Business Maverick

Business Maverick

Global Fatality Rate 3.4%; Olympics Delay Possible: Virus Update

Covid-19 patients (at the rear) wait to be transferred from Wuhan No 5 Hospital to Leishenshan Hospital, the newly-built hospital for Covid-19 patients, in Wuhan in Hubei province on 3 March 2020. (Photo: Str / AFP via Getty Images)

The head of the World Health Organization said the novel coronavirus doesn’t transmit as efficiently as influenza but the fatality rate is higher at 3.4%. Japan’s Olympics minister said it would be possible to delay the summer games to later in the year.

Total infections rose above 93,000, with China reporting 38 more deaths and fatalities rising to nine in the U.S., where the Federal Reserve delivered an emergency interest-rate cut. The Hong Kong Monetary Authority followed suit and South Korea unveiled a $9.8 billion extra budget to help businesses hit by the outbreak. The Group of Seven finance chiefs pledged to use all policy tools to support the global economy, but no direct action was taken.

Infections rose in South Korea and Iran, where more officials were diagnosed. JPMorgan Chase & Co. asked thousands of U.S. employees to work from home, and Ford Motor Co. banned all business travel. U.S. stocks declined and Treasuries surged Tuesday, with the 10-year yield falling below 1% for the first time ever. Gold extended gains in Asia on Wednesday.

Key Developments:
Global cases reach 93,017; death toll rises to 3,201
Tokyo Olympics Postponement Possible, Japan Minister Says
Fed Cuts Half Point in Emergency Move Amid Spreading Virus
Debt-Bloated Firms That Coronavirus Threatens to Drag Down
Hong Kong Business Outlook Plunges to Record Low on Virus

Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts. For analysis of the impact from Bloomberg Economics, click here.

South Korea’s Moon Cancels Trips (10:53 a.m. HK)

President Moon Jai-in canceled visits to the United Arab Emirates, Turkey and Egypt because of the outbreak, according to a statement. The president will instead hold phone calls with leaders of the countries to discuss cooperation over the virus, his spokesman said.

South Korea’s toll from the virus has risen to 5,328 confirmed cases and 33 deaths.

Australia Infections Rise to 41 (10:28 a.m. HK)

Health authorities confirmed Australia’s third locally transmitted case. The woman, in her 50s, works at a care home in Sydney and had been in contact with a number of elderly residents who are now under isolation. Test results are pending for two residents with respiratory symptoms. One of them, a 95-year-old woman, died overnight, though authorities don’t yet know if her death was due to the coronavirus.

Japanese Airlines Reduce Flights (10:10 a.m. HK)

ANA and Japan Airlines said they will reduce domestic flights from March 6 to 12 because of the virus and its impact on demand. ANA is cutting frequencies on routes including Haneda to Sapporo and Hiroshima, while JAL said 352 flights would be affected.

China Cases (9:46 a.m. HK)

China’s National Health Commission reported 38 more coronavirus fatalities as of the end of Tuesday, bringing the country’s total death toll to 2,981. All bar one of the latest deaths were in Hubei province. Total cases rose by 119 to 80,270, while 49,856 patients have been discharged.

Amazon Says Seattle Employee has Virus (9:30 a.m. HK)

Amazon confirmed the first coronavirus case among its U.S. workforce, an employee at its South Lake Union office complex in Seattle. The person left work on Feb. 25 due to illness and the company said it was informed Tuesday about the infection. Two Amazon employees in Italy were previously confirmed to have contracted the virus.

NBA’s New Africa League Postponed (9:25 a.m. HK)

The Basketball Africa League postponed its inaugural season, which had been scheduled to start on March 13 in Dakar, Senegal. The BAL is a partnership between the International Basketball Federation and the NBA featuring 12 club teams.

South Korea Unveils Extra Budget (8:50 a.m. HK)

The government of South Korea said it is seeking a 11.7 trillion won ($9.8 billion) extra budget in response to the epidemic. The plan adds 8.5 trillion won in new spending to an annual budget that was already the biggest on record. The Bank of Korea also called an emergency meeting, as data show domestic demand and supply chains are being hurt by the virus.

In a rundown of scenarios for the virus, Bloomberg Economics said the cost to global GDP would be $2.7 trillion if there was a global pandemic and every country took the sort of containment efforts made by China to bring the outbreak under control.

Wuhan Evacuation Flights to Hong Kong (8:30 a.m. HK)

A total of 258 Hong Kong residents will return from Wuhan on two chartered flights Wednesday, according to Secretary for Constitutional and Mainland Affairs Patrick Nip. There will be two more chartered flights Thursday. Everyone arriving from Wuhan will be sent into quarantine for 14 days.

