North America Update: May 18
- Moderna said today its experimental coronavirus vaccine induced immune responses in some of the healthy volunteers who were vaccinated in a clinical study, and the shots were generally safe and well-tolerated. The study results are the first for a vaccine against coronavirus to enter into human testing and indicates a positive sign about its capabilities to protect people against the virus. However, the results are preliminary and apply only for a portion of study participants. The company’s vaccine could be ready for emergency use as early as the fall if it proves to work safely in continued testing. The Food & Drug Administration recently gave Moderna permission to begin second stage testing.
- In an address to the opening session of the virtual World Health Assembly, the United States criticized the World Health Organization (WHO) for its response to the coronavirus pandemic, saying the UN health agency failed to obtain information about the virus when the world needed it. “That failure cost many lives,” Secretary of Health & Human Services Alex Azar said on the first day of the WHO’s two-day virtual World Health Assembly. “In an apparent attempt to conceal this outbreak, at least one member state made a mockery of their transparency obligations, with tremendous costs for the entire world,” Secretary Azar said in a specific reference to China.
- The new Congressional Oversight Commission today raised questions about how the Federal Reserve and Treasury Department are administering emergency bailout funds in its first assessment of the $500 billion program. The report is the first in what will be a monthly review of how the $2 trillion CARES Act is being used to provide grants and loans to airlines and companies vital to national security and the various lending programs designed by the Fed. The programs are just getting up and running. Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell will testify before Congress tomorrow and both officials can be expected to discuss implementation and measurement of the programs.
- The federal government extended the Canada Emergency Wage Subsidy (CEWS), which offers eligible employers a subsidy of 75 percent of employee wages, until the end of August. The eligibility parameters of the program will also be expanded. Government officials said Friday that they hoped the news would generate greater participation in the program and encourage business owners to bring back their employees.
- The crisis is adding to the debt loads of the provinces as they strain under its financial pressure. Provincial governments had $853 billion of debt securities outstanding before the COVID-19 crisis, more than that of the federal government. The pandemic will require them to sell even more debt, despite Canada’s Parliamentary Budget Officer warning in February that the spending plans of most provinces were already unsustainable.
- France and Germany announced support for a EUR 500 billion fund to help EU countries recover from the pandemic through joint borrowing and debt. Any agreement would require backing from all EU member states.
- French GDP declined by 5.8 percent in the first quarter according to the INSEE (French national institute for statistical and economic studies). The government expects the French GDP will collapse by 8 percent in 2020.
- The UK Government announced it is providing an additional £84 million in funding to British researchers working on potential coronavirus vaccines. Oxford University and AstraZeneca have reached a global licensing deal for a vaccine being developed by Oxford. If the vaccine is successful, AstraZeneca will mass produce 100 million doses.
- Qatar on Sunday began enforcing the world’s toughest penalties of imprisonment for up to three years for failing to wear masks in public as it battles one of the world’s highest coronavirus infection rates.
- Over the weekend the German Bundesliga became the first major football league in Europe to resume play. Games took place without fans in attendance.
- Official data shows Japan has fallen into its first recession since 2015, with the economy recording two consecutive quarters of negative GDP growth. The world’s third-largest economy contracted by 0.9 percent in the first quarter. The drop in GDP followed a 1.9 percent decline in the fourth quarter of 2019 as a tax hike and typhoons hit Japan hard – even before the pandemic shut down much of the economy. Analysts are warning the worst is yet to come as the virus continues to affect companies, households, and spending.
- Thailand’s gross domestic product has shrunk 1.8 percent from a year ago, according to the National Economic and Social Development Council. It’s the first contraction since early 2014. Thailand’s economy is heavily reliant on tourism and trade, both of which have taken a severe knock as countries around the world have imposed restrictions to contain the coronavirus outbreak. Data shows a near 75 percent fall in foreign tourist arrivals in March from a year ago.
