Ratings agency Fitch has downgraded 11 consumer and retail companies because of the financial disruption caused by the COVID-19 pandemic.
On Wednesday alone, Fitch downgraded credit ratings for nine retailers, according to emailed client notes.
Among them were J.C. Penney, Macy’s, Nordstrom, Kohl’s, Dillard’s, Capri, Tapestry, Levi’s and Signet.
As COVID-19 rips through the country, retailers have shuttered stores, furloughed employees, dipped into their credit lines and made other painful decisions about what costs to pay.
As though the halt to physical sales wasn’t difficult enough, across the economy layoffs have surged into the millions and some economists say that the U.S. has already entered a recession.
Many of the department stores downgraded Thursday by Fitch had struggled to maintain or grow sales even in a booming economy. Now they are trying to manage their operations through an unprecedented market shock.
In modeling for the retailers, Fitch analysts assumed discretionary retailers would stay closed through mid-May as the country tries to slow COVID-19’s spread. Revenue could fall up to 90% for those retailers, even if some sales shift online. Even by 2021, sales for some retailers could down double digits, according to Fitch.
Morgan Stanley analysts said this week that apparel retailers they cover have not signaled any material e-commerce sales growth to offset the collapse of store revenue. Moreover, they found retailers were discounting products online to drive traffic to their sites, which is likely to eat into their margins.
And even once stores re-open, retailers face an uncertain selling environment. Will consumers feel safe returning to stores? Will the economy support discretionary spending? For now, nobody can answer these questions with certainty.
That uncertainty, as well as the sales implosion and disruption to financial markets, have set in motion cascading downgrades. S&P, too, has downgradedmajor retail names in recent weeks. The crisis has the potential to weaken some of the stronger retail names, and eliminate the weaker.
As Sarah Wyeth, sector lead for S&P Global’s retail and restaurant coverage, told Retail Dive earlier this month, “As the secular headwinds retail is facing accelerate, this could be the nail in the coffin of some of these brick-and-mortar retailers.”
I’ve long much admired Prof. Bambauer’s work, and when I saw this forwarded to a lawprof discussion list I’m on, I asked her for permission to repost it:
The importance of testing and contact tracing to slow the spread of the novel coronavirus is now pretty well understood. The difference between the communities that do it and the ones that don’t is disturbingly grim (see, e.g., South Korea versus Italy). In a large population like the U.S., contact tracing and alerts will have to be done in an automated way with the help of mobile service providers’ geolocation data. The intensive use of location data in South Korea has led manycommenters to claim that the strategy that’s been so effective there cannot be replicated in western countries with strong privacy laws.
Descriptively, it’s probably true that privacy law and instincts in the US and EU will hinder virus surveillance. The European Commission’s recent guidance on GDPR’s application to the COVID-19 crisis states that EU countries would have to introduce new legislation in order to use telecommunications data to do contact tracing, and that the legislation would be reviewable by the European Court of Human Rights. No member states have done this. Even Germany, which has announced the rollout of a cellphone tracking and alert app has decided to make the use of the app voluntary. This system will only be effective if enough people opt into it. (One study suggests the minimum participation rate would have to be “near universal,” so this does not bode well.)
And in the U.S., privacy advocacy groups like EPIC are already gearing up to challenge the collection of cellphone data by federal and state governments based on recent Fourth Amendment precedent finding that individuals have a reasonable expectation of privacy in cell phone location data. And nearly every opinion piece I read from public health experts promoting contact tracing ends with some obligatory handwringing about the privacy and ethical implications. Research universities and units of government that are comfortable advocating for draconian measures of social distancing and isolation find it necessary to stall and consult their IRBs and privacy officers before pursuing options that involve data surveillance.
While ethicists and privacy scholars certainly have something to teach regulators during a pandemic, the Coronavirus has something to teach us in return. It has thrown harsh light on the drawbacks and absurdities of rigid individual control over personal data.
Objections to surveillance lose their moral and logical bearings when the alternatives are out-of-control disease or mass lockdowns. Compared to those, mass surveillance is the most liberty-preserving option. Thus, instead of reflexively trotting out privacy and ethics arguments, we should take the opportunity to examine some of the assumptions that are baked into our privacy laws now that they are being tested.
