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COVID-19 roundup: Return of the Macklem

Tiff Macklem appears at a Commons finance committee on Parliament Hill in Ottawa on April 29, 2014. The Canadian Press/Sean Kilpatrick
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It’s day 52 since Canada’s 100th coronavirus case. The number of cases is 54,784 as of publication time, up 1,548 since yesterday, a 12 per cent increase from the seven-day prior average of new cases. On their respective 52nd day, U.S. daily new cases were up 11 per cent from the seven-day prior average; the U.K. was down one per cent in daily new cases from the seven-day prior; and in Italy, new cases were down 23 per cent.* 

Over one million people have recovered from the coronavirus. New analysis shows three-fifths of new coronavirus cases in China showed no symptoms of the illness. 

Tiff’s red carpet: Tiff Macklem will become governor of the Bank of Canada on June 3, succeeding Stephen Poloz. Macklem was previously senior deputy governor of the central bank, leaving in 2014 to become dean of the University of Toronto’s Rotman School of Management after missing out on the top job last time around. Announcing the nomination, Finance Minister Bill Morneau cited Macklem’s role in the bank’s response to the 2008 financial crisis. As Financial Post columnist Kevin Carmichael noted, Macklem is well known in international monetary policy circles. 

Despite his long tenure in Ottawa—he’s spent almost his entire career at the central bank—Macklem comes to the job with more exposure to the innovation economy than most past governors. At Rotman, he oversaw the launch of an in-house venture fund and introduced more artificial intelligence into the curriculum; he is (for now) also an adviser to Toronto-based VC firm Georgian Partners. While away from the BoC, Macklem was also a member of Ottawa’s four-person Expert Panel on Sustainable Finance, which in July 2019 recommended a “super tax” rebate for investments in companies and products that reduce emissions. “It’s going to be important that the Bank of Canada understand how climate change is affecting the Canadian economy,” productivity and prices, he said on Friday. 

In the markets: The major U.S. indices dropped over 2.5 per cent each, after Amazon disappointed on profits and Apple failed to provide guidance for the current quarter, its first time doing so since 2003. The tech-heavy Nasdaq dropped the most, down 3.20 per cent. The TSX fared better, down only 1.09 per cent, while the dollar fell to 71.11 cents U.S. in late afternoon trading, erasing most of its gains from this week’s rally. 

A few hours before Macklem was announced as Bank of Canada governor, the C.D. Howe Institute reported that Canada has already entered a recession. In other news greeting the incoming governor, Canadian defined-benefit pension plans reported their worst quarter in 12 years, and ExxonMobil posted its first loss in decades. Meanwhile, the European Central Bank said the continent’s economy could drop by as much as 12 per cent this year and take until 2022 to reach its pre-pandemic size. Robert Kaplan, president of the Federal Reserve Bank of Dallas, is calling for more stimulus and warning that GDP could contract as much as 30 per cent this quarter, with unemployment hitting 20 per cent. Canadian women were more likely to have lost their jobs between February and March. Women with kids were the most affected, with a 17.8 per cent change among respondents aged 25 to 59, compared with a 9.9 per cent drop among men with kids. The U.S. is having difficulty forgiving loans under its US$660-billion small-business rescue program. And some tech investors in China are preparing for lower returns, with little on the horizon for major IPOs other than three firms. 

“I think we’re at the beginning of a long-term period of deflation, falling prices and the loss of pricing power. The only way out of it will be to have a long period of austerity”: Kiril Sokoloff, an investment strategist who predicted the rise of the tech sector in the mid-1990s, projected that global stimulus programs will create significant debt.

Postcard from Montreal: “You’re looking at a f–king cataclysm, an apocalypse,” David McMillan told The Logic. McMillan is co-owner of Joe Beef and Liverpool House, among other choice Montreal eateries, all of which have been shuttered since March. “You have to be worried when a guy like me—a 15-year senior restaurateur whose restaurants are always full, who’s got money in the bank—is worried, and I’m f–king worried.”

On how landlords are approaching their restaurant tenants, he said, “I’ve spoken to 15 of my restaurant friends and there’s 15 different situations. Some of them are ‘F–k you, pay me,’ some of them are ‘Get the f–k out, I’m going to lease the restaurant to someone else.’ Some of them are transparent and are letting guys just carry the mortgage. Joe Beef has done some takeout, but we don’t even know if we can be in a room together. You might as well put me on a hot floor at the hospital and hook me up to a respirator. And I don’t see us going back to reckless abandon like we were operating before COVID until this time next year.

“At some point the government is going to have to step in. I’m going to write off 16 weeks, if not more. But then my landlord should be able to write off 16 weeks. It doesn’t have to be debt annihilation, but that we write this off. Governments know we’re a giant cash cow for them. We pay a lot of f–king taxes and employ a lot of f–king people. And we can’t just keep rolling this snowball of debt up the hill.”

