Wall Street has $1.4 trln chance to amend for 2008 17 Mar 2020 That’s what big U.S. banks could lend using their excess capital. Tapping into what they’ve set aside to help in a crisis would yield more. Financial returns might not be great, but using their strength to bail out taxpayers in need would be an apt reversal of the last meltdown.
Supply chain insurance pain will hasten defaults 17 Mar 2020 The premium that businesses around the world pay for indemnity against unpaid invoices has jumped by as much as 10% since the beginning of the year. And some are struggling to get any cover at all. That’s a recipe for a temporary cash crunch to cause bankruptcies more quickly.
Virus crisis is distorted replay of 2008 meltdown 17 Mar 2020 Echoes abound of the aftermath of the collapse of Lehman Brothers. Central banks are slashing rates, financial markets are behaving oddly, and fears of a credit crunch are rising. Healthier banks give reasons for hope. Yet companies are weaker, and governments less joined-up.
Bond market minor casualty of Macron’s war footing 17 Mar 2020 Yields on French debt rose after the French president announced 45 billion euros in crisis spending to help business. Like Italy, France is bending fiscal rules to mobilise against Covid-19. Opening state coffers makes sense, even if it worsens longer-term debt to GDP outlook.
Virus may leave deep scars on property investors 17 Mar 2020 UK retailers such as Debenhams are asking landlords for rent reductions to deal with the outbreak. It’s hardly surprising given many are already struggling. But healthier stores are also asking for cuts or for rent to be tied to sales. The danger is these terms become permanent.
Fed will struggle to open discount window wide 16 Mar 2020 The eight biggest U.S. lenders are tapping the central bank’s emergency facility to help reduce its stigma. Ones that used the program during the financial crisis were publicly shamed. The likes of JPMorgan are setting a good example, but may not persuade smaller peers to follow.
CEOs finally have a licence to cite “uncertainty” 17 Mar 2020 Despite being paid to deal with doubt, bosses abuse the term as an excuse for poor performance or to criticise disliked policy. Covid-19 is the real deal, though, making it truly hard to read supply, demand and government action. It’ll be a 2020 buzzword alongside “coronavirus”.
Disney business risks getting frozen 16 Mar 2020 More than half the $171 bln entertainment giant's sales come from divisions encompassing theme parks and movie theaters, both empty thanks to the coronavirus. Canceled sporting events are also trouble for ESPN. Former CEO Bob Iger has left his successor with serious headaches.
Cash isn’t king for M&A in falling markets 16 Mar 2020 Prices of bid targets are diverging from where they would be if deals were a sure thing. Bidders who have offered cash have more of an incentive to try and walk away, or at least try to change the terms. But the mechanisms that keep prices predictable may also be under pressure.
EU virus fight requires tricky state aid trade-off 16 Mar 2020 Airlines and other companies hit by the Covid-19 crisis need government support to survive. The widespread shock means Brussels must act faster and be more generous than in the global financial crisis. Clear rules on payouts and how money is spent can reduce moral hazard risks.
Fed’s market fixes leave biggest problem unsolved 16 Mar 2020 Chair Jay Powell wants to ensure an ample global supply of dollars and avoid a repeat of last week’s U.S. bond market disorder. But measures like asset purchases will at best mitigate the stress. The root of tensions is the risk of companies going bust because of the coronavirus.
China’s virus recovery hubris is misplaced 16 Mar 2020 Retail sales and investment plunged in January and February, the first contractions on record. Export markets will seize up next. It’s a preview of pain ahead for others. But by stubbornly sticking to its 6% growth target, Beijing is storing up more market distortions.
EU virus move beggars neighbours a few doors down 16 Mar 2020 Brussels is urging member states to keep borders open with each other for healthcare supplies, following fears of national hoarding. It’s less worried about what happens beyond its bloc. That’s fine, but the stance could have consequences when the crisis subsides.
Chancellor: Monetary cure carries risk of its own 16 Mar 2020 Central bankers aren’t arguing that slashing rates and printing money will resolve the coronavirus panic. But the experience of the 1970s oil crisis suggests meeting a severe global supply shock with fiscal activism and easy money may bring inflation back in a nasty way.
Lockdowns mean heartburn for meal-delivery market 16 Mar 2020 The $123 bln sector, which includes Uber and Meituan, may sound like a winner as the coronavirus keeps diners indoors. Yet the key office-lunch market is collapsing, and panic buying has filled home kitchens with groceries. Paying sick drivers will add to the financial strain.
Fed arsenal shows up White House peashooter 15 Mar 2020 The U.S. central bank slashed interest rates, increased government bond buying and made it easier for foreign firms to get dollars. It’s an impressive response to the Covid-19 crisis. But without fiscal stimulus or adequate public health remedies, the Fed can only do so much.
Uber’s gig model mutates to meet virus challenge 13 Mar 2020 The ride-hailing app will give paid leave to quarantined drivers. It’s also mulling a compensation fund with Lyft, DoorDash and others who treat their labor force as contractors. Silicon Valley’s gig economy giants aren’t admitting workers are employees, but the line is blurring.
Investors’ Brazil dream becomes nightmare 13 Mar 2020 The former market darling’s currency has shed over 16% of its value versus the U.S. dollar this year, and its stock market is among the worst-performing in the world. Its trade position is weakening. And neither Brazil's central bank nor its president have good policy options.
Short-selling bans are no cure for virus rout 13 Mar 2020 A pandemic-induced market crash prompted Spain and Italy to curb trading on some hard-hit local stocks. The measure, also used to protect bank shares in the 2008 crisis, looks rushed and won’t help much. Real panic selling rather than speculation is what’s roiling markets.
Cheap oil will fund quasi-handouts for Indians 13 Mar 2020 A ban on foreign tourists is poised to hurt an economy already reeling from financial blowups. Luckily, cash-strapped New Delhi has a new stimulus option: passing lower crude prices on to consumers. That would be more effective than tax cuts, and relieve rising household debt.