We haven’t reached the bottom yet

February 28, 2020, 11:27 AM UTC

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Good morning. David Meyer here in Berlin, filling in for Alan.

It would be nice to wake up to good news about the markets, but this apparently isn’t the week for that. After we plowed into correction territory yesterday, with stocks like Tesla’s getting hammered, the slide continued.

In Asia today, the Hang Seng fell 2.4%, the Shanghai Composite and Nikkei 225 both dropped 3.7%, and the Kospi shed 3.3%. Similar story in Europe—the Stoxx Europe 600 was down 2.8% at the time of writing—and U.S. futures are very firmly in the red, too. Zooming out, the MSCI World Index is down more than 9% for the week. We haven’t been here since 2008.

Too much, too soon? Swissquote Bank senior analyst Ipek Ozkardeskaya thinks so, writing this morning: “To us, it appears that the market has gone ahead of itself and a rebound should be around the corner. The coronavirus outbreak has certainly hit businesses, and it might have a longer-than-expected negative impact on company earnings and global growth. Yet the extension of the sell-off we are seeing may be a bit too dramatic, even compared with the significant downshift in valuations.”

Maybe, maybe not. There’s some good news in China, where the number of new infections is falling (Hubei province continues to bear the brunt of the outbreak there). But elsewhere, not so much.

South Korea’s infection count has cleared 2,300, and Italy’s is now over 650—the only western European countries without a confirmed case are Portugal and Ireland. Around 1,000 people in the German town of Heinsberg are under quarantine, and the Geneva Motor Show has been cancelled after Swiss authorities banned large gatherings. Sub-Saharan Africa also now has its first case (an Italian citizen who works in Nigeria), which is particularly worrisome given the relatively poor state of medical care in the region. Middle Eastern countries such as Israel and Saudi Arabia are closing their borders to people coming from countries with confirmed cases.

The powerful are not immune: Iranian Vice-President Masoumeh Ebtekar has been confirmed ill just after meeting with President Rouhani and other cabinet members, and Mongolian President Battulga Khaltmaa has been placed in precautionary quarantine after visiting China on a state visit.

The markets also seem to have absorbed the fact that, while drugmakers are scrambling to create a coronavirus vaccine, it won’t be hitting shelves until (best-case scenario) at least a year from now, due to the need for safety and efficacy trials. An effective treatment—perhaps Gilead’s remdesivir—may become available sooner, but a vaccine will only theoretically be of use if Covid-19 becomes like the flu: something that rolls around each year, that we all have to deal with again and again.

In the meantime . . . hey, at least hand-sanitizer merchants like Bath & Body Works are doing well. As well they should. Wash your hands regularly, folks.

More news below.

David Meyer


Location data

AT&T, Sprint, T-Mobile and Verizon are reportedly about to be whacked with fines totalling more than $200 million, due to their failure to protect customers' real-time location data. The carriers were sharing data about the locations of individual people to middlemen who then shared the information with their customers. Some legislators see the scandal as a demonstration of why a federal privacy law is needed. Wall Street Journal

Syria crisis

The EU is warning of a major international conflict in Syria. The battle for the holdout rebel city of Idlib (not far from the Syrian-Turkish border) escalated last night, with at least 33 Turkish soldiers being killed in an airstrike conducted by either Assad's regime or the Russian air force. Almost a million citizens of that city alone have been displaced, and Europe might now be in for a fresh refugee crisis, because Turkey has suddenly decided to end its deal with the EU that saw it stop Syrian refugees from reaching Europe. Greece, which along with Bulgaria provides the EU's border with Turkey, is bracing for arrivals. Reuters

Huawei Europe

Huawei has picked France as the location of its first European factory, the first phase of which will cost around $220 million. The plant will manufacture equipment for 5G networks, and the aim is to supply the whole European market. Huawei denies the move represents a charm offensive. France's government has, like the rest of Europe, so far resisted pressure from the U.S. to shun Huawei's 5G equipment over espionage and sabotage fears. South China Morning Post

A.I. ethics

The Vatican will today release a document, sponsored by Microsoft and IBM, promoting the ethical use of artificial intelligence. According to IBM VP John Kelly III, Pope Francis is concerned about the question of whether A.I.'s benefits will be universally available, or whether it will going to further bifurcate the haves and the have-nots. Reuters


German unemployment

The DAX may be suffering today along with other European exchanges (at one point this morning it was more than 5% down), but Germany does have some good news to savor: unemployment unexpectedly dropped this month, with the jobless total down 10,000. Reuters' consensus forecast had predicted a 3,000 rise in the unemployed. Reuters

Mastercard CEO

Fortune's Rey Mashayekhi has a piece out explaining how Michael Miebach, Mastercard's incoming CEO, has strong knowledge both of banking and tech: " As such, he would appear to be a good fit to continue Mastercard’s continued evolution beyond card-based transactions—which, as [current CEO Ajay] Banga noted, have gone from comprising 'close to 80%' of the company’s revenues a decade ago to only around 50% now." Fortune

Drone regulation

The Financial Times has an interesting piece about developments in U.S. drone regulation, in particular the Federal Aviation Administration's work with startups to develop a new traffic management system that can cope with the likely scale of unmanned vehicle deployments. Financial Times

Brexit jobs

Brexit will bring a jobs boom after all . . . in administration. The U.K. government has confirmed industry estimates that 50,000-ish people will need to be hired to fill in all the customs paperwork that would be entailed in the government's preferred kind of trade deal with the EU (a deal similar to that between the EU and Canada). Financial Times

This edition of CEO Daily was edited by David Meyer.

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