Daily Update: July 20, 2020

In the absence of a federal mandate, the number of large U.S. consumer businesses requiring shoppers in their stores to wear masks is growing.

Starting today, Walmart, the most profitable company in the U.S., will deploy specialized personnel at the entrance of all stores to ensure consumers wear face coverings.

“As the number of confirmed cases has spiked in communities across the country recently, so too have the number and types of face covering mandates being implemented,” Dacona Smith, Chief Operating Officer of Walmart U.S., and Lance de la Rosa, Chief Operating Officer of Sam’s Club, said in a July 15 statement. “Currently about 65% of our more than 5,000 stores and clubs are located in areas where there is some form of government mandate on face coverings. To help bring consistency across stores and clubs, we will require all shoppers to wear a face covering starting Monday, July 20.”

Kroger, the country’s largest supermarket chain by revenue, will implement a mask mandate across its approximate 2,800 stores starting July 22. The company said it will encourage customers who cannot wear masks due to medical reasons to wear other protective face coverings, or utilize pickup and delivery services in lieu of in-store shopping. 

“As an employer, grocery provider and community partner, we have a responsibility to help keep our associates, customers, and communities safe,” Kroger said in a July 17 statement. “Starting July 22, we will require all customers in all locations to wear a mask when shopping in our stores, joining our associates who continue to wear masks. We are taking this extra step now because we recognize additional precautions are needed to protect our country.”

In response, the United Food and Commercial Workers Union, which represents 1.3 million workers in the U.S. and Canada, said that while Kroger’s action was “long overdue and an important step,” the responsibility of mandating masks should lie with government officials.

“To help save lives, every retailer and grocery store across this nation must adopt a mask requirement, and enforcement must be done by trained professionals, not retail workers already stretched thin during this crisis,” UFCW International President Marc Perrone said in a statement. “While action by companies to require masks is essential, the brutal reality is that this is not nearly enough to turn the tide as COVID-19 cases continue to skyrocket.”

“Across the country, every governor and mayor must step up and make masks mandatory at all supermarkets and retail stores. Without universal mask mandates that are fully enforced nationwide, hundreds of thousands of Americans will continue to get sick and die. We cannot wait any longer,” Mr. Perrone said.

Walmart and Kroger are joined by other massive U.S. retail companies—including Target, Best Buy, CVS Health, Home Depot, and Lowe’s—in requiring patrons to wear masks in their locations across the country. Enforcement will vary from company to company. Some retailers said they will put employees at the forefront of the policies to either observe consumers as they enter stores and ask them to comply or give patrons complimentary face masks. At least one conglomerate, CVS Health, said it will rely on customers to comply with the requirement.

As the federal government maintains that it will not enact a nationwide mandate and state and municipality mask requirements differ across the U.S., enforcement of such policies may prove challenging. Mask-wearing has become a partisan political issue across the U.S. Many Americans have refused to wear face coverings, claiming that being forced to do so is an infringement of personal freedoms. Government officials are in disagreement with health experts on the merits of masks. 

“If all of us would put on a face covering now for the next four weeks, six weeks, we could drive this epidemic to the ground,” U.S. CDC Director Dr. Robert Redfield said during a July 14 news conference.

U.S. President Donald Trump told Fox News in a July 19 interview that he “want[s] people to have a certain freedom” and that he doesn’t believe in implementing a national mask mandate. “I don't agree with the statement that if everybody wear a mask everything disappears. Dr. [Anthony] Fauci said don't wear a mask, our Surgeon General, terrific guy, said don't wear a mask. Everybody was saying don't wear a mask. All of a sudden everybody's got to wear a mask, and as you know, masks cause problems, too,” Mr. Trump said.

In February and March, Dr. Fauci, the top infectious disease expert in the U.S. and member of the Trump administration’s Coronavirus Task Force, advised Americans against wearing masks due to a lack of personal protective equipment across the country. Now, health officials are encouraging citizens to wear face coverings in public.

"I don't regret anything I said then because in the context of the time in which I said it, it was correct. We were told in our task force meetings that we have a serious problem with the lack of PPEs and masks for the health providers who are putting themselves in harm's way every day to take care of sick people," Dr. Fauci said in an InStyle Magazine interview. “When it became clear that the infection could be spread by asymptomatic carriers who don’t know they’re infected, that made it very clear that we had to strongly recommend masks.”

