Robinhood Snacks - 🏡 "Flatten the curve" = containment

and the Fed goes full slasher
March 17th
Disclosures
 

The 3 stages of social distancing

 
 
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Hey Snackers,

The shutdowns continue. The SF Bay Area ordered 7M residents to stay home (except for essentials like grocery shopping & doc appointments) until April 7. NYC, LA, Washington, and Illinois shut bars/restaurants, while schools and offices continue to close across the nation.

The 3 major stock indexes fell around 12% each Monday on the growing economic shutdown — That includes the Dow's largest point drop in history. Meanwhile, shares of Clorox hit a 52-week high. Sign of the times...

Protect

The FTC Economy (“Flatten The Curve”) is led by private biz in a big way

"FTC" is becoming a solidarity slogan... Before mandated government shutdowns, American companies and citizens independently took initiatives to "flatten the curve" of the COVID-19 outbreak — aka, reduce the number of infections so that our healthcare capacity can handle them. Most countries are taking the FTC approach:

  • Pros: Social distancing and closures mean fewer infections, fewer deaths, and healthcare systems not overwhelmed by a dramatic spike in cases.
  • Cons: The economy is devastated by biz slowdowns, the peak of the outbreak happens later (and dies down later), and could repeat if widespread immunity isn't developed.
  • Bottom Line: The opposite approach is "herd immunity" — allowing for a large part of the population to be infected — which risks disastrous consequences for the elderly and people with compromised health. So...

The grassroots spirit takes hold... “The health of a democratic society may be measured by the quality of functions performed by private citizens” — Tocqueville said it, and American individuals/companies are still practicing it, decidedly acting to make flattening the curve possible:

  • Social Distancing: WFH has become the norm and social media is rife with self-imposed "stay home" content — risk being "social shamed" for posting a story at a bar.
  • Corporate Closures: Nike, Lululemon, Apple, Vail Resorts, and other companies closed their businesses from the public before the government mandated them to do so — and Starbucks went takeout-only nationwide before NYC required it.
THE TAKEAWAY

FTC has us walking a very fine line... Small/medium sized businesses and hourly wage workers are majorly hurt in this FTC economy — no foot traffic = no sales = no work for hourly workers. Private companies have implemented ways to soften the blow and provide relief for those who can't afford to stay home when they don't feel well or when their bosses tell them to:

  • Grubhub waived commission fees (which can be as much as 30%) for many mom & pop restaurants that are suffering right now.
  • Darden Restaurants is providing paid sick leave for all its hourly workers who weren't covered.
  • Starbucks announced a financial support solution for any US baristas who may have been exposed to the virus — Lyft is also doing this for drivers.

Cut

The Fed slashed interest rates to almost 0% — what does this mean, and will it help?

Like a slasher film... But with interest rates. The Fed's yanked out all the stops in its financial medicine arsenal. On March 3, the nation's central bank doled out the first emergency rate cut since the '08 financial crisis. On Sunday, it cut interest rates to near 0% and announced it's dropping $700B on long-term bonds. Here's what the Fed wants:

  • Interest rates to fall: So that you'll spend on stocks/stuff and take out loans rather than hoarding your money in an interest-bearing savings account, bonds, or under mattresses.... So it lowered rates to almost 0%.
  • More money to flow: So that banks have enough to give/lend to you (so that you can spend).... So it's dropping $700B to buy Treasury and mortgage-backed securities, which flushes the financial system with more freshly printed cash for banks.
  • More cash = less demand for cash = lower interest rates to borrow cash = more loans. That last one could save struggling companies and help kickstart an economic recovery.

But the Fed is fighting a different beast... The COVID-19 pandemic. It's trying to prevent the virus from causing a financial crisis — but investors are looking for medical solutions, not monetary ones.

THE TAKEAWAY

There's only so much the Fed can do... And it's already done it. With all these drastic measures, the Fed has run out of rockets in its economic bazooka. Now it's up to Congress and the White House to help with changes in taxes and spending to help the consumers and small businesses seriously squeezed by the econ shutdown. This might include government bailouts for struggling industries (reportedly, airlines could be first).

Track

Google launches a Trump-endorsed COVID-19 screening website

Wait, he said what?... Alphabet's reaction to Friday's press conference when President Trump talked up Project Baseline, Google's initiative to point people who are COVID-19-worried in the right direction. With the President's public support and the Google parent's huge tech and financial resources, Project Baseline could be big for diagnosing COVID-19:

  • The company: Verily is Alphabet's life sciences "Other Bet." It was created in Google's X Lab as a moonshot/save-the-world project. Now, it gets its big moment.
  • The goal: Screen people for COVID-19 by asking about symptoms, then pointing them in the right direction. If one user says "I have a belly ache," Project Baseline says it's not COVID-19. If another says "I have a fever and cough," it might suggest a local testing facility.
  • The catch: You need to login with a Google account and agree to share your data.
  • BTW: This only launched for the Bay Area yesterday — they'll need to increase capacity before expanding (not taking more appointments for now).

In South Korea and China, the authorities have apps tracking infected people... Verily isn't proposing that, but it insists on being able to share your data with authorities. Claaaassic Privacy vs. Security tradeoff. Giving Google your health data may seem scary, but letting COVID-19 spread is scarier.

THE TAKEAWAY

This could be Google's opportunity to get into healthcare... America's personal health data literally sits in paper files in filing cabinets. That's painful for Google to see after indexing the entire internet. Project Baseline is Google's moment to capture health records on millions of Americans. And it's made other major health-data moves lately:

  • Google acquired Fitbit for $2.1B to get your pulse while you're running.
  • And Google invested in One Medical, the tech-forward healthcare chain that looks more like an Equinox gym than a doctor's office.

What else we're Snackin'
  • Sanitize: Louis Vuitton's luxury parent LVMH will start using its cosmetics/perfume facilities to whip up free sanitizers instead during the global Purell shortage
  • Help: US airlines seek over $50B in government aid as coronavirus evaporates flight demand — would be the first airline bailout since 9/11
  • Open: The NYSE president says both the stock market and the NYSE will remain open for business (Nasdaq and the SEC agree)
  • Vax: The 1st trial of a potential coronavirus vaccine, developed by Moderna, launches in Washington state
  • Power Up: Amazon will hire 100K workers to help with delivery for the coronavirus demand spike
  • Binge: Since movie theaters closed, Universal is letting in-theater movies get rented for $19.99 and Disney is releasing Frozen 2 to Disney+ early, this weekend
The Snacks Daily Podcast

Yep, we're working from home too. On our Snacks Daily podcast, we're trying to turn a quarantine situation into an opportunity to learn/fix/appreciate something — post your WFH resolution to @RobinhoodSnacks on Instagram or Twitter.

Tuesday

Disclosure: Authors of this Snacks own shares of Alphabet, Apple, Lululemon, Starbucks, Disney, and Amazon

ID: 1121474

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