washingtonpost--2020-04-16--Small Business Relief Funds Drained Fast With Many Shut Out

Congress is debating adding an additional $ 250 billion to PPP , and small business advocates are calling on lawmakers to add more money for the disaster loan program as well .
About 100 members of Congress signed a letter Thursday to SBA Administrator Jovita Carranza with concerns about the EIDL program , saying they would strongly back a request for more funding .
House Minority Leader Kevin McCarthy told reporters he supports adding money to the program , and a Senate Democratic bill floated last week included money for it .
Without more money for the PPP program , @ @ @ @ @ @ @ with applications won ’ t get help because the government-backed loans were available on a first-come , first-served basis , and after just two weeks there ’ s no money left for the SBA to guarantee additional loans , officials said .
“ America ’ s small businesses are on the brink , trying desperately to keep their doors open and support their employees , ” Close said in a statement .
“ They have been let down by lawmakers and the bureaucracy , with the smallest businesses most disadvantaged in attempting to @ @ @ @ @ @ @ Wells Fargo & Co. , which was the No .
3 SBA-approved lender by volume last year , said it will continue accepting new applications so it will be ready to proceed if and when Congress adds funds to the program .
The firm said Tuesday that it hadn ’ t funded loans anywhere close to the $ 9.3 billion in loans that JPMorgan Chase & Co. said Tuesday it had .
Because banks make the PPP loans , not the SBA , the fund isn ’ t technically “ out of money @ @ @ @ @ @ @ $ 339 billion to be disbursed , Celtic Bank spokeswoman Linda Howell said .
The bank is concerned about “ authorization hoarding ” by lenders that potentially can ’ t fund the loans , Howell said .
Celtic Bank has disbursed $ 50 million as of Thursday morning with an additional $ 93 million in loans that have been authorized and are being processed , she said .
The SBA said on its website that while it unable to accept new applications for the EIDL loans and emergency grants without more funding , @ @ @ @ @ @ @ will continue to be processed on a first-come , first-served basis .
But small business owners have complained about waiting weeks for answers and funding , and some are getting less than they expected because of the demand .
The NFIB said a survey of its members released April 9 found only 4 % had been approved and no business owner had received a loan or grant .
The SBA has not disclosed how many applications have been approved and funded .
As of Thursday morning , the SBA reported there had been @ @ @ @ @ @ @ loans approved for about $ 339 billion .
That amount is the value of loans approved for lenders to disburse , not money that has reached borrowers .
Comprehensive data on how much money has actually been handed out isn ’ t available , but lenders report that disbursements are being made .
The program launched April 3 .
Republicans sought to approve an additional $ 250 billion for the program last week , but the effort stalled with Democrats also wanting changes to the program and more aid for other groups .
@ @ @ @ @ @ @ after a first day of talks on Thursday .
Ryan Metcalf , head of U.S. regulatory affairs at Funding Circle , an online small business lender that was approved to lend under the program Wednesday , said the company has thousands of people in line for funding .
Given how quickly the initial $ 349 billion was exhausted , the next round should be far larger than $ 250 billion , he said .
The PPP , which was enacted last month as part of a $ 2.2 trillion relief package in response @ @ @ @ @ @ @ as much as $ 10 million .
The loans convert to grants if proceeds are used to keep workers on the payroll and cover rent and other approved expenses for about two months , a short-term stopgap designed to help businesses get by until the economy reopens .
The initiative got off to a rocky start after Trump administration officials said that small businesses would get funding quickly , even the same day they applied .
But some borrowers couldn ’ t find banks to take their applications if they didn ’ t @ @ @ @ @ @ @ lenders couldn ’ t process loans because of vague guidance and an overwhelmed SBA computer system .
Of the more than 1 million applications that SBA had processed as of Monday , construction firms had a larger share of loans approved than other industries so far , followed by professional , scientific and technical service companies , manufacturers and health care and social assistance firms .
The average loan amount for all applications approved was $ 239,152 , an SBA report shows .
“ Oh my god , ” said Alex Steed , @ @ @ @ @ @ @ production firm in Portland , Maine , that ’ s awaiting funding for a loan .
“ This is playing out just about exactly how I expected it to .
It never felt like this was for small business owners anyway , or manufactured with our needs in mind .
”


washingtonpost--2020-04-16--U.S. Junk Funds See Record Inflow With Fed Poised to Buy

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washingtonpost--2020-04-16--N.Y. Targets Loan Website So Confusing Mnuchin Got It Wrong

Mnuchin referred to the company ’ s website rather than the government link at the Coronavirus Task Force briefing on April 2 , when he told millions of viewers how to seek guidance on tapping $ 349 billion in forgivable loans provided under the CARE Act to pay employees .
Congress passed the law last month to help revive the shuttered economy .
“ I encourage all companies , go to SBA.com , go to Treasury.gov , ” Mnuchin said , according to a transcript on the White House website that has since been corrected .
“ You can see @ @ @ @ @ @ @ Small Business Advice has posted warnings on its website that say it has no link to the government , Mnuchin ’ s error illustrated how easily the company could benefit from loan seekers intending to tap into the government website .
The company says its service is free for applicants , but it gets paid when qualifying loans are matched to participating lenders through a third party called Lendio .
Applicants don ’ t need to use Small Business Advice or any other third party to get government money , which is part @ @ @ @ @ @ @ Protection Program and is due to run out at any time .
“ The SBA.com home page only contributes to these misleading impressions by prominently advertising links to find ‘ Covid-19 Relief ’ and stating that ‘ Your Paycheck Protection Program Loan starts here ’ despite the fact that SBA.com is not a lender or certified participant , ” James said in a statement Thursday .
Lendio ’ s founder and chief executive officer , Brock Blake , said his company has helped more than 5,700 small businesses directed to Lendio through SBA.com @ @ @ @ @ @ @ $ 32,000 .
“ They ’ re really helping the smallest business owners , ” Blake said , adding that he ’ s been in partnership with SBA.com for about a year and a half .
Republicans and Democrats are in discussions to extend the small business loans .
If that happens , the risk for confusion will continue .
James advised small businesses to avoid deception and watch out for tricks , such as “ unscrupulous agents or lenders ” that may encourage borrowers to put false information on applications to get @ @ @ @ @ @ @ fees .
The attorney general also suggested applicants check the Small Business Administration ’ s website for participating lenders .


washingtonpost--2020-04-16--Analysis | Trump Would Like You To Buy Some Virtual Oil

Which brings us to a report that President Donald Trump is considering paying domestic oil producers to just keep their oil in the ground and designating that as part of the SPR , as broken by Bloomberg News .
As the oil industry stares into the abyss of the Covid-19 shock , the Trump administration has been searching for ways to alleviate its pain .
There has been talk of buying barrels from producers and using them to fill up the existing SPR — there ’ s room for about 80 million barrels more — or leasing some of that @ @ @ @ @ @ @ Congress nixed the first initiative , and the second is marginal .
The keep-it-in-the-ground plan represents a whole other level .
The federal government is authorized to build a strategic reserve of up to 1 billion barrels , or roughly 365 million more than it has right now .
The new plan would encompass the latter .
Unlike the existing SPR , these are barrels that have never seen the light of day , so to speak , but petroleum engineers are sure they ’ re down there .
In theory — and @ @ @ @ @ @ @ of a small nuclear reactor here — when an emergency strikes , the feds , having purchased the rights to that oil , would demand delivery .
This is some boss-level whiteboarding in action .
Because what we are talking about here is really just a financial transaction : Uncle Sam buying an open-ended call option from oil producers .
Numbers and sort-of obligations .
Someone is surely calling their bankers right now about setting up a special-purpose acquisition company .
That purpose : Buy proved developed reserves from distressed frackers and then @ @ @ @ @ @ @ the Department of Energy .
Let ’ s just hope Virtuoil LP is still operating when the next war hits .
Quasi-petroleum is more common than you might think .
Writing about the 2 million barrels a day of “ cuts ” the U.S. offered in last weekend ’ s frantic round of oil diplomacy , Kevin Book of ClearView Energy Partners pointed out in a report this was really just future oil that wasn ’ t going to be produced anyway at these prices ; “ trend barrels , ” he called @ @ @ @ @ @ @ about Uncle Sam ’ s new kinda-reserve that just doesn ’ t add up .
As it is , the SPR has hardly ever been used , even when triple-digit oil prices were putting real strain on the U.S. economy .
It has mostly been , in practical terms , dead oil — or just a number in a ledger .
If we ever were to face a true oil shortage , with prices to match , then any fracker with decent reserves would cash in by pumping them out as quickly as @ @ @ @ @ @ @ taught us , that ’ s just what they do .
No star-spangled option required .
The barrels don ’ t really matter .
This is a plan to funnel money to an industry facing disaster ; troubled oil relief with a veneer of energy security .
Numbers in a ledger .
An oil producer pumping a barrel at a cost of maybe $ 15-20 and selling it into the SPR for $ 21 is one thing .
You don ’ t have to be a genius to see that just getting cash @ @ @ @ @ @ @ likely never be called is far more attractive .
Call it a strategic petroleum reprieve .
That this is even being talked about speaks to the pressure on the oil market .
But it is also inescapably a testament to Trump ’ s long-standing affinity for any fuel that burns .
He has tried this sort of thing before , floating the Defense Production Act as a way of forcing utilities to stockpile coal they didn ’ t need ( “ energy dominance ” comes with a pronounced hoarding fetish , it seems @ @ @ @ @ @ @ use that emergency legislation this time .
But he may instead need House Democrats to unlock the funds .
This is where his monumental baggage hinders rather than helps his favored fuels ; Democrats aren ’ t going to authorize what amounts to helicopter money for frackers without extracting a sizable quid pro quo ( 1 ) .
Long-term , expanded electric vehicle subsidies , trading virtual barrels for future batteries , is just one option among many .
Time to think expansively and get out that whiteboard .
Liam Denning is a @ @ @ @ @ @ @ and commodities .
He previously was editor of the Wall Street Journal ’ s Heard on the Street column and wrote for the Financial Times ’ Lex column .
He was also an investment banker .


washingtonpost--2020-04-16--Mnuchin, Democrats Remain Far Apart on Bolstering Virus Stimulus

