Corona Capital: Pemex, Bond liquidity 20 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Pemex becomes world’s chunkiest fallen angel, and bond liquidity gets a needed boost.
Dixon: How will pandemic debts be paid for? 20 Apr 2020 The UK introduced income tax to fund the Napoleonic Wars. America imposed it to pay for the civil war. The coronavirus pandemic is not literally a war. But it will lead to massive borrowing. Higher taxes are a better way to repay it than austerity, default or inflation.
Dividend cuts are the new shareholder-value trade 17 Apr 2020 Schlumberger’s stock surged after the company slashed its payout by 75%. Granted, it’s because investors are now more comfortable with the $19 bln oil-services firm’s balance sheet. But as virus pain spreads across industries, ditching dividends’ sacrosanct status is a must.
Corona Capital: Amazon, Procter & Gamble 17 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Amazon CEO Jeff Bezos pokes the French government; consumer giant P&G’s good fortune will be hard to keep.
Hoarding to extend sell-by date of tired brands 17 Apr 2020 Consumers stockpiled pantries and freezers with long-life grub, boosting dowdy products like frozen Hot Pockets. Unilever and Nestlé had been tilting towards higher-end brands. Lockdowns will force CEOs and investors to reconsider the value of what’s in their cupboards.
Chinese GDP is refreshingly, depressingly honest 17 Apr 2020 The economy shrank 6.8% last quarter, its first year-on-year contraction on record. The politicised indicator is usually one of the country’s least informative, but this one speaks volumes. It suggests Beijing is seriously rethinking its approach to economic guidance.
Viewsroom: Freebies no more 16 Apr 2020 Breakingviews columnists check in from home in New York, San Francisco and Hong Kong to discuss disappearing Silicon Valley perks like free meals and booze, office activism at tech firms, the mystery of China’s 20 million lost mobile-phone subscribers and an ascendant TikTok.
BlackRock could be crowned a crisis winner 16 Apr 2020 Larry Fink’s investment giant just shed $1 trln of client assets, but its ETFs survived their first big test and tech investment paid dividends. A gig helping the Fed will further increase its influence. BlackRock could emerge from Covid-19 stronger – if also more scrutinized.
Chancellor: Economic Consequences of Mr. Johnson 16 Apr 2020 Winston Churchill’s biographer Boris Johnson deemed Britain’s 1925 return to the gold standard a “catastrophic error”. The Great Lockdown may be another economic disaster in the making. The recovering leader must hope that the experts haven’t misled him as they did his hero.
Small business life support is killing the patient 16 Apr 2020 UK and French rescue loans are only partly state guaranteed, which means SMEs have to go through slow bank credit checks. Switzerland’s 100% state guarantee is more likely to stop small firms going bust. But with most debt-averse, grants may be what’s really needed.
EasyJet files turbulent post-virus flight plan 16 Apr 2020 The budget carrier hopes face masks and empty middle seats will speed up a return to the skies. Such measures will reduce profit as well as infection risks but lower taxes and fuel prices could help. The bigger question is how soon punters will feel safe enough to travel again.
Corona Capital: LVMH, L’Oréal, Pandemic bonds 16 Apr 2020 Concise views on the pandemic’s corporate and financial fallout. LVMH holds onto the luxury of cash, cutting its dividend; L’Oréal makes the best of lockdowns with more than 50% growth in e-commerce sales in the first quarter; and even Covid-19 fails to trigger pandemic bonds.
U.S. resistance will speed IMF innovation 16 Apr 2020 American opposition may scupper calls for the international lender to help poor countries by conjuring up more of its quasi-currency. Extending loans with strings attached makes little sense when dealing with Covid-19. The crisis will force the fund to become more flexible.
China’s 2003 auto recovery will be instructive 16 Apr 2020 Sales got a bump at the height of SARS, as consumers avoided public transit and purchased cars for the first time. That psychology could soon play out in India and other markets where ownership is low. But the drag of congestion and spending power may be bigger this time.
Cox: Great Lockdown begs Great American Breakup 15 Apr 2020 Washington’s abdication of leadership in coordinating an effective virus response – followed by threats to override states’ rights – is fodder for arguments that the United States has become too big to manage. Several U.S. states just provided a blueprint worth considering.
Buyout barons deserve state help too – at a price 15 Apr 2020 Smaller private equity-owned firms, and those with heavy debt loads, are shut out of some U.S. and UK aid programmes. For the sake of their workers, that should change. But only if Blackstone, KKR and others submit to no layoffs or payouts through the term of government loans.
Guest view: Venezuela is least equipped for virus 15 Apr 2020 The country’s health, water, electrical and economic systems were under immense pressure before Covid-19. With 5 mln refugees from the Maduro regime displaced in the region, the U.N., IMF and others need to brace for a wider humanitarian crisis, warns a WHO epidemiologist.
Trump’s WHO slight opens door to U.S. philanthropy 15 Apr 2020 The U.S. president is halting funding to the health body, accusing it of pro-China bias over coronavirus. Playing politics in a global crisis is irresponsible and trashes Washington’s image. Time for the uber-rich likes of Michael Bloomberg to fill the moral and financial void.
Flaky oil output cuts will favour Saudi Arabia 15 Apr 2020 Supply curbs brokered by the United States make President Donald Trump look like a big winner. But the deal isn’t robust and won’t lift crude prices enough to prevent some U.S. shale producers from going bust. Riyadh could end up with a bigger market share once the dust settles.
FCA’s big dividend ambitions bruised by pandemic 15 Apr 2020 Plummeting auto sales triggered by the Covid-19 crisis and idle plants expose carmakers’ acute need for cash. Tapping state aid would alleviate Fiat’s pandemic pain. But that would probably require delaying or reconsidering payouts to cement a planned union with France’s Peugeot.