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Reuters has learned Amazon.com is in touch with two coronavirus test makers as it considers how to screen its staff and reduce infection risks at its warehouses. Internal meeting notes seen by Reuters say the online retailer is talking to CEOs at Abbott Laboratories and Thermo Fisher Scientific. The CEOs said they'd like to work with Amazon but said their testing capacity is taken up by the U.S. government. The documents also say talks touched upon whether Amazon could start such tests in at least one warehouse near its Seattle headquarters. In a statement Saturday, Abbott confirmed it has been contacted by Amazon and other companies to provide testing for their workforces. Thermo Fisher did not respond to a request for comment, and Amazon declined to comment. The drive to increase screening measures come as Amazon faces protests at several warehouses, where employees say they increasingly fear they'll contract the coronavirus at work. The company plans to roll out temperature checks and face masks for workers at all its U.S. and European warehouses by early next week. In the longer term, the notes say, Amazon wants to test workers for the virus and hopes other companies will follow suit.
On Monday, workers at an Amazon warehouse in Staten Island walked off the job for a second time, just one week after holding an initial strike, citing continued coronavirus fears amid 26 cases of the virus at the warehouse.
Yahoo Finance talks with retired Home Depot Chairman and CEO Frank Blake about how leaders should be leading amidst the coronavirus pandemic.
(Bloomberg) -- Wayfair Inc. soared as much as 51% after the online home-goods retailer said first-quarter net revenue growth would at least meet its forecast and that the sharp sales increase at the end of March has continued into April.Shares of Wayfair, which gets about 85% of revenue in the U.S., posted their biggest intraday jump ever Monday, climbing as high as $76.47.In a business update, the Boston-based company said its gross revenue growth rate more than doubled toward the end of last month, and that demand has been seen across most home goods categories in all of its markets. The outlook gave it some breathing room after Wayfair said just last week that the coronavirus was resulting in disruptions to its supply chain.Meanwhile, the company also announced it’s raising capital through a convertible notes offering, led by Great Hill Partners and Charlesbank Capital Partners. The Spruce House Partnership, one of Wayfair’s largest shareholders, also participated.Jefferies analyst Jonathan Matuszewski said Wayfair’s update shows that the company’s “pureplay e-comm business model is taking share in an environment where about 80% of the category is closed for business, its largest online competitor is focused elsewhere and consumers are spending on their homes.” The analyst, who rates the stock buy and has a price target of $89, said the convertible offering “provides additional cushioning” if a sustained economic slowdown materializes over in the coming months.Matuszewski also highlighted the revenue trends from January through early March. “Growth of slightly below 20% sits above the high-end of management’s guidance for 15-17%,” he said, adding that recent efforts to streamline workflows and prioritize high return-on- investment initiatives “may be bearing early fruit.”Wayfair led home-good peers higher Monday and is the top performer in the Bloomberg Intelligence North America Home Products Stores & Other Specialty Retail Index. The stock is down about 23% this year, compared with the 46% plunge for the index.Wayfair will report results for the first quarter ended March 31 in early May. The stock has 14 buy ratings, 13 holds, and 5 sells, with an average 12-month price target on the shares of $74.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Megvii Technology Ltd.’s revenue growth dissipated in the second half of 2019 after it joined Huawei Technologies Co. on a U.S. trade blacklist, underscoring the extent to which White House sanctions are hurting China’s technology leaders.The company backed by Alibaba Group Holding Ltd. grew revenue a mere 2.7% in 2019’s second half after more than tripling sales in the first six months of the year, according to unaudited numbers for investors seen by Bloomberg. On a full-year basis, Megvii fell short of its target for 2.9 billion yuan ($409 million) in sales by almost 28%, a person familiar with the matter said, asking not to be identified discussing internal targets.Megvii and its biggest competitor, SenseTime Group Ltd., had been among China’s fastest-growing startups but are now under scrutiny after the Trump administration blacklisted them over alleged involvement in human rights violations against Muslim minorities in China. The surprise action in October encompassed several leading players in the field of artificial intelligence, a key area of contention between the world’s two largest economies.Megvii suspended certain operations while it determined which parts of the business may violate the blacklist, which prohibited the export of American technology, and that delayed some orders or shipments in the second half, another person said. To re-energize the business, the AI giant is now developing new revenue streams, including temperature detection solutions deployed to help China curb Covid-19 this year.U.S. sanctions helped tank Megvii’s attempt to go public, a $1 billion deal regarded as the unofficial coming-out party for China’s burgeoning AI sector. Megvii, backed also by Alipay-operator Ant Financial, Lenovo Group Ltd. and China Mobile Ltd., this year allowed its application for a Hong Kong IPO to lapse, throwing its future plans into question. Megvii representatives declined to comment.Read more: U.S. Blacklisting Undermines