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It’s day 49 since Canada’s 100th coronavirus case. The number of cases is 49,815 as of publication time, up 1,315 since yesterday, a nine per cent decrease from the seven-day prior average of new cases. On their respective 49th day, U.S. daily new cases were down three per cent from the seven-day prior average; the U.K. was down 11 per cent in daily new cases from the seven-day prior; and in Italy, new cases were up 18 per cent.*
The U.S. is the first country to surpass one million confirmed cases.
There’s an app for that: Canadian e-commerce giant Shopify launched its first major consumer play on Tuesday, a mobile shopping app called Shop. The app integrates search—including letting customers find local vendors—checkout and delivery tracking; it also makes recommendations based on their previous purchases. The app comes with a built-in download base: it will replace Arrive, an order-status app launched in November 2017 that the company said has been used by 16 million shoppers. Shopify promises to offset the emissions on orders, part of a sustainability effort that includes a carbon sequestration fund and executives’ private tree-planting donations.
It’s Shopify’s latest expansion into an area adjacent to its core business of selling software to let vendors sell online. The company has already rolled out point-of-sale hardware, credit, content, warehousing and delivery, and email marketing. Those products and services are all behind the scenes. Shop general manager Carl Rivera said the new app is “not designed to be a discovery platform.” Consumers will be able to follow individual merchants, and recommendations will be tailored to buying habits, instead of by paid placement as on a marketplace like Amazon. While Shop’s interface prioritizes merchants’ brands, the app also puts a face on Shopify for consumers, and puts hundreds of thousands of its merchants behind a single search bar. And while the product is free for stores, it will funnel purchases through Shop Pay, the accelerated checkout feature only available to merchants that use Shopify’s in-house payment-processing service. Transaction fees from that service make up a significant part of the company’s merchant solutions business, which contributed US$935.9 million of its $1.578 billion in 2019 revenues. The team behind Swedish e-commerce platform Tictail—which the company acquired in November 2018 and subsequently shut down—built the new app.
Shopify’s stock closed at US$886.43 on the Toronto Stock Exchange (TSX), up only 0.29 per cent for the day. While the firm suspended its guidance for 2020 revenues on April 1, citing “uncertainty surrounding the duration and magnitude of COVID-19.” But traffic to its merchants’ sites has surged as self-isolated consumers buy online. And Tuesday’s relatively flat performance follows a long upward run this month—the stock is up 55 per cent since the start of April—that’s made it the second-largest company by market cap on the TSX, although it’s still almost $20 billion behind RBC.
Alphabet reports: Despite a “significant slowdown in ad revenues” in March, Google parent company Alphabet’s first-quarter earnings pleased the Street. Its shares were up about four per cent in after-hours trading after posting revenue of US$41.16 billion, beating analysts’ consensus estimate of US$40.82 billion. Earnings per share were US$9.87, below estimates of US$10.65. It’s among the first of the tech giants to post earnings for the quarter in which COVID-19 paralyzed the global economy; Google is reportedly already slashing marketing budgets and implementing hiring freezes. CFO Ruth Porat said the company was managing the pandemic’s challenge to its business by “sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”
In the markets: The TSX opened at a seven-week high this morning and the dollar hit a two-week high on investor hopes that some countries partially reopening would buoy the global economy. The Dow Jones and S&P 500 were down, as was the tech-heavy Nasdaq, which dropped 0.13 per cent, as Facebook, Apple, Amazon and Alphabet all dipped during the day. Daily Canadian gains were marginal, with the TSX up 1.07 per cent at close and the dollar reaching 71.50 cents U.S. in late afternoon trading.
Several long-term indicators out today show the hardest economic hit may be yet to come. A poll of 25 economists predicted Canada is in its worst recession on record, with the median worst-case scenario being a 50 per cent quarterly reduction, coupled with a 10 per cent decline this year. Economist David Rosenberg is predicting COVID-19 will trigger a depression 10 times worse than the 2008 recession. The U.S. is seeing a wave of bankruptcy filings and the suspension of dividends at record rates, as well as significant volatility in oil prices over concerns they could again reach negative levels. There are some winners—tanker rates, for example, are soaring as firms scramble to find storage for their surplus oil.
