washingtonpost--2020-03-24--Analysis | Why Virus Woes Have Put Bond ETFs Under a Microscope

Mutual funds allow small investors to pool their money and benefit from the expertise of professional money managers .
Index funds and traditional ETFs take a different approach .
Instead of hiring managers to actively buy and sell stocks , they seek to replicate the performance of a basket of securities ( although a small sliver of the ETF market is actively managed ) .
That allows investors who want some emerging-market or small-cap stocks in their portfolio to avoid the cost , hassle or risk of picking individual companies .
Index funds try to replicate the performance of a @ @ @ @ @ @ @ by buying all the stocks that comprise the index .
In an ETF , investors are buying a share in a bundle of the same securities , and that ETF share can be bought and sold much like a share of stock .
The ETFs themselves engage in less trading of assets , because the underlying securities don ’ t have to be bought or sold when a share changes hands .
That smaller turnover means a lower tax bill .
ETFs currently have $ 3.7 trillion in assets , down from their @ @ @ @ @ @ @ February , as investors have pared back holdings in the flight to cash over fears of the economic damage caused by the coronavirus pandemic .
Equity funds hold about $ 2.49 trillion , while those focused on bonds contain $ 770 billion .
The most popular ETFs are the simplest , those that track the broad stock market .
But these days ETFs come in thousands of flavors and are popular with hedge funds and institutional investors as well as moms and pops .
An increasing number track less-traded markets such as junk @ @ @ @ @ @ @ to enhance returns , or laser-in on niche segments of the investable universe .
That has made regulators consider whether the more exotic versions need to be reined in lest they damage investors and markets alike .
Critics and regulators have long voiced concerns that fixed-income ETFs , whose shares are much more liquid than the assets the funds hold , may exacerbate a sell-off as investors scramble to redeem their holdings during periods of market stress.The likes of Mohamed El-Erian of Allianz SE and Scott Minerd at Guggenheim Partners have suggested they @ @ @ @ @ @ @ in illiquid credit markets where they have an outsized trading share .
After finding that fixed-income ETFs fueled volatile trading during August 2015 ’ s stock-market rout , regulators have long planned to closely watch the funds ’ activity and performance during the next downturn .
That time is now here .
Bond ETFs have exhibited signs of liquidity stress , with share prices trading at persistent and deep discounts to the value of the underlying assets .
The historical volatility plaguing American bond markets has created unprecedented dislocations in the ETFs that @ @ @ @ @ @ @ makers who normally step in to repair price inconsistencies .
The turmoil led the U.S. Federal Reserve to announce steps to support corporate bonds and eligible credit ETFs .
That announcement led to an inflow the same day of over $ 1 billion to the iShares iBoxx $ Investment Grade Corporate Bond exchange-traded fund , the biggest credit ETF , alone .
In theory , the price of all of an ETF ’ s shares should be exactly the same as the value of its net assets .
In practice , it ’ @ @ @ @ @ @ @ known as the Net Asset Value ( or NAV ) to drop below the share prices , but such small discrepancies are usually quickly wiped away .
In normal market environments , such a gap is an arbitrage opportunity for middlemen known as authorized participants .
Typically market makers will buy shares of the ETF as its price drops and redeem these shares with the issuer in return for the underlying bonds .
The authorized participant will then sell those securities to capture a relatively risk-free profit .
By reducing the supply of @ @ @ @ @ @ @ price typically returns to tracking the fund ’ s net asset value .
As the coronavirus outbreak unleashes historical turbulence in financial markets and liquidity dries up , ETFs spanning the bond spectrum began trading at steep discounts .
Some of the hardest hit were iShares iBoxx $ Investment Grade Corporate Bond ETF , or LQD , and iShares 20+ Year Treasury Bond , ticker TLT .
That prompted worries that investors scrambling to redeem their holdings would overwhelm the managers , or the traders that channel bonds into and out of the @ @ @ @ @ @ @ Fed to act .
Some fear that investors rushing to redeem ETFs will exacerbate a sell-off in the underlying market , affecting anyone with holdings in it .
ETF investors could lose faith in the products and sell even more , further worsening the situation .
Even so , while some ETFs have struggled , they ’ re holding up overall .
A major reason trading remains orderly is that virtually all of the action is happening in the secondary market , between buyers and sellers of ETF shares .
Trading in ETF @ @ @ @ @ @ @ valve in times of stress , has been soaring versus primary market activity , according to Bloomberg Intelligence .
The fact that the ETFs are trading at modest discounts to their net asset value may even be a selling point .
In a relatively illiquid market , the price of the fund may be the most accurate one the market has got .


