WSJ : Bets Against the Stock Market Rise to Highest Level in Years

Bets Against the Stock Market Rise to Highest Level in Years
Among the companies short sellers have targeted in recent weeks are travel-related firms

Short sellers have revived their wagers against the stock market in recent weeks, taking their most aggressive positions in years.

Bets against the SPDR S&P 500 Trust, the biggest exchange-traded fund tracking the broad index, rose to $68.1 billion last week, the highest level in data going back to January 2016, according to financial analytics company S3 Partners. That was up from $41.7 billion at the beginning of 2020 and $41.2 billion a year ago.

Short sellers borrow shares and sell them, hoping to repurchase them at lower prices and keep the difference as profit. Among the individual companies they have targeted in recent weeks are travel-related firms, including Carnival Corp., CCL 5.99% Royal Caribbean Cruises Ltd., RCL 9.94% Marriott International Inc. MAR 4.81% and Wynn Resorts Ltd. WYNN 8.54%

Those bets come during a wild year for investors who are struggling to reconcile the impact of the coronavirus pandemic on the population and economy. The S&P 500 suffered its fastest drop from a record to a bear market in history—ultimately falling 34% between Feb. 19 and March 23. Its 28% rebound since then has also been brisk, leaving some investors anxious about the strength of the rally when so much remains unknown.

“We’ve really seen a significant bounceback in the last three weeks at levels that I think are too quick,” said Jerry Braakman, chief investment officer at First American Trust. His firm recently bet against the Nasdaq-100, on the belief that technology stocks have fallen too little to reflect the probability of a recession. The index is up 1.1% in 2020.

“When we see a strong move in one direction, where we think the fundamentals and the news can turn ugly, especially during an earnings cycle, we think that’s an opportunity where we could see a 5, 10% selloff again,” he said.

Investors are bracing for the possibility of more volatility this week, as earnings reports from companies including Coca-Cola Co., Netflix Inc. and Delta Air Lines Inc. give another glimpse at how the coronavirus is reshaping the landscape for U.S. business.

The outsize market swings of late require vigilance from investors who sell shares short because they can face losses when prices rise. Short sellers incurred total mark-to-market losses of $108.8 billion over three days in late March when the S&P 500 surged 18%, according to Ihor Dusaniwsky, head of predictive analytics at S3 Partners.

But with the potential for additional declines ahead, many investors have decided that the ability to hedge their portfolios—or simply bet on a selloff—is wise.

“Things will go back to normal eventually and these positions will decrease but not until we start seeing less volatility in the market,” Mr. Dusaniwsky said of the rise in short positions against the SPDR S&P 500 Trust. “No one’s going to give up their insurance until they see the chances of catastrophe are in the rearview mirror.”

The portion of available shares sold short against the SPDR S&P 500 Trust has also risen, climbing to 27% in early April, the highest level since November 2016 and up from 14% at the beginning of 2020.

The increase in bets against the market coincides with a push in other countries to temporarily curb short selling. At times of heightened volatility, critics often argue that the practice exacerbates downward pressure on stock prices. But Jay Clayton, the chairman of the Securities and Exchange Commission, has argued short selling is needed to facilitate ordinary market trading.
To be sure, coronavirus has upended entire industries in recent weeks, leaving investors scrambling to reassess the growth prospects of companies from Marriott to Clorox Co. to Amazon.com Inc. to Carnival.

With the pandemic devastating global travel, hotel, casino and cruise stocks have been among the hardest hit—and seen some of the biggest additions to the short positions against them.

Many hotels and casinos temporarily closed their doors when demand evaporated, furloughing employees and curbing spending plans, and the Centers for Disease Control and Prevention has extended a no-sail order for cruises into July.

Short sellers have added a collective $797 million to their short positions against Carnival, Royal Caribbean, Marriott and Wynn over the past 30 days, according to data Friday from S3 Partners.

Alex Lee, a San Francisco resident who manages a family sandwich shop in Oakland, Calif., and his wife had previously dabbled in short selling but have recently devoted more attention there. They made bets against Marriott, along with other stocks.

“Because of Marriott’s price at the time, it seemed like it had more room to fall and because of its heavy presence in Europe and the United States, we just thought that that company itself would be more vulnerable to falling more,” he said.