Trace me on my cellphone: Alberta chief medical officer Dr. Deena Hinshaw will announce details of the province’s new contact-tracing app at her daily 3:30 pm MDT briefing. The system will be Bluetooth-based and voluntary, she said last week. Alberta will be the first province to deploy a contact-tracing app, but others are in the works. Clearview AI, the controversial facial recognition company, is reportedly in discussions with U.S. federal and state governments to help with contact tracing. One U.S. senator expressed concern about the news: “If this company becomes involved in our nation’s response to the coronavirus pandemic, its invasive technology will become normalized, and that could spell the end of our ability to move anonymously and freely in public.” A group of Republican U.S. senators are set to introduce privacy legislation aimed at companies developing contact-tracing apps, with the goal of holding those “businesses accountable to consumers if they use personal data to fight the COVID-19 pandemic.” 

Meanwhile, a team including Johns Hopkins’ engineering school has launched a free app that tracks users’ daily temperature to help map potential hotspots. Italy is preparing to join Germany in launching a decentralized, encrypted contact-tracing app that incorporates Apple and Google’s technology. One hundred Swiss soldiers are voluntarily testing the government’s contact-tracing application, which is set to launch on May 11. Australian Prime Minister Scott Morrison said an increased number of downloads of the COVIDSafe contact-tracing app was one of the government’s four unmet conditions to ease restrictions. “We need that tool so that we can open up the economy,” he said, refusing to specify a target. “It’s over to you, Australia.”

In the lab: The U.S. Food and Drug Administration has issued emergency approval for Gilead Sciences’ potential COVID-19 antiviral drug remdesivir. In its guidance for patients, the FDA said the drug is “investigational because it is still being studied.” Scientists with the U.S. military have designed a new COVID-19 blood test that could identify carriers as early as 24 hours after infection. If approved, the test could be rolled out in the U.S. in the second half of May. Moderna —a pharmaceutical company chosen by the White House to receive US$483 million in federal funds after promising to be quickest to deliver a vaccine—has partnered with Swiss counterpart Lonza Group to manufacture one billion doses a year. The companies expect to produce the first batches in the U.S. in July. Bloomberg reported Wednesday that President Donald Trump was launching Operation Warp Speed to get 300 million doses to Americans by the end of the year. 

While there are at least 268 therapies and 97 vaccines being explored, only a handful will be approved, if at all. Scientists are grappling with how to speed up a process of determining which those will be—a process that normally takes years. Some are testing decades-old vaccines for polio and tuberculosis. “They can be the bridge until you have the time to develop a specific vaccine,” said one immunologist. So how long will it really take to find a vaccine for the virus? Here’s what experts think.

Cross-country checkup: Some businesses in Alberta will be able to open as early as May 14, including retailers, salons, barber shops, daycares, museums and galleries, as well as cafes and restaurants at reduced capacity. However, easing the lockdown measures is contingent on meeting a number of public health goals, including increasing testing and expanding contact tracing. Premier Jason Kenney has already announced plans to reopen golf courses and most parks next week, and resume some non-elective medical and dental services. 

Some businesses in Ontario have been greenlit to reopen “under strict safety guidelines.” More construction work can now resume, and seasonal businesses like garden centres and landscaping can do pickup and delivery; golf courses and marinas can prepare for the upcoming season, but can’t reopen yet. Quebec’s English school boards said their schools won’t reopen until they know it’s safe to do so; they said that’s still unclear, despite the provincial government saying schools can reopen as early as May 11. 

B.C. is developing its own guidance on pandemic safety, citing the Canadian Food Inspection Agency’s failure to protect workers from COVID-19 outbreaks at federally regulated chicken-processing plants in Metro Vancouver. Some Canadians have gone weeks without an employment insurance cheque.  

Bay Street to Main Street: May rent is due today, and the jockeying for changes to the government’s rent-relief program is only increasing. A group of the country’s largest retailers and landlords is asking the federal government to expand its small-business program to include them. The coalition includes companies like Indigo, which furloughed about 4,600 employees and has seen a 90 per cent share drop in two years, as well as major real estate firms like SmartCentres, which collected 70 per cent of all rent excluding outlet centres for April. Michael Cooper, CEO of Dream Office REIT, one of Canada’s largest landlords, said it will be until 2022 before the property market reaches a “new normal.” The Ontario Chamber of Commerce called for a moratorium on commercial evictions. Ottawa has said some relief is coming for large tenants, but has provided little detail on what it’ll look like. The government is similarly mum on the specifics for the $962 million announced about two weeks ago for tech firms. Innovation Minister Navdeep Bains told The Logic at the time the money, which will be deployed through regional development agencies, would take the form of both grants and loans, but has offered almost no detail since. Today, Economic Development Minister Mélanie Joly said details would come “very soon.” 

