Afternoon Coffee: U.S.-China economic ‘decoupling’ more likely; Appen expects growth despite coronavirus; Algorithms managing market turbulence; U.S. rail volumes decline

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A new survey quoted by The Wall Street Journal reports that the “decoupling” of the U.S. and Chinese economies has become a more realistic prospect than it once was due to the coronavirus pandemic. Of the 25 large U.S. companies in China surveyed, only 44% of them said that decoupling would be impossible in March. This is down from 66% in October 2019, the Journal said.

Additionally, 16% of the companies said they intend to move production outside of China. However, 40% said that their supply chains would most likely remain the same, the Journal said.

Appen still expects growth despite coronavirus disruption

As a publicly traded company, the Australian crowdsourcing platform provider Appen Ltd published an update on its financial outlook and its response to the COVID-19 pandemic. Appen, which engages over 1 million remote crowd workers to perform various micro-tasks and services on a large scale, still expects growth despite the ongoing coronavirus disruption.

It said that all of its roughly 800 internal staff members (located in cities in APAC, the U.S. and the U.K.) “are working safely and productively from home, with the exception of skeleton crews in its secure facilities and staff in China." According to the company, “global crowd workers are fortunately and ideally situated, working from home as usual.”

Appen, known for its services is preparing artificial intelligence systems, stated that its “customer delivery and support have not been impacted.”

After internal analysis, Appen revised its 2020 guidance for full year underlying EBITDA, which is expected to be in the range USD $79 million to $82 million (full-year 2019 EBITDA was $64 million). The company says it “maintains a very healthy balance sheet, with cash resources in excess of $60 million.”

Appen cited factors that could drive its 2020 increase:

  • Could increase: “a pandemic-led increase in the use of search, social media and e-commerce platforms, an increase in available crowd workers, growth in current and new projects and the weaker" Australian dollar.
  • Could dampen: “a slowdown in digital ad spending, a reduction in IT/digital spending, reduction or cancellation of services from Appen’s smallest customers, interruptions to global hardware supply chains and suspension of face-to-face projects such as audio data collection.”

Supply chain researchers helping to supply hospitals

The COVID-19 pandemic has put an unprecedented strain on the healthcare supply chain, which means shortage of personal protective equipment for doctors, nurses and other healthcare professionals.

But some researchers have started coordinating efforts to get these crucial supplies to healthcare workers and facilities, the University of Arkansas reports. One such effort is being led by John Kent, a clinical associate professor in the Sam M. Walton College of Business supply chain management department who works on college supply chain initiatives in China.

Joining him is David Dobrzykowski, a colleague in the supply chain department at the University of Arkansas. They created a volunteer task force that has coordinated a $1 million shipment of personal protective equipment and supplies to hospitals in the United States. They are working to help hospitals whose supply chains have become disrupted or completely broken by the harsh demands for supplies.

How algorithms are beating the turbulence in money market

Reuters reports that a new breed of trading algorithms are successfully handling the turbulence caused by the coronavirus pandemic. This has driven up demand for robots and could have implications on foreign-exchange dealing moving forward. The “algos” have proven much quicker than humans at adapting to the fragmented markets.

This represents a staunch change in the FX industry, which has traditionally not encouraged algos since they have a fail-safe to halt trading when volatility spikes. However, the difficulty of trading from home has caused fund managers to use them more since early March, according to the report.

Steep declines in U.S. rail volumes

The coronavirus has prevented the U.S. rail carload and intermodal volumes from seeing any gains, according to a report from Logistics Management. Rail carloads (198,726) were down 23.8% annually, while intermodal volumes (213,777) were down 20% annually, according to the Association of American Railroads (AAR).

In total, the report says that total U.S. rail carload and intermodal volume (412,503) saw a 21.9% annual decline.

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