Over two rounds of shorting Marriott stock in March and April, they made a profit of about $15,000, Mr. Lee said. Marriott recently said about 25% of its hotels are temporarily closed, and North American occupancy levels are around 10%. Its shares are down 44% this year.
Among the stocks that saw big drops in short positioning in March were stodgy consumer-staples shares, which got a bounce as Americans stocked their pantries to wait out the pandemic at home.

“We had a lifetime of trading in the month of March,” said Mitch Rubin, chief investment officer at RiverPark Funds. He said he had previously bet against shares of Kroger Co., Walmart Inc., Clorox and Campbell Soup Co. but covered those positions in late February and early March as it became clear those companies would perform well with consumers sheltering in place.

“Their business is healthier than it was before the crisis because the demand for their products has increased,” he said. “The amount of times you clean high-touch surfaces with a chemical disinfectant is going to go up for some period of time, maybe for the rest of our lives.”

>>> Week End Press Digest

NEW YORK TIMES
Saturday
• More than six weeks after the first coronavirus deaths in a US nursing home, outbreaks continue to unfold in nursing facilities across the country, where about 7,000 lives—about a fifth of US virus deaths—have occurred, while more than 36,500 residents and nursing home employees have contracted Covid-19.
• Trump openly encouraged right-wing protests of social distancing restrictions in states with stay-at-home orders, a day after announcing guidelines for how the nation’s governors should carry out an orderly reopening of their communities on their own timetables.
• In France, lawmakers are considering the use of digital tracking of coronavirus cases, a move that has proved effective in Asia, but which might be controversial in a country that prizes personal freedom and privacy.
• Determining just how deadly the coronavirus will ultimately be is a key question facing epidemiologists, who expect resurgent waves of infection that could last into 2022, though they say there is no evidence that any strain of the virus, has mutated to become more severe in some parts of the world than others.
• In 2015, Bill Gates warned that the greatest risk to humanity was not nuclear war but an infectious virus that could threaten the lives of millions of people—a speech right-wing agitators now claim as evidence that he planned to create a pandemic to wrest control of the global health system.
• Chinese president Xi Jinping has used the coronavirus pandemic to shore up his political power at home, but the tools the Communist Party has exploited in the effort are threatening China’s international standing—officials in France, Britain, and nearly two dozen African nations have rebuked statements and actions by the Chinese government.
• Unhappy with Treasury secretary Steven Mnuchin’s willingness to offer concessions to Democrats in previous stimulus negotiations, Republicans are warily watching the talks over replenishing a small-business loan program.
• As the coronavirus rages across the globe, ventilators that pump oxygen into the lungs of critically ill patients are seen as the best hope for saving lives, but shortages have unleashed a wave of experimentation that is leading to some promising alternatives to help sustain patients.
• Washington is considering pulling back front-line CIA personnel from bases in Afghanistan, part of the government’s effort to further reduce violence in the country in the wake of its landmark peace agreement with the Taliban.
• The coronavirus outbreak has brought China’s nearly half-century-long run of growth to an end—since the country emerged from abject poverty and isolation more than 40 years ago, it has become perhaps the world’s single most important growth engine.
• Congress has left it to the Treasury Department and the Federal Reserve to help midsize businesses with more than 500 employees and fewer than 10,000, but the Fed’s program will offer those companies only cheap bank loans that cannot be forgiven, potentially saddling them with debt loads that could hamper recovery.
Sunday
• In-depth cover story reports on what lies ahead in the next year for America amid the coronavirus pandemic, with a general consensus among experts that there will be no quick return to previous lives, but that there is hope for managing the virus in the near and long term.
• Doctors are sounding an alarm about an unexpected and perhaps overlooked crisis: a surge in Covid-19 patients with kidney failure that is leading to shortages of machines, supplies and staff required for emergency dialysis.
• One in three jobs held by women has been designated as essential, according to Times analysis of census data crossed and the federal government’s essential worker guidelines—and nonwhite women are more likely to be doing essential jobs than anyone else.
• Meat plants, geared for maximum efficiency and profit, have become major “hot spots” for the coronavirus pandemic, with some reporting widespread illnesses among their workers, making them perhaps the weakest link in the nation’s food supply chain.
• In Germany, 3,000 households chosen at random in Munich for an ambitious study whose central aim is to understand why many people—even those with no symptoms—have the coronavirus, part of an aggressive approach to combat the virus in a comprehensive way.
• In the scramble to contain the spread of Covid-19, the Trump administration has continued its aggressive immigration enforcement agenda, deporting thousands of people to their home countries, including some who are sick with the virus.
• As AMZN becomes an essential company during the pandemic, and moves aggressively to hire people to cement its dominance, it has in some ways also become more vulnerable, something opponents of its worker policies and sheer pervasiveness hope to leverage in their fight against it.
• As the coronavirus spread around the world, the majority of mutual funds found few refuges, with some falling 20 percent or more, but a select few—including Mathews China Small Companies, Grizzly Short, and T. Rowe Price US Treasury Long-Term—managed to find profits.
• Big data and machine learning can help portfolio managers beat the competition, even index funds, but only if they can figure out when to rely on the tech and when to think for themselves, according to experts, who say early efforts to apply these methods to asset management have a spotty record.

