Major International Business Headlines Brief::: 24 March 2020

Tue Mar 24 04:31:26 CAT 2020

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Major International Business Headlines Brief::: 24 March 2020

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ü  Coronavirus: Carmakers answer pleas to make medical supplies

ü  Global economy will suffer for years to come, says OECD

ü  Global stocks fall again despite virus rescue efforts

ü  Virus: Will government rescue package be enough for firms?

ü  Coronavirus: Greggs to close all stores to prevent spread

ü  Cobalt supplies for EVs in question as Congo imposes 48-hour coronavirus lockdown

ü  Verizon gives all mobile customers 15GB of extra data during coronavirus pandemic

ü  Selling surges on Wall Street, Nasdaq falls least

ü  Sunnova asks Congress to include solar in spending bill

ü  UK PMIs to fall only moderately but concerns mount over outlook – Forex News Preview

ü  Electric car emissions myth 'busted'

ü  With the real estate industry facing headwinds, SoftBank-backed Compass lays off 15% of staff

ü  T-Mobile’s budget $15 Connect plan will launch on March 25th

ü  Kraft Heinz Stock Could Enter New Uptrend

ü  Asia stocks rally, Fed launches limitless QE against economic reality

ü  Amazon gives part-time warehouse workers paid time off after a group of them fought for it

 <mailto:info at bulls.co.zw> 

Coronavirus: Carmakers answer pleas to make medical supplies

Carmakers are answering calls from governments to help make more ventilators and face masks to help out during the coronavirus pandemic.

On Monday Fiat began converting one of its car plants in China to start making about one million masks a month.

The carmaker wants to start production in the coming weeks, wrote its chief executive Mike Manley in an email.

Other major automakers are looking at ways they can shift manufacturing towards ventilators.

General Motors, Ford and Tesla in the US have all pledged their support to offer resources to make more ventilators, along with Japanese carmaker Nissan and Formula 1 teams in the UK.

Major car plants in the US, Europe and Asia have halted production to try to help prevent the spread of coronavirus. But they are still pledging to help make ventilators and other vital medical equipment.

US President Donald Trump tweeted on Sunday: "Ford, General Motors and Tesla are being given the go ahead to make ventilators and other metal products, FAST! Go for it auto execs, let's see how good you are?"

It came after the US Food and Drug Administration (FDA) announced that it had reduced barriers in the medical device approval process to help speed up the production of ventilators.

"Medical device makers can more easily make changes to existing products, such as changes to suppliers or materials, to help address current manufacturing limitations or supply shortages," US Health and Human Services Secretary Alex Azar said in a statement.

"Other manufacturers, such as auto makers, can more easily repurpose production lines to help increase supply."

Last week, Formula 1 teams in the UK said they hoped to find "a tangible outcome in the next few days" to help increase the supply of medical equipment. Working with the government and health authorities, F1 said it had experts in design, technology and production capabilities who could help out.

Nissan is part of a consortium, including sports car firm McLaren and aerospace company Meggitt, looking to develop a new medical ventilator. "We are fully focused on the project," McLaren said in a statement, but warned of the "limited time and scale of the challenge".

Indian billionaire Anand Mahindra said his company, The Mahindra Group, would begin work immediately to explore how its factories could make ventilators. The conglomerate is the world's largest tractor maker and India's biggest electric vehicle manufacturer, according its its website.--BBC

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Global economy will suffer for years to come, says OECD

The world will take years to recover from the coronavirus pandemic, the Organisation for Economic Co-operation and Development has warned.

Angel Gurría, OECD secretary general, said the economic shock was already bigger than the financial crisis.

He told the BBC it was "wishful thinking" to believe that countries would bounce back quickly.

The OECD has called on governments to rip up spending rules to ensure speedy testing and treatment of the virus.

Mr Gurría said a recent warning that a serious outbreak could halve global growth to 1.5% already looked too optimistic.

While the number of job losses and company failures remains uncertain, Mr Gurría said countries would be dealing with the economic fallout "for years to come".

He said many of the world's biggest economies would fall into recession in the coming months - defined as two consecutive quarters of economic decline.

"Even if you don't get a worldwide recession, you're going to get either no growth or negative growth in many of the economies of the world, including some of the larger ones, and therefore you're going to get not only low growth this year, but also it's going to take longer to pick up in the in the future," he added.

Big shock

Mr Gurría said the economic uncertainty created by the virus outbreak meant economies were already suffering a bigger shock than during the September 11 terror attacks or the 2008 financial crisis.

He said: "And the reason is that we don't know how much it's going to take to fix the unemployment because we don't know how many people are going to end up unemployed. We also don't know how much it's going to take to fix the hundreds of thousands of small and medium enterprises who are already suffering."

Governments around the world have taken unprecedented steps to support workers and businesses during the outbreak.

Coronavirus: A visual guide to the economic impact

What are shops doing about stockpiling?

Coronavirus recession not yet a depression

Policymakers in the UK have pledged to pay the wages of employees unable to work due to the coronavirus pandemic.

Mr Gurría called on governments to rip up borrowing rules and "throw everything we got at it" to deal with the crisis.

However, he warned that bigger deficits and larger debt piles would also weigh on heavily indebted countries for years to come.

No quick recovery

Mr Gurría said that just weeks ago, policymakers from the G20 club of rich nations believed the recovery would take a 'V' shape - with a short, sharp drop in economic activity followed swiftly by a rebound in growth.

"It was already then mostly wishful thinking," he said.

