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British Airways pilots have voted to accept a deal that will temporarily cut pay by 20% and eliminate 270 jobs, says the pilots’ union Balpa.
The deal prevents a controversial “fire and rehire” scheme where staff would have been handed new contracts “on worse conditions”.
The 20% pay cuts will reduce to 8% over two years and to zero in the long term.
The ballot result saw 85% of members accept the deal on an 87% turnout.
“Our members have made a pragmatic decision in the circumstances but the fact that we were unable to persuade BA to avoid all compulsory redundancies is bitterly disappointing,” said Balpa general secretary Brian Strutton in a statement.
BA had proposed to make 12,000 staff redundant, as it struggles with the impact of the coronavirus pandemic, with 1,255 pilot jobs at stake.
Balpa said there would still be some compulsory redundancies, estimated at 270 jobs, although that number is “likely to fall” as BA will be working with the union to mitigate the impact of the changes.
On 28 July, trade union Unite threatened industrial action against the airline “with immediate effect” over plans to hand staff their notice and then rehire them on new contracts with unfavourable terms.
Talks with other BA staff, such as cabin crew, engineers and office staff, are still continuing.
Many airlines are struggling to survive as the pandemic severely disrupts global travel.
The plunge in travel will drive airline losses of more than $84bn (£66bn) this year, the International Air Transport Association has warned. It said last month that 2020 revenues would drop to $419bn, down 50% from 2019.
BA has insisted that it is doing its best to save jobs. On Thursday, Willie Walsh, the boss of BA owner IAG told the BBC that the coronavirus crisis was the worst the company has faced in its history.
IAG reported a loss of €4.2bn (£3.8bn) for the first half of the year, and Mr Walsh said it would take until at least 2023 for passenger levels to recover.
However, there is anger from staff over the way in which BA has approached job cuts, according to the BBC’s business correspondent Theo Leggett.
For cabin crew, there is not only the threat of redundancy, but also the possibility of big pay cuts for long-serving staff – in some cases of more than 50%.
Many of those affected believe the company is using the current crisis to force through changes it has wanted to make for years.
Longer-serving crew at BA have contracts which are, by modern standards, relatively generous. They date back to an era when the airline industry was less ferociously competitive, before the emergence of budget carriers such as Ryanair and Easyjet forced older airlines to cut costs and change their business models.
James Murdoch, the younger son of media mogul Rupert Murdoch, has resigned from the board of News Corporation citing “disagreements over editorial content”.
In a filing to US regulators, he said he also disagreed with some “strategic decisions” made by the company.
The exact nature of the disagreements was not detailed.
But Mr Murdoch has previously criticised News Corp outlets, which include the Wall Street Journal, for climate change coverage.
Rupert Murdoch, News Corp’s executive chairman, and his other son Lachlan, co-chairman, wished James well in a joint statement.
“We’re grateful to James for his many years of service to the company,” the statement said. “We wish him the very best in his future endeavours.”
Representatives of Mr Murdoch and his wife Kathryn have acknowledged the couple’s “frustration” with coverage of the subject by some of most influential Murdoch-owned news brands, including Fox News.
They have also spoken of particular disappointment about climate change denial in Murdoch-owned Australian outlets.
News Corp also owns The Times, The Sun and The Sunday Times in the UK, as well as a stable of Australian newspapers, including The Australian, The Daily Telegraph and The Herald Sun.
Rupert Murdoch has described himself as a climate change “sceptic” and denies employing climate deniers.
But critics of News Corp pointed to its comment articles and reporting of the alleged role of arson in the wildfires as minimising the impact of a changing climate.
Bitcoin has come to life this week after months of stagnation, jumping over 20% in just the last 10 days.
The bitcoin price had been trading sideways since its supply squeeze in early May but this week leaped past the psychological $10,000 level, soaring to over $11,000 per bitcoin.
Bitcoin’s price surge has triggered a retail trading boom with exchanges around the world reporting sky-high bitcoin trading volume and one cryptocurrency hedge fund chief executive saying fear of missing out, sometimes known as FOMO, is attracting “people who are late to the party.”
“In cryptocurrency we often see ‘momentum’ plays,” Joe DiPasquale, the CEO of San Francisco-based crypto hedge fund BitBull Capital, said via email.
“Bitcoin is currently in a break-out phase, just as it was in the first six months of 2019, when it increased in value by 189%,” DiPasquale added, pointing to growing interest in bitcoin from Wall Street and among payment firms.
DiPasquale expects the bitcoin price to hit $15,000 before the end of the year, which would put bitcoin within touching distance of its $20,000 all-time high.
Bitcoin climbed to around $20,000 in late 2017 before crashing back to around $3,000 a year later, with its huge retail investor-led rally fueled by an explosion of media interest in bitcoin and its underlying blockchain technology.
Bitcoin’s sudden jump higher this week resulted in a rush of traffic to bitcoin exchanges as eager investors attempted to catch the upswing, invoking memories of the 2017 bitcoin gold rush.
Coinbase, the largest U.S. bitcoin and cryptocurrency exchange with 35 million users around the world, has seen a three-fold increase in bitcoin trading volume this week, according to a source familiar with the matter.
Meanwhile, BinanceUS, the 10-month old American arm of Binance, the world’s largest cryptocurrency exchange by volume, reported bitcoin trading this week hit an all-time high on its platform.
Elsewhere, smaller bitcoin companies have also seen a surge of interest.
“[This week] blew away anything we’ve seen,” Cory Klippsten, tech investor and founder of bitcoin buying app Swan Bitcoin, said via Telegram, adding the four-month old startup “did about a third of our all time revenue in five days.”
However, Klippsten doesn’t think we’re back at the FOMO stage yet—although he concedes: “The expectations of so many [bitcoin investors] that we’re in the early stages of another meteoric rise may be self-fulfilling.”
Like many bitcoin price watchers, Klippsten sees bitcoin’s cut to supply in May, when the number of new bitcoin coming onto the market was halved, coupled with the U.S. Federal Reserve’s massive stimulus measures in the wake of coronavirus-induced lockdowns as bullish for the bitcoin price and causing a “price spike for all hard assets”—including gold, which came within striking distance of hitting $2,000 for the first time this week.
In addition, Montreal-based bitcoin buying service Shakepay has this week reported a “significant” surge in demand.