WALL STREET JOURNAL
Weekend
• “Authorities in Wuhan, the coronavirus pandemic’s original center, revised the local death toll upward by 50%, publicly acknowledging for the first time that they had previously omitted many fatalities, including people who died at home.”
• Because the methodologies and tallies of the organizations constructing a global overview of the coronavirus and its death toll differ—and because mistakes are made—discrepancies result that contribute to confusion and hamper progress.
• A new spike in coronavirus cases is the darkest shadow hanging over the future of previously common mass gatherings—and any conversation about getting the economy back up must include the preconditions for containing a second wave through identifying and isolating new cases.
• Governors in states across the country are moving to cancel or freeze billions of dollars in spending as states brace for fallout from the economic shutdown resulting from the coronavirus pandemic.
• House minority leader Kevin McCarthy said he would support adding money for hospitals to funding for a popular small-business aid program, pointing the way to a potential breakthrough in talks on the current round of stimulus spending.
• The Trump administration announced at $19B relief program for farmers that will include $16B in direct payments to farmers and ranchers and $3B in mass purchases of dairy, meat and produce that will be distributed through food banks; related story says the administration “is taking steps to reduce costs and restrictions on farmers looking to hire migrant workers during the coronavirus pandemic, including lowering their minimum wages.”
• Tech startups face new challenges in the coronavirus era—in place of a relentless push for growth is a desperate effort to conserve cash, which means cutting payroll, slashing marketing budgets, asking vendors to extend payment terms, and scratching for additional capital.
• A fleet of tankers full of Saudi oil is slowly making its way to the US Gulf Coast, bringing about seven times as much as the region took from the country in a typical month last year, threatening to worsen an already historic oversupply of crude and further pressure storage companies.
• H.O.T.S.: Companies like Z and Opendoor were supposed to lead a revolution in real estate by using algorithms to flip homes, but the pandemic has thwarted their plans; A viable treatment for Covid-19 is desperately needed, but investors are way too enthusiastic about the latest potential breakthrough; PG is thriving as consumers stock up on daily essentials during the pandemic, but the crisis could have spillover effects for the company and its rivals.

FINANCIAL TIMES
Weekend
• Front page story reports the coronavirus threatens to create a $500B hole in US state budgets, and force major cuts to spending on education and other public services, unless the federal government steps in with bailout funds.
• Denmark became the first European nation to reopen its primary schools and kindergartens after a coronavirus lockdown, a move other countries are likely to watch closely as they prepare for how and when they will take similar action.
• Agriculture experts warn that lockdowns, quarantine requirements, and border closures around the world are likely to have a negative effect on food production by limiting the movement of bees, which are struggling to pollinate under curbs.
• The World Medical Association, which represents 10M global doctors, censured the World Health Organization for being involved in “political games” by failing to heed Taiwan’s early warnings about the coronavirus, leading to a flawed response to the pandemic.
• Two police departments in California deployed the first “homeless outreach” drones in the US to broadcast coronavirus safety messages while protecting officers from contact with people.
• Bank of England head Andrew Bailey supported the claim that UK economic output has fallen 35 percent since the coronavirus lockdown, and said there would be persistent “scarring” to the economy in the years ahead.
• Big Read story says “After a disastrous first quarter, the Chinese economy is showing signs of a strong recovery, but that could be put at risk if there is a second wave of infections and if demand in its main export markets collapses.”
• Lex Column: A retail shakeout will be painful for the millions of people who work in the industry, but it is long overdue, and putting zombie chains like JCP to rest will give the wider sector a better chance of recovery; Foxton’s decision to buy itself some time by bolstering cash reserves will give it a head start over the pack when the UK property market recovers; On one measure of risk—credit default swaps—investors remain overly relaxed about the fortunes of the largest emerging markets.
• Comment: Former US Treasury secretary Henry Paulsen says the world has faced more daunting challenges than the coronavirus, and that the recovery—and the future—can only be secured if major economies pull together and find common ground.

