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The rush to relax strict lockdown measures and jumpstart the global economy after weeks of quarantine restrictions has put businesses in a tight spot.
Competing guidance from national and local officials in the United States and the United Kingdom is leading to confusion about when and how companies should restart operations, while feeding concerns about whether workers will be protected.
What’s happening: Some US states are allowing businesses to reopen, while others are leaving stay-at-home guidance in place for longer. The UK government has changed its main guidance to “stay alert,” while national officials in Wales, Scotland and Northern Island continue to urge citizens to stay at home.
On Sunday, Prime Minister Boris Johnson encouraged workers in some industries, such as construction and manufacturing, to return to their jobs — but the government has yet to share guidance on best practices.
“It’s a recipe for chaos,” Frances O’Grady, general secretary of the Trades Union Congress, which represents 5.5 million workers, wrote on Twitter.
In the United States, Tesla (TSLA) CEO Elon Musk has emerged as the loudest critic in the business community of attempts to keep nonessential businesses shut, after months of railing against stay-at-home orders.
Over the weekend, Tesla filed a lawsuit against Alameda County, California, after local officials refused to let the company reopen its Fremont factory. Musk also threatened to move the company’s headquarters to Texas or Nevada, where shelter-in-place rules are less restrictive.
Wedbush Securities analyst Daniel Ives notes that moving the Fremont factory would take at least 12 to 18 months and could snarl Tesla’s supply chain in the meantime. But the threat highlights the confusion swirling as government leaders and corporations alike try to navigate a patchwork of fast-changing rules.
Despite the murky environment, some companies are tentatively getting back to business. Apple (AAPL), for example, will reopen some stores this week in Idaho, South Carolina, Alabama and Alaska with new safety measures in place. The stores will require temperature checks and face coverings for staff and customers.
Marriott takes stock of the coronavirus damage
Marriott (MAR), the world’s biggest hotel chain, has been battered by the coronavirus pandemic as people around the world stay at home. Now investors have two big questions: How bad are the company’s finances, and what’s the plan moving forward?
What we know: The company on Monday reported a 92% drop in profit between January and March, and said that revenue per available room crashed by roughly 90% in April. A quarter of its hotels around the world remain closed.
Marriott said demand has stabilized, “albeit at very low levels.” The company will hold a call with analysts at 8:30 a.m. ET.
Shares dropped 1.5% in premarket trading. They’re down more than 42% this year, compared to a 9% drop in the S&P 500.
Hospitality companies have been honest that the industry will need some time to rebuild after the pandemic is brought under control.
“I feel spectacularly good about the long-term for the industry,” Hilton CEO Christopher Nassetta told analysts last week. But he cautioned that the recovery period is likely to last two or three years.
Global occupancy levels are up from a low point of 13% to 23%, Hilton said.
One sticking point for investors could be rising costs as hotels roll out new measures to keep staff and customers safe.
Marriott has said that it will use electrostatic sprayers to clean guest rooms and public areas and is testing ultraviolet light technology. It’s also reconfiguring many of its properties to facilitate social distancing.
Investors bet on negative interest rates in the United States
In recent days, investors have bet that the Federal Reserve could push interest rates into negative territory for the first time ever next year. But analysts warn that such action remains unlikely, even as the central bank mulls creative ways to help lift the US economy out of a deep recession.
The latest: Some futures contracts tracking expectations for US interest rates traded at negative yields late last week. Yet UBS economist Seth Carpenter doesn’t think policymakers will bite.
“Chair [Jerome] Powell has stated explicitly on numerous occasions that he does not plan to make the federal funds target rate negative,” he reminded clients on Monday.
Still, the move is feeding chatter about whether the Fed could eventually go this route. Negative rates — which require banks to pay to park money with the central bank, with the aim of spurring lending — are already in place in Europe and Japan. The policy is controversial, though, because it can hurt banks’ profitability and penalize savers.
Up next
AutoNation (AN) and Under Armour (UA) report earnings before US markets open. Caesars Entertainment (CZR), Eventbrite (EB) and Tilray (TLRY) follow after the close.
Coming tomorrow: Saudi Aramco, the world’s largest oil producer, shares results from a tumultuous first quarter.
