Corona Capital: Airbnb 15 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Airbnb’s new $1 bln loan doesn’t come cheap, especially when compared to Booking Holdings. But the home-renting unicorn has troubles, from few assets to offer as security to how to ensure properties are virus-free.
Chaotic 2020 rips up America’s electoral script 14 Apr 2020 This year’s presidential primary season has been full of plot twists – from the Iowa debacle to Joe Biden’s comeback to, of course, Covid-19 and the unprecedented economic upheaval. Breakingviews imagines a lecture given in 2050 on the year U.S. elections changed forever.
Culture is disrupted for coveted tech worker bees 14 Apr 2020 Silicon Valley companies offered perks like free meals, beer, and sweet pay packages to retain white collar staff in a tight labor market. Benefits will be cut as companies try to shore up cash. Office activism for pet issues will be replaced by traditional worker demands.
Norwegian Air is lesson in bare-bones bailout 14 Apr 2020 The airline’s future hinges on creditors swapping $4.3 bln of debt for its nearly worthless equity. That would unlock enough state funds to allow the company to operate as a regional carrier. Its loss-making dream of a low-cost transatlantic revolution is dead whatever happens.
J&J shows safety is relative 14 Apr 2020 The $368 bln healthcare giant upped its dividend as increased demand for painkillers and Listerine helped first-quarter revenue rise 3%. But consumer-goods sales are likely to shrink, medical-device revenue is in free fall and litigation risk remains. J&J’s success won’t last.
JPMorgan adds turret to its fortress balance sheet 14 Apr 2020 Jamie Dimon’s mega-bank has set aside $8.3 bln for bad assets in case of a “fairly severe recession.” The lender is now better padded than in more than six years. Rivals will be under pressure to follow suit, but most can’t match JPMorgan’s ability to still squeeze out a profit.
Corona Capital: American football fail 14 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: The NFL has better finances and sturdier supporters than the XFL, which just filed for bankruptcy right after its reboot. But the Super Bowl operator’s future also rests on coronavirus-induced physical distancing.
Pandemic pendulum swings towards race to reopen 14 Apr 2020 Western economies are gagging to unfreeze sectors hit by Covid-19 lockdowns. But they risk reversing progress in slowing the spread. Italy’s appointment of former Vodafone boss Vittorio Colao to lead a high-calibre committee of experts may be worth copying on a larger scale.
Africa debt holiday may be better for bondholders 14 Apr 2020 The continent wants to delay $40 bln of external payments. Convincing the IMF and China will be easier than private creditors, who are owed half. With Covid-19 upending normal rules, though, granting relief is the right move. It will also help avoid costlier chaotic defaults.
Turkish whip-round is sloshing state money about 14 Apr 2020 Saddled with dwindling FX reserves, high inflation and a budget deficit, Turkey’s President Tayyip Erdogan is asking for aid from individuals and firms to protect society’s most vulnerable from the Covid-19 fallout. But so far the biggest contributors are stretched state banks.
Virus sets off China Inc’s biggest clash 14 Apr 2020 Alibaba, Tencent and Ping An dominate e-commerce, video games, and insurance, respectively. Now the trio, worth a combined $1 trln, is converging on the healthcare system, which is due an urgent upgrade. Financial and regulatory risks abound, but patients will be better off.
Earnings forecasts are rosy and reliably wrong 13 Apr 2020 Analysts expect earnings to fall 10.2% in this quarter and twice as much in the next, but recover briskly. That would be a vote of confidence, if it weren’t for the fact that analysts habitually start way off, and slowly gravitate to too-modest figures that companies easily beat.
Virus forces Fed to clean up its own junk 13 Apr 2020 The U.S. central bank said it will buy bonds of some firms that lose investment-grade ratings. It’s a good compromise to avoid a high-yield market crunch. But companies binged on debt partly because of loose monetary policy. The Fed now risks distorting the price of credit.
Bailouts put Wall St between a rock and hard place 13 Apr 2020 Banks are under pressure to quickly provide loans to keep businesses afloat. It makes fraud checks trickier, exposing them to liability. The Fed can share responsibility by providing a due diligence guide. Then banks have something to point to when inevitable failings happen.
Corona Capital: Oil cheerleading, Mortgaging Ford 13 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: U.S. and Saudi energy ministers agree on pumping up oil, Ford may use an old trick to raise new capital.
Live Nation hoards cash to avoid scary showstopper 13 Apr 2020 The concert promoter behind Lollapalooza has lost about 40% of its value since the end of February. Slashing costs and reworking its credit will help as the world hunkers down. But until a there is public confidence of attending events, Live Nation will be suspended in limbo.
Blackstone has remedy for drug R&D cash burn 13 Apr 2020 The private-equity firm is sinking $2 bln into Alnylam, including buying rights to future revenue from a drug still under regulatory review. It's a way to match Blackstone's bulging wallet with the biotech’s hefty costs while limiting exposure to volatile equity markets.
India Insight: The race back to work is necessary 13 Apr 2020 A nationwide lockdown is driving up poverty and devastating a fragile financial system. Printing money will help New Delhi spend to soften the blow. But if crops wither and supply chains remain broken, social instability will look like a bigger problem than Covid-19.
Banks lay out an earnings-season assault course 9 Apr 2020 Until recently, quarterly earnings were fairly predictable, aside from minor drama around trading revenue. Covid-19 has turned that on its head. JPMorgan already gave a teaser on how to asses pandemic risks, but Breakingviews walks through some of the big things to look out for.
Morgan Stanley gives Covid-19 a materiality test 9 Apr 2020 Boss James Gorman has recovered from the virus investors didn’t know he had. Companies have huge leeway when it comes to disclosing the boss’s ill health; Warren Buffett and Steve Jobs show extremes. Privacy is important, but there are advantages to radical transparency.