NEW YORK POST
Saturday
• Sales of fermented cabbages like sauerkraut and kimchi have spiked as consumers look for ways to bolster their immune systems against the coronavirus.
• Large restaurant chains have taken $30M in federal loans meant to shore up small businesses during the coronavirus crisis.
Sunday
• Treasury Secretary Mnuchin said it was his idea to include Trump’s name on the IRS stimulus checks being mailed to Americans who don’t have direct deposit to help ease the financial burdens caused by the coronavirus pandemic.
• Fraud alerts are going out from U.S. banks in the wake of the coronavirus pandemic—BAC advised its customers not to respond to unsolicited requests for their account or personal information such as access codes, PINs, or Federal Student Aid IDs, and other banks have taken similar actions

WWD : Cartier Launches Digital Platform for New Watch Models

EXCLUSIVE: Cartier Launches Digital Platform for New Watch Models
Richemont’s star label will reveal the year’s new watch models on the “Cartier Watchmaking Encounters” site, which goes live on April 25.

PARIS — The Swiss watch trade shows may have been scuppered by the spread of the coronavirus this year, but Cartier has drawn up an alternative to a traditional fair with plans to launch an online platform next week to show its new timepieces.
“The teams pulled it together in very little time, working remotely — it was a real challenge,” said Arnaud Carrez, marketing and communications director of Cartier International, which belongs to Compagnie Financière Richemont, in an interview.
The COVID-19 shutdown has spurred labels to push deeper into digital realms, which serve as an important link to consumers — the only one, when lockdown measures are in effect — but also as a means to generate interest when splashing out on new products is not a priority.


The brand is launching the platform, dubbed “Cartier Watchmaking Encounters” on April 25, coinciding with what would have been the opening day of Watches & Wonders, the Geneva trade show formerly known as the Salon International de la Haute Horlogerie. The site, which will feature the brand’s new products, will be offered in English, French and Chinese.
Cartier’s 2020 Pasha watch Courtesy
New products include a rendition of the Pasha watch with oversize numbers and a square within a circle — and set to launch in China over the summer and the rest of the world in September — as well as the feminine Maillon watch, the skewed Tank Asymétric model and a limited edition Santos-Dumont piece, which is debuting on Tmall’s Luxury Pavilion. There will also be a range of exclusive precious watches on display.

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When Watches & Wonders was canceled, executives at the brand wondered how to connect with its audience, Carrez explained.
“We thought it was extremely important to engage with our diverse and varied audience — clients, the general public, journalists, commercial partners,” he said.
On the one hand, the label wanted to present the new products for the year in an original manner, but it also sought to introduce Cartier’s approach to watchmaking, with content about brand services, like watch loans, custom engraving or watch servicing.
“This platform is really meant to regroup a certain number of facets of Cartier’s watchmaking style, and going beyond the new products, to show the rich and varied watchmaking ecosystem” associated with the label, he added.
The idea was to produce engaging storytelling for a range of audiences — not too technical or not too marketing-oriented.
“We wanted the platform to convey the Cartier spirit, offer a vantage point on Cartier watchmaking while displaying the collection as if the retailer, journalist or someone in the general public were actually at Watches & Wonders — to bring it to the level of a physical experience — more than a catalogue of products,” added Carrez.
The brand drew on content prepared for the trade show — photos for press kits and social networks, and the elaborate window displays that were meant for the stand at the fair.
“We had our hearts set on raising the bar even higher this year — we had nearly finished the production of our window displays. So some of the photos were directly inspired by these displays which we’ll use in local events that will take place in certain markets, depending on how the situation evolves,” he added.


