DealBook: Coronavirus Is Unwinding Global Economic Gains

January 28, 2020

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Franck Robichon/EPA, via Shutterstock

As virus spreads, investors look for safety

Asian stocks fell again today after a global sell-off yesterday, as investors worried that China’s coronavirus outbreak could undo months of economic gains around the world.

• Shares in Korea and Singapore fell amid fears that companies in those markets will suffer from a drop in Chinese consumer spending.

• The S&P 500 declined 1.6 percent yesterday, while the Stoxx Europe index slipped 2.3 percent.

• Brent crude oil fell below $60 a barrel.

• The values of the dollar, the yen and gold all rose.

There’s reason for investors to still be worried. The death toll from the outbreak has risen to over 100 people, while more than 4,500 infections have been reported worldwide. And this morning, Hong Kong restricted travel from mainland China.

But there’s also reason not to panic, at least in the U.S.: “The American economy is relatively insulated from trade, and the important consumer sector continues to show signs of strength,” write Matt Phillips and Katie Robertson of the NYT.

Today is looking a little better, financially. S&P futures forecast a positive market opening, while European stocks rebounded modestly.

More: Beijing is racing to contain anger at the government’s response to the outbreak. The director-general of the World Health Organization met with Chinese officials to assess the response. And the disease is testing China’s already-struggling health care system.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced in London.

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A pair of Nike Kobe 1 Protro sneakers in 2018. Gregory Shamus/Getty Images

Nike seeks to stop profiteering after Kobe Bryant’s death

The sports gear giant is said to have pulled all items tied to Kobe Bryant from its website, Nick DePaula of ESPN reports. One reported reason: to stop flippers from selling merchandise featuring the late N.B.A. star.

Nike is still figuring out a new strategy for releasing Mr. Bryant’s shoe line, which has been among the company’s best-selling basketball sneakers. A new colorway had been scheduled for release on Feb. 7.

But it’s also worried about people buying up Kobe products and then reselling them online at much higher prices. “On some secondary marketplaces, prices for Bryant’s sneakers and memorabilia have seen a 200-300 percent spike over the past 24 hours,” Mr. DePaula writes.

Other retailers have similar concerns. The online seller Urban Necessities on Sunday moved to limit price increases on consignment sales of Kobe merchandise “out of respect for his family and legacy.”

More: A reconstruction of Mr. Bryant’s doomed helicopter flight.

Google/EPA, via Shutterstock

The secret market for your browsing history

Avast makes money by selling antivirus software. It also profits by selling the internet history of users to companies like Google, McKinsey & Company, PepsiCo and more, according to Joseph Cox of Motherboard.

• Leaked documents from an Avast subsidiary, Jumpshot, “show that the Avast antivirus program installed on a person’s computer collects data, and that Jumpshot repackages it into various different products that are then sold,” Mr. Cox writes.

• “Avast claims to have more than 435 million active users per month, and Jumpshot says it has data from 100 million devices.” Several Avast users said they didn’t know about the sale of their data.

• The data “includes Google searches, lookups of locations and GPS coordinates on Google Maps, people visiting companies’ LinkedIn pages, particular YouTube videos, and people visiting porn websites.”

• “It’s great data for these companies, because it’s down to the device level with a timestamp,” an unnamed source told Mr. Cox.

How regular investors lose out on billions to ultrafast traders

High-frequency traders earn a total of nearly $5 billion a year by acting on information before anyone else can — effectively a surcharge on regular investors, according to a new study by Britain’s Financial Conduct Authority.

• The study focused on “latency arbitrage,” in which high-frequency traders use sophisticated computers and other technology to react to market-moving news within milliseconds, writes Alexander Osipovich of the WSJ.

• Such arbitrage amounts to a tax of about 0.0042 percent on transactions in Britain. Extrapolated worldwide, that means those traders earned about $4.8 billion, the study finds.

• The findings come as presidential candidates like Senators Bernie Sanders and Elizabeth Warren push for a financial-transaction tax to curb high-frequency trading and exchanges weigh “speed bumps” to limit latency arbitrage.