The pressure on businesses from virus-related shutdowns was illustrated by government data Thursday that showed 5.25 million people applied for unemployment benefits last week , capping four weeks of losses that erased more than 10 years of job creation .
The figures suggest an unemployment rate around at least 17 % -- far above the 10 % reached in the wake of the recession that ended in 2009 .
Mnuchin wants to add $ 251 billion to the $ 349 billion small business aid program known as the Paycheck Protection Program that ran out of money Thursday .
Schumer and @ @ @ @ @ @ @ to the program as well as another $ 250 billion to aid hospitals and state and local governments .
Pelosi told reporters on a conference call that with negotiations resuming she was hopeful Republicans “ will come back with something that strikes a balance on what they are willing to do.
” But House Republican leader Kevin McCarthy said on a separate call that Republicans shouldn ’ t give Democrats any concession in exchange for PPP funding .
Pelosi and Schumer are beginning to come under pressure from moderates in their party to @ @ @ @ @ @ @ a deal .
Those moderates may be facing political backlash in the Republican-leaning areas they represent .
“ The PPP program is going to run out of funding soon - the Senate should approve add ’ l funding by unanimous consent ASAP , ” she tweeted .
“ Small businesses need our help to survive during this emergency.
” Representative Kendra Horn of Oklahoma , who took a Republican House seat in the 2018 election and is considered vulnerable in November , was one of a number of moderate Democrats who tweeted support @ @ @ @ @ @ @ Paycheck Protection Program immediately .
One issue that has proved contentious is whether and how much aid to send to state and local governments , many of which are starting to furlough employees and employ other spending cuts because their revenue is plummeting .
“ It not that we don ’ t share the value of small business .
We do , ” Pelosi said .
“ We ’ re willing to give them that money.
” But she said that hospitals and state and local governments “ on the front lines of @ @ @ @ @ @ @ of money .
She cited pleas from the National Governors Association led by Republican Larry Hogan of Maryland and Democrat Andrew Cuomo of New York .
Hogan , the chairman of the governors group , has been leading the charge for a $ 500 billion aid package , far more than the Democrats are proposing in this round .
On Wednesday , the Democratic governors from three swing states crucial to Trump ’ s re-election hopes wrote asking the president to quickly get behind efforts to send more support to states and localities @ @ @ @ @ @ @ damage to our state economies will be exacerbated by the cuts we know we will be forced to make , ” Michigan ’ s Gretchen Whitmer , Wisconsin ’ s Tony Evers and Pennsylvania ’ s Tom Wolf wrote .
A brief delay in topping up funds for the small business loan program isn ’ t as important as addressing obstacles that have been holding up distribution of the loan money to businesses , said Andrew Metrick , a Yale University finance professor .
“ Most of the funds have been claimed but @ @ @ @ @ @ @ me the bigger issue right now is to get the money out the door , ” Metrick said .
“ The main constraint right now seems to be the operational problems .
”


washingtonpost--2020-04-15--Mnuchin’s Partnership With Powell Blurs Lines Between Fed and Treasury

Some analysts and former government officials see an erosion of the Fed ’ s traditional independence from politicians in the White House and Congress , as well as a central bank straying from monetary policy -- the supply of dollars -- into tax-and-spend fiscal policy .
The risk is that “ fiscal dominance ” of the Fed could raise inflation or create currency and banking crises down the road , said Mark Sobel , who was a civil servant at Treasury for more than 40 years .
Other governments and central banks also have clouded the lines .
For instance @ @ @ @ @ @ @ a key player in Prime Minister Shinzo Abe ’ s plan to reflate the economy with a mix of monetary stimulus and fiscal spending .
It now holds 43 % of the national debt , which is the world ’ s largest .
In the U.S. , Mnuchin negotiated with Republican and Democratic congressional leaders to craft the $ 2.2 trillion virus-relief package Trump signed last month .
He and House Speaker Nancy Pelosi worked to find common ground , and as the bill came together , both spoke with Powell by phone @ @ @ @ @ @ @ for the economy .
At the same time , Mnuchin was signing off on about half-a-dozen Fed actions to address the sudden economic collapse from the virus .
He says there have been days when he ’ s spoken to Powell 30 times .
Now , instead of Americans buying war bonds to fight the coronavirus , it ’ s the Fed slurping up debt .
The central bank ’ s work with Treasury is seen doubling its current $ 6.08 trillion balance sheet , which was already at a record high .
@ @ @ @ @ @ @ said the next phase of virus-related stimulus spending should include $ 2 trillion in infrastructure development .
But the last time the Fed and Treasury coordinated so closely was after the U.S. sold war bonds to finance World War II , Sobel said .
The Treasury Department pressured the Fed to keep interest rates high to safeguard the value of that debt , contributing to 21 % inflation by 1951 .
The conflict led to the two agencies signing the Treasury-Federal Reserve Accord of 1951 , in which they vowed to “ minimize @ @ @ @ @ @ @ would lead to what former Fed official Stanley Fischer calls “ the most extreme case ” of central bank and government coordination : “ pure monetary financing of government debt.
” Now at the BlackRock Investment Institute , Fischer and his colleagues have highlighted risks of monetary and fiscal authorities merging to deal with the next crisis but concluded that cooperation would be necessary .
“ What if Congress says : We ’ ll do another $ 2 trillion stimulus and the Fed needs to buy up those Treasuries ?
” Sobel asked @ @ @ @ @ @ @ the Official Monetary and Financial Institutions Forum .
The coronavirus outbreak has pushed the U.S. into a dramatic economic downturn .
Nearly 17 million Americans lost their jobs in the last three weeks , a pace twice as fast as during the Great Recession a decade ago .
Mnuchin , Fed officials and big Wall Street banks say the worst-case scenario is 20 % or more unemployment .
“ The Fed should have no such qualms in this moment to use its emergency authority , but it ’ s an incredibly uncomfortable spot @ @ @ @ @ @ @ said Peter Conti-Brown , a Fed historian and an assistant professor at The Wharton School .
“ This is fiscal policy , this is using the central bank ’ s emergency authority that has long pre-existed to fix dysfunctional markets in a part of the fiscal policy that has nothing to do with the Fed -- like the Small Business Administration program.
” Mnuchin and Congress have made the SBA program -- which offers loan forgiveness if businesses retain workers -- the centerpiece to the economic rescue package .
Mnuchin worked with the @ @ @ @ @ @ @ speed the flow of federal funds to small companies through the Treasury Department ’ s coronavirus stimulus package .
The Fed ’ s involvement wasn ’ t required under the law that created the program .
Small banks lobbied Mnuchin earlier this month for a secondary market to smooth the process .
The job fell to the Fed because it already has connections to banks across America , enabling it to more easily execute the lending facility .
Mnuchin and Powell aren ’ t done with their blitz to help the economy survive @ @ @ @ @ @ @ so far used roughly 40 % of the seed money that Congress has provided.They are undertaking “ very , very intense cooperation , ” said Nathan Sheets , who worked at the Fed and later the Treasury Department during the Obama administration .
“ There are risks that the definition of central bank independence might be a little bit different than when we got into this crisis .
”


washingtonpost--2020-04-16--Analysis | TSMC’s Outlook Isn’t the News You Were Hoping For

An important caveat to this revised outlook , which might be considered rosy given current uncertainties , is that it ’ s based on the pandemic stabilizing in June .
Let ’ s hope we ’ re that lucky .
Even in some places that have shown success in battling the disease , such as Singapore and South Korea , new cases continue to mount .
Outbreaks could recur until a vaccine is found and widely deployed .
Economically , many companies continue to believe things are better than they really are .
In China , for example , some @ @ @ @ @ @ @ think that they ’ re immune from the financial malaise that ’ s playing out in the rest of the world .
It will catch up with them .
TSMC hasn ’ t abandoned all hope , at least in the long term .
It maintained its previous guidance for capital expenditure this year of as much as $ 16 billion , based on the belief that industry trends like the rollout of 5G networks and handsets in coming years will still justify its investment in new equipment .
Much of this view @ @ @ @ @ @ @ But TSMC ’ s extensive client list and years of experience riding economic cycles make its predictive power better than almost anyone else .
ASML Holding NV , a TSMC supplier and one of the world ’ s biggest makers of chip equipment , didn ’ t even dare Wednesday to predict what its revenue might be this quarter or year .
Halfway through last quarter , Apple threw out its previous guidance and didn ’ t take a shot at a new one .
Chief Executive Officer C.C .
Wei made clear @ @ @ @ @ @ @ TSMC ’ s own read of the end-market for devices , not on any indication that its semiconductor clients were cutting orders .
That ’ s an oblique way of saying that customers haven ’ t reduced purchases yet , but they probably will .
The task now is for global technology companies such as Apple , Qualcomm , Nvidia Corp. , Xiaomi Corp. and Huawei to adjust to the new reality .
Some haven ’ t : Xiaomi last month predicted that smartphones are a necessity and demand would rebound quickly .
@ @ @ @ @ @ @ to examine how executives handle this crisis through the same lens that we assess political leadership .
As with the epidemic itself , those who are the quickest to face reality and work to mitigate the impact will stand the best chance of getting through it unscathed .
The deniers may not be so fortunate .


washingtonpost--2020-04-06--Pelosi Says Next Stimulus Round Will Be $1 Trillion or More

Pelosi also said the bill should assist state and local governments , with an emphasis on smaller municipalities with fewer than 500,000 residents , one lawmaker said .
Pelosi has said she wants the next stimulus bill to be passed this month .
The House isn ’ t scheduled to be back in session until April 20 at the earliest .
It is possible to pass legislation with most members out of town , as long as no one objects .
President Donald Trump said Saturday he ’ ll ask Congress for more money for small business loans if the @ @ @ @ @ @ @ program runs out .
In a White House briefing on Monday , Trump also said that if another round of stimulus is needed , he would consider more direct payments to Americans .
It ’ s “ absolutely under serious consideration , ” he said , adding he also wants “ real infrastructure ” as a part of it .
Former Federal Reserve Chair Janet Yellen also participated in the call and told House Democrats that banks are worried about being held accountable for fraud in a program aiming to get money out @ @ @ @ @ @ @ should provide safe-harbor protections to make sure banks aren ’ t held responsible for abuses that aren ’ t their fault , according to one of the people on the call .
Yellen also repeated her earlier predictions about the gravity of the economic crisis as much of the country avoids travel and entertainment to contain the virus .
She said the unemployment rate is probably at least 13 % already , adding that how long and deep the recession is will depend on the public health response .
In response to a @ @ @ @ @ @ @ the best way for states to respond , Yellen said there will be tremendous need for additional funds to support local governments , according to people on the call .
She suggested that the Federal Housing Finance Agency could get involved to help head off a foreclosure crisis , the people said .
Representative Dan Kildee of Michigan said he supports calls by some Democrats to allow the Federal Reserve to buy up municipal debt , although many local governments can ’ t borrow to cover current costs and revenue shortfalls because of @ @ @ @ @ @ @ after the call , Kildee said getting Republicans to agree to help states and localities will be “ very tough.
” ” I don ’ t know how sustainable bipartisanship is as we move into recovery , ” Kildee said , adding that the primary goal is still to mitigate the economic crisis .
More ambitious recovery efforts , involving infrastructure spending , for example , will have to wait .
Kildee said he spoke on the call to say Congress should extend the small-business loan program for five months , from the @ @ @ @ @ @ @ said even if the current funding doesn ’ t run out , “ overshooting ” would help reduce the fear currently driving the recession deeper .


