Energy’s titans will experience a dead cat bounce 21 May 2020 The virus-led crude price crash is upending petrostates and oil majors alike. Incumbent leaders with storage capacity and low costs might seem to be the winners as smaller competitors flounder. But they’ll fall victim to the longer-term behavioural shifts prompted by Covid-19.
Telemedicine may be U.S. healthcare’s new normal 21 May 2020 Online doctor visits are surging. It’s a safe and convenient alternative to going in person, insurers incentivize it, and restrictive rules are easing. While virtual visits are usually cheaper, though, increased uptake could push up total healthcare spending.
Regulators will owe banks a favour post-pandemic 21 May 2020 In contrast to 2008, lenders have so far helped cushion Covid-19’s economic blow, while central banks have propped up financial markets. The crisis highlights banks’ value as steady providers of credit. That will lead to some looser rules - and possibly a green light for M&A.
Lufthansa rescue gives taxpayers first-class seats 21 May 2020 The German flag carrier will get a 9 bln euro bailout, including new shares and non-voting stock. The government gets a 25% stake on the cheap, and a more generous payout than other investors. Shareholders can at least be grateful that politicians are staying out of the cockpit.
Soccer stars’ wallets will carry the Covid burden 21 May 2020 England’s top league wants to follow Germany by restarting games. That would help teams minimise lost sales, which may be up to $1.3 bln. Still, the world’s biggest sport will be far less lucrative after the virus. Player wage cuts may be the only way to ensure clubs’ viability.
Corona Capital: Perpetual WFH, Macy’s 21 May 2020 Concise views on the pandemic’s corporate and financial fallout: Facebook and its peers consider making working from home the new normal, while Macy’s gives an insight into a corner of the retail market that was struggling even before the pandemic.
Xiaomi making the most of the crisis 21 May 2020 Rolling out a 5G model during China's lockdown paid off for the online-savvy handset maker. First-quarter sales increased 14% from a year earlier, to $7 bln. Serious setbacks for rival Huawei and virus-powered interest in home gadgets should help sustain the impressive growth.
Fed’s credit market duct tape will come unstuck 20 May 2020 Junk bond yields have fallen from March peaks despite dire economic forecasts thanks to Federal Reserve boss Jay Powell’s new asset buying plans. He can’t make bad business models sustainable and may even encourage bad decisions. Investors will be out on a limb if things blow up.
American Airlines stock could be worthless 20 May 2020 The biggest U.S. airline by passengers might be the smallest by equity value. Despite a bankruptcy revamp in 2013, American now has outsized debts relative to its big rivals. Assume a 15% cut to its long-term profitability, and its $4 bln market cap could be $4 bln too much.
Icky cash gets shove towards eventual obsolescence 20 May 2020 Lockdowns and fear of contamination have made banknotes less relevant. Such habits will stick. Although central banks won’t yet call time on cash, misgivings over handing too much power to private payment players mean the stars are aligning for government-backed digital money.
African debt holiday choices open new divisions 20 May 2020 Kenya won’t take up a G20-backed offer to poorer nations to suspend debt repayments. That’s because private creditors may take a dim view of such a move, irrespective of what ratings agencies say. Africa’s laggards have to accept the offer and will look worse in comparison.
Corona Capital: China on Wall Street, Wind power 20 May 2020 Concise views on the pandemic’s corporate and financial fallout: U.S. senators want Chinese firms to share their audited accounts – or face being kicked off American stock exchanges. Plus: why wind energy is the key to an economic and social, as well as environmental, resurgence.
To win, U.S. Treasury needs to be ready to lose 19 May 2020 The Fed’s $600 bln Main Street bailout is still not up and running. Among the hurdles are terms that banks may not like, partly due to the Treasury’s conservativism. Steven Mnuchin told senators he was willing to take losses. It's a necessary investment to reduce future trouble.
Jamie Dimon returns to a changed investor climate 19 May 2020 Shareholders fired warning shots at the JPMorgan boss, recently back from surgery. An investor’s push for better information on climate risk is close to passing. The largest minority ever wants an independent chairman. Dimon’s remaining years in charge might not be easy.
Moderna puts stock-sale opportunism to test 19 May 2020 The biotech pitching a Covid-19 vaccine joins a rapidly growing list of firms selling more shares to investors. It makes sense, given the market rebound, and some issuers’ need for cash. But the rush to sell by more speculative companies like Moderna should give buyers pause.
Handshake will be relic of a more trusting time 19 May 2020 Finance will be different after Covid-19, and not just because the disease turned markets and economies upside down. Social shifts that outlast the pandemic – as simple as the reluctance to shake hands – will eat at trust. That’s the last thing a misanthropic Wall Street needs.
Walmart deserves credit for toilet-paper readiness 19 May 2020 Its biggest rival Amazon is still better at delivery services, which is key right now. But Walmart is ahead of the grocery game, and curb-side pickup will get a boost, too, even after lockdowns ease. And yet its stock is up half as much. Being in Jeff Bezos’ shadow has a price.
Cox: Quarantine in Switzerland is surprise luxury 19 May 2020 As the country reopens, the cliché of neighbours chastising you for not sorting recycling properly is to be praised. The key takeaway: a society that prizes self-responsibility, respects rules and institutions and plans for rainy days is a good place to shelter from the storm.
Corona Capital: Natural gas, Disney, Brazil 19 May 2020 Concise views on the pandemic’s corporate and financial fallout: Investors are too optimistic about natural gas; theme-park veterans take key roles at Disney; and Sao Paulo’s idea of bringing forward holidays to improve social distancing proves confusing.
Franco-German motor nudges EU off virus crash lane 19 May 2020 The pair proposed a 500 bln euro fund to help pandemic-hit states. That recognises the need to share the fiscal burden and rely less on ECB boss Christine Lagarde. But market jubilance is premature. Opposition from northern countries means the plan will probably be watered down.