“Over the last few months, and particularly during the last few weeks, we’ve seen a significant surge in customer registrations and activity on our platform,” Shakepay chief executive Jean Amiouny said via email.
“As the Bank of Canada continues to print money, bitcoin purchases and sales on Shakepay have been growing exponentially, and as of this month we’ve broken over $400 million in digital currency bought and sold.”
Junior high and middle school sports are back on in Illinois.
At least for now in regards to the 2020-21 school year.
One week after announcing the cancellation of multiple junior high fall sports for the upcoming fall season because of the coronavirus pandemic, IESA executive director Craig Endsley informed member schools on Friday afternoon of a reversal to that action while also providing a plan for the entire 2020-21 athletic calendar.
Endsley’s latest announcement followed an IESA Board of Directors special meeting. The meeting was held in response to Wednesday’s announcement from IHSA officials about their 2020-21 sports calendar, as well as a press briefing the same day by Gov. J.B. Pritzker detailing restrictions placed upon youth and adult recreation sports that encompassed both the IHSA and IESA.
“I speak for the Board when I say they do not like to reverse decisions,” Endsley said Friday in a statement. “In this case, the Board believed the information that became available after their initial decision on July 23 warranted a review of that decision.”
On July 23, the IESA decided to cancel boys’ golf, girls’ golf, boys’ cross-country, girls’ cross-country, baseball and softball seasons this upcoming fall because of COVID-19 concerns. Endsley also cited a lack of direction from the governor’s office and Illinois Department of Public Health on being able to safely return to play in announcing last week’s decision.
Once both Pritzker and the IHSA made their respective decisions Wednesday, the IESA published a short response on its website indicating the board would review new information.
“The All Sports Guidance document that was recently released from the Governor’s Office placed the sports of golf, softball, baseball and cross-country in the ‘lower risk’ category,” Endsley said. “Sports in that category can hold practices and interscholastic games. As a result of these four sports being recategorized to lower risk and with interscholastic competitions being allowed, the IESA Board of Directors has approved a plan for the return of regular season contests in these activities and a limited state series.”
According to a document shared by Endsley with member schools, fall sports will consist of boys’ golf, girls’ golf, boys’ cross-country, girls’ cross-country, baseball and softball.
Winter sports will feature boys’ basketball, volleyball and wrestling, with girls’ basketball, boys’ track and field and girls’ track and field being spring sports.
Fall events will be held from August through October, winter events from January through March and spring events from February through May.
The only seasons of those listed above that are being significantly moved take place indoors.
Girls’ basketball was set to start Aug. 31 and now will begin March 8, boys’ basketball was slated to open Oct. 19 and now starts Jan. 4, and both volleyball and wresting were initially slated to begin Nov. 30 but now open Jan. 11.
“We are hopeful that the remainder of the sports and activities will be held,” Endsley said. “Currently, the majority of those activities have been deemed as medium or high risk. The Board felt that the plan they approved provides direction and a blueprint should we be able to move forward.”
Other revised start dates are this upcoming Monday (baseball, softball, cross-country) and March 1 (track and field). No start date is listed for golf because, according to Endsley, there are very few full junior high golf teams in the state and the sport is largely individualized.
No state series are scheduled at this time for any of these sports. Instead, regional tournaments will take place in sports with a three-tier state series (baseball, softball, basketball, volleyball, wrestling) and sectional round will occur in sports with a two-tier state series (golf, cross-country, track and field).
Other rules handed down via the IESA’s document on Friday include:
— Teams are limited to a maximum of two contests per week, with the exception of baseball or softball being permitted three games in a week if two are held in a doubleheader, and cannot hold a tournament or event featuring more than three teams.
— If an EMS Region or county is placed in Phase 3 or lower of the “Restore Illinois” plan, all sports for schools in that area will be suspended or canceled.
— Spectator restrictions must follow IDPH guidelines on the topic.
— Regular-season events are limited to intra-conference, intra-region (“approximately a 30-mile radius”) or intra-EMS-region matchups. EMS Regions are used by the IDPH to separate different sections of the state during COVID-19 discussions.
— Students only engaging in e-learning are eligible for IESA events.
“Please know that the modified schedule and seasons as approved (Friday) apply only to the 2020-21 school year,” Endsley said. “Assuming we can return to ‘normal’ in 2021-22, the seasons and schedules would return to their traditional dates in the IESA calendar.”
The credit rating firm Fitch left the United States’ AAA rating untouched, but downgraded its outlook on what is effectively the national credit score, suggesting the country’s status as one of the world’s most trustworthy borrowers could be put at risk by the enormous deficits the federal government is running to combat the fallout from the pandemic.
“The outlook has been revised to negative to reflect the ongoing deterioration in the U.S. public finances and the absence of a credible fiscal consolidation plan,” Fitch analysts wrote on Friday in a report announcing the decision.
Cratering tax revenues and surging expenditures have driven record levels of red ink for the federal government in recent months. The United States’ budget deficit hit a record $864 billion in June as the government continued pumping money into the economy to support workers and businesses slammed by the pandemic. Some analysts expect monthly deficits to soon top $1 trillion.
Ballooning deficits have led to an explosion of new borrowing. Fitch noted that the Treasury Department borrowed just under $3 trillion dollars from the end of February to the end of June.
Much of the supply of new government bonds was, essentially, purchased by the Federal Reserve, which has bought $2.6 trillion in financial assets since the middle of March, Fitch noted.
The presence of the Federal Reserve, which can essentially create whatever money it wants and use it to buy assets, such as U.S. government debt, has depressed yields on government bonds even as debts and deficits rise sharply.
On Friday, the yield on the 10-year note fell to 0.53 percent, one of the lowest levels in recorded history, suggesting there is virtually no concern among investors about the country’s ability to service its growing debts.
Stocks rallied to end Friday as investors looked past gnawing concerns about the economic toll of the pandemic and instead were cheered by a surge in profits reported by America’s largest tech companies.
The S&P 500 rose more than three-quarters of a percent, and ended July with a gain of more than 5 percent. The index has climbed for four consecutive months — rising more than 26 percent since the end of February.
A big factor behind that rally has been the success of big technology companies, which were well positioned to benefit from a shift to remote work and limits on public activity.
