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World leaders call for more cooperation

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A staff member checks information of a woman who just finishes her quarantine at a quarantine center on March 16, 2020 in Shanghai, China.

China News Service | China News Service | Getty Images

Global leaders jointly called for a pandemic treaty Tuesday, arguing that the Covid-19 crisis had posed the “greatest challenge for the global community since the late 1940s.”

The joint letter, published in newspapers around the world, includes the signatories of U.K. Prime Minister Boris Johnson, French President Emmanuel Macron and German Chancellor Angela Merkel, as well as other global leaders and officials in Europe, Africa, South Africa and Asia.

“Today, as we are together in the fight against the Covid-19 pandemic, we are equally united in the hope that we can build a more robust international health architecture that provides better protection for future generations,” the 24 signatories said. 

“There will also be pandemics and other serious health crises in the future. No national government or multilateral organization can face such a threat alone. It is only a matter of time when the time comes again.”

The World Health Organization’s Director General Tedros Adhanom Ghebreyesus, as well as European Council President Charles Michel, one of the first officials to call for an international agreement aimed at tackling future pandemics, also signed the letter.

They are set to comment further on a potential treaty at a WHO press briefing on Tuesday morning ahead of the WHO’s expected presentation of its joint investigation with China into the origins of the Covid-19 pandemic, which is largely expected to reiterate initial findings presented last month.

In February, the WHO-China team of experts reported that the coronavirus “most likely” originated in animals before spreading to humans and dismissed a theory that the disease had been leaked by a laboratory in the Chinese city of Wuhan.

There were unanswered questions over whether the team had been able to fully investigate the matter, however, given delays in the investigation (the team of experts led by WHO went to China in early 2021, more than a year after the pandemic first emerged) and China’s acute sensitivity over the pandemic.

Beijing has refuted accusations that it withheld information and was slow to warn global health agencies of the new coronavirus when it emerged, and has vehemently denied that it was to blame for the initial outbreak that has gone on to severely damage the global economy and kill nearly 2.8 million people so far.

According to a draft copy obtained by The Associated Press, the conclusion of the joint WHO-China study set to be released later Tuesday will reiterate its initial findings that the virus most likely originated in animals, and will propose further investigation into every scenario — except for the lab leak hypothesis.

Need for more transparency

Transparency, or a lack thereof, has been a persistent bugbear throughout the coronavirus pandemic, a global health crisis that few governments appeared prepared for. The U.K. has already said it will launch a new health security agency to ensure that the country is ready for any future pandemics. The lack of international coordination during the pandemic has also appeared to be stark, with vaccine supply and distribution the latest source of acrimony between countries, particularly between the EU and U.K.

The international leaders now calling for an international pandemic treaty say the main objective of the agreement would be “to promote a nationwide and societal approach that strengthens national, regional and global capacities and resilience to future pandemics.”

The system proposed would see increased international cooperation in order to improve warning systems, the shared use of data and research, as well as the “local, regional and global development and distribution of measures in the field of medicine and public health, e.g. vaccines, drugs, diagnostics and personal protective equipment.”

Perhaps equally as important, the treaty would seek to foster “more transparency, cooperation and responsibility” among signatories, leaders hope.

“Such a treaty would lead to more mutual accountability and shared responsibility, transparency and cooperation in the international system in accordance with its rules and norms,” they said.

“To do this, we will work with world leaders and all stakeholders including civil society and the private sector. We believe that, as heads of state and government and heads of international institutions, we have a responsibility to ensure that the world learns the lessons of the Covid-19 pandemic.”

The Group of Seven (G-7) of industrial nations, is expected to explore the pandemic treaty idea further at a summit in Cornwall, in the U.K., in June.

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How Amazon fought the union drive in Alabama

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People protest in support of the unionizing efforts of the Alabama Amazon workers, in Los Angeles, California, March 22, 2021.

Lucy Nicholson | Reuters

Amazon last week soundly defeated a union drive at one of its Alabama warehouses, a major win for the e-commerce giant which has long fought unionization attempts at its facilities. 

