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| After a Terrible First Quarter, Executives Offer Some Hope | After a Terrible First Quarter, Executives Offer Some Hope |
| (7 days later) | |
| Companies releasing first-quarter results in recent weeks have detailed how the coronavirus pandemic is crushing their business, and many have gone so far as to stop offering forecasts for the rest of the year, claiming the future is just too uncertain. | Companies releasing first-quarter results in recent weeks have detailed how the coronavirus pandemic is crushing their business, and many have gone so far as to stop offering forecasts for the rest of the year, claiming the future is just too uncertain. |
| Still, that didn’t stop some companies from pointing to glimmers of hope. Some senior executives said that business in April was slightly better than in the dark days of March as the virus quickly spread, leading to the deaths of thousands of people in the United States. Others tentatively outlined what a post-pandemic recovery might look like by pointing to how things were going in China, where the pandemic started and has since ebbed. | Still, that didn’t stop some companies from pointing to glimmers of hope. Some senior executives said that business in April was slightly better than in the dark days of March as the virus quickly spread, leading to the deaths of thousands of people in the United States. Others tentatively outlined what a post-pandemic recovery might look like by pointing to how things were going in China, where the pandemic started and has since ebbed. |
| These shreds of optimism may have been an exercise in corporate spin, meant to reassure shareholders — or to tell them something many investors already appear to believe. The stock market has rebounded 27 percent from its March low as investors have become confident that the Federal Reserve and the Treasury Department will prevent the economy from going into a tailspin. | These shreds of optimism may have been an exercise in corporate spin, meant to reassure shareholders — or to tell them something many investors already appear to believe. The stock market has rebounded 27 percent from its March low as investors have become confident that the Federal Reserve and the Treasury Department will prevent the economy from going into a tailspin. |
| Though the most recent earnings reports were pretty awful, stocks did not crater, in part because Wall Street is expecting earnings to bounce back quickly. While analysts at Goldman Sachs expect the combined profits of S&P 500 companies to fall by a third this year, they expect them to surge next year to a level that exceeds what the companies made in 2019. | Though the most recent earnings reports were pretty awful, stocks did not crater, in part because Wall Street is expecting earnings to bounce back quickly. While analysts at Goldman Sachs expect the combined profits of S&P 500 companies to fall by a third this year, they expect them to surge next year to a level that exceeds what the companies made in 2019. |
| Government statistics and independent analysts paint a more dire picture. Economists expect the April unemployment rate to have hit about 16 percent, one of the highest on record, and up from 4.4 percent in March. Most important, the chances of an economic resurgence rest largely on whether the coronavirus pandemic will be contained as lockdowns are relaxed and not flare up again. | Government statistics and independent analysts paint a more dire picture. Economists expect the April unemployment rate to have hit about 16 percent, one of the highest on record, and up from 4.4 percent in March. Most important, the chances of an economic resurgence rest largely on whether the coronavirus pandemic will be contained as lockdowns are relaxed and not flare up again. |
| It is important to keep in mind that large companies, through hiring and investment, play a big role in the economy. Once big companies like Google, Ford Motor and Apple are confident about a recovery, their spending could make it so. | It is important to keep in mind that large companies, through hiring and investment, play a big role in the economy. Once big companies like Google, Ford Motor and Apple are confident about a recovery, their spending could make it so. |
| “The overarching theme is uncertainty,” said David Lefkowitz, an equity strategist at UBS Wealth Management. “That said, most companies are thinking the economy will reopen in stages, and on a region-by-region basis.” | “The overarching theme is uncertainty,” said David Lefkowitz, an equity strategist at UBS Wealth Management. “That said, most companies are thinking the economy will reopen in stages, and on a region-by-region basis.” |
| Starbucks, for example, suspended its companywide profits forecast, but provided a bullish prediction about its business in China, where pandemic lockdowns are being lifted and nearly all its stores have reopened. The company says China could offer lessons about what might happen in the United States. | Starbucks, for example, suspended its companywide profits forecast, but provided a bullish prediction about its business in China, where pandemic lockdowns are being lifted and nearly all its stores have reopened. The company says China could offer lessons about what might happen in the United States. |
