Finance chiefs including central bankers are set to join a teleconference on the coronavirus outbreaks, raising hopes for a coordinated response that includes rate cuts and perhaps new bond-buying schemes.
Markets have extended their gains. The S&P 500 is up nearly 2%. The US dollar is sliding across the board, with EUR/USD extending its gains above 1.1150.
The Federal Reserve vowed to act in a special message it released late on Friday as markets were crashing. The Bank of Japan and the Bank of England also joined in with similar promises. While the European Central Bank hesitated, it is part of the coordination and is ready to act.
Coronavirus has already taken the lives of over 3,000 people and has infected nearly 90,000.
There’s a new boardroom battle in tech: activist investor Paul Singer vs. the enigmatic CEO of Twitter and Square Jack Dorsey.
Elliott Management, the activist hedge fund run by billionaire Singer, has taken a nearly 5% stake in Twitter valued at about $1 billion, people familiar with the matter tell Yahoo Finance. The firm is now pushing for the ouster of Dorsey as CEO, and has nominated four members to Twitter’s board, sources say.
Bloomberg News first reported on Friday night a “sizable” stake taken by Elliott and the firm’s desire to send Dorsey packing.
Elliott is not agitating for a sale of Twitter, sources tell Yahoo Finance. (Twitter did hold talks to sell itself in 2016 to Google or Salesforce, and came very close to a sale to Disney, Bob Iger confirmed in his book last year.)
Rather, sources say Elliott believes Dorsey isn’t running the company correctly and that the board has been complacent. Elliott thinks Twitter could be worth significantly more with a full-time CEO running the ship and focusing on growing its ad revenue, sources say.
A decision on Dorsey’s fate may come quickly, as the two sides are already in talks, sources say.
A spokesperson for Twitter declined to comment to Yahoo Finance on the situation. Twitter shares (TWTR) jumped about 8% in trading Monday morning.
Paul Singer, founder, CEO, and co-chief investment officer for Elliott Management Corporation, speaks during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May, 9, 2012. REUTERS/Steve Marcus/File Photo
Elliott Management is hardly the first to question Dorsey’s ability to pull the double-duty of running both Twitter and Square, two publicly traded companies.
Over the past two years, the fortunes of those two tech players have diverged. While Twitter has taken heat for its failure to cut down on trolls and hate speech, Square has made strides in point-of-sale hardware and peer-to-peer mobile payments. Square was Yahoo Finance’s Company of the Year for 2018. Twitter stock is down 6% in the past two years, while Square shares is up 58%.
Jason Kint, CEO of the nonprofit trade group Digital Content Next, tweeted after Dorsey’s announcement, “This is the CEO of company mentioned 74x in [the] Mueller Report investigating Russia’s interference in 2016 US election. He’s moving to another continent for much of 2020 election??? And we’re [shrugging emoji] with this? WTF.”
In December, NYU Stern School of Business professor Scott Galloway, a Twitter shareholder and prominent voice in tech criticism, wrote an open letter to Twitter board chairman Omid Kordestani seeking for Dorsey to step down as CEO.
“A part-time CEO who is relocating to Africa? Enough already,” Galloway’s letter declared. “Twitter has, on every metric, underperformed peers for several years… This decline is despite the fact... that Twitter has become an iconic brand and the global heartbeat for our information age.”
Twitter, Facebook, Alphabet, and S&P 500 performance during Jack Dorsey's current tenure as Twitter CEO.
Since June 2015, when Dorsey returned to be CEO of the company he cofounded, Twitter stock has severely underperformed its competitors.
Twitter stock is down 7.5% in that time, while competitors Facebook is up 136%, Google is up 151%, and the S&P 500 has risen 41%. Square, Dorsey’s other company, is up 374%.
Elliott Management is sure to cite stock performance, among some more abstract recent headlines and events, to make its case with Twitter’s board.
Global gross domestic product would grow by just 1.5% in 2020 if the coronavirus spreads widely throughout Asia, Europe and North America, the OECD said. That's roughly half the 2.9% growth rate the group projected for 2020 before the outbreak, and severe enough to push Japan and Europe into recession.
Policymakers around the world must act now to prevent such a scenario, the OECD said. It called for a coordinated global response to contain the outbreak, recommending that governments increase spending and central banks implement policies to help cushion the blow from the virus.
Even in the best-case scenario, in which the epidemic peaks in China during the first quarter and only mild outbreaks develop in other countries, the OECD predicts that the global economy would grow only 2.4%. That somewhat more optimistic forecast would still be the weakest level of growth since the global financial crisis in 2009. Global growth was about 3% last year.
"The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions. Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected," said OECD chief economist Laurence Boone.