On Thursday, investors heard just how much they benefited. Amazon, Apple and Facebook reported surging profits. The blockbuster earnings seemed to briefly put aside the uncertainty and pessimism surrounding the economic impact of the pandemic, but also perhaps underscored the concerns of lawmakers, expressed on Wednesday, that American’s tech giants have gotten too big.
Apple gained nearly 10.5 percent on Friday, reaching a record, as the company announced a four-for-one stock split, and shares of Amazon and Facebook also rose. Alphabet, the parent company of Google, which reported its first-ever decline in quarterly revenue on Thursday, ended Friday down more than 3 percent.
Microsoft also climbed late in the day, erasing its earlier losses after reports that it is in talks to buy TikTok, the popular video sharing app. The gains helped lift the Nasdaq composite by about 1.5 percent.
But the virus continues spreading, and its damage is mounting. On Thursday, the United States reported that its economy fell 9.5 percent in the second quarter, compared with the previous quarter, the most on record. On Friday, the authorities reported that the eurozone contracted 12.1 percent in the second quarter. Both the United States and Europe are in deep recessions caused by shutdowns in economic activity to curb the spread of the disease.
United Airlines plans to add more than 25 international routes to its September schedule, a sign of limited optimism in a battered industry at a time when coronavirus cases continue to rise across the country.
Many of the new routes include destinations in Europe and Asia, where governments restrict or limit American visitors. United said it would adjust its schedule as necessary to deal with travel and quarantine restrictions.
“We continue to be realistic in our approach to building back our international and domestic schedules by closely monitoring customer demand and flying where people want to go,” Patrick Quayle, United’s vice president of international network and alliances, said in a statement.
Many people are still flying for essential business, to visit friends and family or to return home. Some of the shorter international flights United is adding will serve limited demand for leisure travel.
The airline said it would launch a new route connecting Chicago and Tel Aviv if it could obtain government approval. The airline will also resume service between some of its American hubs and Amsterdam, Frankfurt, Munich, Sydney, Costa Rica, St. Thomas, Ecuador and several destinations in Mexico. United also plans to continue to fly to New Delhi and Mumbai and between Chicago and Hong Kong, pending government approval.
Overall, the airline plans to operate about 37 percent of the flights it flew last September, a relative increase from August. The Transportation Security Administration has only screened about 26 percent as many people at its checkpoint in recent days as it did on the same days a year ago.
The news comes a day after United dealt what appeared to be a fatal blow to ExpressJet, a regional carrier that operates under the United Express brand. United has a 49.9 percent stake in ExpressJet. In a note to staff on Thursday, ExpressJet’s chief executive, Subodh Karnik, said that the two airlines would work together to wind down ExpressJet’s operations after United decided to make another regional carrier, CommutAir, the sole operator of United Express flights aboard the small Embraer ERJ145 jet.
Fiat Chrysler reported a net loss of 1 billion euros ($1.2 billion) in the second quarter, but said it expects improving economic conditions to lift its fortunes in the second half of the year.
Forced to shut down operations in Europe and North American for much of the quarter because of the pandemic, Fiat Chrysler said revenue dropped 56 percent, to 11.7 billion euros. It also used some 5 billion euros in cash.
In a conference call, the automaker’s chief executive, Mike Manley, said auto sales are recovering faster than had been expected, and the company has been able to ramp production back to normal levels in North America. Its European plants should return to typical production levels in the third quarter, the company said.
“We expect significant improvement in profitability and cash flows,” he said. “We expect a much, much better second half.”
The automaker also plans to introduce five new electric vehicles in the coming months, including plug-in hybrid versions of three different Jeep models.
Fiat Chrysler is in the process of merging with French automaker PSA Group, maker of the Peugeot and Citroën brands. The combined company will be called Stellantis.
Exxon Mobil announced a record-breaking quarterly loss of $1.1 billion, blaming the coronavirus pandemic for lowering oil and gas prices and sales volumes.
The results from the largest American oil producer were further evidence of the deepest downturn for the industry in the modern era. Oil prices have recovered in recent weeks to around $40 a barrel, but that is still roughly a third below the oil price of the beginning of the year.
Chevron, the second largest U.S. oil company, also posted disappointing results for the quarter on Friday and said it was writing off its $2.6 billion investment in Venezuela because of the country’s political instability and American sanctions against its government.
Exxon’s oil production was down 3 percent and natural gas output was down 12 percent, compared to the quarter a year ago, a reflection of the crippling of global demand for energy due to a worldwide recession.
Darren W. Woods, Exxon’s chairman and chief executive, attempted to put the best face on the results.
“The global pandemic and oversupply conditions significantly impacted our second quarter financial results,” he said. “We responded decisively by reducing near-term spending and continuing work to improve efficiency. The progress we’ve made to date gives us confidence that we will meet or exceed our cost-reduction targets.”
The $1.1 billion loss compares to a profit of $3.1 billion a year ago. At the same time the company’s capital and exploration expenditures were down to $5.3 billion from $8.1 billion in the quarter last year.
Chevron said it lost $8.3 billion in the quarter; a year earlier it reported a $4.3 billion profit.
The company reported an adjusted quarterly loss of $3 billion, excluding one-time items, compared to adjusted earnings of $3.4 billion in the same quarter of 2019. In addition to the $2.6 billion Venezuelan write down, Chevron also took a $1.8 billion write down based on the company’s oil and gas price outlook.
Chevron reported sales and other revenue of $16 billion, compared to $36 billion in the same period a year earlier.
“We’re focused on what we can control,” Michael K. Wirth, Chevron’s chairman and chief executive, said in a statement. “We’re transforming our company to be more efficient, agile and innovative.”
Exxon and Chevron said they would maintain their dividends.
Percentage change from previous quarter
Percentage change from previous quarter
The European economy tumbled into its worst recession on record, as quarantines in countries across the continent brought business, trade and consumer spending to a grinding halt in the second quarter.
From April to June, economic activity fell 12.1 percent from the previous quarter among the countries that use the euro currency. It was sharpest contraction since 1995, when the data was first collected, according to Eurostat, the European Union’s statistics agency.
Compared to the same period a year ago, the decline was sharper: Economic activity shrank 15 percent from the 2nd quarter of 2019.