At the highest level of abstraction, the pandemic should remind us that privacy is, ultimately, an instrumental right. It is meant to achieve certain social goals in fairness, safety, and autonomy. It is not an end in itself. When privacy is cloaked in the language of fundamental human rights, its instrumental function is lost.
Like other liberties in movement and commerce, conceiving of privacy as something that is under each individual’s control is a useful rule-of-thumb when it doesn’t conflict too much with other people’s interests. But the COVID-19 crisis shows that there are circumstances under which privacy as an individual right frustrates the very values in fairness, autonomy, and physical security that it is supposed to support.
I have arguedinthepast that privacy should be understood as a collective interest in risk management, like negligence law, rather than a property-style right. Even if that idea is unpalatable in normal times, I would hope lawmakers can see the need to take decisive action in support of data-sharing during crises like this one. At a minimum epidemiologists and cellphone service providers should be able to rely on implied consent to data-sharing, just as the tort system allows doctors to presume consent for emergency surgery when a patient’s wishes cannot be observed in time.
In fact we should go further than this. There is a moral imperative to ignore even express lack of consent when withholding important information puts others in danger. Just as many states affirmatively require doctors, therapists, teachers, and other fiduciaries to report certain risks even at the expense of their client’s and ward’s privacy (e.g. New York’s requirement that doctors notify their patient’s partners about a positive HIV test if their patient fails to do so), this same logic applies at scale to the collection and analysis of data during a pandemic.
Another reason consent is inappropriate is that it mars quantitative studies with selection bias. Medical reporting on the transmission and mortality of COVID-19 has had to rely much too heavily on data coming out of the Diamond Princess cruise ship because for a long time it was the only random sample—the only time that everybody was screened.
The United States has done a particularly poor job tracking the spread of the virus because faced with a shortage of tests, the CDC compounded our problems by denying those tests to anybody that didn’t meet specific criteria (a set of symptoms and either recent travel or known exposure to a confirmed case.) These criteria all but guaranteed that our data would suggest coughs and fevers are necessary conditions for coronavirus, and it delayed our recognition of community spread. If we are able to do antibody testing in the near future to understand who has had the virus in the past, that data would be most useful over swath of people who have not self-selected into a testing facility.
If consent is not an appropriate concept for privacy during a crisis, that suggests there is a defect in its theory even outside of crisis time. We can improve on the theoretical underpinnings of privacy law by embracing the fact that privacy is an instrumental concept. If we are trying to achieve certain goals through its use—goals in equity, fairness, and autonomy—we should increase our effort to understand what types of uses of data implicate those outcomes, and how they can be improved through moral and legal obligations.
Fortunately, that work is already advancing at a fast clip in debates about socially responsible AI. If our policies can ensure that machine learning applications are sufficiently “fair,” and if we can agree on what fairness entails, lawmakers can begin the fruitful and necessary work of shifting privacy law away from prohibitions on data collection and sharing and toward limits on its use.
Health care privacy isn’t my field, so I can’t speak independently about this, but if you can point to interesting articles on the other side, please pass them along.
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How long can an economy that is legally about pretty much nothing but food production, distribution, and sales survive in this COVID-19 haunted world?
The United Nation’s Food and Agriculture Organization (FAO) isn’t feeling good about the near future, to judge from the statements posted on its website. “As of now, disruptions are minimal as food supply has been adequate and markets have been stable so far,” it says. But it detects threats looming from both “logistics bottlenecks (not being able to move food from point A to point B), and likely…less food of high-value commodities (i.e. fruits and vegetables) being produced.”
Over the next two months, the FAO anticipates “disruptions in the food supply chains,” thanks to “restrictions of movement, as well as basic aversion behaviour by workers…. Shortage of fertilizers, veterinary medicines and other input could affect agricultural production. Closures of restaurants and less frequent grocery shopping [will likely] diminish demand for fresh produce and fisheries products, affecting producers and suppliers.”
