Virus will clear out overcrowded events industry 25 Mar 2020 Even in its early stages, Covid-19 closed gatherings from Coachella to conflabs on the virus itself. Stopgap online substitutes only underscore the value of face-to-face contact. That means the $30 bln industry should eventually recover, but with a slimmed-down list of operators.
Corona Capital: Bailout fees, Distressed junk 25 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: Wall Street brushes off its bailout pitchbooks. And high-yield debt suggests a deluge of defaults.
Facebook finds all Indian roads lead to Ambani 25 Mar 2020 Mark Zuckerberg is eyeing a 10% stake in Reliance Industries’ upstart telecom operator. The social network would join the likes of Saudi Aramco helping India’s richest man deleverage his oil-to-retail empire. Mukesh Ambani is building an enviable network of partners.
Korean Air drama risks ending in corporate tragedy 25 Mar 2020 Feuding siblings, white knight Delta Air Lines, and a pushy activist are all battling over the country’s top carrier. Change is overdue, but debt worth 862% of equity has left Korean Air more vulnerable than peers to a pandemic. Any victory from the proxy battle will be pyrrhic.
States have upper hand in health vs. economy row 24 Mar 2020 Donald Trump may end U.S. federal social-distancing restrictions earlier than medical experts advise with economic damage mounting. But lifting curbs is mostly up to governors and they'll shoulder health crises if they go too soon. Many businesses may prefer to play it safe, too.
Oil price war bolsters case for U.S. renewables 24 Mar 2020 The Saudi-Russia black-gold spat has drilled a hole in American energy suppliers’ finances and the country’s hopes for energy independence. Bailing out fossil-fuel companies is an option, but a more decisive switch to cleaner energy could make self-sufficiency an attainable goal.
Mexico cans Corona plant in unaffordable sideshow 24 Mar 2020 The country’s president held a referendum that nixed Constellation Brands’ massive brewery, as the nation faces a manufacturing pullback, rock-bottom oil prices, and a weak peso. Rigid nationalist, anti-corporate politics can be costly in normal times – let alone in a crisis.
U.S. bailout needs fewer diversions, more speed 24 Mar 2020 Lawmakers are wedging non-Covid-19 concerns into the stimulus bill. Some are worthy causes, like getting airlines to cut emissions. But the $2 trln-odd rescue package’s goal should be to get aid where it’s needed fast. As the 2010 Dodd-Frank Act showed, broader issues can wait.
Twitter’s revenue problem is bigger than Covid-19 24 Mar 2020 Users of the social network are flocking but advertisers are bailing as coronavirus content proliferates. But for revenue, it’s the ads that matter most. Twitter may hope to turn its new users into advertising dollars, but being widely read doesn’t guarantee being profitable.
Corona Capital: India on lockdown 24 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: India's prime minister, Narendra Modi, tells 1.3 billion people to stay at home as the country grapples with the early stages of an outbreak.
Chancellor: Coronavirus crash is inverted bubble 24 Mar 2020 Financial manias are often described in epidemiological terms, with “contagion” leading investors to become “infected” with speculative “fever”. In a sense, the response to Covid-19 may be a mirror image where fear replaces greed and errors of pessimism replace those of optimism.
Beware battered sterling’s rebound 24 Mar 2020 The currency is up from 35-year lows against the dollar. The worst of the pummelling is over, partly due to official efforts to sate a hunger for the greenback. But such demand is still worryingly high and options prices show deep gloom about the pound’s outlook. Caveat emptor.
Scrap bank dividends to help save the world 24 Mar 2020 Spain’s $39 bln Santander may pause 2020 payouts, freeing up capital to support lending amid the pandemic. A more radical move would be for banks to all cut 2019 dividends. Investors need cash less than virus-hit firms, and U.S. and European share prices already factor in a hit.
EU can retool old crisis weapons for new fight 24 Mar 2020 The European Stability Mechanism was set up to support troubled euro zone countries. Its 410 bln euros of firepower could help Italy and others with the coronavirus pandemic and unlock more ECB support. By stopping short of common borrowing, it may also be acceptable to Germany.
Selloff forces merger arbs to pass up free money 24 Mar 2020 Funds which bet on M&A deals have suffered hefty losses. Gyrating markets triggered risk limits, forcing some to sell out of deals that are very likely to go ahead, like luxury group LVMH’s $16 bln takeover of Tiffany. Arbitrageurs will lose much more than they stood to gain.
