This article is a preview of The Logic’s Daily Briefing newsletter, sent every weekday.
Get complimentary access to award-winning reporting to navigate these unprecedented times. Sign up now.
It’s day 64 since Canada’s 100th coronavirus case. The number of cases is 72,196 as of publication time, up 1,039 since yesterday—a 16 per cent decrease from the seven-day prior average of new cases. On their respective 64th day, U.S. daily new cases were down 14 per cent from the seven-day prior average; the U.K. was up 10 per cent in daily new cases from the seven-day prior; and in Italy, new cases were down 16 per cent.*
Dr. Rick Bright, former top U.S. health department official turned whistleblower, will warn in congressional testimony on Thursday that the U.S. faces its “darkest winter in modern history” unless the Trump administration improves its response to the COVID-19 pandemic.
RRRF spells “relief”: Small businesses in the four western provinces get the largest share of Ottawa’s program to catch firms that fell through the gaps in its other support programs, the federal government announced Wednesday. Western Economic Diversification Canada will allocate $304.2 million from the $962-million Regional Relief and Recovery Fund (RRRF), while the regional development agencies for Southern Ontario ($252.4 million), Quebec ($211 million) and Atlantic Canada ($110 million) also got nine-figure budgets. “If you’re struggling, but did not qualify for other programs like the [Canada Emergency Wage Subsidy] or the [Canada Emergency Business Account], give them a call,” Prime Minister Justin Trudeau said.
The RRRF money can only be used as working capital or to help cash flow, and firms will need to have first tried other federal supports. They’ll also have to demonstrate they’re financially viable, providing accounts that show positive net profits or worth. Firms that want $40,000 or less will receive credit that is one-quarter forgivable if the rest is repaid by the end of 2022, the same terms as the CEBA. Larger loans will need to be repaid over three to five years, depending on the agency, starting in 2023.
In normal times, the six regional agencies have a collective budget of about $1 billion. The 2018 federal budget directed them to “place greater emphasis in helping firms scale up, develop new markets and expand, as well as assist with the adoption of new technologies and processes.” But innovation is not a specific focus of the RRRF, funding for which was first announced a month ago.
Equity as a backstop: The federal government will seek warrants that are convertible to equity or cash equivalents from publicly traded companies that use its new Large Employer Emergency Financing Facility (LEEFF). Under the program, Ottawa will act as a lender of last resort for firms with at least $300 million in annual revenue; Finance Minister Bill Morneau’s office said the provisions to take stakes in firms are part of trying “protect the interests of Canadian taxpayers.”
On Wednesday, Canadian Chamber of Commerce chief economist Trevin Stratton told The Logic that companies aren’t necessarily looking to bring the federal government on as a long-term shareholder, citing the oil and gas sector. While firms may have the balance sheet to repay the loans, they need additional liquidity because of commodity price drops, he said. But Paul Boothe, a former senior federal official who worked on the auto rescue in 2008–2009, said Ottawa may have to take less security or favourable terms to take warrants. The federal funds are meant to be a last resort, so taxpayers should be at the front of the creditor line if companies can’t repay, he said. Meanwhile, the European Union is reportedly planning to take stakes in systemically important firms.
In the markets: All major North American indices dropped over 1.5 per cent today after U.S. Federal Reserve chairman Jerome Powell and OECD secretary-general Angel Gurría expressed separate concerns about stimulus efforts. The Canadian dollar fell to 70.94 cents U.S. in late-afternoon trading. Powell said more stimulus may be needed to prevent long-term economic damage from the pandemic. He ruled out negative stimulus rates, for which U.S. President Donald Trump had been calling, but signalled that lawmakers should allocate more funds for stimulus on top of the US$3 trillion already approved. “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This tradeoff is one for our elected representatives, who wield powers of taxation and spending,” said Powell.
Gurría, meanwhile, warned that extra debt taken on during the pandemic will “come back to haunt us,” and that many countries could take at least two years to recover economically. “I am not convinced that we are going to have a V-shaped recovery,” he said. “I think it will be more like a U. The key thing is to shorten the lower part of the U…. When you are thinking about the recovery, we don’t know whether it is going to be 2021 or 2022.” U.S. economists are now predicting unemployment in that country will hit 17 per cent in June, with GDP shrinking 6.6 per cent in 2020, a drop from the 4.9 per cent contraction predicted last month. The U.K. economy shrank 5.8 per cent in March, the most on record, and April figures are widely expected to be worse.
“We are not running at high speed, but that’s OK. The more important thing at times like this is that people think it’s OK to come back and work in a car factory”: Jose Vicente de los Mozos, global head of manufacturing at Renault, reflected on the reopening of the carmaker’s Flins factory in France. Renault has spent €800,000 on COVID-19 safety measures at the plant, including masks and thermal cameras to help bring its 2,750 employees back to work.
