This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning. David Meyer here in Berlin, filling in for Alan.
European authorities this morning recommended that the lifting of lockdown measures should take place gradually across the EU, with every action being carefully monitored for its impact. “The restart of economic activity should be phased in carefully,” said European Commission President Ursula von der Leyen—a former economics student turned physician—at a press conference.
Judging by new polls from Deloitte and PwC, chief financial officers in the U.S. are also anticipating a slow-and-steady return to something approaching normality. Deloitte’s survey, conducted between April 8 and April 10, found nearly 60% of CFOs thought their operations might return to “near-normal” by the end of the year, with only 12% being bullish enough to anticipate a recovery by the end of this quarter.
PwC’s poll, conducted a couple days earlier, saw 61% of respondents say a return to “business as usual” may be possible within three months, if COVID-19 were to end immediately. Of course, the pandemic won’t just vanish overnight—and, as a Gallup poll conducted in early April made clear, a mere 20% of Americans would immediately return to their normal activities once restrictions are lifted. More than 70% would first wait and see what happens with the spread of the virus.
The professional services firms’ surveys hint at the hits businesses expect to take. Two-thirds of PwC’s respondents may defer or cancel planned investments in facilities, IT, workforce and so on. Just over a quarter said they anticipated layoffs—two weeks ago, only 16% were expecting to do the same. According to Deloitte’s poll, a quarter of CFOs say at least 30% of their workforce is working at less than half capacity.
Here’s PwC chief clients officer Amity Millhiser: “Companies are cutting costs and putting planned investments in technology, workforce and capital expenditures on hold while they try to weather an unprecedented economic storm. Before this pandemic hit, many businesses were focused on long-term growth. Now they are being forced to think short-term and protect liquidity.”
More news below—and be sure to read Maria Aspan’s deep piece on how Ford is pivoting from vehicle to ventilator production during the crisis. And not just ventilators, either—its airbag material is being repurposed for reusable gowns for medical staff protection.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
Bank profits
The first big-bank earnings reports of the coronavirus crisis are in, and there's a common theme: profits are way down, thanks the need for setting aside billions of dollars to cope with looming loan defaults. JPMorgan and Wells Fargo's Q1 results yesterday set the pace, knocking the former's share price by around 3% and the latter's by around 4%. Later today, Bank of America, Goldman Sachs and Citi will report their earnings; Morgan Stanley follows tomorrow. Wall Street Journal
Global markets
Following a five-day rally, European markets dipped this morning as Q1 results continue to reflect the damage wrought by the crisis. Reflecting a similar drop in the Hang Seng earlier, the Stoxx Europe 600 fell by more than 1.3% after the day's open. U.S. futures suggest a similar fall. Reuters
WHO funding
President Trump says he is following through with his threat to withdraw U.S. funding from the World Health Organization, while his administration reviews the WHO and China's "role in severely mismanaging and covering up the spread of coronavirus." Bill Gates says the move is as "dangerous as it sounds." As reports continue to demonstrate, China's secrecy over what was happening there probably did briefly delay the global response, but the U.S. leadership still squandered nearly two months of preparation time after the coronavirus's pandemic potential became clearly recognized. CNN
Oil demand
The COVID-19 crisis is hitting the fossil fuel industry with a major shock that is now being quantified by the International Energy Agency. The IEA said today that April's oil demand is down 29 million barrels per day, compared with a year ago. It said: "Even assuming that travel restrictions are eased in the second half of the year, we expect that global oil demand in 2020 will fall by 9.3 million barrels a day versus 2019, erasing almost a decade of growth." Fortune
AROUND THE WATER COOLER
Chinese VC
China's venture capital market is being transformed by the coronavirus crisis, Fortune's Eamon Barrett reports: "VC investment in the country’s tech sector shrunk 30% in the first quarter of the year, with VCs funneling $16.8 billion into tech enterprises during the first three months, down from $24 billion in the same period last year. The total number of deals contracted too, falling 45% to 634." Fortune
Bezos richer
Amazon's stock price rose 5.3% to a record level yesterday, lifting Jeff Bezos's net worth to $138.5 billion. Shares in Walmart have also advanced during the crisis, making the Walton family richer. As this piece notes, the ultra-rich are in fact ramping up borrowing so as to make more money in what seems like a cheap market. Fortune
Grounds for optimism
Another winner in the crisis: the coffee sector. Roasters have reportedly been struggling to meet demand from American and European consumers who have been stockpiling—and who are of course spending a lot of time at home right now. Arabica-bean futures have risen 20% since the start of February. Financial Times
Grocery demand
The COVID-19 crisis is a trial by fire for the British grocery/logistics giant Ocado, as Fortune's Jeremy Kahn reports. Ocado's robotic warehouses are in overdrive to cope with soaring demand. The surge has not come without problems—in mid-March, Ocado had to shutter its website for almost a week, in order to deal with the overload—but investors seem confident that the automation-focused outfit can capitalize on the current moment. Fortune
This edition of CEO Daily was edited by David Meyer.