washingtonpost--2020-04-06--SBA Computers Crash in Fresh Blow to Companies Seeking Virus Aid

An SBA official said later that the system was up and running and said it ’ s not accurate that the system crashed , without elaborating .
SBA continues to process , approve and guarantee billions of dollars in loans per hour and continues to add lenders to the system , the official said .
Jim Engel , Chief Executive and president of Aquesta Bank in Cornelius , North Carolina , said he was notified about 1 p.m. New York time that E-Tran was down for a few hours .
“ The system is just inundated with users , ” @ @ @ @ @ @ @ Bank said the system was down in the morning and is now back up .
The system troubles follows the rocky launch of the $ 349 billion Payroll Protection Program with loans meant to help small businesses pay workers and expenses as part of the $ 2 trillion stimulus package .
Despite President Donald Trump saying on Saturday the roll-out has been “ flawless , ” there were widespread reports of problems and confusion , including lenders unable to access the E-Tran system .
The president of the union representing SBA workers said @ @ @ @ @ @ @ issues ” with E-Tran since Friday .
The system is used by SBA-approved lenders to send applications to SBA to get a loan registered and receive a guarantee number , and non-SBA lenders use it to get registered to participate in the program .
“ They can ’ t get into the system , ” said Johnnie Green , national president of The American Federation of Government Employees Local 228 , referring to lenders .
According to Green , his union represents more than 1,000 SBA employees .
Green said he was told @ @ @ @ @ @ @ expected Monday , but he wasn ’ t sure whether the issue had been corrected .
Amazon Web Services , the largest provider of cloud computing services and a major seller of software to the federal government , was brought on last week as subcontractor by a company working to build a new software tool for banks participating in the SBA program , according to a person familiar with the matter .
That project , designed to expedite work lenders seeking to become registered to participate in the program , isn ’ t @ @ @ @ @ @ @ Republican Senator Marco Rubio , chairman of the Senate Committee on Small Business and Entrepreneurship , tweeted on Sunday there were “ signs of progress ” on the system upgrade and that by 8 p.m. , a Florida bank with 4,000 loan applications could get 70 of its officers onto E-Tran -- after only 20 could previously .
But the ability of lenders to connect with SBA on Monday -- both SBA-approved lenders trying to process loans and those trying to get registered to participate -- seemed to be about the same as @ @ @ @ @ @ @ Merski of the Independent Community Bankers of America .
The ICBA sent a letter to SBA and Treasury late Saturday night complaining about the technology and a “ myriad of unanswered questions and lack of clear instruction on how to complete loans through the SBA.
” The group made several recommendations , including enhancing SBA systems .
Merski said community lenders are still looking for guidance from SBA on how to complete some loans , including when a firm ’ s officers are also on a lender ’ s board or serve as @ @ @


washingtonpost--2020-04-06--Analysis | Why Leveraged Loans, CLOs Feed Worries in Virus Slump

When the pandemic triggered an extended economic shutdown , attention turned to companies that could face a squeeze and supercharged debt bets that could quickly sour .
Leveraged loans are inherently risky and the market has boomed in the past 10 or so years .
The securities have been a magnet for investors in an era of low interest rates .
But the market has also been prone to bouts of volatility , even as its total size topped $ 2 trillion .
The loans offer financing to companies that have shaky credit ratings because they have a lot of @ @ @ @ @ @ @ .
CLOs have been likened to collateralized debt obligations , or CDOs , which became famous for melting down in the 2008 financial crisis .
While it ’ s a comparison the market dislikes , both are structured products created by pooling assets to create new securities .
While CDOs cover a wide array of debt , CLOs are built from leveraged loans .
They ’ ve become a big part of financing corporate America -- about 60 % of loans to sub-investment-grade firms are folded into CLOs .
While the downgrade of @ @ @ @ @ @ @ damage a CLO ’ s ability to pay investors , a deluge of them around the same time certainly could .
Still , there ’ s a debate .
CLOs fared well in the 2008 crisis , with none of the highest-rating tranches defaulting .
Prices for U.S. leveraged loans trading in secondary markets plunged 13 % in the first quarter as the virus took hold , reaching levels not seen since 2008 .
On April 2 , the benchmark index stood at 83 cents on the dollar , after recovering somewhat from @ @ @ @ @ @ @ , when stock and bond markets were all in freefall .
( It hit an all-time low of 61.7 at the end of 2008 , according to data from Standard & Poor ’ s and the Loan Syndications and Trading Association . )
Market-watchers are predicting a wave of defaults , saying that investors could recover some 55 cents to 60 cents for each dollar they invested .
Probably not directly .
Wall Street regulators have discussed ways they could help the leveraged-loan market by , say , relaxing lending guidelines to make @ @ @ @ @ @ @ financing to troubled companies .
The U.S. Federal Reserve has taken steps to keep liquidity flowing to the corporate debt market and relaxed regulatory requirements on bank capital .
Short term , banks are providing support by ensuring access to so-called revolving credit lines .
Longer term , though , more companies will likely face trouble .
The Fed , the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. have limited reach into the leveraged-loan market , because much of the riskiest financing has been provided by credit @ @ @ @ @ @ @ don ’ t directly regulate .
Investors are attracted by their higher returns -- leveraged loans returned about 8 % in 2019 .
In the credit market , non-investment-grade , or so-called junk bonds have traditionally gotten the bulk of attention .
But if a borrower defaults , leveraged loans are likely to recover more money because they typically rank ahead of bonds in bankruptcy proceedings .
The money raised by leveraged loans was used to do things like fund buyouts by private-equity firms , pay shareholder dividends and refinance borrowings .
They @ @ @ @ @ @ @ a Moody ’ s credit rating of Ba1 or lower or S & P rating of BB+ or lower .
Typically , an asset manager or an asset management arm of a bank buys 100 to 350 loans , sometimes more .
The loans are packaged into bonds in groups , or tranches , representing different risk and return .
The highest-ranking tranches have first dibs on the cash flow generated by the underlying loans , but also have lower returns .
The riskiest but potentially most lucrative layer of a CLO is @ @ @ @ @ @ @ is last in line to receive cash flows but the first to realize losses .
While CLOs are sold globally , 75 percent of the market is U.S.-based .
The U.S. CLO market has more than doubled since 2008 , growing to about $ 670 billion in outstanding debt .
The biggest issuers include the likes of Blackstone ’ s GSO , CIFC Asset Management , PGIM Inc. and Credit Suisse Asset Management .
Insurance companies , pension funds and banks are big buyers ; Wells Fargo & Co. , JPMorgan Chase & @ @ @ @ @ @ @ largest holders of U.S. CLOs , according to Citi research .
( There ’ s also a significant Asian market , with Japan ’ s Norinchukin Bank and Japan Post among the big buyers . )
Wells Fargo said in a March 25 note that AAA CLO notes paid spreads above benchmarks in the mid-to-high 300 basis point area , meaning an extra 3 percentage points in return .
A similarly rated corporate bond paid about 142 basis points more than its benchmark on the same date .
Another part of the appeal @ @ @ @ @ @ @ leveraged loans and the CLO bonds have floating interest rates , meaning they generate higher yields as rates go up , unlike most corporate bonds .
In some ways , CLOs have gotten safer since the last financial crisis : they have more of a buffer between the value of the loan pool and the value of the debt , known as over-collateralization , among other tests designed to shield investors from losses .
The industry also points to the diversity of loans CLOs hold , making them less susceptible to collateral damage @ @ @ @ @ @ @ gets hammered , the way the energy sector was in 2015 and 2016 , stronger areas of the economy could make up for it .


washingtonpost--2020-04-06--Fed, Treasury to Buy Bank-Issued Debt in Small Business Program


washingtonpost--2020-04-06--Analysis | Virus Didn’t Have to Ground This Aviation Deal

There were some signs the companies were still being punished for going through with the deal : As of Friday , Hexcel and Woodward had each dropped more than 55 % since the merger was announced in mid-January , compared with a decline of about 35 % for the SPDR S & P Aerospace & Defense ETF .
At those prices , the deal terms valued Hexcel at about $ 32 a share , or about $ 3.7 billion including debt , compared with an enterprise value of about $ 7.5 billion when the merger was first announced .
While @ @ @ @ @ @ @ the merger was off , Woodward ’ s stock rallied more than 10 % .
That gain feels short-sighted .
If you liked an aerospace combination that “ brings together a broad , unparalleled portfolio of leading-edge technologies ” with a “ strong balance sheet ” in January , you should like it even more in April .
The fact that the companies themselves aren ’ t convinced of this is on the one hand a sign of just how deep and long-lasting the slump in aerospace will be .
But it also @ @ @ @ @ @ @ famous Warren Buffett maxim comes to mind : Be fearful when others are greedy and be greedy when others are fearful .
To be sure , one of the big selling points of the Woodward-Hexcel merger was the ability to significantly ramp up research and development spending to better position the combined company to compete on the next generation of aircraft technology , with an eye toward better fuel efficiency and lower emissions .
That has likely fallen further down the list of priorities for aerospace companies right now given the virus cash @ @ @ @ @ @ @ that ’ s made it more economical to keep flying older , clunkier models .
There is also the question of distraction .
Big deals are complicated .
For all of Hexcel and Woodward ’ s previous talk of complementary cultures , there are bound to be integration hiccups , particularly when the virus fallout makes it likely job cuts will be in order .
Separately on Monday , Woodward said it was implementing “ workforce management ” policies including a hiring freeze , layoffs and furloughs , without specifying the number of @ @ @ @ @ @ @ will also reduce its dividend , eliminate 2020 bonus payments and trim pay for the CEO , board and top officers .
Hexcel also announced plans to evaluate employment levels and reduce spending .
Still , the trend toward more climate-friendly aircraft is likely to be sustained over the longer term and the companies would have gotten more out of these cost-reduction actions if they were spread out across a bigger , combined entity .
“ Calling off the merger is clearly bad news for both companies , as we think scaling up @ @ @ @ @ @ @ when it comes to dealing with a crisis , ” Vertical Research Partners analyst Rob Stallard wrote in a note .
Both Woodward and Hexcel also announced shareholder rights plans meant to guard against unwanted takeover advances in a sign they are worried someone else will have take advantage of their depressed stock prices and have the gumption to pull off a deal that they couldn ’ t .