The collapse marks the severe economic disruption caused by the pandemic. Governments ordered lockdowns that silenced many cities, and residents were told to stay home to prevent the virus’s spread. On Thursday, the United States announced its economy contracted 9.5 percent in the 2nd quarter compared to the previous three-month period.
But there are signs the worst may have passed since then, and that a tentative recovery is gaining some traction as European governments unleashed enormous stimulus spending. The lengthy lockdowns have helped curb a widespread resurgence of the pandemic in most countries.
The data was especially grim for nations on Europe’s southern rim, which were among the worst affected by the virus and which faced longer quarantine periods than northern European countries.
In Spain, which has had one of Europe’s highest death tolls, the economy shrank by a staggering 18.5 percent from the previous quarter. France, the eurozone’s second-largest economy, shrank by 13.8 percent; and Italy, the third-largest economy in the zone, contracted by 12.4 percent. France is officially in recession, with three straight quarters of contraction.
On Thursday, the authorities reported that the German economy, Europe’s largest, shrank by 10.1 percent from the previous quarter.
European Union leaders last week agreed to a landmark stimulus of 750 billion euros, or about $884 billion, to rescue their economies and to anchor a mild turnaround that had started to take hold after lockdowns began to be lifted.
But risks abound as surges in new cases are reported, increasing the possibility of more quarantines.
“The hard part of this recovery is set to start about now,” Bert Colijn, senior economist for the eurozone at ING Bank, said in a note to clients.
European countries have, for the most part, contained the spread of coronavirus. But the outbreak, which was early and widespread, has left a deep scar on the region’s economy:a 12 percent contraction in the second quarter of the year compared with the first quarter. Different government interventions and infection rates means the impact has been uneven. Here are snapshots from the region’s largest economies in the three months that ended in June.
Though France’s 13.8 percent decline is stark, a mild rebound in consumer spending and business activity after quarantines were lifted has helped the country avoid a far sharper decline. In fact, the nation’s central bank recently revised its economic forecasts, expecting slightly less damage in the next few years.
The government’s largess has been key: It spent over 100 billion euros ($118 billion) to pay businesses not to lay off workers; it delayed deadlines for business taxes and loan payments; and it deployed over 300 billion euros in state-guaranteed loans to struggling companies.
The 10.1 percent drop in Germany’s G.D.P., the largest since the country began keeping quarterly records, might already be painting a darker picture of the economy than is warranted. Separate data released Thursday showed the labor market stabilized in July and surveys of business activity indicate a quick rebound.
But the continuation of this recovery is at risk. Germany was in a better position than other European Union countries because the government was effective in containing the spread of the coronavirus. However, there is now an increase in new infections as Germans return from holidays abroad, stoking fear of a second wave.
The devastating economic impact of Italy’s outbreak and lockdown, the first in Europe, was a 12.4 percent drop in G.D.P. While the central bank estimates that two government relief packages mitigated the contraction, a slow return in tourism, consumer spending, and business investment is dragging the recovery down.
“At least for Italy, the possibility of a V-shaped recovery is not what we have in front of us,” Bank of Italy’s governor, Daniele Franco, said. One slice of the economy is experiencing a stronger rebound: industrial production. During the first phase of the lockdown, which ended in early May, half of the Italian companies that were forced to shut managed to reopen, the central bank said.
Spain’s recession is the deepest of all the European countries that have reported second-quarter G.D.P. so far. The economy contracted 18.5 percent compared to the first three months of the year, and the outlook for the rest of the year is grim. Spain officially ended its Covid-19 state of emergency on June 21, but it has since been struggling with an increase in the number of new cases and over 300 local outbreaks, particularly severe in the northeast.
Tourism is a substantial component of the Spanish economy but hopes of a tourism-led economic recovery this summer have been undermined by quarantine restrictions placed on the nation and its islands by Britain and other countries.
Government payments played a critical role in propping up the American economy, data released Friday shows.
Consumer spending rose 5.6 percent in June, the Commerce Department said, the second straight monthly increase after a record-setting plunge in April.
But the end of some benefits, namely the $1,200 payment made to many individuals, also meant that personal income fell 1.1 percent last month. Incomes could fall further now that the federal government’s additional unemployment benefits have ended, at least temporarily.
To understand what’s happening, it helps to go back to the beginning of the pandemic. When businesses began shutting their doors and furloughing workers in March, both incomes and spending fell. Congress then stepped in with a multi-trillion-dollar rescue package, which included sending $1,200 checks to most American families and expanding the unemployment insurance system.
As a result, personal incomes rose a record 12.1 percent in April, despite a big drop in wage and salary earnings. But spending still fell, at least in part because people had fewer opportunities to go shopping and dine out. (Other data suggests spending fell sharply among the wealthy, while rebounding more quickly for other income groups once government checks began arriving.)
In May and June, those patterns began to reverse. Spending picked back up as the economy reopened. Wage and salary incomes rose too, as companies began rehiring furloughed workers. Government payments fell with the end of the $1,200 checks, but remained high.
The net result: Overall personal income was higher in June than in February. But without government intervention — especially the expanded unemployment benefits, which are injecting money into the economy at a rate of $1.4 trillion a year — incomes would be lower now than when the crisis began.
Spending has rebounded but remains almost 7 percent below its precrisis level, even with the government help. And now, that help is in danger of running out: The $600 a week in extra unemployment benefits expires today, and senators have left for the weekend.
The Trump administration announced new sanctions Friday on two Chinese officials and one government entity, citing human rights abuses against predominantly Muslim ethnic minorities in the Xinjiang region in China’s far west.
The sanctions, administered by the Treasury Department’s Office of Foreign Assets Control, effectively cut the Xinjiang Production and Construction Corps and two of its former officials, Sun Jinlong and Peng Jiarui, off from American property and the financial system. The Xinjiang Production and Construction Corps is an economic and paramilitary organization in charge of economic development in the region.
“The United States is committed to using the full breadth of its financial powers to hold human rights abusers accountable in Xinjiang and across the world,” Steven T. Mnuchin, the Treasury Secretary, said in a statement.
Ties between the United States and China have been fraying as the Trump administration takes an increasingly critical posture on China’s handling of coronavirus, its growing influence over Hong Kong, its territorial disputes in the South China Sea and its treatment of a largely Muslim minority in Xinjiang.
The Chinese government has carried out a campaign of mass detentions in Xinjiang, placing one million or more members of Muslim and other minority groups into large internment camps intended to increase their loyalty to the Communist Party.
