Oil plunges again even as economies reopen for business

U.S. futures look set to open in the red, as U.S. crude prices drop dramatically.

Oil plunges again even as economies reopen for business

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. .

Good morning. We just came off back-to-back weeks of gains in the equities market. Can we make it three straight?

Let’s see where investors are putting their money today.

Markets update


  • The region’s major indices are mixed. Shanghai was clinging to small gains while Hong Kong and Japan’s Nikkei were trading lower.
  • Alibaba is doubling down on its fast-growing cloud business, pledging to invest $28 billion over the next three years in the construction of data centers and other cloud infrastructure.
  • Meanwhile, Australia looks intent on forcing tech giants such as Google and Facebook into an ad-revenue-sharing agreement with cash-strapped media companies. Regulators the world over will be watching closely how this plays out.


  • European bourses are mixed this morning with Germany’s Dax up 0.1% in the first hour of trade, after strong gains on Friday.
  • All eyes are on Germany. Beginning today, Europe’s biggest economy will ease lockdown measures, in place for the past month. Reopening German businesses gave European markets a bump at the open, but it’s already fading.
  • Meanwhile, social-distancing measures continue to show positive results. The coronavirus death tolls in Italy, France, Spain and Germany sank again over the weekend.


  • The Dow, S&P 500 and Nasdaq look to open lower today, as I type, putting this mini rally in jeopardy.
  • The Senate is close to a deal on topping up the Paycheck Protection Program by $310 billion and issuing a $60 billion lifeline to rural and minority groups. That should be a big help to small businesses, a vital engine of the U.S. economy.
  • Meanwhile, the Trump Administration is going soft on tariffs, postponing by 90 days select duties and taxes U.S. businesses would have had to pay under some of the tougher trade war measures enacted in recent months. The relief does not extend to American companies buying Chinese goods, however.


  • Gold is down, slightly.
  • The dollar is climbing.
  • Crude is tanking. The triple whammy of futures contracts expiring, collapsed demand and storage headaches have sunk WTI crude to below $15 a barrel, extending last week’s losses. This weekend, Americans were able to fill up their tank for less than a buck-a-gallon in 13 states. If only motorists had somewhere to go.

The Fab 5

In February, longtime Fortune contributor Ben Carlson noted that a mere five stocks were disproportionately driving the ups and downs of the S&P 500. I’m sure you can name them. Hint—they’re Amazon, Facebook, Apple, Alphabet and Microsoft.

“These 5 companies alone now make up more than 18% of the S&P 500,” he wrote in February. (They now account for close to 20%). “This massive growth also means these companies now have an outsized impact on the performance of the market itself.”

If investors decide this “Fab 5” are too pricey, and sell them off en masse, that would almost certainly take the whole index down a notch. On the flip side, if these five rally, it would drive up the S&P. And sure enough, this quintet has had one heck of a run since the S&P hit its 52-week-lows in late March, as today’s chart shows.

The S&P is up roughly 28% since its March 23 low. Apple and Microsoft are doing even better since that stretch. Amazon and Facebook are no slouches either. They actually started their rallies a week prior, on March 16, so this chart undervalues to some extent their contribution to the incredible bull run we’ve seen on the S&P over the past four weeks.

This chart may be particularly instructive as we enter what’s expected to be a brutal earnings season. If the Fab 5 muddle through, the markets as a whole may just do the same.


Today we start Week 7 in lockdown, and everyone here is looking north to Germany. The Germans are reopening parts of the economy. A successful reboot could put more pressure on the Giuseppe Conte government here in Italy to do the same.

The current lockdown measures here will remain in place until at least May 4. The closures are killing Italy’s economy. It’s down 5% in Q1, the Bank of Italy said on Friday. Q2 is expected to be even worse. Italy is highly reliant upon tourism and that’s not coming back any time soon.

There’s a lot of discussion—and, this being Italy, disagreement—about what Phase 2 could look like. Will it be an industry-by-industry reopening? Will the ravaged North of the country need to endure a longer lockout period than us down here in Rome?

There’s plenty of suspicion that the worst-hit regions mismanaged the outbreak, and even some fears there could be super-spreaders among the populations there. The firebrand president of the Campania region said he would even consider closing its border to Italians coming from the North.

So we have a kind of paradox emerging—those Italians hailing from the wealthiest part of the country are no longer welcomed everywhere. This tension continues to play out on the radio and TV talk shows.

