fortune--2020-04-30--In race to make a coronavirus vaccine, AstraZeneca joins forces with Oxford University

AstraZeneca Plc agreed to make an experimental coronavirus vaccine developed by Oxford University researchers as the race heats up for the key to halting the pandemic.
Astra’s goal is to have the capacity to produce 100 million doses by the end of the year. The company is one of dozens around the world that have joined the competition, with the Trump administration preparing an effort making shots available for Americans by year’s end. Astra’s tie-up with Oxford shows how developers are aiming to manufacture vaccines even before they’ve cleared human tests.
As the coronavirus shuts down businesses and industries, countries are vying for a vaccine to help them get workers back in place and economies restarted. Oxford’s swift work offers a glimmer of hope in the U.K., already beset by thousands of deaths and a continuing lockdown.
“This is moving very fast and we are working on the details,” Astra Chief Executive Officer Pascal Soriot said by telephone. “The priority is to supply the U.K., and then the bigger challenge is to scale up to supply the world.”
The Drugs and Vaccines That Might End the Coronavirus Pandemic
The experimental shot could reach late-stage trials by the middle of the year, ranking as one of the most advanced vaccine projects. Astra said Thursday it would join in the development as well as manufacture and distribute the product.
The vaccine developed by a team headed by Oxford’s Sarah Gilbert entered human testing last week. It’s one of at least 70 projects under development against the new virus, Sars-CoV-2. As the number of coronavirus infections globally exceeds 3 million, the pressure is growing to come up with solutions to the contagion.
Astra was one of several companies that were in discussions with Oxford, according to Soriot. The maker of the FluMist nasal spray vaccine, Astra hasn’t been a big player in the market for shots. However, the company has massive capacity for making biotechnology products that are produced in cells.
The vaccine will be made in the U.K. as well as other countries, Soriot said. The accelerated timeline is “a stretch target,” but he was optimistic about the vaccine’s success.
“I think the probability it will work is pretty high,” he said. “The technology has been validated, it’s been tested in monkeys with very good results and now it has to be validated in humans. We’ll have a better sense of this by June or July.”
The Trump administration’s “Operation Warp Speed” program will pull together private pharmaceutical companies, government agencies and the military to try to cut the development time for a vaccine by as much as eight months, according to two people familiar with the matter.
Affordable Shot
The Oxford team’s vaccine candidate is a single shot that’s been administered to 320 people so far, who reported mostly flu-like symptoms, headaches and arm soreness. AstraZeneca didn’t provide financial details of the agreement.
Astra shares rose as much as 2.8% to 8,438 pence, the highest level in more than two decades, in London trading.
GlaxoSmithKline Plc, Astra’s U.K. rival and one of the world’s biggest vaccine makers, has joined forces with France’s Sanofi on separate development work. Astra is also working with Glaxo, the U.K. government and the University of Cambridge on making tests.
For the vaccine, Astra plans to rely on contract manufacturing organizations and other partners globally while ramping up its own production capacity, Soriot said. Based on the agreement with the government and Oxford, Astra will supply the vaccine at cost, according to Soriot.
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fortune--2020-04-30--Buccaneers of the basin: The fall of fracking—and the future of oil

Andreessen Horowitz doubles down on ‘ crypto ’ with new $ 515 million fund

Families aren’t driving, planes aren’t flying, and plastics plants are shuttered. The coronavirus-driven collapse in the world’s consumption of oil has sent the price of West Texas Intermediate Crude (WTI) from $63 at the start of 2020 to $14 on April 29, hitting lows not seen since 1998. The devastating hit to the U.S. shale industry and its aftershocks will decisively reshape the market and guide the course of future prices. Indeed, for the past several years, it was the rise of America’s frackers that broke OPEC’s chokehold, catapulted the U.S. above the Russians and the Saudis to become the top producer in the world, and held prices at around half their level of the previous decade.
The destruction in demand has caused the swiftest, sharpest collapse in U.S. oil output in history. It is also likely to accelerate a structural decline that was already in the cards, but might have taken 10 years or more to play out. By 2025, predicts one veteran analyst, the industry will be 10% smaller and show minimal growth. In that tumultuous five-year window, a wave of bankruptcies and distress sales will push the number of players from around 60 publicly traded producers to between 10 and 15. The six largest are on track to shed 40% of their oilfield service workers by mid-2020, a loss of 140,000 jobs.
Those are the forecasts from Matt Portillo, managing director at Tudor Pickering Holt & Co., a Houston investment banking and research firm. The bleak outlook is underscored by the sudden drops in the stocks he covers: In the past five weeks, shares of big independent drillers EOG, Pioneer Resources, and Devon Energy tumbled between 44% and 56%. For at least the past five years, says Portillo, the frackers—with a few exceptions—have funded their rapid growth by drilling generally unprofitable wells based on their all-in costs, and raising gushers of debt and equity on Wall Street. Investors were already souring on shale, but now that revenues are cratering, the markets will provide virtually no new funding.
Hence, Portillo foresees an entirely new industry emerging from the crisis. “For the past five years, this has been an unhealthy business,” he says. “It’s been all about more capital coming in and less free cash flow coming out.” For Portillo, the shale producers that survive will be the more prudent players that maximize returns over growth—the antithesis of the old buccaneers of the basins.
The retreat in shale signals danger that in the future, oil prices could surge back to the $80 to $120 level that prevailed before the industry’s rise challenged OPEC. So let’s examine how the frackers revolutionized the market, the forces that will curtail their output, and what their waning power is likely to mean for the future of the world’s most traded commodity.
The rise of shale
Fracking produces oil using entirely different technology from the traditional methods that for decades generated nearly all of the world’s supply. In conventional onshore and offshore wells, companies drill straight down, often hundreds of feet, to tap into subterranean pools. By contrast, fracking is more like coal or copper mining. Fracking rigs drill horizontally through a mile or more of shale rock holding oil sandwiched between the layers. The industry’s name is short for “hydraulic fracturing,” the technique that uses water, sand, and chemicals, pumped in at high pressure, to shatter the shale and release the oil and natural gas.
Frackers can sink wells, and reach peak production, much faster than standard onshore projects are able to. The typical shale rig drains 70% of the oil from the rock it’s targeting in the first year, and output continues declining sharply thereafter. As a result, the frackers can rapidly ramp up when a shortage lifts prices, or throttle fast in a glut.
The shale revolution revived the rowdy wildcatting ethos of the early 20th century. The big three regions are the Permian, straddling West Texas and New Mexico; the Eagle Ford in South Texas; and the Bakken, bridging North Dakota into Montana. It wasn’t the oil majors that primarily drove the revolution but adventurous, upstart independents such as Devon, Chesapeake, EOG, Diamondback, and Pioneer. Tiny hamlets mushroomed into boomtowns. The population of Williston, the Bakken’s shale capital, swelled from 12,000 in 2007 to 30,000 in 2018 as acres of trailer parks sprouted in the prairie. In the best years, the average oilfield worker was pocketing around $100,000 a year, and a drilling engineer earned $235,000.
The shale patch was the Wild West reborn, featuring poker games with $1,000 buy-ins, boisterous strip clubs packed with roustabouts, and brawling in the muddy streets illuminated by columns of flaring gas. Teams of armed guards shielded fields of explosives in the Bakken Badlands. The pioneers of fracking counted among the oil patch’s most storied gamblers. The gallery includes Aubrey McClendon, the Chesapeake cofounder who hopped corporate jets to his mansion on billionaires’ row in Bermuda and built a lavish, 110-acre corporate campus. Then, after being indicted for bid-rigging, he drove straight into an embankment at high speed and died in a fiery crash in 2016.
Shale also bestowed new glory on fallen legends. Herbert Hunt, the oil magnate who declared bankruptcy after an alleged attempt to corner the world silver market collapsed in the early 1980s, staged an amazing comeback as an octogenarian fracker, selling a big part of his stake for $1.45 billion in 2013. Hunt’s timing was canny. The frontier spirit captivated most of the big operators; they often prized sinking more wells over generating cash and kept drilling as if the good times would only keep rolling.
How shale held prices in check
The shale explosion established guardrails that curbed OPEC’s power to drive stratospheric prices. From 2004 to around 2014, the Saudi-led cartel was in charge. Global oil consumption was growing briskly, and OPEC, aided by turmoil in Venezuela, Libya, and Iran that curbed their output, held its production flat. The extra barrels that refiners needed flowed from extremely high-cost, deepwater wells in such locales as the Russian Arctic and off Brazil’s Atlantic coast.
But those OPEC-driven prices backfired by luring U.S. stalwarts that deployed fracking to ultimately produce crude at much less than Russian Arctic drillers, say, that were compensating for OPEC’s long-running squeeze. The frackers’ quicksilver agility rocked the world market. At the start of 2012, OPEC was generating 35.5 million barrels per day (bpd) versus the U.S. at 5.7 million, dwarfing stateside market share 40% to 6.4%. Fracking then exploded; even a price war that lasted 18 months in 2015 and 2016 only temporarily slowed the train. In fact, the shale crowd adjusted by lowering costs 50% in that interlude—and raising loads of new capital. From 2017 to 2019, frackers were growing at 15% to 20% a year, and expanding production by a staggering 1.1 million bpd annually.
All told, by the shale summit in November, the U.S. was producing 13.1 million bpd and capturing 13% of world sales. Shale accounted for 10 million of that number, and virtually all of the gains. By contrast, OPEC has shrunk to just over 28 million bpd, declining to 28%. Of the total rise in global consumption of 11 million barrels from 2012 thru 2019, the U.S. captured 7.3 million bpd, or two-thirds. OPEC’s output dropped by an almost identical number. “OPEC ceded share to the U.S.,” says Portillo. “Put simply, the U.S. forced everyone else to cut back. And even with the cutbacks, OPEC was unable to get to anything like the old $100-plus prices.”
The shale miracle was holding prices in a steady $55 to $65 range, handing the world’s drivers, airlines, and plastics producers a 50% discount from prices in the pre-fracking decade.
The new paradigm enabled the U.S. to supplant Saudi Arabia as the world’s largest producer. A report from the Dallas Fed from last May neatly describes the shale phenomenon. It noted that “shale has a shorter lead time between drilling and production relative to offshore and other traditional methods,” and that “shale production means there is a much larger amount of supply that can be called into action given a much smaller price increase than in the past.”
Shrinking storage
Three factors are now pummeling shale: a severe shortage in storage, a collapse in worldwide demand on a scale never before witnessed, and the retreat of the Wall Street backers that funded the boom—a pullback that will persist even when the market recovers. We’ll start with storage. The story that America’s depots are filling so fast that they’ll soon be brimming made headlines on April 21, the day before the expiration of the May futures contract. Producers and speculators that couldn’t find buyers for their crude were paying customers as much as $38 a barrel to take the liquid gold off their hands, a number driven by the escalating cost of storage.
Total warehousing capacity in the U.S. is 653 million barrels. By late April, 375 million or 58% of that space was full, and the glut is growing at 17 million barrels every day. That means America’s tanks will be 85% full by early June, the effective limit since facilities need a buffer for new supplies that move quickly in and out. America’s biggest depot, the famous Cushing facility in Oklahoma, will soon have no vacancies. It’s already 76% full, and its 20 million barrels in extra capacity will vanish in the next four to six weeks.
Demand crunch
The confluence of a storage crunch and much longer-lasting drop in sales will force the frackers to shut down wells that produce a large part of their output. Portillo details how the interplay between the two factors will play out. Since the tanks at Cushing and all other depots will soon be full, the industry will have to produce even less oil than it can sell on the open market until the surplus recedes. It will take refiners a couple of quarters to work off the glut—the reason the crude depots are filling so fast in the previous link of the supply chain. “The refiners are selling at 25% their pace before the crisis,” says Portillo.
How fast will the frackers cut, first to counter the storage squeeze and then to meet the world’s diminished appetite? Those reductions are driven by what’s called the “variable” or “cash operating” cost of pumping oil from wells drilled months or years ago. Forget about the prices operators would need to recoup their big upfront investments. What determines which wells keep pumping is whether they can sell the output for more than the cash operating cost of squeezing the crude from the shale.
Portillo points out that rigs in fracking basins that produce a total of 1.1 million barrels per day operate either older shale wells or conventional, vertical wells. Those aging projects often yield a trickle of less than 25 barrels per day. “Their cash operating breakeven cost is between $15 and $30,” says Portillo. “They’re totally unprofitable at today’s prices.” In fact, the widely quoted WTI benchmark is an average that includes transportation costs, and is often far higher than the cash drillers are getting for each barrel at the “wellhead.” For example, in late April, the going price, picked up onsite, was $4.85 at the Kansas Common field, $4 in Colorado Southeastern, $13 in the Permian, and $13.50 in the Eagle Ford in South Texas.
Of the fields producing the remaining 9 million barrels per day, a significant portion is uneconomic at between $10 and $15.
Adding up the numbers, U.S. output should fall by a staggering 3 million barrels a day in Q2 and Q3 from their marks in January. Almost all of that hit will fall on shale, so that fracking production will drop from roughly 10 million in February to 7 million bpd by mid-May. All that 3 million reduction is needed to match the short-term fall in demand. By the end of the year, U.S. production will have fallen from 10 million to 8 million bdp. That’s a gigantic reduction of 20% since the start of 2020. “The market will work its magic,” says Portillo. “The 2 million decline caused by lack of investment in drilling new wells will start to stabilize the market.”
Shale doesn’t come back to the old highs
Portillo posits that around 300,000 of the 1.1 million barrels flowing from the older projects will never return. Many wells will be permanently damaged from the long shutdown, and others will simply be too expensive to reopen, given their paltry output. The remaining 800,000 wells will return to life slowly, and newer wells with lower operating costs will rebound faster. Portillo forecasts that by 2025, the frackers will be producing around 9 million bpd.
Still, that’s over 1 million below the summit reached late last year. From that point forward, output should expand at only around 300,000 barrels a year. And according to Portillo, this is the probable outlook even if prices surge back into the $60s, and get there pretty soon. “Fracking is widely profitable only at prices over $60,” he says. “And they could get there by 2022.” But in that favorable climate, the producers will eschew breakneck growth for profits. Portillo points out that in the Bakken, Eagle Ford, and regions except the Permian, the best fields are getting depleted fast, so that drilling new wells often won’t be profitable even at $60. “I predict that the drillers that survive will mainly sink new wells only to replace production that runs out on old ones,” he says. Instead, they’ll do what Wall Street will demand: Return free cash flow in dividends and buybacks, and mainly refrain from expansion.
That poses a big danger. Fracking’s great contribution is supplying the extra barrels the world consumes at relatively low cost. When global consumption starts growing again, shale is less likely to play that role, and OPEC could regain the whip hand—and once again drive prices over $100.
America’s fracking industry was headed for decline in any event. The outbreak steepened the slope—in part by sticking investors with even heavier losses and hardening their belief in the new paradigm: Shale can be profitable, but only if it barely grows.
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fortune--2020-04-30--The coronavirus pandemic could have unexpected environmental effects

