The World
Wells Fargo said it can’t fully meet demand from small businesses rushing to participate in a U.S. relief program because of constraints imposed by the Federal Reserve on the bank’s growth. The company has capacity to lend $10 billion to small-business clients under the $349 billion U.S. program, but customers already have expressed more interest than that, Wells Fargo said in a statement late Sunday. The firm will therefore focus on helping nonprofits and businesses with fewer than 50 employees. (Bloomberg)
Bank of America said Monday that it’s seen fierce demand for emergency rescue loans with current applications already accounting for nearly 10% of the entire amount allocated by Congress. The bank confirmed that it has received applications from 177,000 small businesses for a total of $32.6 billion in financing. The current Bank of America numbers are its applications and do not represent the sums the Small Business Administration has approved. (CNBC)
JPMorgan Chase chief Jamie Dimon said Monday he expects the coronavirus crisis to include a “bad recession” and elements of financial strain similar to the 2008 downturn. The chairman and CEO of the biggest U.S. bank said that while JPMorgan entered the crisis from a position of strength and that lenders have prepared for this, the pandemic is playing out in ways that are “dramatically different” from the industry’s Federal Reserve stress tests. Dimon said in his annual shareholders letter: “Our bank cannot be immune to the effects of this kind of stress.” Further, JPMorgan considers an historic dividend suspension. (CNBC & Financial Times)
Russia and Saudi Arabia are “very, very close” to a deal on oil production cuts, according to the chief executive of Russia’s sovereign wealth fund RDIF. “I think the whole market understands that this deal is important and it will bring lots of stability, so much important stability to the market, and we are very close,” said Kirill Dmitriev, CEO of the Russian Direct Investment Fund. (CNBC)
Oil futures dropped early on Monday after a crunch meeting between Saudi Arabia and Russia was delayed until Thursday. (MarketWatch)
Japan’s prime minister, Shinzo Abe, is poised to declare a state of emergency in Tokyo and six other prefectures as early as Tuesday in an attempt to stem a sharp rise in coronavirus cases in the capital and other major cities. The measure, to go into effect for about a month, will enable local authorities to urge people to stay at home except to shop for food, seek medical care, go to work if necessary, and take daily exercise. (The Guardian)
Singapore unveils US$3.6 billion third stimulus package to beat Covid. With the new measures, the city state’s total fiscal injection stands at US$42 billion. The new measures come as the country prepares to shut non-essential businesses and schools for a month. (South China Morning Post)
The merchants and traders of Yiwu, the world’s busiest small-commodity business hub in eastern China, have a sobering message on the outlook of global trade: There will be no quick recovery from the economic devastation of the Covid-19 pandemic, and the fallout may be more severe than from the 2008 financial crisis. (Caixin Global)
In responding to the coronavirus pandemic, the world’s autocrats are turning to their tried-and-tested tool kits, employing a mixture of propaganda, repression and ostentatious shows of strength to exude an aura of total control over an inherently chaotic situation. Yet the virus also brings potential perils for the strongmen. Countries like Russia and Egypt are at the front end of the virus curve, meaning the worst is likely a matter of weeks away. If the crisis is as bad as the one sweeping Europe and the United States, their usual tools may be of limited use. (New York Times)
For-profit hospital operator Quorum Health said in a recent filing with the Securities and Exchange Commission that it may have to file for Chapter 11 bankruptcy to address current liquidity needs while continuing to care for patients and keep its hospitals operating. (Healthcare Dive)
Shake Shack Inc. hardly seems like a small enterprise, with 7,600 employees, about $500 million in annual revenue and net income last year of $24 million. Even so, it plans to apply for a new government-guaranteed small-business loan. While the new $350 billion Paycheck Protection Program is aimed at businesses with 500 or fewer employees, language in the $2 trillion federal stimulus bill allows big restaurant and hotel chains to participate regardless of how many people they employ. (Wall Street Journal)
Carmakers face more than $100bn hit to revenues. New calculation highlights scale of losses should plants remain closed until end of April. (Financial Times)
The coronavirus crisis damaged Britain’s construction sector last month as activity fell at its sharpest rate on record, according to IHS Markit’s purchasing managers’ index. The index for the sector dropped from 52.6 to 39.3 in March, the lowest reading since April 2009 and well below economists’ forecasts of 44. The 13-point fall was the largest recorded since records began in 1997. (The Times (UK))
Mandatory coronavirus quarantines of seasonal foreign workers in Canada could hurt that country’s fruit and vegetable output this year, and travel problems related to the pandemic could also leave U.S. farmers with fewer workers than usual. (Reuters)
Warehousing companies defied the national rush to eliminate jobs in March, adding thousands of new hires as consumer stockpiling of food and household goods placed heavy demand on distribution networks. Warehousing and storage operators brought on 8,200 workers last month, the largest monthly increase since January in a sector that includes grocery distribution and e-commerce fulfillment centers, according to seasonally adjusted preliminary employment figures the U.S. Bureau of Labor Statistics released Friday. (Wall Street Journal)
Boris Johnson will stay in hospital for “as long as he needs to”, the communities secretary said today after the prime minister was admitted for tests because of his coronavirus symptoms. Robert Jenrick said that the prime minister was “doing well” and that he expected him to return to Downing Street shortly. (The Times (UK))
