Coronavirus update: Hong Kong study says China’s true case tally is likely four times higher than official numbers
China’s constantly shifting methodology for tabulating the number of cases of the coronavirus that causes COVID-19 has led it to greatly understate the numbers, and the true tally may be four times the official figures, according to a new study by researchers in Hong Kong.
The study, created by academics at the Hong Kong University School of Public Health and published in the Lancet, found that more than 230,000 people were likely infected in the first wave of the outbreak, whereas official Chinese data recorded just 55,000 cases as of Feb. 20.
China has reported just 83,878 cases of COVID-19 so far and just 4,636 fatalities, according to numbers aggregated by Johns Hopkins University. Those numbers have been treated with skepticism by many health officials and analysts, given that the illness was first reported late last year from the city of Wuhan, which was subjected to strict quarantine measures that were only lifted last week.
China has changed its approach on whom is counted over time and initially did not include patients who were asymptomatic or showed milder symptoms. Last week, China increased the death toll in Wuhan by 50%. The study found the numbers would be far higher if the country had used its most recent approach consistently from the start.
In the U.S., President Donald Trump said he did not approve of Georgia’s decision to restart its economy and told Gov. Brian Kemp so in a phone call. Dr. Anthony Fauci, the nation’s leading infectious-disease expert who appeared at Wednesday’s White House briefing for the first time this week, agreed and cautioned the state to move more slowly.
The head of the Centers for Disease Control and Prevention, meanwhile, said he did not intend to suggest in comments to the Washington Post that the coronavirus is likely to re-emerge as an even deadlier threat in the winter. Robert Redfield said he meant that the coronavirus and the flu would be a deadly combination if they are circulating at the same time and urged all Americans to get flu shots in the fall to help mitigate the danger.
In another controversy, Trump claimed not to know a doctor who was removed from his post as director of the Biomedical Advanced Research and Development Authority and shuffled off to another position with less influence. The agency, known as BARDA and housed within the U.S. Department of Health and Human Services, is on the front lines of vaccine development to treat COVID-19 and other deadly illnesses.
Dr. Rick Bright claimed he was pushed out for political reasons because he opposed funding to study chloroquine and hydroxychloroquine, a pair of long-used malaria drugs touted by Trump as a potential life saver for COVID-19 patients. So far the little research that has been done has been inconclusive, with one limited study indicating they were not effective.
“I don’t know who he is,” Trump said. “Guy says he was pushed out of a job. Maybe he was, maybe he wasn’t.”
Bright also accused members of the Trump administration of pressuring them to “fund companies with political connections” and asked for the an independent inquiry into his removal. He did not name any companies.
In Nevada, officials rushed to condemn comments made by Las Vegas Mayor Carolyn Goodman suggesting the city could act as a test case to measure the impact of the virus by reopening casinos, restaurants and small businesses and allowing conventions again.
“I offered to be a control group, and I was told by our statistician you can’t do that because people from all parts of southern Nevada come in to work in the city,” Goodman said in an interview with Anderson Cooper on CNN. “We would love to be that placebo side so you have something to measure against.”
The casino workers Culinary Union, which represents about 60,000 bartenders, cooks, housekeepers and other workers, said Goodman’s remarks were “outrageous considering essential frontline workers have been dealing with the consequences of this crisis firsthand.”
There are now 2.67 million cases of COVID-19 worldwide and 183,131 deaths, according to the Johns Hopkins data. At least 727,170 people have recovered.
The U.S. has the highest case toll in the world at 856,209 and the highest death toll at 47,272. New York remains the U.S. epicenter with more than 257,000 cases and more than 19,000 deaths, the data shows.
Spain has the highest number of cases in Europe at 213,024 and 22,157 deaths. Italy has 189,973 cases and 25,549 deaths, the highest number of fatalities in Europe.
France has 157,135 cases and 21,889 deaths, while Germany has 151,195 cases and just 5,367 deaths. The U.K. has 139,245 cases and 18,791 deaths. Turkey has 101,790 cases and 2,491 deaths, followed by Iran with 87,026 cases and 5,481 deaths.
