This is episode number fourteen in our series for 2020 and today’s date is Friday, May 8. 

First I talk to Chief Transparency Officer of TransparentBusiness, Moe Vela over in New York. An expert in remote working, he will provide valuable insight for businesses to help make this transition to remote work. Vela also served as a senior advisor to VPs Biden and Al Gore.

And then I’ll be talking to CommSec chief economist Craig James about the market in the week ahead.

But first, let’s talk to Moe Vela.

Listen to the full podcast here:

Goldman Sachs Group Inc. and Morgan Stanley economists said there is evidence the world economy is starting to recover from the coronavirus and the restrictions placed on businesses and consumers. “Economic activity has probably bottomed now,” Jan Hatzius, chief economist at Goldman Sachs, said in a report to clients on Monday. “Lockdowns and social distancing are starting to diminish as many countries are cautiously reopening their economies.”

Goldman Sachs predicted advanced economies will contract an average 32% in the current quarter before growing 16% in the next three months and 13% in the final quarter of the year. At Morgan Stanley, chief economist Chetan Ahya said in a report on Sunday that “a number of the high-frequency indicators we track suggest that the global economy is in the process of bottoming out.” But in a separate note also released on Monday, HSBC Holdings Plc economist James Pomeroy warned against betting on a “sharp turnaround in the global economy.” He cited numbers from China suggesting consumer spending may be slow to bounce back as people will remain nervous about shopping or returning to work.

As governments increasingly ease back on virus restrictions, another threat highlighted is the potential for a second wave of the outbreak, further disrupting activity. “The biggest downside risk to the global economic outlook is that infection rates re-accelerate sharply as the economy reopens,” Hatzius said. “After all, our recent analysis confirms that much of the medical improvement has resulted from lockdowns and social distancing.”

Donald Trump has threatened to axe the first phase of the US-China trade deal if Beijing misses import targets agreed before the pandemic hit amid growing tensions between the two superpowers. The US President said he would cancel the agreement struck after lengthy negotiations if China failed to buy an additional $200bn of American goods and services over the next two years as tensions rise about the origins of the coronavirus outbreak. He said: “If they don’t buy, we’ll terminate the deal. Very simple.” Mr. Trump had hinted he could impose new tariffs on China, claiming he had seen evidence linking a Wuhan disease research laboratory to the coronavirus pandemic – a theory many scientists see as unlikely.

COVID-19 has smashed the demand for workers. ANZ Australian Job Ads fell a massive 53.1% in April to be down 62.2% for the year. In trend terms, job ads declined 11.2% for the month and 33.9% for the year. This was more than five times the previous record monthly fall of 11.3% in January 2009, which was during the GFC.

Almost 1 million Australians have lost their jobs since social-distancing measures to limit the spread of COVID-19 ramped up, according to official figures. The ABS says the number of jobs in Australia fell by 7.5% between March 14 and April 18. Jobs in accommodation and food services slumped by a third, while 27% of arts and recreation jobs went. The job losses have been most severe in Victoria, Tasmania and South Australia With slightly more than 13 million employed people in Australia in early March, that means almost 1 million people lost their jobs in just over a month.

The ABS said job losses were heaviest in accommodation and food services, where more one-third of workers lost employment, followed by arts and recreation services where 27% of staff found themselves out of work. Those aged between 20-29 and over 70 were the worst affected by the job cuts in the accommodation and food services sector, with more than 40% losing work. Given the prevalence of young people in hospitality, it is not surprising that they have been hit hardest by job losses across the economy, with 18.5% of jobs for under-20s gone since mid-March and 11.8% of jobs for under-30s. Women have also been affected more in terms of job losses, with an 8.1% fall compared to a 6.2% slide for men.

Meanwhile, the Reserve Bank of Australia has kept rates on hold at its record low of 0.25% as Australia continues to battle with coronavirus’ impact on the economy.

Australian residential building approvals fell 4% in March, following a revised +19.4% jump in February, according to the ABS. Lower population growth, higher unemployment, declining household income, and consumer uncertainty are all likely to reduce demand for investment properties, which will put downward pressure on residential construction, particularly for the apartment market.    

