Auto cos see some light at end of lockdown tunnel

Once the 21-day lockdown is lifted, which may happen in phases, those who have been contemplating purchasing a car may actually do it, said analysts. 

Thanks to social distancing norms and rising hygiene awareness, daily commuters may ditch public transport and shared mobility solutions like Ola and Uber. Many are likely to prefer the confines of a car over roughing it up in crowded public transport services such as a metro, local sub-urban trains and buses, they said. 

Automakers are bracing for a rough ride ahead. Auto sales, already in reverse gear in India owing to tepid sentiments and a slowing economy, got dented badly in March, with sales at top companies declining by more than 64 per cent over the year-ago period. 

But amid the lockdown, announced by the government to contain the spread of the coronavirus disease (Covid-19), there is a silver lining. Once the 21-day lockdown is lifted, which may happen in phases, those who have been contemplating purchasing a car may actually do it, said analysts. 

Thanks to social distancing norms and rising hygiene awareness, daily commuters may ditch public transport and shared mobility solutions like Ola and Uber. Many are likely to prefer the confines of a car over roughing it up in crowded public transport services such as a metro, local sub-urban trains and buses, they said. 

The trend may particularly boost entry-level and compact cars in the sub-Rs 10 lakh category. 

“While it’s a dark picture right now, there is a silver lining. You will see some pent-up demand, especially for entry-level cars. It’s an opportunity for all the automakers that play in the segment to gear up for it,” says Rajeev Pratap Singh, auto sector head at Deloitte. 

Many people who do not have a car are already actively considering buying one and with this, used cars will also get a boost, he added. 

“The risk of shared transport is very high and there will be a dip in demand for such services and shared mobility platforms,” said Singh. 

Rahul Mishra, principal and lead – automotive at Kearney, agrees. 

“The whole social distancing that we are practising is going to fundamentally alter some of the traditional ways of doing things. One such thing could be a preference for private mode of transport — owning a vehicle instead of using shared public transport,” said Mishra. 

Millennials, who never thought of investing in cars as they preferred an Ola or Uber, may now think of owning a car. He also felt choices may be skewed towards small and compact cars. 

Automakers, that have their hands full dealing with the current crisis, are wary of any forecasts. 

R C Bhargava, chairman at car market leader Maruti Suzuki India, said: “We will have to see how the demand pans out after the lockdown is lifted. With no prior experience, saying anything will be highly speculative.” 

A top executive at another passenger vehicles firm echoed similar sentiments. 

“At this point, making any such prediction on a trend will be premature. We would rather do our bit by helping our channel and vendor partners. I am not sure if car purchase will top the priority of an average salaried class under the current circumstances.” 

Deloitte’s Singh said the challenge for automakers will be to manage the customer wisely. They will need to identify those who are looking to buy an additional car for the family. Given that the liquidity crunch will remain in the foreseeable future, companies will have to offer retail finance, he said.

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European Shares Seen Opening Flat To Lower

European stocks look set to open flat to lower on Monday as investors react to the latest developments on the coronavirus spread.

Spain and Italy demanded a more vigorous response from the European Union as they fight surging coronavirus infections amid the continent’s worst crisis since World War II.

Nine European countries have asked the union to share the burden of European debt, dubbed coronabonds, to help fight the virus, but the idea has met resistance from countries led by Germany and the Netherlands.

The United States has extended its set of social distancing guidelines until April 30 to slow the spread. In Italy, a national lockdown looks certain to continue beyond April 3.

Elsewhere, Japan said it would expand its entry ban to include citizens traveling from the United States, China, South Korea and most of Europe.

President Donald Trump said on Sunday that keeping U.S. Covid-19 deaths to 100,000 would be a ‘very good job’.

The global death toll from COVID-19 has risen to 31,412. The United States has the highest number of infected people with 124,686 diagnosed cases, 2,191 deaths and 2,612 recoveries.

Europe has listed over three lakh 63 thousand cases and 22,259 deaths while, Asia recorded more than one lakh four thousand cases and 3,761 deaths.