Medicare, Medicaid and Obamacare to Cover Tests (7:58 a.m. HK)

Seema Verma, administrator of the Centers for Medicare and Medicaid Services, said the coronavirus test is a diagnostic test that would be covered by insurance, including Medicare, Medicaid and the Affordable Care Act.
Verma spoke alongside Vice President Mike Pence and others at the White House. Pence announced that coronavirus tests would now be available to any American, subject to doctors’ orders. Verma and Pence didn’t specifically answer a question of whether uninsured people would receive any funding for coronavirus testing.

Hong Kong Cuts Interest Rate (7:41 a.m. HK)

Hong Kong’s de facto central bank cut its benchmark interest rate to 1.5% from 2.0%, in line with the U.S. Federal Reserve’s move. Hong Kong essentially imports U.S. monetary policy as its currency is pegged to the greenback. Local banks aren’t obliged to follow with lower borrowing costs, though the city’s economy is in need of support following months of protests and now the impact of the virus. Hong Kong’s business outlook fell to a record low in February, with the purchasing managers’ index at just 33.1, according to IHS Markit.

California Taps Emergency Mask Reserve (7 p.m. NY)

The California Public Health Department said it has approval from the CDC to tap an emergency reserve of 21 million N-95 face masks for certain situations. The masks may be past their manufacturers’ expiration date but have been stored in conditions that should prevent decay of the elastic that holds them in place, the department said.

Silicon Valley’s Santa Clara County said it had two new cases of coronavirus, bringing the total there to 11. The city of Berkeley announced its first confirmed case, from a resident who recently traveled to an affected country. Marin County, north of San Francisco, joined the several areas in the state to declare a local emergency in preparation for potential cases.

Goldman and Boeing Delay Conferences (6:40 p.m. NY)

Goldman Sachs postponed a conference set for Wednesday in New York. “In light of current events and the resulting volatility in the markets, we know that many of you cannot take time to be away from the office as you prioritize the continuity of your business,” the company wrote in a note to attendees. It also citied “travel restrictions that could affect our speakers and guests.”

Meanwhile, Boeing postponed a supplier summit scheduled to take place in Washington D.C. later this month. The company’s new chief executive, Dave Calhoun, was due to speak at the conference.

Temple Congregants Ordered to Self-Quarantine (5:14 p.m. NY)

The health department of Westchester County, New York, ordered Temple Young Israel in New Rochelle to halt all services immediately due to potential coronavirus exposure connected to a member of the congregation. The congregant, an attorney who tested positive for the virus Tuesday, was reported in serious condition at New York Presbyterian Hospital.

Congregants who attended services on Feb. 22 and a funeral and a bat mitzvah on Feb. 23 must self-quarantine until at least March 8, Westchester health officials said. Those who don’t comply will be required to do so, officials said.

The synagogue has 380 member families, according to its website.

Google Cancels Most Important Conference (4:40 p.m. NY)

Google called off its flagship conference, the latest event cancellation as concern about the coronavirus grows among businesses.

The May event, called I/O, brings together thousands of people from around the world who partner with or build apps and websites for Google’s digital services. The company will refund participants and look for ways to hold sessions digitally instead, according to an email sent to participants that Bloomberg viewed. On Monday, Google made the same decision for its Cloud Next conference.

More Travel Restrictions Coming, TSA Chief Says (4:20 p.m.)

More travel restrictions will be announced soon to help prevent the spread of coronavirus, said Transportation Security Administration chief David Pekoske.

“There will be additional countries, I’m sure, as we continue to work with the task force, and I think those announcements will be relatively soon,” Pekoske told the U.S. Senate Appropriations Committee’s homeland security panel on Tuesday.

The comments underscore the potential for tougher limits on international trips as cases increase. The Trump administration has already placed restrictions on travelers who have been to China or Iran in the last 14 days. It has also issued advisories for travel to Italy and South Korea.

North Carolina Case Tied to Washington Outbreak (4 p.m. NY)

North Carolina officials reported the first presumptive case of the disease, and it appears to be linked to an elder-care facility on the other side of the country in Washington state, where several people have fallen ill and died.

The infected person from North Carolina traveled to Washington and was exposed at the long-term care facility, according to a statement from the office of Governor Roy Cooper.

Officials said it was an isolated case and that they’re identifying close contacts of the infected person to contain the spread, according to the statement, which said the patient is “doing well and is in isolation at home.”