There have now been more than 88,000 confirmed cases of coronavirus worldwide, with infections on every continent except Antarctica. The virus has killed over 3,000 people as it continues to spread. South Korea now has over 4,200 cases and 26 deaths. A second patient has died in the United States, and new cases have been reported in Florida, New York and Rhode Island.
Many of the world's biggest companies have issued profit and sales warnings in recent weeks, reflecting changes to consumer behavior that are causing disruption even in markets where relatively few cases have been identified. Some businesses are also having trouble keeping their factories open due to travel restrictions and supply chain problems.
Central banks are already trying to reassure investors that they'll step in to limit the economic fallout.
Bank of Japan Governor Haruhiko Kuroda promised Monday that the country's central bank would provide "ample liquidity" to ensure stability in financial markets. On Friday, US Federal Reserve boss Jerome Powell said the central bank would "act as appropriate to support the economy," suggesting that an interest rate may be coming soon.
The world's central banks may take even more dramatic actions, according to Bill Nelson, executive vice president and chief economist at the Bank Policy Institute. In a note this weekend, he predicted a "coordinated easing across the major central banks," possibly including the People's Bank of China and the Hong Kong Monetary Authority, as early as this week.
A customer exits a Wendy's Co. fast food restaurant in San Antonio, Texas.
Callaghan O'Hare | Bloomberg | Getty Images
DUBLIN, OHIO -- In a crowded field of competition, Wendy's strategy to win over breakfast customers includes spending big on advertising and poking fun at rivals.
Within the fast-food industry, breakfast is the only meal that is seeing more customers return to restaurants compared to a year ago. For chains like McDonald's and Dunkin', the early morning meal plays an important role in their overall business. Breakfast accounted for 16% of fast-food chains' traffic in the 12 months ended Nov. 2019, according to data from the NPD Group.
"As restaurants, and especially when you talk about a breakfast war, you tend to be competing for consumers that are already breakfast consumers. The challenge is to expand that pie," Technomic senior principal David Henkes said.
Wendy's is betting that breakfast will eventually account for 10% of its U.S. sales. To drive those sales, Wendy's will use national advertising campaigns to promote the meal for the first time, starting Monday to coincide with the nationwide launch. Its past attempts at breakfast never expanded beyond regional tests, which meant it could only use local advertising to draw in customers.
Wendy's CFO Gunther Plosch told analysts on Wednesday that the chain plans to spend between $70 million to $80 million in 2020 on advertising for breakfast, increasing its total media spend by about 30%. The company will contribute between $40 million to $50 million. The chain is not planning on pulling any advertising dollars for lunch or dinner.
Other fast-food chains that serve breakfast are expected to step up their own marketing to compete with Wendy's.
"There's clearly a renewed vigor in defending each restaurant chain's turf," Henkes said.
McDonald's, which has been trying to reverse weak breakfast traffic trends, started offering a national 2 for $4 promotion Feb. 24 on several of its breakfast sandwiches. The Chicago-based company has declared Monday "National Egg McMuffin Day" and plans to give away free Egg McMuffins.
"We have to win at breakfast," McDonald's CEO Chris Kempczinski told analysts in late January. "There's obviously a lot of focus and attention that we're going to be putting on that in 2020."
Wendy's anticipates that more breakfast rivals will discount their food and coffee to stave off competition from the new entry.
Kurt Kane, Wendy's U.S. President and Chief Commercial Officer, in the Wendy's Innovation Center.
Source: CNBC
"We fully expect our competitors to start discounting," Wendy's U.S. President and Chief Commercial Officer Kurt Kane said in an interview. "The good thing for us is that every discount they offer takes profitability out of their franchisees' pockets and out of their own restaurants."
Henkes said that McDonald's price promotions will put certain limitations on what Wendy's or other breakfast players will be able to charge for their items.
"If things turn into a price war, McDonald's is able to compete on price better than anybody," he said.
Competition from newcomer Wendy's could also spur on more new breakfast items from other chains.
Wendy's own plan to win over consumers includes stealing away customers from other fast-food chains. Earlier in February, the chain tweeted several videos that featured McDonald's former corporate chef Mike Haracz trying — and raving about — new Wendy's breakfast items. Wendy's began running a TV commercial this week featuring Haracz.
"We love whenever we get a convert from McDonald's that comes over to support our food because they know it's so much better than what the Frozen Arches might be selling everyday," Kane said.
Wendy's is using its cheeky social media presence to promote breakfast in other ways. The company's Twitter account went private on Wednesday. Followers gained access to an exclusive deal for a free Breakfast Baconator delivered by DoorDash with any $5 order.
Traders work during the opening bell at the New York Stock Exchange on February 27, 2020.
