Here are the Google remarks, plus for interest I’ve forwarded the complete
newsletter below.
Worse is yet to come: tech in times of the coronavirus
Alphabet announces its quarterly results today. Google’s parent company is the
first of the American tech titans to release earnings this week, in the first
round of results since the coronavirus struck. (Facebook and Microsoft follow
tomorrow, and Apple on Thursday.) Despite the severity of the crisis, the
numbers will not be bad. Analysts expect revenues to climb by nearly 13% to
more than $40bn compared to the same period last year. But because covid-19
only really made itself felt in March, its true economic impact will show up
only in the results for the current quarter, which will be released in July.
Prices for online advertisements, which bring in more than 80% of Alphabet’s
revenues, for instance, have fallen by between 20% and 30%. Google has already
declared a partial hiring freeze, reduced investments and cut marketing budgets
by as much as half. The belt-tightening is unlikely to end soon.
Nick Gallop
+44 (0)7867 808 872
nick.gallop on Skype
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Date: 28 April 2020 at 05:24:02 BST
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Espresso
A quick round-up of what’s coming up today
The world in brief
The World Health Organisation’s director-general said he was concerned about
how the covid-19 pandemic was disrupting normal health services, especially
vaccination programmes in poor countries. Tedros Adhanom Ghebreyesus said
children were at low risk from the coronavirus but at heightened risk from
preventable diseases. He said immunisations against polio, measles, cholera,
meningitis and others had been delayed for 13m people.
The Bank of Japan pledged to buy as many bonds as it needs to support the
government’s increased borrowing during the pandemic (see main stories). The
bank also said it would keep interest rates low to help the country’s ailing
economy. Last week the government increased its spending commitments by
¥8.9trn ($83bn), with a plan to give every citizen ¥100,000.
With new covid-19 cases in single digits, New Zealand is easing its strict
lockdown. Jacinda Ardern, the prime minister, declared yesterday that her
country had “won the battle” against community transmission. Some businesses
reopened today; schools will welcome some children beginning tomorrow.
Nonetheless, the government plans to maintain social-distancing measures to
prevent a resurgence of the virus.
More than 2m Australians, around 8% of the population, downloaded a
contact-tracing app intended to slow the spread of covid-19. The government
made widespread adoption of the app a condition for easing the country’s
lockdown. Germany, meanwhile, said its version of such an app is weeks away
from being ready. Worries about privacy forced it to abandon an earlier
effort.
Oil prices plummeted again, with America’s benchmark, West Texas
International, falling by 28%. The drop was triggered by the United States
Oil Fund, the world’s biggest oil-backed exchange traded fund, announcing
that it would sell its short-term contracts. A week ago American oil prices
entered negative territory for the first time, before rebounding slightly.
Nancy Pelosi, the speaker of America’s House of Representatives, endorsed Joe
Biden as her party’s nominee for president. She joins a long list of leading
Democrats who have declared their support for the former vice-president. Her
endorsement gives Mr Biden a boost at a time when he has struggled for
national attention during the coronavirus crisis.
The president of El Salvador ordered the army and police to use “lethal
force” to stop escalating gang violence. Nayib Bukele also ordered that all
imprisoned members of the country’s notorious gangs should be confined to
their cells 24 hours a day. The crackdown came after one of the most
murderous weekends in the small Central American country’s recent history,
which left more than 50 people dead.
Today’s agenda
Vers une sortie: France plans to leave lockdown
France, in its seventh week of lockdown, will today get an exit plan. In a
speech to parliament Edouard Philippe, the prime minister, will outline rules
for déconfinement , to begin on May 11th. This is expected to include a
gradual reopening of schools, starting with primary classes, based on
voluntary attendance and with reduced class sizes. The government is also
expected to allow shops to reopen, encourage businesses to get back to work
and lift restrictions on movement within the country. Restaurants, bars,
hotels and sports centres, however, will stay shut for the time being. It is
hoped that mask-wearing in public, increased testing and a contact-tracing
app will help to contain the spread of covid-19. France’s death toll from the
disease exceeds 23,000. But the number in intensive care has been dropping
for nearly three weeks, tipping the argument in favour of an end to rigorous
confinement, albeit provisional and phased.