washingtonpost--2020-04-03--A More Hopeful View of AI’s Impact on America’s Rural Worker

In the months since since Scott finished writing “ Reprogramming the American Dream , ” which is scheduled for release next week , the Covid-19 pandemic has made the shortcomings he identifies starker and more immediate .
The same way it ’ s hard to build a small business in towns without reliable fast internet access , people can ’ t work from home without it .
In underfunded schools with little computer education , it ’ s hard to set up distance learning .
“ We want to put opportunity and the best possible tools into the hands of @ @ @ @ @ @ @ Scott said in an interview .
“ I don ’ t know that it ’ s going to be some overnight transformation , but we have to bake it into the values that we have and the economic decisions we are all making as consumers , big businesses , partners and policy makers.
” After 16 years working on machine learning , Scott , 48 , said he ’ d developed a typical point of view in the industry that AI would be a disaster for low- and middle-skilled workers and a boon @ @ @ @ @ @ @ in a visit to his hometown of Gladys , Virginia , and its county seat -- the evocatively named Rustburg ( population 1,431 in the last census ) -- he found burgeoning small businesses using new technology and a cause for optimism mixed with high rates of poverty and unemployment borne from the demise of local industries like textiles and tobacco .
“ I had this ‘ a-ha ’ moment that these people I ’ d grown up with were doing work and running businesses that were already using technology in really interesting @ @ @ @ @ @ @ they were using were exactly the sorts of things that were going to be amenable to improvements with AI , ” he said .
These people , and not the tech leaders and AI researchers , were going to have a better idea how to use AI for their specific industries and challenges , he said .
Scott is pushing ideas he hopes will boost rural economies and lessen the impact of future disruptions like the current one .
Microsoft , his employer , stands to benefit greatly by more use of AI @ @ @ @ @ @ @ AI tools over the internet .
He suggests the U.S. government spend $ 200 billion , an amount equivalent to the Apollo program that sent the first astronauts to the moon , for “ AI in service of the public good.
” He calculated the figure using the percentage of GDP spent on the Apollo program in the 1960s .
If some of that funding is used to provide better health care for all , it might pay for itself by reducing waste and costs , he said .
He also wants the @ @ @ @ @ @ @ provide ongoing education for the skills of the future and to finally fix the lack of rural broadband .
Promoting rural small businesses , like the precision plastic parts plant a high school classmate of Scott ’ s manages in an former textile mill , will also require buyers for their goods .
The current pandemic , which has large companies rethinking their overseas supply chains , particularly in China , may provide opportunities for smaller U.S.-based businesses to prove their worth , Scott said .
Companies like Microsoft can help by committing @ @ @ @ @ @ @ , he said .


washingtonpost--2020-04-06--Analysis | Why Airlines Don’t Want to Refund Your Flight Tickets

Carnival ’ s predicament is shared by hundreds of travel , airline , sports , education and entertainment businesses — all of which depend on advanced payment from customers to fund their operations .
People probably don ’ t realize it , but when they pay for a ticket months in advance they ’ re effectively extending these companies an interest-free loan .
The world ’ s airlines might have to repay $ 35 billion in customer cash during the next three months , according to industry body IATA ; the largest of these companies each held close to $ @ @ @ @ @ @ @ the end of December , corporate filings show .
What happens to this customer money is a hugely important question that could determine whether businesses will remain solvent or will need a government bailout .
Tour operator Tui AG , for example , secured a 1.8 billion-euro ( $ 1.9 billion ) rescue loan from the German government last month , even though it had taken in about 2.9 billion euros of advance payments from customers — it had spent much of this cash .
There are sound reasons why companies should be @ @ @ @ @ @ @ Taxpayers would foot a rescue bill , which doesn ’ t seem very fair when it ’ s estimated that just 15 % of Brits take 70 % of the country ’ s international flights .
By pulling their cash out now — rather than waiting for rescheduled holidays , flights and events , or accepting a credit voucher to book a future alternative — customers ’ risk destabilizing businesses that they admire and depend upon .
But it ’ s essential too that customer money is adequately protected and people who urgently @ @ @ @ @ @ @ those who ’ ve recently lost their jobs , can get it .
That ’ s why there ’ s such disagreement around the travel industry ’ s preferred solution to the problem : the credit voucher .
Like the airlines , Carnival hopes that people will accept these to put toward a future trip in lieu of cash .
So far about 45 % of customers have chosen this option .
But the travel industry is worried that this voluntary uptake isn ’ t enough .
Hence it is furiously lobbying governments @ @ @ @ @ @ @ the vouchers non-optional .
This would require the suspension of consumer protection laws .
While governments like Germany and the Netherlands are sympathetic to their domestic companies ’ plight and are encouraging the use of vouchers , the European Union and the U.S. have held firm , saying that if customers want their money back , they should get it .
They worry that if a company goes bust , customers with vouchers would join a long queue of unsecured creditors .
In theory , European holidaymakers ’ prepayments are protected if a @ @ @ @ @ @ @ Thomas Cook collapsed last year , the Air Travel Trust Fund that ’ s used to repay U.K. customers was drained of most of its cash .
Similarly , Thomas Cook ’ s insurance didn ’ t adequately protect German customers ; German taxpayers ended up refunding those customers .
There are other ways for consumers to get their money back if a company goes bust .
Some travel insurance policies will pay out for an insolvency , as will credit-card processors .
Still , the safest way to protect your money is @ @ @ @ @ @ @ keep the cash in the first place .
In the hope that governments will come round to their point of view , some airlines have reportedly been complicating the refund process for customers .
By stonewalling , they ’ re able to keep the cash a bit longer but at the cost of alienating customers and travel agents .
A much better approach is to offer customers an incentive to take the voucher option .
Finnair Oyj customers can get vouchers worth 10 % more than their cancelled booking .
To make sure @ @ @ @ @ @ @ needed or are protected in the event of a company ’ s collapse , governments also need financial safety nets and insolvency guarantees .
Germany has proposed something like this , without providing details .
It also plans a hardship clause for customers that can ’ t afford to accept a voucher .
As an alternative , governments might consider a travel emergency fund to cover reimbursement of flights and other services so businesses don ’ t immediately have to foot the bill .


washingtonpost--2020-03-20--Analysis | Can I Get It? What’s Known About Virus Transmission

In its first major report on the Covid-19 outbreak , the WHO said the virus spreads in respiratory droplets -- spatters of liquid that are sometimes visible to the naked eye -- forcefully expelled from an infected person ’ s cough or sneeze .
These are usually heavy enough to fall immediately to the ground or surrounding surfaces .
Infection could occur if the droplets reach the mouth , nose or possibly the eye of someone nearby either directly or via an unwashed hand that ’ s touched a so-called fomite -- an inanimate surface or object such as a @ @ @ @ @ @ @ that the novel coronavirus can survive four hours on copper , 24 hours on cardboard , 48 hours on stainless steel and 72 hours on plastic .
The WHO recommends people wash their hands frequently and keep a distance of least 1 meter ( 3 feet ) from anyone who has a fever , cough or other respiratory symptoms .
It advises against shaking hands , hugging and kissing for now .
For households with a suspected or confirmed case of infection , the U.S. Centers for Disease Control and Prevention suggests keeping @ @ @ @ @ @ @ as possible and cleaning and disinfecting “ high-touch surfaces ” in common areas -- such as light switches , tables and remotes -- daily .
When people sneeze , cough or even breathe , they also emit particles so small that instead of falling right to the ground , these aerosols can float for a time through the air .
When a virus is carried by such particulates , its odds of infecting people are higher because of the potential for them to be inhaled .
According to the WHO report , this @ @ @ @ @ @ @ for the new coronavirus virus , though it “ can be envisaged ” in health-care facilities conducting procedures such as tracheotomy and airway suction that can generate aerosols .
Researchers who aerosolized it found active virus can float in the air for as many as three hours .
This risk is one reason medical workers who deal with suspected or confirmed Covid-19 patients are directed to wear face masks , specifically the more sophisticated type known as respirators .
It ’ s less clear how helpful masks are for the hordes of regular @ @ @ @ @ @ @ provoking shortages .
A few small studies have suggested that widespread use of face masks by the public may have reduced transmission in outbreaks of two other respiratory diseases , influenza and severe acute respiratory syndrome , or SARS .
However , the evidence is not generally considered conclusive .
And with masks in short supply , public health authorities have argued that everyone is better off if they are reserved for those who actually require them and who can ’ t avoid exposure to people who are infected .
Another possible route @ @ @ @ @ @ @ their hands after using the toilet , and then touching surfaces that come in contact with healthy people .
Some patients have been found to have live virus particles in their stool .
The WHO said in its report that the fecal-to-oral route does not appear to be a significant pathway for the novel coronavirus .
To the extent it is a means of transmission , sanitizing bathrooms , food-preparation and serving areas could help slow the virus , in addition to regular hand-washing .
They may be a source of infection if @ @ @ @ @ @ @ person ’ s respiratory secretions or feces .
The virus was found to have spread readily among food service workers on the Diamond Princess cruise ship , where about one in five people became infected while it was quarantined off Yokohama , Japan .
Chinese health officials recommend strengthened sanitation and hygiene measures in epidemic areas .
These include drinking boiled water , avoiding eating raw food , washing hands frequently , disinfecting toilets , and preventing water and food from being contaminated by patients .
According to U.S. officials , the coronavirus @ @ @ @ @ @ @ water supplies .
Conventional treatment methods that use filtration and disinfection should remove or inactivate the virus .
After the infection appeared in babies born to mothers with the disease in China , the possibility was raised that the virus could be passed in utero .
But a subsequent study cast doubt on the notion .
The study looked at nine pregnant women infected with the coronavirus who gave birth to uninfected babies .
No virus was detected in amniotic fluid , cord blood , the babies ’ throats or in breast milk @ @ @ @ @ @ @ child occurs through respiratory droplets .


washingtonpost--2020-03-20--Analysis | Why a Texas Oil Regulator Could Play the Role of OPEC