The company is drawing on its partnership with Alibaba, on Tmall’s Luxury Pavillion platform, for insight to apply on a global level, Carrez said.
“It’s a source of inspiration and learning that’s interesting for us, beyond the good results and sales we’ve seen since launching on the platform in February. It allows us to learn about digital transformation. China is key for our omnichannel strategy and what we do with Tmall is a real laboratory in terms of digital marketing, omnichannel, consumer insight, engagement — all this feeds us on a global level,” said Carrez, noting the pre-launch of the Santos-Dumont watch on the site is the first time the brand has launched a new watch exclusively through digital means.
Cartier took an initial step in this direction with its Panthère watch launch in 2017, through a pop-up configuration on Net-a-porter as well as offering it at a limited number of retailers. But the Santos-Dumont launch goes a step further.
“It’s an extra step in our digital journey — in China and around the world. It’s the first time we launch a new watch product on a digital platform before launching it in a physical boutique. It will be extremely interesting and rich in new information for us,” he added.
As for the new “Cartier Watchmaking Encounters” platform, the executive hopes people will take time to explore it.
“I hope that, given the current context, people will spend time on it, because there’s an enormous amount of content,” he added.

FT : Consumer spending: urge to splurge, postponed

EXCLUSIVE: Cartier Launches Digital Platform for New Watch Models
Richemont’s star label will reveal the year’s new watch models on the “Cartier Watchmaking Encounters” site, which goes live on April 25.

PARIS — The Swiss watch trade shows may have been scuppered by the spread of the coronavirus this year, but Cartier has drawn up an alternative to a traditional fair with plans to launch an online platform next week to show its new timepieces.
“The teams pulled it together in very little time, working remotely — it was a real challenge,” said Arnaud Carrez, marketing and communications director of Cartier International, which belongs to Compagnie Financière Richemont, in an interview.
The COVID-19 shutdown has spurred labels to push deeper into digital realms, which serve as an important link to consumers — the only one, when lockdown measures are in effect — but also as a means to generate interest when splashing out on new products is not a priority.


The brand is launching the platform, dubbed “Cartier Watchmaking Encounters” on April 25, coinciding with what would have been the opening day of Watches & Wonders, the Geneva trade show formerly known as the Salon International de la Haute Horlogerie. The site, which will feature the brand’s new products, will be offered in English, French and Chinese.
Cartier’s 2020 Pasha watch Courtesy
New products include a rendition of the Pasha watch with oversize numbers and a square within a circle — and set to launch in China over the summer and the rest of the world in September — as well as the feminine Maillon watch, the skewed Tank Asymétric model and a limited edition Santos-Dumont piece, which is debuting on Tmall’s Luxury Pavilion. There will also be a range of exclusive precious watches on display.

VIEW GALLERY
RELATED GALLERY
Designers Give Style Advice for Working from Home

When Watches & Wonders was canceled, executives at the brand wondered how to connect with its audience, Carrez explained.
“We thought it was extremely important to engage with our diverse and varied audience — clients, the general public, journalists, commercial partners,” he said.
On the one hand, the label wanted to present the new products for the year in an original manner, but it also sought to introduce Cartier’s approach to watchmaking, with content about brand services, like watch loans, custom engraving or watch servicing.
“This platform is really meant to regroup a certain number of facets of Cartier’s watchmaking style, and going beyond the new products, to show the rich and varied watchmaking ecosystem” associated with the label, he added.
The idea was to produce engaging storytelling for a range of audiences — not too technical or not too marketing-oriented.
“We wanted the platform to convey the Cartier spirit, offer a vantage point on Cartier watchmaking while displaying the collection as if the retailer, journalist or someone in the general public were actually at Watches & Wonders — to bring it to the level of a physical experience — more than a catalogue of products,” added Carrez.
The brand drew on content prepared for the trade show — photos for press kits and social networks, and the elaborate window displays that were meant for the stand at the fair.
“We had our hearts set on raising the bar even higher this year — we had nearly finished the production of our window displays. So some of the photos were directly inspired by these displays which we’ll use in local events that will take place in certain markets, depending on how the situation evolves,” he added.