"I do not agree with the idea of a 'V' shaped phenomenon ... Right now we know it's not going to be a 'V'. It's going to be more in the best of cases like a 'U' with a long trench in the bottom before it gets to the recovery period. We can avoid it looking like an 'L', if we take the right decisions today."

The OECD is calling for a four-pronged plan to deal with the outbreak, including free virus testing, better equipment for doctors and nurses, cash transfers to workers including the self-employed and tax payment holidays for businesses.

Mr Gurría compared the level of ambition to the Marshall Plan - which helped to pay for the reconstruction of Europe after the Second World War.--BBC

Global stocks fall again despite virus rescue efforts

Financial markets in Europe and the US have continued to fall despite fresh action by the Federal Reserve to support the American economy.

The US central bank said it would buy as much government debt as needed to soothe markets, while providing new financing for households and firms.

Shares in Europe and the US rose on the news, but soon fell back as Congress remained divided over further relief.

Investors are worried about economic damage due to the coronavirus.

In making its announcement, the Federal Reserve said the pandemic was "causing tremendous hardship across the United States and around the world".

"Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes to promote a swift recovery once the disruptions abate," it said.

However, a broader US bailout bill worth almost $2tn being debated in Congress failed to advance for a second time, after Democrats said proposed financial relief for industries such as airlines would not do enough to help workers.

The Dow Jones and S&P 500 fell about 3%, while the tech-heavy Nasdaq dipped almost 0.3%. The Dow and S&P have now lost more than three years of gains made since US President Donald Trump became president.

In London, the FTSE 100 closed nearly 3.8% lower, while Germany's Dax dropped 2% and France's CAC 40 fell 3.3%. Earlier, Asian stock markets closed sharply lower.

Russ Mould, investment director at AJ Bell, said: "We really are in the thick of a global crisis and markets are showing little sign of optimism as the new trading week gets underway.

"Events are moving so fast that it is difficult for investors to truly understand what's going on with businesses."

US stocks have already fallen by around a third since the middle of last month, while even areas of investment normally seen as safe havens, such as the bond market, are under stress as hard-hit funds are forced to sell good assets to cover losses elsewhere.

The declines come as countries around the world, including the UK, have announced new measures to slow the spread of the virus, including ordering people to stay at home and closing down bars and restaurants. In the UK, fast food chains McDonald's and Nando's are among the firms closing their doors.

As activity slows, numerous companies have announced job cuts or furloughs.

On Monday, those firms included Boeing, which said it would suspend production at its factories in Washington state and General Electric, which said it would cut 10% of its aviation workforce.

Kristalina Georgieva, managing director of the International Monetary Fund, said the shock to global growth will produce "a recession at least as bad as during the global financial crisis or worse".

The Organisation for Economic Co-operation and Development has warned that the world will take years to recover from the coronavirus pandemic.

Angel Gurría, OECD secretary general, told the BBC the economic shock was already bigger than the financial crisis and it was "wishful thinking" to believe that countries would bounce back quickly.

Will government rescue package be enough for firms?

Coronavirus: A visual guide to the economic impact

McDonald's to close all UK restaurants

In the US, the Federal Reserve had already slashed interest rates and intervened to stabilise debt markets, in an effort to cushion the blow to the economy.

On Monday, it said it would expand its holdings of government-backed debt as needed to keep financial markets working smoothly. It also announced plans to loosen requirements for banks to encourage them to keep lending, while taking steps that would provide up to $300bn more financing for employers and consumers. It is working on a lending programme for small and medium sized businesses as well.

In Asia, the Hang Seng index in Hong Kong fell by nearly 5%, while China's Shanghai Composite lost 2.4%.

New Zealand's main share index started the day down by more than 10%, but recovered some ground to close 7.6% lower.

The ASX 200 in Sydney dropped more than 7% in early trading and closed down 5.6% at the end of the trading session.

In India, where a 14-hour curfew was announced, its Sensex index fell 10%, triggering a "circuit breaker" and a 45-minute trading halt. It continued its slide to fall 12%.

“It would be a brave, or foolish, man to call the bottom in equities without a dramatic medical breakthrough,” said Alan Ruskin from Deutsche Bank.

Policymakers around the world have been unveiling ever larger emergency rescue packages - but America's central bank has gone further than any other.

The announcement aims to ease fears on the financial markets that a financial crisis amongst over-indebted companies could be looming. It said it would not limit the amount of assets it buys on the markets via quantitative easing, an effort to ensure there are sufficient funds in the system.

But its separate programme, announced simultaneously - to directly provide aid to smaller businesses and struggling households - is just as important. For it is their financial woes that could turn a recession into a lasting depression. These are massive amounts but as the crisis intensifies, so too will the further measures all policymakers - not just central banks - may have to provide in the coming days.--BBC

Virus: Will government rescue package be enough for firms?

The government has announced the biggest intervention in private sector business since the Second World War to help fight the economic impact of coronavirus.

The questions it will try to answer later on Monday are: "How will it work? How do I get the money? What will it mean for my business and my staff?"

The British Business Bank will act as intermediary between the Treasury and the High Street banks who will be at the front line of getting it to customers.

At £350bn, the promised supply of financial support is enormous. But details on how the loan guarantees and grants announced in the Budget will be distributed in practice need to be clarified urgently.

Some of this is not straightforward so please bear with me.

Here's what we know

Firms with a turnover of up to £45m a year will theoretically be able to get a loan - interest free for 12 months of up to £5m with the government guaranteeing 80% of that loan. An enormous intervention welcomed by business.

