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Good morning.
We’ve been writing in this newsletter about how ill-suited markets are to deal with a pandemic like Covid-19. Normal supply and demand signals simply can’t respond to such a jarring shock to the system…at least not quickly enough to matter. Turns out, the same can be said about A.I. These modern day “prediction machines” are often based on data drawn from past behavior. They aren’t prepared to deal with massive shifts in behavior—for instance, when people inexplicably start hoarding toilet paper.
Fortune’s Jeremy Kahn tells the story of Ocado, the popular online grocery business in the U.K., which has seen its website traffic spike 4X because of the pandemic. The company says its cybersecurity software concluded such a spike could only be the result of a denial-of-service attack, and moved to block the new transactions. Fortunately, human beings were standing by to correct the mistake. Kahn provides some advice companies can use to check their A.I. algorithms and avoid such errors.
Separately, Moody’s tells Fortune its models are estimating that 5 to 6 million people could be added to the unemployment lines in March—the biggest one-month job loss in recorded history, and seven times the 800,000 jobs lost in March 2009. “This is cataclysmic,” says Moody’s Mark Zandi. “I can’t think of a darker word.”
But there are people hiring out there. Chris Morris looks at 17 companies that have put out “Help Wanted” signs. Top of the list: Amazon and Walmart.
And Shawn Tully provides an optimistic view of the stock market. Prices have fallen so low, he says, that the Shiller Price/Earnings ratio is finally flirting with its long-term average. That could be a sign that the market is, for the first time in a while, a good buy.
Other news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Rescue package
The Trump administration and Senate leaders have finally agreed on an emergency relief package worth nearly $2 trillion. Senate Majority Leader Mitch McConnell: "In effect, this is a wartime level of investment into our nation." Senate Minority Leader Chuck Schumer: "This bill is far from perfect, but we believe the language has been improved significantly to warrant its quick passage." The Democrats' wins include oversight of the funds' disbursement by an inspector general and congressional panel, stock buyback bans, and beefed-up unemployment insurance. Fortune
Markets surge
After yesterday's stellar performance (Dow up 11.4% in its best day since 1933; Dax up 11%), the markets look set for another good day. The Nikkei 225 is up 8% and the Hang Seng 3.8%. The Stoxx Europe 600 rose more than 4% at the start of the European day, and U.S. futures again look rosy too. Financial Times
Indian lockdown
Of all the national lockdowns, this is the biggest: India has ordered all its 1.3 billion people to stay home for at least three weeks, with only essential services remaining operational. Prime Minister Narendra Modi: "What the experts are saying is that social distancing is the only option to combat coronavirus. That is to remain apart from each other and stay confined to within your homes. There is no other way to remain safe from coronavirus. If we have to stop the spread, we have to break the cycle of infection." Meanwhile, French President Emmanuel Macron's scientific advisors are recommending that France's week-old lockdown should be extended from 15 days to six weeks. CNN
Occidental pay
Occidental Petroleum will reportedly cut the salaries of its regular U.S. employees by up to 30%, and those of its executives by an average of 68%—CEO Vicki Hollub is taking an 81% pay cut. Employee bonuses and perks will also end. The moves come after a steep decline in oil prices, and a badly timed $38 billion takeover of Anadarko Petroleum that left Occidental saddled with a lot of debt. Wall Street Journal
AROUND THE WATER COOLER
Infection rates
A group of University of Oxford researchers has estimated that up to half the U.K. population may have already been infected by coronavirus. If this is true (and it's far from being confirmed) then that would mean far lower rates of hospitalization and death than currently assumed—it's a very different take to the scary Imperial College modelling that is informing lockdown policy in the U.K. and elsewhere. Who's right? We need large-scale antibody testing to find out, as this would indicate how many people have already had the virus. If it's a lot, perhaps restrictions can be lifted sooner rather than later. Financial Times
Mutation news
More potential good news: researchers examining the SARS-CoV-2 virus are not seeing significant mutations as it passes through the population. That suggests a long-term vaccine could be viable, as opposed to short-term vaccines that have to be redesigned every year, as with the flu vaccine. See also: the hope that warm and humid weather could slow the virus's spread. Washington Post
Airline bailouts
The British government is sounding cool on the idea of bailing out the country's big airlines. Chancellor Rishi Sunak wrote to airline bosses (including those of British Airways, easyJet and Virgin Atlantic) that they should tap recently-announced aid schemes like other companies are doing. Further bailouts "would only be possible if all commercial avenues have been fully explored, including raising further capital from existing investors and discussing arrangements with financial stakeholders," he wrote. Sky News
Food hoarding
Kazakhstan and Serbia have banned some food exports in order to ensure domestic supplies continue during the pandemic; Russia is considering doing the same. Bloomberg asks whether this could be the "start of a wave of food nationalism that will further disrupt supply chains and trade flows". Bloomberg
This edition of CEO Daily was edited by David Meyer.
