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It’s day 70 since Canada’s 100th coronavirus case. The number of cases is 79,077 as of publication time, up 1,005 since yesterday—flat from the seven-day prior average of new cases and the lowest number of daily new cases in six weeks. On their respective 70th day, U.S. daily new cases were down 30 per cent from the seven-day prior average; the U.K. was down 28 per cent in daily new cases from the seven-day prior; and in Italy, new cases were down eight per cent.*
CEBA anew: Companies staffed by contractors rather than employees will soon qualify for Ottawa’s COVID-19 small-business loan program, Prime Minister Justin Trudeau announced on Tuesday. Owner-operators and firms that pay out through dividends instead of wages will also have access to the Canada Emergency Business Account (CEBA), through which financial institutions issue federally backed, partially forgivable credit of up to $40,000, under forthcoming rules.
Eligibility is currently restricted to firms that paid out employment income of between $20,000 and $1.5 million in 2019. But businesses that compensate workers through a system other than payroll—including service operations like physiotherapy clinics or fitness studios that classify staff as independent contractors—don’t fulfill that requirement. The Canadian Federation of Independent Business (CFIB) estimated 280,000 firms were excluded through their use of contract agreements or dividends. Under the new system, companies will need to show non-deferrable expenses—including rent, property taxes, utilities and insurance—of $40,000 to $1.5 million.
Despite the changes, Treasury Board president Jean-Yves Duclos argued the CEBA had been “quite effective”; the government said financial institutions have approved more than 600,000 loans worth over $24 billion under the program, most of its initial $25-billion budget.
The CFIB and Canadian Chamber of Commerce both welcomed the CEBA expansion, although the former wants Ottawa to increase the forgivable portion of the loan from the current 25 per cent. The chamber noted that business owners who don’t have a separate corporate bank account still don’t qualify. Trudeau said Small Business Minister Mary Ng is working on a fix. Fintech firms and the Council of Canadian Innovators (CCI) have called for Ottawa to use online lending platforms to distribute a portion of its COVID-19 benefits, arguing they work with businesses that traditional financial institutions don’t.
In a mid-May survey of 307 Canadian tech executives released Tuesday, CCI found that 76 per cent will need government support beyond June, such as more “access to strategic capital and procurement opportunities.” Some 49 per cent of respondents claimed their firms’ valuation had dropped due to the pandemic, while 37 per cent said incoming interest from acquirers or merger partners has increased.
Facebook takes on Amazon: Facebook and Instagram users will be able to look at products on in-platform storefronts and contact the businesses via Messenger, WhatsApp and Instagram direct messaging as part of the company’s new Shops feature. The company also has plans for in-platform checkout, currently limited to Instagram in the U.S. Facebook CEO Mark Zuckerberg said the firm will use the browsing and buying data to deliver better-targeted advertising, including recommendations. “We’re seeing a lot of small businesses that never had online presences get online for the first time” amid the pandemic, Zuckerberg said in a video announcement. Merchants will be able to import inventory from several popular e-commerce platforms, and Shops will integrate shipping, customer support and other retail technology providers. Shopify CEO Tobi Lütke was the only other face on the stream—prime placement akin to a guest speaker slot at an Apple special event. The two companies share a longstanding integration.
Uber cuts hit Canada: Uber Canada employees were part of the company’s global layoffs of about 3,000 people announced on Monday, The Logic has learned. The company has reduced its total headcount by about 25 per cent this month. In 2018, CEO Dara Khosrowshahi announced a $200-million investment in Toronto and unveiled plans to go from 200 staff to over 500 in the next few years. Spokesperson Lois Van der Laan did not directly answer questions regarding how much of that $200 million has Uber invested at this point, or whether the company still plans to have over 500 workers in Toronto. The company’s Canadian workforce was spared from an earlier round of cuts in September 2019.
In the markets: The Dow Jones dropped 1.59 per cent by close following Monday’s 900-point surge, its best day in over a month, on news of progress toward a COVID-19 vaccine. The S&P 500’s 32 per cent gain since March has largely been driven by investors betting on energy and health-care companies, as well as tech firms like Amazon and Microsoft that are benefitting from shelter-at-home orders. Despite the surge, markets have been relatively stable over the past three weeks, with the S&P 500 generally staying between 2,800 and 3,000. The TSX beat the major U.S. indices today, closing up 1.68 per cent, while the Canadian dollar jumped 0.12 per cent to hit 71.78 cents U.S. in late-afternoon trading. The strong Canadian results were partially driven by a rise in oil prices, with the Canadian Crude Index jumping 7.15 per cent in late-afternoon trading.