Buccaneers of the basin : The fall of fracking—and the future of oil

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning. David Meyer here in Berlin, filling in for Alan.
There’s a baffling array of predictions out there about how the COVID-19 pandemic might change this or that aspect of our existence, and, as this Inc. essay points out, it’s good to be skeptical—crisis pundits so often get these things wrong.
That said, there’s an interesting thread of air-pollution research taking place in the context of the pandemic crisis. It could just lead to one of those drastic post-pandemic changes.
As Fortune reported last week, drastic drops in road and air traffic, and in industrial activity, are leading to dramatic if temporary improvements in air quality. And, as a new study from Europe’s Centre for Research on Energy and Clean Air suggests, this is having a direct impact on European people’s lives: the organization estimates that the coronavirus lockdown has already resulted in 11,000 fewer air-pollution-related deaths, as well as 6,000 fewer cases of child asthma, 600 fewer preterm births, 1.900 fewer asthma-related emergency room visits—and 1.3 million fewer days of work absence.
Of course, in the grand scheme of things this needs to be weighed against the health impacts of the lockdown itself—in terms of stress, lack of exercise, reduced income. But there’s more.
In hard-hit countries such as the U.S., the U.K. and Italy, officials and researchers are increasingly noting a disturbing phenomenon of COVID-19 death rates being higher in places that—until the crisis hit—had high levels of dangerous pollution particles in the air.
The implication appears to be that air pollution weakens our defenses against a virus such as SARS-CoV-2. We already knew that air pollution is linked with chronic respiratory disease, cancer, cardiovascular disease and so on—and people with these conditions are particularly susceptible to COVID-19.
Of course, this research is at a very early stage and we need to be cautious about drawing overt causal links. But if the links really are there, then, as WHO public health director Maria Neira told the Financial Times: “The day we take off these masks, we need to breathe clean air, no way will we accept the level of pollution that we had before…We have to use the pandemic to create a healthier society—one that is better prepared for emergencies.”
Time will tell if the coronavirus crisis ends up accelerating the drive away from fossil fuels. But German Chancellor Angela Merkel yesterday delighted environmental campaigners by insisting that coronavirus-related economic stimulus programs be strongly linked to climate protection. “The restart can lead to a healthier and more resilient world for everyone,” added U.N. Secretary General Antonio Guterres, at the virtual summit where they were speaking.
Could a green recovery be a chance to kill two birds with one stone? More news below.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
Mixed markets
Global stocks rose this morning following yesterday's news about the Federal Reserve's pledge to use "its full range of tools to support the U.S. economy in this challenging time," and about Gilead Sciences' remdesivir COVID-19 treatment achieving a positive result in a clinical trial. The Nikkei rose 2.1% and the Shanghai Composite 1.3%. In Europe, the Stoxx 600 was flat at the time of writing, but U.S. futures look set for a modest rise. P.S., Market researcher James Bianco thinks this month's rally will end in tears. Wall Street Journal
Facebook results
Investors were happy with Facebook's earnings report yesterday, which included an expectation-beating user count of 2.6 billion—revenues, at $17.74 billion, also beat expectations. Shares popped 10%. Facebook's Q1 ad revenues were also up 17% year-on-year but the company had an unsurprisingly stark warning about Q2 on that front, noting "a significant reduction in the demand for advertising, as well as a related decline in the pricing of our ads, over the last three weeks of the first quarter of 2020." Fortune
Oil cuts
Norway has for the first time in almost two decades joined international efforts to cut oil production, in the context of the historic oversupply and price plunge that is taking place. Europe's biggest oil producer said it would cut production by 250,000 barrels a day in June and 134,000 barrels in H2. Meanwhile, Shell has cut its dividend for the first time since World War II, blaming "the risk of a prolonged period of economic uncertainty, weaker commodity prices, higher volatility and uncertain demand outlook." Bloomberg
Saving airlines
EU member states seem set to force the European Commission to temporarily amend air-passenger-rights legislation, so people can't claim cash refunds for flights that have been cancelled due to the pandemic—instead, they would get vouchers. The move would be part of a wider effort to keep Europe's airlines alive, as the sector faces a catastrophic year that could easily kill many of them off. Politico
AROUND THE WATER COOLER
Eurozone economy
Newly-released data shows a 3.8% shrinkage in Q1 economic output across the Eurozone, when compared to the previous three months (when the eurozone economy grew by 0.1%). That's 0.3% more than the expectations of economists polled by Reuters, and a record quarterly decline. However, the slowdown in inflation was less than expected. Reuters
Elon rants
Elon Musk used an investor call to describe coronavirus stay-at-home orders as "fascist" and demand that the authorities "give people back their god damn freedom." Yes, an investor call—and one that otherwise was quite positive, given strong quarterly numbers. But he did have a business-related point to make: "The extension of shelter-in-place, or as I would say forcibly imprisoning people against their constitutional rights…it will cause great harm not just to Tesla, but to many companies. While Tesla will weather the storm, other companies will not." Fortune
Zoom numbers
Does Zoom really have 300 million daily active users now, as it claimed in a blog post earlier this month? Probably not. As eagle eyes at The Verge noted, booming Zoom quietly edited that post to delete the reference, and to now claim that there are "300 million daily Zoom meeting participants." If you have multiple Zoom meetings in a day, your attendance is counted multiple times. The Verge
PPP chaos
Fortune's Anne Sraders provides a fascinating but grim look at the chaotic rollout of the U.S. Small Business Administration's Paycheck Protection Program (PPP), describing "a picture of a well-intentioned program with a multitude of unintended consequences that has left many small businesses—those same ones initially targeted to receive much-needed help—still struggling to get lifeline funds." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-04-30--Coronavirus patient data stored in electronic health records found difficult to study at scale