Workers at the Bessemer, Alabama, warehouse voted overwhelmingly in favor of rejecting unionization, with fewer than 30% of the votes tallied in favor. The Retail, Wholesale and Department Store Union, which led the union drive, intends to challenge the outcome, arguing that Amazon broke the law with some of its anti-union activity before and during voting. 

The outcome delivers a setback to organized labor, which had hoped the Bessemer election would help establish a foothold at Amazon. But unions, worker advocates, and some employees at the Bessemer facility, known as BHM1, said they believe that the Bessemer election will fuel further organizing attempts at other warehouses across the country. Labor leaders say the Bessemer election also revealed to the general public the lengths to which employers will go to prevent unions.

According to multiple workers and union representatives who described the tactics, Amazon unleashed an aggressive public relations campaign at BHM1, including text messages to employees, leaflets, a website that urged workers to “do it without dues” and fliers posted in bathrooms that urged workers to “vote ‘NO.'”

Amazon sent out text messages and mailers urging workers at its Bessemer, Alabama, facility to “vote NO.”

Amazon’s greatest opportunity to influence workers came in the form of so-called captive audience meetings, which workers were required to attend during their shift. Amazon held the meetings weekly from late January up until ballots were sent out in early February. Workers sat for approximately 30 minutes through PowerPoint presentations discouraging unionization and were given the opportunity to ask Amazon representatives questions.  

Captive audience meetings are a common tactic used by employers during union campaigns. Supporters of proposed labor law reforms, such as the Protecting the Right to Organize (PRO) Act that awaits passage in the Senate, have argued that captive audience meetings serve as a forum for employers to deliver anti-union messages “without giving the union an opportunity to respond.” The PRO Act would prohibit employers from making these meetings mandatory.

Amazon said it hosted ongoing meetings in small groups as a way for employees to get all the facts about joining a union and about the election process itself.

The company also defended its response to the union campaign more broadly, arguing in a statement following the result that workers “heard far more anti-Amazon messages from the union, policymakers and media outlets than they heard from us.”

Why some voted ‘no’

Amazon’s messaging in the meetings was more convincing for some BHM1 workers than others.

One Bessemer employee, who started working at Amazon last year, said he felt Amazon used some scare tactics when talking to workers about the union, but also told CNBC he didn’t understand how the union would help workers at BHM1. This person, who asked for anonymity to prevent retaliation, said the RWDSU did not explain what they were going to do for workers, and did not respond to his request for information about how they had helped employees at other job sites.

Beyond his doubts about the RWDSU, this employee said he’s also had a primarily positive experience working for Amazon. While some workers complained about the stressful, demanding nature of the job, he said a previous construction job prepared him for the physical labor of warehouse work, so he finds it easy. Amazon’s pay and benefits are also a step up from his previous job.

In the end, this worker voted against unionization.

In private Facebook groups where Amazon workers engage with each other, other BHM1 employees shared their thoughts about the union campaign. One worker feared that if the union was voted in, employees would lose access to certain benefits provided by Amazon, such as its upskilling program, where Amazon pays a percentage of tuition costs to train warehouse workers for jobs in other high-demand fields.

Another worker felt that a union wasn’t necessary, asserting that if you work hard you can succeed at Amazon: “I voted no. Amazon is just a game, with rules. Learn the rules, play the game, move up, win.”

Mandatory meetings

Some BHM1 workers found Amazon’s anti-union messaging too aggressive.

One BHM1 employee who works as a stower, which involves transferring items into vacant storage bins throughout the facility, said Amazon designed the texts, fliers and mandatory meetings to convey a message that the union wouldn’t help anybody. This worker requested anonymity out of concern for losing their job.

The worker, who voted for the union, said he was wary of showing support for unionization in front of Amazon and his coworkers, and was nervous to ask questions, instead playing dumb to avoid getting fired.

