Musk Slams U.S. Lockdown; Beijing Loosens Curbs: Virus Update

(Bloomberg) — U.S. President Donald Trump ordered meat-processing plants to stay open to stave off shortages and said confirmed cases had topped one million in the country because of “better” testing. Elon Musk hit out against the lockdowns that have kept businesses closed for more than a month.

Sales of plane tickets leaving Beijing surged after the government said it will lower its municipal emergency response to the outbreak. France and Spain took cautious steps toward reopening, while new cases rose for the first time in three days in Germany as the government weighs removing more curbs.

GE said that the pandemic “materially challenged” results, while Boeing cut production rates and plans to reduce its workforce by 10%. Airbus burnt through nearly $9 billion in the first quarter and IAG plans to slash as many as 12,000 jobs at British Airways.

Key Developments

Virus Tracker: Cases top 3.1 million; deaths pass 217,000European lockdowns ease as cases drop, economies reelDeutsche Bank, Barclays and StanChart warn of pain aheadChina is attempting to prevent a second wave of infectionsVirus tests state of the unions on both sides of Atlantic

Subscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus.

Germany Sees Output Shrinking 6.3% (8 a.m. NY)

Germany expects the impact of the coronavirus to plunge the economy into its worst recession since the nation began its recovery in the aftermath of World War II, as confidence at companies and households plummets across Europe.

Gross domestic product is forecast to shrink by 6.3% in 2020, more than even during the financial crisis a decade ago, according to Economy Ministry projections published Wednesday. The low point of the recession — the worst since at least 1950 — is expected in the second quarter, before a gradual recovery and growth of 5.2% next year.

Boeing to Cut Jobs, GE ‘Materially Challenged’ (7:45 a.m. NY)

Boeing reduced production rates, burned $4.7 billion in the first quarter — its worst period for free cash flow ever — and is “actively exploring” all available options for additional funding. CEO Dave Calhoun said the company is targeting a 10% cut through voluntary layoffs, natural turnover and “involuntary layoffs as necessary.”

Earlier, GE CEO Larry Culp said Covid-19 “materially challenged” first-quarter results, especially in aviation. The pandemic reduced cash from operating activities and industrial free cash flow by about $1 billion. Anthem temporarily suspended its share repurchases and maintained its profit forecast, while withdrawing all other guidance. Meanwhile, Spotify said that “every day now looks like the weekend” as usage in car, wearable and web platforms drops while TV and game-console use increases “materially.”

Travel Demand From Beijing Surges (7:30 a.m. NY)

Sales of plane tickets leaving Beijing surged shortly after the local government announced it will lower its municipal emergency response to the coronavirus outbreak to the second-highest level, from the highest level now. Trip.com ADRs gained as much as 12% in pre-market trading.

As the Chinese capital prepares to host the nation’s highest-profile political meeting next month, the city will relax quarantine requirements for domestic travelers from low-risks areas starting Thursday. The easing doesn’t apply to overseas visitors, as well as travelers from Hubei province and other places designated as mid- and high-risk areas, she said.

Flight bookings from Beijing increased 15 times on Qunar, a Chinese travel platform, within 30 minutes of the news being announced, according to a report by Beijing Daily citing data provided by Qunar. Searches for holiday packages and hotels also tripled, the report said.

Germany to Extend Travel Warning (7:15 a.m. NY)

Germany will extend its warning for all tourist trips abroad until June 14 and cannot promise that it will be dropped after that date, Foreign Minister Heiko Maas told reporters on Wednesday in Berlin. “To answer that question we will have to wait and see how things develop in the next few weeks,” he said. A coordinated European approach for ending travel restrictions would be desirable and there will soon be talks about this, Maas added.

Earlier, the number of new cases in the country rose for the first time in three days. Chancellor Angela Merkel is scheduled to consult with state premiers on whether to further relax restrictions on public life. North Rhine-Westphalia Premier Armin Laschet tried to lower expectations, telling the Funke media group that “we won’t discuss any major steps to ease the measures until May 6 at the earliest.”

Separately, Health Minister Jens Spahn said Germany will seek to strengthen the European Centre for Disease Prevention and Control, the EU’s infectious-disease agency, when it takes over the presidency of the Council of the European Union in July.

First Flights Will Be Between ‘Low-Risk’ States (6:45 a.m. NY)

Until a vaccine is developed for Covid-19, travel between countries is likely only if each considers the other to be low risk, London Heathrow CEO John Holland-Kaye said in remarks circulated by London Aviation Club. The critical issue is to reopen borders without the need for quarantine, requiring a “common biosecurity standard,” he said.

U.K. Softens Libor Transitional Deadline (6:16 a.m. NY)

Libor won a reprieve as U.K. regulators acknowledged the role of the discredited benchmark in pumping funds into an economy wracked by the coronavirus.

The Bank of England and the U.K. Financial Conduct Authority issued a statement saying it is no longer feasible to completely cease issuing Libor-linked loans by the end of September. Authorities had been accelerating plans to ditch the rate, which is used to underpin bonds and loans worth trillions of dollars, by the end of 2021. But calls had mounted to slow the process as pressure intensified on banks to issue emergency loans.

Senators Ask for Meat-Industry Consolidation Probe (6 a.m. NY)

Two U.S. senators are asking the Federal Trade Commission to investigate consolidation in meatpacking and processing for any anticompetitive behavior resulting from concentration. Senators Tammy Baldwin of Wisconsin and Josh Hawley of Missouri said that four companies process 85% of all beef in the U.S. and three companies control 63% of pork processing.

That has “undermined the stability of America’s meat supply and become an issue of national security,” according to a copy of the letter sent to the FTC on Wednesday and seen by Bloomberg.