Australia’s coronavirus lockdown will see gross domestic product plunge 10% in the June quarter, wiping $50 billion from the economy, according to Treasurer Josh Frydenberg. The Treasury forecast cited by Frydenberg is a further indication that Australia may be spiraling toward its first recession since 1991 as large tracts of the service sector are shuttered to stem the outbreak. The damage to the economy has already forced the central bank and conservative government to deliver a massive fiscal-monetary injection worth 16.4% of GDP to cushion households and help businesses to survive and retain workers. As a small open economy, the weak global backdrop may also constrain Australia’s economic recovery, according to Bloomberg economist James McIntyre, who has forecast the nation will suffer its deepest recession in 90 years.

The vast majority of businesses could be up and running in less than two months after the national cabinet approved a comprehensive set of health protocols to enable commerce to resume in a “COVID-safe environment”. Treasurer Josh Frydenberg says he wants large swathes of the economy running at full speed by July. Declaring “we now need to get 1 million Australians back to work”, Prime Minister Scott Morrison and the state and territory leaders agreed on Tuesday that when they next met on Friday they would lift restrictions in three steps with the aim of establishing “a sustainable COVID-19 safe economy in July 2020”.

Each state will move at its own pace with the common end goal of July. While not every business will be able to reopen, such as those that rely on international tourism, Mr. Morrison agreed the aim was to have the overwhelming majority back on their feet. He said the work done over the past six weeks to suppress the spread of the coronavirus while simultaneously boosting the capacity of the health system − as well as having 5 million people download the COVIDSafe app so far − “means that we are in a much stronger position to resist and deal with any increase in cases”.

A quarterly scorecard for women’s financial progress has recorded its weakest start to a calendar year since 2015, as job cuts start to pile on amid the coronavirus crisis. The Financy Women’s Index rose by 0.4 percentage points to a revised 71.3 points in the March quarter, compared to 71 points in the December period. The quarterly pace was the weakest since September 2018, with a slowdown in full-time employment growth among women and rising unemployment relative to men weighing on the result.

With COVID-19 driving expectations that female employment will worsen and exacerbate gender gaps in pay, superannuation, and unpaid work, it’s likely that the pace of progress will slow further and impact the timeframe to economic equality with men in Australia.  Financy reported the index result means that based on the rate of progress, economic equality in Australia is at least 32 years away. But the group has speculated the timeframe could expand, depending on the long-term impact of COVID-19.  The timeframe for achieving gender equality in superannuation was 19 years. Based on 2017-18 data, the report noted, women are retiring with 31% less super than men – but the gender gap is likely to widen if the pandemic has a sustained impact on employment and wage trends. Full-time job numbers had remained largely consistent, up only 0.1% to 3.35 million during the quarter, while male full-time employment rose by 0.9% to 5.49 million.  Prior to the pandemic, full-time employment growth for women had been stronger, but the rate of men has now become 10 times that for women. 

Westpac Banking Corp has revealed a massive 70% slump in first-half cash profit to $993 million and elected to defer the dividend until there’s greater clarity on the impact that COVID-19 will have on bad debts. Westpac chief executive Peter King sheeted the hit to profits back to the likely cost of settling the AUSTRAC matter, its ongoing response to recommendations from the Hayne royal commission, and growth projections of the cost of the virus crisis.

Blood products giant CSL has commenced development of its COVID-19 fighting immunoglobulin product at its Melbourne-based Broadmeadows facility, using the antibodies from plasma of recovered coronavirus patients. The development is the first step toward commercialising the investigative product, targeted at critically ill patients, and will be conducted in two phases.

A week after the government unveiled its COVIDSAFE smartphone app with grand promises about its potential to track the spread of the coronavirus among the community, it is facing a problem experienced by tech start-ups the world over … a failure to attract enough users.

While in any normal circumstances a new app attracting 5 million sign-ups in its first week would cause a company founder to harbour dreams of a future fortune, it is well below the threshold needed to make COVIDSafe worthwhile. Users have complained about technical problems with the app itself, which has been acknowledged as not working as well on iPhones as it does on Androids yet. Prime Minister Scott Morrison originally suggested he wanted 40% of Australians to download the app, whereas Chief Medical Officer Brendan Murphy said it would need contact tracing data for more than 50% of the population before he could be confident in using it as a factor in suggesting reduced restrictions. Australia’s population is 25.7 million, so it’s clear that, even with children removed from the numbers, we are miles away from getting where they really want to be.