The agency is particularly concerned with “countries that rely heavily on food imports, such as Small Islands Developing States, and countries that depend on primary exports like oil. Vulnerable groups also include small-scale farmers, pastoralists, and fishers who might be hindered from working their land, caring for their livestock, or fishing. They will also face challenges accessing markets to sell their products or buy essential inputs, or struggle due to higher food prices and limited purchasing power.” The FAO also worries what will happen to the developing-world children—up to 85 million of them—who depend on school-supplied meals.
During the 2014–16 Ebola ourbreak in Sierra Leone, the group reports, quarantines “led to a spike in hunger and malnutrition. The suffering worsened as restrictions on movement led both to labour shortages at harvest time even as other farmers were unable to bring their produce to market.”
The FAO says is already sees “challenges in terms of the logistics involving the movement of food…and the pandemic’s impact on livestock sector due to reduced access to animal feed and slaughterhouses’ diminished capacity (due to logistical constraints and labour shortages) similar to what happened in China.” Transport route blockages from virus fears could especially harm the fresh food market, where products are highly perishable. The FAO thus anticipates price spikes in the meat and fish markets.
Some countries are already practicing isolated bits of food protectionism. Malaysia closed some palm oil planatations because of a virus outbreak. Reuters reports that Kazakhstan has “suspended exports of wheat flour, buckwheat, sugar, sunflower oil, and some vegetables until at least April 15 to ensure their steady supply during the coronavirus emergency.” Russia has stopped exporting processed grains, and Vietnam is stockpiling rice.
Here in America, the U.S. Department of Agriculture continues to order the destruction of tanker trucks of milk because processing dairies are full—a product of demand spiking and then, with the disappearance of school lunches, crashing. The U.S. also faces COVID-19-inspired immigration restrictions that will likely harm our food production.
The United Farm Workers union is warning that American food producers aren’t doing enough to prepare for the pandemic’s potential impact on the industry’s workers. “More than 400 commodities grown in California represent 13% of US agricultural value, totaling some $50 billion in business each year,” Quartzreports, and “just two California farms supply about 85% of US carrots. If the virus were to disrupt production at thelargest of the state’s 77,500 farms, it would be felt globally” as “the state’s department of food and agriculture put its combined agricultural export value at $20.5 billion.”
Short-term stockpiling of things such as yeast can create apparent shortages that are really just supply-chain blockages. But as Ananth Iyer, a supply chain specialist with Purdue University, tells Quartz, labor-dependent items such as avocados, grapes, and tomatoes might face quicker actual shortages if agriculture workers start getting sick.
If U.S. farm worker safety is the world’s worry, then the world’s production and supply chain is the U.S.’s worry. As the food economist Shub Debgupta argued in The New York Times this week, “The United States relies on foreign suppliers for almost 20 percent of its food, including 80 percent of its seafood, with almost half of that coming from Asia….About half of our imported dairy products come from Europe, also hit hard by the virus. Almost 25 percent of America’s cheese comes from Italy…the nation with the world’s highest death toll from Covid-19.”
“Significant parts of the food supply could be jeopardized should food protectionism accelerate,” Debgupta worries. Among other things, he recommends that “state and federal authorities…provide flexibility while ensuring food safety and minimizing waste.”
In short: We’re entering unprecedented territory in the world of food production, processing, and distribution. But as always, the more interconnected our supply and labor chains remain—and the less governments or viruses keep them from functioning—the better fed we are likely to be.
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How long can an economy that is legally about pretty much nothing but food production, distribution, and sales survive in this COVID-19 haunted world?
The United Nation’s Food and Agriculture Organization (FAO) isn’t feeling good about the near future, to judge from the statements posted on its website. “As of now, disruptions are minimal as food supply has been adequate and markets have been stable so far,” it says. But it detects threats looming from both “logistics bottlenecks (not being able to move food from point A to point B), and likely…less food of high-value commodities (i.e. fruits and vegetables) being produced.”