On July 20, the Trump administration added 11 new Chinese entities, including firms supplying major American brands like Apple, Ralph Lauren and Tommy Hilfiger, to a list that cuts them off from purchasing American products without a special license, saying the firms were complicit in human rights violations in Xinjiang. On July 1, the administration issued a warning to businesses with supply chains that run through Xinjiang to consider the reputational, economic and legal risks of doing so.
A day after lawmakers grilled the chief executives of the biggest tech companies about their size and power, Alphabet, Amazon, Apple and Facebook reported surprisingly healthy quarterly financial results, defying one of the worst economic downturns on record.
Even though the companies felt some sting from the spending slowdown, they demonstrated, as critics have argued, that they are operating on a different playing field from the rest of the economy.
Combined, the companies reported $28.6 billion in quarterly net profit, underscoring how regulatory scrutiny remains more background noise and a distraction for them rather than an imminent threat to their businesses.
“The strong continue to get stronger,” said Dan Ives, managing director of equity research at Wedbush Securities. “As many companies are falling by the wayside, the tech stalwarts continue to gain muscle and power in this environment.”
The editors and reporters for the DealBook newsletter sift through a lot of company reports and dial into many earnings conference calls. A huge number of companies reported their latest financial results on Thursday, and aside from the tech giants’ bumper profits these are some of the things that caught our notice, from lapsed cereal eaters to “coronabeards.”
🍺 “To put a finer point in the level of demand we’re seeing, we eclipsed July 4 week shipment days in the United States four times already this year. That’s unheard of.” — Gavin Hattersley, the C.E.O. of Molson Coors
🇯🇵 “We would be in Tokyo right now under normal circumstances. So it’s a total bummer for our company that we don’t have the Olympics.” — Jeff Shell, the C.E.O. of NBCUniversal
🥣 “Special K gained share in quarter two as did Mini-Wheats and Raisin Bran. We are also excited about the consumer trial and rediscovery we are seeing from new and lapsed users in cereal.” — Steven Cahillane, the C.E.O. of Kellogg’s
🧔 “As people go back to work in offices and outside the home, we’ll see a pickup in the wet shave rate.” — David Taylor, the C.E.O. of Procter & Gamble, in response to an analyst question about the rise of mullets and “coronabeards” during lockdowns
🍩 “I love when we really get on our doughnut mojo, but look, we are leaning into beverages in a big way.” — David Hoffmann, the C.E.O. of Dunkin’ Brands
With Zoom call fatigue setting in and boozy lunches out of the question during the coronavirus pandemic, housebound executives are finding new ways to meet and bond in video games. The goal is to break up a day that is crammed with get-togethers that generally look, sound and feel identical.
And for people like Lewis Smithingham, an advertising executive in Brooklyn, an outing in virtual space is a chance to form memories with people he has never met, which is a crucial part of developing relationships, business and otherwise.
“It’s my golf,” he said. Unlike golf, video games come with social distancing built in. It is back slapping without the slapping or the back, ideal during a pandemic.
Nobody knows how many executives are meeting in video games, including game publishers, but examples are popping up on Twitter and other social media platforms.
The idea of holding business meetings in a virtual world enjoyed a certain vogue about a decade ago. More than 1,400 organizations had a presence on Second Life, an online realm with everything an avatar would need, including auditoriums and beer.
For Mr. Smithingham, different games offer advantages for different clients. Gunplay and mayhem is not always the right fit. He is a fan of Animal Crossing: New Horizons, a new version of a long-popular Nintendo game, which was released in March.
“My production value is now considerably better in Animal Crossing than it is on Zoom,” he said.
Europe has a bad rep with investors. For years, asset managers and bank strategists have characterized the region by its anemic growth rate and shaky political union, and steered investors away.
Now, a crisis has turned into an unlikely investment opportunity as the region appears to have handled the pandemic better than some other parts of the world. In the past few months, European assets have staged a comeback, writes Eshe Nelson, who gives two reasons for the turnaround:
The euro has gained more than 5 percent against the dollar so far this year, according to FactSet data. Since late May, Europe’s stock market has recorded stronger gains than the S&P 500 index, after taking the strength of the euro into account.
Investors are starting to take advantage of the relative cheapness of European equities, but a sustained recovery in either stock market will depend on consumer and business confidence returning, which would in turn stir economic activity.
Here’s some of what happened on Thursday that you might have missed.
Ford Motor said it earned $1.1 billion in the second quarter as a large one-time gain in the value of its investment in an autonomous driving company more than offset losses in its main business. Without the gain, from its stake in Argo AI, Ford lost $1.9 billion excluding interest and taxes. The result was better than Ford’s earlier forecast of a pretax loss of $5 billion.
United Airlines warned its pilots that it might need to expand planned furloughs if demand for flights remained deeply depressed and a vaccine was not mass produced by the end of next year. The airline previously said that it could furlough up to one third of its pilots, or 3,900 people, this year and next.
Comcast, the largest cable operator in the U.S., said that Peacock, its new streaming product, attracted 10 million sign-ups in its first three months.
California Pizza Kitchen filed for bankruptcy protection in Texas. The company, which operates more than 200 locations in the United States and internationally, said it would use the restructuring process to close unprofitable locations and cut debt, and planned to emerge from bankruptcy in less than three months.
The price of Bitcoin surpassed $11,400 for the third time in three days, breaching a critical resistance level. Earlier today BTC price reached $11,444 but it quickly rejected back to the $11,250 range.
Surprisingly, within the last hour the price has risen above the $11,400 mark again and some traders believe that repeated retests of the resistance could raise the chances of a breakout.
Spartan Group’s Kelvin Koh said that when BTC breaks out of $11,400, a rally to $12,000 is likely. Meanwhile, on-chain analyst and trader Willy Woo said Bitcoin’s rally above $11,000 could place BTC at the start of the “main bull phase.”
The 1-hour price chart of Bitcoin. Source: TradingView.com
After surging to as high as $10,470 on BitMEX, the price of Bitcoin dropped to around $11,260. Currently, the resistance range from $11,200 to $11,400 is seemingly triggering sellers to defend this level and prevent a major breakout.
