“The COVID-19 pandemic has created a breeding ground for cybercrime. The past couple of months have represented one of the most active threat environments we have ever seen” George Kurtz, CEO, Crowdstrike Holdings Inc [global cyber-security software company]
As part of the NAOS investment process, we pay particular attention to the comments made by company CEOs and business leaders in order to gain a greater understanding of the current investment environment and key trends that may be emerging. Below are quotes from the week which in our view detail some of the most important and prominent industry trends and economic factors impacting their businesses.
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Financial Markets
“There could be a period of time where these large extended deficits in which central banks resolve all their asset purchases, could put some pressure on the markets in the future, but I don't think that's even an issue today” Larry Fink, CEO, BlackRock Inc
“What's been good about it is, the [current activity of the debt capital] markets have been open across a range of issuers. It hasn't been just limited to the top echelon of investment grade” Mike Corbat, CEO, Citigroup Inc
Commercial Property
“I think it'll [COVID-19] definitely cut down on building and construction for office” Stephen Schwarzman, CEO, The Blackstone Group
Infrastructure
“I believe infrastructure will be the key component in job creation going forward and helping the [global] economy to be really strong and have the entire world rebuild its economic growth” Larry Fink, CEO, BlackRock Inc
Domestic Property
“We believe that the construction and housing sectors will emerge as one of the stronger and more resilient sectors within the economy. Housing has always been under-supplied, or at best, at equal demand” Lindsay Partridge, CEO, Brickworks Ltd
“The unit market is going to be knocked around. Rental vacancies will climb because all of these [international] workers and students who come and live in apartments for a few years just aren’t coming anymore” Lindsay Partridge, CEO, Brickworks Ltd
Aviation
“I am not optimistic that some of the [airlines] that are here today, and have already been significantly bailed out, will get through the next few months. A lot of the current fleet today is geared with debt through all sorts of financial structures. The notion that you will simply ground them and say that is OK, it is not” Tim Clark, CEO, Emirates Airlines
“While there are glimmers of good news in our July schedule — we expect to be down about 75% versus 90% right now — travel demand is still a very long way from where it was at the end of last year and the financial impact on our business remains severe” Scott Kirby, CEO, United Airlines Inc
PR, Media & Advertising
“As a business, we have suffered a succession of body blows. This is a truly global recession. No office, market or region escaped its impact” Richard Edelman, CEO, Edelman Inc [world’s largest PR firm]
“We are starting to see a significant uplift in client briefing activity for late Q2-Q3 [CY2020] as advertisers begin looking for opportunities as movement restrictions are eased further” Brendon Cook, CEO, oOh!media Ltd
Payments
“The fact that debit is outperforming credit is not surprising, we have seen this in times like these, although this is highly unusual. But in time of stress, people do tend to spend money they have in the bank and they do become a little more cautious. They do reduce spending on discretionary items, which often tend to be more on credit” Vasant Prabhu, CFO, Visa Inc
“Contactless is truly the perfect solution in this environment. And everybody knows that, consumers know that, merchants know that [and] governments know that” Vasant Prabhu, CFO, Visa Inc
Retail & Shopping
“The consumers who come back, when they do come back, they have an intent to buy. They know they want to buy something. And they are also buying more” Marc Rosen, President, Levi Strauss & Co
“Tenants have generally seen higher conversion rates and basket sizes than expected, with visitors returning for specific shopping objectives, resulting in better than anticipated sales impact relative to footfall” Market Announcement, Unibail-Rodamco-Westfield
“There has been an absolute step-change in online consumer behaviour during COVID. Some are asking: is it temporary or permanent? My view is absolutely it is permanent. We are seeing all e-commerce companies in Australia and worldwide reporting a surge in online shopping” Mark Kehoe, Managing Director, Gumtree Australia
Technology
“Every single CEO and every single CIO [chief investment officer] I talk to has the same message, which is whatever digital transformation they have left has just accelerated thanks to COVID-19” Bret Taylor, COO, Salesforce.com Inc
“Video is going to change everything about the communication, the way for us to work, live and play has completely changed” Eric Yuan, CEO, Zoom Video Communications
“The COVID-19 pandemic has created a breeding ground for cybercrime. The past couple of months have represented one of the most active threat environments we have ever seen” George Kurtz, CEO, Crowdstrike Holdings Inc [global cyber-security software company]
Healthcare
“We are really encouraged by the things [demand pickup] that we have seen in the month of May” Karen Parkhill, CFO, Medtronic PLC [world’s largest medical device company]
“I would say this time, one of the things we see clearly is that countries around the world are really thinking about their [future] pandemic preparedness and how they might do things differently” Nicholas Gangestad, CFO, 3M Company