The Economist 29Feb2020

6 The EconomistFebruary 29th 2020
The world this week Business

Globalmarketshada turbu-

lent week amid heightened

concern about the economic

impact of the coronavirus

outbreak. The s&p 500index

dropped by 3.4% in a day, its

worst daily performance in two

years; over a week it was down

by 8% from the record high it

had recently attained. Stock-

markets in Europe and Japan

also swooned. As investors

piled into safe assets, the yield

on the ten-year usTreasury

bond closed at its lowest-ever

point. The vixindex, a

measure of stockmarket

volatility, spiked to its highest

level in two years.

Oil pricesalso fell sharply, as

the coronavirus led forecasters

to lower their projections for

demand sharply. Brent crude

traded below $53 a barrel, a big

dip from the almost $70 it had

reached at the start of the year.

Curtailed travel because of the

outbreak could cost the airline

industryalone $29bn in lost

revenue, according to one

estimate.

A long list of companies

warned about the impact of

coronaviruson their business,

including Microsoft,

Anheuser-Busch InBev and Rio

Tinto. The latter is a big pro-

vider of iron ore to China,

where dozens of blast furnaces

have been closed because of

restrictions on movement.

Wells Fargoagreed to pay $3bn

to settle with America’s Depart-

ment of Justice and Securities

and Exchange Commission

over a mis-selling scandal.

Between 2002 and 2016 thou-

sands of employees at the bank

who were under pressure to

meet sales targets created

millions of fake accounts for

customers. The scandal dented

theimageofWellsFargo,one

ofthefewbankstoemerge

fromthefinancialcrisiswith

itsreputationintact.

Mexico’sgdpshrankby0.1%

in2019,thefirstfullyearin

powerforPresidentAndrés

ManuelLópezObrador.Mr

LópezObradorcametooffice

promisingtoturbocharge

growththrougha mixtureof

spendingandinvestment,but

lastyearwastheeconomy’s

worstperformanceina decade.

Thecentralbankcutitsfore-

castforgrowththisyear.

Salesfromrecordedmusicin

Americahit$11bnlastyear,the

mostinovera decade,though

stillsomewayshortofthe

$14.6bnchalkedupin1999,

whencds ruledthecharts.

Four-fifthsofmusicrevenue

nowcomesfromstreaming.

The incredible journey

Although he has announced

and then delayed his departure

four times as Disney’s chief

executive, Bob Igertook mar-

kets, and employees, by sur-

prise when he stepped down

from the job with immediate

effect. After taking the reins in

2005 Mr Iger expanded Dis-

ney’s content catalogue by

acquiring several film studios

(culminating in 21st Century

Fox last year), turning Disney

into an entertainment behe-

moth. Mr Iger is staying on as

executive chairman until 2021

to focus on the creative side of

the business. Bob Chapek, the

new ceo, fresh from running

Disney’s theme parks, will

report to Mr Iger.

hpsaid it was “reaching out” to

Xeroxto explore whether a

combination of the two com-

panies would be in share-

holders’ interests. But it also

announced a $15bn share

buy-back plan, almost half its

market value, complicating the

path for such a tie-up. Xerox

has gone hostile in its $35bn

takeover bid for the computer-

and-printer maker.

In his annual letter to share-

holders, Warren Buffettde-

fended the investment strategy

of Berkshire Hathaway, his

holding company, which strad-

dles insurance, stockmarket

bets and industrial activities.

Last year Berkshire’s share

price recorded its worst perfor-

mance set against the broader

market in a decade. Still, it

made a net profit of $81.4bn

(mostly because of a change in

accounting rules). Separately,

Mr Buffett, a famous

technophobe, revealed that he

has started to use an iPhone,

though only for calls.

A measure that would compel

Appleto consider rights to

freedom of expression in its

dealings with China was

backed by 40% of shareholders

present at a meeting. A similar

item had been voted on before

but drew little support; in-

vestors today seem more eager

to push companies to take up

purpose-driven agendas.

Just bag it and go

Amazon opened its first Go

supermarket, which has no

cashiers, simply charging

customers through an app for

items they have taken from

shelves fitted with sensors.

The supermarket in Seattle

builds on technology used in

two dozen convenience stores

that Amazon operates. Teeth-

ing problems include accurate-

ly weighing fruit and vegeta-

bles. Shoppers must put a

product back in its correct

place if they do not want to be

charged for it, a potential

nightmare for those who have

enough trouble dealing with

self-checkout machines.

Volkswagen’sboss said he was

looking to employ a young

green activist who can push

the board to take a more ag-

gressive stance against climate

change. Sounds like an ideal

job for Greta Thunberg.

S&P 500

1941-43=

Source: DatastreamfromRefinitiv

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2019 2020