The Nasdaq is tightening requirements for companies looking to go public, thereby making it harder for some Chinese firms to list. Germany and France have agreed on a proposal for a €500-billion recovery fund to help European nations hardest hit by COVID-19. The money comes with a proposal for a continent-wide tax on the digital economy. The Bank of Japan, meanwhile, is holding an emergency meeting on boosting lending to small businesses. At least 30 public companies in the U.S. said they plan to keep money under a small-business lending program after the government asked them to repay it. The U.S. is already planning to roll out more money and take greater risk in Federal Reserve lending programs.
“So once lockdowns started and sports were done and movies weren’t coming out, everybody started going backwards. We’ve been doing that for 10 years, so we were ready to go. Problem is, I think the audience is going to start to get bored of it”: In a wide-ranging interview, The Ringer’s Bill Simmons spoke about moving his podcast to Spotify just days before the pandemic shut everything down.
Cross-country checkup: Canada and the U.S. have agreed to keep their shared border closed to non-essential travel for at least 30 more days. An independent task force is calling for stimulus funds to focus on “shovel-ready,” environmentally conscious infrastructure projects. The advocacy group includes Barbara Zvan, formerly of the Ontario Teachers’ Pension Plan (OTPP), and Gerald Butts, Trudeau’s former principal secretary. Telecoms are beginning to reopen stores across the country, though many technicians and call-centre staff will continue working remotely, a change some companies plan to carry into the post-pandemic world. With the price of crab half of what it was pre-COVID-19, fishing communities in Newfoundland and Labrador are facing economic crises. Ontario schools won’t reopen this school year.
Bay Street to Main Street: OTPP and the Caisse de dépôt et placement du Québec increased a number of their bigger equity holdings as stocks plummeted earlier this year. Teachers’ increased its holdings in Alibaba, Lyft and BlackBerry, while the Caisse upped its stakes in Berkshire Hathaway and Johnson & Johnson. Meanwhile, the Alberta Investment Management Corporation sold 19 per cent of its RBC stake and 68 per cent in CIBC. The pension is increasing its tech exposure, though, with a 148 per cent increase in its Shopify stake.
- Fashion retailer Reitmans has been granted creditor protection. The Montreal-based firm has 576 stores nationwide and $147 million worth of merchandise, as well as a debt load of $109 million.
- Only eight per cent of organizations are fully prepared to reopen their workplaces, according to a Conference Board of Canada survey.
- Operating partnerships that include public pensions or Crown corporations are now eligible for the 75 per cent wage subsidy.
- Air Canada reported fewer ticket cancellations and an increase in bookings on some routes, as did several other U.S. airlines.
- Nav Canada’s traffic figures dropped 74.7 per cent in April compared to the same month last year.
- Ottawa is committing $15 million in new funding to support women entrepreneurs.
- Cancer-drug developer Trillium Therapeutics, which has a Mississauga office, is up over 460 per cent this year as at least 10 hedge funds have taken stakes in the firm.
- Apple is reopening 12 stores in Canada and 25 in the U.S. this week.
- Many of Canada’s largest law firms are bringing in summer students despite widespread cancellations among smaller firms.
- Respawn Entertainment, maker of the video game Apex Legends, has expanded to Canada with a Vancouver studio, and is looking to hire local staff.
Trace me on my cellphone: Lütke has open sourced Shopify’s application of Google and Apple’s contact-tracing technology. In a tweet, Lütke said the mobile app, called COVID Shield, “isn’t quite ready but will follow shortly.” The rollout of the U.K.’s contact-tracing app, originally scheduled for mid-May, is still weeks away. A trial run of the app on the Isle of Wight was hailed as a success by one local politician, who said that 65 per cent of residents had downloaded it as of Friday. Alphabet CEO Sundar Pichai said he and Apple CEO Tim Cook decided to make their contact-tracing technology public “earlier than both companies would normally do in a process like this” instead of taking the time to “hash out issues more fully.” Pichai said the two companies talk “multiple times a week.”
Crowdsourcing the crisis: Borrowell has launched a payment deferral monitoring feature. Stefan Palios, a Toronto-based entrepreneur, has created Remotely In Business, a resource library for entrepreneurs and CEOs running businesses from afar. Medical Innovation Xchange is offering free support to non-medical manufacturing companies that have received a purchase order or funding for medical supplies from the Ontario government.