Megvii IPO, China’s AI Ambition China’s advances in AI have unnerved Washington because both countries are vying for leadership in a technology at the heart of everything from autonomous driving and robot waiters to facial recognition. Chinese names like Megvii and SenseTime are joined by established players including Huawei, Tencent Holdings Ltd. and Didi Chuxing in a race with the likes of Google and Microsoft Corp. to develop systems fundamental to future modern economies.The company, last valued at about $4 billion according to people familiar with the matter, generates most of its revenue from products that combine software and sensors to help government agencies and other clients enhance public safety and optimize traffic management. Megvii disclosed in its August IPO documents that sales from that business, which it labeled “city IoT solutions,” jumped 270% to 694.8 million yuan in 2019’s first six months. It said in its prospectus that it served 112 cities in China, 38% of the country’s total, as of June.It also sells face-scanning systems to companies from iPhone-maker Foxconn Technology Group to Lenovo and Ant Financial, the payments affiliate that supports Alibaba’s e-commerce business. The company generated 207.2 million yuan from the segment it dubs “personal IoT solutions,” or 22% of its revenue. Its third major business line, solutions for logistics that deploy AI-empowered robots and sensors, made up some 5% of revenue.Megvii lost 3.4 billion yuan in 2018, partly due to changes in the value of preferred shares, according to its prospectus. It listed 1.4 billion yuan in cash, equivalents and bank balances at the end of June, while it used nearly half of that for operations in the first six months of the year. Its term deposits, which refers to short-term bank deposits with maturities of three to twelve months, stood at 3.3 billion yuan as of June, according to the IPO document.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Over the past few weeks, we’ve seen the sort of uptick in broadband usage that you’d expect to see over the course of years. In the US, data usage via the cable company Comcast is up 32 per cent nationwide, and by over 60 per cent in locked-down cities. Verizon had a 75 per cent increase in gaming traffic in just one week in mid-March.
(Bloomberg) -- Data sharing by technology companies is helping government officials fight the dizzying spread of the coronavirus by monitoring compliance with social distancing and stay-at-home orders.It’s also putting privacy experts on edge.Companies including Alphabet Inc.’s Google and Facebook Inc. were already collecting, for advertising purposes, huge volumes of data from websites and smart-phone apps like maps and weather services, which transmit signals about their owners’ location. Some of them are now stripping the data of personal identification markers, aggregating it, and providing it to researchers, public-health authorities and government agencies.The ability to pinpoint the movements of individuals is crucial at a time when controlling the pandemic’s spread depends on compliance with government orders to stay home if possible, and to practice social distancing if not.But consumer advocates fear that an emphasis on health over privacy could undermine the protection of civil liberties, similar to what happened after 9/11, when the U.S. secretly began collecting mass amounts of data on its own citizens in an effort to track down terrorists.Risk of Intrusion“There is an understandable desire to marshal all tools that are at our disposal to help confront the pandemic,” said Michael Kleinman, director of Amnesty International’s Silicon Valley Initiative. “Yet countries’ efforts to contain the virus must not be used as an excuse to create a greatly expanded and more intrusive digital surveillance system.”In the U.S. the new data-sharing practices are happening on many levels. One leading effort that began two weeks ago involves a partnership between a network of researchers and tech companies such as Facebook, which supplies anonymous and aggregated geo-location data.In assembly-line fashion, an analytics firm called Camber Systems takes mobile application data from digital ad companies and sends it multiple times a day to researchers who’ve joined the Covid-19 Mobility Data Network, according to network co-coordinator Andrew Schroeder.Those scientists study the now-anonymous data from multiple sources for insights about mobility rates, which are then shared with foreign governments like Italy and Spain and with U.S. states and cities, including New York, Seattle and California, Schroeder said.No ‘Surveillance’ The network says the analysis, which is meant to help measure enforcement of social-distancing rules, doesn’t contain personally identifiable information and that contracts governing the use of the information prohibit raw data from going directly to governments.Camber Systems declined to comment. Facebook said its data are aggregated in formats that prevent re-identification of individuals and that scientists and other users are subject to licensing agreements. Schroeder said the group is only using the data to address the public health crisis and not “for commercial purposes” or for “police surveillance.” Separately, Facebook, Google, Microsoft Corp., Amazon.com Inc. and others have pledged to work together in coordination with government to combat the spread of the virus. An ad hoc tech industry task force has also spoken with White House officials and the U.S. Centers for Disease Control and Prevention, according to a person familiar with the matter. Members of that task force have discussed proposals to share analyses of social-distancing compliance and hospital usage, the person said.Google announced Friday it would release new data about how the pandemic has cut down on foot traffic