When President Donald Trump started touting hydroxychloroquine as “one of the biggest game changers” for treating COVID-19, researchers hoped electronic health records could quickly tell them if he was on the right track.
Yet pooling data from the digital records systems in thousands of hospitals has proved a technical nightmare thus far. That’s largely because software built by rival technology firms often cannot retrieve and share information to help doctors judge which coronavirus treatments are helping patients recover.
“I’m stunned at EHR vendors’ inability to consistently pull data from their systems,” said Dale Sanders, chief technology officer of Health Catalyst, a medical data analytics company. “It’s absolutely hampering our ability to understand and react to COVID.”
Over the past decade, federal officials have spent some $36 billion switching from paper to electronic health records, or EHRs, expecting, among other things, to harness volumes of medical data to reveal which treatments work best.
A nurse, left, wearing a powered air purifying respirator helmet, checks data on a computer before treating a COVID-19 patient on the Medical Intensive Care Unit floor, at the Veterans Affairs Medical Center in New York City on April 24, 2020. Robert Nickelsberg—Getty Images
EHRs document every step doctors or other health care workers take in treating a COVID patient, from medicines prescribed to signs of progress or setbacks. Data collected from large numbers of patients could quickly yield answers about which treatments are succeeding.
But the pandemic is bringing into stark relief just how far the nation is from achieving the promised benefits, critics say.
Dr. Richard Cook, a research scientist and health care safety specialist, traces the data problems to missteps dating to the rollout of EHR, which began in earnest in 2009 and has been controversial ever since because commercial players produced―and hospitals bought—systems that have proved more suited to billing than public health. “This was a boondoggle from the get-go, and the promoters knew it at the time,” Cook said.
Although some health systems are beginning to draw on EHR data to spot coronavirus trends and beneficial treatments, most health organizations around the country cannot readily do so.
“If we had a national database, we’d get a readout quickly about responses to [COVID-19] treatments,” said Dr. Eric Topol, director of the Scripps Research Translational Institute.
Medical researchers favor studies that test the efficacy of a drug in a formal clinical trial, and trials are underway for a variety of possible COVID-fighting medicines, including hydroxychloroquine. The results could take months or more, however, and doctors treating critically ill patients have few options in the meantime.
Topol said “real-world” evidence drawn from computerized records of COVID patients, while not as reliable as a clinical trial, is “still very useful” to help guide medical decisions.
Medical data has been hard to tease out because much of it resides in electronic “silos,” which government officials have not required technology companies to open up and eliminate.
“We’ll see piecemeal readouts of small numbers from individual health systems,” Topol said, but “don’t have the important data that we need.”
Sanders, whose firm is a member of the COVID-19 Healthcare Coalition, a business-sponsored group promoting coronavirus data-sharing and analysis, said federal health officials lost precious time by failing to address this need as early as mid-January.
He said the federal Centers for Disease Control and Prevention, or CDC, should have devised a COVID data-collection plan using standardized terminology so hospitals with incompatible EHRs could compare notes on the fast-paced pandemic.
The CDC did not respond to written requests seeking comment. A spokesman for the Health and Human Services office that coordinates health information technology policy said: “This is a novel disease so the health care system did not know what data we needed to collect ― we are learning that the system needs to build out reporting information on multiple clinical features.”
Still, several of the top EHR manufacturers have joined the data-sharing coalition, which is pledging to at least partially fill the information void. The group has access to COVID data from about two dozen health systems and is expecting to add more.
“This is the first attempt at this that I’m aware of where inherently competitive EHR vendors have come together to work together with clinical researchers,” said Dr. Brian Anderson, chief digital health physician with the MITRE Corp., a nonprofit technology group that formed the coalition in late March.
Anderson said the coalition is “getting close” to being able to share some results from reports of treating people with convalescent plasma recovered from patients who have survived COVID-19. The group is also examining treatment data on the drug remdesivir as it irons out some of the technical difficulties that complicated its analysis of hydroxychloroquine. Last week, the Food and Drug Administration warned that hydroxychloroquine could cause heart problems and should be used only in a hospital or clinical trial.
There are other signs the EHR industry is relaxing its grip on medical data in response to the emergency. Major EHR vendor Cerner Corp. has offered researchers access to some types of COVID-19 data, including “clinical complications and outcomes that could help drive important medical decisions.”
And some health systems have begun publishing data drawn from EHRs. One study released this month, for instance, tracked the outcome of 5,700 coronavirus patients treated at 12 hospitals in a New York City health system and found that 88% of patients placed on ventilators had died. All the hospitals shared the same records vendor.
“In crisis, people seek data and authorities demand it,” said Cook, the health care safety specialist. But, he said, “it is not possible to build such a system on demand.”
Ross Koppel, a professor at the University of Pennsylvania and longtime EHR safety expert, said that the COVID-19 pandemic illustrates both “strengths and disappointments” of the digital systems.
While health systems using a single vendor have been able to pool data, Koppel said, the industry has battled regulators seeking to adopt common standards, a practice known as interoperability.
“That failure to mine these oceans of invaluable data reflects the power of the vendors to prevent government requirements for data standards and interoperability,” he said.
Limits in electronic data collection systems also are hindering COVID-19 public health and surveillance efforts.
Officials said they are sometimes required to manually fill out and fax some forms, wasting valuable time. Some information must be printed out from EHRs and reentered by public health authorities because it cannot be sent electronically.
Certain CDC forms, such as Person Under Investigation COVID case reports, can take up to 30 minutes to complete. Other forms exchanged between hospitals and laboratories often are missing critical information, leading to delays in contacting patients and identifying people they had close contact with. In some states, demographic information on race and ethnicity is missing 85% of the time, and patients’ addresses, half the time, according to Janet Hamilton, executive director of the Council of State and Territorial Epidemiologists.
“We’re using yesterday’s technology for the biggest public health emergency in our lifetimes,” Hamilton said. “COVID has demonstrated for people what we’ve known all along. You can’t leave public health at the end of the line.”
The government’s health IT chief says a new administrative rule to promote interoperability and bar EHR manufacturers from impeding the flow of information will take time to change behavior.
“If this were to have happened three or four years in the future when we have interoperability … we would be in a much better spot here. But unfortunately, that’s not quite the case, but we’re still keeping our work going,” Donald Rucker, national coordinator for health information technology, said during an April 15 virtual meeting.
Kaiser Health News (KHN) is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.
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fortune--2020-04-30--The April stocks rally defied the odds. Here’s what’s driving markets

