Coronavirus

TUI’s summer cheer may be short-lived

2 Jun 2020

The $3.5 bln holiday operator’s shares have risen by around 60% since Spain said it would welcome tourists again. But fewer sales and high debt could eventually force CEO Friedrich Joussen to raise more equity. With the stock buoyant, it’s a good time to tap shareholders.

Cities exodus will be more fringe than fashion

1 Jun 2020

Covid-19 and its lockdowns have left many urbanites yearning for more space. Technology makes it easier to contemplate working from a hamlet than after past pandemics. But a mass shift to the ‘burbs and beyond requires a lot of investment to overcome a dearth of infrastructure.

West End foray breathes life into UK property M&A

1 Jun 2020

Capco, owner of much of London’s upmarket Covent Garden district, has bought a 26% stake in $2.4 bln Shaftesbury, which manages large swathes of the trendy Soho area. A merger could follow. The risky punt shows UK landlords are starting to think about life after the pandemic.

UK’s small-firm debt pile is ripe for forgiveness

1 Jun 2020

Companies have borrowed $23 billion in state sponsored “Bounce Back” loans. Many will probably default. Pursuing debtors will be politically awkward and dent growth. Better to link repayments to financial health or grant relief to companies that hire back furloughed workers.

Germany’s car bonus scheme is only half the trip

1 Jun 2020

Chancellor Angela Merkel is mooting 5 bln euros in auto subsidies. A similar plan saved jobs at Volkswagen and Daimler in 2009. But the incentives would cover 2 mln vehicles – barely half last year’s sales. If the pandemic has permanently dented demand, a bigger boost is needed.

Corona Capital: Tech diversity, CNN’s middle age

1 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: As big U.S. technology companies’ CEOs speak out about racial inequality, working from home trends could give them a chance to make a real difference; and 24/7 news network CNN feasts on Covid-19 as it turns 40.

Mall-to-retailer relationships will get creative

29 May 2020

Brookfield Asset Management launched a $5 bln fund to invest directly in retailers. It’s an effort to salvage some of the Canadian mall owner’s top customers. As Neiman Marcus and J.C. Penney march into bankruptcy, other real estate owners will rethink traditional rents, too.

Review: MMT lives up to some of its promises

29 May 2020

“The Deficit Myth” clearly explains why governments should aim to balance the economy, not the budget. Stephanie Kelton’s book comes at a good time, as huge deficits will help limit the pandemic’s damage. Unfortunately, Modern Monetary Theory suffers from narrowness and naivete.

Irish eyes keep smiling despite a strict lockdown

29 May 2020

Village pubs are shut until August. The Emerald Isle’s restrictions may look extreme but have kept deaths low even if unemployment has soared to near 30%. Yet with ample supplies and a clear reopening plan, Matt Damon isn’t alone in finding Ireland an ideal pandemic bolthole.

Virus bailouts will be messier than past rescues

29 May 2020

Governments are ponying up trillions of dollars to save lockdown-hit firms. Further assistance looks inevitable as economies falter. States will demand higher taxes and jobs in return, putting them at odds with private owners. And lending to smaller firms creates bigger tensions.

Corona Capital: Saving/not spending, Pandemic Pig

29 May 2020

Concise views on the pandemic’s corporate and financial fallout: what to make of falling spending and the growing taste for meat alternatives.

Exxon climate activists can call in reinforcements

28 May 2020

Environment-linked resolutions won less backing at the $193 bln energy firm’s annual meeting on Wednesday than at rivals’. Replacing directors is the next logical step. It’s a task traditional activists are more used to – and Exxon’s poor financial record could pull them in.

Activist curve will get flattened by the pandemic

28 May 2020

Dozy boards are crying out for prodding as Covid-19 ravages businesses. But balance sheets will need to be more, not less, robust. And pushy investors can hardly point to great returns. After years of barging down doors, they should prepare to have more slammed in their faces.

Vacant arenas fortify TV’s financial grip on sport

28 May 2020

When games restart, distancing rules will mean emptier soccer and baseball stadiums. Sports which rely less on live crowds, like golf or Formula 1, may benefit. More home viewers should further boost the value of media rights, already worth $51 bln, and offset lost ticket sales.

Big Tech faces a post-virus global tax onslaught

28 May 2020

The OECD’s efforts to fashion a fairer global tax system are at risk of stalling. France and Britain already levy charges on the revenue of Facebook, Amazon and others. With public debt soaring and the pandemic boosting Big Tech’s sales, a messy patchwork of levies could ensue.

Corona Capital: GE cash burn, Macy’s lifeline

28 May 2020

Concise views on the pandemic’s corporate and financial fallout: General Electric’s cash flow will be more negative than expected as Covid-19 damages its aviation and power businesses; and U.S. department-store chain Macy’s borrows more, buying time but not much else.

Equity markets hatch a chicken-and-egg scenario

27 May 2020

The month of May logged the most equity offerings in history – beating the record from December 2009. Issuing equity to fortify coffers beats raising more debt for most companies. But raising cash will be easiest for those that already have it, or have other ways to get it.

Economic distancing is sad sequel to social kind

27 May 2020

Coronavirus has struck disproportionately as a disease of the poor. The human tragedy has been especially stark in dense, unequal places like New York. As economic distancing sets in, the gap is going to widen further between black and white, urban and suburban, north and south.

Burst Michigan dams send pollution risk to surface

27 May 2020

Flooding after heavy rain almost reached a Dow chemical-storage site. That’s one crisis averted, but in general, companies pay too little attention to water contamination. Its effects are vast and are part of recent high-profile legal fights. But cleaning up won’t break the bank.

Europe’s bond taboo finally broken by pandemic

27 May 2020

Brussels wants to raise 750 bln euros to help EU members recover from Covid-19. Hard-hit Italy and Spain would get the lion’s share, chiefly in grants rather than loans. Though obstacles remain, the health crisis may have helped the EU overcome its aversion to joint deficits.