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Pinterest shares fall after Facebook releases new copycat app

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Pinterest CEO Ben Silbermann speaks in conversation with Matthew Lynley of TechCrunch during the TechCrunch Disrupt SF 2017 on September 18, 2017 in San Francisco, California.

Justin Sullivan | Getty Images News | Getty Images

Pinterest shares slid more than 4% in after-hours trading on Thursday after news broke that Facebook has released a competing app.

The new app is called Hobbi and was released in Colombia, Belgium, Spain and the Ukraine, according to The Information, which was the first to spot the new Facebook product.

“Organize your photos into visual collections and see the progress you’re making over time,” reads the app’s description.

Though Hobbi has thus far had a limited release, its features would make it a direct competitor to Pinterest, which is a social media network to sharing photos and other material organized by topic.

Hobbi was developed by Facebook’s New Product Experimentation team, a unit launched by the company in July to develop consumer-focused apps.

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5 charts that explain the Saudi Arabia-Russia oil price war so far

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Two of the world’s largest oil producers — Saudi Arabia and Russia — are set to increase production dramatically this month, after an agreement between OPEC and its allies to lower output expired at the end of March. 

OPEC+ countries have teamed up to reduce their supply to the market since 2017, but failed to reach a deal last month. 

Riyadh and Moscow then separately announced that they would flood the market with oil in April. That, against the backdrop of demand destruction due to the global coronavirus pandemic, has crushed oil prices. Crude oil benchmarks plunged to 18-year lows on Tuesday and have fallen more than 60% since the beginning of the year.

Here’s how the oil price war unfolded.

Slide in oil demand

As early as mid-January, the future of oil demand came into question as the coronavirus spread, prompting factory closures and trip cancellations in China. These concerns have now intensified — many countries have gone into lockdowns and air travel has largely been halted in a bid to prevent infections.

Both OPEC and the U.S. Energy Information Administration (EIA) slashed their oil demand outlooks in March reports.

The Middle-East dominated alliance now sees demand growing by 60,000 barrels per day, while the EIA expects a rise of 400,000 bpd. They had initially expected growth of more than 1 million bpd in January.

As coronavirus fears arose, there was talk of an emergency meeting between OPEC and its allies to stabilize the market, but only the Joint Technical Committee met in February. While it officially recommended extending voluntary production cuts to the end of the year, reports said OPEC kingpin Saudi Arabia was considering cuts by 1 million bpd.

Saudi Arabia-Russia standoff

Prices plummeted after Russia declined to approve OPEC’s proposal to cut production by an additional 1.5 million bpd, on top of the 1.7 million bpd agreed upon in December, excluding voluntary reductions.

Saudi Arabia responded by offering discounts on its oil and announcing that it would increase production, leading both WTI and Brent to their worst days since 1991 on March 9, which in turn caused a sell-off in global markets.

Analysts said Russia may have taken the action in order to target the U.S. “It’s Saudi Arabia against Russia, and Russia against the United States. I think that’s what it is,” vice-chairman of IHS Markit Dan Yergin said at the time.

Competing for market share

U.S. shale oil has been a wild card in the energy market, with production surpassing both Riyadh and Moscow in 2018. Its market share has continued to climb and stood at around 15% as of November 2019, according to CNBC calculations based on EIA data.

But that top position has been threatened as American producers struggle to break-even as a result of the price war.

“If we continue where we are with these low prices, we’ll see a big decline in U.S. oil production,” Yergin said this week. “It will no longer be number one.”

Increasing output

Saudi Arabia could potentially claim the top spot. State-owned Saudi Aramco said in a statement last month that it will provide 12.3 million bpd of crude oil in April. That’s nearly 2 million bpd more than an estimate for March, according to Refinitiv Eikon data.

Russia and the United Arab Emirates have also indicated that they could increase production, and other countries that have the capacity to pump more barrels are likely to do so, said Ravi Krishnaswamy, senior vice president of Frost & Sullivan’s Asia Pacific industrial practice.

Russia’s Energy Minister Alexander Novak said his country can increase its production by 200,000 bpd to 300,000 bpd in the short term, and 500,000 bpd in the longer term. Its output was around 11.3 million bpd in February.

The UAE said it would pump more than 4 million bpd, up nearly 1 million bpd from its March estimates.

Elevated production levels could last “until June at least” because that’s when OPEC+ is supposed to meet next, Krishnaswamy said, while acknowledging there are “no signs” so far that the meeting will take place. Washington-Moscow talks or cooperation may not produce results either, he added.

When asked what it would take to bring the parties back to the negotiating table, Krishnaswamy said demand, production and storage capacity are three factors to watch.

For now, however, he predicts that prices will continue to slide.