Asian markets are trading mixed and the dollar remains under pressure against its major peers while oil hovered near 17-year lows. Gold prices edged higher on dollar weakness.

Economic confidence data from euro area and a report on German consumer prices are due later in the session, headlining a busy day for the European economic news.

U.S. stocks tumbled on Friday to snap a three-day winning streak despite the
House of Representatives approving a $2 trillion package to address the coronavirus crisis.

The Dow Jones Industrial Average lost 4.1 percent, the tech-heavy Nasdaq Composite gave up 3.8 percent and the S&P 500 declined 3.4 percent.

European markets retreated on Friday as the U.S. surpassed China as the country with the most coronavirus cases and EU leaders failed to agree on a common economic response to the COVID-19 pandemic.

The pan European Stoxx 600 fell 3.3 percent. The German DAX shed 3.7 percent, France’s CAC 40 index plummeted 4.2 percent and the U.K.’s FTSE 100 nosedived 5.3 percent.

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Goldman CEO Buys Two New Private Jets in Break With Tradition

For years, there was an allergy inside Goldman Sachs to owning a private corporate jet. Top bankers had access to rides on planes shared with others, but didn’t want to erode their less-than-stellar image on Main Street with the unnecessary extravagance of having their own.

Until David Solomon took over.

The CEO has ordered up a pair of top-of-the-line Gulfstreams for the firm, according to people with knowledge of the matter. The firm chose a G700 model that sells for about $75 million each, is powered by Rolls-Royce engines and offers cabins so long and wide they contain a master suite with shower.

It is moves like this that have earned Solomon his share of detractors within the firm’s top ranks. Some of them worry that his flashy ways can make him appear out of touch at a time when he is also pushing through a program of austere cost cuts. Just last month, he angered critics — both internally and externally — by announcing he took a 20% pay raise in 2019 to $27.5 million. It was the biggest increase given to the CEO of any big U.S. bank, even though Goldman’s stock price has lagged rivals throughout most of his 18-month tenure.

The rapid economic collapse caused by the coronavirus pandemic creates another optics problem for the firm. With unemployment skyrocketing and the death toll mounting, the purchases risk rekindling some of the fury that was directed toward bankers following the 2008 financial crisis, when people took to the streets to protest Wall Street excess.

Expected Perk

A spokeswoman for Goldman Sachs Group Inc. said the purchase of the planes would save it money.

“We have long made private aircraft available to senior executives who travel extensively to see clients, and that travel was arranged through a fractional ownership arrangement with NetJets,” Leslie Shribman said. “A detailed analysis demonstrated conclusively that it would be more cost effective to own the aircraft directly.”

Private jets are an expected perk at the highest levels of Wall Street, where JPMorgan Chase & Co. and Morgan Stanley have had their own for years. And it’s also possible that the use of private jets becomes more accepted in the age of coronavirus because they can mitigate the risk of spreading the disease.

But Goldman’s purchases have already made some at the firm uncomfortable. Even if the jets do eventually save the firm money, internal critics saw the Gulfstreams as attention grabbers, according to people familiar with their thinking.

Congressional Hearing

Solomon’s raise drew immediate condemnation from the likes of Senator Elizabeth Warren and former Treasury Secretary Larry Summers. They criticized the idea of one executive getting so much money at a time of widespread economic pain.

His pay had been set before the pandemic devastated the global economy. Even so, some colleagues have faulted him privately for accepting the raise while asking the rest of the firm to make do with less.

Private jets are inherently fancy, but the kind that Goldman chose are among the most luxuriant. Marketing material for the G700 advertises speakerless surround sound and “the industry’s only ultra-high-definition circadian lighting system.”

It’s the sort of extravagance that can attract unwanted scrutiny, like in early 2009, when the heads of the biggest U.S. banks were called in to testify before congress on the financial crisis.

At one point, the executives were asked to raise their hand if their company owned or leased a private plane. Lloyd Blankfein, Solomon’s predecessor, was the only one who didn’t.

“Let the record show,” said congressman Brad Sherman, “all the hands went up except for the gentleman from Goldman Sachs.”