Despite its name , the three-member commission no longer oversees the state ’ s rail system .
It was established in the 1890s to regulate private railroads , terminals , wharfs and express companies .
That mandate grew to include oil and gas in 1919 .
Its oversight of railroads was gradually transferred elsewhere within state government , with the Texas Department of Transportation taking the last of the rail functions in 2005 .
Today the commission has a reputation for being a lenient regulator of the state ’ s oil and gas industry , which raked in $ 138 @ @ @ @ @ @ @ from the commission to drill and operate wells .
Ryan Sitton , one of the three commissioners , wrote in a Bloomberg Opinion column that the agency could order production limits for Texas producers , something last done in 1973 .
“ In theory , Texas could cut production by 10 % , and if Saudi Arabia is willing to cut production by 10 % from its pre-pandemic levels and Russia is willing to do the same , it would return the market to pre-crisis levels ( and only somewhat oversupplied ) , @ @ @ @ @ @ @ column , Sitton says he ’ s been invited to address the Organization of Petroleum Exporting Countries , or OPEC , at the group ’ s June meeting in Vienna .
Global crude prices are getting hit by a toxic combination of a supply shock as Saudi Arabia and Russia battle for market share and a demand hit from the Covid-19 pandemic .
West Texas Intermediate crude futures , the U.S. benchmark , are far below the prices shale producers need to generate cash from drilling new wells .
In the early 1930s @ @ @ @ @ @ @ scientists and public officials advocated for the state to regulate production in order to stabilize plummeting prices driven by unrestrained output from East Texas .
The commission ultimately won the authority to “ prorate ” output -- meaning it can set the rate at which every oil well in Texas produces .
In its wielding of this power , the Texas commission served as a model for OPEC .
Texas voters elect them to staggered six-year terms .
The next election -- for Sitton ’ s seat -- is this November .
Sitton @ @ @ @ @ @ @ ballot : In a major upset , he lost the Republican primary election on March 3 to Jim Wright , a rancher and chief executive of an oilfield service company .
Two Dallas lawyers , Chrysta Castañeda and Roberto Alonzo , will compete in a May runoff for the Democratic nomination to challenge Wright .
No Democrat has won election to the commission in more than 25 years .
The two Democratic candidates say the commission should be tougher in regulating the oil and gas industry , particularly when it comes to flaring @ @ @ @ @ @ @ which oil producers burn off unwanted natural gas that comes up with their crude .
Oil drillers say flaring is the most environmentally friendly way to get rid of excess gas they can ’ t sell .
Environmentalists say regulators in states including Texas and North Dakota should be tougher on a practice that harms air quality and contributes to climate change .
The commission , which has never denied a flaring permit , has faced criticism even from some industry members for its lax policy on the issue .


washingtonpost--2020-03-20--Analysis | Why the OPEC-Russia Blowup Sparked All-Out Oil Price War

Russia had joined forces with OPEC in 2016 , along with nine other non-member countries , and the group controlled almost half of the world ’ s oil production .
The “ OPEC+ ” pact led to a resurgence of the cartel , which wields immense power over the world ’ s most critical commodity .
Russia stunned oil traders when it refused to go along with production cuts pushed by Saudi Arabia at a March 6 meeting in Vienna .
The kingdom -- OPEC ’ s biggest producer and its driving force -- wanted to trim output further to @ @ @ @ @ @ @ energy demand .
Saudi Arabia responded aggressively just hours later : Its state-owned oil behemoth said it would reverse course on March 8 , open the taps and slash crude prices .
Talks between Russia and the Organization of Petroleum Exporting Countries broke down because the country didn ’ t want to be strong-armed into further cuts to its lucrative oil production .
It complained that the OPEC+ deal had aided America ’ s shale industry .
Russia was also increasingly angry with the willingness of U.S. President Donald Trump to employ energy @ @ @ @ @ @ @ It was irked by the use of U.S. sanctions to prevent the completion of a pipeline linking Siberia ’ s gas fields with Germany , known as Nord Stream 2 .
The Kremlin was reluctant to cede further market share to U.S. shale drillers -- known as frackers -- that have been adding millions of barrels of oil to the global markets .
An attack on shale has been tried before : When the new technique was expanding in 2014 , Saudi Arabia ’ s strategy was to flood the market , expecting @ @ @ @ @ @ @ the new competition .
As shale producers found cheaper ways to operate and a global supply glut dragged on , OPEC then returned to its traditional tool of constraining output , sending oil to a four-year high of more than $ 85 a barrel by mid-2018 .
The victory proved self-defeating .
Higher prices re-invigorated U.S. fracking , propelling the U.S. to overtake Saudi Arabia and Russia as the world ’ s No .
1 crude producer .
Many drillers in Texas and other shale regions look vulnerable , as they ’ re @ @ @ @ @ @ @ natural gas prices .
The price of oil tumbled more than 50 % to less than $ 25 a barrel in the days following the OPEC+ bustup , and began to swing violently as investors tried to assess the increases in oil output and the collapse in demand due to travel bans and other pandemic containment measures .
That prompted the main oil regulator in Texas to consider whether the state should curb crude production for the first time in nearly half a century in a coordinated effort with Saudi Arabia and Russia @ @ @ @ @ @ @ a total industry meltdown .
That remains to be seen -- the two sides could always return to the negotiating table , though Russia ruled that out on March 20 .
In the short run , Russia is in a good position to withstand a price slump .
Its government budget breaks even at a price of $ 42 a barrel and it has squirreled away billions of dollars in a rainy-day fund .
Saudi Arabia , which is almost entirely dependent on oil to fund lavish government spending , holds about $ @ @ @ @ @ @ @ cushion the blow .
One source of potential stress : The kingdom ’ s currency , the riyal , has been pegged to the U.S. dollar for more than three decades , providing economic and financial stability .
OPEC has a built-in competitive advantage , since its Middle Eastern members can produce crude at about a third of the cost of U.S. shale .
Such a dramatic crash in the price of oil , if it were sustained , would savage national budgets of petro-states from Venezuela to Nigeria to Iran , threatening @ @ @ @ @ @ @ To policy makers , volatile oil prices are an added complication as they try to shield economies from the impact of the coronavirus epidemic .
There are winners from rock-bottom oil prices -- among them China , the world ’ s largest oil importer , whose recovery from the virus will be key for the global economy .
The U.S. -- once a beneficiary of low oil prices -- is now an exporter rather than a buyer .
Sudden surges in oil prices are feared because of the way they could jack up @ @ @ @ @ @ @ economic growth .
Now a world reeling from an economic slump triggered by the virus is enduring another sort of oil shock .


washingtonpost--2020-03-20--Analysis | A Trump Texas Oil Deal Opens the Door to a Green New Deal

For the most abyss-adjacent oil producers , the prospect of Uncle Sam Houston playing Santa Claus must be as joyful as it is unexpected .
They should be careful what they wish for .
The swing from energy dominance based on the raw capitalist power of American fracking to something more like energy endurance supported by the state is of back-throwing ferocity .
Yet it isn ’ t completely out of left field , either .
The Railroad Commission used to regulate oil production ; indeed , it provided the model for OPEC .
Moreover , energy dominance , with @ @ @ @ @ @ @ sheer quantity , encouraged many frackers in their mad dash for growth at all costs .
They also relied on OPEC to support oil prices .
Now the Saudi-Russian price war , dovetailing with the plunge in oil demand due to Covid-19 , has revealed the rot in E & P balance sheets .
There may have been a time when the very idea of Washington ( and Austin ) intervening so overtly to protect the wildcatters would have been dismissed out of hand .
But that was before the shock of the @ @ @ @ @ @ @ what Kevin Book of ClearView Energy Partners termed “ command capitalism ” in a report published a year ago .
That crisis ushered in enormous state intervention in an effort to ameliorate its fallout .
Trump ’ s shock election in 2016 owed at least something to the inequalities and insecurities built up over roughly three decades of neoliberal economics , starkly revealed after 2008 ( Trump repaid the favor with a tax cut reinforcing said inequalities , but whatever ) .
Meanwhile , under Trump , the Republican Party embraced such previously @ @ @ @ @ @ @ sweeping trade tariffs and barely disguised attempts to subvert markets for favored industries such as coal mining .
And although efforts continue , Republicans have failed to upend the healthcare reforms of President Barack Obama , largely because few Americans want to go back to the old system .
Now we ’ re living the pandemic-themed sequel to 2008 , minus the Tea Party ( how about that ? )
.
As my colleague Pankaj Mishra wrote recently , the Covid-19 crisis means the state “ is back , and in its fundamental @ @ @ @ @ @ @ off life ’ s rougher edges for citizens .
Mishra ’ s message , though , is that Leviathan brings sharp edges of its own .
Oil producers should take a break from high-fiving to think about that .
Decades of opposition by fossil-fuel producers to more market-based approaches for dealing with climate change , such as carbon pricing , along with outright denial , have amped up the sense of urgency ( and anger ) around the issue , particularly among younger Americans .
The result has been a striking shift in @ @ @ @ @ @ @ toward state-prescribed mandates , exemplified in last year ’ s Green New Deal resolutions .
It just so happens the # GND also came with a populist wish-list of federal job guarantees and massive public investment in infrastructure .
When you ’ re in a deep hole , you don ’ t think about how the landscape might change up top .
But it ’ s becoming something unrecognizable .
The oil market grew up alongside , and was enabled by , globalization and post-war free trade .
These were fading already .
@ @ @ @ @ @ @ gives us a taste of the sort of disjointed , fractious future spelled out in geopolitical analyst Peter Zeihan ’ s new book “ Disunited Nations.
” Similarly , state-led help for oil ’ s stragglers should inspire strife in the industry ’ s ranks .
The E & P business needs a shake-out rather than a bail-out .
Indeed , while the process would be painful ( 1 ) , a restructured shale business would be far more resilient than today ’ s .
Even with tempered growth , it could set @ @ @ @ @ @ @ Saudi Arabia and Russia should also be careful what they wish for ) .
So potential consolidators , who didn ’ t spend themselves into penury , should have their pick of targets when the fog clears — and lobby against state aid .
Above all , a grand bargain for oil would take energy further into command capitalism .
Sitton may wrap his appeal in the usual tropes of liberty , but his bare argument beneath is that we have to burn the free market in order to save the free market @ @ @ @ @ @ @ climate change , having spent decades trashing its credibility , state-led energy policy will be friendly right up until the moment the cast changes .
I ’ m not making hard predictions about who gets elected and what they enact ; GND-ers should contemplate what nationalism might do for coal , especially in Asia .
But I am reasonably sure America ’ s 21st century energy system ultimately will not revolve around the sort of handshake deals with ailing petrostates that defined the last century .
What we are witnessing is an industry @ @ @ @ @ @ @ knows rather than what is best .
This may buy its weakest members some time , but would also lay yet more groundwork for potentially radical intervention of a different order .


washingtonpost--2020-03-20--Analysis | ECB Undid a Fail But Left Collateral Damage