“This is a new model I’m working on, it picks the start of exponential bull runs. 1) Bitcoin was setting up for a bullish run until the COVID white swan killed the party. 2) This model suggests we are close to another bullish run. Maybe another month to go.”
The weekly price chart of Bitcoin with a new price model. Source: Willy Woo
A month has passed since the model was revealed and the price of Bitcoin has increased from $9,100 to over $11,000. Following up on the model, Woo said he is “relatively confident” the main bull phase is igniting.
The analyst broke down various on-chain data points, including Bitcoin’s mempool and the relative strength index (RSI), to evaluate market cycles. Woo said that the on-chain RSI, specifically, suggests the main bull market could begin in the fourth quarter.
Woo explained that:
“With the current break to 11K, I’m relatively confident last months model is working on queue, we’re at the start of the ‘main bull phase’… 365 day on-chain RSI shows the compression at the early phase of the bull cycle nearing completion, I’m expecting RSI expansion that typifies the main bull season run starting Q4 2020 into 2021.”
Similarly, Koh said that if the price of Bitcoin continues to increase above $11,400, it will sustain its momentum. But if BTC continues to rally, the investor emphasized that alternative cryptocurrencies could consolidate. Koh said:
“If BTC breaks the resistance at $11.4K, we are going above $12K in no time. Will take the wind out of altcoins again in the short term.”
According to ExoAlpha chief investment officer David Lifchitz, profit-taking from well-performing DeFi tokens led BTC and Ether (ETH) to surge. The initial upsurge then led to short contracts on futures exchanges being liquidated.
As Bitcoin started to rally, DeFi tokens and other top alternative cryptocurrencies started to decline, which strengthens the argument. Assets in the likes of Compound, Chainlink, and Cardano, which outperformed BTC in June, stagnated in the past several days.
Lifchitz told Cointelegraph:
“The recent move in BTC-USD seems to have been linked to DeFi coins profit-taking rolled into the majors (Bitcoin and Ethereum), which triggered a short squeeze of the overleveraged shorts at the BitMEX casino.”
In the short-term, Lifchitz said a pullback could occur as the market cools down, but if BTC surpasses $12,500 and remains on top of it, a bull market could then materialize. Lifchitz said:
“So basically, the run-up in Bitcoin seems more driven by rotation and a devaluating USD than a genuine interest in the coin, but should BTC reach and remain above $12,500 (i.e. July 2019 high) it could change the narrative. In the short term, a small pullback might be in the making, which would be healthy from here before engaging in a new run to $12,500.”
Overall, traders and on-chain analysts remain positive after Bitcoin’s relatively swift rally above $11,000.
There are some risks of a pullback as the futures market gets overheated with high funding rates, but the sentiment appears to be improving, and BTC is repeatedly testing a key resistance level at $11,400 as a result.
At the beginning of this week, the Eastman Kodak Company handed its chief executive 1.75 million stock options.
It was the type of compensation decision that generally wouldn’t attract much notice, except for one thing: The day after the stock options were granted, the White House announced that the company would receive a $765 million federal loan to produce ingredients to make pharmaceuticals in the United States.
The news of the deal caused Kodak’s shares to soar more than 1,000 percent. Within 48 hours of the options grants, their value had ballooned, at least on paper, to about $50 million.
The government loan is part of a broader federal effort to increase the country’s ability to respond to the coronavirus and future pandemics.
The options grant to Kodak’s executive chairman and chief executive officer, Jim Continenza, is the latest example of executives and board members at companies receiving such federal support to benefit from extraordinarily good timing. A number of those companies are involved in the hunt for vaccines and treatments for Covid-19.
Insiders at Vaxart, for example, received stock options shortly before the California biotech company announced in June that its potential coronavirus vaccine was being tested in a program organized by a federal agency, causing its shares to instantly double.
A Kodak spokeswoman declined to comment on the timing of the stock-options grants and emphasized that the value of the options could change before Mr. Continenza uses them to buy Kodak shares.
Kodak, best known for its iconic camera and film business, has been struggling for years to reinvent itself. The company emerged from bankruptcy protection in 2013, and its shares in recent years have mostly been trading at $2 or $3, giving it a market value of about $100 million.
Starting in May, Kodak began talks with the Trump administration about manufacturing the ingredients for pharmaceuticals, Mr. Continenza said in a television interview this week.
The deal was announced on Tuesday. President Trump said the federal loan from the U.S. International Development Finance Corporation would help reduce the United States’ reliance on other countries, in particular China and India, for the vast majority of ingredients used to make generic drugs. Mr. Trump called the Kodak deal “a breakthrough in bringing pharmaceutical manufacturing back to the United States.”
Kodak said it was creating a new pharmaceuticals division and will expand its facilities in Rochester, N.Y., and St. Paul, Minn. The division will eventually have the capacity to produce as much as 25 percent of the active ingredients used in generic drugs in the United States. Kodak has been in the chemicals business for more than a century and “has the facilities sitting there ready to go,” Mr. Continenza said in a TV interview this week.
It’s unclear whether the ingredients that Kodak makes will have any role in the fight against the coronavirus. Kodak will coordinate with the federal government and other manufacturers to figure out which ingredients to make, prioritizing those that are deemed critical to Americans and national security.
The day before the loan was announced, trading in Kodak shares surged, and its stock jumped about 25 percent, closing at $2.62 a share. That activity raised suspicion about improper trading ahead of the market-moving news, but The Wall Street Journal reported that it was apparently the result of reports by the media in Rochester, where Kodak is headquartered, about the pending announcement.
Around the time that Kodak began talking with the federal government this spring, Kodak insiders began receiving stock options. The pattern was first reported by Non-GAAP Thoughts, a digital newsletter.
On May 20, Kodak handed out 240,000 stock options to board members — an addition to its usual equity distribution in January.
The May stock options awarded to directors are now worth about $4 million. Those options are eligible to be exercised gradually over the course of this year.
Arielle Patrick, a spokeswoman for Kodak, declined to answer questions about why the directors were granted stock options in May.
On the same day that Kodak was alerting the local media to its about-to-be-announced deal with the Trump administration, the compensation committee of the company’s board voted to award Mr. Continenza 1.75 million stock options that allow him to purchase shares at prices ranging from $3.03 to $12.
By Wednesday morning, Kodak’s shares had soared as high as $60 each. They have since retreated to about $24, which means the stock options give Mr. Continenza the right to buy shares at a deep discount.