The company is drawing on its partnership with Alibaba, on Tmall’s Luxury Pavillion platform, for insight to apply on a global level, Carrez said.
“It’s a source of inspiration and learning that’s interesting for us, beyond the good results and sales we’ve seen since launching on the platform in February. It allows us to learn about digital transformation. China is key for our omnichannel strategy and what we do with Tmall is a real laboratory in terms of digital marketing, omnichannel, consumer insight, engagement — all this feeds us on a global level,” said Carrez, noting the pre-launch of the Santos-Dumont watch on the site is the first time the brand has launched a new watch exclusively through digital means.
Cartier took an initial step in this direction with its Panthère watch launch in 2017, through a pop-up configuration on Net-a-porter as well as offering it at a limited number of retailers. But the Santos-Dumont launch goes a step further.
“It’s an extra step in our digital journey — in China and around the world. It’s the first time we launch a new watch product on a digital platform before launching it in a physical boutique. It will be extremely interesting and rich in new information for us,” he added.
As for the new “Cartier Watchmaking Encounters” platform, the executive hopes people will take time to explore it.
“I hope that, given the current context, people will spend time on it, because there’s an enormous amount of content,” he added.

FT : Consumer spending: urge to splurge, postponed

Consumer spending: urge to splurge, postponed
Luxury sector must hold out hopes for shopping sprees once the pandemic ends

Hard times play out differently for the rich. “Remember, when our customer tightens their belt, it’s generally ostrich or alligator,” said the boss of upmarket department group Neiman Marcus, as he eyed the advancing recession in 2008.

Now as then, many businesses are counting on the better-off. Some may have more to spend as a result of the lockdown. The richest fifth of British households normally blow a fifth of their spending on eating out and holidays, compared with just 12 per cent of the poorest fifth, said the Institute for Fiscal Studies think-tank. After the pandemic, some might be keen to spend quickly the money they were forced to save. In China such buying binges have been dubbed “revenge spending”.

Splashing cash may not fit the mood of the times. It could be seen as socially divisive, especially given the important role played by poorly paid key workers during the pandemic. Moreover, higher unemployment and taxes will depress consumer confidence. Ipsos Mori surveys found that the economic anxieties of the affluent post-2008 took years to lift.


Airlines like Lufthansa forecast it will be years until the worldwide demand for air travel returns to pre-crisis levels. Eating out might take eight years to recover, if it followed the pattern of the recessions of 1990 and 2008, said analysts at Barclays. The impact could be more severe If social isolation becomes “normal”, they said.

But predicting consumer behaviour is tricky. To take one example, few economists foresaw the surge in UK consumer spending immediately after the Brexit vote. It is possible that the desire to spend will be sharpened by the current misery of lockdowns. There are precedents. In 14th century Europe, sumptuary laws were passed to limit the rise in conspicuous consumption following the Black Death. Something similar happened in the hedonism of the “roaring twenties” and the extravagance of Christian Dior’s postwar 1947 “New Look” fashion. 

Periods of great crisis always lead to an increase in the propensity to buy, Jean-Christophe Babin — boss of LVMH’s jeweller Bulgari — told Vogue magazine last week. That might sound like wishful thinking from an industry peering over the abyss. Luxury sales are forecast to fall more than a third this year. The sector must hold out hopes that a pent-up desire to live life to the full will be unleashed once the pandemic ends. 

FT : Harbin outbreak threatens China’s coronavirus recovery

Harbin outbreak threatens China’s coronavirus recovery
Cluster of cases near Russian border leads to fresh lockdowns and new temporary hospital

A cluster of coronavirus cases in China’s north-eastern city of Harbin has forced authorities to impose new lockdowns, shattering the country’s run of weeks of reporting near zero domestic transmissions.

China first reported zero new local infections in mid-March and only a few cases were disclosed in subsequent weeks. In the past week, however, dozens of transmissions within the country have been confirmed, the vast majority in Heilongjiang province, which borders Russia.

As China attempts to reboot its economy, Huang Yanzhong, a senior fellow for global health at the Council on Foreign Relations, said that the outbreak in Harbin illustrates the present and unpredictable risk of a resurgence.

“A second wave attack could be coming in a way that authorities don’t expect,” he said. More lockdowns elsewhere, just as it closed temporary hospitals in Wuhan, would hamper the country’s recovery.

As of Sunday, including non-symptomatic cases, Heilongjiang said it had 61 active cases of Covid-19 from local transmission, 54 of which were in Harbin, the provincial capital.

China’s health commission on Saturday said it recorded double-digit domestic infections for four days in a row. By Sunday, the country had disclosed 1,041 active cases in total, most of which are imported, while it has revealed 82,725 cases since the outbreak began.

