Silicon Valley gears up to leave Silicon Valley 13 May 2020 Remote work has highlighted the Bay Area’s high costs. Some startups are closing San Francisco offices; giants like Facebook were already expanding their national footprint. Covid-19 will hasten the planting of tech flags across America, altering recruiting and local economies.
Hadas: Welfare states will be big Covid-19 winners 13 May 2020 National systems of income support and social care are being expanded in the fight against the pandemic. Some of the special welfare measures are going to become permanent parts of governments’ repertoire. That will benefit marginalised groups, especially in the United States.
Corona Capital: Cruise ships, China/U.S. friction 13 May 2020 Concise views on the pandemic’s corporate and financial fallout: Royal Caribbean raises and dreams of a time when cruise ships come back into favor, while a U.S. pension fund decides to give Chinese stocks a miss.
Crisis exposes flaws in EU’s second-tier banks 13 May 2020 ABN Amro and Commerzbank, both former bailout recipients, lost money in the first quarter. The cause, virus-induced bad debt, is common. But a narrow focus and low profitability make them particularly exposed, leaving taxpayers stuck with some of the lowest returns in Europe.
Modi’s stimulus surprise is just credible enough 12 May 2020 India’s premier pledged a package equivalent to 10% of GDP. The number is probably too good to be true, but the signal of intent is important. India reforms best in times of crisis. And Modi’s vision, which combines self-reliance with supply-chain clout, is easy to buy into.
Aramco well placed for timid oil recovery 12 May 2020 The Saudi oil giant’s earnings slumped 25% in the first quarter, but its cash pile means it can keep dividends flowing. True, Aramco may not prevail in its Atlas-like attempt to prop up the world’s oil market alone. But there are tentative indications that it might not have to.
Swedish virus outcomes will be hard to copy 12 May 2020 The only Western state not to enforce a lockdown has a higher death rate than Nordic peers but lower than Britain or Italy. Its economy will emerge less scarred. But that’s also because of generous welfare and the fiscal room it’s using to compensate companies for lost sales.
Buyout shops and hired bosses gird for tug-of-war 12 May 2020 Many executives of private equity-owned companies are watching their future equity payouts dwindle as growth rates and valuations tumble. They have become more demanding over the years, but are typically the first to lose out when returns fall. Fraught negotiations lie ahead.
The Exchange: Tyler Brûlé 12 May 2020 The coronavirus has only temporarily grounded Monocle’s peripatetic founder and editor in chief. Rob Cox pops by his Zurich HQ to discuss how the globally minded consumers of his media empire are prepping for post-pandemic life, and how the Swiss handled lockdown with aplomb.
State bailouts could use a tax transparency clause 12 May 2020 France and Denmark want to ban companies operating out of tax havens like Panama from Covid-19 help. That’s fair but may only exclude a few firms. Forcing those which tap state aid to disclose how much tax they pay in each country would offer a bigger anti-avoidance boost.
Irish banks caught between two crises 12 May 2020 Bank of Ireland and Allied Irish Banks’ shares have performed worse than most European lenders this year. A recession and 25% unemployment explain some of the pain. The bigger worry is that the state, an investor following the 2009 bailout, will force both to prop up the economy.
Corona Capital: Fauci, Covea/Exor, Uber pay 12 May 2020 Concise views on the pandemic’s corporate and financial fallout: Anthony Fauci testifies on the coronavirus in Congress; Covea pulls back on PartnerRe; and Uber’s executive pay gets only lukewarm support.
Hotels can ride out a cleaner, more vacant future 12 May 2020 The U.S. lodging industry is bleeding $1.4 bln a week in sales. The lockdown wind-down will offer some respite, but new hygiene measures like deep cleans and 24-hour delays between guests will slash occupancy. Big brands like Hilton and Accor have a leg-up in the post-Covid era.
Corona Capital: Tequila sales, U.S. healthcare 11 May 2020 Concise views on the pandemic’s corporate and financial fallout. Sales of Mexico’s famous liquor soared in April – though not enough to take more than an edge off as the country’s economy falters. And the Amazon-Berkshire Hathaway-JPMorgan healthcare venture may need a new boss.
Fringe taxes will go mainstream when lockdowns end 11 May 2020 Governments are currently handing out money, but their focus will eventually shift to recouping the costs of the crisis. The target will be those who benefited most from bailouts. Expect wealth taxes, tariffs on tech firms, and levies earmarked for public health to gain new fans.
Virus will accelerate European mall king’s decline 11 May 2020 Unibail-Rodamco is facing a cash crunch as retail tenants withhold rent. Although the crisis looks temporary, the accelerated advance of online shopping is an existential threat to the 7 bln euro Westfield owner. Disposals may be the only way to shrink its 24 bln euro debt load.
Sino-Australian DNA sequenced by virus-test deal 11 May 2020 Fortescue’s chairman helped broker a controversial Canberra purchase of 10 mln Covid-19 kits from Chinese genomics giant BGI. It adds to diplomatic tensions over Huawei and the pandemic’s origins. And yet over $150 bln of bilateral trade probably will endure, and maybe even grow.
Deal sabotage offers Trump potent trade weapon 10 May 2020 The U.S. president is weighing tariffs to punish Beijing for Covid-19. Thwarting regional trade deals China hopes to sign this year would sting harder, as would buttressing the TPP pact. But that would require buttering up alienated allies, which is not Trump’s forte.
Corona Capital: SPAC reversal, Italy, Toilet paper 8 May 2020 Concise views on the pandemic’s corporate and financial fallout: Dan Loeb’s blank-check company tries to nix a deal; Italians warily get back to work; Australian TP panic subsides.
Ugly U.S. jobs data hides as much as it reveals 8 May 2020 The awful April report brings the jobless rate to almost 15%. But just as February’s super low 3.5% was misleading, Friday’s figure leaves much out. Stimulus alters the income story, and what matters most is how and whether demand returns to the economy.