to transit centers, retail stores and public parks in more than 130 countries. The company said it’s responding to requests from public-health officials who want to know how people are moving around cities as a way to better combat the spread of Covid-19, the disease caused by the virus. Google reiterated in a blog post on Friday that, in its mobility reports, it’s using anonymized, aggregated data. Apple Inc. launched yet another initiative when it announced on March 27 that it was developing an app in partnership with the White House’s coronavirus task force, the CDC and the Federal Emergency Management Agency. The goal is to give the CDC guidance on users who input symptoms, risk factors and other information. The company said that individual responses wouldn’t be sent to the government.Earlier: Apple Joins Others in Launching Covid-19 Screening ToolsBut on Friday, four Democratic senators sent a letter asking what Apple was doing about privacy compliance, data retention, cybersecurity, and the terms of agreements with governments.With so many initiatives popping up, privacy gurus worry that information collected will later be used in ways it wasn’t intended. They say they don’t want to obstruct efforts that could help turn the tide in the crisis. Still, they want assurances that the data are truly anonymous. They want the data to be clearly defined, with real potential to be helpful, and to include limits on its reuse -- especially by law enforcement. They also want the data discarded once the coronavirus crisis ends.The sources of anonymous data can sometimes be exposed by combining datasets. Even when made anonymous, location points that come from phone apps, for instance, can be linked to a person by checking who lives at the address where the phone rests at night.“Location data can clue you in to a lot of other sensitive points about you,” said Sara Collins, policy counsel at Public Knowledge. “This discussion about backing into sensitive data from one data point I think is going to stay relevant.”Some of the data-sharing initiatives have already exposed potential community-spread problems. Tectonix GEO, based in Maryland, specializes in visualizing geolocation data, including for the federal government. It teamed up with X-Mode Social, based in Virginia, which sells location data from mobile phones to marketers. In March, they used the phone coordinates found on a single Florida beach during spring break to show how people had congregated and then dispersed -- possibly spreading the virus far and wide.X-Mode hasn’t shared any data with governments or heath agencies and hasn’t been been asked to, a spokesman for the company said.Cuebiq Inc., which specializes in helping companies analyze the effectiveness of ad campaigns on travel, weather, and other location-based apps, is posting its own “Mobility Insights,” with county-level readings across the U.S. on the movements of people in areas under stay-at-home orders. Chief Executive Officer Antonio Tomarchio, said it chose to provide analysis from a wide geographic area to protect privacy while trying “to help as much as we can.”“This is not like surveillance,” said Tomarchio, who’s watched the “disaster” unfold in his native Italy. “It’s not that we’re seeing each device.”Privacy RulesBusiness groups have used the pandemic to seek a delay in privacy rules, including a March letter from dozens of trade groups that urged California Attorney General Xavier Becerra to delay enforcement of the state’s new privacy law for six months due to Covid-19. The groups represent advertisers, tech companies, financial services firms, telecom providers, retailers, toymakers and more. Becerra’s office said it wasn’t planning any delay in the July 1 enforcement date.“Industry wants to use its role addressing today’s threats to public health as a lobbying tool to weaken the resolve of lawmakers to protect privacy,” said Jeff Chester, executive director of the Center for Digital Democracy and a longtime online privacy advocate.Use of consumers’ data is governed largely by individual services’ privacy policies, which are often contained in sprawling documents that most users click through without reading. Few, if any, of the data uses clearly run afoul of laws or regulations, privacy experts say.Hubei ProvinceMany of the proposed ways to use data to combat coronavirus in the U.S. also stop short of what several other countries have done.In China, authorities used phone-carrier data to trace everyone who’s been in or near Hubei province, home to Wuhan, the epicenter of the outbreak. Singapore’s TraceTogether app uses Bluetooth technology to map a person’s contacts in case an infected person fails to recall all social interactions. And Israel has approved the use of tracking technology developed to combat terrorism to trace the movements of coronavirus patients.The lack of a federal law in the U.S. and the potential for privacy erosions are prompting advocates to push for guardrails. “This pandemic is just another example of why we need a strong, comprehensive baseline federal privacy law and a U.S. data protection agency,” said Caitriona Fitzgerald, policy director of the Electronic Privacy Information Center, which has filed government records demands about the White House’s work with tech companies.“People may choose safety for the moment,” said Jessica Rich, a former director of the Federal Trade Commission’s consumer protection bureau and now a fellow at Georgetown Law’s Institute for Technology Law & Policy. “When this crisis is over, we will have eroded privacy norms and expectations and even regulations. And will we be able to get that back?”