ECB President Christine Lagarde last week told the world “ we are not here to close spreads , ” prompting Italian bond yields to shoot higher .
This week , she said there are “ no limits ” to what her institution will do to safeguard the common currency project .
Italian yields have duly plummeted .
As the chart above shows , both Italian and Greek 10-year yields have made daily outsize moves far beyond what is typically experienced in a single trading session .
That will have generated losses for portfolio managers who found themselves on the wrong @ @ @ @ @ @ @ big enough to close a fund .
Others who fared better will still have had their confidence shaken .
Investors facing price swings of 10 % or more in a single week , which they just experienced in Greek debt , are likely to curtail their trading activity .
Liquidity in the euro zone ’ s benchmark fixed-income market was already tight .
In a February 2018 presentation , ECB executive board member Benoit Coeure outlined that the free float in German bunds — securities available for market participants to buy and sell @ @ @ @ @ @ @ accounts at the central bank and elsewhere — amounted to roughly 15 % of the total outstanding .
That proportion is likely to have fallen since , and will shrink further as the central bank resumes bond buying .
The ECB will be greatly encouraged with the rapid reduction in government borrowing costs in the euro zone following its latest moves ; unleashing more than 1 trillion euros of stimulus in 2020 has to have some effect .
But there has been an unseen cost .
Risk managers will have to reduce exposure @ @ @ @ @ @ @ as volatile assets .
Extreme price moves deter trading and will further reduce already impaired liquidity in the cash bond markets .
These problems are doubly bad for market participants that hedge their euro sovereign bond trading by taking counterbalancing long and short positions , whether for risk management purposes or because they are market makers .
Over the last week hedges may have amplified losses rather than mitigated them .
Reduced liquidity in the sovereign bond market can only be bad news for finance ministries that will have to increase bond sales @ @ @ @ @ @ @ .
This is clearly an exceptional point in history and the rapidly increasing financial impact of the coronavirus explains much of the volatility in asset prices .
But it is regrettable that central bank missteps exacerbated market instability .
The ECB acted swiftly and decisively to reverse its earlier error ; the memory of its clumsiness will take longer to fade .
Mark Gilbert is a Bloomberg Opinion columnist covering asset management .
He previously was the London bureau chief for Bloomberg News .
He is also the author of “ Complicit : @ @ @ @ @ @ @ Crisis Unstoppable.
” Marcus Ashworth is a Bloomberg Opinion columnist covering European markets .
He spent three decades in the banking industry , most recently as chief markets strategist at Haitong Securities in London .


washingtonpost--2020-03-20--Analysis | Tiffany Engagement Is Already Testing Commitment

The bid for Tiffany is a long-term investment .
Since the deal was agreed in November , the outbreak of the coronavirus has brought an abrupt end to luxury spending , first in China , and now in Europe and the U.S. Bernstein analyst Luca Solca estimates a decline of 20 % in industry sales before currency movements this year , assuming a recovery in the second half , and a fall of 25-30 % in the event of a global recession .
Tiffany ’ s stock price is supported by the $ 135-a-share offer , but touched a year-to-date @ @ @ @ @ @ @ week .
That large spread suggests an element of uncertainty the deal will actually close .
Shareholders in the U.S. group approved the transaction in early February .
Even with the collapse of luxury goods demand , financing shouldn ’ t be an issue .
LVMH raised about $ 10 billion in a bond sale last month .
Bernstein estimates net debt could be in the range of between 1.5 times and 2.5 times Ebitda at the end of this year , depending on how long the pandemic lasts .
That ’ s @ @ @ @ @ @ @ question is whether there is any provision in the fine print of the deal agreement that LVMH lawyers could use to walk away — and whether Arnault would even want to if there was .
Wriggling off the hook would damage Arnault ’ s reputation and send a terrible message to investors about the strength of LVMH .
The company would also miss out on the long-term potential of Tiffany .
Expanding in jewelry is a deeper strategic priority for LVMH .
Trophy assets never come cheap , and if LVMH balked , @ @ @ @ @ @ @ hearing especially if other suitors emerged .
That all fits with what Arnault is doing — mulling the purchase of Tiffany shares in the market , below his offer price .
This would be a pragmatic way to try to bring down the overall cost of the deal , without trying to renegotiate , or pressing the panic button .
Of course , staying the course has some cost too .
Tiffany needed some polish even before the luxury and the non-food retail industry shuttered stores in response to the Covid-19 outbreak .
@ @ @ @ @ @ @ .
And by sticking with Tiffany , LVMH is tying up financial resources that might otherwise be available to buy other assets .
In reality , some of the smaller luxury houses have family shareholders who may be unwilling to sell out in a weak market .
The Tiffany deal was never about buying the jeweler ’ s 2020 earnings .
Just as well , for all sides .


washingtonpost--2020-03-20--Analysis | How the Fed’s Swap Lines Aim at Dollar Funding Stress

First used extensively during the 2007-2008 financial crisis , they ’ re temporary lending facilities that allow central banks around the world to borrow dollars from the Fed in exchange for an equivalent amount of their local currencies .
On March 15 , the Fed and five major central banks , including those in the euro zone and Japan , said they ’ d activate the program to ease a squeeze as demand for the dollar surged .
It subsequently increased the frequency of seven day maturity operations to daily from weekly .
The Fed also lowered the rate and @ @ @ @ @ @ @ later it expanded the swap line to nine other central banks , including Australia and Brazil , bringing the total to 14 .
The goal is to ease the panic for dollars and allow foreign-exchange markets to keep operating normally .
Surging volatility in stock and bond markets has spurred a rush to secure the U.S. currency for borrowers and as a haven against further turmoil .
The Fed says the lines are necessary at times because bank funding markets are global and can break down “ disrupting the provision of credit to @ @ @ @ @ @ @ and other countries.
” That ’ s the big question .
While the measures can ease pressures for banks , the effect is felt in the broader economy only if these lenders extend more dollar loans to companies and other financial institutions .
Banks also may shun a central bank swap line because of a stigma attached to tapping it .
Making dollars available to foreign nations -- even if it didn ’ t cost the Fed -- became a point of contention for some lawmakers in the U.S. Congress during the 2008 @ @ @ @ @ @ @ repeatedly defend the action , saying U.S. taxpayers were not on the hook because these were swaps -- not loans -- and there was no risk of default .
The dollar shortage became acute as the greenback soared on March 18 , throwing other currencies from the British pound to the Brazilian real into free fall .
As stocks plunged and investors fled to U.S. Treasury bonds amid the global coronavirus pandemic , the currency derivative market showed signs of stress .
Notable is the move in cross-currency basis swaps , which shows @ @ @ @ @ @ @ than euros or yen .
They ’ re contracts where two sides agree to exchange interest payments in two different currencies .
During the life of the contract , floating interest-rate payments are exchanged , typically on a quarterly basis .
On March 17 , the premium paid to swap funding exposure from euros into the dollar surged to the widest since 2011 .
The premium narrowed in the days that followed , though it remained elevated .
That suggests investors were still struggling to get their hands on dollars despite injections of @ @ @ @ @ @ @ .
Dollar funding stress is particularly pronounced for yen- and euro-based investors , based on cross-currency basis swaps .
While higher demand to swap funding exposure from the yen into the dollar was evident from the start of February -- coinciding with the rally in Treasuries -- the euro-denominated market was more resilient until mid-March .
The moves have also come at a time when financial companies become increasingly cautious about lending to each other and demand higher premiums on interest over risk-free rates , known as the FRA/OIS spread .
Banks are @ @ @ @ @ @ @ and proprietary trading firms rank second .
The favored currencies are the dollar , euro and yen .
Most contracts involve the dollar .
They typically range from 1 to 30 years , reflecting the length of the transactions they fund , such as loans .
What makes them unique in the world of swaps is that the parties agree to exchange notional principals , or the face amount used to calculate the payments .
Let ’ s say a European company needs a dollar loan .
While the firm may be well-established @ @ @ @ @ @ @ U.S. may demand a stiffer rate to lend to a relatively little-known entity on the other side of the Atlantic .
Enter the cross-currency basis swap .
The European firm borrows in euros and swaps the payment into dollars with another entity that needs funds in Europe ’ s common currency .
That ’ s the million-dollar question .
If investors continue to seek the safety of Treasuries and stocks keep tumbling , the preference to swap out funding exposure into the dollar may persist .
The pressure may be more pronounced in @ @ @ @ @ @ @ historically been a good proxy for institutional funding stress .


washingtonpost--2020-03-20--Analysis | If Ray Dalio Isn’t Making Money Now, Neither Will You

Take the risk parity trade , made popular by Bridgewater Associates LP .
Such strategies bet on a near-perfect match between stock rallies and bond sell-offs — and it has worked out very well for the past decade .
As of early March , the weekly correlation between the S & P 500 and 10-year Treasury bonds was minus 0.84 , the lowest since early 2015 , Goldman Sachs Group Inc. estimates .
A score of minus 1 would mean there is perfect negative correlation — that is , when stocks rise , bonds would always fall .
But the @ @ @ @ @ @ @ on 10-year Treasuries has doubled in recent days , from 0.54 % on March 9 to 1.14 % Thursday , even as the Federal Reserve slashed its benchmark rate to zero .
We ’ re seeing the same thing in Japan .
Stocks and bonds are falling , dragging the underlying thesis of the risk parity trade down with it .
To make matters worse , these trades tend to use leverage to amplify bond exposure , because stocks have historically been more volatile .
Risk parity — as the name implies — @ @ @ @ @ @ @ risk exposure in both asset classes .
And boy , whoever said bonds are stable hadn ’ t seen anything like the coronavirus .
Take a look at the ICE BoA MOVE Index — the bond-market equivalent to the Chicago Board Exchange Volatility Index , or VIX — which is at its most volatile since 2009 .
It turns out even U.S. government bonds aren ’ t that safe .
Or consider those statistical arbitrage funds that use computer algorithms to scour markets for tiny mispricings .
These funds rely heavily on leverage @ @ @ @ @ @ @ is freezing up as banks hunker down for corporate clients and add to reserves to buffer against market volatility , margin calls and flash crashes .
If a fund was only making , say , 10 basis points on illiquid trades , and its broker is now raising lending rates to pare back counterparty risk , it now faces the uncomfortable question of whether to liquidate its position .
And forget about relative value trades , which seek to find arbitrage opportunities in mispriced pairs of highly correlated assets .
In the currency @ @ @ @ @ @ @ rush to the haven of the U.S. dollar .
A sharp weakening of the Australian dollar this month , for instance , might seem overdone , as it tends to follow the Chinese yuan , which has been eerily stable lately .
But as Societe Generale SA ’ s currency strategist Kit Juckes wrote , the current market makes a mockery of overthinking trade ideas .
Industry titans are getting caught wrong-footed .
Bridgewater ’ s All Weather fund , which pioneered the risk parity trade , is down 12 % so far @ @ @ @ @ @ @ ’ s Millennium Management has closed more than 10 of its “ trading pods.
” Millennium relies heavily on relative value trades .
And these are the pros , who have been through the Long-Term Capital Management bailout in 1998 and the Lehman Brothers Holdings Inc. bankruptcy a decade later .
For those too young to remember such violent market dislocations , the bloodbath has probably been even worse .
Considering the benchmark S & P Risk Parity Index already tumbled 16.5 % this year , Bridgewater ’ s All Weather fund isn @ @ @ @ @ @ @ Global markets managed to breathe a little Thursday as major central banks took out the big guns .
The Federal Reserve revived a few emergency lending facilities put to sleep after the global financial crisis , and established currency swap lines with emerging markets such as Brazil and Mexico .
But is it enough ?
We have all agreed central banks can ’ t stop the virus ; at best , they can only blunt the blow to financial markets .
Ray Dalio , Bridgewater ’ s founder , famously said that cash @ @ @ @ @ @ @ who is revered in China , has to get associates there to dispel rumors that his funds have “ crashed.
” As we ’ ve argued , the coronavirus is turning all of us — people and companies — into hoarders .
All we want is cash .
The hedge funds that borrowed piles of the stuff to buy everything around the world can ’ t be feeling too comfortable about the weeks ahead .


