President Donald Trump holds up tweets from Google as he speaks during a press briefing about the Coronavirus.
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Protocol Index: A trade war is ‘the last thing we need’

Protocol Index

Good morning! This Monday, everyone's scared about another trade war, a proptech company sees opportunity amid chaos, and Elon's selling some houses. Want Index in your inbox each morning? Subscribe here.

What Matters This Week

  • It's another busy earnings week: Pinterest, Activision and EA all report on Tuesday, with Disney's release also anticipated for any indication of Disney+ subscriber growth. Wednesday brings Shopify, PayPal, Square, Twilio, Lyft, T-Mobile and Etsy. Roku, Uber, Dropbox, Booking Holdings, Nintendo and GoPro report Thursday.
  • April's job report is out on Friday, and it's expected to show the U.S. unemployment rate soaring to 16%, with an estimated 21 million people losing their jobs last month.
  • Meanwhile in Europe, Germany's constitutional court will rule on the legality of the ECB's asset purchase scheme tomorrow. A negative ruling could bring "mayhem of a previously unseen scale … on Europe and the world," according to UniCredit's chief economist.

Layoff Watch

Today's News

As of 4:20 a.m. PDT: Nasdaq Futures: -0.87% | Euro 600: -2.46% | Nikkei: Closed | Hang Seng: -4.18%




Everyone's Thinking About

A trade war's just what we need

I know what you're all thinking: It's been a really slow and quiet year, and it would be awfully nice to have some news to shake things up a bit. Enter: Trade War, Volume II.

  • Over the weekend, the U.S. administration got increasingly aggressive towards China. Secretary of State Michael Pompeo said there was "enormous evidence" to suggest coronavirus came from a Chinese lab.
  • And last night, President Trump said tariffs would be the "ultimate punishment" if it turns out China has misled the world about the virus. "Our country is being ripped off by every nation in the world," he added.
  • "A very strong report as to exactly what we think happened" is coming soon, Trump said. "I think it will be very conclusive."

Markets are, unsurprisingly, freaking out: Today's drop in the Hang Seng Index wiped out all of April's gains.

  • The economic slowdown in the last couple of years was partly attributed to the U.S.-China trade war, with January's detente calming markets.
  • A resurgence of combative policy would be disastrous in any economic environment, let alone this one — and it could be particularly bad for tech firms.
  • "The last thing we need is more trade war," said Société Générale's Kit Juckes, summing up the mood of basically everyone.


  • "People are seeing more and more intellectuals and influencers share TikTok videos on Twitter and Instagram … This is subconsciously removing the barrier for users who thought the platform is for the masses and not the classes." — Ad exec Nikhil Chinnari says Indians who once thought TikTok "was below" them are now using the platform.
  • "As for the recovery, the west is at a disadvantage to China where the response to COVID-19 has been more effective than the uncoordinated and tragically belated firefights conducted in the US and elsewhere." — In a Financial Times op-ed, Sequoia's Michael Moritz says western consumers will take longer to regain confidence.
  • "At least for the short term, gone are the days where it is a founder's world." — Cooley's Rachel Proffitt said founders are going to face "a stark reality."
  • "I don't feel that it's far more compelling to buy Berkshire shares now than I would've felt three months, or six months ago, or nine months ago." — Warren Buffett doesn't think Berkshire Hathaway's 19% year-to-date stock decline warrants buybacks, signaling just how bearish he is.


It's not all bad for iBuyers

A couple of weeks ago, we talked about some of the issues facing proptech companies: A frozen housing market and a tanking economy puts pressure on their already thin margins. But according to Sundae CEO Josh Stech, not everyone's in trouble.

  • Sundae flips homes that need extensive renovations, which other iBuyers won't touch because of the work involved. "Typically, the motivation for selling that home is some sort of trigger," Stech told me. That tends to be something bad: A death in the family or a job loss, for instance.
  • "We are seeing these acute levels of distress pop up, and it's causing the urgent need to sell the house," Stech said. "You're actually seeing more supply for our segment of real estate," even though many sellers want to wait until things return to a semblance of normality.

Sundae focuses on California, so Stech has lots of thoughts on what's going to happen to the Bay Area market.

  • Residential property prices have been partly fueled by the tech boom, he said. The "fever pitch" around Uber's IPO last year "drove a lot of people … to buy houses," Stech included. So a subdued tech industry could lead to a drop in house prices: Stech said he's already hearing of a "material softening."
  • Commercial real estate, meanwhile, "is going to be significantly impaired." The remote work boom, if it sticks around, could drive a lot of companies to downsize or ditch their office space, putting downward pressure on prices.

Stech said he's feeling good about Sundae's prospects, saying that a recession is the perfect time to build a company like his. But he does worry about his employees.

  • "People like to be productive, and so I think my biggest challenge as a CEO right now is keeping people engaged, keeping them feeling like they have what they come to work for — which isn't a wage, but it's fulfillment."

Closing Bell

Elon doesn't want a house

You've probably seen Elon Musk's Twitter meltdown by now, in which he said Tesla's stock was overvalued (which may or may not have been an illegal tweet). In and among all that, he said he is "selling almost all physical possessions," including his home. And he seems to be following through on that! CNBC's Sam Shead spotted listings for two of Elon's LA properties: A $30 million mansion, along with a $9.5 million ranch over the road. (The latter was once owned by Gene Wilder!) But don't worry, he's not going to have to move into the Tesla factory again: He still owns another four houses just next door.

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

Correction: An earlier version of this article misidentified a company that had reportedly laid off approximately 10% of its staff. It is SoftBank Group International. This story was updated May 4, 2020.

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