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- As the Black Death scythed through Europe in 1348 and 1349, workers across the continent discovered that they had power for the first time in their lives. Textile workers in St. Omer in northern France asked for and received three successive wage rises within a year of the Great Plague’s passing. Many workers’ guilds struck for higher pay and shorter hours. When the French government tried to cap these demands in 1351, it still allowed pay rises of as much as a third more than their pre-plague level. By 1352, the English Parliament — which in 1349 had passed a law limiting pay to no more than its pre-plague level — was taking action against employers who had instead doubled or tripled workers’ pay.These numbers come from the historian Barbara Tuchman’s, “A Distant Mirror,” a masterwork on the miseries of Europe in the 14th century. Published in 1978, when she thought it reflected the contemporary miseries of the 1970s, it has surged up the Amazon ratings as scholars from all disciplines search the history of pandemics to understand the post-coronavirus future that awaits us. Pandemics, we discover, have shaped civilization, and there are even arguments that they have ushered in positive change. The Black Death, which came as the Catholic Church was riven by a papal schism, changed attitudes toward religion, leaving Europeans more reluctant to submit to authority. As Tuchman put it, “the Black Death may have been the unrecognized beginning of modern man” — even if the Renaissance, Reformation and Enlightenment were all centuries in the future.One of the clearest lessons: labor gains in power at the expense of capital. This might seem too big an extrapolation from one of history’s truly extreme events. The Black Death cut Europe’s population by some 40% in less than two years. Naturally that strengthened the hand of the surviving workers. No other epidemic has had so great an impact, and neither will this one. But research just published by the San Francisco Federal Reserve suggests that less damaging pandemics have similar effects. They looked at a dozen epidemics, from the Black Death through to the H1N1 flu of 2009, which claimed at least 100,000 lives. The final death toll of several of these outbreaks was much lower than the current estimates for Covid-19 — although they tended to attack the working-age population more directly. The academics also re-ran their data excluding the Black Death (by far the most lethal) and the Spanish flu of 1918 (because the Great Depression following barely a decade later might have skewed results) and found the same picture. In the decades after a pandemic, real wages in Europe (for which there is the best continuous data) invariably increase:These figures are relative to what would have been expected absent the plagues, (and they are in real terms: after the Black Death, grain prices shot up, so higher wages initially only kept up with inflation) and show that pandemics boost labor for almost four decades. These gains are at the expense of capital; shareholders should brace for lower returns than they had been anticipating. Any look at the headlines should confirm that we could see a replication of these patterns. Under emergency conditions, governments across Europe are subsidizing wages and paying workers not to work. Workers who are still required to work while others are social distancing, and who had previously been prepared to accept poor pay and conditions, are becoming much more assertive. Most famously, workers at Amazon, long subject to complaints about practices at its warehouses, took to the streets to protest being forced to work in close proximity to each other after colleagues had contracted Covid-19; and Amazon even responded by making 80,000 new hires. Another alarming finding from the study is that there is no great recovery to look forward to. Pandemics are not like wars. Buildings and machines are not destroyed, and so there is nothing to rebuild. Some European politicians, including Spain’s prime minister, already are calling for a “new Marshall Plan” that would be “the greatest mobilization of economic and material resources in history.” But it may be optimistic to draw a parallel to the Marshall Plan, the enormous program of investment with which the U.S. supported the reconstruction of western Europe after World War II.When the academics looked at real natural interest rates after pandemics and compared them with the impact of wars, they found they had exactly opposite effects. The natural rate of interest, by their definition, is “the level of real returns on safe assets which equilibrates savings supply and investment demand—while keeping prices stable—in an economy.” Greater economic activity will require higher rates, all else being equal, while weaker economic activity will bring with it lower rates. A remarkable paper published by the Bank of England earlier this year calculated real natural rates back to 1311, before the Black Death. Their finding was clear-cut. Wars lead to higher real interest rates, which imply greater economic activity that needs to be controlled. Pandemics are followed by lower real rates, implying sluggish economic activity:The intuition behind this is that there is no shortage of capital that needs to be replaced, as there would be after a war. Further, there is probably a tendency to save rather than invest. When the economy takes a huge hit, many feel the need to save more — and hence consume less, meaning slower economic growth.There are also important psychological differences. After a war, traumatic though it was, the winners have the satisfaction of victory, while the losers can bring great intensity to rebuilding and salvaging national honor. The second half of the 20th century, and the economic rise of countries such as Germany, Japan and South Korea, shows the possibilities. After a pandemic, people have literally had the fear of God put in them, and there is no great sense of victory at the end. Often survivors feel guilty. Thus