FlightHub granted creditor protection: Quebec’s Superior Court has granted travel-technology company FlightHub creditor protection; its revenue dropped more than 90 per cent in less than two months. FlightHub is the first Canadian tech company to be granted protection under the Companies’ Creditors Arrangement Act since the pandemic began. The Montreal firm was facing some difficulties pre-pandemic, including a drop in revenue and an investigation by the Competition Bureau. A group of its shareholders have formed a company to transfer its debt from TD Bank.
Bay Street to Main Street: OpenText CEO Mark Barrenechea said his decision to close half his firm’s offices worldwide wasn’t primarily about saving money. “From a cost perspective, it’s probably neutral, getting to maybe a slight benefit,” said Barrenechea. “It also is going to allow us to go after talent that we weren’t able to go after before, because our talent has always been tied to a physical space.” OpenText made the decision to close offices in April. It’s now being joined by a handful of other major companies, including Twitter, which told some employees on Tuesday that they could work from home indefinitely. Montreal-founded firm Breather is benefitting from the push for greater flexibility in office arrangements. “We’re getting a lot of phone calls from companies that are looking to leave co-working for private spaces, but on flexible terms,” said CEO Bryan Murphy.
- StatCan will stop providing advance copies of its monthly jobs report to certain government officials after Bloomberg published April’s numbers ahead of the government release.
- The CRTC has rejected a request to investigate telecoms’ alleged involvement in developing contact-tracing apps.
- The Canadian Union of Public Employers has filed an unfair labour practice complaint against Foodora Canada, alleging the food-delivery platform’s decision to pull out of the country was impacted by the potential its drivers could unionize.
- Retailers nationwide are trying to reassure customers their stores are safe to shop at despite the pandemic. Tactics include limiting customers allowed inside and floor decals showing where to walk.
- Canadians’ trust in the telecom sector jumped 19 percentage points, from 52 per cent in January to 71 per cent in May, according to a survey by communications firm Edelman.
- Import transactions dropped 26.9 per cent in April 2020 compared with the same month last year, according to Statistics Canada.
- Domestic aircraft movements hit 14,781 in April, a four-week high, but still well below the 47,930 seen in the first week of March, according to StatCan.
- Alberta’s petrochemical sector, which produces plastics, is surging on demand for medical devices and other products, while the province’s oil sector is struggling.
- Toronto tech firm Loopio has laid off 11 staff members, representing eight per cent of the company, citing economic downturn due to COVID-19.
- Top Hat has laid off 16 staff and shifted the roles of 28 others as it tries to adapt to the changing higher-education sector. The changes come three months after the edtech platform raised $72 million.
- Intersect CEO Paul Crowe is stepping down one week after he said the company had laid off 19 employees. Anthony Lipkin and Chris Hirst, both executives with the Toronto-based software firm, will lead the company in Crowe’s stead.
Cross-country checkup: Quebec Finance Minister Eric Girard said the province’s economy will shrink between four and six per cent this year, and that it won’t return to 2019 levels until the end of 2021; balancing the budget won’t happen for another three to five years, said Girard, due to unanticipated expenses related to COVID-19. B.C. residents are being asked to take a survey and blood test so the province can determine how widespread the infection is and how it spread. Non-essential travel between Canada and the U.S. will be banned until at least June 21. According to a survey from Payments Canada, 75 per cent of Canadians are spending less than they did pre-COVID-19; another 62 per cent are using less cash and 42 per cent avoid stores that don’t offer contactless payment. The Northwest Territories’ plan for reopening its economy includes a ban on singing “Happy Birthday” in restaurants and bars.
Crowdsourcing the crisis: Project K(IN)D is an online exchange platform designed to match the needs of the non-profit sector with donors that can offer their time, talent and goods. The platform is challenging professionals and companies to give one billion in-kind donations to help community organizations impacted by COVID-19. Tanya Woods, who helped found the project, told The Logic she hadn’t finished fundraising when the coronavirus hit. Realizing that the pandemic would have a serious impact on the non-profit sector, Woods and a group of volunteers rushed to get it up three months early. So far, over 200 businesses and 200 charities have signed up. In September, 20,000 students from Algonquin College will sign up to offer their services. Businesses can sign up here to offer their help.
Trace me on my cellphone: Less than four per cent of Albertans—about 165,000 people—have downloaded the government’s contact-tracing app. In comparison, almost 25 per cent of Singapore’s population has downloaded its app. Experts say such apps need an even higher percentage of the population to use them for them to be effective. In new guidelines, the European Commission urged member states to ensure their apps are “voluntary, transparent, temporary, cybersecure, using pseudonymised data, should rely on Bluetooth technology and be interoperable across borders as well as across operating systems.” French research institute Inria has released a portion of its source code design for the government’s contact-tracing app, which is set to be released in June.
In the lab: Health Canada has approved a test called the DiaSorin Liaison that can detect COVID-19 antibodies in blood. (Here’s how antibody treatments work.) Canadian researchers are also studying drugs made from interferons, a group of proteins naturally generated by the body’s immune system, as a potential treatment. The U.S. is likely to get French company Sanofi’s COVID-19 vaccine before the rest of the world because it was first to fund it. Gilead Sciences has signed non-exclusive voluntary licensing agreements with five generic drug makers in India and Pakistan to manufacture remdesivir. The licences are royalty-free until the World Health Organization declares the end of the pandemic.