Over the next two months, the FAO anticipates “disruptions in the food supply chains,” thanks to “restrictions of movement, as well as basic aversion behaviour by workers…. Shortage of fertilizers, veterinary medicines and other input could affect agricultural production. Closures of restaurants and less frequent grocery shopping [will likely] diminish demand for fresh produce and fisheries products, affecting producers and suppliers.”
The agency is particularly concerned with “countries that rely heavily on food imports, such as Small Islands Developing States, and countries that depend on primary exports like oil. Vulnerable groups also include small-scale farmers, pastoralists, and fishers who might be hindered from working their land, caring for their livestock, or fishing. They will also face challenges accessing markets to sell their products or buy essential inputs, or struggle due to higher food prices and limited purchasing power.” The FAO also worries what will happen to the developing-world children—up to 85 million of them—who depend on school-supplied meals.
During the 2014–16 Ebola ourbreak in Sierra Leone, the group reports, quarantines “led to a spike in hunger and malnutrition. The suffering worsened as restrictions on movement led both to labour shortages at harvest time even as other farmers were unable to bring their produce to market.”
The FAO says is already sees “challenges in terms of the logistics involving the movement of food…and the pandemic’s impact on livestock sector due to reduced access to animal feed and slaughterhouses’ diminished capacity (due to logistical constraints and labour shortages) similar to what happened in China.” Transport route blockages from virus fears could especially harm the fresh food market, where products are highly perishable. The FAO thus anticipates price spikes in the meat and fish markets.
Some countries are already practicing isolated bits of food protectionism. Malaysia closed some palm oil planatations because of a virus outbreak. Reuters reports that Kazakhstan has “suspended exports of wheat flour, buckwheat, sugar, sunflower oil, and some vegetables until at least April 15 to ensure their steady supply during the coronavirus emergency.” Russia has stopped exporting processed grains, and Vietnam is stockpiling rice.
Here in America, the U.S. Department of Agriculture continues to order the destruction of tanker trucks of milk because processing dairies are full—a product of demand spiking and then, with the disappearance of school lunches, crashing. The U.S. also faces COVID-19-inspired immigration restrictions that will likely harm our food production.
The United Farm Workers union is warning that American food producers aren’t doing enough to prepare for the pandemic’s potential impact on the industry’s workers. “More than 400 commodities grown in California represent 13% of US agricultural value, totaling some $50 billion in business each year,” Quartzreports, and “just two California farms supply about 85% of US carrots. If the virus were to disrupt production at thelargest of the state’s 77,500 farms, it would be felt globally” as “the state’s department of food and agriculture put its combined agricultural export value at $20.5 billion.”
Short-term stockpiling of things such as yeast can create apparent shortages that are really just supply-chain blockages. But as Ananth Iyer, a supply chain specialist with Purdue University, tells Quartz, labor-dependent items such as avocados, grapes, and tomatoes might face quicker actual shortages if agriculture workers start getting sick.
If U.S. farm worker safety is the world’s worry, then the world’s production and supply chain is the U.S.’s worry. As the food economist Shub Debgupta argued in The New York Times this week, “The United States relies on foreign suppliers for almost 20 percent of its food, including 80 percent of its seafood, with almost half of that coming from Asia….About half of our imported dairy products come from Europe, also hit hard by the virus. Almost 25 percent of America’s cheese comes from Italy…the nation with the world’s highest death toll from Covid-19.”
“Significant parts of the food supply could be jeopardized should food protectionism accelerate,” Debgupta worries. Among other things, he recommends that “state and federal authorities…provide flexibility while ensuring food safety and minimizing waste.”
In short: We’re entering unprecedented territory in the world of food production, processing, and distribution. But as always, the more interconnected our supply and labor chains remain—and the less governments or viruses keep them from functioning—the better fed we are likely to be.
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And yesterday, Gates opened himself to critics once again by publishing an op-ed in the Washington Post where he obliquely criticized the Trump Administration’s approach to combating the virus, and suggested an alternative that sounded like something that might be possible in the world from The Jetsons.
Yeah, humanity (and the US in particular) has made some pretty big strides in the worlds of big data and AI in recent years, but we suspect that American government’s capabilities aren’t quite advanced enough to permit for the seamless and flawless allocations of vital medical resources and semi-automated contact tracing.
