THE DAILY EDGE: 22 APRIL 2020

Virus Update

• New York to Ease Coronavirus Rules by Region to Reopen State Economy Businesses in different parts of New York state will reopen on separate schedules, Gov. Andrew Cuomo said Tuesday, as upstate elected officials and employers made the case for a regional approach to easing coronavirus restrictions
• Almost all major U.S. metropolitan areas are seeing improvements in their outbreaks, said Deborah Birx, a top health official on the Trump administration’s coronavirus task force. She spoke after data showed that the nationwide infection tally had accelerated. Cases appear to be flattening in areas including Chicago and Boston, while New Orleans is back to its baseline for infections, Birx said at the daily White House briefing. Philadelphia, Houston, Atlanta and Nashville are also among cities improving, she said. The Washington, D.C., region is one where “we don’t see a decline yet,” Birx said.
• Sydney’s famous Bondi Beach will reopen next week for swimming and surfing. That’s after Australia’s government said Tuesday that lockdown measures have led to a “sustained and consolidated” slowdown in new coronavirus cases.
• France’s testing weakness shows challenges of lifting lockdowns Macron wants to loosen curbs in mid-May but scientists first want capacity trebled
• David Rosenberg calculates that when/if a vaccine is found, we would need 300 million doses (600M for 2 shots). He says That American vaccine plants produce between 5 to 10 million doses a year. Then, there are syringes. Better get in line now…2 meters apart.
• The U.K. only has half the testing capacity of other European countries such as Switzerland when it comes to running Roche Holding AG’s most efficient equipment for Covid-19 tests, Chief Executive Officer Severin Schwan said on a call with reporters. Countries struggling to scale up pandemic screening failed to invest enough in health-care infrastructure for decades, he said. “They are just not able to ramp up because they don’t have the know-how, they don’t have the personnel, because they simply don’t have the capabilities,” Schwan said. “Which is not surprising, because you cannot just start up a lab on a green field out of nothing.” Among those who did invest, he cited Germany, South Korea and Singapore.
• In developing its antibody test, Schwan said, Roche scrutinised some existing products for reliability before rejecting them. “It’s a disaster. These tests are not worth anything, or have very little use,” Schwan told reporters on a conference call. “Some of these companies, I tell you, this is ethically very questionable to get out with this stuff.” Schwan said there were about 100 such tests on offer, including finger-prick assays that offer a quick result. The Basel-based company declined to specify which rival tests it had studied, but said it was not referring to tests from established testing companies.
• US health agency warns against drugs touted by Trump Covid-19 patients alerted mix of antimalarial medicine and antibiotic poses serious risks
• U.S. Adversaries Are Accelerating, Coordinating Coronavirus Disinformation, Report Says The State Department has assessed that Russia, China and Iran are mounting increasingly intense and coordinated disinformation campaigns against the U.S. relating to the outbreak of the new coronavirus, according to an internal report.
• Chinese Ambassador to U.S. Urges ‘Serious Rethinking’ of Ties

(…) “I think I should be hoping for more than just a pause in tensions, but really a serious rethinking of the very foundations of this important relationship,” Cui Tiankai said in response to a question on U.S.-China ties during a Bloomberg New Economy webcast on Tuesday. (…) Missouri this week sued the Chinese government for what it alleged was covering up the extent of the coronavirus epidemic. (…)

“Hopefully this pandemic will teach all of us a good lesson,” he said, adding that the relationship should “be based on a more realistic, forward-looking foundation.” (…)

Cui added that China’s development has not come at the expense of the U.S., saying China wants “nothing to do with U.S. domestic politics, we can’t even make sense of it,” in response to a question on who China would prefer to win the presidential election in November. (…)

PANDENOMICS

Goldman Sachs

Global CEOs see U-shaped recession due to coronavirus: survey

Global business leaders are preparing for a drawn-out U-shaped recession due to the impact of coronavirus and many fear their companies won’t survive the pandemic, a survey of thousands of chief executives showed on Wednesday. (…)

Around 60% of chief executives are preparing for a U-shaped recovery – a long period between recession and an upturn – compared with 22% who predict a double-dip recession, according to an April 15-19 poll of 3,534 chief executives from 109 countries conducted by YPO, a business leadership network.

The survey found that 11% of chief executives see coronavirus as a risk to the survival of their firm, while a further 40% say the pandemic poses a severe threat. (…)

Business leaders in the hospitality and restaurant sectors were the most vulnerable with 41% of executives saying their firms were at risk of not surviving, while 30% in aviation and 19% in wholesale and retail sales feared they may go under, the survey found. (…)

Almost two-thirds of business leaders forecast a negative impact on earnings to continue for more than a year, while a quarter expect their workforce to be down by more than 20% a year from now. (…)

So, 60% U-shapers and 22% double-dippers. Not much space left for V-shapers.

What are the current lockdown restrictions and when will they be lifted or re-evaluated?

ING Research

‘Scary Time’ for American Middle Class as Office Jobs Disappear A tsunami of job losses, which began in restaurants, hotels and factories, is now reaching white-collar America.

Bundesliga set to become first big league to restart in pandemic German football to resume in May offering blueprint for rivals

Trump Administration Weighs Aid for Oil Companies Possible conditions include producers offering ownership stakes or oil reserves to the government

The Trump administration is considering offering federal stimulus funds to embattled oil-and-gas producers in exchange for government ownership stakes in the companies or their crude reserves, according to people familiar with the matter. (…)

But it faces long odds given likely opposition from congressional Democrats to using stimulus funding for the oil industry.

Separately, Texas regulators declined to act Tuesday on a proposal to limit state oil production, even as the U.S. shale industry scales back anyway. The Railroad Commission of Texas, which regulates the oil-and-gas industry in America’s largest oil-producing state, deferred until May 5 a decision on whether to make operators curtail production for the first time since the 1970s. (…) We need to make darn sure when we make the motion that it fits legal requirements,” said commissioner Wayne Christian. (…)

“We will never let the great U.S. Oil & Gas Industry down,” the president wrote. He said he wants the plan “so that these very important companies and jobs will be secured long into the future!” (…)

“Obviously the energy business is very important to the U.S.,” Mr. Mnuchin said, adding, “this has national security issues, but different.” (…)

Critics of the oil industry say it doesn’t deserve a government bailout. Many consider the oil industry a contributor to climate change, and say producers ran up irresponsible debt and paid gaudy executive salaries even while returning scant profits. (…)

EARNINGS WATCH

We now have 68 reports in. Surprise! 65% beat rate with 7 of 8 sectors having reported showing positive surprise. Only Financials negatively surprised (-19.9%)

Still, the 68 companies having reported had aggregate earnings down 25.6% on a 2.6% revenue gain. The current blended growth rate for Q1 is –13.6%, from –4.7% on Apr. 1. Q2 estimates are for –29.9%, Q3 –15.8% and Q4 –7.2%.

Trailing EPS are $158.65. Full year EPS estimates: $140.05, down 14%. Here’s the V-shaped EPS pattern unseen by two-thirds of the executives in the above mentioned survey.

The Rule of 20 P/E is now 19.5 at today’s pre-opening of 2765.

• BEAR ESSENTIALS