REAL ESTATE

Offices Clock Out

Yesterday, Twitter CEO Jack Dorsey wrote in an email to employees that the company will allow almost everyone to work from home permanently. 

• Dorsey had said he planned to make Twitter’s workforce more “distributed” before the coronavirus pandemic, but then...those plans got pushed up. 

Big picture: Office closures have forced many companies to try remote working. Google said a majority of Googlers will WFH until 2021, and Facebook will allow all employees who are able to WFH to do so even after it reopens offices after the July 4 weekend. 

And it’s not just tech: The pandemic prompted members of the button-down brigade like Morgan Stanley and Barclays to add security measures that allow employees to WFH, to generally positive results. 

• One report by NordVPN found that average workdays have stretched three hours longer since lockdowns began. Feel that. 

The real estate implications 

This could signal a turning point for a commercial real estate trend that’s been gaining steam for over 100 years. Since the late 19th century, a company without an office has been no company at all. But as the economic outlook gets bleaker, anxious execs could eagerly ditch leases while employees work from their breakfast nooks. 

• Commercial real estate leases often last 10 years, and very few firms are currently in a position to make 10-year decisions. 
• Google owner Alphabet has stopped real estate deals for over 2 million sq. ft. of new office space since the pandemic began, per Marker. 

For companies that do return to offices, the digs will look different. Staff might work alternate days and be herded by sensors and markings to enforce social distancing—and architects say the long-abandoned cubicle’s comeback has arrived. 

Looking ahead...real estate is slow to react to economic contractions, so we probably won’t see the peak of any office exodus until 2021 at least.

DEBT

Boom Boom Powell

In late March, Fed Chair Jerome Powell soothed markets with lullabies of unprecedented economic stimulus. Yesterday, the central bank made good on his promise to buy corporate debt for the first time in history by kicking off a $750 billion lending program. 

What the Fed is doing: Providing relief to capital markets by buying exchange-traded funds invested in corporate debt. The Fed will mostly buy investment-grade bonds, with some junk bonds as well.

Jerome’s got help 

The Fed drafted BlackRock, the world’s largest asset manager, to administer the program. It isn’t the first time the central bank has asked private companies for a hand: During the financial crisis, money management firms helped the Fed “handle toxic assets.” 

BlackRock will do what it normally does—investing clients’ money in line with their goals. It’s just that this time the Fed’s the client, the money’s in the upper nine figures, and the stakes couldn’t be higher.

Big picture: Some economists are concerned BlackRock could unfairly boost its ETFs, but the Fed has established clear guidelines for BlackRock to avoid conflicts of interest, the WSJ reports.

FOOD DELIVERY

Rub a Dub Dub, Thanks for the Grubhub

Uber is looking to acquire food delivery service Grubhub, according to multiple reports. Grubhub shares shot up 29% as if it were a soggy burger excited to finally become someone’s dinner.

Zoom out: Food delivery is a fierce business, so consolidation was on the menu this year, global pandemic or not. The WSJ reported in February that industry players like Uber, DoorDash, and Postmates were already sketching out ways they might combine to not completely cannibalize one another. 

For Uber, this could be a seamless acquisition in more ways than one. 

• Its food delivery arm, Uber Eats, has been surging during the lockdowns, with Q1 bookings up over 50% annually. 
• However, the company’s core rides business was down about 80% in April, forcing it to implement harsh cost-cutting measures. Last week, Uber laid off 3,700 employees, or 14% of its total workforce. 

But it’s not crawling into a shell. Besides its reported interest in Grubhub, Uber is leading a $170 million investment in e-scooter and bike company Lime.

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CONSUMER

Prices Go Down Like a Punctured Moon Bounce

We knew something was up with consumer prices after we traded our neighbor 2 oz. of yeast for a Caribbean timeshare. But yesterday’s release from the Bureau of Labor Statistics paints a more detailed picture. 