Of course, Gates’ guide to how the US can “catch up” in its battle against the coronavirus includes some more practical tips, too, like recommending a mandatory national shutdown that the Trump Administration has specifically said it is opposed to doing (Florida only finally closed the last of the state’s beaches when Gov. DeSantis caved to critics and issued a sweeping lockdown order yesterday). Still, several states have only “recommended” that people WFH and avoid public places…if and when possible.
He brings up other valid points too, echoing Andrew Cuomo’s criticism of the federal government essentially forcing states to bid for vital resources. And finally: Running more rapid trials to find effective treatments while drug companies race to find a vaccine (kind of like what was done here?)
The full op-ed is below. We’ll let readers be the judge.
* * *
This is a recipe for disaster. Because people can travel freely across state lines, so can the virus. The country’s leaders need to be clear: Shutdown anywhere means shutdown everywhere. Until the case numbers start to go down across America – which could take 10 weeks or more – no one can continue business as usual or relax the shutdown. Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths.
Second, the federal government needs to step up on testing. Far more tests should be made available. We should also aggregate the results so we can quickly identify potential volunteers for clinical trials and know with confidence when it’s time to return to normal. There are good examples to follow: New York state recently expanded its capacity to up to more than 20,000 tests per day.
There’s also been some progress on more efficient testing methods, such as the self-swab developed by the Seattle Coronavirus Assessment Network, which allows patients to take a sample themselves without possibly exposing a health worker. I hope this and other innovations in testing are scaled up across the country soon.
Even so, demand for tests will probably exceed the supply for some time, and right now, there’s little rhyme or reason to who gets the few that are available. As a result, we don’t have a good handle on how many cases there are or where the virus is likely headed next, and it will be hard to know if it rebounds later. And because of the backlog of samples, it can take seven days for results to arrive when we need them within 24 hours.
This is why the country needs clear priorities for who is tested. First on the list should be people in essential roles such as health-care workers and first responders, followed by highly symptomatic people who are most at risk of becoming seriously ill and those who are likely to have been exposed.
The same goes for masks and ventilators. Forcing 50 governors to compete for lifesaving equipment – and hospitals to pay exorbitant prices for it – only makes matters worse.
Finally, we need a data-based approach to developing treatments and a vaccine. Scientists are working full speed on both; in the meantime, leaders can help by not stoking rumors or panic buying. Long before the drug hydroxychloroquine was approved as an emergency treatment for covid-19, people started hoarding it, making it hard to find for lupus patients who need it to survive.
We should stick with the process that works: Run rapid trials involving various candidates and inform the public when the results are in.
Once we have a safe and effective treatment, we’ll need to ensure that the first doses go to the people who need them most.
To bring the disease to an end, we’ll need a safe and effective vaccine. If we do everything right, we could have one in less than 18 months – about the fastest a vaccine has ever been developed. But creating a vaccine is only half the battle. To protect Americans and people around the world, we’ll need to manufacture billions of doses. (Without a vaccine, developing countries are at even greater risk than wealthy ones, because it’s even harder for them to do physical distancing and shutdowns.)
We can start now by building the facilities where these vaccines will be made. Because many of the top candidates are made using unique equipment, we’ll have to build facilities for each of them, knowing that some won’t get used. Private companies can’t take that kind of risk, but the federal government can. It’s a great sign that the administration made deals this week with at least two companies to prepare for vaccine manufacturing. I hope more deals will follow.
The Opinions section is looking for stories of how the coronavirus has affected people of all walks of life. Write to us.
In 2015, I urged world leaders in a TED talk to prepare for a pandemic the same way they prepare for war – by running simulations to find the cracks in the system. As we’ve seen this year, we have a long way to go. But I still believe that if we make the right decisions now, informed by science, data and the experience of medical professionals, we can save lives and get the country back to work.
US Box Office Sales Collapse To Just $5,179; Was $204 Million During Same Period Last Year
As millions of Americans spend quality time with their families to avoid the global pandemic, box office sales across the US have predictablycratered – falling to just $5,179 from March 20 through March 26 as movie theaters across the country remain shuttered.