However, I say theoretically because the government will only offer this guarantee if it thinks it is a loan that the business would be unable to get without state help. Erm, how do we police that?

Question: How do we know that the banks wouldn't have lent the money anyway - and are thus getting an 80% guarantee from taxpayers?

Answer: No-one cares right now. Lending industry bosses admit this is a potential problem but the urgency of the situation means we can't be too squeamish about potential abuses of the system. We can retrospectively punish bad behaviour where necessary.

Remember, the government guarantee is to the bank for taking the risk. The borrower will still be 100% liable for the debt.

Any loan of over £250k will need to be secured by company assets. If you don't pay it back, the bank gets to keep your company car, your factory, your equipment, your tools, but importantly NOT your principal primary residence.

Question: How many businesses will feel like taking on more secured debt at a time when no one can predict and few expect a return to business as normal anytime soon?

Answer - anecdotally - not many. £330bn of loan guarantees is a lot of supply but there may not be much demand.

In terms of sheer size, this support package is a howitzer, but if it doesn't hit the target it's of limited use. There are two programmes on offer.

The loan guarantee scheme for companies with turnover up to £45m and a government promise to buy unlimited amounts of short-term IOUs from companies that are investment grade. That is a technical term that applies to firms with a high credit rating.

There are thousands of businesses that fall between the two stools. Just about every High Street chain wouldn't qualify for either. Next, generally considered the best-run retail business in the UK, scrapes over the hurdle. M&S, Boots, WH Smith, Pret a Manger and countless others would not.

The UK hospitality and retail sector employs 3.2 million people, more than any other sector in the economy. Most of the industry won't be eligible. While firms in this space will get 80% of their staff wages reimbursed (backdated to 1 March so staff laid off days before that announcement can be taken back onto payroll and still qualify), that still means cost going out, with little income coming in and no access to the big government pots.

The BBC also understands that while the loan guarantee scheme will cover 80% of any bank's losses on any individual loan - it will only guarantee a maximum of 60% of a bank's total loans under the scheme. So in fact the government is offering to share 60% of a bank's total losses rather than 80%. A materially different calculation.

Rent woes

Here is the final question for lenders. At what point does a health emergency and its pursuant severe economic downturn turn into another full-blown financial crisis?

Most commercial businesses I speak to have little intention or ability to pay a quarterly rent bill due next week. If they don't pay, those losses land on the landlords who have already seen huge reductions in rents, with many having massive debts of their own. Those debts then become bad loans to the banking system.

New international accounting rules (called IFRS 9 if you are interested) require firms to record their best guess of future total losses on bad loans upfront and account for it immediately, rather than drip feed them over years through their accounts. Given the gravity of the situation, that could mean a massive hole being ripped in company finances rendering some firms technically insolvent.

The international banking and accounting firms are aware of this - as are the regulators and there is huge pressure for the rules to be relaxed.

There are so many other questions. How do you get assistance to the self-employed - government-backed loans or grants based on recent trading history? Is there any assistance available to gig economy/zero hours workers above and beyond a benefits system that is far less generous than in other European countries?

To be fair to government and the civil servants who, like NHS staff, supermarket workers, taxi and delivery drivers and others, are working round the clock under incredibly demanding circumstances - this is an impossible situation to "get ahead of". Policies made on the hoof at such pace are bound to have holes in them.

The challenge will be to fill them nearly as quickly as they become apparent. It is a grim, grave and gruelling task.--BBC

Coronavirus: Greggs to close all stores to prevent spread

Greggs has become the latest food retailer to say it will close its shops temporarily to help fight coronavirus.

The bakery chain, which has more than 2,050 outlets, said all shops would shut on Tuesday night to help maintain social distancing.

McDonalds, Nando's, KFC, Costa Coffee, Subway and Pizza Express have already announced similar measures.

Prime Minister Boris Johnson has told restaurants and cafes to close, but has exempted takeaway food places.

Greggs, which has about 25,000 employees, had already converted its stores to provide solely a takeaway service.

But it said: "It is now clear that to protect our people and customers we need to go further and temporarily close our shops completely.

"During this period, with support from the government's Coronavirus Job Retention Scheme, we intend to maintain employment of colleagues at full contract hours for as long as is practicable."

McDonald's had earlier said it would close all 1,270 of its restaurants in the UK by the end of the day, affecting 135,000 workers.

The chain said staff employed directly by the company would receive full pay for their scheduled hours until 5 April.

McDonald's UK boss, Paul Pomroy, said: "Over the last 24 hours, it has become clear that maintaining safe social distancing whilst operating busy takeaway and Drive Thru restaurants is increasingly difficult and therefore we have taken the decision to close every restaurant in the UK and Ireland by 7pm on Monday 23 March."

Nando's, which has around 19,000 staff, said its bosses had "decided that the best course of action right now is to temporarily close our restaurants".

Pizza Express, which employs 14,0000, will also close all of its stores until it is safe to open them again, and will not be offering home delivery.

Others that have announced temporary closures include:

KFC: The chicken chain will start closing its 900 outlets immediately until further notice, with all due to be shut by Wednesday.

Costa Coffee: It will close 2,000 branches by the end of Monday, but said its hospital branches would remain open for the time being, and the chain would continue to provide free hot drinks to all NHS workers for the next two weeks. Its 19,000 staff, many of whom are on the minimum wage, will be paid in full for the next eight weeks.