Meanwhile, there are all kinds of signs here in Rome that locals intend to push the boundaries of the lockout rules. Every day, you see more people on the streets and fewer police patrols. I’ve seen businesses open their offices for a few hours in the mornings. And, a local restauranteur told me would-be diners came knocking on her door Saturday evening, asking if they could sit and eat a meal rather than do take-out.

“Three weeks ago, when we reopened for take-outs, the carabinieri stood outside to enforce social-distancing rules on each and every customer,” she told me. “I haven’t seen the carabinieri since.”

It was admirable the Romans held out this long, you could say. Besides, they point out, the number of infections here continues to go down day by day.

We may be entering the most fraught stretch yet.


Have a nice day, everyone. I’ll see you here tomorrow.

Bernhard Warner

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When red is unlucky: What we can learn from China’s color-coded apps for tracking the coronavirus outbreak

The apps’ color codes have become a way of life, one that—at the very least—has given users a ticket out of lockdown.

When red is unlucky: What we can learn from China’s color-coded apps for tracking the coronavirus outbreak

In January, when officials in ­Wuhan, China, declared a citywide quarantine to contain the coronavirus, they enforced the order with old-fashioned barricades. Walls of bright yellow and blue plastic sealed off streets, bisected neighborhoods, and isolated 11 million residents in their homes, initiating the largest lockdown in human history.

Those barriers started coming down after Wuhan lifted the lockdown on April 8. By the time shops opened, and residents ventured out, authorities had introduced a more modern method for isolating those at risk of infection. At checkpoints throughout the city, police and security guards demanded that anyone seeking to come and go present a QR code on their mobile phones that rates the user’s risk of catching the coronavirus. Green codes granted unrestricted movement. A yellow code required seven days of quarantine. Red meant 14 days of quarantine.

Local governments created the algorithms behind the ratings at the behest of China’s State Council and rolled them out in Wuhan and hundreds of other cities on apps hosted by China’s largest tech companies: Alibaba Group, Tencent Holdings, and Baidu Inc. To receive a rating, users must download an app embedded in one of the tech giants’ ubiquitous payment, messaging, or search engine platforms. The apps work differently by city and province, but they typically require users to register with basic information—name, national identity card number, phone number, and home address. Subsequent questions are more invasive, quizzing users on health status and travel history, and asking them to identify any close contacts diagnosed with the virus. 

The apps largely automate the tasks of symptom reporting, contact tracing, and risk evaluation that are sucking up time and man power in other coronavirus hotspots. Global experts, including many from the West, have hailed them as vital tools that helped China contain the coronavirus and allowed it to restart its economy with speed and confidence.

The efficiency, however, comes with tradeoffs. The apps’ opaque algorithms run on sensitive information, and users’ freedom of movement is dictated by the tools’ pocket-size traffic light. Even as China resumed travel to and from Wuhan and its surrounding Hubei province, residents unable to show a green badge were denied entry to shops, public parks, residential compounds, and commercial buildings. In some places, green codes were needed to ride the subway, buy a train ticket, or take a taxi. The apps concern human rights advocates, who fear they’ll transform smartphones into an ever more powerful tool for China’s authoritarian government to spy on its own citizens. 

An increase in state digital surveillance powers can threaten people’s privacy and freedom of expression, especially in places where these rights and freedoms are not well-protected by law.

Doriane Lau, a China researcher at Amnesty International

But the high cost of the coronavirus—in lives and livelihoods—has reordered nations’ value systems at a stunning pace. Other virus hotspots, including those in Western democracies, mimicked China’s mass lockdowns to combat the virus—unthinkable several months ago. Now they are considering their own deployment of digital contact-tracing tools like China’s in the next stage of the pandemic, a signal that such technology might be a staple of everyday life for months—if not years—to come, even in some of the world’s most freedom-loving countries. 

Hangzhou, Shenzhen, and Beijing—the hometowns of Alibaba, Tencent, and Baidu, respectively—were the first Chinese cities to deploy health apps. They did so in February, when China was reporting thousands of new coronavirus cases each day. Adoption across China was rapid, if inconsistent. There is no single centralized system. Rather, local governments decided whether to embrace an app, and, if so, what form it would take. (Though the State Council in March introduced a platform that lets disparate local health codes recognize one another.) By mid-April, Alibaba was hosting apps for more than 200 cities and Tencent had over 300. Baidu didn’t say how many apps it was hosting.