Aerial view of the Amazon facility where workers will vote on wether to unionize, in Bessemer, Alabama, March 5, 2021.

Dustin Chambers | Reuters

In one mandatory meeting held before ballots were distributed in February, this worker said, Amazon sought to cast doubts about how workers’ dues would be spent by telling workers that the RWDSU spent more than a hundred thousand dollars a year on vehicles for employees. The worker was skeptical of Amazon’s presentation, thinking that Amazon likely spent a lot more on cars each year than the union did.

Union President Stuart Appelbaum said in an interview that the RWDSU purchases cars for some representatives whose job it is to travel from workplace to workplace for organizing campaigns. 

Amazon said it wanted to explain to workers, particularly those with no previous knowledge of unions, that a union is a business that collects dues, and explain how those dues may be used.

In another mandatory meeting, the two Bessemer workers told CNBC, Amazon circulated examples of previous contracts the RWDSU had won, trying to highlight the union’s shortcomings. Amazon also asserted that the RWDSU was primarily a poultry workers’ union who had limited experience representing warehouse workers. 

Appelbaum said poultry workers make up a significant share of the RWDSU’s membership in Alabama, and many of the organizers who led the campaign, and approached Amazon workers outside BHM1 as they wrapped up their shifts, came from nearby poultry plants. The union also represents workers in other industries, including retail, food production, non-profit and cannabis, said RWDSU spokesperson Chelsea Connor.

In response to questions about whether it characterized the RWDSU as a poultry union, Amazon said it sought to highlight to workers how well (or poorly) the union might understand their employer.

During the meetings, Amazon also sought to highlight negative outcomes that could arise from voting for the union. Amazon told workers the union could force workers to go on strike and that employees could lose their benefits in the future, workers told CNBC.

The RWDSU’s Mid-South office, which led the organizing at Amazon, countered Amazon’s claim that the union would force BHM1 workers to go on strike, calling it a “fear tactic,” according to communications distributed to workers. 

“Amazon has insinuated that the union will ‘pull you out on a strike,'” said Randy Hadley, president of the Mid-South Council, in a February letter to workers, which also addresses other claims made by Amazon. “Here are the facts, our membership and our membership ONLY controls whether or not to strike by a super majority. This means nearly 4,000 Amazon workers would have to vote to go on strike. A strike can be useful when needed, but it is also very, very rare. This is yet another fear tactic by Amazon.”

Amazon said it sought to point out to workers that if a union is voted in, the union could call for a strike, as it’s the union’s main leverage over an employer.

In response to questions asking whether it told workers they could lose their benefits if a union is voted in, Amazon said it looked to inform employees, as part of general education about unions, that there are many outcomes that can result from collective bargaining negotiations.

Not the last effort

Amazon employees, labor leaders and worker advocates are hopeful that the loss in Alabama won’t be the last attempt at organizing the retail giant’s sprawling workforce. 

There may be future campaigns at BHM1, too. The worker who voted for the union said some pro-union employees have discussed the possibility of approaching the Teamsters and pursuing a future union campaign at their warehouse.

Elsewhere, Amazon workers and labor unions are considering different organizing strategies. The Teamsters is communicating with Amazon drivers and warehouse workers at a facility in Iowa and considering paths to rally workers beyond the election process. Amazon workers in Chicago have formed a group to organize employees at facilities in the area, called Amazonians United Chicagoland.

A worker at an Amazon facility in New Jersey, who also requested anonymity, said they previously approached a union about organizing their facility. After seeing the outcome in Bessemer, the worker said they’re going back to the drawing board and looking into more informal tactics for achieving leverage.

Susan Schurman, a professor at Rutgers’ School of Management and Labor Relations, pointed to the Alphabet Workers Union, a recently formed union of more than 800 Google employees, as a potential model for Amazon workers.

Unlike a traditional union, minority unions don’t represent the majority of workers. They also aren’t recognized by the NLRB and they don’t act as bargaining agents with employers.

However, Schurman said minority unions can serve as a “pathway to majority unions” and can be a powerful tool for building worker support even before launching a formal campaign with the NLRB.