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Good morning, Bull Sheeters. We look to close out a stellar April on a high note. Even oil is climbing.
Let’s take a look at what’s moving markets.
Markets update
Asia
The major indices were all trading higher in afternoon trade, led by Japan’s Nikkei .
in afternoon trade, led by Japan’s . Zero cases. South Korea reported its first 24-hour stretch of no new local cases (there were four imported cases) since February.
cases. reported its first 24-hour stretch of no new local cases (there were four imported cases) China reported April factory activity slowed slightly—still, it was below consensus estimate. Export orders also fell, suggesting the road to recovery will be a somewhat lengthy one.
Europe
European bourses came out of the gates climbing. At the open, Germany’s DAX was up 1.1% , before retreating.
bourses came out of the gates climbing. At the open, was up , before retreating. The ECB meets today. The big question: will the central bank announce any further measures to keep the eurozone economy from falling into a deep recession ? Its biggest move to date was a 1 trillion euro ($1.1 trillion) asset-purchases plan.
today. The big question: will the central bank announce any further measures to keep the eurozone economy from falling into a deep ? Its biggest move to date was a 1 trillion euro asset-purchases plan. Something dramatic may be needed. Spain and France reported big hits to their economies in Q1 .
and reported big hits to their economies in . To company news now . . .walloped by the tumultuous oil market, Royal Dutch Shell announced today it will cut its dividend, a first since World War II. Its profit fell by 46% last quarter. French bank, Societe Generale, meanwhile, reported a surprise loss. Unlike its peers, trading revenue fell precipitously last quarter.
U.S.
The Dow , S&P 500 and Nasdaq futures point to a flat open . Yesterday, the big three soared, led by the Nasdaq.
, and futures point to a . Yesterday, the big three soared, led by the Nasdaq. The markets took off before the bell yesterday after Gilead Sciences revealed details of a promising trial behind remdesivir , a drug that could prove to be an effective treatment for COVID-19 patients.
revealed details of a promising trial behind , a drug that could prove to be an effective patients. Facebook and Microsoft were trading higher in the after-hours market as both reported strong results yesterday evening.
in the after-hours market as both reported strong results yesterday evening. Tesla also posted an earnings win , but it was CEO Elon Musk who stole the spotlight. Musk went into an epic rant about the lockdown measures, calling them “ fascist .”
, but it was CEO Elon Musk who stole the spotlight. Musk went into an epic rant about the lockdown measures, calling them “ .” Who’s up today? Apple, Amazon and Visa, to name a few.
Yesterday’s Q1 GDP figures were worse than expected. The 4.8% contraction was the worst since 2008, at the depths of the global financial crisis. Q2 will be far worse.
Elsewhere
Gold is up, as is the dollar .
is up, as is the . Crude extends its rally into a third day. WTI futures were trading around $16.80/barrel, well above Tuesday’s lows. Brent is advancing too, above 25 bucks per barrel.
The April surprise
After a tumultuous February, and a brutal March, April has been one for the bulls. The global equities markets are trading mostly sideways this morning, but this past month has been a huge cure-all for investors’ portfolios.
From Tokyo to New York, equities have been soaring, as today’s chart show.
Stock traders have shrugged off a collapse in oil prices, millions of COVID-19 infections, record unemployment, GDP wipe-outs and a parade of dreary corporate results to post solid gains over the past month.
What gives?
Veteran markets observers say investors are focussing on COVID-19 infection data, and little else. That was certainly true yesterday. Dismal GDP numbers were completely overshadowed by the remdesivir drug trial news.
As the brilliant Marketear blog notes, investors have gone “from fear to FOMO,” seeing any sign that the worst is behind us as a buying opportunity.
Goldman Sachs, for one, warns we could re-test lows in the coming weeks, particularly if the rebound is a protracted one.
State by state, country by country, we’re seeing lockdown measures lifted, so we should know more about the economic bounce-back fairly soon.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
“The single best trade of all time.” That’s what one former Wall Street heavyweight called hedge fund king Bill Ackman’s wager, back in February, that the coronavirus would be way worse than investors were factoring in. Ackman bet against the markets before things got ugly, and exited the hedge at the absolute bottom, netting a cool $2.6 billion. He detailed the ins and outs of the trade in a recent podcast.
Bumpy Landing. To conserve cash, Boeing will slash production and layoff 10% of its staff in the hopes of going cashflow-positive some time next year. Boeing shares closed up 5.9%. As Bloomberg notes, the stock “has plunged 57% this year, the worst drop on the Dow Jones Industrial Average.”
Ahead in the cloud. Microsoft’s “beat” yesterday stunned even the biggest tech bulls, sending shares higher in after-market trading. Cloud, gaming and tablet sales were big lifts in Q1. But it’s not all blue skies for MSFT. Fortune’s Jonathan Vanian picks apart the earnings to find a trio of business lines that are particularly vulnerable to an extended COVID-19 shutdown.
(Some of these stories require a subscription to access. There is a 50% discount for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)
Market candy
This date in history
April 30, 2009
On this date 11 years ago, at the height of the global financial crisis, Chrysler filed for bankruptcy. The move paved the way for the automaker— one of the original Big Three—to merge with Italy’s Fiat, and stay alive. The news was cheered in Washington. President Obama, in remarks at the White House, called it "one more step on the path to Chrysler's revival." It was hardly a smooth ride, however. Plants and dealerships closed. The unions were furious. And the Treasury had to lend it billions to get through the year.


fortune--2020-04-30--Cybercriminals adapt to coronavirus faster than the A.I. cops hunting them

Businesses have been trying to adapt to the coronavirus pandemic’s “new normal.” It turns out, criminal enterprises have been making the same transition—often in ways more nimble than those of legitimate companies.
Last month, the international law enforcement agencies Interpol and Europol both warned of a spike in fraud related to the pandemic, with tactics involving everything from COVID-19-themed phishing emails to sales of phony coronavirus test kits and fake PPE. Hackers have seen an opportunity too, attacking hospitals with ransomware just when they can least afford to have their computer systems fail.
“There has been a very high increase in attacks and, in fact, health care institutions have been attacked the most,” says Ajay Bhalla, president of cyber and intelligence solutions at payments giant Mastercard.
Earlier this month, Mastercard began offering health organizations free cybersecurity risk assessments through its RiskRecon subsidiary and a partnership with the Health Information Sharing and Analysis Center (H-ISAC), a consortium of key players in global health.
Max Heinemeyer, director of threat hunting at Darktrace, a cybersecurity company based in Cambridge, England, that uses artificial intelligence to guard against cyberattacks, says there has been an increase in “fearware”—phishing emails that target hospitals: Made to appear official and purporting to contain vital information about the COVID-19 pandemic, these emails contain attachments or links that launch ransomware. Darktrace has been offering its software to British hospitals for free during the pandemic to help protect them from these attacks.
But the pandemic poses a particular challenge for security software designed to detect fraud, money laundering, and cybercrime, experts say.
That’s because many of these systems rely on machine-learning algorithms to spot deviations from normal patterns—but when everyone’s normal changes, the software struggles to cope. The result can be too many false positives, blocking legitimate commerce and overwhelming human analysts tasked with investigating the alerts such software generates.
Too many false positives and companies will just turn the security systems off, says Michal Pechoucek, chief technology officer at cybersecurity company Avast. Or, he says, they will raise the thresholds for the software to trigger an alert, potentially allowing more fraudulent transactions or cyberattacks to slip through.
In fact, Pechoucek says, sophisticated hackers may even incorporate this into their tactics and deliberately try to trigger false alarms in advance of an actual attack in order to condition their targets’ cybersecurity analysts to ignore the alerts or relax their defenses. Avast recently helped a hospital in the Czech city of Brno mitigate a ransomware attack that had temporarily shut down its IT systems.
One way to guard against this is to have multiple security systems working in concert, notes Martin Rehak, the cofounder and CEO of Resistant AI, a Prague startup specializing in protecting the automated systems that many financial firms are now using to register new customers and conduct required background checks from being gamed by criminals.
“We don’t trust any one classifier,” Rehak says, referring to a single A.I. algorithm that has to predict whether an activity is fraudulent. Instead, Resistant AI uses four or five different machine-learning modules together to make a decision. “Defense in depth is the only security solution that survives,” he says.
Pechoucek says, however, that coordination among different security layers is vital because simply using more A.I. modules independently will result in more false alarms. “You have to statistically merge the results of the systems,” he says.
Pechoucek, who founded a previous company with Rehak called Cognitive Security, which Cisco purchased for an undisclosed amount in 2013, is an investor in Resistant AI. Today the startup announced it has received $2.75 million in seed funding from two venture capital firms, Index Ventures and Credo Ventures, with participation from technology incubator Seedcamp. Daniel Dines, the CEO of UiPath, the robotic process automation company, is also an angel investor in the startup.
Rehak says the company’s software is designed to work in conjunction with human fraud analysts. “Our view of A.I. is that it is a great way to scale human teams,” he says. Human review is essential, especially when the cost of a false alarm‚ such as blocking an important transaction from a valued customer, is high.
Another solution to the challenge shifting consumer behaviors are posing for A.I.-based fraud detection systems is to simply retrain them on new data. That’s the approach that Feedzai—a San Mateo, Calif., company that uses machine learning to help protect businesses, including Citigroup and Lloyds Bank, against financial fraud—has taken, according to its cofounder and chief science officer, Pedro Bizarro.
Bizarro says just a few years ago, Feedzai would have required at least 12 months’ worth of data to train a good machine-learning–based fraud detection system. Now, thanks to advances in A.I. techniques, he says, Feedzai can achieve the same results with just a few months of data. And he says that for a large national bank, “even just five days of data is tens of millions of transactions, and it is easy to train a good model from that.”
Having a comprehensive view of the person attempting a transaction, as Mastercard’s Bhalla says his company’s card network often does, is a big advantage too. He says that while the pandemic may have forced people to shop online instead of in-store, the kinds of things they are buying, the brands they are buying from, and the amounts they are spending, have not changed too dramatically. As a result, automated systems that examine multiple forms of identification, such as a card number, registered card address, delivery address, IP address, and device type, and then compare these against normal purchasing patterns, can easily cope.
There are exceptions, of course, Bhalla says. For instance, a business manager who is working from home on their personal laptop and making a one-off business purchase with a company card registered to a work address, but asking for the item to be delivered to a coworker’s home address, may find that a legitimate transaction is flagged as suspicious.
Of course, the pandemic has also forced criminals to change their normal behaviors too. “Often fraudsters were trying to buy things with very high retail value,” Bizarro says. Now, some of those items—such as expensive airline tickets—aren’t available. Instead, he says, Feedzai is seeing more of what he calls “sugar and rice” fraud, in which stolen credit card numbers are used to shop for groceries or other everyday items that are less likely to stand out and be flagged by fraud detection software.
Rehak says that the increasing use of automated systems to register customers for financial services and conduct required know-your-customer and anti–money-laundering checks has created new avenues for fraudsters. Sophisticated criminals, he says, are discovering how to use machine learning themselves to produce fake documents, ID photos, and even biometric data, such as fingerprints, that can fool these automated onboarding tools. But, he says, these methods tend to leave traces of manipulation that other A.I. systems, such as the ones developed by Resistant AI, can be trained to identify.
Bizarro says that cybercriminals have also discovered ways to use A.I. systems that can identify objects in photographs to defeat the image-based captcha challenges that many businesses use to ensure those trying to complete transactions are “not a robot.”
He says such A.I.-based methods have lowered the barriers to entry to online financial crime. More sophisticated hackers and criminal groups now package and sell stolen credit card numbers and software that enables anyone to easily perpetrate cyberattacks or fraud attempts.
And he worries that with the crushing economic impact of the coronavirus—with millions of people out of work worldwide—a massive surge in fraud is likely imminent, as some people are tempted, out of desperation, to become at least part-time criminals. “There are 25 million people out of work in the U.S.,” he says. “Even if just 0.1% of them consider it, that’s 25,000 new fraudsters.”
More must-read tech coverage from Fortune:
—Who is new AT&T CEO John Stankey?
—Work-from-home tips from the executive team that brought you Zoom
—Is A.I. better at diagnosing illnesses than doctors? Don’t believe the hype
—Facebook debuts Zoom-like videochat feature called Messenger Rooms
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Zoom’s ups and downs since the coronavirus crisis
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-04-30--How luxury fashion shopping habits are shifting during the coronavirus pandemic