— With assistance by Stephanie Davidson

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ViacomCBS Closes Purchase Of Stake In Miramax, With Distribution And First Look Deals

ViacomCBS  said Friday it’s closed on the acquistion of a 49% stake in Miramax from owner beIN Media Group, whih will retain 51% in the company. The current Miramax leadership team will continue in their existing roles.

ViacomCBS said that $150 million of the $375 million pricetag was paid at closing and it’s committed to invest $225 million – comprised of $45 million annually over the next five years – to be used for new film and television productions and working capital.

Paramount Pictures also entered into an exclusive, long-term distribution agreement for Miramax’s film library and an exclusive, long-term first-look agreement allowing Paramount Pictures to develop, produce, finance and distribute new film and television projects based on Miramax IP.

Qatar-based entertainment company beIn Media Group bought Miramax – originally launched in 1979 by Bob ad Harvey Weinstein – in 2016 from shareholders Qatar Investment Authority and Colony Capital.

The Miramax library contains more than 700 titles including Best Picture Oscar winners The English PatientChicagoShakespeare in Love and No Country for Old Men.

“This represents a major investment in and endorsement of our thriving Miramax business, which has grown in value under beIN Media Group’s ownership and has a fantastic future ahead with major new movies and unexploited premium dramas. We are thrilled to partner with ViacomCBS and Paramount to explore further opportunities around Miramax’s iconic IP, and also at group level,” said beIn Media chairman Nasser Al-Khelaifi. The partership with the U.S. media conglom, “substantially increases the scale of our entertainment business [and] further underlines beIN’s ambitions on the global stage.”

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As coronavirus spreads, suppliers are rationing face masks

New York (CNN Business)3M, the world’s largest maker of respirator masks, said Friday it is willing to comply with President Trump’s order to manufacture and supply more critically needed N95 masks for the United States. But 3M cautioned about being forced to halt exports of those masks to other parts of the world.

A day after Trump invoked the Defense Production Act (DPA) to order 3M to significantly ramp up production of N95 respirators, 3M said in a statement that “3M and its employees have gone above and beyond to manufacture as many N95 respirators as possible for the US market.”

3M is the world's largest maker of N95 respirator masks.
The DPA also requires 3M to prioritize its respirator orders from the Federal Emergency Management Agency (FEMA). The company said it was already working closely with the administration to supply more masks to FEMA while increasing its mask imports into the United States from its global manufacturing facilities, including from China.

    3M, however, took issue with the administration’s additional request that 3M (MMM)cease exporting made-in-the-USA respirators to Canada and to Latin America.
    “There are significant humanitarian implications of ceasing respirator supplies to healthcare workers in Canada and Latin America, where we are a critical supplier of respirators,” the statement said, adding that such a move would “likely cause other countries to retaliate and do the same.”

      3M warned the end result could lead to the net number of respirators being made available to the United States to decrease.
      “That is the opposite of what we and the administration, on behalf of the American people, both seek,” the company said.
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      US Suffers Record Daily Death Toll From COVID-19

      As COVID-19 continues to rage across the United States at an alarming pace, the number of daily deaths in the country due to the virus reached a new peak of 1,169.

      The U.S. also recorded more than 30,000 new confirmed cases in the same 24-hour period, raising the total to 245380.

      This is nearly a quarter of the global confirmed cases. By late Thursday, U.S. reported 6,095 deaths.

      Although this is less than half the number of coronavirus deaths recorded in Italy, United States is now the most widely spread country with all the fifty states affected, and infections more than double the number reported in Italy.

      New York is the worst-hit state with 2538 deaths and 93,053 confirmed cases, according to Johns Hopkins University data.

      New Jersey is the second badly hit state with 537 deaths and 25590 infections.

      Michigan (417 deaths, 10791 infections), Louisiana (310 deaths, 9150 infections), Washington (272 deaths, 6585 infections), California (246 deaths, 11207 infections) and Georgia 176 death, 5444 infections) are the other worst-affected states.

      Wyoming still remains to be the only U.S. state not to have reported a death from the coronavirus, but there are 150 infected cases.