What the data show
The growth in the number of Americans applying for jobless benefits eased slightly from a week earlier but remained alarming, with another 4.4 million applicants pushing the number above 26 million since the pandemic started to force states and local governments enforce strict stay-at-home and other social-distancing rules.
The spike in unemployment has likely pushed the jobless rate to between 15% and 20%, economists estimate. The only other time in American history when unemployment was that high was in the early stages of the Great Depression almost a century ago.
In less than two months, the pandemic has eliminated all the 23 million jobs created after the 2007–09 Great Recession.
Separately, the IHS Market flash purchasing managers index for services in April fell to a record low, while the manufacturing PMI weakened to the lowest level in 11 years. The flash services PMI fell to 27 from 39.8 in March, while the manufacturing PMI dropped to 36.9 from 48.5. Any reading below 50 indicates worsening conditions. The “flash” reading is based on approximately 85% of the final number of replies received each month.
New-home sales fell 15% in March to a seasonally adjusted annual rate of 627,000, according to the monthly report from the U.S. Census Bureau and the Department of Housing and Urban Development.
What are companies saying?
In company news, U.K. drug company AstraZeneca
said it will start a clinical study evaluating its diabetes drug Farxiga in 900 patients hospitalized with severe cases of COVID-19 who may be risk of organ failure. The randomized, global, Phase 3 trial will be conducted at Saint Luke’s Mid America Heart Institute in Kansas City, Mo., as well as at sites in Europe.
Two analysts said they expect Apple Inc.
to maintain an aggressive share-buyback program in the face of the pandemic, even as other companies are halting or suspending theirs to conserve cash. The stimulus bill that passed in March bans companies that accept aid from buying back their own shares until a year after they’re repaid their loans.
Apple has about $100 billion in cash and has pledged to become net cash neutral “over time.”
Walt Disney Co. had its credit rating downgraded by S&P Global Ratings by one notch to A-minus, with analysts citing the fact that its theme parks are closed indefinitely and all TV and film production is on hold.
Domino’s Pizza emerged as another pandemic survivor given strong demand for pizza, beating profit and sales expectations for the first quarter.
Target Corp. said April same-store sales are up 5% so far, boosted by demand for essentials and food and beverage, that weighed against declining demand for apparel and accessories. Target is extending a wage high for frontline workers until at least May 2.
Elsewhere, companies continued to furlough workers, cut costs, defer nonessential spending and tap credit lines.
Here’s the latest on what companies are saying about COVID-19:
• Alcoa Corp.
has halted its global quarterly supply-and-demand projections on the alumina, aluminum and bauxite markets because of the pandemic. The company ended the first quarter with $829 million in cash and debt of $1.8 billion, for net debt of $973 million. All of its bauxite mines, alumina refineries, aluminum smelters, casthouses, energy assets and its rolling mill remain operational, it said.
• Boston Beer Co.
missed consensus estimates for the first quarter and took a revenue hit during the pandemic. The maker of Samuel Adams Boston Lager and other beers pulled its 2020 guidance and said it has seen reduced keg demand and higher labor and safety costs. Revenue took at $10 million hit in the quarter due to $5.8 million worth of keg returns, and $4.2 million in direct costs. The company has shifted more volume to third-party breweries, which has increased production costs and impacted margins.
• Beyond Meat Inc.
has entered into a $150 million, five-year secured revolving credit facility to help fund future growth projects. The credit facility includes an accordion feature for up to an additional $200 million.
• Cooper Tire & Rubber Co.
will begin the process of reopening and ramping up production at its manufacturing facilities in the U.S. next week. The facilities, which have been closed for about five weeks as a result of the pandemic, include locations in Findlay, Ohio; Clarksdale and Tupelo, Miss.; and Texarkana, Ark. The tire maker has to close its Mexico plant again starting April 28 (it was reopened on April 13) after the Mexico government determined the plant was a nonessential business. The company will reopen its plant in Krusevac, Serbia, while its Melksham, England, plant remains closed.