Subway: The sandwich chain closed all its UK stores from 17:00 GMT on Monday. It tweeted that many of its franchise owners were "continuing to support the nation's frontline workers... by donating food responsibly, over the next few days".

Starbucks: The chain had closed all of its UK branches by Saturday.

They join big retailers like Ikea, John Lewis and Topshop who have also said they'll be shutting down for a while.

All of them have said they want to protect the wellbeing of staff and customers.

Julian Metcalfe, who runs Asian food chain Itsu, described the decision to close as "heartbreaking".

"Whilst we are closed we'll continue to do everything we can to look after our people, who are being wonderful, strong and supportive," he said in a statement.

The hospitality industry, which was already struggling from slowing consumer demand, has been put under severe pressure by the coronavirus outbreak.

Last week, industry leaders warned of widespread closures of pubs, cafes and restaurants without state support.

On Friday, Chancellor Rishi Sunak announced the government would pay 80% of wages of furloughed employees, up to a maximum of £2,500 a month.

The move will not, however, cover self-employed and "gig economy" workers, unless they are paid via their company's PAYE system, as is the case at McDonald's.

On Sunday, a Treasury spokesman said the government had strengthened the safety net for the self-employed under universal credit, and was deferring income tax self-assessment payments.

"We have always said we will go further where we can and are actively considering further steps," the spokesman said.--BBC

Cobalt supplies for EVs in question as Congo imposes 48-hour coronavirus lockdown

The EV industry was already finding ways to reduce its dependence on cobalt before the coronavirus hit. Now the supply of the expensive metal is being disrupted as Congo imposes a two-day lockdown in Haut-Katanga, where two people tested positive for the coronavirus.

The Democratic Republic of Congo produces about 60% of the world’s cobalt, a critical component in electric-vehicle batteries. China is also a major supplier.

>From today, Congo will only allow the military, police, medical staff, and authorized civil servants to travel around the province, according to Reuters.

Meanwhile, General Motors last month unveiled its new battery system. The company is shifting its battery chemistry to an NCMA mix that will allow it to reduce cobalt by 70%. Tesla is also making that switch to NCMA for use in the made-in-China Model 3.

Andy Oury, a lead engineer for batteries at GM, called the NCMA chemistry a “giant leap on the road toward higher nickel, lower cobalt chemistries.” And he added that it’s going to “break through the $100 per kilowatt-hour cost target.”

There are also ethical concerns regarding the extraction of cobalt. Child labor is used in mining in the Democratic Republic of Congo, one of the poorest countries in the world.

Tim Grewe, GM’s director of battery cell engineering and electrification strategy, told us in January that GM is very aware of threats to the cobalt supply. “Our engineering is talking about using no cobalt,” he said. “And how you make batteries with the same energy density with no cobalt.”

Last month, demand for electric vehicles in China, the world’s biggest market, went into decline due to the coronavirus. Factories producing EVs all over the world are now shut down.

Analysts believed there could be a stockpile of materials for batteries. In early February, CRU Group analyst Daniel Chen said, “There could also be a raw material stock build as mine supply is located outside China.”

Tesla, BYD, and other EV makers had announced plans to use batteries with less cobalt for vehicles produced in China. That led to declines in the stock price of China’s largest cobalt-mining companies.

But the news about the mining shutdown in Congo could shift the balance of cobalt production to China, as the country further develops its own supplies.-eletercl.co

Verizon gives all mobile customers 15GB of extra data during coronavirus pandemic

Verizon has announced that it is automatically adding 15GB of high-speed data to wireless plans in response to the coronavirus pandemic. Additionally, the company announced it will waive overage charges and late fees for those affected by the crisis, waive internet and voice service for those on its discount Lifeline plan, and reiterated its previous pledge of free international calling for consumer wireless and home voice customers to CDC level 3 countries, among other efforts.

“We understand the hardships that many of our customers are facing, and we’re doing our part to ensure they have broadband internet connectivity during this unprecedented time,” said Verizon Consumer Group CEO Ronan Dunne. “With so many Americans working and learning remotely from home, having access to reliable and affordable internet is more important than ever before.”

“WE UNDERSTAND THE HARDSHIPS THAT MANY OF OUR CUSTOMERS ARE FACING.”

The changes are in response to the Federal Communications Commission’s 60-day Keep Americans Connected Pledge. The pledge asks US internet service providers to not terminate service for residential and small business customers, waive late fees incurred as a result of the pandemic, and provide open access public Wi-Fi hotspots to “any American who needs them.” It also urges companies to suspend data caps and fees for long distance calls.

>From March 25th through April 30th, Verizon consumer and small business customers with metered data plans will get 15GB added, which can be used for hotspot, smartphone, or another device. Meanwhile, Verizon unlimited customers will get 15GB of 4G LTE hotspot data added to their plan.

It’s worth noting that Verizon is waiving overage charges, but isn’t removing data caps for mobile customers. In a separate post, the company notes that “most of the company’s wireless customers are on unlimited wireless plans,” and says that customers who aren’t are “encouraged to connect to Wi-Fi hotspots whenever available” as Wi-Fi connections don’t count against data usage. So, that means if you have a plan with a data cap, you may still need to call up Verizon after the fact to get them to remove incurred overage fees.

Several companies have also laid out how they plan to comply with the pledge. Comcast announced it will suspend its internet data cap policy for 60 days and waive overage fees for home internet customers, among other initiatives. T-Mobile removed mobile data caps and gave customers 20GB of additional hotspot / tethering data. AT&T, like Verizon, isn’t outright removing caps, instead saying it will “waive domestic wireless plan overage charges for data.”