washingtonpost--2020-03-24--China’s Dollar Bonds Show Trump Value of Government Backing

While there are many reasons for the difference , a key one is investor confidence in the Chinese government providing an effective backstop for important borrowers .
What ’ s a no-brainer in Beijing is a much more complex question in Washington , where politics and public appearances play an inevitably significant role .
As the Trump administration mulls how to support American companies , the market is showcasing the cost of going without .
Ironically , China has actually been moving for years closer to the American model of letting the market set corporate financing costs , and rolling @ @ @ @ @ @ @ Both the dollar and the domestic markets have seen a jump in defaults in recent years .
But recent rescues of a regional bank and a major conglomerate underline that Chinese policy makers won ’ t hesitate to shift tack to prevent any wider turmoil .
“ China ’ s corporate sector remains more cushioned by the state than others , ” said Yao Wei , chief Asia & China economist at Societe Generale SA in Puteaux , France .
“ The experience from the past few years is that Chinese policy makers @ @ @ @ @ @ @ modestly systemically important firms , ” she said .
The China Securities Regulatory Commission said Feb. 2 that given the coronavirus , “ it can not be ruled out that some companies will face a short-term liquidity crunch and will not be able to make payments due on their bonds.
” The CSRC said it “ will actively guide investors to reach agreement ” with issuers to help the borrowers “ withstand difficult times.
” While that might be harder in the offshore market , it ’ s a concept that ’ s @ @ @ @ @ @ @ outside of exceptional circumstances , such as the 2008 efforts to avert the collapse of Bear Stearns Cos. or American International Group Inc. Those and other bailouts during the financial crisis left a sour taste in the mouths of some , who charged that Washington bailed out Wall Street but not Main Street .
President Donald Trump last Thursday said he supports the idea floated by his economic adviser Larry Kudlow of the U.S. government taking stakes in companies that receive assistance during the epidemic -- a way for the taxpayer to get @ @ @ @ @ @ @ that was a concept Kudlow himself opposed back in 2009 , underscoring its potential sensitivity .
On the other side of the aisle , the minority leader of the Senate , Democrat Chuck Schumer , over the weekend complained that a giant Republican economic-support bill included “ a large corporate bailout ” with insufficient oversight .
Bonds in China are by no means immune to pain , and there have been some surprises over the past couple of years about government support that wasn ’ t forthcoming , there ’ s no political @ @ @ @ @ @ @ .
HNA was specifically named by the central bank in 2018 as a private enterprise that could pose a risk to the financial system -- a move that observers concluded was effectively declaring it too-big-to-fail .
Its takeover could give solace to bondholders nursing paper losses on China Evergrande Group , one of the nation ’ s top three home builders , which saw its dollar notes due in 2025 slump 7.4 cents at one point Monday , to 59.7 cents on the dollar .
Authorities also this month agreed to inject $ @ @ @ @ @ @ @ Bank of Jinzhou Co. , underscoring previous efforts to forestall any collapse in confidence with regional lenders -- which are an important source of credit to small and medium-sized enterprises .
“ In the current uncertain market environment , government support becomes valuable , especially when there is a track record of government support in the past , ” said Judy Kwok-Cheung , Hong Kong-based director of fixed-income research at Bank of Singapore .
“ A significant proportion ” of China ’ s dollar-bond issuers have direct or indirect government ownership , she @ @ @ @ @ @ @ front might also be helping China : its years-long campaign to scale back leverage in its financial system .
Along with a slowdown in economic growth , that helped trigger record defaults in 2018 and in 2019 .
“ The Chinese equity and debt markets have held up much better , ” said Michael Shaoul , chief executive officer at Marketfield Asset Management LLC .
“ This virus crash comes at the end of an 18-month war on shadow banking and de-risking from the trade war .
The opposite is true in the @ @ @

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washingtonpost--2020-03-24--Euro-Zone Economy Crashes on Coronavirus Business Shutdowns

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washingtonpost--2020-03-23--Analysis | A Doyen of Globalization Makes Its Final Retreat