Johannes Eisele | AFP | Getty Images
8:09 am: Wall Street anticipating some big Fed rate moves
Markets have no doubt that the Federal Reserve is about to come through with some serious interest rate cuts to combat a slowdown related to the novel coronavirus. Traders have completely priced in a 50 basis point reduction by the central bank's March meeting, a 75% chance of another 25 basis points in April, and a 70% probability for one more 25 basis point move by September, according to the CME's FedWatch tracker. That's not all: The market is assigning a 40% chance for one more move in December that would take the overnight funds rate down to a range of 0.25%-0.5%, and a non-negligible 10% probability of going all the way to zero. On the latter point, JP Morgan economists sees an even bigger likelihood – the firm's economists think there's a 1 in 3 chance that the Fed goes to zero by the end of summer. – Cox
8:06 am: Apple shares higher after Oppenheimer upgrade
Shares of Apple rose 1.7% in premarket after Oppenheimer upgraded the tech giant, saying that the company's products and strong balance sheet should help it withstand any economic uncertainty due to the coronavirus. "We believe Apple products and services will prove more resilient than competitive products in uncertain times," analyst Andrew Uerkwitz said. The firm also said the company is a "recurring revenue machine" and said the tech giant should be able to withstand any coronavirus fears.— Bloom
8:00 am: ECB says it 'stands ready' to step in
The European Central Bank said Monday that the fast-spreading coronavirus added uncertainty to global growth prospects, and it's willing to intervene to combat any economic impact. "The Governing Council stands ready to adjust all its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner," ECB Vice President Luis de Guindos said at a speech in Monday. The remarks marked a change in tone from just last Thursday when president Christine Lagarde told the Financial Times that the coronavirus hasn't reached the point where monetary policymakers need to step in. — Li
The maker of household cleaning products rallied in premarket trading Monday morning as the coronavirus continued its spread around the globe and fostered demand for sanitizing wipes, gels and sprays. News of novel cases in metropolitan areas like New York City, in particular, has sparked a boost in production at companies like Clorox, Lysol and Purell-parent Gojo Industries that make hand sanitizers and other ethanol and bleach cleaners, the Wall Street Journal reported on Friday. — Franck
7:45 am: First coronavirus case in New York City
The first coronavirus case in Manhattan has been confirmed, a woman who recently traveled to Iran and is currently isolated in her home. Meanwhile, the disease is spreading rapidly in South Korea and Japan. South Korea has reported an additional 123 cases of the coronavirus, taking the country's total number of infections up to 4,335. Japan has confirmed five more cases in Hokkaido, bringing the country's total number of infections to 77. Iran's health ministry said 66 people have died due to coronavirus.— Li
7:43 am: Twitter shares jump 5% after Elliott Management pushes for CEO change
Shares of Twitter jumped more than 5% during Monday's premarket trading after news that Elliott Management founder and billionaire investor Paul Singer is seeking to replace Twitter CEO Jack Dorsey, a person familiar with the matter told CNBC. The firm said that Dorsey's attention is split between running both Twitter and Square, among other things. Shares of Twitter have shed 22% in the last 6 months. — Stevens
7:35 am: Another record low on the 10-year Treasury yield
The 10-year Treasury yield dropped to a fresh record low below 1.04% as the historic decline in U.S. rates continued amid the coronavirus outbreak and Wall Street calls for Federal Reserve stimulus. The benchmark 10-year rate, which moves inversely with prices, tumbled about 37 basis points in February alone. The fed funds futures market has already priced in a 50 basis point cut at the Fed's meeting this month, according to CME Fed Watch tool.— Li
7:30 pm: Chart analyst says Friday's low is the new line in the sand
On Friday, stocks rapidly pared losses in the last 15 minutes of trading, which serves as the first evidence of "downside exhaustion," according to Rich Ross, Evercore ISI's technical analyst. Therefore, investors should use the S&P 500′s intraday low on Friday — 2,853 — as the "new line in the sand," Ross said. Below that level, there are only two levels of support of note at 2,722 (-7%) and 2,632 (-10%), he added.— Li
7:26 am: Bad China economic data spooked investors
China's official Purchasing Managers' Index (PMI), a gauge for its manufacturing sector, plunged to a record low of just 35.7 in February from 50.0 in January, the National Bureau of Statistics said on Saturday. Any reading below 50 signals a contraction. The somber reading provides the first official snapshot of the state of the Chinese economy since the outbreak of the coronavirus epidemic which has killed almost 3,000 people in mainland China and infected about 80,000.— Li
7:20 am: Dow futures down nearly 200 points after wild overnight session
The market's worst rout since the financial crisis is set to resume as stock futures dropped again before the opening bell. Dow futures were lower by about 168 points, indicated a loss of about 207 points at Monday's open. The futures market experienced a volatile overnight session where Dow futures traded in a range of more than 1,000 points. S&P 500 and Nasdaq futures also pointed to more losses at the open. — Li
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