During the same week in 2019, ticket sales were over $204 million – thanks to “Captain Marvel” and “Us.”
The Domestic Box office (movie theaters) brought in a whopping $5,179 for the week of Mar 20-26. Down 100% from $204,193,406 the same week a year ago… These numbers are just incredible.
So far this year, domestic box office sales are down $600 million year-over-year according to The Hollywood Reporter.
Domestic ticket sales turned in a combined $1.81 billion from Jan. 1 through March 19, the day when Comscore stopped reporting theater grosses. That compares to $2.41 billion for the first full three months of 2019, according to Comscore.
In March of this year, revenue came in at a mere $255.7 million as new product underwhelmed at the beginning of the month before moviegoing started slowing and then came to a standstill. That compares to $612.8 million for the March 1-19 stretch last year, making for a decline of 58 percent. When counting all of March 2019 ($967.8 million), the year-over-year dip for the month was 74 percent. -The Hollywood Reporter
Earlier in the week, AMC Theaters CEO Adam Aron predicted that it might take until mid-June before they’re back in business.
The Food and Drug Administration (FDA) has relaxed another senseless regulation to help fight COVID-19: Gay and bisexual men will now be able to donate blood more easily.
U.S. medical centers have been facing a major blood shortage, as drives were canceled en masse amid the spread of the coronavirus, though the updated FDA guidelines are expected to remain in place after the COVID-19 emergency has been lifted.
The agency previously mandated that men who have sex with men abstain from that behavior from a full year before donating blood—even though every blood donation is screened for HIV. The FDA has now eased that period to a three-month deferral, which makes much more sense given current testing capabilities. When the U.K. instituted a similar three-month deferral, it saw no increase in HIV-infected blood. As I wrote Monday:
Paramount to this discussion is the safety of the blood supply—endangering that is certainly not worth sparing any one group’s hurt feelings. Calls to remove deferrals entirely for potentially risk-prone individuals make little sense. But current testing capabilities do support relaxing gay and bisexual men to a three-month deferral rate, which may even increase compliance among donors who would otherwise lie in the face of ridiculous waiting periods.
The new FDA guidance also recommends that those with new tattoos and piercings and those who have recently been to malaria-endemic areas be deferred for three months as opposed to a year.
Until 2015, the FDA enforced a lifetime ban on blood donations by men who have sex with men. That rule may have made sense in the 1980s, when it was instituted against the backdrop of the AIDS crisis. But blood testing capabilities have made leaps and bounds sense then. Every donation is tested for the full slate of blood-borne infectious diseases, including syphilis, hepatitis, human T-lymphotropic virus, and HIV.
Although those newly infected with HIV may initially test negative, current testing screens for the virus 9 to 11 days after transmission, rendering the yearlong deferral nonsensical. The regulation was particularly confusing in light of the fact the screening procedure does not discriminate against heterosexuals engaging in high-risk sexual practices. A man who has slept with several women in the span of a week would be able to donate blood without question; a gay male whose last sexual encounter was six months past would have been turned away.
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The Food and Drug Administration (FDA) has relaxed another senseless regulation to help fight COVID-19: Gay and bisexual men will now be able to donate blood more easily.
U.S. medical centers have been facing a major blood shortage, as drives were canceled en masse amid the spread of the coronavirus, though the updated FDA guidelines are expected to remain in place after the COVID-19 emergency has been lifted.
The agency previously mandated that men who have sex with men abstain from that behavior from a full year before donating blood—even though every blood donation is screened for HIV. The FDA has now eased that period to a three-month deferral, which makes much more sense given current testing capabilities. When the U.K. instituted a similar three-month deferral, it saw no increase in HIV-infected blood. As I wrote Monday:
Paramount to this discussion is the safety of the blood supply—endangering that is certainly not worth sparing any one group’s hurt feelings. Calls to remove deferrals entirely for potentially risk-prone individuals make little sense. But current testing capabilities do support relaxing gay and bisexual men to a three-month deferral rate, which may even increase compliance among donors who would otherwise lie in the face of ridiculous waiting periods.
