The Business World Wakes Up to a Pandemic


The N.B.A. has suspended its season because of the coronavirus and Tom Hanks said he and wife Rita Wilson have both tested positive. Global markets are sinking and U.S. futures point to another big drop. (Want this in your inbox each morning? Sign up here.)

A cascade of announcements marked a turning point in the coronavirus crisis, with ordinary life for many disrupted for the foreseeable future. Businesses and investors are adjusting to this new reality, in which everyday social interactions are altered, travel is restricted and general economic activity is limited — in some cases severely.

The World Health Organization declared the outbreak a pandemic, and said it was “deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction.”

• In sounding this alarm “loud and clear,” the agency noted that it hasn’t changed its assessment of the threat, nor did it want to cause “unreasonable fear.”

• It reiterated that countries should be taking “urgent and aggressive” action to contain the virus, noting that it is possible to control it, albeit while “taking a heavy toll on societies and economies.”

President Trump announced a travel ban and stimulus measures.

• Foreigners who have been in the 26 countries of Europe’s Schengen Area in the previous 14 days cannot travel to the U.S. for 30 days. The move will have profound economic consequences.

• The president also pledged aid for workers who are ill or quarantined, an expansion of low-interest loans for small businesses, and tax deferrals.

He mischaracterized some of these policies during his speech: It had to be clarified shortly afterward that the travel ban applied only to people, not goods, as he’d said. This spooked investors, according to Gregory Daco, the chief U.S. economist at Oxford Economics, in a research note this morning:

“Markets reacted negatively to what was perceived as a solemn but confused speech that placed blame on other nations, omitted to focus on immediate actions to relieve the most affected individuals, and lacked in concrete fiscal and health measures to address the economic and financial impact of the virus.”

Schools, sporting events and offices shut down.

• The N.B.A. suspension came after a player tested positive, and the N.C.A.A. said that its end-of-season tournament would take place in empty arenas. The fate of other sports leagues, and the Tokyo Olympics, remains up in the air.

• Schools across the country — and the world — have canceled classes.

• Many companies (including the New York Times) have asked employees to start working remotely.

The other big issue that corporate boards may soon have to confront: If your C.E.O. tests positive for the coronavirus, when do you tell investors?

At the end of last year, nonfinancial companies had borrowed $13.5 trillion, double their debt a decade earlier. According to a recent report from the O.E.C.D., this debt “has lower overall rating quality, higher payback requirements, longer maturities and inferior investor protection.”

What could go wrong? Energy companies are big issuers of so-called junk bonds, and the plunge in oil prices could make it harder for them to repay these debts, as the NYT’s Peter Goodman explains. Historically low interest rates have also given a wide variety of borrowers a false sense of security — “zombie” companies that have gorged on cheap debt may face a reckoning if lenders refuse refinancings during a virus-induced downturn, writes the FT.

How bad could it get? Moody’s expects defaults on junk bonds to rise, but even its worst-case scenario envisions a smaller spike in the share of bad debt than during the 2008 financial crisis. That said, given the recent borrowing binge, even a lower rate of defaults than during the global financial crisis could mean a similar absolute number of junk-rated companies reneging on debts.

We are, too. Here’s how to stay productive away from the office:

• The Verge advises setting up an area that helps you focus, and make sure you have the tools you need, like reliable Wi-Fi and mobile signals. And don’t forget to stretch your legs every so often.

• Quartz offers tips on how to work from home when your partner is too, including setting up separate zones if possible and deciding who does what around the house during the day.

• The NYT has useful information for leaving the house, such as whether you can get your money back if you cancel a flight — and what experts say about whether you should travel at all.





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