THE DAILY EDGE: 29 APRIL 2020

Coronavirus Lingers in Air of Crowded Spaces, New Study Finds

At two hospitals in Wuhan, China, researchers found bits of the virus’s genetic material floating in the air of hospital toilets, an indoor space housing large crowds, and rooms where medical staff take off protective gear. The study, published Monday in the journal Nature Research, didn’t seek to establish whether the airborne particles could cause infections.

The question of how readily the new virus can spread through the air has been a matter of debate. The World Health Organization has said the risk is limited to specific circumstances, pointing to an analysis of more than 75,000 cases in China in which no airborne transmission was reported. (…)

The researchers, led by Ke Lan of Wuhan University, set up so-called aerosol traps in and around two hospitals in the city that was home to the pandemic’s first steps.

They found few aerosols in patient wards, supermarkets and residential buildings. Many more were detected in toilets and two areas that had large crowds passing through, including an indoor space near one of the hospitals.

Especially high concentrations appeared in the rooms where medical staff doff protective equipment, which may suggest that particles contaminating their gear became airborne again when masks, gloves and gowns are removed.

The findings highlight the importance of ventilation, limiting crowds and careful sanitation efforts, the researchers said.

More on this from the South China Morning Post

(…) While they noted low concentrations of coronavirus in the air of well-ventilated or open public spaces, this was not the case in areas which drew crowds, including a busy entryway outside the hospital and a thoroughfare. This finding emphasised the importance of avoiding crowded areas, the researchers said. (…)

Coronavirus Testing Capacity Is Going Unused Many commercial and academic laboratories in the U.S. are processing coronavirus diagnostic tests far below their daily capacity, leaving tools crucial to slowing the virus’s spread unused.

(…) Lab executives and public-health officials blame barriers including fragmented supply chains, relatively strict test guidelines, incompatible electronic systems and a lack of centralized data on where capacity exists.

The result is a disorganized system that isn’t matching the limited testing supply with the demand, and some public-health experts are calling for national coordination to scale up quickly. (…)

Many companies say widespread worker testing is part of their return-to-work plans.

Last week, the Trump administration provided governors with lists of sites with unused testing capacity. States, cities and organizations have started coordinating to expand and work through the logistical barriers. (…)

With the full potential of U.S. hospital, commercial and academic labs unlocked, testing could scale from roughly 1.5 million to 3 million weekly tests within eight weeks, says Rajiv Shah, president of the Rockefeller Foundation.

But then jumping to 30 million weekly tests—the next phase in the foundation’s plan—would likely require new tech, such as quality rapid tests and at-home testing, he said. The Defense Production Act would also likely need to be invoked, according to the foundation’s report. (…)

When will we get the Covid-19 vaccine? By the time the jab arrives, we might not even need it

PANDENOMICS

Coronavirus Prompts Record Souring of Consumers’ Outlook—and Hope Pain Will Be Short-Lived The coronavirus pandemic prompted a record souring of consumers’ views on the U.S. economy in April surveys, but people remain hopeful the gloom will be short term.

The Conference Board, a private research group, on Tuesday said its index of consumer confidence sank to 86.9 in April from a revised 118.8 in March. The index of current conditions drove the decline, falling in April by a record change to 76.4, from 166.7 in March. Despite this unprecedented drop, a measure of consumer expectations rose slightly—signaling an increase in the share of respondents who think business conditions will have improved six months from now.

The University of Michigan survey of consumer sentiment released Friday registered a similar gap, as the index of current conditions plunged 29.4 points in April, compared with a 9.6-point fall in the expectations index.

On the cusp of past recessions, current conditions typically peaked while expectations bottomed out, said Richard Curtin, the University of Michigan survey’s chief economist. “Now we have the opposite,” he said. “The whole situation is completely unique in the history of our surveys, and we go back to the early 1950s.” (…)

The share of respondents in the consumer-sentiment survey saying they anticipate “bad times” in the year ahead hit 68% in April—more than double the share in February.

Manufacturers Hit a Wall as Coronavirus Saps Demand Caterpillar, Harley and 3M are among companies idling production and cutting costs

(…) Caterpillar and 3M said a quarter of their factories are offline. Harley, which idled assembly plants in mid-March, said it is restarting some production. The Milwaukee-based company also said, though, that the worsening economic outlook has prompted it to reconsider when to introduce some new models it is counting on to draw new customers. Nearly two-thirds of its U.S. dealers remain closed. (…) Caterpillar said it was considering closing plants in Germany. (…)

Simon Property to Reopen 49 Malls

China office vacancy rates surge, rents drop amid pandemic headwinds Office rents continue to be battered by the novel coronavirus pandemic, and vacancy rates are on the rise in mainland China.