- Schools, malls, and other public places will remain mostly closed until the end of May, but India is easing its nationwide lockdown to allow some shops to re-open, with restrictions in place such as having only 50 percent of employees work at a time. The relaxation will not apply to hundreds of hotspots and containment zones across the country. Shops in single and multi-brand malls will not be allowed to re-open.
- Mexican businesses are planning to sue the government in national and international courts for its decision to cancel private investment in the electricity and energy industry and return to the use of fuel oil and coal. The European Union and Canada sent letters protesting this decision and announced that they will defend the investments of their country’s entrepreneurs.
- The federal program of economic reopening and social mobility was rejected by the governors of 7 of the 32 states of the country, because they have little confidence in the government and its refusal to apply tests to detect the actual contagion level.
- The largest Mexican airline, Grupo Aeroméxico, has a potential probability of default of almost 19 percent, according to a study by the company RapidRatings International Inc. The probability of global default at one year is around 5 percent. The company is in the “high risk” category, based on its financial health score, and there are no signs that the Mexican government would be willing to help them.
- Brazil lost another Health Minister pressured by President Bolsonaro to reopen the economy and determine the use of chloroquine as an official health protocol. Isolated and publicly disavowed by the President, former minister Teich’s brief administration was marked by a lack of autonomy and criticism from state health officials for his slow actions. Today, Bolsonaro exempted taxes on chloroquine and 100 other drugs in tests. At the WHO assembly, the interim Minister of Health, General Pazuello, explained the regional differences in Brazil and defended the articulation of the federal government with states and municipalities. Political turmoil continues to exacerbate the spread of COVID-19 in Brazil, says The New York Times. The French newspaper Le Monde states that the Brazilian president makes an ‘unreasonable political calculation’ in defending the maintenance of economic activity at any cost.
- The death toll from coronavirus grew 50 percent in one week. According to the State Health Secretariat, Brazil has recorded more deaths from COVID-19 than Mexico. To account for underreporting and discrepancies in official data, several organizations launched initiatives to carry out surveying within the country. Rio de Janeiro summoned 1,900 health professionals to the front line to treat coronavirus.
- Banks provided BRL 540.3 billion in credit in the 2-month pandemic period. The four largest Brazilian banks have allocated BRL 28 billion to cover possible defaults due to the pandemic. Latam Airlines, Latin America’s largest airline, reported that it will dismiss 1,400 employees as a result of the coronavirus crisis. The announcement comes after the three main Brazilian airlines, Gol, Latam, and Azul, signed up for the rescue proposal coordinated by the National Bank for Economic and Social Development. After a pause in production due to the Coronavirus, General Motors resumed vehicle production today with the approval of the local government.
INSIGHTS & INTEL: TODAY’S OPENING SESSION OF THE 73RD WORLD HEALTH ASSEMBLY
Global fault lines over the coronavirus response were on display during today’s opening session of the 73rd World Health Assembly, held virtually from Geneva. Here are some highlights:
- The United States delivered sharp criticism of the WHO’s management of the coronavirus pandemic and China’s failure to meet its transparent obligations to inform the world of the virus.
- The Assembly is expected to agree tomorrow to conduct an “impartial, independent and comprehensive evaluation” into the pandemic. The resolution was co-sponsored by the European Union and Australia and endorsed by more than 120 member states, including traditional China allies such as Russia and Indonesia. While Beijing has criticized any attempt to shift blame or politicize a global health crisis, China’s President Xi Jinping expressed openness to a WHO-led inquiry into the pandemic in his remarks to the Assembly, backing “the idea of a comprehensive review of the global response to COVID-19 after it is brought under control.”
- President Xi endorsed the principle of making any vaccine produced in his country globally accessible. He also said China would provide the WHO with $2 billion (up from $40 million) in funding over the next two years.
- Top European leaders invited by WHO Director-General Tedros Adhanom Ghebreyesus to open the virtual assembly, including French President Emmanuel Macron and German Chancellor Angela Merkel, voiced support for the WHO – isolating further U.S. criticism of the organization.
