The World
China's economy shrank for the first time in decades in the first quarter of the year, as the virus forced factories and businesses to close. The world's second biggest economy contracted 6.8% according to official data released on Friday. This is the first time China has seen its economy shrink in the first three months of the year since it started recording quarterly figures in 1992. Further, Xi fears Japan-led manufacturing exodus from China. Meanwhile in the US, New York Fed President Williams says the economy won’t be back to ‘full strength’ by end of 2020. While he sees pockets of the economy, such as construction, coming back, he expects people to continue to be reluctant to attend big public gatherings. (BBC, Nikkei Asian Review, CNBC)
The world is set to become more hostile for China after the coronavirus as the risk of “black swan” events gathers for Beijing, a heavyweight in China’s state oil industry has warned, reflecting growing wariness about the geopolitical environment among political and business elites. Fu Chengyu, the former chairman of both China National Offshore Oil Corporation (CNOOC) and Sinopec Group, painted an ominous picture of increasing antagonism from the United States and damaging unforeseen events, known as black swans, like Covid-19 at an online symposium organised by business magazine Caijing. (South China Morning Post)
Emmanuel Macron has warned of the collapse of the EU as a “political project” unless it supports stricken economies such as Italy and helps them recover from the coronavirus pandemic. Speaking to the FT from the Elysée Palace, the French president said there was “no choice” but to set up a fund that “could issue common debt with a common guarantee” to finance member states according to their needs rather than the size of their economies. This is an idea that Germany and the Netherlands have opposed. The EU faced a “moment of truth” in deciding whether it was more than just a single economic market, with the lack of solidarity during the pandemic likely to fuel populist anger in southern Europe, Mr Macron said. “If we can’t do this today, I tell you the populists will win — today, tomorrow, the day after, in Italy, in Spain, perhaps in France and elsewhere,” he said. (Financial Times)
The German economy, Europe’s largest, is in its most grave economic situation since World War Two, Economy Minister Peter Altmaier said on Friday. (Reuters)
A Chicago hospital treating severe Covid-19 patients with Gilead Sciences’ antiviral medicine remdesivir in a closely watched clinical trial is seeing rapid recoveries in fever and respiratory symptoms, with nearly all patients discharged in less than a week, STAT has learned. Remdesivir was one of the first medicines identified as having the potential to impact SARS-CoV-2, the novel coronavirus that causes Covid-19, in lab tests. The entire world has been waiting for results from Gilead’s clinical trials, and positive results would likely lead to fast approvals by the Food and Drug Administration and other regulatory agencies. If safe and effective, it could become the first approved treatment against the disease. (STAT)
Emirates Airline has begun conducing rapid-on site COVID-19 for passengers.
The testing began with passengers on a flight from Dubai to Tunisia on Wednesday. The analysis is a blood test with results within 10 minutes. The airline says it is the first to roll out rapid testing. Emirates says it is working to scale up testing capabilities and extend it to other flights. Etihad Airways, which is also based in the United Arab Emirates, said last week that it is trialing new kiosks that can monitor the temperature, heart rate and respiratory rate of a person checking in for a flight or dropping a bag. (NPR)
Africa could see 300,000 deaths from the coronavirus this year even under the best-case scenario, according to a new report released Friday that cites modeling from Imperial College London. Under the worst-case scenario with no interventions against the virus, Africa could see 3.3 million deaths and 1.2 billion infections, the report by the U.N. Economic Commission for Africa said. (Associated Press)
Americans impatient with continuing stay-at-home orders and other coronavirus-related restrictions have descended on several statehouses this week to clamor for governors to ease up and reopen the economy. In Lansing, people protested Democratic Gov. Gretchen Whitmer’s recent order expanding stay-at-home restrictions. They blocked traffic around the Capitol and some protesters stood with guns a few feet from each other outside the building. Some chanted, “Lock her up!” Meanwhile, roughly a quarter of Michigan’s eligible workforce is now trying to obtain unemployment aid, according to local officials. (Wall Street Journal, Washington Post)
Video of armed protesters at the Michigan state house (The Guardian):
L.A. County represents a quarter of California’s population but has been the site of almost half the deaths due to COVID-19, a Times data analysis has found. The five-county Southern California region accounts for roughly 60% of the deaths in California related to the coronavirus, even though it makes up just 48% of California’s population. (Los Angeles Times)
The coronavirus has sickened workers and forced slowdowns and closures of some of the country’s biggest meat processing plants, reducing production by as much as 25 percent, industry officials say, and sparking fears of a further round of hoarding.