Today is Monday, July 20, 2020, and here is today’s essential intelligence.

Uncertainty in the Global Economy

Default, Transition, and Recovery: After Tupperware Default, Consumer Products Lead Corporate Defaults In 2020

The 2020 global corporate default tally has reached 134, after two issuers defaulted since S&P Global Ratings’ last report. The defaulters included Orlando, Florida-based consumer products manufacturer Tupperware Brands Corp. and Houston, Texas-based frac sand mining company Hi- Crush Inc. With the default of Tupperware, the U.S. and Europe consumer product default tally has eclipsed the numbers of each of the last six years with 21 defaults in 2020 so far. Prior to the COVID-19 pandemic, consumer durables and apparel companies were already facing challenges due to changing consumer preferences and greater price transparency amid a growing online marketplace. There will likely be additional pressure, and we will likely see defaults among speculative-grade issuers, especially those with sizable near-term maturities due to limited access to the debt markets.

—Read the full report from S&P Global Ratings

Carmakers Are A Step Behind In Industrial China's COVID Comeback

China's industrial sectors are staging a strong recovery from the COVID-19 outbreak, with production and public demand picking up sharply from their March lows. In 2020, government policies and infrastructure-focused stimulus will likely drive growth for many industries, including engineering and construction (E&C) and capital goods makers. S&P Global Ratings expects ratings in these sectors to be generally stable in COVID's aftermath, with most fundamentals in good shape. Carmakers are a weak spot, given the softness of consumer confidence.

—Read the full report from S&P Global Ratings

Insurance stocks jump as Q2 earnings starts, cat loss estimates released

Insurance stocks gained ground in a week that saw a healthcare private equity takeout, the announcement of a flurry of second-quarter catastrophe loss estimates and the kickoff to earnings season. The S&P 500 rose 1.25% to 3,224.73 for the week ending July 17, while the SNL U.S. Insurance Index gained 5.13% to finish at 1,045.99. In the first major earnings announcement for the second-quarter season, UnitedHealth Group Inc. disclosed very favorable results. Moody's analyst Dean Ungar said the report was "not surprising" since there were very few nonessential medical procedures performed in April and May. Those procedures would typically have represented a fairly substantial percentage of claims. Ungar said the entire managed care industry likely benefited from lower expenses this quarter.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

New York to add thousands of EV chargers, markets eye load shape impact

New York's recently announced "EV Make Ready" initiative to expand electric vehicle use by supporting over 50,000 level 2 charging plugs and 1,500 public direct current fast charger stations in the state could impact the shape of power demand peaks, sources said on July 17. The New York Public Service Commission on July 16 approved a "Make Ready" order to advance New York's commitment to accelerate its transition to cleaner mobility, according to a statement from Governor Andrew Cuomo's office.

—Read the full article from S&P Global Platts

Utilities face tough choices in meeting climate goals after natural-gas binge

Environmentalists and consumer advocates for years have complained that utility companies are piling up risks by continuing to invest in natural-gas infrastructure even as the costs of cleaner alternatives fall and scientists warn about the threats posed by climate change. With the recent explosion in sustainable investing, utilities are under even more pressure to slash greenhouse gas emissions, and some may well face "a lot of stranded-asset exposure" said Jim Hempstead, a managing director of global project and infrastructure finance at Moody's.

—Read the full article from S&P Global Market Intelligence

The Future of Energy and Commodities

Listen: Global natural gas markets adjust to bulging inventories, oversupply

align="center"> 

Ira Joseph, head of gas and power for Platts Analytics, and Ryan Ouwerkerk, manager of Americas natural gas pricing for S&P Global Platts, take a look at oversupply in global natural gas markets.

—Listen to Commodities Focus, a podcast from S&P Global Platts

INTERVIEW: EU rules could end Gazprom's pipeline gas export monopoly: EC

Russia may have to end state-owned Gazprom's pipeline gas export monopoly to comply with EU rules that affect its planned 55 Bcm a year Nord Stream 2 link to Germany, according to a senior European Commission energy official. The EU amended its gas directive last year to require all new offshore gas links entering EU territorial waters -- including Nord Stream 2 -- to be unbundled from any parent energy supply companies, and to offer third-party access, non-discriminatory tariffs and more transparency.

—Read the full article from S&P Global Platts

Written and compiled by Molly Mintz.