      Meanwhile, with more than 30 states ordered its people to stay at home, leaving more than 75 percent of the country’s population under lockdown, the nation’s top infectious disease expert wondered why every state is not implementing the strict social distancing measure.

      “If you look at what’s going on in this country, I just don’t understand why we’re not doing that.” Dr Anthony Fauci said at CNN’s coronavirus town hall.

      The director of the National Institute of Allergy and Infectious Disease called for a federally mandated stay-at-home order.

      U.S. unemployment figures hit a record high of 6.6 million, highlighting the dire effects of the shutdowns on the economy.

      Meanwhile, Miami Mayor Francis Suarez sent a letter to President Donald trump asking him to stop flights from coronavirus hotspots to Miami airport.

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      US Overtakes China In Number Of Coronavirus Cases

      On Thursday, the United States reported more deaths from Covid-19 than ever before – 246 – and overtook China in the number of confirmed infections.

      With 85,755 people tested positive, the situation in the U.S. has become worse than that of China (81,782 cases) and Italy (80,589), according to the latest data released by Johns Hopkins University.

      With 1,304 deaths, the United States currently stands sixth in terms of COVID-19 casualties behind Italy (8,215), Spain (4,365), China (3,292), Iran (2,378) and France (1696).

      New York, the worst affected U.S. state, reported nearly 39000 cases of infection and 466 deaths.

      Washington (147 deaths, 3207 infections), California (83 deaths, 4052 infections), Louisiana (83 deaths, 2305 infections) and New Jersey (81 deaths, 6876 infections) are the other worst-affected states.

      However, President Donald Trump appears to downplay the seriousness of the pandemic, as he said at a White House news conference that the nightmare would not last “much longer.”

      Meanwhile, 25 sailors on board the aircraft carrier USS Theodore Roosevelt have tested positive for the coronavirus, CNN reported quoting a Navy official.

      Worldwide, COVID-19 deaths crossed 25000. Infected cases reached 552,589, while the number of people who have recovered from the deadly disease rose to 128,704.

      Spain had the the highest surge in fatalities, reporting 493 new deaths in a day, taking the total deaths to 4858.

      It is now second only to Italy, where a total of 8215 people have died due to COVID-19, according to Johns Hopkins University.

      France has recorded 1,696 deaths.

      In the UK, 578 patients have died of COVID-19.

      In China, after a lull in the spread of the killer disease, 55 new cases and 5 deaths were reported.

      In view of the rapid spread of COVID-19 across the world, China has suspended the entry of all foreign visitors to the country,

      South Africa reported its first death from Coronavirus, and infection cases passed 1,000.

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      The Biggest Chokepoint in the Global Food Supply Chain Is Trucks

      Truckers hauling food are facing delays across the globe in the latest disruption to supply chains snarled by the coronavirus pandemic.

      They’re enduring lengthy wait times in Europe because of restrictions that have been imposed to control the virus’s spread. In South America, local laws have at times conflicted with country-wide ordinances that deem hauling food an essential service, leaving supplies sometimes stuck in storage. In parts of Africa, the shuttering of public transportation means drivers aren’t even able to make it into work. And huge spikes in demand have caused lags for loading at some U.S. warehouses.

      Just about everywhere, drivers’ access to critical services has been reduced or even cut off. It’s getting harder to find places to eat with restaurants shut down and rigs too big to go through drive-thru lanes. A decent place to sleep, shower, even use a clean toilet is becoming difficult to track down.

      Faced with these difficulties, some truckers in places like Brazil, one of the world’s biggest food exporters, have even refused to take on new trips in recent weeks.

      The problems highlight the vulnerability of the complicated process needed to take goods from farm to table. Almost all food and agricultural products are transported by road at some point, whether that’s from a field to a grain terminal, a processing plant to a port, or from a wholesaler to a store.

      “We’ve never had anything of this magnitude and this widespread,” Derek Leathers, chief executive officer of Werner Enterprises, one of the top five U.S. truckload carriers, said, referring to strains on the trucking system. “But we are open for business, and we need to stay that way.”