Several of the country’s largest beef-packing companies have announced plant closures. This week there probably will be around 500,000 head processed at U.S. plants still in operation. That’s 25 percent less beef being produced. (Washington Post)
British Prime Minister Boris Johnson’s plan to let Huawei Technologies help build the UK’s fifth-generation mobile networks is under threat from mounting opposition to the Chinese company in his ruling Conservative Party, government officials say. The government had hoped to win over Tory rebels with an information campaign about Huawei ahead of an as-yet-unscheduled vote in Parliament on the company’s involvement in the country’s 5G infrastructure. But two people familiar with the government’s thinking now believe that a hardening of positions among rank-and-file Conservative MPs will make it difficult – if not impossible – to get the legislation passed. (South China Morning Post)
Skilled nursing facilities and assisted living centers treating COVID-19 patients have experienced a 1,064% increase in costs for required personal protective equipment since the deadly virus started its rampage in the U.S. The rise is even higher (1,084%) for those using nitrile gloves due to vinyl glove shortages or allergies, reported the Society for Healthcare Organization Procurement Professionals. (McKnight’s)
Climate-driven megadrought is emerging in western US: With the western United States and northern Mexico suffering an ever-lengthening string of dry years starting in 2000, scientists have been warning for some time that climate change may be pushing the region toward an extreme long-term drought worse than any in recorded history. A new study says the time has arrived: a megadrought as bad or worse than anything even from known prehistory is very likely in progress, and warming climate is playing a key role. "Earlier studies were largely model projections of the future," said lead author Park Williams, a bioclimatologist at Columbia University's Lamont-Doherty Earth Observatory. "We're no longer looking at projections, but at where we are now. We now have enough observations of current drought and tree-ring records of past drought to say that we're on the same trajectory as the worst prehistoric droughts." (Science Daily)
Venezuela is running out of gas. Analysts are calling the severity of the current gas shortage unprecedented — so bad that vegetables are rotting on farms, doctors can’t get to work and even the people of Caracas, a bubble ordinarily spared the worst of Venezuela’s misery, are waiting in gas lines miles long. (Washington Post)
The host committee for the Democratic National Convention in Milwaukee announced Thursday that it cut its staff by more than half, raising further doubts about the convention taking place as previously planned because of the coronavirus pandemic. (Politico)
President Donald Trump’s former lawyer and longtime fixer Michael Cohen will be released from federal prison to serve the remainder of his sentence in home confinement amid the coronavirus pandemic, a person familiar with the matter told The Associated Press. (Associated Press)
Finance
Earnings news:
Procter & Gamble on Friday reported that its fiscal third-quarter U.S. sales surged 10% as consumers stocked up on staples like Charmin toilet paper and Bounty paper towels ahead of the coronavirus outbreak. But the consumer products giant cut its revenue forecast for fiscal 2020, citing headwinds from foreign currency. (CNBC)
Schlumberger Ltd., the world’s largest oil-field services company, cut its shareholder dividend 75% and is restructuring businesses, cutting jobs and closing facilities to cope with a historic energy rout. Chief Executive Olivier Le Peuch said Friday that Schlumberger is bracing for an acute downturn in oil-field activity as he expects spending by global oil companies, which sustains services firms, to fall 20% this year, with North American capital budgets falling 40%. Schlumberger disclosed its plans while reporting a $7.4 billion net loss in first-quarter earnings. The company is taking an $8.5 billion pretax charge on asset impairments, almost all noncash. (Wall Street Journal)
At least eight European hedge funds are launching portfolios betting on a recovery in corporate debt and emerging markets after the coronavirus pandemic triggered the biggest market rout in a generation. Fund managers and service providers told Reuters that seven hedge funds focused on credit and equities have either launched or plan to launch portfolios since the start of March while another credit fund got under way in the past few weeks. (Reuters)