(…) “The basic operations of most companies have not been affected, but some might suspend or delay their expansion plans … thus new [office space] supply in the market will not be digested [fast enough],” said Martin Wong, research and consultancy associate director for Greater China at real estate consultancy Knight Frank. (…)

As a result, in the January to March period, vacancy rates for Grade A office buildings in Shenzhen and Shanghai rose to 22.3 per cent and 21.1 per cent, respectively. In Beijing, 12.6 per cent of office space was unoccupied, while Guangzhou was more resilient, with only 4.8 per cent of its offices vacant. (…)

Office real estate in Chinese cities that had a higher proportion of multinational firms, such as Shanghai, will recover slower than other cities, as a result, he said.

The Four Seasons Hotels and Resorts announced this month to cease operating its Shanghai hotel and residences from May 15. Starbucks said it had decided to halt new shop openings in China, with some postponed until the next financial year. Luxury brand Kering, which owns Gucci, Saint Laurent and Balenciaga, has also suspended plans for new openings in China. (…)

Rents in tier 1 cities are expected to decline 3 per cent to 5 per cent, Knight Frank’s Wong added. (…)

Chinese homebuyers go on ‘revenge spending’ binge as cities emerge from coronavirus lockdowns

(…) “The demand was only deferred [by the lockdowns] and did not disappear. With new homes flooding the market, and developers wooing homebuyers with measures such as online viewings [during the outbreak] and discounts, we expect another jump in the coming months,” said Lu Wenxi, analyst at Hong Kong-based Centaline Property Agency. (…)

In Shanghai, Shenzhen and Beijing, for instance, residential property purchases rose 37 per cent in the week ending April 20, compared with the previous week. (…)

“The rebound in sales is fragile. Demand remains highly dependent on consumer [and investor] confidence, which is not a sure thing given the global economic downturn. For now, we maintain our base case view, which is that national contracted sales will drop 5 per cent to 10 per cent in 2020,” said Christopher Yip, senior director at S&P Global Ratings. (…)

• Alibaba-backed online bank lends to over 20 million small and micro firms
• Europe’s $2 trillion tourism industry is in dire straits, due not only to a lack of visitors from outside the continent, but also the chaotic re-imposition of national borders that have been effectively invisible for the last 35 years. European Tourism Association CEO Tom Jenkins: “We are in the unique position of there being no demand and no product. You could not devise anything worse.” Fortune
• Companies Are Suspending Dividends at Fastest Pace in Years Nearly 200 companies have cut, suspended or eliminated their dividend payments this year—the most since 2009. The number one calendar year on record for the highest number of dividend reductions was in 2009, with 316 such announcements. But 2020 is still young, and the crisis has just begun. All dividend actions so far this year through Monday amount to a cut in payouts of about $22.8 billion, according to S&P Dow Jones Indices, cited by the Wall Street Journal. (ZeroHedge)

The Coming GOP Spending Split Trump risks dividing his party in the Senate with another $1 trillion bill.

Australia defies China with renewed calls for coronavirus inquiry Diplomatic skirmish alarms business as Canberra accuses Beijing of ‘economic coercion’

Canada’s inflation rate plunges to lowest in almost five years in March

• Statistics Canada reported Wednesday that the consumer price index rose 0.9 per cent year over year in March, down sharply from 2.2 per cent in February and the lowest reading since April, 2015. It was the biggest drop in more than 13 years.

  On a month-over-month basis, seasonally adjusted, the CPI fell 0.9 per cent – the sharpest one-month drop since the inception of the current gauge in 1992. (…)

  Excluding energy costs, inflation fell to 1.7 per cent in March from 2 per cent in February. The Bank of Canada’s three preferred measures of “core” inflation – designed to filter out short-term volatility in pockets of the CPI in order to better reflect underlying inflation trends across the broader economy – averaged 1.8 per cent, down from 2 per cent in February. (…)

• German inflation dropped to 0.8% YoY in April, the lowest reading since November 2016. In March, inflation was still at 1.4% YoY. This first estimate is based on the results of regional states data, according to which the drop in headline inflation was mainly driven by the sharp fall in oil and other energy prices. (ING)

SENTIMENT WATCH

World’s Richest Are Waiting for New Dip in Stocks Before Buying Many fear worst is yet to come, a new survey from UBS finds.

Among the surveyed investors and business owners with at least $1 million in investable assets or in annual revenue, 61% want to see equities fall another 5% to 20% before buying, while 23% say it’s already a good time to do so. Some 16% say that now is not the time to load up on stocks as it’s a bear market.

High net-worth individuals are cautious on risk assets as 60% say a global recession is highly likely to occur in the next 12 months, the April poll by UBS showed. Still, they remain largely positive about the long-term outlook. (…)

Axios adds:

(…) those looking to increase their market exposure over the next six months outnumber those looking to reduce exposure by a ratio of more than 2 to 1,” Mike Ryan, Americas chief investment officer at UBS Global Wealth Management, tells Axios.