The new FDA guidance also recommends that those with new tattoos and piercings and those who have recently been to malaria-endemic areas be deferred for three months as opposed to a year.
Until 2015, the FDA enforced a lifetime ban on blood donations by men who have sex with men. That rule may have made sense in the 1980s, when it was instituted against the backdrop of the AIDS crisis. But blood testing capabilities have made leaps and bounds sense then. Every donation is tested for the full slate of blood-borne infectious diseases, including syphilis, hepatitis, human T-lymphotropic virus, and HIV.
Although those newly infected with HIV may initially test negative, current testing screens for the virus 9 to 11 days after transmission, rendering the yearlong deferral nonsensical. The regulation was particularly confusing in light of the fact the screening procedure does not discriminate against heterosexuals engaging in high-risk sexual practices. A man who has slept with several women in the span of a week would be able to donate blood without question; a gay male whose last sexual encounter was six months past would have been turned away.
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Robert Kraft Ferries Nearly 2 Million N95 Masks Back To US On Patriots’ Private Jet
Now that Tom Brady has left town, it looks like the Patriots are getting a jump start on trying to convince the rest of the country to stop hating the most successful franchise in football.
Bloomberg reported Thursday that team owner Robert Kraft is using the Patriots’ private jet to ferry nearly 2 million N95 masks back to the US.
At 3:38 a.m. Wednesday morning, the New England Patriots’ team plane departed from an unusual locale: Shenzhen, China. On board the Boeing 767, in the cargo hold that used to be home to Tom Brady’s duffel bags, were 1.2 million N95 masks bound for the U.S.
Video and pictures of the event show workers in masks and full-body suits at Shenzhen Bao’an International Airport loading box after box of the scarce and valuable personal protective equipment onto a red, white and blue plane emblazoned with the Patriots logo and “6X CHAMPIONS.”
The plane was permitted to be on the ground in China for a maximum of three hours, people familiar with the matter said, and the crew was required to stay on the plane while a ground crew loaded the cargo. It took 2 hours and 57 minutes. On Thursday, that plane will land somewhere more familiar: Boston Logan International Airport.
As they pointed out, the luggage hold that once carried Tom Brady’s bags is currently stuffed with masks that are widely believed to prevent the spread of the virus, even as the White House and CDC continue to debate whether they should officially “recommend” that all Americans wear masks when they go out in public.
USA Today Sports
The decision to pick up the masks was a major entertainment news story in China. Video and pictures show workers in body-suits and masks loading crates of the preciously valuable medical equipment in to the jets cargohold at Shenzhen Bao’an International Airport. The red, white and blue plane emblazoned with the Patriots logo and “6X CHAMPIONS” could be clearly seen. The Kraft family put up $2 million – about half the cost of the load and the logistics.
The masks will be turned over to the State of Massachusetts, whose desperate quest to acquire the masks, which are valued because they are secure enough to be worn in hospitals and other clinical settings, eventually led it to the Patriots.
Kraft’s son, Jonathan Kraft, the chairman of the board at Massachusetts General, played an integral role in connecting Mass. Gov. Charlie Baker to his father, and then in helping resolve the many logistical hurdles.
“I’ve never seen so much red tape in so many ways and obstacles that we had to overcome,” said Robert Kraft, the Patriots’ owner. “In today’s world, those of us who are fortunate to make a difference have a significant responsibility to do so with all the assets we have available to us.”
The effort began with Massachusetts Gov. Charlie Baker, who was concerned about the state’s mask supply and, two weeks ago, believed he had struck a deal to acquire more than a million of them from a collection of Chinese manufacturers. But officials had to figure out how to get them shipped out of China at a time when unusual cargo shipments out of the country can be especially tricky.
“I just have to get them here,” he told a longtime friend.
That longtime friend was Jonathan Kraft, Robert Kraft’s son, who holds two jobs that became highly relevant to the proceedings. Jonathan Kraft is the chairman of the board at Massachusetts General Hospital, one of the country’s most renowned facilities. He’s also the Patriots’ president, and the team had something it thought might be of help: a giant airplane.