“There is a very good chance that the oil price will still fall … even to levels of $10 (for WTI),” he said, adding that “nobody knows” how low it could go. “It’s just going to fall further because the reality is it can fall further. $15, $13, $10 … I think that’s kind of the number we might be looking at.”

— CNBC’s Pippa Stevens and Patti Domm contributed to this report.

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Charts show the coronavirus spike in US, Italy and Spain

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A temporary hospital which is been settled up by members of the California National Guard is seen in Indio, California on March 29, 2020.

Apu Gomes | AFP | Getty Images

The ongoing coronavirus pandemic has shown few signs of abating and is now one of the largest threats to the global economy and financial markets.

The virus, first reported in the Chinese city of Wuhan in December, has spread to 180 countries and territories, according to data compiled by Johns Hopkins University. Globally, more than 850,000 infections have been reported, with over 42,000 deaths, the data showed.

Here are seven charts that look at how the coronavirus disease, which has been formally named COVID-19, has spread in countries with the largest outbreaks.

United States

Italy

Italy has reported the world’s highest number of deaths related to the coronavirus at more than 12,000, Hopkins data showed. The country has the second highest number of cases globally, second only to the U.S. 

Spain

By the end of February, Spain had reported only 45 cases of COVID-19, Hopkins data showed. But cumulative cases surged past 90,000 over the past month, while the death toll jumped from zero to more than 8,000 — the second highest globally behind Italy, according to Hopkins data. 

The rapid spread of the virus led the Spanish government to implement — and later extend — a nationwide lockdown.

To support the Spanish economy, the government announced stimulus measures that include tax payment deferrals for small businesses and unemployment benefits for workers who lost their jobs. But the country — like others in the euro zone — is counting on more support from the European Union.

Analysts from French bank Societe Generale said the Spanish economy, which was already slowing before the outbreak, is expected to contract by 6.6% this year, reversing the 2% growth in 2019.  

China

The virus was believed to have originated from a seafood market in Wuhan, China. Up until late February, the outbreak in China far outpaced the rest of the world.

Chinese authorities took what many observers considered draconian measures to contain the coronavirus. In late January, they quickly locked down cities including Wuhan — the epicenter of the outbreak in the country — shutting down businesses and halting public transportation to limit people’s mobility.

The number of reported cases has since slowed and China is expected to gradually remove its domestic restrictions, starting with Wuhan on April 8. But with many “imported” new infections, China has tightened border controls to limit the entry of visitors.

Months of reduced economic activity has hurt China, the world’s second-largest economy. The Economist Intelligence Unit cut 2020 growth forecasts for China twice in less than two weeks — first to a growth of 2.1% and then revising it further down to 1% — from its previous projection of 5.4%.

To support its economy, the People’s Bank of China has slashed lending rates and reduced the amount of reserves that banks must hold. But compared to other economies, Chinese authorities have been much more conservative in rolling out stimulus measures.

Germany

Like the outbreaks in the U.S., Italy and Spain, the number of coronavirus cases in Germany surged in March, jumping from just over 100 cases at the start of the month to more than 70,000 currently, according to Hopkins data.

The government led by Chancellor Angela Merkel placed the country under lockdown, with measures such as school closures and banning gatherings of more than two people.

In terms of economic measures, the government launched a fiscal package worth around 750 billion euros ($830.2 billion) — or 20% of Germany’s GDP, and planned on taking on new debt for the first time since 2013, according to Reuters.

Still, the largest economy in Europe will find it hard to escape recession. The EIU downgraded its GDP forecast for Germany this year, from a growth of 0.9% to a contraction of 6.8% — one of the worst among G-20 economies. 

“In Germany, the huge manufacturing sector (which represents a fifth of the economy) is highly export oriented, which means that the country is particularly exposed to both supply chain disruption and weak global demand,” the EIU said in a report. It added that the country is also likely to recover more slowly than other European economies.

France

In late January, France became the first country in Europe to report cases of COVID-19. Since the end of February, confirmed coronavirus cases in the country have spiked to more than 50,000, with more than 3,000 deaths at present.

French President Emmanuel Macron declared “war” against the virus. His government called for a nationwide lockdown on March 17, closing all but essential businesses. The lockdown was subsequently extended until April 15. On the European level, France and other members of the European Union agreed to bar non-EU citizens from entering the Schengen area.

The French government also announced a 45 billion euro ($49 billion) package to help small businesses as well as other hard-hit sectors of the economy, in addition to 300 billion euros ($330 billion) in bank loan guarantees.

But Finance Minister Bruno Le Maire said the package — worth 2% of the country’s GDP — would push public debt to over 100% of GDP in 2020, and that the government is now expecting the economy to shrink by 1% this year. 