consumption and investment patterns can be influenced by post-traumatic stress disorder. To quote the investment analyst Peter Atwater, of Financial Insyghts: “We don’t recover from trauma; we adapt to it. We learn to live with its scars and to move forward amid the pain.”Specific effects of the coronavirus also include greater demands on government, as this generational crisis has shown at least one case where clear direction from the top can be very helpful. Figures on the political right are already alarmed that the coronavirus era will lead to a “collectivist temptation” and a rise in the appeal of left-wing and socialist political movements. More alarming is the potential for disorder and unrest. A common thread of pandemics has been an attempt to blame outsiders and foreigners. Massacres of Jews during the Black Death forced them to resettle in eastern Europe. Loss of faith in the church’s authority was disorienting, as were workers’ attempts to assert their rights. The two centuries after the Plague saw Europe riven by a succession of unnecessary wars. Revolts by peasants and artisans were common and always ended in brutal suppression. Like its predecessors, this panic has probably tipped the balance in favor of labor and against capital. It will intensify distrust in governments while also intensifying the desire for governments to take a more active role in society and in markets. We will be lucky if those conflicts are resolved peacefully.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.John Authers is a senior editor for markets. Before Bloomberg, he spent 29 years with the Financial Times, where he was head of the Lex Column and chief markets commentator. He is the author of “The Fearful Rise of Markets” and other books.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
At-home entertainment is seeing a dramatic surge amid the coronavirus pandemic, with streaming platforms like Disney+ (DIS) and Netflix (NFLX) benefitting.
(Bloomberg Markets) -- Mia Mottley’s gravelly voice rang with urgency. Standing at the podium at the United Nations, the prime minister of Barbados was warning of the dangers her island faced as storms swollen by warmer oceans tore through the Caribbean. “This is a matter of life or death for us,” she said.It was late September 2018 hurricane season and Barbados was flooding. A tropical storm threatened neighboring St. Lucia. On the other side of the globe, a typhoon took aim at Japan. The confluence of disasters was almost unthinkable. Almost. “This is not a science fiction movie,” Mottley said. “This is not a cartoon. And if I ever thought that it was a fantasy, what transpired in the last 24 hours across the different poles of the world has reminded me that it is not.”Mottley had won office only four months earlier, becoming her nation’s first woman leader. This was her inaugural address to the UN, but she spoke with conviction, her words charged by decades of pent-up concern about a changing climate. She had seen for herself how flying fish, a once plentiful delicacy, were avoiding warming coastal waters, how rising seas were eating away at the wide white-sand beaches she’d known growing up, and how droughts were drying up aquifers that provide the islanders’ drinking water.Financially shaky Barbados had escaped the wrath of disastrous hurricanes, but for how much longer? “We cannot plan our affairs or that of our people on the basis of luck,” she said. “It must be on the basis of policy and decisive action, but above all else on the basis of caring and empathy. I ask the world to pause, pause, and just get this one right.”In front of her in the UN’s vast General Assembly hall, half the seats were empty. Some in the audience of dignitaries slumped in their seat. Others milled about. The signs were clear: Mottley was on her own. She returned to Barbados that day to work on a plan to protect the island, a plan of her own.With wildfires ripping through Australia and the Amazon and along the U.S. West Coast, rising seas threatening small islands, and supercharged storms killing thousands and costing billions of dollars, markets and public officials are grappling with how to respond. There’s little that the prime minister of a country of some 290,000 people can do on her own to cool the world. But she can prepare her island nation for the inevitable crisis and its financial impact.Now 54, Mottley has become a champion of what are known in sovereign debt contracts as natural-disaster clauses, measures that give the government a break from principal and interest payments in the event calamity strikes. Over the course of a year and a half of contentious negotiations to restructure Barbados’s sovereign debt, Mottley was finally able to persuade creditors to accept the clauses last October. She also needed to win the support of Bajans, as the people of Barbados are called, many of whom lost money when the government defaulted on its Treasury notes.But in the process, Mottley says, Barbados has developed a model for how countries can protect their finances from climate change, especially neighboring Caribbean islands, which have been prone to default. “You’re not walking away from the liabilities, but you are walking away from the immediacy of the payments to create the cash flow that you need,” she says, seated at the head of a conference table at government headquarters in Bridgetown.Under the deal the government and its creditors finalized in October, Barbados would get a two-year payment moratorium in the event of a disaster severe enough to trigger a payout from the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Co., a risk pool that provides coverage for calamities. The Mottley clauses, which now cover about 80% of the country’s outstanding debt, would free up as much as $700 million to spend on rebuilding if weather events cause the