The rosy views of investors run counter to a recent survey by PwC of American business leaders, who continue to downgrade expectations for their own companies and the broader economy.

In its latest survey of top CFOs, the global accounting firm found 80% expect revenue/profit losses this year, while more than half (53%) expect losses will be greater than 10%, and about a quarter (24%) said they expect losses will be greater than 25%.

• A third (32%) expect layoffs to occur in the next month, up from 26% two weeks ago and double the percentage who expected to lay off employees at the end of March.
• 70% say they are considering deferring or canceling planned investments and 56% say they are changing company financing plans, up from 46% two weeks ago.

CEO expectations also have declined markedly, with the Conference Board’s latest survey of chief executives showing confidence at its lowest since the height of the Great Recession.

• “[W]hile CEOs see brighter days ahead, they also expect to experience major consequences from the current crisis,” Conference Board chief economist Bart van Ark says.
• “For example, workers, profits, sales, and investment activity will all take a hit, and such impacts could endure post-crisis.”

49% of companies say they’re planning to make remote work a permanent option for some roles.

• 40% say they plan to accelerate automation and “new ways of working.”
• 26% say they plan to “reduce their real estate footprint.”

Data: PwC; Chart: Axios Visuals

• More than 30% of debt from U.S. companies is trading at distressed levels, ratings agency S&P Global reports. “The U.S. distress ratio grew considerably to 30.2% as of April 10 from 24.9% as of March 16.  Almost 70% of all debt in the oil and gas sector is trading at distressed levels and four other sectors have a distress ratio higher than 35%, including retail and restaurants (44.6%), transportation (43.2%), automotive (36.7%) and midstream and merchant power (36.5%). (Axios)

EARNINGS WATCH

After 157 releases, the beat rate is 67% and the surprise factor –1.8% with only 2 sectors showing a negative surprise factor, Energy and Financials. Aggregate earnings for the companies having reported are down 17.8% on a 2.0% gain in revenues.

Q1 EPS are now seen down 14.8% (-12.8% ex-E), worsening to –35.1% (-29.5%) in Q2 as revenues are seen dropping 9.7% (-6.7% ex-E) following –0.2% (+1.1%) in Q1.

Trailing EPS are $158.03 and their forward 12-m estimate is $137.27.

• Google Revenue Climbs, but Company Warns of ‘Tale of Two Quarters’ The online search giant’s parent posted a sustained rise in revenue in the first quarter, but executives said that company performance fell off as the pandemic accelerated and signaled uncertainty about the months ahead.

• (…) March produced “a significant and sudden slowdown in ad revenues.” Alphabet reported total revenue of $41.2 billion for the first quarter, up 13% compared with a year earlier. (…) Advertising revenue on the company’s traditional properties like search—its longtime flagship franchise—was tracking down more than 10% year over year by the end of March, Ms. Porat said, a possible indicator for advertising rivals Amazon and Facebook. New hardware activations of devices fell in the first quarter, a potentially discouraging sign for Apple.

  Snap Inc. reported another tech surprise to the upside last week, when it posted growth in users and revenue, sending its shares up more than 30%. (…)

• Michael Levine of Pivotal Research Group estimates that half or more of Google’s advertising base comes from small-to-midsize businesses and that travel is the company’s largest vertical segment. He noted that he would be stunned if the latter didn’t take years to fully recover.

Nervous Republicans See Trump Sinking, and Taking Senate With Him The election is still six months away, but a rash of ominous new polls and the president’s erratic briefings have the G.O.P. worried about a Democratic takeover.

President Trump’s erratic handling of the coronavirus outbreak, the worsening economy and a cascade of ominous public and private polling have Republicans increasingly nervous that they are at risk of losing the presidency and the Senate if Mr. Trump does not put the nation on a radically improved course. (…)

The surveys also showed Republican senators in Arizona, Colorado, North Carolina and Maine trailing or locked in a dead heat with potential Democratic rivals — in part because their fate is linked to Mr. Trump’s job performance. If incumbents in those states lose, and Republicans pick up only the Senate seat in Alabama, Democrats would take control of the chamber should Mr. Biden win the presidency. (…)

Republicans were taken aback this past week by the results of a 17-state survey commissioned by the Republican National Committee. It found the president struggling in the Electoral College battlegrounds and likely to lose without signs of an economic rebound this fall, according to a party strategist outside the R.N.C. who is familiar with the poll’s results.

The Trump campaign’s own surveys have also shown an erosion of support, according to four people familiar with the data, as the coronavirus remains the No. 1 issue worrying voters. (…)