Mr. Continenza can exercise some but not all of the options immediately.
Ms. Patrick said that the rapid increase in the values of Mr. Continenza’s new stock options “are paper only. Mr. Continenza has not received any proceeds nor does he have any intention of selling.”
She added that Kodak’s board awarded the options to Mr. Continenza because when the company last year issued a type of debt that converts into equity, the value of the chief executive’s stock and options were diluted.
She said that Kodak received shareholder approval in May to issue additional shares, and that the compensation committee approved the options “at the first meeting of this committee since the annual stockholders meeting,” which was on Monday, July 27.
She declined to comment on why Kodak did not wait until after the White House announcement to grant the options.
The increase in Kodak’s shares this week also transformed some stock options that Mr. Continenza received when he became chief executive. They had been effectively worthless because of Kodak’s low stock price. This week, their value grew to about $59 million, Reuters reported.
LONDON — Before the pandemic, a traditional state of play prevailed in the enormous economies on the opposite sides of the Atlantic. Europe — full of older people, and rife with bickering over policy — appeared stagnant. The United States, ruled by innovation and risk-taking, seemed set to grow faster.
But that alignment has been reordered by contrasting approaches to a terrifying global crisis. Europe has generally gotten a handle on the spread of the coronavirus, enabling many economies to reopen while protecting workers whose livelihoods have been menaced. The United States has become a symbol of fecklessness and discord in the face of a grave emergency, yielding deepening worries about the fate of jobs and sustenance.
On Friday, Europe released economic numbers that on their face were terrible. The 19 nations that share the euro currency contracted by 12.1 percent from April to June from the previous quarter — the sharpest decline since 1995, when the data was first collected. Spain fell by a staggering 18.5 percent, and France, one of the eurozone’s largest economies, declined 13.8 percent. Italy shrunk by 12.4 percent.
Percentage change from previous quarter
Percentage change from previous quarter
Europe appeared even worse than the United States, which the day before recorded the single-worst three-month stretch in its history, tumbling by 9.5 percent in the second quarter.
But beneath the headline figures, Europe flashed promising signs of strength.
Germany saw a drop in the numbers of unemployed, surveys found evidence of growing confidence amid an expansion in factory production, while the euro continued to strengthen against the dollar as investment flowed into European markets — signs of improving sentiment.
These contrasting fortunes underscored a central truth of a pandemic that has killed more than 670,000 people worldwide: The most significant cause of the economic pain is the virus itself. Governments that have more adeptly controlled its spread have commanded greater confidence from their citizens and investors, putting their economies in better position to recuperate from the worst global downturn since the Great Depression.
“There is no economic recovery without a controlled health situation,” said Ángel Talavera, lead eurozone economist at Oxford Economics in London. “It’s not a choice between the two.”
European confidence has been bolstered by a groundbreaking agreement struck in July within the European Union to sell 750 million euro ($892 million) worth of bonds that are backed collectively by its members. Those funds will be deployed to the hardest hit countries like Italy and Spain.
The deal transcended years of opposition from parsimonious northern European countries like Germany and the Netherlands against issuing common debt. They have balked at putting their taxpayers on the line to bail out southern neighbors like Greece while indulging in crude stereotypes of Mediterranean profligacy. The animosity perpetuated the sense that Europe was a union in name only — a critique that has been muted.
The United States has spent more than Europe on programs to limit the economic damage of the pandemic. But much of the spending has benefited investors, spurring a substantial recovery in the stock market. Emergency unemployment benefits have proved crucial, enabling tens of millions of jobless Americans to pay rent and buy groceries. But they were set to expire on Friday and there were few signs that Congress would extend them.
Europe’s experience has underscored the virtues of its more generous social welfare programs, including national health care systems.
Americans feel compelled to go to work, even at dangerous places like meatpacking plants, and even when they are ill, because many lack paid sick leave. Yet they also feel pressure to avoid shops, restaurants and other crowded places of business because millions lack health insurance, making hospitalization a financial catastrophe.
“Europe has really benefited from having this system that is more heavily dominated by welfare systems than the U.S.,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Oslo. “It keeps people less fearful.”
The more promising situation in Europe is neither certain nor comprehensive. Spain remains a grave concern, with the virus spreading, threatening lives and livelihoods. Italy has emerged from the grim calculus of mass death to the chronic condition of persistent economic troubles. Britain’s tragic mishandling of the pandemic has shaken faith in the government.
If short-term factors look more beneficial to European economies, longer-term forces may favor the United States, with its younger population and greater productivity.
A sense of European-American rivalry has been provoked by the bombast of a nationalist American president, making the pandemic a morbid opportunity to keep score.
“There is a certain amount of triumphalism,” said Peter Dixon, a global financial economist at Commerzbank in London. “People are saying, ‘Our economy has survived, we are doing OK.’ There’s a certain amount of European schadenfreude, if I can use that word, given everything that Trump has said about the U.S.”
But for now, Europe’s moment of confidence is palpable, most prominently in Germany, the continent’s largest economy.
Though the German economy shrank by 10.1 percent from March to June — its worst drop in at least half a century — the number of officially jobless people fell in July, in part because of government programs that have subsidized furloughed workers.
Surveys show that German managers — not a group inclined toward sunny optimism — have seen expectations for future sales return to nearly pre-virus levels. That buoyancy translates directly into growth, emboldening companies to rehire furloughed workers.
Ziehl-Abegg, a maker of ventilation systems for hospitals, factories and large buildings, recently broke ground on a 16 million euro ($19 million) expansion at a factory in southern Germany.
“If we wait to invest until the market recovers, that’s too late,” said Peter Fenkl, the company’s chief executive. “There are billions of dollars in the market ready to be invested and just waiting for the signal to kick off.”
The euro has gained more than 5 percent against the dollar so far this year, according to FactSet. European markets have been lifted by international money flowing into so-called exchange-traded funds that purchase European stocks. The Stoxx 600, an index made up of companies in 17 European countries, appears set for a second straight month of gains outpacing the S&P 500.
The French oil giant Total saw demand for its products in Europe drop by nearly one third in the second quarter of the year, but a powerful recovery has been gaining momentum, said the company’s chairman and chief executive, Patrick Pouyanné.