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Retailers have taken a beating since the breakout of COVID-19. But luxury fashion finds itself in a strange spot. Some of the world’s top fashion houses and designers were among the first to suspend their own production, repurposing supply lines to churn out personal protective equipment like masks and medical gowns.
But that positive glow can only last so long. Upcoming Fashion Weeks have been either moved to streaming or canceled outright. Not only are fashion magazines scrambling to determine how to conduct photo shoots in a world that works from home, but many advertisers are pulling marketing campaigns, gutting the bottom line. Then there are the celebrities and influencers still shilling their luxury goods, only to be labeled as tone-deaf, at best.
High-fashion retailer Moda Operandi‘s Runway Report normally offers a preview of next season’s looks based on the preceding quarter’s retail data trends. But these aren’t normal times, so the e-commerce platform is taking a pulse on the luxury fashion industry amid the coronavirus pandemic and how quarantine mandates and the economic fallout have influenced fundamental shifts in home life, leisure, and work.
Researched in partnership with the Harris Poll, Moda Operandi’s findings are based on the responses of 1,500 women in the U.S. between the ages of 18 and 60, who were surveyed in January 2020 on their perception and attitudes toward wardrobe purchases. The report also covers spending data through April.
Moda Operandi looked at how uncertainty caused by COVID-19 has potentially impacted global spending month to month, finding that spending has stayed flat in some regions and has seen sharp declines in others. Courtesy of Moda Operandi
While all geographical regions saw declines in daily average spending in April, rates didn’t fall everywhere at once. New York, Illinois, and the U.K., for instance, began seeing luxury spend decline in March, while California, Florida, and Texas saw growth in spend through March, before declining in April. Meanwhile, European countries saw flat spending in March, and the steepest decline of all regions in April.
“We’ll, of course, see spending decline during this economic crisis—that’s just the reality of any downturn,” says Lisa Aiken, director of buying and fashion at Moda Operandi. “But we feel strongly that consumers’ sentiment and propensity to buy higher-quality, longer-lasting items will remain steadfast through this period as people will seek out apparel and products that will last them for years or decades, rather than ‘wear-once’ or ‘use-once’ pieces.”
Thus, the biggest takeaway from the report is that consumers don’t mind shopping full-price if there is a clear perception of long-term value. This points toward a shift favoring investment pieces over fast fashion, a movement that had already been generating interest before the pandemic started. Fine jewelry, in particular, saw an uptick by the end of the first quarter, up 35% in sales versus the same period last year.
Approximately 73% of the women surveyed said they are willing to pay more for higher-quality items in their wardrobe. And of the women shopping for investment pieces, half of them said they’re looking for a quality piece that will endure. Nearly 40% believe the investment pays off long-term because of the cost-per-wear ratio, while some women (13%) make fashion investments because they know they can eventually resell it, and others (12%) plan to pass these items—from luxury handbags to accessories to apparel—to their own children some day.
While promotions allow for more casual purchases, those flash 50%-to-75%-off sales at high street stores like J. Crew and the Gap aren’t going to make much of a dent with online shoppers right now like they would in a normal year on Black Friday, or even a holiday weekend like Presidents’ Day or Labor Day.
“For many, staying at home has necessitated a simpler lifestyle,” Aiken explains. “People are eating out less and cooking more. They’re at home with their families and living less extravagantly. This lifestyle shift will undoubtedly cause people to examine the quality and quantity of the products they choose to buy. We think consumers will begin moving away from a ‘more is more’ fast-fashion mentality and instead emerge from this crisis with a ‘fewer better’ mindset.”
“While the fashion industry adjusts to a new normal, we hope that by lifting the curtain on our data and consumer research, we’re able to add some value back into the fashion ecosystem, including to our designer partners, fellow retailers, and consumers,” writes Moda Operandi CEO Ganesh Srivats in the report. Courtesy of Moda Operandi
Aiken notes that during the pandemic, some of Moda Operandi’s bestselling items have fallen under what she describes as “quiet luxury,” describing those purchases as understated, high-quality products. “With the fashion industry at large, there’s a sense that, in seasons to come, designers and big fashion houses will embrace a scaled-back approach to creating collections,” Aiken continues. “Designers will release fewer collections throughout the year and rethink the grand-scale fashion shows they once produced. While the fashion itself will continue to evolve and have elements of playfulness and fun, there’s no question that the industry’s scaled-back approach will trickle down to American consumers and the fashion they choose to wear.”
Meanwhile, pollsters found that, despite the economy’s slump, charitable components can still draw in new customers, suggesting full-price buyers also have a propensity to spend their dollars on luxury goods when there is an opportunity to give back.
Still, while shoppers might be dreaming of when they’ll actually be able to wear any of these luxury goods in public again, they seem to want to dress more comfortably in the meantime. Moda Operandi casually notes searches for “sweats” and “sweatpants” on its site have spiked by 50% and 85%, respectively, in recent weeks as people have been cooped up in their homes.
More must-read lifestyle coverage from Fortune:
—Behind the B Corp movement and its fight against corporate “greenwashing”
—Retailers retooled podcasts to connect with customers and staff during the pandemic
—The comfort economy gains momentum during the coronavirus pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—Airbnb hopes new cleaning guidelines will bring guests back after the pandemic
—WATCH: How the battered food-service industry is weathering the coronavirus
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-04-30--As lockdowns decimate energy demand, renewables come out ahead of coal

Could the COVID-19 crisis hasten the collapse of coal?
That was one takeaway from the International Energy Agency’s Global Energy Review, released Thursday, which tracks the wide-ranging impact of COVID-19 lockdowns worldwide nearly to the present day.
Demand for coal is projected to fall 8% in 2020 from last year, the Paris-based agency said—the sharpest annual drop since the Second World War.
But coal was merely at the pointy end of a decline across fossil fuels as a whole, with oil and natural gas also hit harder than renewables. Earlier in April, the IEA forecast that global oil demand was expected to fall by 9.3 million barrels per day during 2020—an unprecedented annual drop. On Thursday, the agency said natural gas, too, was facing a sharp drop, with a forecast decline of 5% year-on-year, after a decade of uninterrupted growth.
Fossil fuels are being squeezed from both directions, the agency notes. On the one hand, from the evaporation of demand as a whole, and on the other, from the rise of affordable renewable power—particularly solar, but extending to all low-carbon sources, including hydropower and nuclear.
That surge has been most apparent in electricity, where low-carbon sources are expected to collectively account for 40% of the world’s electricity generation, taking a six percentage point lead on coal as a source of power, the IEA said—although they are making up a greater share of a smaller pie, with electricity demand itself expected to drop by 5% this year, the largest decline since the Great Depression.
“This is a historic shock to the entire energy world,” says Fatih Birol, the IEA executive director. “Amid today’s unparalleled health and economic crises, the plunge in demand for nearly all major fuels is staggering, especially for coal, oil, and gas. Only renewables are holding up during the previously unheard-of slump in electricity use.”
As a result, he warns, the energy industry that emerges from the crisis “will be significantly different from the one that came before.”
The impact on global emissions is expected to be immense. Global energy-related CO2 emissions are projected to fall by 8% in 2020, the IEA says, essentially lowering emissions to levels last seen a decade ago. It is expected to be the largest-ever fall, a drop six times the size of the decline in 2009, during the financial crisis.
That change in global energy dynamics in many ways reflects the sudden jolt to the way we are using energy: at home, for heating and electricity—a sector that is already far closer to being decarbonized than the transport sector, which has in many ways nearly ground to a total halt.
With countries in lockdown, energy demand as a total is expected to plunge by 6% this year, seven times the drop during the last financial crisis. That drop is expected to be the sharpest in the U.S. (down 9%) and the EU (down 11%), and is expected to drop a further 1.5% for every additional month of a global lockdown, the IEA says.
But the reduction was “nothing to cheer,” warns Birol, echoing comments he has made in the past that any reductions are a result of “economic meltdown” rather than the more robust alternative: long-term policy decisions.
“If the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon see a sharp rebound in emissions as economic conditions improve,” he says.
Whether lasting changes to our global energy sources are made will depend, in large part, on the decisions governments make now, he adds: if governments put clean energy at the heart of their visions for rebuilding economies and keep renewables on track for further growth.
More must-read energy sector coverage from Fortune:
—Why the coronavirus crisis could make Big Oil greener
—How Global 500 companies are responding to the coronavirus
—The oil industry is running out of storage for its unprecedented surplus
—The Church of England is going up against ExxonMobil on climate change. Can it win?
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the coronavirus crisis could make Big Oil greener
Subscribe to The Loop, a weekly look at the revolutions in energy, tech, and sustainability.