Technology’s deep foothold in Chinese society fast-tracked the rollout. More than 60% of China’s population, or 850 million people, own smartphones and depend on them for a wider range of daily activities than consumers anywhere else in the world. Local governments all but mandated app usage by making it a prerequisite for moving about.

Another reason the apps garnered wide adoption is that they seem to work. After coronavirus cases soared in February, China’s outbreak quieted by April, prompting Beijing to lift lockdowns like Wuhan’s. 

“I don’t think there’s any question” China’s use of digital contact tracing helped contain the virus, says Paul Triolo, head of the geotechnology practice at Eurasia Group, a risk consultancy. The apps let officials “track who’s been tested, who’s infected, who’s not.” Countries able to leverage such systems, he argues, “will have a big leg up” in restoring growth and preventing future outbreaks.

Oxford University researchers endorsed China’s system of “digital contact tracing” in a March issue of Science, crediting it for achieving “sustained epidemic suppression.” The system can “replace a week’s work of manual contact tracing with instantaneous signals transmitted to and from a central server,” enabling authorities to make swifter and more accurate decisions about whom to quarantine. 


That apparent success hasn’t quelled fundamental questions about the apps’ fairness, privacy, and infringement of individual rights.

“Technology can play a role in containing the pandemic,” says Doriane Lau, a China researcher at Amnesty International, but “an increase in state digital surveillance powers can threaten people’s privacy and freedom of expression, especially in places where these rights and freedoms are not well-protected by law.”

Alibaba, Tencent, and Baidu insist they merely host the apps in the way Apple’s App Store hosts the software of third-party vendors. The software itself, they say, is the handiwork of local governments. The tech companies claim they have no knowledge of the algorithms that dictate the health codes and that the government agencies that created them have shared no information about how the colors are assigned. 

Because the color codes dictate so much—where users can go, what services they can access—their criteria are “distressingly ambiguous,” says Sophie Richardson, China director of Human Rights Watch.

Just as ambiguous is the fate of the enormous data set the apps are generating. The tech companies say they have no access to the data. If the data’s being funneled into a central repository, there’s no public knowledge of it. 

INN.05.20.Wuhan Drone
Staff check travelers’ health QR codes at an expressway toll gate in Wuhan, China.

Despite those concerns, other governments are weighing how to use digital aids similar to China’s in their own fights against COVID-19.

South Korea launched an app that lets health officials track quarantined individuals. Hong Kong issued tracking wristbands to people under quarantine. Singapore’s contact-tracing app uses Bluetooth to monitor individuals who opt in and determines if they’ve been near a confirmed case. 

Western democracies, too, are coming around. In late March, the European Commission persuaded telecommunications companies to share users’ mobile data to help predict the spread of the coronavirus across Europe. And in mid-April, U.S. tech rivals Apple and Google said they had partnered to build software similar to Singapore’s that will use Bluetooth to alert Americans if they’ve been close to a confirmed ­COVID-19 case.

None of the other models go as far as China’s apps, which are essentially compulsory in cities that use them. “It is fair to say that in times of crisis or emergencies people generally are more willing to accept new rules or restrictions,” says Richardson. But that sentiment is hard to measure in China in this case—there’s no “opting out” of an app when it’s tied to basic needs.

For now, other countries are going with more voluntary, less intrusive tools. It remains to be seen whether watered-down versions of China’s approach will be as effective.

“This is the discussion that’s been happening in Europe and North America, in the sense that yes, we have this epidemic, we need to have accurate information and to get this accurate information at a speedy rate, these kinds of modeling techniques are really helpful,” says Yuka Kobayashi, professor of China and international politics at SOAS University of London. “However, can we switch these things on and off?” 

Back in China, the apps’ color codes have become a way of life, one that—at the very least—has given users a ticket out of lockdown. 

Cathy Fu, a tech worker in Beijing, got stuck in Wuhan’s Hubei province for two months. She received her first green QR code on March 10. “I was so happy,” Fu said. She gladly flashed it weeks later as she finally boarded a train back to her home in Beijing. 

A version of this article appears in the May 2020 issue of Fortune with the headline “When red is unlucky.”

More coronavirus coverage from Fortune:

—How 500 companies are utilizing their resources and expertise during the pandemic
—Inside the surreal “Mask Economy”: Price-gouging, bidding wars, and armed guards
—The IRS just launched “Get My Payment” portal for —Should you fear government surveillance in the coronavirus era?
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