“Why not stay and build an organization and keep at it?” Schurman said. “Let workers recruit new members and demonstrate the value of a collective negotiating power.”

Appelbaum, the RWDSU president, said a minority union strategy is “well worth thinking about.”

“We haven’t made a decision on that yet, but I think we’ll look at it,” Appelbaum said. “We know we’re not going away.”



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Investors look for hints of inflation in earnings in the week ahead

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Traders on the floor of the New York Stock Exchange.

Source: CNBC

Earnings will be the major focus for investors in the week ahead, as they home in on whether rising costs are squeezing margins and signaling a build in inflationary pressures.

From Coca-Cola and IBM to Johnson & Johnson and Netflix, investors will hear from a broad swath of corporate America.

So far, with one week in, companies are beating earnings estimates by a wide margin of more than 84%, according to Refinitiv.

This three-month period is the first to be compared to year earlier profits that were affected by the pandemic. Profit growth for the S&P 500 is a stunning 30.2% for the quarter so far, based on actual reports and estimates.

That makes it the best three-month period since the third quarter of 2010, according to FactSet.

Signs of margin pressures?

Major banks, like JPMorgan Chase, Goldman Sachs and Bank of America reported better than expected profits in the past week.

The S&P 500 ended the week at a record high of 4,185, a gain of 1.4%. The Dow, higher for a fourth week, gained 1.2 to end the week at a record 34,200. Nasdaq gained 1.1% for the week, finishing at 14,052.

Utilities was the best performing major S&P sector, gaining 3.7%, followed by materials, up 3.2% and health care, up 2.9%. Technology was up 1%. Financials were up 0.7%, while industrials were up 0.6%.

Lori Calvasina, head of U.S. equity strategy at RBC, said she is watching the coming week’s earnings for signs of margin pressures from higher commodity prices, supply chain issues and other cost factors.

“Those big forces that are threatening margins right now don’t really apply to financials. They apply more to industrial companies, the material companies and consumer companies,” she said.

“I think [sectors] like the industrials will give you color on margins,” Calvasina added. “Margins really are the big question mark going forward. I’m definitely watching and listening to see what companies are going to say about taxes.”

President Joe Biden has proposed raising corporate taxes to 28% from 21% to help pay for his infrastructure plan.

While the fate of the tax hike is still not clear, the increase in other costs is apparent. Fuel costs have risen sharply with a 30% rise in oil prices since the beginning of the year. Lumber prices in the futures market are at an all-time high and copper futures are up about 17% year-to-date.

Calvasina said companies face a headwind and a tailwind.

“Companies are saying we found new ways to cut costs. When revenues come back, margins are going to explode to the upside,” she said. “Some of the Covid-related costs will come down. Those are some of the positives.”

But not every company will see those benefits. “We could start to see wage pressures come back. Rising commodity costs — increases in PPI and increases in CPI — those are negatives for margins,” Calvasina said, referring to the producer price and consumer price indexes.

Searching for hints of inflation

Economic rebound

In the past week, economic reports underscored how strong the economic momentum could be in the second quarter. Retail sales for March were up nearly 10%, and jobless claims were the lowest of the recovery.

There is little data in the week ahead, aside from PMI manufacturing and services data Friday. But the markets will keep a close eye on unemployment figures after Thursday’s report of 576,000 new claims — the lowest level since the early days of the pandemic.

“The large claims decline suggests that job separation rates may finally be normalizing, a good sign for April payrolls,” note Barclays economists. A surprise 916,000 jobs were added in March, and economists have said they now expect a string of reports showing payrolls are up by 1 million or more.

However, Stephen Stanley, chief economist at Amherst Pierpont, says it may be too early to read too much into the claims data, and the coming week’s report will be important.

He said the drop in claims was driven by sharp drops in a number of states, including more than half in California and even larger percentage declines in Kentucky and Virginia.