New Washington Deaths Bring U.S. Total to 9 (3:40 p.m. NY)

Two deaths last week in the Seattle area are now confirmed to have been due to coronavirus, making them the earliest known cases in the U.S. as an outbreak spread unnoticed in a nursing home. That brings the total number of deaths in the U.S. and Washington state to nine — eight in King County, which includes Seattle.

On Feb. 24, a 54-year-old male patient was transferred to Seattle’s Harborview Medical Center from the Life Care Center home in Kirkland, Washington. Two days later, the patient died of what is now known to be Covid-19, the disease caused by the virus, the hospital and the county public health department said Tuesday.

In the interim, the patient may have exposed some staff who were treating him in the intensive-care unit, Harborview said in a statement. Those workers have been contacted and are being monitored and screened daily. The hospital doesn’t believe other patients were exposed. A second resident of Life Care, a woman in her 80s, died at her family home the same day from the virus.

Ford Bans All Business Trips (3:05 p.m NY)

Ford Motor Co. has banned all business travel after two of its employees in China contracted the coronavirus.

The employees were quarantined after being diagnosed with the virus, and they’re recovering, Anderson Chan, a Ford spokesman, said in an email. He declined to reveal the employees’ location, gender, ages or whether they were factory or office workers.

Effective Tuesday, Ford curbed all business travel — both international and domestic — until March 27. The U.S. automaker joins multinational companies including Nestle SA and L’Oreal SA in suspending business trips in hopes of curbing the spread of the virus that is slowing economies and sending markets into a tailspin.

JPMorgan Tests U.S. Work-From-Home Plan (2:55 p.m. NY)

JPMorgan Chase & Co. is asking thousands of U.S. employees to work from home as it tests a contingency plan for closing domestic offices should the coronavirus spread, according to people with knowledge of the matter.

Managers requested that about 10% of staff across its consumer bank work remotely as part of the plan’s resiliency testing, which has been code-named “Project Kennedy,” said the people, who asked not to be identified discussing internal matters. JPMorgan’s consumer bank, which primarily operates in the U.S., has 127,137 employees, the most of any of the firm’s divisions.

Read the full story here

Tesla Blames China Autopilot Issue on Supply Chain (1:45 p.m. NY)

Some Tesla Inc. customers in China have complained they were sold locally assembled Model 3s with older Autopilot-related hardware. The electric-car maker responded by blaming supply-chain issues after a temporary virus-related shutdown of its factory near Shanghai.

Tesla said in a post on the social media platform Weibo that it plans to gradually replace the hardware free of charge.

WHO: Not Time to Wave a White Flag (12:15 p.m. NY)

The head of the World Health Organization said countries shouldn’t be “waving a white flag” and should pursue aggressive containment strategies, even if they have no or few cases of the novel coronavirus. Producers of medical gear need to boost supply 40% because each month the world will need 89 million medical masks, 76 million exam gloves and 1.6 million goggles, he said.

China has managed to steadily reduce the number of new cases, which dropped to the lowest number since Jan. 20, Tedros Adhanom Ghebreyesus said at the group’s daily briefing in Geneva Tuesday.

In some people the coronavirus can cause much more serious illness than influenza, even if it doesn’t spread as easily, Tedros said. The coronavirus fatality rate is about 3.4% based on globally reported cases, while seasonal flu generally kills far fewer than 1% of those infected, he said.

A related coronavirus killed 9.5% of patients in the 2002-2003 epidemic of severe acute respiratory syndrome, or SARS, and another known as MERS-CoV led to death in 34% of the 2,499 cases recorded since 2012. In those outbreaks, however, the viruses didn’t transmit from one person to another as efficiently as this new one appears to do.

Iran, the center of the outbreak in the Middle East, is in need of medical equipment including ventilators, and the large increases in new cases are a reflection of how medical authorities are being more aggressive in trying to detect the virus, Tedros said. “Things tend to look worse before they get better.”

FDA on Watch for Drug Shortages From India (11:10 a.m. NY)

U.S. health regulators are watching for potential drug shortages after India restricted the export of some raw pharmaceutical ingredients, a move that has potential to disrupt the global supply chain of drugs manufactured around the world.

Earlier Tuesday, India said it would limit export of some common medicines as concerns grow over shortages of chemical ingredients. Many manufacturers in China are shut due to the novel coronavirus outbreak.

Though India is the source of about 20% of the world’s generic-drug supply, the country is dependent on China for about 66% of the chemical components needed to make them. India wants to ensure that there are enough supplies at home for its citizens.