• Crocs Inc.
missed profit and revenue estimates for the first quarter as stores were shuttered during the coronavirus pandemic. The Niwot, Colo.–based company ‘s adjusted per-share earnings came to 22 cents, below the 31 cents FactSet consensus. Revenue slid to $281.2 million from $295.9 million, also below the FactSet consensus of $296 million. The company withdrew 2020 guidance provided on Feb. 27 because of the uncertainty caused by the virus, but expects revenue declines to continue in the retail and wholesale channels as long as social-distancing measures remain in effect. Crocs has no near-term liquidity concerns and has taken measures to preserve cash. The company has furloughed store workers, cut executive and board pay and deferred certain spending. Its distribution centers remain operational with strict cleaning protocols in place. Capex for 2020 is expected at about $30 million, down from earlier guidance of $50 million to $60 million. The company has increased a credit facility with PNC Bank, National Association and other lenders to $500 million from $450 million and eased covenants for the second and third quarters. It has temporarily suspended share buybacks.
• Entertainment giant Endeavor Group Holdings Inc. is planning more cutbacks in the coming week, including staff furloughs and pay cuts that will affect about one-third of its 7,500 employees, the Wall Street Journal reported, citing a company spokesman. The company has already had layoffs and salary cuts. The pandemic has disrupted many of Endeavor’s businesses, which include talent management through WME and live events, including mixed-martial-arts organization UFC, along with other sporting events and beauty pageants. Last month, the company laid off 250 employees, including restaurant workers and groundskeepers. Chief Executive Ari Emanuel and Executive Chairman Patrick Whitesell will go without pay this year.
• Expedia Group Inc.
is raising $3.2 billion in new capital, in an effort to boost financial flexibility and liquidity. The online travel company will implement furloughs and reduced work week programs, suspend matching 401(k) contributions and the CEO and board members will forgo cash compensation for the rest of the year. The new capital will consist of $1.2 billion in a private placement of perpetual preferred stock and $2 billion in new debt financing. Apollo Global Management Inc. and Silver Lake are providing the equity investment. Separately, the company named Vice Chairman Peter Kern as its CEO and Acting CFO Eric Hart as permanent CFO.
• Gap Inc.
has suspended rent payments totaling $115 million in North America and is in talks to renegotiate or even terminate leases and close stores entirely. If the company is unable to change lease terms, it could be deemed to be in default. Gap has drawn down its full $500 million revolving credit facility and at the end of the fiscal quarter on May 2, expects to have $750 million to $850 million in cash. The retailer expects to take other measures to preserve and add to its liquidity, including canceling orders, cutting staff and expenditures further, among others. The ailing apparel company has furloughed the majority of its workers in the U.S. and Canada and cut corporate head count. It has cut capital expenditures by $300 million, withdrawn guidance for the full year, suspended stock repurchases and cut pay for the board and leadership team.
• Mack-Cali Realty Corp.
a real-estate investment trust focused on waterfront office and residential properties, has collected 96% of residential tenant rent for April and 90% of office rent. The news comes after New Jersey Gov. Phil Murphy’s executive order earlier this month, in which nonessential construction was to ceased and essential businesses were to adopt aggressive social-distancing and disinfection measures. “It is not known at this time whether the Governor’s executive order will be extended and what, if any, impact it may have on future rent collections, and past performance and April 2020 rent collections to date are not indicative of future results,” the company said.
• Snap Inc.
plans to offer $750 million in convertible notes that would mature on May 1, 2025. The notes will be offered in a private placement to institutional buyers who will have the option to purchase an addition $112.5 million in notes. Snap expects to use the proceeds from this convertible sale for general corporate purchases, including operating expenses as well as capital expenditures, with the option to also use the funding for acquisitions or share buybacks, though the company currently has no plans for either.
• Target Corp.
same-store sales so far in April have increased more than 5% from a year ago, as a “midteens” percentage decline in store sales was more than offset by a near four-fold jump (up 275%) in digital sales. Same-store sales fell 40% in apparel and accessories month to date, but rose more than 12% in essentials and food and beverage, more than 30% in hardlines and in the high teens in home. That follows same-store sales growth of 3.8% in February and an increase in the low double digits in March. The company still expects profitability to be negatively impacted by factors including category mix shift to lower-margin products, inventory write downs, and investments in pay and benefits. Target is extending its $2-an-hour wage increase until May 30, for frontline employees working amid the pandemic. The company had previously said the wage hike would last until at least May 2.