government to enact them in the next five years. That’s equivalent to almost 15% of the economy that otherwise would go to debt payments. After the moratorium, payments would resume, including on accrued interest.That sort of breathing space could preserve the ability of Barbados and other tiny nations to respond to ever-more-frequent disasters. Hurricanes have caused more than $212 billion in losses and damages in the Caribbean since 1980, according to the Center for Disaster Management and Risk Reduction Technology in Karlsruhe, Germany.QuickTake Q&A: Who Pays Cost of Mother Nature's Destructive Fury?The region is strewn with examples of the link between disaster and debt. The Bahamas, 1,400 miles northwest of Barbados, is borrowing as much as $300 million to deal with 2019’s Hurricane Dorian, the worst in its history. In 2017, Hurricane Maria crippled Puerto Rico’s ability to pay down the more than $70 billion in debt owed by the U.S. commonwealth at the time. Again and again, natural disasters have held back economic growth and, coupled with fiscal mismanagement, pushed countries into untenable situations.Caribbean countries have restructured debt more than a dozen times in the past 20 years. “We live in such a bad neighborhood in terms of our vulnerabilities,” says Monica La Bennett, a vice president of the Bridgetown-based Caribbean Development Bank. “Governments, multilateral institutions, and the financial markets are recognizing that this is now a new normal, and so these clauses have become more important as part of the armory these countries can put in place.”Mottley has lived under the specter of a natural catastrophe for all her life. At the decaying three-story concrete government headquarters in the capital, she recalls how two decades ago, when she was minister of education, she warned that a bad storm could set back the country, once one of the most prosperous in the eastern Caribbean because of a thriving tourism industry and its offshore banking businesses. “The gains of development you thought you had are immediately whittled away in hours,” she says.The 166-square-mile pear-shaped island sits closer to South America than the U.S. That’s put it outside the main Atlantic hurricane belt, sparing it so many times that locals quip, “God is Bajan.” And it can look that way. Across from Mottley’s offices, sailboats bob in the clear waters of a horseshoe-shaped bay while cruise ships the size of office buildings dock in the distance.But Barbados is small, flat, and vulnerable. Most of the population lives near the coast. Some Bajans live in rickety wooden homes known as chattel houses, their design dating to days when sugar plantations dominated the island and many residents were former slaves. “Nature—and what it brings with it—was our greatest threat,” Mottley says.In conversation, Mottley, who earned a law degree from the London School of Economics and Political Science in 1986, switches fluidly from climate science to international finance to economic policy. She wears polygonal glasses that contrast with a round face, and an occasional smile reveals a gap between her front teeth.Mottley’s immersion in Barbadian politics began early. Her grandfather was Bridgetown’s first mayor. Her father served as consul general in New York, where Mottley studied at the United Nations International School. She entered politics before turning 30, becoming one of the youngest education ministers in the country’s history. She rose to become leader of the then-minority Barbados Labour Party in 2013.By 2017 she was already hatching a plan to turn the country around. The economy had stopped growing a decade or so earlier, infrastructure was in such disrepair that sewage leaked into the sea, and the country’s debt-to-gross domestic product ratio was surpassed only by Japan and Greece.The economy of the former British colony depends massively on tourism, so when the financial crisis came along, it ravaged international travel. Growth contracted and didn’t return until 2015. The travel and tourism industry supports more than a third of the nation’s $5 billion GDP. In recent years, the number of foreign visitors has risen to more than 1.5 million annually. The coronavirus pandemic has hit the island hard. Tourists canceled thousands of hotel reservations in March, according to the Barbados Hotel & Tourism Association, even as cruise lines dropped voyages to the Caribbean, including Barbados, where some 800,000 passengers normally disembark each year.The year before the 2018 election, as leader of the opposition, Mottley recruited a team of advisers that included Avinash Persaud, a native Barbadian, who’d spent years abroad as an investment banker at global heavyweights including State Street Corp. and JPMorgan Chase & Co., winning recognition for his work on risk modeling.As Mottley’s team settled down to work, Persaud and the others couldn’t ignore what was going on around the region. The 2017 Atlantic hurricane season brought 10 of them, plus a handful of tropical storms that wreaked havoc in the U.S., the Caribbean, and Central America. Hurricanes Irma and Maria, Category 5 monsters, formed within days of each other, severely damaging Caribbean and Atlantic islands and the U.S. mainland. Irma destroyed tiny Barbuda. Maria left almost 3,000 dead in Puerto Rico. “It was just a horrific year,” Persaud says. “It led to a complete rethinking.’’Mottley was already familiar with debt clauses that could afford protection against storms. The idea was actually born in neighboring Grenada, a tiny island whose major exports are nutmeg, mace, and newly minted doctors from its medical school. Hurricane Ivan hammered it in 2004, beginning a decade of economic malaise that resulted in a default a decade later.During Grenada’s restructuring, financiers sought ways to cushion government indebtedness. A few ideas already existed, including so-called collective action clauses, which give a supermajority of bondholders power to make debt restructurings binding, as well as catastrophe bonds, mainly issued by insurance companies to protect against disasters.Grenada’s adviser in the restructuring was White Oak Advisory in London. Managing director J. Sebastian Espinosa, an ex-managing director at investment bank Houlihan Lokey Inc., and his partner David Nagoski, a former U.S. Treasury official, have advised governments throughout Africa and Latin America. In Grenada’s case, they developed a clause that would specifically address the government’s fiscal condition after a hurricane.