Provincial programming: The financial measures the 10 provincial governments have introduced in response to COVID-19 add up to 2.8 per cent of Canada’s GDP, according to a Scotiabank report released Monday. Quebec, which has the country’s highest per-capita case rate, has led the pack, spending 4.5 per cent of its GDP, mostly on benefits for households and communities. Prince Edward Island, Nova Scotia, Ontario, Saskatchewan and Alberta have concentrated on business support, with the last two of those provinces focused on their energy sectors. “Industries most vulnerable to lockdowns—such as food services, accommodations, hospitality, entertainment and recreation—face fragile recoveries,” wrote Marc Desormeaux, Scotiabank senior economist and the report’s author, citing B.C., Quebec, Nova Scotia and Newfoundland and Labrador as provinces with large affected sectors that may need to provide more support. But provincial governments don’t have a lot of fiscal room; Desormeaux noted the country’s four largest provinces will end this fiscal year with their debt at record highs relative to GDP.
“If there’s no transmission of the virus, and no cases, it makes it very challenging to test whether the vaccine works”: Social distancing and nationwide lockdowns may inadvertently be complicating the search for patients to test possible coronavirus vaccines, according to some scientists.
Right on CEWS: Revenue at Skylight, a software-enabled home-renovation startup, has “dropped to almost zero for April,” said COO Fiona Lake Waslander. She told The Logic last month she was concerned its 50 Canadian staff were ineligible for the Canada Emergency Wage Subsidy (CEWS) because the firm is incorporated in the U.S. “We unfortunately did have to reduce our team size—mostly on the sales, marketing and operations side—as we didn’t know where we stood on CEWS,” she said. “It was probably still the right thing to do, as the CEWS is only partial support and we see a long road ahead of us to recover.” But the salary assistance, for which Skylight now qualifies, will help maintain its Canadian team, now down to 32 employees, and it’s considering some tech hires to continue developing its service. Over 44,000 companies applied for the wage subsidy on Monday.
Trace me on my cellphone: Apple and Google are due to release their contact-tracing technology today. The U.K.’s National Health Service (NHS) said it won’t use their decentralized model, where all the potentially identifying information is stored locally on users’ phones as opposed to an external server. The NHS has hired one of Britain’s most senior spies to advise it on its centralized Bluetooth-based contact-tracing app, which could be tested in the next week or two. Matthew Gould, CEO of the NHS’s digital innovation unit, said the app has been developed quickly and “will iterate.” Meanwhile, Germany has chosen software company SAP and Deutsche Telekom to build its app, a day after it decided to take a decentralized approach. Cyber-intel firms have an alternate proposal: old-fashioned spying.
Cross-country-checkup: Quebec retailers outside Greater Montreal with direct exterior access can reopen May 4, while those in and around the city will have to wait until May 11 as part of the province’s “gradual reopening,” Premier François Legault announced. Construction sites will also reopen May 11, along with the province’s manufacturing sector, though those workplaces will reintroduce employees gradually. All told, about 450,000 of the 1.2 million Quebecers currently off the job are expected to return to work by the end of May. Montreal’s Mirabel Airport is preparing for the country’s biggest single delivery of personal protective equipment yet; the shipment is expected to arrive via the world’s largest cargo plane—a Soviet-era Antonov AN-225—from China on Thursday night. Toronto is introducing bigger sidewalks in some high-traffic areas to help pedestrians maintain physical distance. The B.C. government has launched a $50-million program that will offer grants of up to $50,000 to internet providers to improve internet access and speed in rural, remote and Indigenous communities, as usage soars during the pandemic. Manitoba is expanding testing criteria to allow anyone with even mild symptoms to be tested for the virus. Saskatchewan is releasing new modelling later this afternoon that will detail an “improved outlook.” Some parents are giving up on online learning, exhausted after more than a month of juggling homeschooling and, in many cases, full-time jobs. The first day of Canada’s virtual Parliament featured interesting backdrops and muted MPs.
