North America Update: October 13
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- A new wave of COVID-19 cases is building across the United States. The U.S. is now averaging nearly 48,000 new confirmed cases every day, the highest numbers since mid-August, according to the COVID Tracking Project. More than 34,500 Americans are currently hospitalized with the virus across the country, up from less than 30,000 a week ago. Nearly 700 new deaths a day are being reported on average, down from August, but deaths may eventually start increasing if cases and hospitalizations continue to rise. Case numbers are up in the Northeast, the Midwest and the West. The South appears to be plateauing but remains at a level higher than that which the Northeast endured during the worst of New York’s outbreak.
- The U.S. Transportation Security Administration screened 984,234 airline passengers on Sunday, the most since March 16. While that is welcome news for airlines struggling to attract passengers during the pandemic, it is still more than 60 percent below the same level a year ago. Airlines have far to go before returning to pre-pandemic operations. United and American Airlines are beginning to furlough employees, with more reductions expected if additional federal assistance is not approved soon. Airlines are eager to increase travel during the Thanksgiving and Christmas holiday weeks, but consumers are likely to wait until the last minute to book.
- Canada’s daily case counts continue to rise nationwide with an average of 2,000 new cases a day – a 40 percent increase in the last week alone. Public health officials are warning Canadians to stay home as much as possible, saying that the next few weeks will be critical to the country’s efforts to contain the virus.
- After a week of recording its highest daily case counts since the beginning of the pandemic, the province of Ontario is enacting new temporary restrictions in three of its largest metropolitan areas, including Ottawa and Toronto. The new measures will last for a minimum of 28 days and include closing indoor restaurants, bars, gyms and casinos, limiting team sports, suspending wedding receptions, and banning travel.
- Last week the federal government introduced a new program for small business owners to apply directly for relief on the cost of rent until June 2021. The revamped commercial rent-relief program will cover up to 65 percent of eligible expenses for companies, and up to 90 percent for those subject to lockdown orders. The new program replaces the Canada Emergency Commercial Rent Assistance (CECRA), which required landlords to apply on behalf of their leaseholders.
- Beginning Wednesday through November 3, the government of the Czech Republic ordered bars, restaurants and clubs to close, and shifted most schools to distant learning as it put new measures in place to curb the fast spread of COVID-19 cases in the country. The Czech Republic is experiencing the second largest surge of cases in Europe, as the number of infections detected since the beginning of the outbreak has risen to nearly 120,000, from roughly 25,000 at the start of September.
- The European Parliament is due to return to Strasbourg, France for a reduced-size session next week. All sessions since February were cancelled due to the pandemic. The Parliament’s President, David Sassoli, entered into self-isolation last week due to close contact with someone who tested positive for COVID-19, but will reach the end of his quarantine period before the start of the session.
- On Friday, EU ambassadors will vote on a proposal regarding EU travel guidelines. The original proposal, which was put forward on September 4, called for mandatory EU-wide testing to replace travel-based quarantine – a popular suggestion from the aviation industry. However, many countries have pushed back and the current proposal instead set out to encourage cooperation between member states while leaving decisions to national governments.
- Despite supply chain disruptions, a recent report from the World Trade Organization found that food and agricultural trade have demonstrated greater resilience than other sectors worldwide.
- Japan has experienced a radical shift in coffee consumption habits as more coffee drinkers stay home. Robusta coffee beans, a component of instant coffee, has seen Q2 sales of instant coffee products grow by approximately 10 percent, year-on-year. This shift has made Vietnam the top seller of unroasted coffee beans for the first seven months of 2020, surpassing Brazil. Canned coffee, a Japanese invention from the seventies, has recently seen foreign brands such as Nestlé-owned Blue Bottle coffee launching their first canned coffee vending machines in Tokyo.
- The Philippines have begun to export okra to Japan, a “significant development” amid COVID-19 according to the country’s Department of Agriculture. JelFarm, a leading local okra exporter, will ship five tons of okra daily when harvest season begins, ramping up to 13-15 tons per day during peak season. Harvesting okra is beneficial to farmers due to short turnaround times, high yield, and more lucrative pay than rice.