washingtonpost--2020-03-19--U.S. Should Flood Businesses With Cash, Says Former White House Economist

“ I am fearful of that if we don ’ t do the right policy , ” said Hubbard , who was chairman of the White House ’ s Council of Economic Advisers under President George W. Bush and is now dean emeritus of Columbia University ’ s Graduate School of Business .
“ If you shut down an economy , you need basically to replace private business demand.
” In an interview with Bloomberg News , Hubbard said such a plan would serve the country better than sending every American a check for $ 1,000 , as the Trump @ @ @ @ @ @ @ keep their jobs would be a far better outcome , he said .
“ If you keep people employed , you don ’ t really need the checks , and if you don ’ t keep people employed you ’ re increasing unemployment expenses , maybe you ’ re jumping them into Medicaid programs , ” he said .
Hubbard said he ’ s been talking up his plan among lawmakers in Washington .
It comes just as Congress is scrambling to offer a substantive stimulus program to combat the crippling impact of @ @ @ @ @ @ @ Rubio of Florida and Susan Collins of Maine on Wednesday proposed a $ 300 billion emergency relief package for small businesses that has some of the flavor of Hubbard ’ s idea .
Under their plan , small businesses could obtain government-guaranteed loans from banks that would be forgiven after a six-to-eight-week period provided the companies met certain conditions , including retaining staff .
“ Small businesses in this country will not be able to survive unless there is an extraordinary assistance , ” Rubio , chairman of the Senate Committee on Small @ @ @ @ @ @ @ So far those efforts have failed to stop a massive sell-off on Wall Street .
The S & P 500 Index of U.S. stocks has plummeted almost 30 % from its Feb. 19 record .
A rush for cash by investors has forced the Federal Reserve , which already cut interest rates to near zero , to roll out emergency lending facilities to keep the flow of credit moving .
“ People think the markets may be crazy , but the markets may be pricing in a doom loop , ” Hubbard said @ @ @ @ @ @ @ depression.
” His idea is aimed primarily at aiding service-oriented companies who face a loss of almost all their revenue and may not survive until the crisis passes .
Hubbard roughly calculated that such a program covering all U.S. companies -- more than he ’ s proposing -- might cost $ 1 trillion if it covered 80 % of lost revenue for three months and gross domestic product dropped by 25 % in that quarter .
“ Is it expensive ?
Yes , but I don ’ t think it ’ s crazy @ @ @ @ @ @ @ don ’ t think policy makers should think that doing nothing for businesses is a zero cost .
It ’ s just going to show up elsewhere .
”


washingtonpost--2020-03-20--Analysis | Global Banks Get Stressed Like Never Before

As forecasts for the severity of the economic downturn are worsening , so are the prospects of banks coming through the crisis intact .
Expectations for a sharp “ V-shaped ” recovery are fading amid the realization that social distancing – and economic activity – will lead to a slump that could last several quarters .
There is no visibility as to when or how quickly economic activity will resume .
Deutsche Bank AG analysts forecast an annualized GDP contraction of 24 % in the euro area and 13 % in the U.S. in the second quarter .
At this @ @ @ @ @ @ @ than one and a half times greater than the financial crisis .
Even with considerably more equity than a decade ago , banks remain inherently levered institutions .
Borrowings of banks from JPMorgan Chase & Co. to Deutsche Bank AG to HSBC Holdings Plc exceed their capital by more than 15 times .
Stress tests show the biggest lenders have sufficient capital , but it ’ s debatable whether these assessments capture the magnitude of the downturn ahead .
Nor do they model the implications of the synchronized shutdown that is paralyzing large @ @ @ @ @ @ @ stress tests last year , banks ’ resilience was measured against a real GDP decline of 8 % from the pre-recession peak and a surge in the CBOE Volatility Index , or VIX , to 70 .
The index , often referred to as the fear gauge , soared past 80 this week for the first time since 2008 .
The Institute of International Finance estimates that at $ 75 trillion non-financial corporate debt is worth around 93 % of global gross domestic product , up from about 75 % of GDP before @ @ @ @ @ @ @ the highest burdens in sectors with weak earnings , such as small and medium-sized companies .
Analysts at Goldman Sachs Group Inc. estimate that if credit lines across travel , commodities and energy get fully drawn , the liquid assets held by the top U.S. banks to cover draw-downs would come close to regulatory minimums .
Executives from UBS Group AG , Credit Suisse Group AG and Deutsche Bank told a virtual conference this week they ’ re seeing clients drawing on credit lines , regardless of whether the cash is needed now @ @ @ @ @ @ @ and governments have raced to ramp up their stimulus and are taking steps to ensure credit keeps flowing to the economy .
From cutting interest rates , to resurrecting a commercial paper backstop , in a matter of days the U.S. Federal Reserve has gone through the financial crisis catalog of fixes .
Even against that backdrop , banking supervisors rightly see the need to be accommodating with lenders .
Post-crisis measures , some of which were designed to be eased in times of economic slowdown , are being rolled back .
Banks @ @ @ @ @ @ @ fall - an inevitable function of assets going bad - and in Europe stress tests have been postponed .
At first , such measures looked like potentially detrimental regulatory forbearance .
Perhaps not now .
Deutsche Bank warned on Friday it may be “ materially adversely affected ” by a protracted downturn .
As the economic impact of radical steps to curb the coronavirus worsens , the challenge will be to keep the banking sector part of the solution rather than part of the problem .


washingtonpost--2020-03-19--Analysis | Coronavirus Tests Whether Tesla’s Stock Is Built to Last

For investors seeking to make sense of this sideshow , the more salient point concerns what actually is happening to Tesla ’ s production and sale of vehicles in this most unexpected of quarters .
Tesla came into the year on what can only be described as a ludicrous wave of enthusiasm for the stock .
Having jumped almost two thirds between October ’ s third-quarter results announcement and New Year ’ s Eve , it then more than doubled again in the space of seven weeks .
Now it is back roughly where it began January , having round-tripped @ @ @ @ @ @ @ in less than three months .
After this latest drubbing , Tesla now trades at a mere … 138 times consensus GAAP earnings for 2020 ( 2 ) .
The supporting narrative — and I use supporting in its loosest sense — is that Tesla is finally sort-of self-funding and , as ever , growing like an electrified weed .
Yet the self-funding aspect is highly questionable .
And while Tesla has built a new factory in China and raised its sales targets , revenue growth stalled out in the second half of @ @ @ @ @ @ @ was jarring in February when , just days before the stock peaked , Tesla sold another $ 2.3 billion of equity .
While investors were practically begging the company to dilute them , the issuance didn ’ t really square with the prevailing narrative that Tesla didn ’ t need the money .
As it turns out , of course , Covid-19 makes that extra cash very welcome indeed .
There is a financial impulse that fits with Tesla ’ s efforts to keep the lines running in Fremont , California .
Even @ @ @ @ @ @ @ the past two years , profits have been slow to materialize .
When they have , they ’ ve been exceedingly small .
The $ 120-billion-odd gain in market cap between mid-October and mid-February came on the back of two quarters of positive net income that added up to about $ 250 million , along with $ 1.4 billion of positive free cash flow that relied largely on positive working capital effects and slashing the original capex budget .
In other words , we are yet to see significant operating leverage on the @ @ @ @ @ @ @ , he have a recent example of what happens when Tesla falls short on expectations .
Roughly a year ago , Tesla reported a big drop in vehicle sales in the first quarter , burning through almost $ 1 billion of cash in the process , despite slashing capex .
To justify even today ’ s diminished stock price , Tesla must maintain momentum .
Without it , negative operating leverage shows up pretty quickly in red ink .
More importantly , it dents confidence in the high-growth , highly-profitable future underpinning the @ @ @ @ @ @ @ multiple .
Call it the potential robotaxi factor .
With Tesla sitting on $ 6.3 billion of cash at the end of December , and having raised another $ 2 billion or so , it has a big cushion to absorb some sort of temporary shutdown of Fremont .
Even so , the company ’ s 2025 bonds now yield more than 10 % .
The last time they yielded anything like that , the stock was less than half today ’ s level .
Besides general dislocation in the more speculative end @ @ @ @ @ @ @ have no idea how deep or long the acute phase of the Covid-19 crisis will last .
We can , on the other hand , reasonably assume that buying ( or even driving ) premium vehicles of any sort will not be a priority for many while it is going on .
As an investment , Tesla ’ s momentum machine will now be tested on an indicator less familiar with this stock but all-too familiar in the autos sector : resiliency .
( 2 ) Even now , the consensus forecast for @ @ @ @ @ @ @ 12 days - is somehow higher than where it began the year .
Liam Denning is a Bloomberg Opinion columnist covering energy , mining and commodities .
He previously was editor of the Wall Street Journal ’ s Heard on the Street column and wrote for the Financial Times ’ Lex column .
He was also an investment banker .


washingtonpost--2020-03-20--Analysis | What to Know About the 2020 U.S. Tax Season