FCC Chairman Ajit Pai says that virtually every major US broadband and telecom business has committed to the pledge, including Charter, Sprint, and others.--thevergecom

Selling surges on Wall Street, Nasdaq falls least

NEW YORK, New York - Drastic moves by the U.S. Federal Reserve to defer student and credit card loans and buy corporate bonds as well as treasuries, failed to persuade investors to stay the course on Monday.

"What the Fed did is important because it does help in the credit markets. But it's not enough from an equity market perspective," Willie Delwiche, investment strategist at Robert W. Baird in Milwaukee told the Reuters Thomson news agency Monday. "What we now need is leadership out of Congress to pass some sort of stimulus bill, because what the Fed's doing is relieving some problems, but it doesn't do enough to solve to solve what's out there."

While selling surged most of the day, losses were trimmed towards the end. The Dow Jones closed down 582.05 points or 3.03% at 18,591.93.

The Standard and Poor's 500 dropped 67.52 points or 2.93% to 2,237.40.

The Nasdaq Composite did best of all, falling just 18.84 points or 0.27% to 6,860.67.

On foreign exchange markets, the U.S. dollar continued to climb. The euro wilted to 1.0728 by the close in New York Monday. The British pound was softer at 1.1538, but like the euro recovered from earlier lows.

The Japanese yen was sharply lower at 111.24. The Swiss franc eased to 0.9848.

The Canadian dollar fell to 1.4502. The New Zealand dollar was little changed at 0.5700. The Australian dollar meantime, advanced to 0.5824.

Overseas equity markets were weak, but were recovering ground in late trade. In London, the FTSE 100 finished down 3.79%. The German Dax fell 2.10%. The Paris-based CAC 40 retreated 3.32%.

In Asia, the hardest hit market was the New Zealand market which dived 10% after the country shutdown was announced. The Australian market was also friendless. The benchmark All Ordinaries index fell 290.60 points or 5.98% to 4,564.10.

China's Shanghai Composite shed 85.45 points or 3.11% to 2,660.17.

The Hang Seng in Hong Kong dived 1,108.94 points or 4.86% to 21,693.13.

In Japan, the Nikkei 225 went against the trend, rising 318.52 points or 3.70% to 8,923.95.-sierraleonetimes

Sunnova asks Congress to include solar in spending bill

Sunnova released the following statement urging the U.S. Senate to also include support for the solar industry in the current spending package, not just the oil and gas industry.

Speaking on the company’s behalf, Sunnova’s CEO William J. (John) Berger, made the following statement:

“The solar industry is an integral component of the U.S. energy industry, employing more than 250,000 people and comprising over 40% of new energy capacity additions last year alone. We are not only a significant driver for the economy, but we also provide critical infrastructure and services by installing and maintaining cleaner and resilient energy for millions of homes across the country. As Congress grapples with the demands of an economy in crisis, we urge them to put the entire energy industry front and center to not only help limit job loss but to also ensure that Americans do not see any interruptions in their energy services.

“The Senate’s current spending package falls short of offering the support needed by the entire energy industry by focusing only on one specific part of the sector — oil and gas. The current draft includes billions of dollars in loans for the oil and gas industry. While we believe that the oil and gas industry should receive the support it needs in these trying times, we remind our elected representatives that oil and gas is not the only part of the sector that is struggling with our new reality. Therefore, we call on our representatives to include support for the solar industry in the current spending package that is being reviewed in order to keep job losses to a minimum, give consumers access to resilient energy options and ensure that we do not fall behind in our efforts to move our country towards cleaner and more resilient energy sources as a part of the world-wide energy transition.”--solarpowerworldonline

UK PMIs to fall only moderately but concerns mount over outlook – Forex News Preview

The preliminary PMI report for March is due to be released in the United Kingdom on Tuesday at 09:30 GMT and February numbers for inflation and retail sales will follow on Wednesday and Thursday, respectively, at the same time. With data for February now considered inconsequential given the unfolding situation with the coronavirus crisis, all the attention will be on the March business surveys as they will be the first indicators to shed some light on the extent of the hit to the economy from the outbreak.

‘Boris bounce’ fizzles out

UK growth failed to rebound substantially at the start of the year, despite hopes of a ‘Boris bounce’. This means that going into the crisis, the British economy was not on a strong footing to begin with and therefore business and consumer confidence were likely less immune to external shocks. However, although economic activity has undoubtedly been badly affected by the global pandemic, the UK government did not adopt tough measures to combat the spread of the virus until recently, and even now, the restrictions in place are not as extreme as those followed by many other European countries, such as France and Italy.

Hence, the March PMIs by IHS Markit are expected to paint the UK in a relatively more upbeat light. The manufacturing PMI is anticipated to decline from 51.7 to 45.0 in the flash reading, while the services PMI is also forecast to drop to 45.0, from 53.2 previously. In contrast, the Eurozone PMIs are projected to tumble below 40.0.

Pound not impressed by government’s virus response

Nevertheless, the pound is unlikely to get much of a lift, if any, from the data if they fall more or less in line with expectations. Apart from the fact that the virus turmoil appears to be getting worse by the day and it’s too soon to predict an end to the crisis, investors are worried about the Johnson government’s response to halting the spread of the disease and fear the number of infections in the UK may peak much later than the rest of Europe.