“Since June, we have seen a rebound here in Europe,” he said during a call with analysts. “Activity in our marketing networks is back to, I would say, 90 percent of the pre-Covid levels.”
France, Europe’s second largest economy, has been buttressed by aggressive government spending. President Emmanuel Macron has mobilized more than 400 billion euros ($476 million) in emergency aid and loan guarantees since the start of the crisis, and is preparing an autumn package worth another 100 billion euros.
Those funds paid businesses not to lay off workers, allowing more than 14 million employees to go on paid furlough, stay in their homes, accumulate modest savings and continue spending. Delayed deadlines for business taxes and loan payments spared companies from collapse.
In the second quarter, when France was still partially locked down, the country’s economy contracted by nearly 14 percent. Tourism, retail and manufacturing, the main pillars of the economy, ground to a halt.
But services, industrial activity and consumer spending have all shown signs of improvement. The Banque de France, which originally expected the economy to shrink more than 10 percent this year, recently forecast less damage.
In Spain, a sense of recovery remains distant. Its economy shrunk by nearly 19 percent from April to June. The nation’s unemployment rate exceeds 15 percent, and could surge higher if a wage subsidy program for furloughed workers is allowed to expire in September.
Spain officially ended its coronavirus state of emergency on June 21, but has since suffered an increase in infections. The economic impacts have been compounded by Britain’s decision to force travelers returning from Spain to quarantine for two weeks. Tourism accounts for 12 percent of Spain’s economy.
Italy is also highly exposed to tourism. Its industry is concentrated in the north of the country, which saw the worst of coronavirus. The central bank expects the Italian economy to contract by nearly 10 percent this year.
But exports surged more than one-third in May compared with the previous month. That left them below pre-pandemic levels, yet on par with German and American competitors, according to Confindustria, an Italian trade association.
“We are starting to slowly recover after the most violent downfall in the last 70 years,” said Francesco Daveri, an economist at Bocconi University in Milan.
Europe’s fortunes appear on the mend because its people are more likely to trust their governments.
Denmark acted early, imposing a strict lockdown while paying wage subsidies that limited unemployment. Denmark suffered far fewer deaths per capita than the United States and Britain.
With the virus largely controlled, Denmark lifted restrictions earlier, while Danes heeded the call to resume commercial life. The Danish economy is expected to contract by 5.25 percent this year, according to the European Commission, with a substantial improvement in the second half of the year.
In the United States, people have wearied of bewildering and conflicting advice from on high against a backdrop of more than 150,000 deaths.
The result has been record surges of new cases along with a syndrome likely to persist — an aversion to being near other people. That spells leaner prospects for retail, hotels, restaurants and other job-rich areas of the American economy.
Liz Alderman reported from Paris. Emma Bubola contributed reporting from Milan, Raphael Minder from Madrid and Stanley Reed and Eshe Nelson from London.
The chairman of NBC Entertainment is under investigation for allegedly creating a ‘toxic work environment.’
According to The Hollywood Reporter, several current and former employees claim Paul Telegdy routinely made racist, sexist and homophobic remarks.
The 49-year-old is accused of mocking a gay employee’s voice, making fun of the size of someone’s penis and commenting on the size of a female executive’s chest.
Telegdy also allegedly threatened two former America’s Got Talent judges for speaking out against NBC.
However, despite his alleged behavior, he was never reprimanded by leadership at the network nor did he ever suffer any consequences.
Paul Telegdy, 49, is under investigation for allegedly creating a toxic work environment as the head of NBC Entertainment. Pictured: Telegdy speaks onstage at the UCLA Jonsson Cancer Center Foundation 24th Annual ‘Taste For A Cure,’ April 2019
Telegedy is accused of threatening two former America’s Got Talent judges, Gabrielle Union (left) and Sharon Osbourne (right), for speaking out against NBC
Sharon Osbourne, a judge on America’s Got Talent for six seasons, says Telegdy threatened her back in 2012.
Osbourne claims that it came after her son, Jack, was kicked off off a reality-show competition called Star and Stripes after he revealed he had multiple sclerosis.
When she said her family was considering holding a press conference, Telegdy allegedly thew several expletives at her.
‘He said: “Go f*** yourself,”‘ Osbourne told The Hollywood Reporter.
‘[He said]: ‘If you call the press you’ll never work in this town, you f******witch.
Osbourne says she quit America’s Got Talent after that phone call, but Telegdy denies that he uttered those words on the phone call.
But she’s not the only judge Telegdy battled with.
Throughout 2019, during her one season as a judge, Gabrielle Union said the culture at the show was racist, sexist and toxic.
In a claim filed with California state’s fair employment office, she alleged that Telegdy threatened to silence her during an internal company investigation.
Union told The Hollywood Reporter that his behavior ‘speaks to the culture at NBC’ and ‘shows very clearly that white male senior executives of NBC have a completely different set of rules that apply to them.’
However, in interviews with more than 30 current and former employees, they say this behavior was ‘par for the course’ with Telegdy and he never suffered any repercussions.
One executive claims Telegdy mocked an artist over the size of his penis and made lewd comment about a pregnant employee’s breasts.
Telegdy allegedly mocked the size of an artist’s penis and ridiculed the voice of a gay employee. Pictured: Telegdy during an NBC Universal Press Tour, January 2020
Union (left) claims Telegdy’s behavior was racist while Osbourne (right) says she first met him during a dinner, which he arrived to with a date
Another insider alleges he would ridicule a gay employee’s voice and pretended to impersonate a gay man with a lisp.
Three executives also told the magazine that Telegdy discussed a sexual encounter between him and two others in a work setting.
NBC says it is opening an investigation into the allegations, but did not elaborate on who would be leading it.
‘This narrative is not reflective of the values of NBC Entertainment or the culture we strive to create,’ an NBC spokesman told The Hollywood Reporter.
‘NBCUniversal takes these matters seriously, and will investigate these allegations, many of which are coming to our attention for the first time. NBCUniversal remains committed to creating a safe, respectful and supportive workplace for all.’
Telegdy also provided a statement to the magazine in which he denied the claims.
He said: ‘The nature of these allegations flies in the face of everything I stand for.
‘I hope that my actions over decades – empowering those around me, supporting artists, and creating shows with values of aspiration and inclusion at the core — speak louder than the selective words of a few.’