Iran

Iran recorded more than 44,000 confirmed cases and over 2,800 deaths, making the country the hardest hit within the Middle East, according to Hopkins data. The virus is believed to have spread from Qom, the country’s religious capital.

In response to the pandemic, the Iranian government temporarily freed close to 85,000 prisoners, including political prisoners. Iranian authorities also closed schools and universities till early April, on top of shutting four key religious sites including the Imam Reza shrine in the holy city of Mashhad, which attracts millions of pilgrims each year.

Iranian President Hassan Rouhani, in a state television broadcast on March 15, also announced measures such as payment deferments for health insurance, tax and utility bills and cash handouts for three million of Iran’s poorest.

The country has also applied for a $5 billion emergency loan from the International Monetary Fund — the first time it has done so in six decades.

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Here’s what to expect now

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European markets have posted their worst quarter since 2002 as the coronavirus pandemic, and the nationwide shutdowns it has necessitated, hammer the global economy.

By Tuesday’s close, the pan-European Stoxx 600 index had fallen by 23.03% since the turn of the year, its worst first quarter on record but narrowly beating the 23.33% loss posted in the third quarter of 2002.

Spain’s IBEX 35 experienced the biggest plunge of all the major European indexes, shedding 28.94% to post its worst-ever quarter. Italy’s FTSE MIB also had its worst overall quarter on record, tumbling 27.46%.

It is no coincidence that these are the two European countries hit hardest by the coronavirus outbreak. Confirmed cases in Italy now exceed 105,000 with more than 12,400 deaths, while Spain has confirmed more than 95,000 cases and more than 8,400 deaths, according to Johns Hopkins University.

France’s CAC 40 plummeted 26.46% in the first quarter, while Britain’s FTSE 100 and Germany’s DAX dropped 24.8% and 25% respectively.

In the U.S., meanwhile, the Dow and S&P 500 on Tuesday closed out their worst first-quarter performances ever, dropping 23.2 and 20%, respectively. The Dow also posted its worst overall quarter since 1987 while the S&P 500 notched up its biggest quarterly loss since 2008.

Into the unknown

Governments and central banks in Europe and countries around the globe have thrown the proverbial monetary and fiscal kitchen sink at shoring up their economies in recent weeks.

The European Central Bank (ECB) most recently deployed a 750 billion euro ($823 billion) “Pandemic Emergency Purchase Programme” in a bid to combat the economic damage, while governments in Germany, France and the U.K. among others have turned on the fiscal-spending taps.

Investors will be watching closely to see whether the stimulus measures are having the desired economic effect in the region that has become the epicenter of the outbreak. They will also keeping an eye on any indication of the pandemic slowing, although that looks some way off with the death toll on the continent accelerating sharply on Monday.

“As we have repeatedly noted, monetary and fiscal stimulus may not be enough to revive global growth if nations around the globe stay in a lockdown mode for a few more months,” said Charalambos Pissouros, senior market analyst at JFD Group.

“Thus, when this is reflected in economic data, investors may once again abandon risk-linked assets in favor of the safe-havens. In order to change our view, a vaccine has to be ready for distribution, and the vaccine in this case is not fiscal spending, neither monetary policy easing.”

‘Bad to less bad’

Purely fundamental investors could be whipsawed by continuing market volatility, according to Fidelity International Equities Portfolio Manager Amit Lodha, although he said there were some opportunities to be had.

“Medium- to long-term, when the picture stabilizes, we may find ourselves in an environment similar to that in 2009,” Lodha said in a note Tuesday.

“In that recovery, the best thing to do was to sell everything that had been defensive in 2008 — good quality companies with low leverage — and buy everything cyclical that had survived.”

Lodha suggested that an investor with a three-to-five year horizon may consider looking for cyclical businesses at distressed valuations in anticipation of this stabilization. Cyclical businesses are those whose success is closely tied to the economy, and are therefore likely to fluctuate in accordance with economic cycles.

He also flagged a possible repeat of the Marshall Plan — a U.S. initiative designed to help resuscitate the European economy after the Second World War. Lodha anticipated that a number of major economies will have to deploy their own “Marshall Plans” in order to begin rebuilding.

The $15 billion promised (by the U.S. in 1948) for the reconstruction of Europe under the plan was about 5% of U.S. GDP (gross domestic product). Given the pace of recent announcements, I would not be surprised if we reach similar levels, around 2-5% of GDP in terms of fiscal stimulus, before the effects of the coronavirus pandemic pass,” Lodha projected.

“To repeat what could be described as one of the core tenets of my colleague Anthony Bolton’s investment philosophy: ‘The most money in equity markets is made when things go from bad to less bad’,” he added.

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