      Bob Stanton, a 62-year-old truck driver with three underlying health conditions, said he’s frightened of catching Covid-19 and only has a half can of disinfectant spray left. He doesn’t know where to go for testing if he were to develop symptoms, and he’s afraid of being caught far from his Illinois home if he gets sick. Despite that, he rebuffed the idea of using vacation time to ride out the virus storm.

      “If I take a couple of weeks’ vacation, you all starve,” he said. The 20-year trucking veteran had just taken sugar to Memphis, cereal to Chicago and was waiting to be loaded in Batavia, Illinois, for cargo going to a Walmart Inc. distribution center in Hopkinsville, Kentucky.

      “I’m out here trying to keep you all fed.”

      The severity of the problem depends on where in the world you are.

      In the U.S., pressures on drivers have taken a toll, but for the most part, the supply chain is flowing, just with small pockets of slowdowns. Trucks crossing the border from Germany to Poland were seeing wait times of 10 hours or more, meaning meat would come to market with time knocked off the “best before” dates, though some delays have eased. In India, vegetable oils are getting stuck at ports because of a shortage of trucks coming in.

      Many drivers in Uganda depend on public transportation to get to their places of work. That transport has been shuttered under the nation’s lockdown measures. Mary Kamugisha runs Step Supermarket in Buwate, a suburb of the capital, Kampala. She’s now relying largely on motorcycle taxis, known as bodabodas, for deliveries.

      “Supplies are running low,” she said. “Deliveries by suppliers aren’t made because their drivers can’t access their places of work.”

      Some of the disruptions have already started to ease as governments work to ensure that food transport is covered under lockdown allowances for essential businesses and policy makers do more to help support truck drivers. Pennsylvania has reopened truck stops after briefly closing them statewide. The European Commission has worked to create “green-lane” crossings at border checks to minimize delays. Special lanes for truckers have also been used in parts of Malaysia.

      Argentina, the worlds’ top exporter of soybean meal, is another example of progress. While federal regulations labeled food transport an essential service, local mayors were putting up restrictions. They blocked access to roads, afraid that truckers would spread the virus to their towns. The problem was acute in farming regions, halting grain terminals from delivering supplies to ports. Marcelo Torresi, who runs a 5,000-metric-ton elevator in Bustinza, Santa Fe province, said those issues have started to clear up, and port-bound trucks are now loading.

      Businesses are also working to help support truckers. Some clients are providing drivers with bottled water and snacks to help ease the blow from restaurant closures, said Steve Wells, the chief operating officer of Baltimore-based trucking company Cowan Systems.

      And in the U.S., traffic is light with most people staying at home. With few passenger cars, trucks are actually making faster transit times, which is helping mitigate the delays for loading and unloading.

      Some problems could be more long-lasting.

      Canadian carriers are driving empty trucks to the U.S. to pick up food items to transport back north, said Stephen Laskowski, president of the Canadian Trucking Alliance. Normally, they’d be full of manufactured goods from Canada to deliver to the U.S., but that need has dwindled, he said.

      The issue with one-way hauls has also popped up in parts of the U.S., Europe and Asia, and it’s raising freight costs for food. With manufacturing slowing, it’s unclear how long before this gets resolved.

      Demand for trucks in the U.S. has increased while efficiency has gone down due to longer distances traveled and the empty one-way hauls. That’s prompted farm groups to call for relief on rules that restrict driving hours and weights.

      On top of all that, there’s also the risk that the drivers who traverse hundreds of miles in a single day are getting exposed to the virus and could fall ill, sparking the possibility of labor shortages.

      Charles Stallings, 46, hasn’t stopped driving his usual run between Iowa and California. But his routine has changed. He wears a mask and puts on gloves when he leaves his cab to fuel up. He uses his own pen to sign paperwork and doesn’t touch the one chained to the clipboard. When he gets back in the cab he sanitizes everything, including his hands, the steering wheel and seat.

      “As long as I’m out here in my truck and my world, I’m safe,” he said. “I really put a focus on the minute I get out of this truck and what I touch and how I touch things.”

