AMC’s delayed reopening shows the tough path ahead
Need a good example of the immense challenge of managing a fragile economic recovery? Look no further than movie theaters.
What’s happening: AMC is pushing back its reopening by two weeks after studios further delayed the release of “Tenet” and “Mulan,” two summer blockbusters that could be key to getting people back into theaters.
AMC had planned to begin a multi-phase reopening on July 15, with the goal of being fully operational by July 24. Now, it will begin the reopening process with 450 US theaters on July 30, and aims to have nearly all 600 of its US theaters fully up and running by “early August.”
The decision comes as at least 16 states have halted their reopening plans in response to a surge in new infections.
California shut bars back down across seven counties over the weekend and recommended their closure in several more. Florida has suspended on-premise alcohol consumption statewide, while Arizona closed its bars, gyms, and other businesses for a month.
New York Governor Andrew Cuomo announced Monday the state will decide later this week whether to slow the reopening of indoor dining in New York City, since it has “been shown to pose risks in other states.”
Goldman Sachs estimates that at least 27% of the US population is now in a state that has begun to reimpose stricter policies.
Economists and investors have warned that the biggest risk to the economy — and the market recovery — is that the virus could spin out of control again. In a recent note, Matthew Luzzetti, Deutsche Bank’s chief US economist, points out that rising cases trigger changes in behavior that cause even more economic damage than quarantine measures themselves.
For now, though, traders aren’t exhibiting much fear. The S&P 500 rose 1.5% on Monday, regaining some of the ground it lost Friday.
Holger Schmieding, chief economist at Berenberg Bank, told clients Tuesday that he’s still operating under the assumption that “advanced economies are learning to live with the virus,” and even the United States will not reimpose lockdowns that are harsh and widespread enough to undermine confidence in the recovery.
Still, he said, this is an assumption that needs to be “constantly” reassessed.
“US virus trends remain the key risk to our global outlook,” Schmieding said.
In the meantime, the uncertainty makes it almost impossible for businesses like AMC to plan for the future. Cineworld, which owns the Regal chain, followed suit in delaying theater openings on Tuesday, pushing them back until the end of July.
These deals were made with the pandemic in mind
Companies aren’t wasting any time snapping up the technology they need to compete in a post-coronavirus world.
The latest: Lululemon said Monday that it has entered into an agreement to buy home exercise startup Mirror for $500 million.
The startup sells an immersive mirror through which customers can participate in fitness classes and personal training sessions — the type of service whose appeal has grown as gyms stay closed and at-home workouts grow in popularity.
Investor insight: Lululemon shares have jumped 27% this year, faring far better than other retailers as consumers opt for leggings and other comfortable clothing. The company’s stock is up nearly 4% in premarket trading, while Peloton shares are down more than 2%.
The New York Times also reports that Uber is in talks to buy delivery startup Postmates for $2.6 billion. Uber Eats, the company’s food delivery service, has been one bright spot as demand for ride-hailing has plunged in cities around the world.
But the industry is rapidly consolidating. Earlier this month, shortly after reports that Uber was in discussions with Grubhub about a possible merger, Europe’s Just Eat swooped in, buying Grubhub for $7.3 billion.
Why it matters: Companies clearly feel they need to move quickly to adjust to current business conditions, lest they be left behind. Expect to see more deals supporting at-home lifestyles in the months to come.
India bans TikTok as tensions with China escalate
India is banning 59 Chinese apps, including TikTok and WeChat, saying they pose a “threat to sovereignty and integrity.” It’s the latest indication of escalating tensions between the two countries, my CNN Business colleague Rishi Iyengar reports.
India’s Ministry of Electronics and Information Technology said Monday that it had received many complaints about misuse and transmission of user data by some mobile apps to servers outside India.
Bigger picture: The Indian government’s statement did not mention China by name. But the ban comes as military tensions between the two countries continue to escalate following deadly border clashes earlier this month that left at least 20 Indian soldiers dead.
Many Indians have called for a boycott of Chinese goods and services, particularly from China’s dominant tech industry.
What it means: Experts warn that the action raises the threat that China and India could start decoupling economically, cutting Chinese firms off from a huge base of internet users.
“The moves are serious, with major implications for Chinese technology companies and Beijing,” analysts at Eurasia Group, a political risk consultancy, told clients Tuesday. They note that India is the largest market for TikTok, “one of China’s most successful tech exports.”
US consumer confidence data for June posts at 10 a.m. ET.
Also today: Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin testify before the US House Financial Services Committee about the pandemic response at 12:30 p.m. ET.
Coming tomorrow: The ADP private employment report for June will provide a crucial look at the US labor market ahead of the official jobs report Thursday.