In immediate terms , the HK $ 7.22 billion ( $ 930 million ) offer is attractive , representing a 150 % premium to the stock ’ s closing price before the bid was made public .
Long-term shareholders who kept faith in the company ’ s plans to restructure , digitize its operations and diversify sourcing away from China are unlikely to be impressed .
Li & Fung shares had fallen 98 % from their 2011 high as of Friday ’ s close .
The offer premium pares that loss to 94 % .
As the world ’ s @ @ @ @ @ @ @ & Fung designs , sources and transports products from Asia to retailers such as Walmart Inc. and Nike Inc .
There are many factors behind its long decline , from rising factory wages in China to the “ retail apocalypse ” hollowing out American main streets .
The U.S.-China trade war dealt another grievous blow to a business model that depended on linking factories in Asia with American retailers .
The coronavirus , which shut down swathes of China ’ s economy and threatens to drive the world into recession , may have @ @ @ @ @ @ @ driver of Li & Fung ’ s downfall , though , may be the rise of e-commerce and , specifically , of Alibaba Group Holding Ltd. Jack Ma ’ s internet behemoth connected Chinese producers with overseas buyers directly , finally obviating the need for a comprador-type service to negotiate the pitfalls on behalf of foreign companies .
At the same time , the tightening grip of e-commerce retailers in the U.S. , principally Amazon.com Inc. , has undermined the bricks-and-mortars retailers such as Macy ’ s Inc. and Kohl ’ s Corp. @ @ @ @ @ @ @ Chief Executive Officer Spencer Fung , whose great-grandfather founded the company more than a century ago , and GLP , a logistics firm that was taken private in 2018 in a private equity-backed management buyout , will now seek a revival away from the glare of the public markets .
It ’ s not the first time Li & Fung has gone private , having withdrawn in the 1980s before listing again in 1992 , as Vinicy Chan and Daniela Wei of Bloomberg News wrote Monday .
Repeating the trick will be more @ @ @ @ @ @ @ of another storied Hong Kong business , the real estate company Wheelock & Co. , this isn ’ t a purchase of undervalued tangible assets that can ( arguably ) be expected to revive with a turn in the market cycle .
Li & Fung has long prided itself on its “ asset light ” model .
As a result , the company has typically traded at high multiples of its book value — averaging 7.3 times in the decade through 2010 .
Even in its present depressed state , Li & Fung @ @ @ @ @ @ @ to book .
Li & Fung ’ s value lies in intangibles such as its network of relationships with factories and buyers .
What are these worth now , after the whole model has been upended ?
The company has pushed into the higher-margin logistics business .
This , though , made up only 10 % of revenue last year , insignificant beside the 77 % that sourcing contributed .
The fundamental trouble for Li & Fung is that the world appears to have changed irrevocably .
If the company does return to @ @ @ @ @ @ @ s likely to be in a radically different form .


washingtonpost--2020-03-24--Analysis | We’re Looking at a System-Wide Margin Call

Consider OTC derivatives , which are mostly betting slips on the future movements of interest rates and currencies .
When regulators tightened capital rules in the wake of the global financial crisis , transactions in these securities became cash cows for banks to boost their profits with minimal impact on their balance sheets .
Currency swaps , as I noted last week , are now an important channel for foreign lenders to get a hold of U.S. dollars from their American peers .
As of June 2019 , the notional amount of such derivatives rose to $ 640 trillion , @ @ @ @ @ @ @ by Bank of International Settlements show .
Gross market value , which gauges how much money would be transferred if all trades shut down , totaled about $ 12 trillion in mid-2019 , 30 % lower than in 2014 .
In ordinary times , gross market value is a better gauge of the amount at risk because of netting agreements .
If a bank is $ 99 short on a trade and $ 99.10 long with other clients , its exposure is only 10 cents .
But we live in extraordinary times , @ @ @ @ @ @ @ as a proxy for how much money the financial system has put aside to sustain that $ 640 trillion OTC derivatives exposure , according to research conducted at Prerequisite Capital .
As of last June , the margin requirement , which the firm defines as the ratio between gross market value and notional amount , was 1.9 % — a record low .
In other words , there isn ’ t enough balance sheet provision for black swan events .
After the collapse of Lehman Brothers Holdings Inc. , the margin requirement for @ @ @ @ @ @ @ to 5.8 % from 2.2 % in early 2007 .
The derivatives market , in turn , became a $ 24 trillion scramble for cash and collateral .
Similar worrying signs are emerging again .
Just like 2008 , market volatility is spiking and dollar funding is tightening .
To make matters worse , the virus has caused a massive global asset dislocation , breaking down traditional relationships between currencies and interest rates , stocks and bonds .
If our experience from the global financial crisis is any guide , the OTC derivatives @ @ @ @ @ @ @ short on margin .
More than a decade ago , the scramble for cash wiped out as much as $ 36 trillion , or more than half of the market value of global equities .
So far , the coronavirus has cost global stocks about $ 26 trillion , or roughly 30 % of their market value , from their late-February peak .
So you could argue there ’ s a long way to go .
It ’ s laudable that the Fed is acting fast .
But unlike in China , it @ @ @ @ @ @ @ issuing margin calls or boosting margin requirements .
Given how light the provisions have been , it ’ s only natural that banks will tighten their risk controls .
From risk parity strategies to statistical arbitrages , the coronavirus is unraveling the most sophisticated of trades .
This is a reminder that there ’ s only so much hedging we can do .
Today you ’ re in , tomorrow you ’ re out .