In April, the consumer price index (CPI) experienced its sharpest monthly decline since the Great Recession. CPI is an indicator of prices for a “basket” of typical consumer goods and services, from food and medical care to transportation. 

• Core CPI, which removes volatile food and fuel costs from the picture, fell 0.4% in April, the biggest drop since record-keeping began in 1957. 
• Some outliers: Food at home (groceries) rose a record 2.6%. The biggest drops were transportation and apparel—4.7% apiece.

Big picture: April was the second month in a row CPI declined. If the trend continues, some economists fear we’ll experience deflation, a prolonged period of widespread decreases in prices and wages. That could make an economic recovery even harder, since people may hold off on purchases assuming goods will only get cheaper from here.

ADVERTISING

Advertisers Aren't Buying Advertisements

So they’re just companies now, we suppose. Heavyweights like PepsiCo, GM, and General Mills are backing out of Q3 ad agreements with TV networks, the WSJ reports. 

Starting May 1, companies were allowed to cancel up to 50% of their Q3 ad commitments (they’re required to give networks ~60 days' notice). And cancel they reportedly are—the drawback could total $1–$1.5 billion, per some estimates.

The normal ad buy calendar: Around May-ish, networks throw fêtes that make the Met Gala look like a potluck. Wined and dined advertisers make agreements called “upfronts” with networks way ahead of TV seasons’ September starts. 

• But this May isn’t exactly fête-friendly, so networks are pitching via livestream...which is a bit less glamorous than Radio City Music Hall. 

Zoom out: Companies are reluctant to spend on TV ads because they’re anticipating 1) reduced consumer spending and 2) minimal new programming. Thus far, Fox is the only major broadcaster that has released a fall schedule.

WHAT ELSE IS BREWING

• Boeing CEO David Calhoun told NBC a major U.S. airline would “most likely” go out of business because of the pandemic.
• Chesapeake Energy shares collapsed 22% to a record low after one analyst cut its price target to...0.
• Saudi Aramco has also been stung by the oil price plunge. Net income dipped 25% in the first quarter.
• Luckin Coffee, a Starbucks rival from China, fired its CEO and COO for alleged fraud.
• Simon & Schuster CEO Carolyn Reidy died of a heart attack yesterday morning. She was 71.

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BREW'S BETS

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Interactive Office viewing: Sign up to Dunder Mifflin’s Slack channel to watch episodes of The Office play out over instant message.

Another day, another awesome set of Zoom backgrounds:

• Pretend to be in your favorite BBC show or movie with these empty sets
• Look posh with backgrounds made by artists and designers

FROM THE CREW

Sports Docs Poll Results

On Monday, we asked readers what other sports documentary they’d like ESPN to produce on the same scale as The Last Dance. Here are the topics with the most mentions:

• Kobe Bryant, the New England Patriots dynasty, Wayne Gretsky, and Tiger Woods ranked in the top four.
• A few other popular subjects include Serena Williams, the 2016 Chicago Cubs, Leicester City’s remarkable Premier League championship in 2016, and the U.S. women’s national soccer team.
• Our pick, in case you’re wondering, is Michael Phelps at the Beijing Olympics
• And apparently the BYU Women’s Rugby team went from nothing to national champs. 100% would watch.

CLOCKWISE OR COUNTERCLOCKWISE?

We’ll give you a clue, you figure out whether it moves clockwise or counterclockwise.

1. A roundabout in England
2. Rotation of the planet Mercury on its axis
3. Hurricanes in the Northern Hemisphere
4. NASCAR race at Daytona
5. Carousels in North America

CLOCKWISE OR COUNTERCLOCKWISE ANSWERS

1. Roundabouts in England circulate clockwise
2. Mercury rotates counterclockwise on its axis
3. Hurricanes in the Northern Hemisphere spin counterclockwise
4. NASCAR races on ovals go counterclockwise (only turn left)
5. Carousels in North America typically go counterclockwise