Transurban said that traffic on its toll roads was observably hit by COVID-19 from early March. For the week starting April 26, traffic was down 44% across the group. Traffic will remain sensitive to future government responses, the firm said, although there are early signs of traffic stabilisation. As a result, Transurban’s $6.7 billion West Gate Tunnel project in Melbourne will be delivered late and will not be finished until 2023, the tollroad group said.

The 20 bidders for Virgin Australia, including Richard Branson, Andrew Forrest and AustralianSuper backed BGH, have been in frantic talks to determine which bidders can team up, as the race to save the stricken airline heats up. Administrators Deloitte said on Thursday, at the first meeting with creditors, that 20 parties had expressed interest in buying Virgin, although just eight had signed non-disclosure agreements.

Bidders with no airline experience are seeking to partner with those who have airline experience. Indicative offers are due within the next fortnight. The talks mean that the 20 potential bidders could consolidate to a dozen or less over the next fortnight, as the consortiums sharpen their bids and any tyre-kickers are weeded out. Local private equity firm BGH Capital is working with AustralianSuper on a potential deal and is among the local frontrunners. BGH – led by Ben Gray and advised by PwC head Luke Sayers and lawyer Leon Zwier – has been pushing hard on its “Team Australia” advantage. But talks are believed to include Singapore’s state-owned investment fund Temasek, which has an indirect interest in Virgin through its controlling stake in Singapore Airlines, which owns 20% of Virgin. Temasek was one of the large limited partners in BGH’s initial $2.5 billion equity fund when it was set up in 2018 and said it would look to co-invest in companies alongside BGH.

Potential new owners of Virgin Australia are on notice from Qantas chief executive Alan Joyce that there will be ultra-cheap domestic airfares when the coronavirus lockdown is lifted. Joyce’s declaration that Jetstar will be offering lots more seats at $39 each and special deals at $19 each on the popular Sydney to Melbourne route could throw a spanner in the sales pitch from Virgin administrator Vaughan Strawbridge.

Electronics and hardware giant JB Hi-Fi has ended the third quarter of its financial year with a bumper sales result, thanks to an unprecedented number of Australians working from home. JB Hi-Fi told investors on Wednesday comparable sales at its Australian stores for the three months through March climbed 11.3%, one of its highest-ever comparable growth figures for a single quarter.

At the same time, retail sales have soared by a record number in March as panic buying ahead of COVID-19 lockdowns spurred a huge increase in consumer activity. According to the Australian Bureau of Statistics, retail sales In March rose by 8.5%, well up from the 0.5% increase in February. The previous record had been set in June 2000 when consumers scrambled to buy goods before the implementation of the goods and services tax in July 2000.

Bringing forward the current pipeline of wind and solar projects will create more than 50,000 jobs and inject $50 billion worth of investment into the ailing economy, according to the Clean Energy Council. The industry group said in a report released that accelerated investment in renewable energy could power Australia’s economic recovery on the other side of the coronavirus. It said bringing forward approved projects could also lower power bills, help Australia become a “clean energy superpower”, and create jobs in regional communities that are normally left behind. The industry group argues that taxpayers do not need to carry the full financial burden of the projects, as private investors have a big appetite for investment in renewables. The council argues that “A Clean Recovery” should also:

  • Develop a national home battery program
  • Switch government and community buildings to solar and batteries, and commit government agencies to 100% renewables
  • Build 21st-century transmission and distribution networks and an electric-vehicle charging network
  • Support investment in large-scale energy storage and encourage the development of offshore wind energy
  • Help major energy customers secure low-cost supply and become globally competitive
  • Establish Australia’s renewable hydrogen capability.

And that’s it for this week. And next week, I’ll be talking to the CTO of Fornetix and Cybersecurity expert, Chuck White on Zoom Bombing and how to protect your remote workforce’s teleconferences from outside hackers. And I’ll be talking to IFM Investor’s chief economist Alex Joiner about the dire economic outlook.

In the meantime, you can find me on Twitter at talkingbizz, on Facebook, and on LinkedIn. And if you want, leave a comment. Wishing you all a safe and healthy week and looking forward to bringing you Talking Business next week.