Law firms are retraining lawyers in areas including restructuring and insolvency during the coronavirus crisis to handle a rush of business from companies in financial distress. Some of the largest global law firms including Latham & Watkins and Hogan Lovells are retooling lawyers and moving them from quieter departments, with some forecasting a fourfold increase in the number working on restructuring matters in the coming months. (Financial Times)
It is possible the rest of the 2020 sports calendar, including college football and the NFL, will be lost, according to interviews with and public comments from more than a dozen sports leaders and public health experts. (Washington Post)
Finance
European banks prepared for a crisis, but not this one. The financial impact of the coronavirus surpasses the old worst-case scenarios, threatening a credit crunch or even a new financial crisis. When it’s all over, European banks could be even more diminished on the global stage than they already are. After the 2008 financial crisis, American giants like JPMorgan Chase and Goldman Sachs bounced back more quickly than their European rivals and pushed them to the sidelines. Deutsche Bank is the last eurozone lender among the top 10 investment banks globally, based on revenue. (New York Times)
Private-equity firms are pooling their resources to set up crisis-management hubs that can help the companies they already own contend with the wide-ranging effects of the coronavirus pandemic. It is “kind of a nerve center that is processing all information from all different sources to be a clear voice to all the different portfolio companies,” said Jason Phillips, a partner and private-equity practice leader at consulting firm McKinsey & Co., which advises private-equity firms and the businesses they back on a range of operational issues. (Wall Street Journal)
The Securities and Exchange Commission said it would not object to a provision in the $2 trillion stimulus packageallowing lenders to delay implementing a new accounting standard on expected credit losses. The law also gives lenders the option to defer implementing a rule, known as Current Expected Credit Losses, or CECL, that requires companies to forecast expected loan-related losses as soon as a loan is issued and to set aside capital for them. (Wall Street Journal)
The latest NFX VC & Founder Sentiment Survey, an ongoing initiative to track how early-stage Investors and Founders are reacting to the COVID-19 crisis, has been released. 57.4% of Founders find VCs not responding or slower to respond; 49% of Founders have delayed their fundraising plans; 94% of VC respondents feel the economy will head into depression or recession. (NFX)
Union Square Ventures Partner Albert Wenger writes: There is a money grab going on right now by some venture backed startups that this program absolutely should exclude. (Continuations)
A “sleeping risk” on the books of U.S. businesses could be awakened by the pandemic, as the sudden cash crunch exposes a hidden type of financing that makes balance sheets look better, credit-rating firms are warning. The three biggest ratings firms each issued reports last month highlighting the dangers of supply-chain financing, a fast-growing, opaque technique for delaying payments to suppliers to improve cash flow. (Wall Street Journal)
Technology
Slack Technologies Inc. said it plans to sell $600 million worth of convertible senior notes, due 2025. The business communication company said the notes will be convertible to cash, shares of common stock, or a combination of both, at the option of the holder. The note holders will have the right to require Slack to repurchase all or a portion of the notes at 100% of their principal amount, plus accrued interest, "upon the occurrence of certain events." (MarketWatch)
Tech startups spent the weekend scrambling to figure out whether they were eligible for a federal emergency loan program that some said could make the difference between whether they are forced to lay off employees or not. (The Information)
Hospitals, grocery stores and other essential services are enlisting robots in the fight against the coronavirus outbreak, accelerating an already fast-growing market for workplace automation, industry analysts say. The deployments include both software and hardware robots. (Wall Street Journal)
Quibi risks mobile video platform launch amid quarantine and economic turbulence. Amid expanding coronavirus lockdowns, video streaming has been booming. But Quibi is introducing a product designed to be consumed while people are on the go at a moment when most people are going nowhere. (Venture Beat)
Zoom CEO says, “I really messed up” on security as coronavirus drove the video tool’s appeal. Eric Yuan says he is scrambling to restore reputation of platform that has drawn soaring usage, privacy concerns during pandemic. (Wall Street Journal)
While many Americans are relying on digital connections during this time of social distancing, relatively few say interacting via these technologies will be as effective as in-person contact. About two-thirds think the internet and phones will help but are not a replacement for face-to-face encounters. (Pew Research Center)
Gaps in Amazon’s virus response fuel warehouse workers’ demands: Shifting sick-leave policy and communication issues are causing employees to assert themselves after they stayed on the job. (New York Times)
China’s months-long effort to contain the coronavirus pandemic is boosting the digitalisation of the world’s second largest economy, with online sales, teleconferencing and entertainment thriving. The outbreak has given new momentum to China’s digital economy, which has grown at an annual rate of more than 20 per cent in recent years and accounts for about a third of gross domestic product and quarter of the national workforce. (South China Morning Post)
Smart Links
How antibody testing works. (MIT Technology Review)
How do infections like the coronavirus jump from animals to people? (National Geographic)
Wisconsin still plans primary vote tomorrow. (Milwaukee Journal Sentinel)
Will colleges give coronavirus refunds? (Wall Street Journal)
Wall Street banks explore option of ‘virtual internships’. (Financial Times)
Private flights getting cheaper thanks to stimulus tax relief. (Bloomberg)