the east of Tokyo.
In some cases, patients have been turned away from dozens of hospitals, even though Japan, with fewer than 15,000 cases, has relatively few Covid-19 patients. It also has more hospital beds a head than any other country in the world: twice as many as France and almost five times as many as the US.
Japan has drawn close to the limit of its health capacity in recent weeks, forcing it to declare a state of emergency. The coronavirus outbreak has exposed longstanding structural problems caused by bureaucratic inflexibility and a plethora of small hospitals.
read more here.
India reports record surge of 3,890 new cases
Amy Kazmin in New Delhi
India has recorded another record surge in coronavirus cases, with 3,890 confirmed on Monday, highlighting the challenge the country still faces containing the virus even as it begins to ease its lockdown in the face of severe economic pressure.
The new cases bring the total to 46,352, of whom 1,559 have died and 12,732 have recovered.
India’s daily coronavirus data is difficult to interpret due to protracted lags in reporting cases and delays in processing tests by overstretched laboratories.
However, the huge jump in cases highlights how the virus continues to spread in a country where the benefit of a draconian six-week long lockdown — which saw virtually all economic activity and public transported suspended — has been undermined by acute poverty and overcrowding in residential areas of India’s major cities.
However, doctors on the frontline say that the pathogen does not appear to be causing as much serious illness in India as it has done elsewhere. Medical professionals also believe that many carriers in India might remain asymptomatic.
India has begun to ease its six-week lockdown amid fears of economic collapse and serious financial pressure on state governments.
Korean baseball lands US deal as Seoul eases virus controls
Edward White in Wellington
South Korean baseball will be televised by US broadcaster ESPN starting from Tuesday giving global sports fans, who have been starved of live action, relief amid the coronavirus pandemic.
The opening of the South Korean season is part of a broader loosening of social distancing controls this week, after the country contained what was in February one of the world’s worst outbreaks outside China.
South Korea reported three new virus cases on Tuesday. New daily cases have been in the single digits since late April, compared to a peak of more than 900 in late February.
Of around 10,804 confirmed cases, 9,283 have made full recoveries while 254 people have died.
Seoul also announced that schools will be reopened in stages starting this month.
However, Yoo Eun-hae, education minister, warned that the return to the classroom should not be considered “the end of the coronavirus”, according to state news agency Yonhap.
“Schools cannot go back to the times before the Covid-19 outbreak,” she said.
US oil prices head higher as storage concerns recede
Hudson Lockett in Hong Kong
US Oil prices were on track for their fifth straight day of gains as traders shook off concerns over global storage capacity which have hammered energy prices in recent weeks, while Asian stocks built on an overnight gain from Wall Street.
The gains for crude came despite a decision by the Texas Railroad Commission, the state’s oil and gas regulator, to drop an effort to force producers to cut output after running into opposition from energy companies.
West Texas Intermediate, the US marker, was up 6.7 per cent at $21.76 a barrel, on track for its fifth straight day of gains. Meanwhile Brent crude, the international benchmark, was up 4.1 per cent at $28.31.
A collapse in demand sparked by the coronavirus outbreak has put pressure on prices in recent weeks, with US prices swinging into negative territory as producers paid buyers to take product they could not find storage for.
Robert Rennie, global head of market strategy at Westpac, said US oil prices had been boosted by an early estimate showing reserves at the key oil storage centre of Cushing, Oklahoma had risen by only 1.8m barrels last week. If confirmed by data from the American Petroleum Institute later today, that would mark the smallest increase since mid-March.
In equities, Hong Kong’s benchmark Hang Seng index rose 0.9 per cent in morning trading, while Australia’s S&P/ASX 200 climbed 1.5 per cent. Japanese, Chinese and South Korean markets were closed for public holidays.
The gains for Asian equities came after Wall Street eked out a slight gain overnight, despite concerns over a resurgence in US-China tensions. The S&P 500 closed 0.4 per cent higher and the tech-heavy Nasdaq Composite notched a gain of 1.2 per cent.
Sentiment also received a boost from New York governor Andrew Cuomo, who suggested that part of the state could end its most stringent lockdown measures by mid-May as the state reported its lowest daily coronavirus death toll in more than a month. That helped bring daily fatalities in the US below 1,000 for the first time in as long.