Philip Krim, Casper's C.E.O. George Etheredge for The New York Times

Casper isn’t a unicorn anymore

The popular online seller of mattresses disclosed yesterday that its I.P.O. may value it at less than $1 billion. It’s a sign that once-highly-valued start-ups are continuing to face a new, more skeptical reality.

Casper currently expects its shares to be priced at $17 to $19 each, the company said in an updated prospectus. At the high end of that range, the business would be valued at about $745 million.

The company raised money last year at a $1.1 billion valuation. It has pitched itself as a leading direct-to-consumer company that understands how to sell to younger customers online — while also striking partnerships with brick-and-mortar retailers like Target.

That drop reflects investor concerns about money-losing companies with no clear path to profitability, which took on new urgency with the flameout of WeWork’s I.P.O. effort last fall. Casper lost about $67 million in the first nine months of last year, and said its ability to make profits depends on … spending more money on growth.

We’ll see what happens if Casper follows through on the I.P.O., which could price as early as next week.

The bigger issues behind that viral nanny post

Silicon Valley and Twitter were abuzz last week about a job posting from a mother and C.E.O. looking for a nanny with seemingly lofty qualifications. But there’s more to think about than just poking fun at a very specific job posting.

In case you missed it, the qualifications included:

• The ability to “compare and make recommendations regarding using credit card points to booking vacations versus paying cash.”

• The ability to play math games with the C.E.O.’s twins like “‘how much fish should we buy today for five of us?’”

• Being able to do calisthenics with the kids and have experience driving in the snow.

The internet mocked the posting, calling it “bananas” and “the most demanding ad for a nanny ever.”

But the unnamed single mother who wrote it disagrees, telling Ruth Graham of Slate, “What I realize now is that, like a lot of working executives and working moms, I’m spending a significant amount of my time doing research and organizing.” (Petula Dvorak of the WaPo agrees, writing, “It taps into the trap modern motherhood has become.”)

“If I were Scott McNealy, former C.E.O. of Sun Microsystems, and I’d done this ad, nobody would think twice,” the mom also told Slate.

The speed read

Deals

• Boeing has secured $12 billion in loans to build up a financial cushion as it struggles to return its 737 Max plane to service. (FT)

• Antitrust regulators are reportedly investigating a potential takeover of Dean Foods, the bankrupt milk processor, by a big dairy farmer cooperative. (WSJ)

• Why MGM, the cinematic home of James Bond, could be a takeover target this year. (CNBC)

• Big fees and bad performance are making hedge funds increasingly unattractive to institutional investors. (FT)

Politics and policy

• President Trump announced plans to broaden tariffs on imported steel and aluminum, saying that existing levies haven’t done enough to spur domestic production. (NYT)

• Democrats in Pennsylvania are worried that calls to ban fracking could hurt their chances of winning the state in November. (NYT)

• How the Republican Party is increasingly becoming the party of poorer Americans. (NYT)

Tech

• The grocery delivery service Instacart is reportedly fighting efforts by some Illinois employees to unionize. (Motherboard)

• The food delivery service Grubhub has listed some restaurants on its platform without their consent. (SF Chronicle)

• The hacker who uncovered details about the finances of Africa’s richest woman was initially looking for secrets about soccer teams. (NYT)

• Did you know that tech giants have in-house musical groups, some with names like Cloudy With a Chance of Beatbox? Now you do. (WSJ)

Best of the rest

• Federal and state regulators accused Martin Shkreli, the former drug executive, of using anticompetitive tactics to maintain a monopoly over a lifesaving drug. (NYT)

• Prince Andrew of Britain has offered “zero cooperation” in a U.S. investigation into Jeffrey Epstein, according to the federal prosecutor for the Southern District of New York. (NYT)

• “Americans Will Inherit $764 Billion This Year, Mostly Tax-Free.” (Bloomberg)

• There won’t be any more free beer and wine on tap at WeWork locations. (Business Insider)

Thanks for reading! We’ll see you tomorrow.

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