      — With assistance by Agnieszka de Sousa, Matthew Boyle, Fred Ojambo, Tatiana Freitas, Fabiana Batista, Michael Hirtzer, Jen Skerritt, Leslie Patton, Pratik Parija, Anuradha Raghu, Jonathan Stearns, and Megan Durisin

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      More trouble brews for Indian tech companies

      Though there have been no cancellations of contracts by invoking the force majeure clause, a number of clients – especially in the worst-affected sectors like travel and hospitality, oil and gas, as well as manufacturing – have started asking for reducing level of IT support.

      Enterprises in the United States, the United Kingdom, and Europe, which have halted operations or have significantly reduced their scale owing to Covid-19, are pressurising Indian IT services vendors to reduce their level of support and maintenance functions.

      People in the know said this could be seen as a precursor to renegotiation of pricing, which clients may take up with IT firms in coming quarters.

      “Though there have been no cancellations of contracts by invoking the force majeure clause, a number of clients – especially in the worst-affected sectors like travel and hospitality, oil and gas, as well as manufacturing – have started asking for reducing level of IT support,” said an official of a mid-tier IT services firm.

      This potentially opens up the window for renegotiation of prices, said the person.

      Core business operations, comprising application and maintenance-related work, still contribute around 60 per cent to Indian IT firms’ top line, despite a rising share of digital revenue.

      In case of reduced IT support, the share of core revenue is likely to fall.

      Further, as billing in many projects is done on the basis of the number of engineers deployed in a project (with hourly rates), any reduction in support staff could lead to downward revision of pricing in coming days.

      According to experts tracking the sector, clients in hospitality, manufacturing, and oil & gas are likely to hold back their IT spends, which could potentially affect 10-12 per cent of export revenue, aggregating $15 billion.

      With a travel ban imposed by many nations, several airlines have informed their investors regarding the cut in their budgets.

      While US-based Delta Air Lines has gone public about reducing its expenditure, peers such as United Airlines, American Airlines, JetBlue, and Southwest Airlines have hinted at the same.

      Hong Kong’s Cathay Pacific has said it will incur losses in the first half of 2020, owing to the outbreak.

      Besides airlines and cruise companies, even oil and gas majors including Total SA, BP, Exxon Mobil, Royal Dutch Shell, and Chevron Corporation are likely to cut IT spends in 2020, owing to the plunge in crude oil prices.

      “Many of the new multi-year contracts were signed in January and February.

      “In that way, the deal pipeline is good. But given the crisis, ramping up of these deals will take time,” said an IT outsourcing advisor.

      Brokerage firm Anand Rathi said in a report that dollar revenues of Indian IT firms are likely to fall three percentage points in FY21.

      In a note, it said the overall industry will grow around 4 per cent in the current financial year.

      • Coronavirus Attack

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      BofA Prepares for Deluge of Small-Business Loan Applications

      In this article

      Bank of America Corp. is preparing for a flood of applications from U.S. small businesses seeking government relief to weather the impact of the coronavirus outbreak.

      “We know for these businesses speed is of the essence,” the bank said in a statement. “We can move fastest with our nearly 1 million small-business borrowing clients. That is our near-term priority. As the administration has made clear, going to your current lending bank is the fastest route.”

      The Charlotte, North Carolina-based lender will have staff working overnight Thursday to prepare for expected high volumes of applications Friday. The initiative is part of the $2 trillion government stimulus package and is aimed at helping small businesses survive the devastating impact of the pandemic.

      “We’re setting up shop and activating thousands of people to be able to take the applications,” Chief Executive Officer Brian Moynihan said in an interview Wednesday on Bloomberg Television. The bank has been heavily involved in talks with the White House and Treasury on the program, he said.

      Earlier, the Small Business Administration bumped up to 1% the interest rate lenders may charge small businesses after banks complained that the previous approved rate of 0.5% was below even their own cost of funds.

      U.S. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza released additional guidelines for the program just a few hours before it is expected to become widely available Friday.

      — With assistance by Mark Niquette, and Michael Sasso

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