“We wanted to come up with something that was conducive to bolstering resilience to rising climatic risks,” Espinosa says. “Adverse-weather clauses provide vulnerable sovereign debtors with a degree of flexibility by creating built-in buffers that can help them absorb some of the financial impact.”Grenada’s restructuring culminated in 2015, and Mottley would build on that work. Having won office in a landslide in May 2018, she promptly announced the island would default on its debt of about $8 billion. She took the born-in-Grenada idea and expanded it, hiring White Oak for Barbados’s restructuring. The company drafted clauses that would include all types of natural disaster and cover almost all of Barbados’s obligations. Mottley sees the clause as a way to free up cash for rebuilding that would otherwise go to creditors. “If you have an event, you need fiscal space,” she says. “How do you best do that but by suspending your debt payments?”To get the restructuring done, however, Barbados needed buy-in from skeptical creditors. Mottley also needed the support of her own citizenry, who in a restructuring risked losing money from their savings and from retirement plans.In the end, Mottley was able to spread out the pain of austerity. She raised taxes on tourism, reasoning that visitors use infrastructure and services as much as residents, if not more. She also announced that foreign loans and bonds would be renegotiated, a surprise from a country that once boasted of its investment-grade credit rating and history of fiscal prudence.Reaching an agreement with foreign holders of dollar-denominated bonds proved more contentious. Mottley tried to sell the natural-disaster clause as protection for lenders, because the government, without the clause, might default on its debts following a big storm.Creditors didn’t buy it. Several institutional bondholders formed a committee, including Eaton Vance Corp., Greylock Capital Management, Teachers Advisors, and the Guyana Bank for Trade & Industry. The group wanted Barbados to consider an alternative approach, such as an insurance policy, says Rafael Molina, managing partner at Newstate Partners LLP, an advisory firm in London for the creditors. “I can understand the government of Barbados is concerned about hurricanes, because the threat of climate change is very real,” he says. “But from the beginning, creditors said they didn’t want this clause. There is no market for bonds with these clauses. It has to be driven by the market.”Mottley took a hard-line approach. Negotiations dragged on and at times appeared stalled. Having secured a $290 million bailout package from the International Monetary Fund, she could afford to bide her time because Barbados didn’t necessarily need to borrow from capital markets.In the end, fatigue set in, Molina says. Despite the creditors’ objection to the clause and to other government demands, they wanted to close the deal. “The thought was, Do we really want this to drag on for two years? We’ll just take it and move on,” he says.The creditor committee accepted the government’s deal, with one caveat designed to make the bonds more salable: If natural disaster strikes, Barbados has to notify creditors of its intent to enact the clause. If a committee majority votes against its use, it can’t be enacted.The wrangling over the Barbados deal exposed a weakness that may inhibit widespread use of Mottley clauses: The market hasn’t figured out how to price the risk in such cases. So far, though, investors seem welcoming. Similar bonds issued by Grenada were trading around par before the March credit sell-off. Buyers have actually pushed up the price for the new Barbados dollar bond, which matures in 2029 and carries a 6.5% coupon, since it started trading in December.Just as Barbados built on Grenada’s experience, other countries may build on Mottley’s. As they consider ways to balance the needs of countries and creditors alike, the IMF and World Bank have held discussions on the clauses. In the Bahamas, where Hurricane Dorian caused $3.4 billion in losses and damages, the government has considered a similar provision in new debt sales.For now, the clauses are “experimental,” says Michael Papaioannou, a visiting scholar at Drexel University in Philadelphia and an expert on emerging-market debt. They could become common if multilaterals such as the World Bank and IMF include them in loan contracts. “We are seeing the first steps,” he says.Barbados is determined to keep taking them. Although wide-scale acceptance of the clauses “will take a while,” Persaud says, Barbados plans to include the clause in all future debt sales, blazing a path for other governments. “It does require a few pioneers,” he says. “Financiers love to let someone else be first. They get paid a lot of money, but they’re risk-averse.”On a January afternoon in Bridgetown, Mottley gathers her cabinet together to go over the numbers for the coming budget year. She whips out an iPad to check spreadsheets that show debt has declined to 114% of GDP from about 176% when she took office. She points to a part of the spreadsheet that shows how much the country will save if it has to enact the