Bear market blues

March 13, 2020, 10:52 AM UTC

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Good morning.

Since it’s Friday, let me start with some feedback. KZ took me to task on Tuesday, when I noted that the S&P 500 was just a percentage point shy of bear market territory, and commented: “Don’t worry; we’ll get there.”

“Incorrect,” KZ replied. So we made a $10 bet. If the S&P 500 at the end of the first week in April is above Monday’s close of 2,882, he wins. If it’s below, I win.

Yesterday we closed at 2,481. Indeed, yesterday it felt like the whole nation finally capitulated to the reality of coronavirus. (Maybe even KZ.) The string of cancellations and closings that filled my inbox was too long to mention here. I’ll only cite the big one: for the first time in my Carolina blue lifetime, March madness has been muzzled. No NCAA tournament. If that isn’t a clear sign of a recession ahead, I don’t know what is.

Most Americans, it turns out, now agree with me. Fortune Analytics, our new data service for premium subscribers, worked with Survey Monkey to reach a representative cross section of more than 2,000 Americans. We found that 75% of Americans believe the virus will have a negative effect on the economy, and 65% think a recession is likely.

At Fortune, we closed down our Manhattan office last night for a one-week work-from-home “test.” But the cascade of New York cancellations and closings makes it clear that the “test” is likely to be extended. The question is: for how long? On that point, I hear the experts disagree, with some saying 2-3 months for the virus to cycle, while others say it may take a year or more.


In the midst of this virus-mania, we at Fortune are launching a new podcast next week called Leadership Next, that I have the honor of hosting. Readers of this newsletter know I believe that the way the best CEOs run their companies has changed dramatically in the last few years. Leadership Next is a chance for me to talk with the people who are driving that change. We launch Tuesday with Microsoft CEO Satya Nadella as our guest, and will follow up weekly after with a line-up that includes Starbucks CEO Kevin Johnson, Bank of America CEO Brian Moynihan, IBM CEO Ginni Rometty, Delta CEO Ed Bastian, and former Unilever CEO Paul Polman. You can subscribe here.

More news below.

Alan Murray


First, the markets

Following yesterday's historic plunge (are we done with those for now?) Japan's Nikkei 225 slipped by 6.1%, but the damage elsewhere in Asia was more limited—in Australia, the ASX 200 even recovered 4.4%. In Europe, the day started off with signs of a welcome bounce, then the bounce faded, then it showed signs of returning; the Stoxx 600 is currently up 7%. U.S. futures look similarly positive. Bloomberg

Good news!

According to Beijing, the Chinese mainland recorded only eight new cases yesterday, marking the first drop to single digits there in recent months. Bad news: the global infection count is now more than 125,000 and the death toll above 4,600. Mixed news, depending on your stance on such things: Bitcoin's tumble has continued to the point where the cryptocurrency lost around half its value in the last month. Xinhua

CEO coronavirus

Philip Jansen, CEO of British telecoms giant BT, has become the first chief executive of a major firm to come down with Covid-19. He tested positive late yesterday and is now in isolation, though as he feels alright he is continuing to lead the company. BT says it is now deep-cleaning its group headquarters, and Jansen has notified industry partners with whom he recently met. Sky News

Isolated politicians

Australian home affairs minister Peter Dutton has the coronavirus, as confirmed after he met with Ivanka Trump and Attorney General William Barr last week. Canadian Prime Minister Justin Trudeau is in isolation after his wife, Sophie Grégoire Trudeau, tested positive. Romania's interim prime minister, Ludovic Orban, is quarantined after coming into contact with an infected colleague. Brazilian President Jair Bolsonaro is being tested after his press secretary, Fabio Wajngarten, tested positive—Wajngarten met with President Trump and Vice President Pence just days ago. Spanish Equality Minister Irene Montero has also tested positive, sending her husband, Deputy Prime Minister Pablo Iglesias, into quarantine as well. And the Kremlin has told journalists covering President Vladimir Putin to stay away if they feel unwell. Business Insider


Roche test

The U.S. government has granted Roche Holding emergency approval for a highly automated coronavirus test, which should greatly speed up the testing process in that country (it's also available in Europe). Roche diagnostics unit chief Thomas Schinecker: "We are increasing the speed definitely by a factor of 10" compared with Roche's older testing kit. Results from the test are available in just several hours, not days. Fortune

Eurozone policy

Eurogroup president Mário Centeno says he expects Eurozone member states will provide a "very large" policy response to the coronavirus economic crisis, adding up to a lot more than the €27 billion aggregate level mentioned yesterday by ECB President Christine Lagarde. Centeno said the support would include backing for health and civil protection, support for families and workers, and tax deferrals and the like for companies facing liquidity shortages. Financial Times

Paying suppliers

The British supermarket group Morrisons is to pay its smaller suppliers more urgently than usual—within 48 hours—to help them weather the coronavirus crisis. The move should be good news for local food suppliers and farmers providing eggs and meat. Yorkshire Post

Recession planning

Ritholtz's Ben Carlson has some advice for preparing personal finances for the coming recession. Tips include making sure you have enough liquidity, getting your lifestyle inflation in check, and refinancing your mortgage. Fortune

This edition of CEO Daily was edited by David Meyer.

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