A 22-year-old university student, who returned to Harbin from the US, has been identified by authorities as the source of more than 40 new infections. She was quarantined at home rather than in a central quarantine facility.

Coronavirus spread through the student’s local community, infecting her 87-year-old neighbour, who had a stroke and received treatment in two of the city’s largest and busiest hospitals, where at least 26 other people were infected.

The infections in Harbin set off a flurry of activity in the city, with long lines outside major hospitals and some central areas being once again placed under lockdown, according to videos shared online and local media reports.

On Saturday, 18 Harbin officials were given a political demerit, a black mark in Communist party personnel files that can impact career prospects, and accused of “wishful thinking” for failing to prevent the new outbreak.

Heilongjiang’s hospitals have been further stretched by hundreds of imported cases from Chinese citizens who entered the country from Siberia via the bordern town of Suifenhe, which now has more than 400 confirmed cases.

The influx has made Russia — which has reported a week of record rises in infections and now has more than 35,000 in total — China’s largest source of imported cases.

Three planeloads of medical equipment were flown from Wuhan to Suifenhe this week, where a makeshift quarantine hospital with 600 beds has been built.

Chinese authorities closed the land border with Russia on April 8, the same day travel restrictions were officially lifted in Wuhan, the city where the coronavirus pandemic began. Wuhan has since closed some of its temporary hospitals.

FT : How to secure the future of the eurozone

How to secure the future of the eurozone
Emmanuel Macron is right that without solidarity the single currency could fail

The economic and human devastation inflicted on Europe by the coronavirus pandemic is so severe that the survival of the eurozone and the postwar project of European integration as a whole is in peril without greater solidarity among its member states. That was the stark warning issued by French president Emmanuel Macron in an interview with the Financial Times last week. He is right. Europe, as he put it, is facing a moment of truth.

Jobs are being lost and output crushed everywhere. But the pain will be uneven. Mediterranean countries with important tourist industries may suffer longer than manufacturing economies as foreign visitors stay away in their millions this year. They also entered this crisis saddled with the legacy of the last one: high unemployment, large public debt burdens and, in some cases, weak banking sectors.

Every day reveals the economic damage and the price governments will have to pay to try to cushion the blow. Italy and Spain are already worrying about the affordability of crisis-fighting measures, spending considerably less than France or Germany. The Italian and Spanish deficits are likely to balloon since release from economic lockdown will be slow and piecemeal at best. Debt to gross domestic product ratios will soar. Italy’s will climb to 155 per cent next year, the IMF predicts. It could rocket beyond sustainable levels in the years afterwards if the economy flatlines and borrowing costs rise.

Such a prospect could persuade investors to dump Italian debt, pushing the country into a spiral from which it could be hard to escape. If Rome tightened its belt in a slump it would deepen the crisis and turn Italians fully against the euro and into the arms of the populists. The market sell-off would spread to other eurozone members. This is the apocalyptic scenario Mr Macron fears. It is closer to reality than some in northern Europe would care to admit.

For now, the pressure is contained thanks to the might of the ECB, whose asset purchases have suppressed borrowing costs — although Italy’s have begun to rise again. But the ECB’s €750 Pandemic Emergency Purchase Programme will be wound up later this year and regular bond-buying will be harder to sustain if a recovery gains traction in the north.

It would help if Rome tapped the European Stability Mechanism, the eurozone’s rescue fund. True, its loans would add to Italy’s debt pile. But they are cheap and they come with few strings attached. More importantly, they bring potentially unlimited bond-buying from the ECB should its other programmes have to be scaled back next year. But tapping the ESM has become a taboo. Matteo Salvini, leader of the Eurosceptic League, equates it with subjugation. The Five Star Movement, one of the governing parties, is against.

For these reasons European leaders will need to go much further to safeguard their cherished project when they meet for their video summit later this week. To relieve the pressure on the weakest members and give them the means to rebuild their economies, the eurozone needs to embrace the idea of mutual support.

Coronabonds are too emotive. But there are proposals for a time-limited recovery fund, with EU debt issued either on the back of member-state guarantees or the EU budget. Money would be paid out in grants but repaid according to the strength of a country’s recovery. Many details need to be worked out. There would have to be conditions. But the scale of this crisis requires a demonstration of exceptional solidarity. Without it, political support for the euro will evaporate.