- The organization of the maquiladora industry foresees a substantial expansion of Chinese manufacturing companies in Mexico due to the United States-Mexico-Canada Agreement, as a way to escape the effects of the trade war between the United States and China.
- The Mexican government made a $159 million payment to secure access to COVID-19 vaccines through a World Health Organization-backed plan as countries across the globe race to secure supplies.
- In response to the COVID-19 pandemic and the need to ease lockdown restrictions, the federal government of Mexico established a bimonthly traffic-light monitoring system aligned with health protocols to guide Mexico’s states through the country’s phased reopening plan.
- With 212 million inhabitants, Brazil has accumulated a majority of COVID-19 deaths in South America. To date, there have been 150,198 fatalities and 5,082,637 infections, according to the country’s health ministry.
- Despite Brazil’s government emergency aid program, which provided cash stipends to roughly 23 million Brazilians, the country’s economy remains fragile amid rising levels of public debt used to finance the stimulus package and a growing fiscal deficit currently forecast at 12 percent of gross domestic product. The International Monetary Fund said a second wave of cases, long-term economic damage from the recession and confidence shocks all pose significant risks to the country’s economic recovery. Additional fiscal response could be needed.
- According to the World Trade Organization, Latin America will suffer a major drop in GDP. However, Brazil’s commercial trade results have been less severe compared with the rest of the continent.
INSIGHTS & INTEL
- This week is the beginning of the third quarter’s corporate earnings season. Major U.S. banks and financial institutions will be among 30 S&P companies reporting this week. Investors and markets believe the results will show that corporate performance has turned a corner after a dreadful second quarter. Investors will be looking for signs from companies that cost cuts, including layoffs, are behind them and that business leaders are more confident about the fourth quarter and 2021.
- While many companies will experience an improved quarter-by-quarter result, all 11 of the S&P 500 sectors are expected to see earnings fall this year from 2019. The energy sector is leading the way with an estimated 122.5 percent drop in earnings, followed by industrials at -60.4 percent growth and consumer discretionary at -36.9 percent. The sectors currently expected to perform the best are healthcare (-0.5 percent) and information technology (-2.7 percent).
- Investors say this will not be a normal earnings season. Corporate earnings and forward guidance will be important but not a dominant factor in how markets react in the next few weeks. News about the virus or vaccines, the reopening of the economy, and the outcome of the U.S. elections will be what moves the markets.
Beginning Thursday, Cineworld Group PLC, the second-largest theater chain in the United States, is planning to suspend operations at more than 500 of its Regal Cinema locations in the U.S. and at 127 of its Cineworld and Picturehouse locations in the United Kingdom. According to the company’s CEO, Mooky Greidinger, the company cannot operate for a long time without a product as more studios postpone theatrical releases.
- Bloomberg Breakaway CEO Town Hall – The New Normal Virtual Series: Bloomberg Breakaway will host three virtual CEO Town Halls (October 21, November 12 and January 21) with experts and executives discussing what they are seeing on the ground and in research as it relates to building inclusive teams, and how the remote/hybrid work environment is impacting how we create them
- Milken Institute Future of Health Summit: The Future of Health Summit will officially take place remotely December 7-9, with a focus on the converging crises of public health, economic insecurity, and social injustice.
- Web Summit: The 2020 Web Summit has been moved to a virtual event this December 2-4, after previously postponing to November, and will use its own conference platform for the event featuring approximately 800 speakers.
- Broadway: Broadway’s doors will officially be shuttered for more than a year due to the pandemic. The Broadway League announced they will stay closed until at least May 30, 2021.
- NFL: The NFL is still working through the first wave of COVID-19 among its players and staff. After reshuffling eight team schedules due to outbreaks, the owners are hosting a virtual meeting on October 13 to discuss strategy to make its standard 17-week slate of games work, as well as other extended schedule scenarios.
- College Football: Baylor has suspended all athletic activities amidst a rise in positive COVID-19 cases on campus. As a result, the Big 12 announced that the Baylor vs. Oklahoma State football game has been postponed to December 12.
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