Worse is yet to come: tech in times of the coronavirus
Alphabet announces its quarterly results today. Google’s parent company is
the first of the American tech titans to release earnings this week, in the
first round of results since the coronavirus struck. (Facebook and Microsoft
follow tomorrow, and Apple on Thursday.) Despite the severity of the crisis,
the numbers will not be bad. Analysts expect revenues to climb by nearly 13%
to more than $40bn compared to the same period last year. But because
covid-19 only really made itself felt in March, its true economic impact will
show up only in the results for the current quarter, which will be released
in July. Prices for online advertisements, which bring in more than 80% of
Alphabet’s revenues, for instance, have fallen by between 20% and 30%. Google
has already declared a partial hiring freeze, reduced investments and cut
marketing budgets by as much as half. The belt-tightening is unlikely to end
soon.
On life support: Japan’s economy
The Japanese economy was already sluggish, and the coronavirus is dragging it
down further. The Bank of Japan is shifting focus from its long reflation
effort towards preventing a wave of bankruptcies and keeping the economy
afloat. The central bank announced yesterday that it would nearly triple its
holdings of corporate debt, make it easier for commercial banks to borrow,
and offer new incentives for those banks to lend to small businesses. The BoJ
also ditched its ¥80trn ($746bn) per year cap on government-bond purchases.
Though largely symbolic—the bank was nowhere near its limit—this signals a
willingness to support the government’s borrowing to finance a $1trn stimulus
package. Despite these efforts, the downturn will be steep. The unemployment
rate hit its highest levels in a year in March (albeit, an enviable 2.5%).
The bank predicts a 3-5% contraction in GDP this fiscal year. Private
analysts tend to be even more bearish.
Primary school: Ohio votes
With Joe Biden the only candidate left standing, the result of Ohio’s
Democratic primary today is not in doubt. But the contest still offers
lessons in how to conduct elections during a pandemic. Mike DeWine, the
state’s Republican governor, postponed this one just hours before polls were
set to open on March 17th, due to the risk of contagion. (Yesterday New York
state threw its hands up, cancelling outright the primary it had scheduled
for June.) Most of Ohio’s voters will cast ballots by mail, though slow
postal delivery may drive some to the only polling booths left—each county’s
Board of Elections building—where, ironically, they may have to brave queues.
By April 24th Ohioans had requested 1.7m absentee ballots, with just 1m
returned. Ohio’s election will also test voters’ patience: with counties
required to accept all ballots postmarked by yesterday until ten days after
the election, results cannot be announced until May 8th.
Caught in the camps: Bangladesh’s Rohingya refugees
Camps in Cox’s Bazar that provide rudimentary shelter to more than 1m
Rohingya refugees from Myanmar have been under complete lockdown since April
9th. With water scarce and physical distancing impossible (40,000 people are
crammed into a square kilometre) they remain extremely vulnerable to the
rapid spread of covid-19. More than 2,000 could die in an outbreak, according
to an epidemiological model used by the United Nations’ refugee agency. The
government’s decision to cut off mobile-phone coverage in the camps, and to
encircle them with barbed wire, has stoked rumours about the spread of the
virus, but so far only one case has been reported in Cox’s Bazar, and that is
outside the camps. Nonetheless, many Rohingya are desperate to escape.
Meanwhile Bangladeshi authorities have been urged to open their ports to
another 500 Rohingya, drifting perilously and perhaps starving in two boats
on the Bay of Bengal.
“The trouble with having an open mind, of course, is that people will insist
on coming along and trying to put things in it.”
Terry Pratchett
Your Economist Espresso has been tailored for Europe
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