The Treasury Department is giving individuals and corporations an additional three months -- until July 15 -- to file their returns and pay their tax bills .
The government is hoping that this will help companies and people who could be facing a short-term cash flow shortage get through the coming weeks until it ’ s safe to resume normal economic activity .
There also was concern that it could be difficult or unsafe for people to met with their tax preparer before April 15 while most schools and many businesses are shut down to prevent the spread of the @ @ @ @ @ @ @ , including Maryland , California , Connecticut and Oregon have delayed some deadlines , giving taxpayers more time to submit the paperwork and come up with the cash .
Other states are still formulating their plans and deadlines .
The American Institute of Certified Public Accountants is keeping a running list of state and city tax deadline extensions .
In a normal year , the Internal Revenue Service will atomatically grant a six-month filing extension , no questions asked , giving Americans until October 15 to file their returns .
But the extension @ @ @ @ @ @ @ , so interest and penalties accrue once the payment deadline -- April 15 normally -- passes .
Whether extensions will be so leniently granted this year , and how long they ’ d be for , are still to be determined .
Last year , a record 15 million taxpayers requested the six-month filing extension .
Accountants had expected that even more would request one this year .
Treasury Secretary Steven Mnuchin estimates that the payment delay will inject about $ 300 billion in liquidity into the economy as individuals ( wealthy ones @ @ @ @ @ @ @ their money longer .
Most middle- and lower-income people don ’ t owe a tax bill -- they get a refund instead .
They can , and usually do , file early in the tax season to get their hands on their refund checks as quickly as possible .
Though the IRS is cutting staff in half at some of its processing centers , that shouldn ’ t have a significant impact on refund timing , according to IRS Commissioner Chuck Rettig .
The agency recommends filing as soon as possible , submitting @ @ @ @ @ @ @ the refund via direct deposit , rather than by check , to get your refund as quickly as possible .
The IRS says the average time to get a refund is three weeks .


washingtonpost--2020-03-20--ECB Gives Banks Further Virus Relief With Break on Bad Loans

Governments and regulators are taking unprecedented measures to avoid that the temporary lockdowns required to slow the spread of the virus disrupt the economy more permanently .
Germany and France alone have pledged almost $ 1 trillion combined for guarantees and loans .
The ECB is also allowing banks to put some of their financial cushions to work , a measure it said would free up an estimated 120 billion euros ( $ 129 billion ) in capital .
“ The ECB supports all initiatives aimed at providing sustainable solutions to temporarily distressed debtors in the context of the current @ @ @ @ @ @ @ statement .
The measure should help banks “ fulfill their role to fund households and corporations amid the coronavirus-related economic shock to the global economy.
” Bloomberg reported on Wednesday that European regulators are considering giving the continent ’ s lenders more time before they have to set aside billions of euros for bad loans .
Other authorities have issued similar statements to limit the damage on balance sheets .
The Bank of England said on Friday banks should be flexible in estimating and providing for loan losses under the so-called IFRS9 accounting @ @ @ @ @ @ @ for borrowers .
U.S. Federal Deposit Insurance Corp. Chairman Jelena McWilliams wrote to the rule-setting Financial Accounting Standards Board on Thursday to say the current method to account for expected credit losses should be delayed .
The most recent measures are part of a suite of emergency ECB actions to try to contain the economic fallout of the pandemic .
Last week it announced measures to support lending to small and medium-sized enterprises and a special 120 billion-euro bond buying plan .
This week , it announced another bond plan , worth 750 @ @ @ @ @ @ @ Program will begin soon , once officials have finalized the details of its implementation , according to people familiar with the matter .
Despite the program not yet being under way , bonds have surged since the announcement .
Yields in Italy , the worst-hit by the virus , and Greece , which will be included in the ECB ’ s quantitative easing for the first time , have seen especially steep drops .
The buying of Greek debt hasn ’ t yet started , the people said , asking not to be @ @ @ @ @ @ @ .
The Bank of Italy said purchases of Italian debt are under way , but under existing programs .
An ECB spokesman declined to comment .


washingtonpost--2020-04-07--Trump Praises Banks for Small Firm Aid Amid Loan Fund Issues

“ We really appreciate what you ’ re doing , ” Trump said .
“ I hope the media here can see what an incredible job the banks have done.
” The participants , top executives from the five biggest U.S. banks and two largest payment networks , touted their efforts to help affected businesses and consumers -- pointing to capital devoted to small business loans , an assortment of waived fees , and loans and grants to community development financial institutions .
Goldman Sachs is planning to double its balance sheet capital available to small businesses to $ 500 @ @ @ @ @ @ @ The move is in addition to $ 25 million for a relief fund and $ 25 million in grants to community development financial institutions .
The participants have also been helping the Treasury Department and Small Business Administration distribute $ 349 billion for the Paycheck Protection Program , part of the $ 2 trillion stimulus package aimed at shoring up an economy battered by the pandemic .
It offers loans of as much $ 10 million that are forgivable if firms use the funds mostly to keep workers on their payrolls for the @ @ @ @ @ @ @ as rent .
Bank of America Chief Executive Officer Brian Moynihan said his firm has gotten 250,000 applications that it ’ s beginning to process , and continues “ to get several thousand applications every hour.
” JPMorgan Co-President Gordon Smith said the largest U.S. lender had gotten 375,000 requests as of Tuesday afternoon , amounting to roughly $ 40 billion in loans .
Trump announced that as of Tuesday , the SBA has processed more than $ 70 billion in guaranteed loans from more than 225,000 business that have applied .
That @ @ @ @ @ @ @ firms yet , but rather is the value of loans SBA has registered and guaranteed for lenders to complete the process and disburse funds , according to a senior administration official .
That would mean about 20 % of the $ 349 billion appropriated for the program has already been committed .
The Treasury Department is asking Congress for $ 250 billion more for the program , and Senate Majority Leader Mitch McConnell said the Senate could act as soon as this week to pass additional money .
Trump said the program has @ @ @ @ @ @ @ “ glitches , ” but there ’ s been reports of widespread problems and confusion since it launched Friday .
Lenders have complained about not being able to connect with SBA to process loans , and there were reports on Monday that E-Tran , the SBA system that lenders use , crashed .
Lenders reported that the system was working on Tuesday , but applications were trickling through , and the ability of lenders to connect with SBA to get loans approved and for non-SBA lenders to get approved was “ a little @ @ @ @ @ @ @ of the Independent Community Bankers of America in an interview before the briefing .
Noah Wilcox , chairman of Grand Rapids State Bank of Minnesota and chairman of the ICBA , complained during the Trump briefing that many community banks aren ’ t able to participate in the program because they aren ’ t approved SBA lenders .
The SBA plans to certify more to participate .
“ We know from an informal survey that about one-third of all community banks still do not have access to the system , and that means @ @ @ @ @ @ @ , and unable to serve their communities and their customers , ” Wilcox told Trump during the meeting .


washingtonpost--2020-04-07--India Stocks Post Best Day Since ‘09 on Signs of Waning Pandemic

“ We are drawing cues from the global markets where the pace of new cases has reduced and the worst appears to have been factored in , ” said Umesh Mehta , head of research at Mumbai-based Samco Securities Ltd. “ There is also the possibility of government stimulus for sectors.
” The infection curve has yet to flatten in India , however .
A total of 4,778 people in India have been infected with 136 deaths , according to data compiled by John Hopkins University .
The nation is also seeing a sharp uptick in infected cases as the @ @ @ @ @ @ @ lock-down through April 14 was imposed to try prevent transmission of the virus in the world ’ s second most populous country .
“ Market participants are now focusing on the peak of the pandemic even as economic conditions have worsened , ” said Chokkalingam G , head of investment advisory at Equinomics Research & Advisory Pvt .
in Mumbai .
“ A three-week lockdown means no business activity for a quarter of a three-month period , which will have a substantial impact on earnings.
” Trading volumes have fallen and volatility remains @ @ @ @ @ @ @ with limited flexibility .
The Nifty index closed at 8792.2 on Tuesday and Abhimanyu Sofat , head of research at IIFL Securities Ltd. , said more positive news on the domestic front regarding the virus is needed for the gauge to surge past the 9,000 level .
Sovereign bonds were lower as states ramped up debt supply during the week .
The benchmark 10-year bond yield was up 11 basis points to 6.42 % .
The rupee advanced 0.7 % against the dollar .
Bond and currency markets today begin reduced trading hours @ @ @ @ @ @ @ until April 17 due to market volatility , the Reserve Bank of India said last week .
The disruption has already beginning to show signs of pain .
Lender Bajaj Finance Ltd. , said in an analyst call on Monday that the company has lost 47.5 billion rupees ( $ 625 million ) in assets under management in the last 10 days , BloombergQuint said in a report .
The firm also said that small and medium -sized businesses were under severe strain and asked the central bank to consider further economic relief @ @ @ @ @ @ @ Companies will start announcing their results for the January-March quarter this month .
Kotak Institutional Equities expects a 14 % decline in profits for the companies under its coverage with a double-digit drop in net income for sectors like autos and construction material as economic activities suffered in March .


washingtonpost--2020-04-07--Optimism Among U.S. Small Businesses Plummets by Most Ever

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washingtonpost--2020-03-22--Mnuchin Sees Emergency Package on Track for Monday Passage

The plan would include aid to small businesses to help retain workers , direct cash payments to some Americans , enhanced unemployment insurance , a “ significant new liquidity package in coordination with the Federal Reserve , ” and financial support for hospitals .
The package is designed to address the impact of the rapidly spreading coronavirus pandemic .
The deadly contagion has sent markets plunging , eliminating gains in U.S. stocks made during the first three years of Trump ’ s term , and brought much of the economy to a near standstill .
Mnuchin said the administration will @ @ @ @ @ @ @ .
“ If this lasts longer , we ’ ll come back again , ” he said .
Mnuchin outlined the following details on the package now working its way through Congress : • Eligible companies account for about half of the U.S. workforce , according to Mnuchin .
• Direct cash payments for some Americans , totaling about $ 3,000 to the average family of four .
• Approval for the Fed to launch new emergency lending facilities mobilizing “ up to $ 4 trillion of liquidity ” -- though it was @ @ @ @ @ @ @ announced by the central bank • Mnuchin says it will be a broad-based program “ to help everything from small businesses to big businesses get through the next 90 to 120 days.
” The U.S. looks certain to experience an enormous and sudden economic contraction as businesses close and Americans stay home .
Mnuchin said the issue of whether the economy is now in recession was a “ technical question ” and added that U.S. growth would bounce back “ significantly ” when businesses reopen .
By some estimates , the economy may @ @ @ @ @ @ @ to 1947 .
JPMorgan Chase & Co. expects gross domestic product to shrink at an annualized rate of 14 % in the April-June period while Bank of America Corp. and Oxford Economics both see a 12 % drop .
Goldman Sachs Group Inc. sees a 24 % plunge .
Goldman Sachs projected jobless claims would surge to a record 2.25 million in the week ended March 21 , while Bank of America projects 3 million and Citigroup 4 million .
That compares with 281,000 in the prior week and would be more than @ @ @ @ @ @ @ in 1982 .