Bay Street to Main Street: May rent is due in three days, but both tenants and landlords are raising concerns about Ottawa’s relief program, which is designed to stave off mass evictions. Some of those worries are technical, like whether the $50,000 monthly cap is calculated off base or gross rent. Others are more fundamental, like: can a landlord apply for relief for one tenant in a building, but not others? At least one of the country’s big retail landlords, SmartCentres REIT, has said it’s open to taking the 50 per cent government subsidy in exchange for reducing rent by 25 per cent for certain tenants. Many business groups are calling for more generous rent relief terms from the government, but some experts are pushing back, pointing out that many of the largest landlords enjoy healthy profit margins. One major REIT, for example, made $508 million in net operating income off expenses of $207 million. That’s an operating margin of 65 per cent. In any event, it’s unclear how much further the government is willing to go on this file. On Monday, Trudeau said the federal government would not be offering a residential relief program.
- Ontario’s labour ministry has declined every request made during the pandemic by workers seeking to refuse tasks they feel are unsafe.
- Calfrac Well Services, one of Canada’s largest oilfield-services firms, is cutting 70 per cent of its North American staff.
- Total wheat milled in Canada hit 281,585 tonnes in March, a five-month high.
- Restaurant owners are praising DoorDash for reducing commission fees and raising concerns about Uber Eats’ rates cutting into already-slim margins.
- RBC told staff there’ll be a “long road ahead” before a return to workplace normalcy while Scotiabank told staff not to expect the “old normal” after the pandemic.
- Bombardier is planning to use the CEWS wage-subsidy program.
Crowdsourcing the crisis: Visualping has created a free COVID-19 widget for website operators to keep visitors informed with important updates. ValtX is offering its Cyber Resilience & Security services for free until February 2021. MapinHood is a free navigation app for pedestrians to find the best walking routes in a city. Ratio.City is an interactive map showing the width of Toronto sidewalks for those looking to social distance.
Postcard from Brooks: Efren Macatangay has been quarantined in his room for seven days, waiting to be tested for COVID-19. He was sent home from the JBS beef-processing plant in Brooks, Alta. last Wednesday after clocking a fever. He’s feeling better, he said, but doesn’t want to risk infecting his family: all seven adults in his household—including his wife and son, with whom he works at JBS—are off work because colleagues of theirs have tested positive for the virus. Macatangay only leaves his room now to use the washroom and grab food when his family members aren’t around. He spends most of his days on his computer, reading about the pandemic and waiting for the mayor’s daily updates.
Brooks, a small city in southern Alberta between Calgary and Medicine Hat, managed to stave off an outbreak longer than many cities of a similar size. Mayor Barry Morishita had in part credited the city’s biggest employer, JBS, for maintaining the clean bill of health for so long. The Brazil-based company issued a travel ban for its employees back in January and put its ambitious overseas recruiting efforts on ice. Since the first week of March, management has been screening its nearly 3,000 workers before every shift with temperature checks and questionnaires to ensure they’re not showing symptoms of the virus. But since the city reported its first cases on April 15 the number has soared, and most of the infected are JBS employees.
A group of Brooks residents is now circulating a petition demanding the plant be closed for two weeks so its staff can quarantine. Shutdowns at plants across the U.S. and Canada due to COVID-19 outbreaks are already putting pressure on the meat supply chain, and closing JBS in Brooks—the biggest beef-processing plant in the country—would compound the problem. With hundreds of workers opting to stay home, worried they might contract the virus, production at the plant has already slowed. Still, Macatangay—who’s had two colleagues die from the virus—thinks a temporary shutdown is the better of two bad options. “It could help get control of the spreading, even though it’s difficult because JBS is essential to Canadians—we need food on our table,” he said. “The management believes the plant is safe for us, so I’m still waiting [for] the decision from our mayor.”