Australia’s economy forecast to contract by 10%
Jamie Smyth in Sydney
Australia’s economy is forecast to shrink by 10 per cent in the June quarter as a result of Covid-19 restrictions, which are delivering a A$4bn ($2.6bn) hit to economic activity every week, according to Australia’s treasurer.
Extracts of a speech due to be delivered by Josh Frydenberg later on Tuesday show unemployment is forecast to double to 10 per cent due to the temporary closures of numerous businesses, including pubs, restaurants and cafes.
Gross domestic product is expected to fall significantly, with the Treasury forecasting a fall in the June quarter of around A$50bn, equivalent to a 10 per cent reduction.
Mr Fydenberg said Australia’s success in suppressing the virus provided it with an opportunity to begin easing restrictions in a way that minimises the health risk and maximises the economic activity.
“We must get people back to their jobs and back to work. For every extra week the current restrictions remain in place, Treasury estimates that we will see close to a A$4bn reduction in economic activity from a combination of reduced workforce participation, productivity, and consumption,” the speech says.
Australia’s national cabinet will discuss the timeframe for a further easing of social distancing restrictions this week.
Australia has not imposed the strict lockdown that has been implemented in many European nations as well as New Zealand. The lighter restrictions have enabled the construction, mining and agriculture sectors to continue operating. Some retailers and takeaways have also been allowed to remain open.
Mr Frydenberg said if the restrictions were increased to the type of eight-week lockdown seen in Europe, the hit to GDP could double to 24 per cent of GDP in the June quarter.
China’s new normal may be major export after pandemic
FT reporters
As they squeezed cappuccinos through a doorway barricaded with tables and stools last month, staff at a Starbucks in the Chinese city of Wuhan were determined to keep their customers as far away as possible.
The improvisation was one small store’s answer to an urgent global problem: how to get the wheels of commerce turning again without unleashing a second wave of the coronavirus pandemic.
Starbucks is just one of dozens of multinationals that have resumed business in China, where the virus began and a version of life after the lockdown is slowly emerging.
As western governments begin to loosen the restrictions that have plunged economies into deep freeze, companies say they are drawing on the experience of their Chinese operations in recent weeks for lessons on how to reassure nervous consumers and employees.
read more here.
News you might have missed
Hong Kong’s economy contracted at the fastest rate on record, shrinking by 8.9 per cent on an annual basis and by 5.3 per cent on a quarterly basis, according to the latest government data, as coronavirus seriously disrupted local economic activities and supply chains.
New York governor Andrew Cuomo detailed the conditions regions will have to satisfy in order to reopen on May 15 as New York recorded its lowest daily coronavirus death toll — 226 — in more than a month.
Greece cautiously loosened a six-week lockdown on Monday, lifting restrictions on movement and allowing 10 per cent of retailers to reopen, while enforcing strict social distancing in stores and on public transport.
Finland will let restaurants, libraries and sports facilities open up from June 1 while essential travel to other Schengen countries in the EU will be allowed from mid-May in the latest opening up in the Nordic country.
Turquía announced it would lift a ban on entering and exiting seven out of 31 Turkish provinces that are currently under lockdown, including the coastal regions of Antalya and Mugla, as part of a general easing of restrictions.
the UK has unveiled a “test, track and trace” strategy, saying the Isle of Wight will be used to trial the next stage of efforts to contain the spread of the virus and help ease the lockdown.
The US health regulator is tightening the rules around antibody tests after unreliable and unauthorised tests flooded the market.
Here’s some of the latest corporate news
AIG said its quarterly profits tumbled more than 90 per cent, dragged down by lower investment income and losses tied to the coronavirus outbreak, which chief executive Brian Dupperault said will be the single largest catastrophe loss the insurance industry has seen.
Quarterly earnings published on Monday showed average weekly sales at Shake Shack’s domestic outlets operated by the company had doubled from lows of $24,000 to $49,000 by the end of April, but remained 45 per cent lower than last year’s levels.
Cruise operator Carnival will resume some services in North America this summer, while extending a temporary suspension in services elsewhere in North America and Australia as it looks to gradually restart operations.