| The coffee chain, which has long billed itself as a hub for social interactions, is expecting comparable-store sales in China for the three months through the end of September — its fiscal fourth quarter — to be roughly in line with the same period in 2019. In the three months through the end of March, comparable-store sales were down by half compared with the year-ago period. “We are leveraging our experience in China to inform our actions in other markets, including the U.S.,” Starbucks said in a statement. | The coffee chain, which has long billed itself as a hub for social interactions, is expecting comparable-store sales in China for the three months through the end of September — its fiscal fourth quarter — to be roughly in line with the same period in 2019. In the three months through the end of March, comparable-store sales were down by half compared with the year-ago period. “We are leveraging our experience in China to inform our actions in other markets, including the U.S.,” Starbucks said in a statement. |
| Other executives are also seeing signs that customers want to get back to old habits. The chief executive of McDonald’s, Christopher J. Kempczinski, said there was a three-hour wait at one of its restaurants in France when it reopened. But overall, he sounded cautious on last week’s earnings call. “The exact trajectory of our recovery, however, is highly uncertain and dependent on many factors outside our control, such as government mandates, the risk of a second wave of infection to the availability of testing and the overall economic backdrop,” Mr. Kempczinski said. | Other executives are also seeing signs that customers want to get back to old habits. The chief executive of McDonald’s, Christopher J. Kempczinski, said there was a three-hour wait at one of its restaurants in France when it reopened. But overall, he sounded cautious on last week’s earnings call. “The exact trajectory of our recovery, however, is highly uncertain and dependent on many factors outside our control, such as government mandates, the risk of a second wave of infection to the availability of testing and the overall economic backdrop,” Mr. Kempczinski said. |
| He is hardly the only corporate executive who is unwilling or unable to predict when business will pick up. | He is hardly the only corporate executive who is unwilling or unable to predict when business will pick up. |
| Of the roughly 300 companies in the S&P 500 stock index that regularly provide an earnings forecast, 114 have not provided one for future profits, according to Savita Subramanian, an equity strategist at Bank of America Merrill Lynch. “A lot of corporates are using this as an opportunity to essentially go silent,” she said, “No one knows when we’re going to come back on line.” | Of the roughly 300 companies in the S&P 500 stock index that regularly provide an earnings forecast, 114 have not provided one for future profits, according to Savita Subramanian, an equity strategist at Bank of America Merrill Lynch. “A lot of corporates are using this as an opportunity to essentially go silent,” she said, “No one knows when we’re going to come back on line.” |
| Even Apple, one of the most profitable companies in the world, declined to provide a forecast. | Even Apple, one of the most profitable companies in the world, declined to provide a forecast. |
| Of course, for companies in the hardest-hit industries like airlines and logistics, the downturn could last a while and sales will not quickly snap back. “Historically, it has taken years, typically five or more, for business travel to recover,” Gary C. Kelly, chief executive of Southwest Airlines, said last week. Southwest was one of the companies that did not provide an earnings projection. Stock analysts expect the company to lose $3.86 per share this year, a sharp swing from a profit of $4.27 per share last year. | Of course, for companies in the hardest-hit industries like airlines and logistics, the downturn could last a while and sales will not quickly snap back. “Historically, it has taken years, typically five or more, for business travel to recover,” Gary C. Kelly, chief executive of Southwest Airlines, said last week. Southwest was one of the companies that did not provide an earnings projection. Stock analysts expect the company to lose $3.86 per share this year, a sharp swing from a profit of $4.27 per share last year. |
| And FedEx might not report profits that match its 2019 haul until 2024, according to analysts that cover the package delivery giant. This would not be without precedent. After the financial crisis, Fedex’s earnings took seven years to return to their pre-2008 level. Unsurprisingly, FedEx has also stopped providing an earnings forecast. | And FedEx might not report profits that match its 2019 haul until 2024, according to analysts that cover the package delivery giant. This would not be without precedent. After the financial crisis, Fedex’s earnings took seven years to return to their pre-2008 level. Unsurprisingly, FedEx has also stopped providing an earnings forecast. |