fortune--2020-04-30--Elon Musk calls COVID-19 lockdowns “fascist,” distracting from another Tesla earnings win

“To say that they cannot leave their house, and that they will be arrested if they do – this is fascist,” Tesla CEO Elon Musk ranted on Wednesday, attacking shelter-at-home orders aimed at curtailing the coronavirus pandemic. “Give people back their god damn freedom.”
Musk’s comments, made during a call with investors, may resonate longer than the strong quarterly numbers the company had just reported. They also seemed to mix profits and principles.
Musk argued that the continued shutdown of its Fremont, Calif. electric car factory because of the pandemic could pose a serious risk to his company. But Tesla has a lot of cash to help it get through any downturn.
“The extension of shelter-in-place, or as I would say forcibly imprisoning people against their constitutional rights . . . it will cause great harm not just to Tesla, but to many companies,” Musk said. “While Tesla will weather the storm, other companies will not.”
Musk’s outburst came during what should have been a celebratory earnings call. For much of March, it seemed entirely plausible that the coronavirus pandemic could pose an existential threat to Tesla, which had shuttered factories and was staring down a shaken economy. While the company is not yet out of the woods, Musk has at least kept the bears at bay a bit longer with today’s reported net profit of $16 million, or 9 cents per share.
Tesla rarely touts those standard metrics, but its report emphasized that this is the first time the company has earned a net profit in the first quarter, which is generally a tough time for auto sales. In adjusted terms, which exclude some one-time expenses, Tesla reported a $227 million profit, or $1.24 cents per share.
Wall Street analysts could hardly have gotten it more wrong. Ahead of the earnings report, analysts had predicted a $1.24 per share loss in standard terms, and a 32 cents per share loss in adjusted terms. This marks the third consecutive quarter of Tesla outperforming analyst predictions.
Investors reacted to the earnings beat by piling into the company’s stock, which popped 9% in after-hours trading.
Tesla’s automotive sales grew massively year over year, from $3.72 billion in the first quarter of 2019 to $5.13 billion for the start of 2020. Auto revenues declined sequentially from $6.37 billion in the fourth quarter of 2019. But January to March is traditionally a slow period for auto sales overall, and that decline doesn’t fulfill the most dire warning of skeptics, who had predicted a massive first-quarter sales drop off, in part thanks to expiring tax credits.
Despite the decline in volume, the profitability of Tesla’s vehicles legged up yet again, with automotive gross margins rising from 22.5% in the fourth quarter to 25.5% during the first quarter. That points to broad efficiency gains, such as reduced manufacturing labor.
One highlight in particular should have bulls salivating – Tesla says that the Model 3 cars it produces in its Shanghai Gigafactory are “approaching” the profitability of U.S.-made models, indicating in part that the Chinese factory is running efficiently after just a few months. During the Wednesday conference call, Musk announced that those efficiencies will allow Tesla to lower the price of some of its Chinese-made Model 3s, which will now qualify for recently-restricted Chinese electric-vehicle incentives.
Few if any of those cost reductions likely came from furloughs and pay cuts that the company implemented in the face of the coronavirus – they didn’t go into effect until early April, after the end of the first quarter.
Tesla’s auto revenues did get at least one extra boost. Revenue generated by selling environmental regulatory credits to conventional carmakers such as GM nearly tripled, from $133 million in the fourth quarter of 2019, to $354 million for the start of 2020. Tesla’s regulatory credit sales also rose in the first quarter of 2019, in both cases helping boost lowered sales revenues.
Other flexible line-items–what analyst Craig Irwin of Roth Capital Management has referred to as “levers Tesla can pull”–may lie beneath the impressive numbers. Those could include reduced warranty costs or the recognition of additional revenue from new autonomous driving features, but those factors won’t be clear until Tesla releases more detailed financials in about 10 days.
After that, Tesla will be face to face with the much more uncertain territory of the coronavirus future – constitutional or not.
More must-read tech coverage from Fortune:
—Who is new AT&T CEO John Stankey?
—Work from home tips from the executive team that brought you Zoom
—Is A.I. better at diagnosing illnesses than doctors? Don’t believe all the hype
—Facebook debuts Zoom-like video chat feature called Messenger Rooms
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Zoom’s ups and downs since the coronavirus crisis
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-04-30--3 ways COVID-19 impacted Microsoft’s latest earnings

Despite the coronavirus weakening the global economy, Microsoft managed to be relatively unscathed.
The technology giant said Wednesday that its overall revenue in its latest quarter jumped 15% year-over-year to $35 billion. Those results beat analyst expectations of $33.7 billion, fueling a 4.5% rise in the company’s shares during after-hours trading, to $177.43.
But while Microsoft continued its string of solid quarterly earnings, it wasn’t totally immune from financial troubles related to Covid-19, as company executives explained in a conference call. Here’s three ways the pandemic did impact the business.
Bing and LinkedIn took a hit
Chief financial officer Amy Hood said Microsoft experienced a “significant reduction” in ad spending, which affected its search business and LinkedIn professional network. The decline was part of a broader retrenchment in the online ad industry, which Facebook also highlighted on Wednesday.
With companies laying off thousands of workers and pausing hiring, they aren’t spending as much on LinkedIn as they were previously, Hood said without providing financial details. That said, LinkedIn’s revenue still grew 21% year-over-year from an unspecified amount.
Microsoft doesn’t typically reveal specific Bing and LinkedIn sales in its quarterly reports, which indicate that they are not big enough be significant. So any hit those businesses take due to the coronavirus are unlikely to have a big impact on Microsoft’s overall results.
On to personal computing
With more people at home because of shelter-in-place orders, the company’s Xbox gaming business benefited, Hood explained. The company said that overall Xbox content and services revenue grew 2% year-over-year, without providing specific numbers, reversing a trend of flat or declining quarterly sales as people wait for a new Xbox gaming console later this year.
As for Microsoft’s Surface computers, that business only increased 1% year-over-year from an unspecified number. While that growth seems small, Hood said that the Surface business grew along with the company’s Windows business because more people are working from home.
Overall the company’s personal computing business—which includes Surface, Windows, Xbox, and search—rose 3% year-over-year to $11 billion.
Bring on the cloud data centers
The coronavirus pandemic has led to more businesses and people using Microsoft’s cloud-related services like Azure. But the heavy use also caused some of Microsoft’s cloud services to experience some outages.
Hood explained that Microsoft expects more capital spending later this year, which means heavy investment in the data centers that provide cloud services.
Microsoft spent $3.9 billion in capital improvements in its latest quarter, a drop from the $4.5 billion it spent during the previous quarter. She said problems in the supply chain due to the coronavirus resulted in Microsoft having to pause some data center investments. With the supply chain looking healthier than expected, she noted, data center spending will increase.
More must-read tech coverage from Fortune:
—Who is new AT&T CEO John Stankey?
—Work from home tips from the executive team that brought you Zoom
—Is A.I. better at diagnosing illnesses than doctors? Don’t believe all the hype
—Facebook debuts Zoom-like video chat feature called Messenger Rooms
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Zoom’s ups and downs since the coronavirus crisis
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-04-30--The communities we forget during COVID-19