There were tough questions to resolve. Robert and Jonathan Kraft first had to check if the plane was ready and able to make such a lengthy journey on such short notice. There was also the fact that the team’s Boeing 767 is a passenger plane built to carry Bill Belichick and Tom Brady, not massive stores of cargo.
The wealthy have been such objects of scorn and derision during the outbreak so far, it’s a nice break to read a story about a rich person doing something good for a change. The WSJ story about how the whole thing came together is pretty interesting.
But we still have one question: Would Kraft have been so eager to help out another state, say, Florida?
These days, every corner of the oil market is “unprecedented” – from the demand destruction to the supply surge and the resulting glut. The oil futures curve is no exception and is also in a state never seen before.
This is the super contango, the market situation in which front-month prices are much lower than prices in future months, pointing to a crude oil oversupply and making storing oil for future sales profitable.
The last time a super contango appeared on the market was during the previous glut of 2015. During the peak of the 2008-2009 financial crisis, the super contango hit a record—the discount at which front-month futures traded compared to longer-dated futures was at its highest ever.
The double supply-demand shock of the past month threw the oil futures market into another super contango. And this super contango is already beating previous records.
[ZH: Update after this morning’s tweet from Trump]
The super contango is representative of the state of the oil market right now: the growing glut with shrinking storage capacity as oil demand craters, OPEC’s leader and the world’s top exporter, Saudi Arabia, intent on further cratering the market with a supply surge beginning this month. Storage costs are surging, and so are costs for chartering tankers to store oil at sea for future sales when traders expect demand to recover from the pandemic-hit plunge.
The market structure flipped into contango in early February, when the Chinese oil demand slump in the coronavirus outbreak led to lower estimates for oil consumption. A month and a half later, oil consumption is set to plunge by 20 million bpd, or 20 percent, this month. Add to this the Saudi supply surge, and here we have what analysts expect to be the largest glut the oil market has ever seen.
Earlier this week, the oversupply and fast-filling storage capacity sent the discount of the May futures of Brent to the November futures contract to the widest contango spread ever—$13.95 a barrel, higher than even the super contango at the peak of the 2008-2009 financial crisis.
With the rollover of the front-month futures contract in April, the June Brent futures traded early on Wednesday at a discount of $10.30 a barrel to the November futures, while the June 2020 futures spread to the June 2021 futures was $13.59.
One of the hottest ‘commodities’ in the market right now is storage—be it onshore or offshore—as commodity traders and oil majors are increasingly looking to profit from the super contango in several months’ time.
Apart from the traders who manage to secure storage for stashing crude for sale in a few months, the other big winners of the super contango market structure are set to be tanker owners and operators, as rates for chartering tankers for storage are soaring.
Over the next few months, the tanker companies will be the biggest winners from the double market shock as traders rush to secure what’s left of available crude carriers for storage in the super contango structure.
The inventory buildup around the world will be so high that it will force up to 10 million bpd of global oil production to be “cut or shut-in from April to June 2020 as oil storage fills up and output from financially strapped companies begins to fall,” IHS Markit said on Tuesday.
“Under current conditions second-quarter global demand for oil is expected to be 16.4 million barrels per day less than a year ago. That is more than six times the record drop experienced during first quarter 2009 during the Great Recession. In April the drop will be even bigger,” said Aaron Brady, vice president, IHS Markit.
“A combination of rapidly increasing crude supply and a buoyant market for crude storage is underpinning a very robust tanker freight market and strong cash generation presently,” tanker operator Euronav said in the outlook in its 2019 results release. However, it warned this would be a temporary event.
“The second quarter of 2020 now looks like it will be one of the greatest quarters in history for large crude carriers, and while there will be a hangover at some point, this party is totally worth it,” Eirik Haavaldsen, head of research at Pareto Securities, told Financial Times this week.
After the crude tanker operators, the next in line to profit from the super contango are the traders who will have stored oil to sell at higher prices several months or a year from now.