hurricane clause—a bit of certainty amid the wild unpredictability of climate change.Outside, a steady, light rain is falling. It’s a welcome respite from a punishing dry spell. But even this relatively small amount of precipitation is inundating streets that have never flooded before. “Even without hurricanes you have normal floods,” she tells the room. She mentions that it’s been six decades since a catastrophic hurricane struck the island. She turns to a wooden tabletop and raps it with her knuckles. “Barbados has been luckier than most.”Fieser is a credit market reporter based in Bogotá. For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- Senator Kelly Loeffler sold a total of $46,027 worth of stock in an online travel company in the day leading up to President Donald Trump’s announcement of a ban on most European travel to the U.S.Though the transactions were relatively small for Loeffler and her husband -- whose net worth is estimated at more than $500 million -- the sales represented an about-face.Loeffler, a Georgia Republican, had just days earlier purchased the shares, in Booking Holdings, jointly with her husband, Jeffrey Sprecher, the chief executive officer of Intercontinental Exchange, parent firm of the New York Stock ExchangeBooking Holdings provides online bookings for flights, hotels and other travel-related services, all of which have collapsed because of the Covid-19 pandemic.The stock was purchased on March 6, the day that Loeffler traveled with Trump, visiting the Centers for Disease Control and Prevention headquarters in Atlanta for an update on the coronavirus response, and continuing on a later flight to Florida.It was sold on March 10 and 11. After the markets closed on March 11, the president announced his European travel restrictions.The details, provided by the senator’s office, go beyond the financial transaction reports she recently filed that merely require ranges for various holdings.Last month, news reports about her sales and purchases of other stocks -- after government briefings to Congress on the virus -- caused a stir, with critics questioning whether she was sufficiently focused on her constituents. Some stock sales by another senator, Richard Burr, a North Carolina Republican, have prompted a government inquiry.Loeffler said that outside finance professionals manage her portfolio and do so at arm’s length. Her campaign has declined to identify those advisers.“These transactions are consistent with historical portfolio activity and include a balanced mix of buys and sells,” according to a spokesman, Stephen Lawson. “Her stock portfolio is managed independently by third-party advisors, and she is notified” after transactions occur, he said.She was appointed in December by Georgia’s governor, Brian Kemp, to fill out the term of Senator Johnny Isakson, who retired, and is running for the seat this fall.Her messages on Facebook try to maintain a focus on her efforts to combat the coronavirus and keep Georgia strong. “So, all of these stories that you are seeing attacking me are nothing but fake news. These are politically motivated attacks that prey on the fears of Americans during a global pandemic,” she said in a video posted on Wednesday.The disclosures present a fuller portrait of the couple’s trading activities this year. The activity shows their advisers taking a number of defensive steps as the markets began to slide.The new, detailed financial disclosures from Loeffler show that she and her husband bought $590,557 in stocks between Feb. 24 and March 13, and sold stocks worth $845,557 from Feb. 20 to March 9.There was a different series of transactions that allowed them to take some money up front while betting that stock prices, even if crushed in the near term, would rebound later this year.The strategy, involving the sale of put options, is commonly used by hedge funds to take advantage of fluctuating markets.“Why sell put options? They’re a play on volatility,” said Jim Angel, a professor at Georgetown University.On Feb. 20 and 21, Loeffler’s advisers sold put options on five companies, including DuPont de Nemours Inc., Kellogg Co. and Alibaba Group Holding Ltd. The sale generated immediate premiums, but obligate the couple to buy the underlying shares if they fall below the strike price when the options expire later this year. So far, all but the Alibaba and Kellogg options are in the red. Two weeks later, Loeffler’s advisers sold put options in another basket of companies, including BP Plc, Chevron Corp. and American International Group Inc. Most of those are also underwater.Earlier in the year, Loeffler reported the sale of put options in Delta Airlines, Aflac and Caterpillar Inc., all of which are currently in the red.Another professor suggested the strategy was unusual for a traditional portfolio and might suggest a need for cash. “It’s a risky play, with limited upside and unlimited downside,” said Craig Pirrong, a professor of finance at the University of Houston. “If my adviser were doing that,” he added, “I’d be kind of ticked.”Before she became senator, Loeffler had served as chief communications and marketing officer for Intercontinental Exchange, and later was chief executive officer of Bakkt, an Intercontinental unit that trades Bitcoin futures. She is also a co-owner of the Atlanta Dream of the Women’s National Basketball Association.She is self funding her campaign. Four-term Republican Representative Doug Collins is among those challenging her in what is a wide open “jungle primary” on Nov. 3. While Loeffler’s spokesman said her financials are being handled with integrity and transparency, a spokesman for Collins accused her of having a “peek-a-boo” trust rather than a truly independent blind one. (Updates with comment from Loeffler spokesman in paragraph 10)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.