Here ’ s who is winning ( and losing ) during Q1 earnings seasons so far

Good afternoon, readers.
It’s starting to become clear that the coronavirus afflicts certain communities more than others. We’re still learning plenty about COVID-19, an insidious and complicated disease, but it still seems that older people and those with underlying cardiac or respiratory conditions, as well as those with diabetes, face a heavier risk.
People of color have been facing particular danger in these times, according to Johns Hopkins, with a significantly higher mortality rate compared to white Americans.
Those are complex and interconnected issues given the various factors which have brought us to this point. The late Bernard Tyson, who led the nonprofit health group Kaiser Permanente up until his untimely death last year, often spoke about the social determinants of health.
Society and the laws which govern it have a profound effect on the wellbeing of various communities, whether they be policies that restrict access to adequate health care or those that force them to live in regions with poor air quality and a dearth of healthy food options.
But the complexities of a pathogen spread further. And that includes Americans with the rarest of diseases.
I had the privilege of speaking with Leeann Fortenberry, alongside several representatives from the Muscular Dystrophy Association, about the unique challenges facing this rare disease community during the COVID-19 pandemic. Leeann’s daughter, Faith, has spinal muscular atrophy (SMA), a muscle-wasting disorder, and the coronavirus has thrown new complications into their lives.
The good news is that patient groups are taking creative tacts to tackle the situation, especially when it comes to drug development for neuromuscular disorders. These are some of the people it’s important to keep in mind during these difficult times.
Read on for the day’s news, and see you again next week.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
Coronavirus' digital dilemma. It's clear at this point that the coronavirus pandemic's effects have leeched into just about every industry. Health care is an obvious one. But the specifics, especially in the digital health space, are fascinating—especially when it comes to the fraught field of electronic health records (EHRs). This is an issue that my colleague Erika Fry has covered in extraordinary detail; but it takes special significance in this particular moment. Fred Schulte, who collaborated with Erika on an epic piece about the troubles of EHRs long before this pandemic manifested, outlines the consequences for the current times. "Pooling data from the digital records systems in thousands of hospitals has proved a technical nightmare thus far," he writes. "That’s largely because software built by rival technology firms often cannot retrieve and share information to help doctors judge which coronavirus treatments are helping patients recover." (Fortune)
INDICATIONS
How we should think about Gilead's coronavirus treatment. Gilead's experimental antiviral remdesivir will, barring unforeseen circumstances, become the first drug approved to treat COVID-19. The federal government has all but given it an official thumbs-up; public health officials ranging from those at the World Health Organization (WHO) to the National Institutes of Health (NIH) and others have said it's a serious way forward to quelling the crisis. But it's important to keep things in perspective. Dr. Anthony Fauci, who heads up the NIAID, has cautioned that remdesivir is just a first step. And the data we've seen to date shows that remdesivir will likely be a stopgap measure tailored towards the sickest COVID-19 patients in order to alleviate the financial and practical burden on health systems. That's nothing to scoff at—but don't call it a miracle cure. (Fortune)
Glaxo drug wins expanded approval in ovarian cancer. In some non-COVID news... The FDA on Wednesday gave GlaxoSmithKline's ovarian cancer drug zejula an expanded approval. In essence, the drug's label expansion will extend access to women who have advanced ovarian cancer and have seen some success from chemotherapy—regardless of whether or not they have specific genetic mutations which may have previously limited their access to the drug. (Reuters)
THE BIG PICTURE
Disinfecting the country's largest subway system. New York City is the epicenter of the coronavirus pandemic in the U.S., with some 18,000 reported COVID deaths (out of 63,000 total reported in America). The state has taken some extraordinary measures in the face of those numbers. But the on-the-ground response remains complicated. On Thursday, NY Governor Andrew Cuomo announced what he says is an "unprecedented" effort to disinfect public transportation systems for those who must still use them. Service will now be halted for four hours, between 1 a.m. and 5 a.m., in order to disinfect cars, beginning May 6. (NPR)
REQUIRED READING
How T-Mobile shifted 12,000 call center employees to work from home, by Aaron Pressman
The latest round of unemployment claims puts real jobless claims at a depressing peak, by Lance Lambert
Sanofi's CEO on how we can prevent being caught off guard from a pandemic, by Paul Hudson
The fall of fracking and the future of oil, by Shawn Tully
Sign up for other Fortune newsletters.


fortune--2020-04-30--Here’s who is winning (and losing) during Q1 earnings seasons so far

Macy ’ s stores to start slowly re-opening next week but CEO warns retailer will emerge ‘ a smaller company @

The Street was bracing for a mixed earnings season. While the impact of the coronavirus has, in many cases, been immediate and dire, corporate earnings for the first quarter are on a lag. “Two-plus of the three months were pretty decent,” says Charles Schwab chief investment strategist Liz Ann Sonders, making earnings for the quarter as a whole “not terribly relevant.”
So far, roughly half of companies have reported. According to a Refinitiv note on Wednesday, there have been 90 negative EPS preannouncements issued by S&P 500 companies, versus 42 positive ones. But much like the GDP report for the first quarter, which came in at -4.8%, first-quarter earnings won’t “tell you all that much about the depth and scope of the impact of the lockdowns,” suggests LPL Financial equity strategist Jeff Buchbinder.
Most estimates show that year-over-year earnings growth for the quarter is down about 15% or 16%, and BofA Global Research noted on Wednesday that based on actual values and the latest consensus estimates, “[year-over-year] revenue growth [is] –0.5%.” For those who have already reported, earnings and sales growth came in “10.9% and 0.4% weaker than expected at the start of the season, respectively, while earnings growth ex-financials has surprised to the upside by 2.5%,” according to BofA research.
But the picture is extremely murky, given the unprecedented business shutdown. According to BofA Global Research on Monday, about 100 companies in the S&P 500 suspended guidance. Yet a large portion of companies in the S&P 500 haven’t been issuing quarterly guidance for a while, even pre-coronavirus, and Schwab’s Sonders suggests the slew of companies withdrawing or not issuing guidance now will only accelerate that trend even after the crisis is largely over.
Instead of guidance numbers, “what I think is most important to try to glean from commentary on calls is what the more macro implications are,” Sonders tells Fortune. Alternatively, she suggests taking note of “What does your balance sheet look like? Do you have cash flows to stay afloat for x period of time? Have you started to lay workers off? If you have, are they furloughed or permanent layoffs? Have you taken government assistance?”
Meanwhile, LPL’s Buchbinder is not suggesting investors look on the sunny side. In fact, he believes investors should watch for “credible downside risk estimates” from companies.
“Investors are looking for comfort: How bad is this going to get in the second quarter?” he says. “The big question, though, is where’s the trough? The companies that can give people an idea of where that trough is are going to perform better.” So far, it’s the big tech names that are doing just that, he says.
Looking back, full-year 2020 earnings estimates were close to $180 earnings per share to start the year. Now, the most optimistic projections are $132. Both Sonders and Buchbinder think those earnings estimates need to come down further still (Sonders estimates it will be around $100 when all is said and done).
Yet perhaps more than ever, strategists note there’s a big gap between winners and losers, and the first-quarter earnings season only emphasizes the “stock-pickers market” we’re in, says Buchbinder.
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fortune--2020-04-30--Amazon plans to spend more amid the coronavirus pandemic, prompting stock drop

Amazon.com saw its profit shrink and predicted it may incur a loss in the current quarter due to increased spending to keep logistics operations running smoothly during the coronavirus pandemic.
Operating income could range from $1.5 billion to a loss of $1.5 billion in the quarter ending in June, the company said Thursday in a statement.
“Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit,” Chief Executive Officer Jeff Bezos said in the statement. “But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on Covid-related expenses getting products to customers and keeping employees safe.”
Sales increased 26% to $75.5 billion during the period ended March 31, the Seattle-based company said. Net income was $5.01 per share. Analysts, on average, estimated $73.7 billion in revenue and earnings of $6.27 a share, according to data compiled by Bloomberg.
Wall Street expects the coronavirus pandemic to accelerate long-term trends in favor of Amazon and online shopping, while further weakening brick-and-mortar stores. The company, which has prioritized stocking essential goods, is among a few large retailers that have continued to operate relatively normally during the crisis.
Amazon had warned that a hiring binge beginning in mid-March and a temporary $2 an hour hazard pay raise for the company’s hundreds of thousands of warehouse workers would ultimately cost some $700 million.
Amazon shares declined about 4.5% in extended trading after the results. The stock closed at $2,474 in New York and has jumped more than 33% in 2020.
“The big spending promise is clearly weighing on shares, though I think that reinvestment is an important step for customer satisfaction/retention as other competitors have stepped up their delivery/fulfillment capabilities,” said RJ Hottovy, an analyst at Morningstar Inc. “Sales are likely to outperform, but the benefit to margins will be offset by other incremental costs.”
Sales in Amazon’s physical stores category, which is almost entirely Whole Food Market stores, rose 8% to $4.6 billion in the quarter, the largest increase since Amazon bought the organic grocer in 2017. That tally doesn’t include online sales from Whole Foods stores, which surged in March as people stocked up and overwhelmed Amazon’s food delivery infrastructure.
Amazon’s fulfillment costs surged 34% to $11.5 billion from the period a year earlier. Shipping costs rose 49% to $10.9 billion.
Amazon Web Services, the cloud computing unit that in recent years has accounted for most of the company’s operating income, posted sales of $10.2 billion, up 33%, and just below analysts’ estimates.
More must-read retail coverage from Fortune:
—How luxury fashion shopping habits are shifting during the coronavirus pandemic
—Vending machines—the original contactless delivery—now deliver ramen and art
—Restaurants are converting their spaces into retail stores to ride out the pandemic
—The outdoor industry’s crucial spring season will be its most challenging in years
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: The ugly toll COVID-19 has taken on retail
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-04-30--Coronavirus infects iPhone sales, slowing Apple’s growth

Apple said its quarterly revenue increased 1% from last year, as the global coronavirus pandemic hurt iPhone sales and made it harder for the company to manufacture its products.
For the first quarter of 2020, Apple’s fiscal second quarter, sales totaled $58.3 billion. That was better than the $54.6 billion analysts had expected. In February, Apple withdrew its earlier forecast that revenue would total $63 billion to $67 billion. Net income per share of $2.55 was up 4%, also much better than analysts had expected.
While overall sales increased slightly, iPhone sales dropped 7%. “Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” CEO Tim Cook said in a statement.
The coronavirus pandemic has crushed sales of discretionary consumer purchases around the world, and Apple products have been no exception. The company’s supply chain has also been disrupted as many factories in Asia shut down. The virus interrupted a strong rebound in iPhone sales at the end of last year. Just three months earlier, in the 2019 holiday quarter, iPhone revenue had increased 8% to almost $56 billion, helping Apple’s total sales hit a record $91.8 billion.
But with growing concerns about how Apple will fare this quarter and for the rest of the year, Apple’s stock price dropped nearly 2% to $288.23 in aftermarket trading on Thursday. Over the past three months, Apple’s shares have lost 10% amid growing concern about the damage wrought by the spread of COVID-19. The stock has done slightly better than the S&P 500 index, which dropped 11% over the same period, but not as well as some rivals, like Amazon, which has seen its stock gain 33%.
Apple typically gives analysts guidance about its expectation for revenue, expenses, and other items in the current quarter but it did not do so on Thursday. Still Cook and CFO Luca Maestri offered some descriptions of how they expected sales would go. The trend remains negative for iPhones and wearables, but should improve for Macs and iPads. “That’s customers either taking online education or working remotely,” Cook explained on a call with analysts.
Apple’s supply chain was impaired in February, particularly due to factory closures in China. But it has since bounced back to typical levels, Cook said. “If you look at the shock to the supply chain that took place this quarter, for it to come back up so quickly really demonstrates that it’s durable and resilient,” Cook told analysts. “That said, we’re always looking at tweaks. It’s just not something we talk about…We will look to see what we learned and what we should change.”
For the completed past quarter, services revenue, which includes everything from Apple Music to Apple’s cut of app sales to iCloud storage plans, was a source of strength, rising 17% to $13.3 billion.
Wearables, which includes the Apple Watch, headphones, and earphones, increased 23% to $6.3 billion.
More must-read tech coverage from Fortune:
—How T-Mobile shifted 12,000 employees to work from home in less than two weeks
—Coronavirus patient data stored in electronic health records found difficult to study at scale
—Cybercriminals adapt to the coronavirus faster than the A.I. cops hunting them
—Elon Musk calls COVID-19 lockdowns “fascist,” distracting from another Tesla earnings win
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Zoom’s ups and downs since the coronavirus crisis
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-04-30--Macy’s stores to start slowly re-opening next week but CEO warns retailer will emerge ‘a smaller com

