Corporate America is getting more worried even as stocks soar

CNN's Jon Sarlin explains why just looking at the stock market at a time of mass unemployment isn't good enough.

Posted: Sep 1, 2020 7:01 AM
Updated: Sep 1, 2020 7:01 AM

Corporate America was much more positive about the economic recovery before summer arrived.

What's happening: A survey conducted by Accenture in July found that nearly half of executives in North America think a "U"-shaped recovery is more likely than the rapid bounce back characterized by a sharp "V." That's up from 36% in May.

Jimmy Etheredge, Accenture's CEO of North America, told me that he's observed a sharp change in sentiment in recent conversations with other executives.

"I'm not accustomed to seeing such dramatic changes in just a few months," he said. "Clearly, the early days of optimism about a 'V'-shaped recovery are fading into the rearview mirror, and everyone's buckled down."

Remember: A spike of coronavirus cases across US Sun Belt states, which prompted the reimposition of some restrictions in June, served as a reality check for companies expecting a more linear recovery. The US economy is now operating at 79% of where it was in early March, according to the Back-to-Normal Index from CNN Business and Moody's Analytics.

Firms are bracing for another difficult nine months.

Business leaders increasingly believe their companies won't revert to pre-coronavirus growth plans until mid-2021, according to Accenture, and most return-to-work efforts have been put on ice.

Etheredge said he does not anticipate the majority of Accenture workers in North America going back into the office until the spring — and even that's up in the air.

"I could easily see that timeline shifting out," he said.

Investor insight: While executives are bracing for a prolonged era of slow growth, investors have put their faith in central banks. Unprecedented support from the Federal Reserve helped drive the S&P 500 up 7% in August for its strongest month since April.

Morgan Stanley points to school reopenings and Congressional gridlock on the next round of fiscal stimulus as risks to the rally, as well as an end to the recent string of promising economic data. But its strategists also said that if economic data heads south quickly, that could encourage lawmakers to come together and approve an even bigger package than expected.

Zoom cashes in on the work-from-home era

Video conferencing has become an integral part of our daily lives — and Zoom is reaping the benefits.

Details, details: The California-based company said Monday that revenue surged more than 350% to more than $663 million in its most recent quarter, which ended in July, my CNN Business colleague Laura He reports.

The company has been cashing in by courting corporate clients who are willing to pay for subscriptions.

By the end of July, Zoom had about 370,000 corporate customers with more than 10 employees, up nearly 460% from a year ago. Its biggest paying customers — those that pay more than $100,000 a year for the service — more than doubled to 988 compared with the same quarter a year ago.

CEO Eric Yuan told analysts that ExxonMobil is now a paying subscriber, while companies like video game maker Activision Blizzard are ramping up their use of the service.

Investor insight: Shares of Zoom are up 31% in premarket trading after reaching an all-time high of $325.10 on Monday. The company's stock is up 210% since March, making it once of the top beneficiaries of the stay-at-home era.

Airlines ditch change fees to woo wary travelers

In a desperate bid to encourage would-be fliers to purchase plane tickets, airlines are ditching the change fees that brought in billions of dollars per year.

The latest: United announced Sunday that it was dropping most of its change fees for good. Rivals American Airlines and Delta Air Lines quickly followed suit, announcing on Monday that they'd ditch most change fees as well, my CNN Business colleague Chris Isidore reports.

"When we hear from customers about where we can improve, getting rid of this fee is often the top request," United CEO Scott Kirby said. "Following previous tough times, airlines made difficult decisions to survive, sometimes at the expense of customer service. United Airlines won't be following that same playbook as we come out of this crisis."

The change is a sign of the extent to which airlines feel they need to court customers to make up for a huge drop in demand due to the pandemic. With a muted summer travel season coming to an end, many carriers don't have a choice.

"The airlines are in a position where they are not generating a lot of revenue," Cowen analyst Helane Becker said. "If this gets people to book, that's a huge positive for them."