Postcard from Singapore: Pavel Bains went to the mall to get a haircut yesterday. It was the first day the country allowed some businesses to reopen after weeks of near-total lockdown. Despite that, Bains, the CEO and co-founder of blockchain-technology company Bluzelle, told The Logic the mall was empty. The barber wore a mask while he cut Bains’s hair. “It was like I was in some weird sci-fi movie,” Bains said.
The pandemic-induced lockdown didn’t take the 5.7 million residents of Singapore by surprise. Much of it happened slowly, Bains said, with the government being “open and transparent” at every step. Bains works in software, so the disruption to his business was minimal; much of his company’s work was already cloud-based, so the shift to working from home wasn’t too difficult. “You missed the personal touches—your own office, meeting people, going for a walk and getting coffee—which was annoying,” Bains said. With kids at home, his schedule wasn’t as rigid as he liked: he couldn’t get to the office early to get some quiet time, for example. “The hours sort of merged into each other.” He formed a new routine, with home-based workouts that his children would join, brief walks outside and lots of phone calls. Outside, everything was very quiet. “It’s a small, dense city, so seeing it so still was pretty bizarre,” said Bains. A nearby restaurant district that was usually “slammed full” would only have 10 people inside on any given day. The one change many made was downloading the government’s contact-tracing app, TraceTogether, which has now become a starting point for apps in other jurisdictions, including Alberta. “It’s not really invasive,” he said. “You just keep it on…. Everybody kind of does it; nobody has freaked out.”
In the wake of the economic fallout of COVID-19, Bains has started “being more alert about the future and finances.” Many of his family members in Vancouver are in service-based businesses and struggling: one of his brothers runs a basketball camp, while another has a flower business. “I think we need to pay more attention to economic health,” Bains said. “How do I help my family move on? Where do I put my money for the kids? Where do I put my savings?”
Drinking from the firehose: The attorneys general of 13 U.S. states have written an open letter to Amazon CEO Jeff Bezos and Whole Foods CEO John Mackey, urging them to increase worker protections during COVID-19 and provide information on sick leave, infection rates and safety measures at their workplaces. Meanwhile, Amazon said it plans to keep its six warehouses in France closed until at least May 18 after a court ruled it could only ship essential goods during the pandemic. The company is starting to resume one- and two-day shipping as orders stabilize.
- Tesla is reopening its Nevada Gigafactory; employees who feel unsafe to return to work will have to take unpaid sick leave. The company has been operating its Alameda County, Calif. plant for days without permission from local officials; the county said Tesla can reopen the plant next week.
- April venture capital deals in the U.S. were down slightly from February levels, but substantially lower than the same month last year.
- The world’s biggest shipping container line is expecting volumes to be down 25 per cent this quarter due to the slowdown in international trade.
- Uber will require all drivers and passengers to wear masks starting May 18.
- Chinese online grocery-delivery firm Dada Nexus has filed to go public in the U.S., following a strong U.S. debut from Beijing-based Kingsoft Cloud Holdings.
- Tencent’s video-gaming business boosted the company’s revenues in the last quarter; the sector grew 31 per cent to US$5.26 billion, as people spend more time gaming during quarantine.
- Analysts predict Disney could lose US$1 billion for every month parks remain closed.
- Online crowdfunding company Kickstarter has lost about 40 per cent of its staff to layoffs and buyouts.
The grand reopening: The European Commission is recommending that countries with similar levels of outbreaks should ease restrictions to restore tourism; it also released travel guidelines. This Saturday, Germany will relax some border controls, with plans for all restrictions from its European neighbours to be lifted by June 15. Belgian schools will be allowed to partially reopen from Monday, as will markets, museums and zoos. California’s state university system, the largest in the United States, cancelled classes for the fall semester. Seeing low mortality rates, India and Pakistan are relaxing their lockdowns.
Around the world: India will offer US$40 billion in collateral-free loans to small and medium enterprises. Self-employed workers in Britain will be able to reclaim 80 per cent of their monthly profits for three months, up to a maximum £7,500, starting Wednesday. Hackers from China and Iran are reportedly targeting American firms and institutions working on COVID-19 vaccines. A Chinese database of COVID-19 case information was leaked. Hong Kong reported its first case in 23 days. Lesotho, the last country in Africa left unaffected by the coronavirus pandemic, has reported its first case.
Cheap dates: A three-Michelin-star restaurant in Washington, D.C. will seat mannequins wearing vintage, 1940s-style outfits at tables to make socially distanced fine dining feel less lonely.
* 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.
Our reporting team is working tirelessly around the clock to deliver the very latest information on the COVID-19 crisis. If you like our journalism, please consider subscribing. You can get a subscription today for more than $100 off your first year.