Macy’s stores to start slowly re-opening next week but CEO warns retailer will emerge ‘a smaller company’

Finally some relief from the coronavirus crisis is coming for Macy’s.
The department store chain said on Thursday that it will begin reopening stores on Monday, starting with 68 locations of its 500 namesake stores, gradually ramping up from there. The company expects all stores will be open in some manner by mid-June, depending on what local authorities allow and the trajectory of the pandemic. (The company also operates Bloomingdale’s and Bluemercury.)
Macy’s chief executive officer Jeff Gennette warned investors that it will be slow going at first, saying on a virtual business update that some stores might get only 20% of normal sales volume in the first week, perhaps 25% the week after, with the timing of the return to business as usual unknowable.
“We’re going to be smaller, we’re going to be more levered but we have a path forward,” Gennette told Fortune. Macy’s had already been planning to shrink to bolster its turnaround, saying in February it would close 125 stores and expected a slight sales decline this year.
But the pandemic is accelerating that. As a non-essential retailer, Macy’s stores have been closed since mid-March, prompting the country’s largest department store chain to furlough 130,000 store employees, tap a credit line, slash salaries, and cut its capital spending by half.
“Our business model was not built not sustain the full closure of our stores for an extended period of time,” said Gennette.
Still, there have been bright spots for Macy’s. Gennette said e-commerce sales had been strong in April after a muted March, with beauty products and home furnishings, along with furniture, turning in better than expected numbers. Apparel, particularly dressier clothing, has taken a big hit. Macy’s rang up $6 billion in sales last year, making it a top 10 online retailer.
What’s more, its investments to connect stores and e-commerce has mitigated some of the pain: Early this month, some 230 Macy’s stores were partially open to allow staff to use store merchandise to fill online orders. That’s now up to 466. This will reduce how much Macy’s ultimately has to mark down and will speed up merchandise changeover for the summer and back-to-school seasons.
Macy’s has also set up 100 stores to offer curbside pickup, an option that has preserved sales at other retailers such as Target, Petco, and Home Depot.
The first group of stores set to re-open will be in states where shelter in place orders are lifted, namely Texas, Georgia, South Carolina, Tennessee, and Oklahoma. Another batch will reopen on May 11.
But that’s not to say stores will reopen as they were. Some might only be open to offer curbside pickup, in-store pickup, or both. They will all have reduced hours and staffing levels at first. And they are likely to only be partially open with big areas of the stores off limits, depending on the store.
And they will look different: There will be plexiglass barriers at cash registers, no fitting rooms, beauty consultations will be no-touch, and anyone trying on jewelry will have to sanitize their hands. Macy’s has no intention of requiring shoppers to wear masks.
In February, Macy’s announced a turnaround plan that included store remodels and trying out new store formats. But many of those plans are on hold as Macy’s looks to preserve cash while its basic business returns to some semblance of normalcy.
“I do believe that all of our stores will open at some point,” said Gennette “But we don’t want to get ahead of our skiis.”
More must-read retail coverage from Fortune:
—How luxury fashion shopping habits are shifting during the coronavirus pandemic
—Vending machines—the original contactless delivery—now deliver ramen and art
—Restaurants are converting their spaces into retail stores to ride out the pandemic
—The outdoor industry’s crucial spring season will be its most challenging in years
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: The ugly toll COVID-19 has taken on retail
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-04-30--Boris Johnson declares the U.K. ‘past the peak’ of COVID-19 infections—but no plans to ease restrict

Boris Johnson declares the U.K. ‘past the peak’ of COVID-19 infections—but no plans to ease restrictions yet

Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.
Boris Johnson said the U.K. was “past the peak” of COVID-19 infections Thursday, in his first daily press conference after recovering from the virus this month.
But the British Prime Minister did not announce any immediate easing of social distancing measures. Instead, he said, a comprehensive plan for how the restrictions will be eased—including ways people could safely return to work and schools might begin to reopen—would be unveiled sometime next week.
Johnson also referenced the “knotty” and “infuriating” issues of a lack of protective equipment and tests, particularly for frontline medical workers. “I am not going to minimize the serious logistical problems we have faced” in getting PPE to health care workers, and testing, said Johnson.
The lack of equipment had caused increasing frustration in recent weeks, drawing harsh criticism from within the NHS as the death toll of frontline workers continued to mount.
“We are throwing everything at it, heart and soul, night and day,” Johnson said.
This acknowledgement came on the day the government had set as a self-imposed deadline to ramp up testing to 100,000 tests per day. On April 2, health secretary Matt Hancock promised the government would meet its target of 100,000 tests per day by the end of the month, after facing criticism over a lack of tests even for frontline health care workers. It is unclear if the government missed that goal. Johnson said the U.K. tested 81,611 people on April 29.
At the time, Hancock said the country would need to build a diagnostics industry “at scale” in order to ramp testing up 10-fold, and said that the slow pace of testing in the country compared to Germany was due to the U.K.’s smaller diagnostics industry.
Return to work
It was only Johnson’s fourth day back at work. The British leader had been recovering out of sight from COVID-19, which had put him in the ICU for two nights earlier this month. It was an eventful week: On Wednesday, Johnson announced his fiancée, Carrie Symonds, had given birth to a healthy baby boy.
On Thursday, Johnson said the current rates of infection and deaths showed that the nationwide lockdown, which is now in its sixth week, has been effective.
“Your efforts and your sacrifice is working, and has been proven to work,” he said.
The rate of transmission for the virus has dropped to an estimated range between 0.6 and 0.9, meaning that fewer than one new person is being infected from every current infection, according to Patrick Vallance, the U.K.’s chief medical officer.
While coronavirus deaths in the U.K. have been declining since early April, they remain relatively high. On Wednesday, another 674 people were reported to have died of the disease, though daily tally reports of deaths do not necessarily reflect a death on that day. However, the number of new cases has also been slow to come down: More than 6,000 new cases were reported yesterday.
Johnson also denied accusations that the U.K. had been harder hit by the virus compared to other countries as a result of the timing and approach to the nationwide lockdown—as Labour opposition leader Keir Starmer alleged earlier this week—and defended the government’s actions as “the right thing at the right time.”
“Let’s not charge into who’s won and who’s lost,” added chief medical officer Chris Whitty, who added that different methods for tracking and reporting COVID-19 deaths meant that comparing countries’ death rates in real time was a “fruitless exercise.” Whitty also cited an examination by David Spiegelhalter in the Guardian on why national death rates are so difficult to compare.
SAGE Controversy
The Prime Minister did not address mounting questions about a lack of transparency on the membership and decision-making process of the government’s Scientific Advisory Group for Emergencies (SAGE), the key group who Johnson has repeatedly said guides major policy decisions on the pandemic.
The identities of the group’s members have been kept secret. Media reports over the weekend and early this week, however, reported that in addition to well-respected scientists, Dominic Cummings, a key political aide to Johnson, also attended the meetings and played an active role in discussions. Ben Warner, a data scientist who works with Cummings at Downing Street, also attended the meetings.
In addition to Cummings and Warner, on Thursday, DeepMind, the London-based artificial intelligence company owned by Google-parent Alphabet, confirmed reports that its chief executive officer, Demis Hassabis, attended the key SAGE meeting on March 18 at which stricter lockdown measures were debated. The company said Hassabis attended “in his personal capacity” and at the invitation of Vallance. Hassabis is a well-respected expert on A.I., has a Ph.D. in cognitive neuroscience, and is a fellow of the Royal Society, Britain’s most prestigious scientific body. But he is not an epidemiologist, behavioral scientist, or economist, and it is unclear what input he provided.
On Wednesday, the Guardian reported that the government was looking to expand the membership of the advisory group, putting out a call to well-known research institutions for additional experts.
A link to David Spiegelhalter‘s article in this story has been corrected.
More coronavirus coverage from Fortune:
—The coronavirus pandemic could have unexpected environmental effects
—Latest round of unemployment claims puts real jobless rate near Great Depression peak
—Could COVID-19 kill coal?
—Unemployment claims are taking some states weeks to process. What to know
—Cybercriminals adapt to coronavirus faster than the A.I. cops hunting them
—Mike Schur talks Parks and Rec coronavirus episode and why remote TV production isn’t the future
—Buccaneers of the basin: The fall of fracking—and the future of oil
—PODCAST: How 2 CEOs outside of health care decided to pivot to fight COVID-19
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.