Drinking from the firehose: HSBC is pausing plans to cut 35,000 employees, announced before the pandemic in February. While the bank has seen profits drop about 50 per cent in recent months, CEO Noel Quinn said he didn’t want to put laid-off workers in the position of having to find new jobs during the pandemic.
- Uber executives are considering cutting as much as 20 per cent of the ride-hailing company’s workforce as it copes with a sharp decline in business, according to The Information; Uber’s longest-serving executive, CTO Thuan Pham, has reportedly resigned.
- Apple CEO Tim Cook told employees in a company-wide meeting on Tuesday that, while the firm isn’t immune to the impacts of COVID-19, he plans to continue investing heavily in research and development throughout the health and economic crisis.
- Videoconferencing firm Zoom—which surpassed 300 million daily users last week—has selected Oracle to expand its cloud capacity, a loss for larger competitors like Amazon Cloud Services and Microsoft’s Azure Cloud.
- YouTube is ramping up fact-checking on videos shown to U.S. viewers in an attempt to stymie the spread of misinformation about the virus online.
- Airline JetBlue will require passengers to cover their faces while travelling starting May 4, a first for a U.S. carrier.
- Mask manufacturer 3M beat Wall Street’s sales and profit expectations in its first-quarter earnings report. Along with mask sales, cleaning supplies, food-safety products and home-improvement items helped counteract losses in car parts and office supplies.
- Republican Senator Josh Hawley is calling for a criminal antitrust investigation into Amazon’s business practices, after The Wall Street Journal reported the firm used data from third-party sellers on its platform to inform the development of Amazon-branded products.
- New York’s attorney general is investigating Amazon’s labour practices during the pandemic, including whether the firm violated state whistleblower protections by dismissing a worker who spoke out against conditions at a local facility.
The grand reopening: About 400,000 people went back to work in New Zealand Tuesday after nearly five weeks of nationwide lockdown; many lined up for fast-food takeout. Hong Kong civil servants will head back to their jobs on May 4. France has laid out plans for a “progressive and controlled” exit from its lockdown starting from May 11, though the reopening will be postponed or restricted if infection rates don’t fall over the next few weeks. French Prime Minister Édouard Philippe said the lockdown had saved 62,000 lives, but it had to be lifted to prevent economic collapse. In Germany, where some small businesses have been allowed to reopen, the first signs have appeared that transmission of the virus has picked up. An advisory board of 100 businesses and civic leaders is working with New York officials on a plan to reopen the state’s economy.
Around the world: More than 30 million workers in Europe’s five biggest economies—or almost a fifth of the workforce in Germany, France, the U.K., Italy and Spain—have applied for state wage assistance. U.S. Treasury Secretary Steven Mnuchin said he will audit any company taking out a loan of more than US$2 million. A White House adviser said officials are studying the need for a fourth stimulus package that includes more individual stimulus cheques. Italian aid for small businesses, first approved in mid-March, is only just starting to flow.
China has threatened a boycott of Australian products like beef and wine if the country continues to push for an inquiry into the origin of the pandemic. Saudi Arabia has passed 20,000 confirmed coronavirus cases, while COVID-19 deaths in London have exceeded the number of civilians killed during the worst four-week period of aerial bombing of the city during the Blitz in the Second World War. The head of the Tokyo Olympics said the games could be “scrapped” entirely if a vaccine isn’t found in time. Chinese scientists say the novel coronavirus will not be eradicated like SARS was, with one saying, “This is very likely to be an epidemic that co-exists with humans for a long time, becomes seasonal and is sustained within human bodies.”
“Island recession incoming”: The Bank of Nook in the Nintendo game Animal Crossing: New Horizons has cut its interest rates paid on savings to near zero. The bank’s raccoon-like manager Tom Nook apologized for “any inconvenience” and offered customers a floor mat shaped like a bell.
* 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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