US banks moved to tighten lending standards to businesses and households as the coronavirus pandemic rippled across the American economy over the past three months, according to a closely-watched survey of senior loan officers conducted by the Federal Reserve.
Asia-Pacific stocks set to follow Wall Street’s narrow gain
Australian stocks gained on Tuesday and Hong Kong stocks were set to rise after Wall Street staged a late comeback overnight.
In early trading, Australia’s S&P/ASX 200 rose 0.4 per cent, with futures pointing to a 0.2 per cent gain for the Hang Seng index in Hong Kong.
Japanese, Chinese and South Korean markets are closed for public holidays.
On Wall Street on Monday, the S&P 500 eked out a 0.4 per cent gain after shaking off concerns over a resurgence in US-China tensions while the tech-heavy Nasdaq Composite closed 1.2 per cent higher. S&P 500 futures point to a 0.3 per cent rise when US markets reopen on Tuesday.
Andrew Cuomo, New York governor, suggested that part of the state could end its most stringent lockdown measures by mid-May, while California also moved to allow some businesses to reopen.
Oil prices rose, with West Texas Intermediate, the US marker, up 4.8 per cent at $21.36 a barrel. A collapse in demand sparked by the coronavirus outbreak has put pressure on prices in recent weeks.
China reports 1 new coronavirus case, no new deaths
Health authorities in China reported one new coronavirus case to the end of Monday with no new deaths.
The new case was found in a person returning to Shanghai from overseas and takes the total number of cases in mainland China to 82,881. The number of reported deaths linked to Covid-19 remains at 4,633.
There were 15 new cases of people found to test positive for the virus while not showing any symptoms.
California to ease restrictions for some businesses by Friday
Hannah Murphy in San Francisco
California governor Gavin Newsom said on Monday that he would begin to relax lockdown restrictions for certain businesses from the end of the week, as the state begins to reopen its economy.
Mr Newsom said that florists, bookstores and clothing and sports stores would be permitted to reopen for curbside pickup from Friday. However, individual counties will be able to keep stricter restrictions in place if they choose, he said.
The decision by Mr Newsom to issue a shelter in place order on March 20 — one of the first states to do so — is believed to have helped keep coronavirus case numbers fairly low relative to some other states — as of May 2, it had reported nearly 54,000 cases and 2,215 deaths.
However, several smaller California counties have moved to defy the statewide lockdown in recent days and there have also been a handful of protests against the quarantine order. Mr Newsom added that offices, restaurants and shopping malls would remain closed.
NY Fed study links Spanish flu to extremist voting in 1930s Germany
James Politi in Washington
A staff report by the Federal Reserve Bank of New York has found a correlation between deaths from the influenza pandemic in 1918-1920 and extremist voting in Germany in 1932 and 1933, in research that will fuel concerns about the long-term social and political implications of the coronavirus outbreak.
The NY Fed study, released on Monday, found that German cities hit hardest by the disease that spread at the end of the first world war ended up, more than a decade later, with lower public spending and a higher propensity to vote for Adolf Hitler’s Nazi party.
“Influenza deaths themselves had a strong effect on the share of votes won by extremists, specifically the extremist national socialist party,” the NY Fed research, authored by Kristian Blickle, found. “This effect dominates many other effects and is persistent even when we control for the influences of local unemployment, city spending, population changes brought about by the war, and local demographics or when we instrument for influenza mortality,” it said.
The NY Fed report said the coronavirus outbreak had “renewed age-old questions about the economic and social effects of pandemics”, saying the 1918 outbreak had “profoundly shaped German society going forward” .
Its findings could raise alarm bells about the long-term ramifications of coronavirus at a time when western democracies are already grappling with the reality of populist leaders in power or close to power. Germany has not been hit as hard as other European nations such as Spain, Italy and the UK by pandemic – and one big difference compared to the 1918 influenza outbreak is that last century’s disease affected young people more.
The NY Fed research suggested that one of the 1918 influenza pandemic’s consequences was a disturbing “resentment” towards foreigners and minorities. “The correlation between influenza mortality and the vote share won by right-wing extremists is stronger in regions that had historically blamed minorities, particularly Jews, for medieval plagues,” it said.
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