Postcard from Toronto: The Ontario government allowed any business with a street entrance to open today, but Melissa Ball decided not to. “My gut said I didn’t want to put my staff or customers in danger,” said Ball, owner of Chosen Vintage, a clothing store on Dundas Street West. “There’s no solid step-by-step plan on how retails are supposed to open,” she said. “It’s a very different experience to a grocery store.” For one, customers will touch the clothing and try them on; people also spend more time hanging out in retail stores because they’re intimate and therapeutic, she said. “I don’t want to put a time limit on how much time they can spend inside or wait outside,” she said. “Clothing isn’t an essential service; it’s something people do to feel good about themselves.… I’m not going to bring people in my space as long as I can’t guarantee they’ll be safe.”
As she spoke to The Logic, Ball received two customers for curbside pickup, a service she began to offer last week. She shut her store in March, days after she returned from a trip to Mexico and went into self-isolation for two weeks. Since April, she’s been doing personal deliveries, serving customers across the Greater Toronto Area. Her store has been open for 10 years, so her first delivery was an emotional experience because she reunited with a familiar customer. “I felt tears well up because she was so grateful,” Ball said. Her store already had a website and a strong following on Instagram, so she started putting more items on Stories. “I had to learn how to become a photographer,” she said, in an effort to “adapt to a new business model” she said she builds on every day. While big retailers can invest in social-distancing measures like security and protective equipment, she said smaller stores like hers cannot. “I’ll come to a decision about reopening with my fellow owners that I trust,” she said. “It’ll feel right when it feels right.”
Drinking from the firehose:
- Walmart beat Wall Street predictions for earnings in its first quarter, reporting a 74 per cent rise in e-commerce sales and a 10 per cent jump in same-store sales, driven by the pandemic. The firm also announced plans to discontinue Jet.com, the online marketplace it bought in 2016 for over US$3 billion.
- Amazon is reopening its six distribution facilities in France starting this week. The plants have been closed since April 15, after a French court threatened to fine the company €1 million for every non-essential item it shipped.
- Amazon also said it’s delivered more than 100 million units of personal protective equipment and medical gear globally.
- Job postings in the e-sports sector grew by 43 per cent in the first quarter, according to Indeed, with top employers including Tencent, Twitch, Facebook and YouTube.
- Sony’s cloud gaming service PlayStation Now has 2.2 million subscribers, according to the company, up from about one million subscribers a year ago.
- Seventy per cent of startups in India—which is among the world’s largest startup ecosystems—will run out of cash in less than three months, according to a survey by Nasscom. Local food-delivery company Swiggy is laying off 1,100 employees, citing the impact of the pandemic on its business, and WeWork announced a 20 per cent cut to its Indian workforce.
- Over the long weekend, Japanese tech conglomerate SoftBank reported operating losses of US$12.7 billion in the fiscal year ended March 31. It’s the first annual loss for the company in 15 years and the biggest loss on record for any listed Japanese company, according to the country’s public broadcaster. Hours before reporting its earnings, it announced that Jack Ma, co-founder of Chinese tech giant Alibaba, had resigned from its board.
The grand reopening: Singapore will reopen three-quarters of its economy, including some schools, on June 2. China has imposed a Wuhan-style lockdown in the northeastern city of Shulan, which is near Russia and is home to about 700,000 people. Pakistan’s Supreme Court has declared the coronavirus “not a pandemic in Pakistan,” ordering the government to reopen businesses. Jerusalem’s al-Aqsa mosque, which has been closed for nearly two months, will resume prayers next week. U.S. companies looking to reopen are creating new jobs including temperature takers and contact tracers.
Around the world: World Bank president David Malpass warned that up to 60 million people will be pushed into extreme poverty because of the pandemic. U.K. companies that receive relief funds from the government’s stimulus package for big businesses will not be able to pay executive cash bonuses or dividends. Prince Charles and the U.K. government have joined forces to ask students and furloughed workers to help pick fruit. Nigerian scammers are filing fraudulent unemployment claims and receiving millions of dollars in benefits from multiple U.S. states. The pandemic has cut carbon emissions down by 17 per cent, to levels not seen since 2006. But a separate analysis found China’s pollution levels have since rebounded to above their pre-crisis levels.
“The atmosphere was eerie, but the singing was fantastic”: Germany’s Wiesbaden state theatre has resumed opera performances with five soloists, a piano and a single violin.
* We’re emphasizing new cases, rather than running totals, because “flattening the curve” is when each day’s new cases are fewer than those of the previous day. The percentage increase is determined based on how today’s cases compare to a rolling seven-day prior average. Numbers may also vary based on countries’ individual testing capacity and reporting.
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