| In tough times, companies, hoping to conserve cash and shore up profit margins, cut spending in ways that can weigh on the economy. Ford has been doing that in China, including laying off thousands of workers. “The stark reality of a protracted global shutdown of our sector and our vertical has forced a laser focus on cost and liquidity,” James D. Farley, Ford’s chief operating officer, said last week. “And just as we did in China, we have ratcheted down spending across the board, both fixed and variable.” | In tough times, companies, hoping to conserve cash and shore up profit margins, cut spending in ways that can weigh on the economy. Ford has been doing that in China, including laying off thousands of workers. “The stark reality of a protracted global shutdown of our sector and our vertical has forced a laser focus on cost and liquidity,” James D. Farley, Ford’s chief operating officer, said last week. “And just as we did in China, we have ratcheted down spending across the board, both fixed and variable.” |
| Updated July 7, 2020 | |
| The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization. | |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. | Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| Even Google, which has done relatively well during the pandemic, said it was paring the pace of its hiring. | Even Google, which has done relatively well during the pandemic, said it was paring the pace of its hiring. |
| Spending on new plants, buildings and technology, which can give a big lift to other parts of the economy, is another budget item that is getting chopped — even at technology companies that are profitable and have tens of billions of dollars in the bank. Facebook said last week that it expected capital expenditures this year of $14 billion to $16 billion, down from an earlier forecast of $17 billion to $19 billion. | Spending on new plants, buildings and technology, which can give a big lift to other parts of the economy, is another budget item that is getting chopped — even at technology companies that are profitable and have tens of billions of dollars in the bank. Facebook said last week that it expected capital expenditures this year of $14 billion to $16 billion, down from an earlier forecast of $17 billion to $19 billion. |
| Still, one promising sign highlighted by some executives is that the economy might quickly hit bottom, or may already have done so. In other words, things are bad but they don’t seem to be getting worse. | Still, one promising sign highlighted by some executives is that the economy might quickly hit bottom, or may already have done so. In other words, things are bad but they don’t seem to be getting worse. |
| Mastercard, for example, said that U.S. transaction volume in the week ended April 21 was down 15 percent from the same period in 2019. Ordinarily that would be considered disastrous but it was an improvement from the 26 percent decline the week before. | Mastercard, for example, said that U.S. transaction volume in the week ended April 21 was down 15 percent from the same period in 2019. Ordinarily that would be considered disastrous but it was an improvement from the 26 percent decline the week before. |
| “We believe we are currently in the stabilization phase in most markets,” Ajay S. Banga, Mastercard’s chief executive, said last week. | “We believe we are currently in the stabilization phase in most markets,” Ajay S. Banga, Mastercard’s chief executive, said last week. |
| Even companies in the health care sector, which is playing a central role in the pandemic, are hoping that conditions will return to normal in the coming weeks. | Even companies in the health care sector, which is playing a central role in the pandemic, are hoping that conditions will return to normal in the coming weeks. |
| The pandemic has weighed on HCA, which operates over 300 hospitals and surgery centers. Many of them are in Texas and Florida, which have begun to open up. The company has said that elective surgeries, generally more profitable than other types of care, have been put on hold. But HCA’s chief executive, Samuel N. Hazen, told investors last month that its “reboot phase” would be finished across most of its operations by the end of June, and said the company is taking steps to make sure patients feel safe in hospitals, clinics and other health care facilities. | The pandemic has weighed on HCA, which operates over 300 hospitals and surgery centers. Many of them are in Texas and Florida, which have begun to open up. The company has said that elective surgeries, generally more profitable than other types of care, have been put on hold. But HCA’s chief executive, Samuel N. Hazen, told investors last month that its “reboot phase” would be finished across most of its operations by the end of June, and said the company is taking steps to make sure patients feel safe in hospitals, clinics and other health care facilities. |
| When asked by an analyst during a conference call, Mr. Hazen seemed upbeat about the loosening of lockdowns. “We’re excited about the reopening in Texas,” he said. “We’re excited about Tennessee, and we anticipate other states starting to relax some of these procedures and policies.” | When asked by an analyst during a conference call, Mr. Hazen seemed upbeat about the loosening of lockdowns. “We’re excited about the reopening in Texas,” he said. “We’re excited about Tennessee, and we anticipate other states starting to relax some of these procedures and policies.” |