 “Unfortunately, I have no confidence that these moves won’t be at least partially reversed next week,” he wrote. “Continuing claims in the special pandemic programs continue to seesaw up and down every week, with the latest reading, for the period ended March 27, being a down week.”

Watching bonds

Stock investors will also be watching the bond market, where yields declined in the past week and then reversed. The 10-year Treasury was at 1.59% Friday, after tumbling sharply on Thursday.

Yields move opposite price, and the 10-year is the most widely watched bond security, as it impacts mortgage rates and other loans.

“The 10-year will now trade in the 1.50% to 1.75% trading range,” said Boockvar.

“It’ll break below that if inflation is transitory and it will break above if it’s proven to be otherwise,” he added. “I think we priced in the last inflation stats and then we’ll take into account what the real world is saying, from companies.”

Week ahead calendar

Monday

Earnings: Coca-Cola, IBM, United Airlines, Zions Bancorp, FNB, Steel Dynamics

Tuesday

Earnings: Johnson & Johnson, Travelers, Procter and Gamble, Netflix, Abbott Labs, CSX, Lockheed Martin, Intuitive Surgical, Tenet Healthcare, Philip Morris, Northern Trust, Fifth Third, KeyCorp, Comerica

Wednesday

Earnings: Verizon, Chipotle, Whirlpool, Nasdaq, Baker Hughes, Anthem, Netgear, Spirit Airlines, Canadian Pacific Railway, Lam Research, Discover Financial, SLM, Halliburton, Knight-Swift Transportation

Thursday

Earnings: AT&T, Intel, D.R. Horton, American Airlines, Union Pacific, Alaska Air, Pentair, Tractor Supply, Celanese, Seagate Technology Biogen, Dow, Credit Suisse, SAP, Boston Beer, Mattel, Snap, Valero Energy, Freeport-McMoRan, Quest Diagnostics

7:45 a.m. European Central Bank rate decision

8:30 a.m. Initial jobless claims

10:00 a.m. Existing home sales

Friday

Earnings: American Express, Honeywell, Daimler, Regions Financial, Schlumberger, Kimberly-Clark

9:45 a.m. Manufacturing PMI

9:45 a.m. Services PMI

11:00 a.m. New home sales

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Amazon’s ‘Lord of the Rings’ will cost at least $465 million

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Still from “Lord of the Rings: The Fellowship of the Ring.”

New Line Cinema

Amazon’s ‘Lord of the Rings’ television show is shaping up to be a costly endeavor for the tech company.

On Friday, New Zealand’s minister for economic development and tourism revealed that the fantasy drama will be one of the most costly television series ever made, with its season one price tag coming in at around $465 million.

“But what I can tell you is Amazon is going to spend about $650 million in season one alone,” Stuart Nash told Morning Report. The figure he provided was in local currency.

The production figure is massive and likely the largest sum any studio has spent to produce a single season of television. For comparison, HBO’s “Game of Thrones” cost around $100 million per season. Season one episodes cost around $6 million each and eventually rose to around $15 million by season eight.

Amazon shelled out around $250 million for the rights to the Tolkien property in 2017.

“This will be the largest television series ever made,” Nash said.

The figures, released as part of the New Zealand government’s Official Information Act, were first reported by the New Zealand-based outlet Stuff. Their report indicated that Amazon is looking to film five seasons in the country and possibly produce a spin-off series.

Amazon’s spending in New Zealand will trigger a tax rebate of around $114 million and has been flagged as a “significant financial risk” by the country’s treasury. There’s no cap on how much Amazon is allowed to spend, and therefore, New Zealand could be on the hook for hundreds of millions of dollars to help subsidize the project.

However, the production will likely bring a large financial boost to the local economy, as Amazon pays for local labor, hotels and food, among other things. Then there is the future tourism bump. Peter Jackson’s “Lord of the Rings” and “Hobbit” trilogies were a big boon to New Zealand, as they brought in travelers from around the world.

The “Lord of the Rings” series is currently in production and expected to debut in late 2021.

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