Those fears appear to be weighing on the pound, which has plunged against both the US dollar and the euro over the past couple of weeks. If the flash PMIs disappoint, sterling’s descent could accelerate, risking the breach of major supports at the 138.2% and 161.8% Fibonacci extensions of the September-December 2019 uptrend, at $1.1362 and $1.0995, respectively.

But there may be some love for the pound later in the week if Thursday’s retail sales figures provide rare good news. UK retail sales are forecast to have increased by 0.2% month-on-month in February. A beat in the data won’t make any difference to the economic outlook but may assist an upside correction in the pound, which is due, according to technical indicators.

A rebound could see cable recovering towards important resistance in the $1.1710 region.

Bank of England to hold third meeting this month

Another key event on Thursday is the Bank of England policy meeting. The BoE has already had two emergency meetings in March, cutting rates twice and restarting its quantitative easing program to help calm markets. Further measures cannot not be ruled out at this week’s regular meeting, especially if the market panic does not subside, though any additional action probably won’t be on the same scale as those already announced.--xm.com

Electric car emissions myth 'busted'

Fears that electric cars could actually increase carbon emissions are a damaging myth, new research shows.

Media reports have questioned if electric cars are really “greener” once emissions from manufacture and electricity generation are counted.

The research concludes that in most places electric cars produce fewer emissions overall - even if generation still involves fossil fuels.

Other studies warn that driving overall must be reduced to hit climate targets.

The new research from the universities of Exeter, Nijmegen - in The Netherlands - and Cambridge shows that in 95% of the world, driving an electric car is better for the climate than a petrol car.

The only exceptions are places like Poland, where electricity generation is still mostly based on coal.

The five major challenges facing electric vehicles

Electric cars: Best and worst places to charge up

Lifetime emissions

The researchers say average “lifetime“ emissions from electric cars are up to 70% lower than petrol cars in countries like Sweden and France (where most electricity comes from renewables and nuclear), and around 30% lower in the UK.

They say the picture for electric cars will become steadily more favourable as nations shift to clean electricity.

The study projects that in 2050 every second car on the streets of the world could be electric. This would reduce global CO2 emissions by up to 1.5 gigatonnes per year, which is equivalent to the total current CO2 emissions of Russia.

The progress could be much faster if nations adopt stricter targets, as the UK has done by pledging that every new car sold will be zero emissions by 2035 at the latest.

The study’s lead author, Dr Florian Knobloch from the University of Nijmegen said: “The idea that electric vehicles could increase emissions is a complete myth.

“We've seen a lot of discussion about this recently, with lots of disinformation going around.

“We have run the numbers for all around the world, looking at a whole range of cars and even in our worst-case scenario, there would be a reduction in emissions in almost all cases..”

Problem not solved

But that doesn’t mean the problem of cars and the environment is solved. First, it’ll be hard to shift the car fleet to electric in time to meet the UK’s 2050 climate goal.

Second, the process will put a huge strain on the generation and supply of clean energy.

And third, abrasion of electric car tyres and brakes will still create pollution in cities.

Prof Greg Marsden, from the Institute for Transport Studies at Leeds University, warned: “Electrification is necessary but not enough.

“Travel demand reductions of at least 20% are required, along with a major shift away from the car if we are to meet our climate goals.

“This implies a really major social change. That is why it is a climate emergency and not a climate inconvenience.”

The new study also looked at electric household heat pumps and found they, too, produce lower emissions than fossil-fuel alternatives in 95% of the world.

The researchers carried out a life-cycle assessment in which they not only calculated greenhouse gas emissions generated when using cars and heating systems, but also in the production chain and waste processing.

In 53 of 59 global regions – including all of Europe, the US and China – the findings show electric cars and heat pumps are already less emission-intensive than fossil-fuel alternatives.

The paper is published in the journal Nature Sustainability.--BBC

With the real estate industry facing headwinds, SoftBank-backed Compass lays off 15% of staff

Compass, the real-estate brokerage startup backed by roughly $1.6 billion in venture funding, has laid off 15% of its staff as a result of the shifting economic fortunes created by the global response to the novel coronavirus pandemic, according to an internal email seen by TechCrunch.

Citing economic fallout that has seen stock markets plummet 30 percent in just 22 days, Compass  chief executive Robert Reffkin wrote that the company has seen an over 60 percent decline in real estate showings and is modeling a six-month decline in revenue of 50 percent.

“We aren’t just facing an economic recession, we are facing an economic standstill,” Reffkin wrote. As the country’s unemployment rate soars to a projected 10 percent, Reffkin wrote that the company had no choice but to cut its workforce.

The 15 percent reduction in staffing is being accompanied by an 80% reduction in its concierge business for the moment. As part of the reductions in corporate spending, Reffkin cut his own salary to nothing and reduced the entire executive team’s salary by 25 percent.

For the employees that are laid off, the company said it would provide an “enhanced severance and COBRA health insurance” along with letting employees hang on to their company laptops and providing tools, training, and networking help so that they can try to get a new job.

The news from Compass is just one indicator of a potential reckoning coming for the booming property tech investment category.

Earlier today, TechCrunch  reported that Zillow  was suspending its homebuying activities as a result of the new economic reality.

Zillow  said it decided to halt its offers to sellers after several states, including California, Illinois, Louisiana, Ohio, New York and Nevada, implemented emergency orders requiring people to stay home and stopping all non-essential business activities, including some real estate-related activities.

Opendoor and Redfin  made similar decisions to pause homebuying. Meanwhile other real estate companies are also laying off staff. The co-working startup Convene laid off staff as well, citing current market conditions.