This month, Covid-19 outbreaks sickened thousands of American food workers, and at least 20 have died. Major meat plants have shut down, resulting in surging prices. Experts have said shortfalls could hit U.S. retailers in a matter of weeks.

Spain New Cases, Deaths Hold Steady (5:30 p.m. HK)

The number of new Spanish coronavirus cases and deaths held steady at low rates as the country prepares to ease some restrictions on public life. The number of fatalities rose by 325 to 24,275 in the 24 hours through Wednesday, according to Health Ministry data. The total also includes another 128 previously uncounted deaths. Confirmed cases increased by 2,144 to a total of 212,917.

The latest figures on new infections reflect updated reporting standards adopted in recent days. Previously, the government included people who had virus antibodies in its overall figure, but now the daily total only includes patients who are confirmed positive using a testing technique known as PCR.

On Tuesday evening, Prime Minister Pedro Sanchez announced a plan to end the lockdown within eight weeks, as health officials become more confident that Europe’s largest outbreak has been contained. The government had already announced a tentative easing of some curbs, beginning this week.

Malaysia Cases Rise Most in Two Weeks (5:10 p.m. HK)

Malaysia reported the highest daily increase in new cases since April 16 due to infections among people who returned from overseas. The country confirmed 94 new coronavirus cases on Wednesday, of which 72 recently flew back from neighboring Indonesia. That brings the total number of cases to 5,945.

Malaysia said its lockdown has succeeded in flattening the curve as the number of new cases declined to a six-week low on Tuesday. That’s even as the health ministry cautioned against the possibility of new waves of infections among foreign workers, as seen in Singapore, or among those returning from overseas.

U.K. Cancer Deaths Could Surge (4:44 p.m. HK)

Cancer deaths in the U.K. could rise by almost 20% over the next year as treatments are disrupted by the fight against the pandemic, according to a research paper. Almost 18,000 more people with cancer are expected to die over the next 12 months than pre-pandemic estimates suggested, researchers at University College London and Health Data Research UK said on Wednesday.

Cancer treatment, testing and screening has been severely disrupted as the country moved to free up thousands of hospital beds to treat coronavirus patients. At the same time, many people who have medical concerns have avoided going to hospitals.

Australia Stokes China Tensions (4:36 p.m. HK)

China’s foreign ministry spokesman Geng Shuang said there was “no factual basis” for Australia’s accusations of “economic coercion.” “China stands ready to work with all countries in the world with mutual assistance to overcome the difficulties,” Geng said. “At the same time, we hope other countries will join us in contributing to global cooperation and enhancing mutual trust.”

Australia’s calls for an independent probe into the origins of the pandemic is heightening tensions with Beijing, worrying businesses in the world’s most China-dependent developed economy.

Even as Australia prepares for its first recession in almost three decades after the lockdown shuttered pubs, cinemas and thousands of small retailers, the government is determined that the roots of the outbreak must be investigated. China is pushing back, labeling calls for the probe “politically motivated” and warning of a potential consumer boycott of Australian products, but Treasurer Josh Frydenberg dismissed the complaints and said Australia would not bow to “economic coercion.”

Bosch Boosts Covid-19 Test Output (4:30 p.m. HK)

Bosch plans to produce more than 1 million tests in 2020 that can diagnose Covid-19 in less than 2 1/2 hours and intends to triple output to 3 million next year, the German engineering giant said. A new test that allows diagnosis in less than 45 minutes is in “final development stage,” the company said.

Musk Says ‘Free America Now’ (4:29 p.m. HK)

Elon Musk hit out against the lockdowns that have kept businesses closed for more than a month. “Give people their freedom back!” Tesla Inc.’s chief executive officer said, as he promoted Wall Street Journal analysis that suggested closures don’t save many lives. “Bravo Texas!” he tweeted, highlighting a Texas Tribune story that said the state’s businesses can reopen on Friday.

In a separate tweet, Musk also agreed with another user who said the U.S. should carefully peel back restrictions — albeit with social-distancing measures in place.

The tweets come a day after Musk’s plan to reopen Tesla’s lone U.S. vehicle-assembly plant looked doubtful, with San Francisco Bay area health authorities looking to extend the shelter-in-place orders.

Russia Spread Slows (3:45 p.m. HK)

Russia reported fewer than 6,000 new cases for the first time in four days. Total coronavirus infections rose by 5,841 to 99,399. It’s the lowest increase since April 23 and the pace of growth has slowed to 6.2%. Fatalities rose by 108, topping 100 for the first time, taking total deaths to 972.

President Vladimir Putin has ordered Russians to remain under lockdown through May 11 after cases in the country surpassed China and Iran. “We have been able to slow down the epidemic,” Putin said on Tuesday in a video-conference with officials and regional governors. “The peak has not yet been reached. We are facing the most intense stage of the fight against the epidemic.”

U.K. Antibody Tests Could Be Ready by End of May (3:39 p.m. HK)

Tests to detect who has recovered from the coronavirus could be available to be rolled out in the U.K. by the end of May or early June, the national coordinator of coronavirus testing Professor John Newton said in an interview with the BBC. “There are antibody tests available now, it’s just that we think there is potential to get a better antibody test,” he said.

The U.K. government is about three weeks away from releasing the tool it says is essential to easing the current lockdown, Health Secretary Matt Hancock said earlier, in a sign current restrictions are likely to largely continue until at least the second half of May.

The government has said it sees a “test, track and trace” system as the way to ensure that Covid-19 infections don’t take off again as the lockdown is eased. That requires the recruitment of 18,000 “contact tracers” to identify people who might have been exposed to the virus, as well as the release of a mobile phone app that will do part of that job automatically.

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