  • Export Development Canada is “broadening the parameters” of the investment-matching program The Logic reported on earlier this month. 
  • OpenText won’t reopen half its offices post-pandemic, as having 95 per cent of its 15,000-person workforce work remotely during the pandemic is going well.
  • Tim Hortons daily sales are down about 40 per cent, despite 85 per cent of its Canadian stores remaining open. 
  • TD Bank’s plan to return to its offices will depend on guidance from governments in all the regions in which it operates. 
  • Gildan’s main printwear business is down 75 per cent; the clothing firm is bracing for a long-term revenue hit. 
  • Canada is letting meat-packing plants choose when to close, leading to disparate responses. Cargill’s Alberta plant had 391 sick workers before it closed; Maple Leaf Foods had just three at an Ontario plant when it paused operations.
  • Some investors are hoping Air Canada will renegotiate last year’s purchase of Air Transat now that the latter’s shares are trading at 44 per cent below the former’s offer price. 
  • TC Energy, builder of the Keystone XL pipeline, reported a 15 per cent profit rise partially due to high demand for its natural gas pipelines.
  • Toronto-based remote team-working firm Vizetto raised over $3 million in seed funding.

Crowdsourcing the crisis: Uppercase, a real estate company that works with e-commerce retail brands, has put together a COVID19 Retail Guide for Founders; it includes guides on commercial rent, leases, rebuilding strategies and more. 

Procure our way out: As Canadian governments head past survival mode and toward the recovery phase of the crisis, Angela Mondou, CEO of Technation, is urging them to create a procurement strategy that moves past personal protective equipment and healthtech supplies to technology more broadly. The crisis has highlighted several gaps, she told The Logic: the need for mobile platforms to deliver government information, for example, which Mondou envisions small- and medium-enterprises (SMEs) helping solve. It also highlighted how the government’s ability to mobilize in an emergency was lacking “a digital marketplace” that connected them with the country’s supply chain. “A crisis is wasted if it’s not a catalyst for change—you learn so much from lack of preparedness,” she said. Technation created an “Innovation Exchange,” a search portal that showcases Canadian technological COVID-19 solutions that can be accessed by the public sector, to show how the process of procurement can be transformed moving forward. “It’s apparent in this crisis that SMEs are struggling. One of the most powerful things you can do is buy from them,” she said. “The stimulus is great to keep the lights on … procurement becomes critical to keep companies alive.” 

Drinking from the firehose: The list of ex-WeWork employees keeps growing, as the pandemic delivers another blow to the already-struggling office space company. The firm announced another round of layoffs on Thursday, after cutting 250 staff in March and slashing 2,400 jobs last year. WeWork didn’t say how many people were let go in the latest round. 

  • Promising Silicon Valley startups are settling for lower valuations and reduced funding rounds, as investment deals slow. 
  • Workers at Amazon, Whole Foods, Target and Instacart are calling in sick today and protesting what they say are poor working conditions during COVID-19. 
  • Uber said it will pay its workers in California three days of sick leave if they are diagnosed with COVID-19, in response to demands for better health and safety measures.
  • Amazon is allowing its workers at its headquarters in Seattle to work from home until at least October. 
  • Sales of plant-based protein products are booming, as virus outbreaks at meat-processing plants put pressure on supply chains. 
  • Chinese startup Rokid has developed augmented reality glasses that screen wearers for COVID-19 symptoms, including via temperature checks. 
  • Cloud computing giants are seeing usage soar, but fewer new large client contracts is putting pressure on revenues. 
  • Walmart is launching two-hour delivery for some 160,000 products, including groceries, electronics and “everyday essentials.” 
  • Thousands of Nissan SUVs are parked on a cargo platform anchored offshore, as demand for new cars plummets. 
  • Tesla lost US$14 billion in market value after CEO Elon Musk said the firm’s stock price was too high in a tweet Thursday night. The stock was down 10.30 per cent on Friday, perhaps more in line with Musk’s expectations. 

The grand reopening: India extended its coronavirus lockdown for two more weeks, although areas with few or no cases will see “considerable relaxations.” The new guidelines permit most private offices across the country to resume operations with up to 33 per cent staff. Industrial activities will also be permitted to resume, provided social-distancing requirements are followed. South Africa began to ease its lockdown on Friday, allowing some industries to reopen after five weeks of restrictions; residents promptly began jogging. Germany is delaying making a decision on reopening schools. China’s Hubei province, where the first case was detected in the city Wuhan, will lower its coronavirus emergency response from the highest to the second-highest level.

Around the world: Beijing reportedly used its networks in Canada and elsewhere to bulk-buy and ship personal protective gear to China early this year, while still downplaying the global threat of COVID-19. South Korea has reported no new domestic cases for the first time since February. Mayors from cities around the world, including Montreal, are discussing how to coordinate a low-carbon, sustainable recovery from the coronavirus crisis. The U.K.’s health secretary said it has hit its “audacious” target of carrying out 100,000 coronavirus tests a day, though it’s been accused of inflating numbers. U.S. Treasury Secretary Steven Mnuchin said wealthy private schools should return loans they accessed through the government’s small-business loan scheme. A European parliament building in Brussels is housing 100 women experiencing homelessness. Police in India are using giant tongs to apprehend people, which one officer called a “social-distancing clamp” or a “lockdown-breaker catcher.” Here’s the story of how a small Icelandic fishing community replaced quarantined nursing home staff in the middle of a winter storm. 

“Could you show your face to our garden eels from your home?”: The caretakers of the eels at Sumida Aquarium in Tokyo are urging everyone to video-call the sensitive creatures so they don’t forget humans. 

* 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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