A state-run program that helps businesses cut costs while retaining staff is becoming an increasingly common strategy to fight the economic toll of the coronavirus pandemic. State labor departments are seeing a swift increase in employer applications for programs known as workshares that allow companies to reduce worker hours and employees to collect prorated unemployment benefits to help offset lost wages, avoiding full layoffs. (Wall Street Journal)
Public companies in need of capital to weather the fallout from the coronavirus outbreak are turning to an unlikely source: private equity firms. Investors including private equity firms and hedge funds deployed more than $4.3bn in the U. through private investments in public equity— commonly known as PIPEs—this year to April 13, according to data provider Dealogic. The amount is the most for the start of a year since 2008 when a record $13.7bn was invested over the same period, the data shows. (Private Equity News)
Private equity-backed companies in the UK will be allowed access to a newly expanded coronavirus loan scheme, announced by chancellor Rishi Sunak. The British Business bank has confirmed that portfolios companies, even when they are majority owned by private equity funds will be able to apply for bank loans under the Coronavirus Large Business Interruption Loan Scheme (CLBILS). The plan brings relief to 4,330 UK businesses and 840,000 individuals in the industry. (Private Equity News)
Daniel Loeb, the billionaire hedge fund manager, has blasted the Federal Reserve for extending its assistance to the junk bond market where companies owned by private equity groups often raise capital, saying it is “fraught with moral hazard on several fronts”. In the latest quarterly letter to investors in his $13bn-in-assets fund, Mr Loeb wrote that he was “dismayed” by the Fed’s decision to buy shares in exchange traded funds that own high-yield bonds. (TechnoCodex)
Italy to launch retail bonds for coronavirus funding. The product aimed at ordinary savers will be earmarked for health spending. (Financial Times)
Technology
The rising use of telemedicine spurred by the novel coronavirus pandemic could lift the sector over obstacles and drive more venture-capital investment in the field, according to analysts. “This virus has been a game-changer for telemedicine,” said Matthew Hewitt, an analyst with Craig-Hallum Capital Group LLC, a Minneapolis-based research, trading and investment-banking firm. Several telemedicine entrepreneurs say they are now inundated with interest from hospitals seeking to cope with the pandemic. But for years, regulatory and other restraints hindered the field. (Wall Street Journal)
Chinese autonomous vehicle start-up Pony.ai has launched a self-driving delivery service in Irvine, California, to help fulfil increasing online grocery orders during the coronavirus lockdown. The service, launched in partnership with Los Angeles-based e-commerce platform Yamibuy, enables residents in the area to receive their purchases of daily necessities at home in an “contactless” way, the company announced on Friday. Founded in 2016 by two former senior Google engineers, the company was valued at over US$3 billion after a funding round led by Japanese carmaker Toyota in February. The start-up counts Sequoia Capital and Fidelity International among its backers. (South China Morning Post)
Biz Stone, who co-founded both Twitter and Medium, is raising capital for a new venture fund, setting a target of up to $200 million, according to a person familiar with the matter. Through the fund, Stone plans to make early-stage investments in startups focused on the future of health, work, wealth and play, and has already begun identifying potential investments, said the person. Stone is raising the fund with the entrepreneur Frederick Blackford, who filed paperwork with the U.S. Securities and Exchange Commission on March 23 indicating plans to raise an undisclosed amount of capital. Stone wasn’t listed in the filing, which identified the name of the fund as Future Positive. (The Information)
The United States experienced nearly four times as many distributed denial-of-service (DDoS) attacks on its servers in March than Chinese targets, according to an industry report. American targets were hit more than 175,000 times in the month, making the US the most attacked country in the world. China suffered 45,000 attacks, placing it fourth on the list, according to figures from virtual private network (VPN) provider Atlas. (South China Morning Post)
Smart Links
EPA overhauls mercury pollution rule, despite opposition from industry and activists alike. (Washington Post)
USTA to decide on US Open by June with no spectators 'highly unlikely.' (The Guardian)
Half of U.S. public school students are home for the school year. (NPR)
How to teach your children about the stock market. (Financial Times)
How to test everyone for the coronavirus. (MIT Technology Review)
Cardboard fans as Taiwan professional baseball season begins. (South China Morning Post)