Homeland Security Closes Field Office in Seattle (10:37 a.m. NY)

The U.S. Department of Homeland Security closed a field office in Seattle after an employee was potentially exposed to coronavirus.

An employee in the U.S. Citizenship and Immigration Services office in Seattle developed flu-like symptoms after visiting a nursing home in Kirkland, Washington, where a cluster of coronavirus cases have been diagnosed, said Deputy DHS Secretary Ken Cuccinelli.

“The employee had been coming to work in the intervening days between the possible exposure (Feb. 22) and becoming ill (Feb. 26). In an effort to contain the threat of potential spread & out of an abundance of caution, the @USCIS Seattle Field Office was ordered closed,” Cuccinelli tweeted.

Fed Cuts Rates Half Point in Emergency Move (10:20 a.m. NY)

The U.S. Federal Reserve delivered an emergency half-percentage point interest rate cut Tuesday in a bid to protect the longest-ever economic expansion.

“The coronavirus poses evolving risks to economic activity,” the Fed said in a statement. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point.”

Read the full story here

N.Y. Man in Westchester Tests Positive, Cuomo Says (9:40 a.m. NY)

A 50-year-old man who works in Manhattan and lives in the New York suburb of Westchester County has been hospitalized and tested positive for the coronavirus.

The man doesn’t have a history of foreign travel and it wasn’t immediately clear if he’d had contact with known cases in the U.S. Health authorities around the country are closely watching for coronavirus cases with unknown origins, a sign that the virus could be spreading from person-to-person.

The man lives in Westchester with his family. A school in the Bronx attended by one of his children has been closed as a precaution, Cuomo said.

There are also two families in Buffalo that are suspected of having the virus, the governor’s office said in an email.

New York City has at least one confirmed case so far, a Manhattan woman in her 30s who contracted the virus while traveling in Iran. She was isolated in her Manhattan apartment as of last weekend.

Read the full story here

Pence Visited School Where Student Is in Quarantine (9:40 a.m. NY)

A Florida student whose classmates shook hands last Friday with Vice President Mike Pence has been quarantined after his mother came into contact with a coronavirus patient.

Some White House aides were aware of the case in Sarasota, Florida, but there was no blanket notification about it in the executive mansion, according to people familiar with the matter. Some advisers to the vice president were unaware of the quarantine as of Tuesday morning.

Read full story here

New York City High School Closes on Suspected Case (8:41 a.m. NY)

A New York City high school is closed Tuesday after a suspected case of coronavirus in its community, Reuters reported, citing a statement.

Italy’s Business Lobby Sees GDP Contraction Worsening (8:07 a.m. NY)

Italy’s GDP was already expected to shrink in the first quarter and there’s a high probability of a more significant contraction in the second quarter, Italy’s business lobby Confindustria says in monthly economic survey. “In the absence of effective and timely economic policy measures — not only in Italy — the worst risk is that there is a spiral of supply and demand shocks capable of causing a strong and prolonged recession.”

G-7 Ready to Take Action, Including Fiscal Tools (7:44 a.m. NY)

G-7 finance ministers “are ready to take actions, including fiscal measures where appropriate” in response to coronavirus threat, according to a joint statement released by the U.S. Treasury.

Iran Supreme Leader Says ‘Let’s Not Exaggerate’ Virus (6:53 a.m. NY)

“The coronavirus won’t affect the country for long & will leave,” Ayatollah Ali Khamenei said on Twitter on Tuesday. Iran, which has the second-highest number of fatalities from coronavirus, reported 835 new confirmed cases on Tuesday, taking the total to 2,336. The death toll climbed to 77 from 66, while 435 patients have recovered.

Hedge Fund Winners Warn of Bull Trap (6:42 a.m. NY)

Two of the best performing macro hedge funds of recent weeks have a tip for investors: buying the dip in stocks may not work this time. “This could become a textbook bull trap: the market rallies, you think it’s over, mommy and daddy are going to intervene,” said Quadriga Asset Managers’s Diego Parrilla, referring to central banks and governments. “If this doesn’t really play out, it’s game over.”

BlackRock changed its recommendation on global equities to neutral.

Satellite Data Suggest China Is Getting Back to Work (6:30 a.m. NY)

Satellite data show economic activity in China could be picking up. Nitrogen dioxide levels rose across China’s industrial heartland, according to the most recent Copernicus Atmosphere Monitoring Service data compiled by Windy.Com.

The reddish-brown gas mainly enters the air from burning fossil fuels such as oil, coal and natural gas. Levels plummeted in February after Chinese authorities locked down communities to contain the virus.


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