Reffkin is hopeful that the economy will turn around and predicted that the economy could recover in the next 100 days, ending his email saying that he looks forward to a return to normalcy for Compass and the broader market.

“I feel hopeful that China’s apparent success at reducing the spread of the Coronavirus and restarting their enormous economy may provide a blueprint for our future, as well,” Reffkin wrote. “And I feel hopeful because of the ways I see people throughout our company and throughout our society stepping up during this challenging time.”

To date, Compass has raised $1.6 billion in financing from investors including the Canadian Pension Plan Investment Board, Fidelity, Wellington Management, Softbank Vision Fund, and the Qatar Investment Authority, according to Crunchbase.techcrucnh

T-Mobile’s budget $15 Connect plan will launch on March 25th

T-Mobile will launch its budget Connect plan on Wednesday, March 25th. The prepaid package will deliver unlimited talk and text as well as 2GB of data for $15 per month (or 5GB for $25). The carrier is launching the deal early; it was originally intended to launch after its pending merger with Sprint finalized.

As the novel coronavirus pandemic forces businesses to shutter, T-Mobile claims Connect is ideal for Americans who are struggling financially. “Right now, having a reliable, low-cost connection is absolutely crucial for Americans, and with many facing financial strain, time is of the essence,” wrote CEO John Legere in a statement. “We knew we couldn’t wait for the merger to finalize to launch T-Mobile Connect, our lowest priced smartphone plan, so we’re rolling out ahead of schedule.”

$15 is certainly a low price for a phone plan, though it does come with some caveats. Video streaming on the Connect plan is limited to 480p. It’s also pretty easy to blow through 2GB of data (and you’re cut off completely when you’ve used it up), so customers who choose this option will need to be judicious with it.

Metro by T-Mobile will also begin offering the same plan on Wednesday as well as a $35-per-month hotspot plan with 20GB of data, though the new prices will only apply for the next 60 days. In addition, Metro will offer a free 8-inch tablet for new or current customers with a voice line, and it will sell its hotspot devices for half off.

T-Mobile first unveiled the Connect plan last November, but it claimed that it would only offer it after the merger with Sprint went through. The plan was one of several initiatives the company announced in an effort to garner goodwill for its pending deal.

“The things consumers love about T-Mobile won’t change,” said T-Mobile president and COO Mike Sievert. “We’re still solving pain points and forcing change, but now we’ll be powered by a supercharged network that is only possible with a combined T-Mobile and Sprint.”

Update March 23rd, 12:32PM ET: Added more information about the Connect plan.

Correction March 23rd, 1:17PM ET: This story originally stated that the T-Mobile Connect plan did not include hotspot use. Connect is not eligible for T-Mobile’s 10GB hotspot features, but does allow tethering up to the volume of data on the plan.--theverge

Kraft Heinz Stock Could Enter New Uptrend

The Kraft Heinz Company's (KHC) troubles began in 2016, well before the COVID-19 pandemic, with a botched merger between equals, high debt levels, and a poorly managed reorganization plan contributing to a brutal downtrend that has dropped the food giant to an all-time low. Indeed, the virus has just made a bad situation even worse, knocking an additional 30% off the stock's value since February.

However, market players have ignored the company's most attractive attribute since the crisis began. Simply stated, this is a food stock at a time when anxious shoppers are loading up on canned goods and other staples that form the vast majority of the company's product line. Just look at Hormel Foods Corporation (HRL) and Campbell Soup Company (CPB), which have outperformed broad benchmarks in the past two months, and it won't take much imagination to see that Kraft is likely to beat quarterly estimates.

Recent comments from CEO Miguel Patricio underpin this bullish scenario, telling CNBC that some factories are now working three shifts per day to meet extraordinary demand. The executive also noted that the company has drawn down its $4 billion revolving credit line as a precaution, but this investment could pay off, with additional workers ramping up much needed revenues and profits. In the meantime, the stock pays a hefty 7.18% forward dividend yield.

Even so, this is a high-risk trading call because we can't rule out a forced liquidation event in which investors have to sell everything in order to meet margin calls. That type of worst-case scenario would affect nearly 100% of equities that fill a typical retail portfolio in 2020, including all the cheap bottom fishing plays that more aggressive market players have been jumping on this month.

KHC Long-Term Chart (2012 – 2020) 

Chart showing the share price performance of The Kraft Heinz Company's (KHC)

TradingView.com

Kraft Foods spun off food and beverage operations into Mondelēz International, Inc. (MDLZ) and Kraft Foods Group in September 2012. The common stock for this entity came public at $35.42 and eased into a narrow trading range, with support in the lower $30s and resistance in the upper $30s. It broke out in the first quarter of 2013, entering an uptrend that stalled in the upper $40s a few months later.

The rally made little progress above that resistance level until March 25, 2015, when the Kraft-Heinz merger announcement triggered a 15-point rally gap into the low $70s. Price action hovered around that level for more than a year, consolidating gains while awaiting government approvals. The stock turned higher once again in May 2016, carving a two-legged advance into February 2017's all-time high at $97.77.

Selling pressure escalated in the first quarter of 2018, carving a series of lower highs and lower lows. The stock broke 2012 support in February 2019, posting new historical lows into August 2019, when it bounced at $24.86. That uptick failed in the mid-$30s in November, yielding a shallow but persistent decline that broke 2019 support on March 11. It has bounced once again after posting an all-time low at $19.99, but willing buyers still haven't come to the rescue.

