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Good morning. David Meyer here in Berlin, filling in for Alan.
The number of reported Covid-19 cases in the U.S. rose by almost half over the last day, hitting a total of 1,030—31 people have died. According to a special report released late yesterday by Deutsche Bank Research, it is likely that there will be 301,000 cases in the U.S. by the start of June, when warmer weather might start to slow the disease’s spread.
That’s a lot of people and, mortality aside—Deutsche Bank’s researchers warn there’s too little data to give reliable estimates on that front—it is clear that there will continue to be a major economic impact. Which makes it strange to hear President Trump say “we’re doing a great job with it, and it will go away,” as he did yesterday, adding for good measure: “Stay calm and it will go away.” He did not announce, as promised, a “very dramatic” economic relief plan; it seems neither Democrats nor Republicans are keen on the White House’s proposal for a heavy payroll tax cut.
The lack of a clear roadmap for the U.S. stimulus plan did little to pacify the markets. Yesterday’s wild market oscillations in the U.S. may have ended with a 4.8% boost to the S&P 500, perhaps in expectation of a big White House announcement, but Asian markets ran mildly negative today; Saudi Arabia’s decision to ramp up oil production even more is clearly not helping. However, at the time of writing, European markets are doing alright—the Stoxx Europe 600 is up 1%. U.S. and oil futures are down.
EU leaders yesterday agreed to quickly inject $8.5 billion into health care systems, small businesses, labor markets and “other vulnerable parts” of the economy. Details may be light for now, but the plan is to ramp up to $25 billion of public investment “to deal with the fallout of the coronavirus crisis.” (All this was agreed during a videoconference between the leaders—with politicians around the world going into quarantine, they are taking no chances.)
In the U.K., where mental health minister Nadine Dorries has been diagnosed with Covid-19, the Bank of England yesterday followed the Fed’s lead and cut interest rates by half a percentage point to 0.25%; it also launched a scheme to support small-business lending. Today will also see the first budget delivered by new Chancellor Rishi Sunak, and it’s expected to include serious measures to tackle the coronavirus crisis.
The virus is going to keep on spreading to some degree whatever the authorities do, but nonetheless now is the time for governments and central banks to demonstrate they at least have a plan for managing its effects. Without that reassurance, expect markets to keep sliding.
More news below.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
Biden time
It now looks very likely that Joe Biden will be the Democratic nominee in November, following a run of victories in "Super Tuesday II" yesterday. The former vice president took Michigan, Idaho, Mississippi and Missouri, giving him roughly a third more delegates than Bernie Sanders. Both candidates have now called off rallies due to the coronavirus crisis. CNN
Putin power
You may think Vladimir Putin is attempting a power grab, given his backing for a surprise constitutional amendment that would allow him to stay president after his fourth term expires in 2024, but you would definitely be wrong, according to a former senior Kremlin official who told the FT: "He will not be a dictator…This is about beauty and aesthetics. It is theater. The aim is to make a fifth term an option, or even a sixth or seventh." See? No need to worry. Financial Times
Coronavirus treatment
According to CDC director Robert Redfield, Gilead's experimental drug remdesivir is already being deployed to treat coronavirus in Washington state. Redfield said yesterday that the treatment was being rolled out "on compassionate use", which means in life-threatening cases. Fortune
Sharp suit
Japan's Sharp has sued Vizio for alleged patent infringement. Sharp, these days a Foxconn subsidiary, claims the screen in Vizio's 70-inch TV infringes on 12 patents owned by the Japanese firm. As part of the action, it is also suing Chinese panel maker Xianyang CaiHong Optoelectronic Technology Co and Hong Kong contract manufacturer TPV Technology. Reuters
AROUND THE WATER COOLER
Sneaker hit
The German sportswear giants Adidas and Puma have warned of a huge hit to their Chinese sales, knocking their stocks by 7% and 6.5% respectively. Adidas expects its Q1 sales to drop by as much as $1.14 billion in China, and Puma has ditched the 2020 guidance it provided less than a month ago, when it was feeling more optimistic about the duration of the crisis. CNBC
Oil politics
What does the collapse in the price of oil mean for the energy transition? As this Bloomberg piece argues, it could lead to more oil usage and put oil firms' clean-energy projects in doubt, but sustained low prices could lead to a reduction in oil investment. Government might also be less tempted to prop up troubled fossil-fuel companies, as greener alternatives also promise less dependence on the volatility of the oil markets. Bloomberg
Remote working
The surge in home-working that has been spurred by the coronavirus crisis could be a good thing, argue MIT's Erin Kelly and the University of Minnesota's Phyllis Moen. They write: "For the many companies where employees can work remotely, the coronavirus crisis may be the nudge that companies need to let go of outdated policies and practices—and discover that working differently can be advantageous for everyone involved." Fortune
Algorithmic trading
Did algorithmic trading worsen the fall seen in markets Monday? Some suggest this was the case, though as Adrian Croft writes: "It's notable…that you rarely hear criticism of computerized trading when stocks are booming." Fortune
This edition of CEO Daily was edited by David Meyer.