- The U.S. was among countries who object to casting coronavirus immunization as a “global public good” in a section of the resolution on the COVID-19 response. The term global public goods could mean weaker intellectual property (IP) protections or other measures designed to reduce costs and make access more widely available. The U.S. and Europe are not yet aligned on future vaccine access, while Washington has also accused China of trying to steal U.S. immunization research.
- Washington has also been leading several countries in demanding that the WHO end its exclusion of Taiwan, but that will not be realized because of Beijing’s continued objection.
BUSINESS RESPONSE TO CORONAVIRUS
Below are summaries of interesting business responses to COVID-19 in recent days.
- Dial committed to donating over 600,00 units of hand soap, bar soap, and body wash soap to FEMA to help communities affected by COVID-19.
- SC Johnson announced it will increase the company’s commitment to aid COVID-19 frontline workers to $15 million in financial assistance and product donations. The resources will support medical workers, first responders and pressing public needs in healthcare, children’s education, and humanitarian relief and worker training. To date, the company has distributed $10 million to COVID-19 relief efforts.
- UPS announced it has delivered five million meals to rural students and their families impacted by COVID-19 in partnership with food and logistics company McLane Global.
Industry Faces More Layoffs and Staff Changes
- Vice Media CEO Nancy Dubuc announced Friday that the media company will lay off 155 employees worldwide.
- Quartz will lay off 80 employees and close its physical offices in London, San Francisco, Hong Kong, and Washington, D.C. The media outlet will embark on a new strategy that emphasized paid subscriptions over advertising revenue.
Virtual Graduation for the Class of 2020
- T-Mobile is encouraging the class of 2020 to celebrate their graduations and toss their caps in the air on TikTok. TikTok has flouted an agreement it made with the Federal Trade Commission to protect the privacy of children on the service, a coalition of 20 children and consumer groups said on Thursday.
- Celebrities, athletes, and other high-profile individuals have recorded and given live commencement speeches through streaming services. This weekend, former President Barack Obama gave a commencement speech to high school graduates across the U.S. Forbes published a roundup of the best commencement speeches of 2020, featuring Oprah Winfrey, Dr. Anthony Fauci, LeBron James and many others.
Financial Challenges and Recent Developments
- Newsday has been selected to receive a $150,000 grant from the Facebook Local Journalism Project. The publication was selected among 10 news organizations across New York State to receive more than $1 million in grants from Facebook’s relief fund, part of $16 million spread across North America to support 200 local newsrooms.
- The Writers Guild For America East released guidelines to highlight the need for union solidarity amid the crisis. Highlights include encouraging work from home and asking employers to adopt strict contact tracing plans to self-isolate those who may have been exposed.
- The NewsGuild-CWA, the largest union for journalists in North America, launched a new advocacy campaign to compel Congress to assist local news organizations financially harmed by the outbreak of the novel coronavirus. The union, which represents more than 24,000 journalists and other communications professionals, said in news release that the “Save The News” campaign will push for local news outlets to be included in future federal recovery efforts.
New Bloomberg Virtual Events:
- The Year Ahead Revisited: Jim Coulter Presents Investing in a New Era, June 17: For the launch of this virtual series based on Bloomberg’s The Year Ahead conference, TPG Co-CEO and Founding Partner Jim Coulter will share key insights from the TPG investor conference presentation on the impact of COVID-19 on business, the road to recovery, and managing through crisis.
- Sooner Than You Think: A Digital Reboot, June 18: The virtual event will address the importance of digital transformation in the COVID-19 era.
- The Next Era in Health Care, June 25: The virtual event will explore the latest technologies and tools deployed by health care providers to respond more quickly and efficiently, as well as the innovative solutions, lessons learned, and long-term implications of the pandemic on the health care system.
TaylorMade Driving Relief: The TaylorMade Driving Relief charity event this past weekend raised more than $5.5M to support COVID-19 relief efforts.
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