KHC Short-Term Outlook

The weekly stochastic oscillator entered the oversold zone in January 2020 and crossed into a buy cycle in early March, predicting six to twelve weeks of relative strength. The breakdown through the 2019 low marks the first resistance on a bounce, with the stock trading less than two points below that level on Monday. However, there's little to gain in catching this falling knife until it remounts that level and tests it successfully.

The Bottom Line

Kraft Heinz could post much higher-than-expected profits and revenues in the first quarter, potentially ending the stock's four-year downtrend.--investopedia.com

Asia stocks rally, Fed launches limitless QE against economic reality

SYDNEY (Reuters) - Asian stocks rallied on Tuesday as the U.S. Federal Reserve’s sweeping pledge to spend whatever it took to stabilize the financial system eased debt market pressures, even if it could not offset the immediate economic hit of the coronavirus.

While Wall Street seemed unimpressed, investors in Asia were encouraged enough to lift E-Mini futures for the S&P 500 ESc1 by 1.9% and Japan's Nikkei .N225 by 4.9%.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 1.2%, though that followed a drop of almost 6% on Monday. South Korea .KS11 and Australia also recouped a little of their recent losses.

In its latest drastic step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and muni bonds.

The numbers were certainly large, with analysts estimating the package could make $4 trillion or more in loans to non-financial firms.

“This open-ended and massively stepped-up program of QE is a very clear signal that the Fed will do all that is needed to maintain the integrity and liquidity of the Treasury market, key asset-backed markets and other core markets,” said David de Garis, a director of economics at NAB.

“COVID-19 developments remain the wild card, as is the development of government policies to support cash flow and the economy.”

The Fed’s package helped calm nerves in bond markets where yields on two-year Treasuries hit their lowest sine 2013, while 10-year yields dropped back sharply to 0.77% US10YT=RR.

Yet analysts fear it will do little to offset the near-term economic damage done by mass lockdowns and layoffs.

Speculation is mounting data due on Thursday will show U.S. jobless claims rose an eye-watering 1 million last week, with forecasts ranging as high as 4 million.

Goldman Sachs warned the U.S. economic growth could contract by 24% in the second quarter, two-and-a-half times as large as the previous postwar record.

A range of flash surveys on European and U.S. manufacturing for March are due later on Tuesday and are expected to show deep declines into recessionary territory.

While governments around the globe are launching ever-larger fiscal stimulus packages, the latest U.S. effort remains stalled in the Senate as Democrats said it contained too little money for hospitals and not enough limits on funds for big business.

The logjam combined with the stimulus splash from the Fed to take a little of the shine off the U.S. dollar, though it remains in demand as a global store of liquidity.

“The special role of the USD in the world’s financial system – it is used globally in a range of transactions such as commodity pricing, bond issuance and international bank lending – means USD liquidity is at a premium,” said CBA economist Joseph Capurso.

“While liquidity is an issue, the USD will remain strong.”

The dollar eased just a touch on the yen to 110.90 JPY= after hitting a one-month top at 111.59 on Monday, while the euro inched up to $1.0754 EUR= from a three-year trough of $1.0635.

The dollar index stood at 102.120 =USD, off a three-year peak of 102.99.

Gold surged in the wake of the Fed’s promise of yet more cheap money, and was last at $1,564.51 per ounce XAU= having rallied from a low of $1,484.65 on Monday. [GOL/]

Oil prices also bounced after recent savage losses, with U.S. crude CLc1 up 64 cents at $24.00 barrel. Brent crude LCOc1 firmed 53 cents to $27.56. [O/R]

Amazon gives part-time warehouse workers paid time off after a group of them fought for it

Amazon is offering paid time off for thousands of warehouse employees after workers pushed for the benefits.

The company said Monday that all part-time and seasonal delivery employees are eligible to apply for paid time off, effective now. Employees can accrue paid time off retroactively to March 1.

With the policy change, part-time delivery employees can now take paid time off if they would prefer not to come into work in light of the coronavirus outbreak. An Amazon spokesperson declined to say what percentage of warehouse workers are part-time employees. 

DCH1 Amazonians United, an employee advocacy group based in Chicago, began pressuring Amazon to give delivery workers paid time off after workers in Sacramento circulated a petition calling for those benefits. Some workers realized they weren’t being given paid time off, despite it being outlined in Amazon’s employee handbook. The new policy applies to logistics employees who work more than 20 hours per week, according to a document published by the group.

Amazon said it has been planning to give workers paid time off for some time and that the decision wasn’t made in response to the actions of any one group. 

But DHC1 Amazonians United said it’s skeptical about the timing of Amazon’s move.

“We have now won PTO for tens of thousands of fellow Amazon workers and we celebrate our win!,” the group said in the blog post. “Amazon is giving us PTO because they see our movement growing and they want to calm our anger during this Coronavirus Peak by giving us what they already owed us.” 

The shift comes just a few days after four senators wrote a letter to Amazon CEO Jeff Bezos calling for him to establish sick leave and time-and-a-half hazard pay for fulfillment center workers. Warehouse workers have also called out Amazon for putting workers at risk during the coronavirus and circulated a petition urging it to give workers paid leave.

Prior to giving workers PTO, Amazon had announced other benefits changes. Last week, Amazon said it would raise pay for warehouse workers and delivery drivers by $2 per hour through the end of April. The company also extended its unlimited unpaid time off policy for all hourly employees through April.--cnbc.com

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Companies under Cautionary

Bindura Nickel Corporation

Padenga Holdings

Delta Corporation

Meikles Limited

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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