Plus, expectations are low for an agreement at tomorrow’s OPEC+ meeting on an oil production cut, McDonald’s reported a 22% decline in same-store sales last month, and Zoom Technologies just got hit with a lawsuit over its privacy and security shortcomings.
Stocks were higher to start Wednesday with the Dow gaining 122 points, or 0.5%. The S&P 500 and Nasdaq also rose 0.5%.
The White House is working on a plan to get parts of the U.S. economy back up and running. According to people familiar with the plan, the reopening effort will begin in smaller towns and cities that haven’t been heavily impacted by the coronavirus, and will depend on testing far more Americans for the virus than has been possible thus far. “Hot spots” like New York, Detroit, and New Orleans will take longer to open. “We’re looking at the concept where we open sections of the country and we’re also looking at the concept where you open up everything,” President Donald Trump said last night, while National Economic Council director Larry Kudlow said, “We are coming down, I think, the home stretch, that’s what the health experts are telling ups. Once we can reopen this thing, I think it’s going to be very successful.” The White House’s reopening plan is likely within about 30 days and its expected that CDC and other government health officials may object as further outbreaks are likely.
U.S. cases of the coronavirus have risen to at least 400,000 as deaths have risen to nearly 13,000. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said today that while this week is “going to be a bad week for deaths,” the U.S. should soon see the “beginning of a turnaround.” “So, we need to keep pushing on the mitigation strategies because there is no doubt that that is having a positive impact on the dynamics of the outbreak,” Fauci said. “Now is not the time to pull back at all. It’s the time to intensify.” New York City Mayor Bill de Blasio said that the city is seeing a slow down in the number of coronavirus patients there who need to be put on ventilators, but said that the city should “double down” on efforts to suppress the pandemic. “We’re now seeing some leveling off… Something has started to move,” de Blasio said. “We know we’re not out of the woods. It’s too early; it’s too preliminary.” De Blasio added that there’s a risk that infections are “going to reach a huge percentage of us” if residents don’t adhere to social distancing and shelter-in-place policies.
Expectations are low for the outcome of tomorrow’s virtual meeting of OPEC+, with the spotlight on whether Russia and Saudi Arabia will be able to come to agreement on a production cut. “Stalemate is not an option for any of the parties involved,” said Nansen Saleri, CEO of Texas-based analytics firm Quantum Reservoir Impact, and Saudi Aramco’s former head of reservoir management. “It’s against everyone’s interest to oversupply the world. There is a common element here, and that is that everybody is hurting.” Edward Bell of Dubai-based bank Emirates NBD, said in a report from today, “We are assigning a low probability that a deal to cut production can be reached. The positions of the main actors, notably Saudi Arabia and Russia, have not changed.”
McDonald’s said today that its global same-store sales fell 22% last month as the coronavirus pandemic forced the fast-food chain to close its dining rooms. McDonald’s also withdrew its 2020 outlook and long-term forecast issued in February due to the uncertainty caused by the pandemic and its impact on the economy. CEO Chris Kempczinski said in a letter to the McDonald’s team that he will be cutting his salary in half until at least September 30, while four other top executives have volunteered to reduce their salaries by 25% through the same period. Kempczinski also said the chain’s virtual global franchisee convention will be postponed until later this year, “once we’ve emerged from the peaks of this crisis.”
Zoom Technologies has been hit with a class-action lawsuit by one of its shareholders, who alleges the video conferencing company failed to disclose shortcomings in its platform’s privacy and security. The suit was filed by investor Michael Drieu in the U.s. District Court for the Northern District of California, and claims that concerns over Zoom’s privacy and security flaws have hit its share price following reports of “zoombombing” attacks where meetings have been hijacked and bombarded with toxic and sometimes pornographic content, as well as reports that the company shares users personal data with Facebook even if they don’t have a Facebook account, and routing calls through China to deal with network congestion. Researchers at the University of Toronto’s Citizen Lab wrote, “The rapid uptake of teleconference platforms such as Zoom, without proper vetting, potentially puts trade secrets, state secrets, and human rights defenders at risk.”
Stocks We’re Watching
DPW Holdings Inc (OTC: DPW): Shares of this nano-cap gained as much as 144% yesterday after it announced that its global power electronics business, Coolisys Technologies, has seen offshore manufacturing partners, particularly those in Asia, coming back up to full capacity after having shut down amid the coronavirus pandemic. “In addition to recent defense industry orders, we are seeing an increase in demand for our products in the medical and healthcare sector,” said Coolisys CEO Amos Kohn. “We are also pleased to report that our offshore manufacturing partners are back to near full capacity to enable us to continue our strong reputation for delivering custom high-reliability power solutions for the medical industry.”