New Zealand airline rescue puts taxpayers in first 24 Mar 2020 The national carrier has received a $514 mln state lifeline that ensures its survival. A high interest rate should ensure any loan is repaid quickly, while shareholders share the pain through suspended dividends. It’s a model for other countries considering bailouts to follow.
World will be ready for some 2021 Olympic spirit 24 Mar 2020 It’s likely the Summer Games won’t go on as planned in Tokyo. Cancelling would be a defeat, but rescheduling for next year a symbol of resilience. By then, an economic recovery should hopefully be under way and global audiences will be drawn more than ever to the Olympic flame.
America could use a UK-style wage injection 23 Mar 2020 The $1.8 trln stimulus stuck in Congress has flaws, not least no stringent rules on retaining workers. It may also only last for 10 weeks. A British plan to help pay salaries would address such drawbacks in one shot and avoid more rounds of partisan squabbling by lawmakers.
Fed’s ultra-loose efforts will cast long shadow 23 Mar 2020 The U.S. lender of last resort is living up to its name. The latest extraordinary measures are needed but, like the response to the last crisis, may leave the system vulnerable to further debt buildup and asset bubbles. After the storm, policymakers will need a serious rethink.
Investors have bigger worries than GDP’s nosedive 23 Mar 2020 That U.S. economic output will plunge in the second quarter is clear. Whether it drops up to the 50% evoked by St. Louis Fed boss James Bullard is debatable. What matters more is how long virus shutdowns last and whether there are worse scenarios for investors to anticipate.
Guest view: End Iran sanctions on moral grounds 23 Mar 2020 The Islamic Republic was in desperate straits even before becoming the first state outside China to be badly hit by the coronavirus. U.S. sanctions are making its fight even harder. Taking the moral decision to roll them back would send a powerful signal, argues Chandran Nair.
Hadas: Trillion-dollar platinum is uber-real money 23 Mar 2020 Two precious coins can skirt any U.S. debt limit. The ingenious idea demonstrates the absolute power of governments to create money, for good and for bad. In the coronavirus crisis, extra money is the best way to ration available production. Later, it could cause problems.
Super-stimulus shows what Fed was made for 23 Mar 2020 As Covid-19 decimates the economy, the U.S. central bank pledged to buy unlimited Treasury and mortgage securities as needed, and backstop corporate credit. The resulting moral hazard is tomorrow’s problem. Combatting deflation and unemployment are why the Fed was created.
Late German virus budget lacks neighbourly gesture 23 Mar 2020 Finance Minister Olaf Scholz unveiled a 756 bln euro plan to defend Europe’s biggest economy from Covid-19. That’s bigger as a proportion of GDP than those announced by European peers but he waited too long to act. His silence on joint euro zone bonds is also disappointing.
Corona Capital: Religious aid, Ad-spending slump 23 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: U.S. Vice President Mike Pence wants Americans to donate to religious institutions to bolster community aid. But churches have their own fiscal problems. Plus: TV ad revenue look set for a pounding.
Masayoshi Son’s bold streak works in reverse too 23 Mar 2020 The acquisitive SoftBank boss plans to sell up to $41 bln of assets to retire debt and buy back the company’s deeply discounted shares. Balance sheet concerns had reached fever pitch. There are good reasons to worry, but Son is showing he has big levers and is ready to pull them.
Virus gives Africa a good debt default excuse 23 Mar 2020 The continent faces Covid-19 largely on its own as other countries strain to help their own citizens. A young population helps; weak health systems and stretched public finance don’t. Cash-strapped countries like Zambia and Ghana may stop paying what they owe bondholders.
Hong Kong signals virus battle will be a long slog 23 Mar 2020 The city has been lauded as an example of how to contain Covid-19. A second wave of infections, though, has prompted new tough measures including a tourist ban. It’s a sober reminder for the world that getting back to a post-outbreak normal will be a complicated and bumpy ride.
India Insight: Facing the pandemic on a shoestring 23 Mar 2020 As it braces for an outbreak of Covid-19, India lacks the authoritarian system that helped China cope and the advanced healthcare of Italy. India’s experience will illustrate the added struggle that poor, unruly nations face from rising disease and a straightjacketed economy.
China’s rate caution is conscious uncoupling 23 Mar 2020 The central bank is holding lending benchmarks steady as global peers slash. Bad debts and capital flight risk make big fiscal and monetary moves more dangerous than in 2009. That pushes the burden for stimulus to the government. Either way, structural imbalances will get exacerbated.