If you’ve been following my blog, Thank you! Lets hit the ground running with some hard facts and numbers. In case you missed some of the unprecedented news and events over the past few weeks here’s a quick recap (as at May 2020):
Crude oil prices recorded their largest single-day gain on record on March 19 – a whopping 25%. Wait for it though.
US blocked a UN security council resolution focused on creating a global ceasefire to fight the pandemic. Referring to the virus as a common enemy, the UN council hoped for coordinated action and diplomacy in conflict zones to combat the spread of the virus and channel much needed medical supplies to affected zones. The rift was a result of a mention of the WHO that the US administration was uncomfortable with – Trump halted funding for the organization and blamed it for mishandling the response in the early days of the pandemic (The Guardian). This is a developing story so a resolution could eventually pass if compromises are made.
Wimbledon was canceled for the first time since World War II. Lucky for the All England Club, pandemic insurance was in place. The Wimbledon organizing committee paid $31.7 million in premiums for the policy over 17 years (The Insurance Journal). The total amount of the premiums is dwarfed by the $142 million the franchise will pocket as a result of the pandemic insurance.
Bank of England (BOE) predicts an economic contraction in Great Britain not seen since 1706. GDP in the UK is headed for a precipitous decline of 14% for 2020, and 25% for Q1. Unemployment in the country is expected to rise to 9% (Investopedia).
Sidewalk Labs, a subsidiary of Google’s parent, Alphabet, has cancelled Toronto’s ambitious Smart City project. For Tech’s sake! The auspicious $1.3 billion spending plan by Sidewalk Labs included affordable housing in tall buildings made of timber, Google Canada headquarters, and several integrations of advanced technology. Sidewalk Labs had projected $38 billion in private sector investment by 2040, and creation of tens of thousands of jobs (The Verge). The cancellation is a big setback for the city of Toronto.
33.3 million: the largest jobless claims in US history. Two months ago, the unemployment figure in the US stood at 3.5%, marking a 50 year low (BBC). During the Great Recession of 2008, approximately 8 million jobs were lost over 18 months and unemployment reached nearly 10%. During the Great Depression of the 1930s, unemployment reached near 25%.
Donald Trump called the current crisis worse than pearl harbor, or the 9/11 attacks (BBC).
Air pollution dropped by unprecedented levels in major cities around the world during lockdowns. The research by IQAir that included 10 global cities, revealed that cities like Mumbai and Seoul that suffer from high air pollution, experienced decreases of up to 60% (CTV News). Is our planet healing?
In 2019, Adam Neumann, the founder of WeWork, was enlisted to receive the largest golden parachute in history, valued at $1.7 billion. A golden parachute is a form of severance pay for senior executives once their employment is terminated. However, earlier this year, WeWork’s main investor SoftBank, pulled out of a further injection of capital ($3 billion) into the beleaguered office sharing business which put Adam’s golden parachute in a tailspin. Neumann is now suing SoftBank for breach of ‘whatever’. Moe Tkacik of Bustle provides a fascinating tale of WeWork’s search for enlightenment and downfall – its a long read but worth it.
On April 12, OPEC agreed to the largest ever oil output cut in history – at 9.7 million barrels per day. The measure served to address hostility between Russia and Saudi Arabia and to calm the nerves for oil prices. The negotiation took place over video chat and could very well be the most consequential video chat in history. Trump played an active role in the negotiations given the threat to the US shale industry of low oil prices. He intervened to address Mexico’s reservations by deciding to pick up some of the slack for Mexico so agreement could be reached – a fitting win for Mexico’s president (CNBC).
The mergers and acquisition market froze over – the lowest point since September 2004 (Reuters).
Here’s a 150 year history of oil prices in one chart. The first time in history that prices went negative. Who could have foreseen that?
USO, the largest energy focused ETF that tracks crude oil prices experienced a surge in fund flows with many mom and pop traders buying into the fund in hopes of an oil price rebound. Sadly though, there is a grave misunderstanding among novice investors about how the fund actually invests. The key word is “contango” which creates a drag on returns given the structure of futures contracts held by the fund. This Forbes article does a good job explaining the quandary and cautions retail investors.
Dubai Expo 2020, has been postponed to 2021. Six years in the making, the multi-billion dollar global innovation fair was expected to attract close to 24 million visitors to the wealthy principality (Al Jazeera). Dubai’s expenditure on the Expo was expected to reach $18 billion this year. The last exhibition was held in Milan in 2015.