Investor insight: Investors appear unsure about the strategy. Shares of American, United and Delta all fell more than 3% on Monday.

Up next

The August reading of the ISM Manufacturing Index, a closely watched gauge of US industry, posts at 10 a.m. ET.

Coming tomorrow: Macy's reports earnings as retailers struggle to get back on track.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 895229

Reported Deaths: 9462
CountyCasesDeaths
Hennepin1749772017
Ramsey722701040
Dakota66032572
Anoka62513568
Washington39357355
Stearns32821275
St. Louis28761399
Wright25354211
Scott25329181
Olmsted21750127
Sherburne18478126
Carver1629166
Clay11923103
Blue Earth1126366
Rice11234138
Crow Wing11003122
Chisago974676
Kandiyohi9660106
Otter Tail9611126
Benton8815124
Beltrami801794
Goodhue786596
Douglas7689100
Itasca752796
Mower721349
Winona702756
McLeod694483
Isanti681383
Steele669431
Morrison663479
Becker620873
Polk591684
Freeborn550846
Carlton529474
Nobles521654
Lyon518761
Mille Lacs516573
Nicollet510960
Pine500641
Cass491252
Todd483642
Brown465057
Le Sueur445933
Meeker422357
Martin378143
Wabasha366010
Waseca365132
Dodge351511
Hubbard349848
Roseau307931
Fillmore299115
Wadena298239
Redwood277845
Houston266817
Renville264151
Faribault253032
Pennington247529
Sibley246917
Kanabec241536
Cottonwood225032
Chippewa216342
Aitkin215850
Pope203210
Watonwan194920
Yellow Medicine185423
Rock174728
Swift169322
Koochiching168123
Stevens164511
Jackson159216
Clearwater155720
Marshall151122
Murray150911
Pipestone148329
Lake129824
Lac qui Parle120025
Wilkin119416
Mahnomen104714
Norman10389
Grant9719
Big Stone9365
Lincoln8705
Kittson71523
Red Lake70710
Traverse5996
Unassigned572124
Lake of the Woods5235
Cook3020

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 516453

Reported Deaths: 7289
CountyCasesDeaths
Polk80319799
Linn32142424
Scott26637292
Black Hawk21974378
Woodbury20490258
Johnson19778105
Dubuque18515241
Pottawattamie15890213
Dallas15320113
Story1380258
Warren8450104
Cerro Gordo7964123
Clinton7725114
Webster7326122
Des Moines7098105
Marshall669093
Muscatine6645117
Wapello6441144
Jasper619591
Sioux610177
Lee5908105
Marion557897
Buena Vista502149
Plymouth488388
Henry418655
Benton404859
Jones404862
Bremer395372
Washington391463
Boone389739
Carroll367755
Mahaska365365
Crawford353747
Dickinson314655
Jackson307747
Buchanan305741
Clay295536
Delaware294654
Kossuth289077
Fayette286353
Hardin284353
Tama279777
Page272533
Wright266149
Cedar265527
Hamilton259857
Winneshiek258143
Floyd255449
Clayton244459
Poweshiek237243
Madison234525
Harrison234379
Cass233466
Butler232744
Iowa229634
Jefferson223043
Mills220930
Winnebago215938
Hancock214639
Cherokee211347
Lyon206142
Appanoose205357
Allamakee203955
Calhoun196919
Shelby196442
Union191141
Humboldt185130
Grundy183637
Franklin183029
Mitchell182043
Chickasaw178922
Emmet178246
Louisa176953
Sac171026
Guthrie168137
Montgomery161745
Clarke160829
Keokuk150839
Palo Alto150532
Howard146824
Monroe142739
Ida130141
Greene127517
Davis124625
Lucas124426
Monona122939
Worth12139
Pocahontas120724
Adair114337
Osceola104818
Decatur101913
Taylor98514
Fremont95913
Van Buren93222
Wayne84525
Ringgold76729
Audubon74917
Adams5748
Unassigned480
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