Summer Olympics were canceled for the third time in history. The first two times happened during World War II (1940 and 1944). Tokyo Olympics 2020 were projected to cost Japan more than $26 billion (LA Times). The games are now scheduled for 2021.
For the first time in history, NYC subways will not run on a 24 hour schedule to allow for daily cleaning (NPR). This is much less of a ‘big deal’ than its made out to be by the news media. Needless to say, cleaning the subway is sensible.
Oil behemoth ExxonMobil, reported its first quarterly loss since its founding merger in 1999 (Oil Price.com).
Warren Buffett used Powerpoint slides for the first time to present at the first ever virtual annual meeting for Berkshire Hathaway. Buffett exited his stake in airlines but insisted “never bet against America”. More on the Berkshire briefing (CloudTen).
Luxury goods chain Neiman Marcus, Golds Gym, and JC Penny filed for Chapter 11 bankruptcy. Macy’s and Hertz Car Rental are in a precarious position, and are working to restructure their debt obligations to avoid bankruptcy. News has it that Carl Icahn was involved in debt restructuring talks for Hertz since the billionaire investor holds a substantial stake in the ailing rental car company (Bloomberg).
On April 14, Marriott announced that close to 25% of its 7,300 hotels around the world temporarily closed during the pandemic and that the hotel chain may expect further closures (Travel Pulse). Note: Marriott only owns a fraction of corporately owned stores and serves as operator for many franchisee owned locations.
UBS predicts that one in five of restaurants in the US could close permanently (Business Insider) after the lockdowns are lifted. In Canada, an industry group projects that half of independently owned restaurants may close in the country (BNN Bloomberg).
Amazon hired tens of thousands of employees in the past few weeks – more than it did in all of 2019, to bolster fulfillment efforts at its multitudes of warehouses.
In a rare joint effort, arch-rivals Apple and Google announced a partnership to develop a tool that will help track exposure to the virus. The tracking system will help combat future outbreaks and enable authorities to take timely action. Users of iPhone and Android devices will have the option to opt-in. The tech giants confirmed that the tracking system will not reveal the location or identity of users (CBS News).
Lyft surprised investors by reporting a quarterly climb in revenue of 23% compared to Q1 2019. The car hailing company reported revenue of $955.7 million compared to $776 million for the same quarter last year. Lyft’s $400 million quarterly loss is an improvement from last year’s quarterly loss of $1.14 billion. The company has announced layoffs and furloughs – it’s stock price soared last week amid the earnings surprise (Marketwatch).
Peloton, the $2000-plus bike at-home company smashed Wall Street expectations by adding 1.1 million users to its platform in just 2 weeks (Mar 16 – Apr 30). The demand for Peloton bikes has been so significant that the company reported adjusted operating income of $23.5 million versus a loss of $52.7 million expected by analysts (Yahoo Finance).
Hermes store in the sprawling city of Guangzhou, China, reported a $2.7 million single day revenue after it reopened (Robb Report). The consumer behavior in Guangzhou may be far from what we could expect elsewhere in China / Asia / And rest of the world.
Greece says the coast is clear and will open for tourism starting July 1 (CNN). Are we that desperate for a holiday already?
While the world was busy fighting the current crisis, a massive and potentially hazardous asteroid passed too close to planet earth last week (Global News). No need to panic though, we won’t be needing Bruce Willis anytime soon since astronomers don’t expect any such object to hit earth for several hundred years. But then again, I would balk at any suggestion this time last year that our planet would be under lockdown.
The oldest patient to survive the virus is 107 years of age. Her name is Centenarian Cornelia Ras (Yahoo Finance). A British woman aged 106 years also survived the virus. Both women survived the two world wars and the Spanish flu.
That pretty much sums it up for now. In case you didn’t notice, I didn’t use the C word once in this recap – one country went ahead and banned use of the word entirely. Have a wonderful Sunday and #stayhome and healthy!
References: Reuters, The Insurance Journal, Investopedia, The Verge, BBC, Bustle, CTV News, CBS News, CNBC, Marketwatch, The Balance, Al Jazeera, LA Times, Forbes, NPR, OilPrice.com, Bloomberg, BNN Bloomberg, Travel Pulse, CNN, Business Insider, Yahoo Finance, Global News, The Guardian, and Rob Report. Please note that this briefing contains paraphrased summaries and attributes the original content to the news sources. Readers are encouraged to visit the links to access the full article in its original form for a thorough and complete view. You may need to subscribe to the news agency and source for access.