washingtonpost--2020-03-24--Analysis | Real Estate Billionaire Is Right to Sound the Mortgage Alarm

Real estate investor Tom Barrack has issued dire warnings of a “ domino effect ” of margin calls , cross defaults and other related debt failures if financing in the sector dries up .
To prove his fears might be well placed , Invesco Mortgage Capital Inc. , a real estate investment trust , said on Tuesday that it can ’ t make its margin calls ( demands for extra capital or securities that kick in when asset prices fall ) .
It won ’ t be alone .
The coronavirus-inflicted crisis of confidence is also afflicting the primary market @ @ @ @ @ @ @ for sale aren ’ t being completed .
A syndicate of banks led by Citigroup Inc. — and including Deutsche Bank AG , Barclays Plc and Societe Generale — has been left holding billions of dollars of debt on a Las Vegas casino deal , involving currently shuttered MGM Grand and Mandalay Bay properties , according to Bloomberg News .
This won ’ t be the last project that debt investors back away from , leaving the underwriting banks exposed .
And unfortunately , this isn ’ t just about large , well-capitalized @ @ @ @ @ @ @ .
This could become a systemic problem if risk appetite is pared to the bone .
If things keep heading in this direction , the world ’ s other central banks will be looking to take their lead from how the Fed ’ s prepared to respond .
The commercial property market is under severe strain internationally because of the Covid-19 enforced shutdowns of retail and leisure businesses .
That said , the commercial mortgage-backed security market is considerably larger in the U.S. than elsewhere , and has a much wider variety of @ @ @ @ @ @ @ are measures in place to manage the fallout from similar asset-backed securities , although commercial mortgage-backed stuff is rarer there .
The European Central Bank doesn ’ t buy the latter , but it has already purchased more than 30 billion euros ( $ 33 billion ) of investment grade asset-backed securities in an ongoing program .
A crisis in commercial property could force the Fed and other central banks to ease up on a lot of accounting regulations , maybe by not making lenders mark assets to market prices and allowing more @ @ @ @ @ @ @ require the Fed and the U.S. Treasury to build further on its bailout template from the last financial crisis and restart the Troubled Asset Relief Program ( TARP ) to buy toxic assets directly .
It used the Public-Private Investment Program ( P-PIP ) , unveiled back in March 2009 , to buy legacy loans and securities .
This time around , the U.S. has already restarted the Term Asset-Backed Securities Loan Facility ( TALF ) , but that doesn ’ t include non-public distressed real-estate assets and commercial property derivatives .
The @ @ @ @ @ @ @ to the virus crisis , including unlimited Quantitative Easing for Treasury bonds and residential mortgage-backed debt .
It ’ s even buying investment-grade corporate bonds , to the despair of some .
But it won ’ t end there .
The wider risk now is how commercial real estate copes if the banking system gums up its access to financing .
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--2020-04-17--As $2 Trillion Relief Flows, Almost Nobody Is Watching for Abuse

Congress is out of town until next month , while a congressional panel that is to have five members limps along with one appointee , who has no staff and can wield little more than a Twitter account .
President Donald Trump has signaled hostility to oversight , sidelining the inspector general named to monitor all pandemic spending , and clashing with Democrats over how much independence to grant the overseers .
“ The money is already out the door , and there ’ s no one watching where it ’ s going , ” said Danielle Brian , executive @ @ @ @ @ @ @ , a group that monitors government spending .
“ There ’ s been a lot of talk but nothing has happened with any of the oversight mechanisms.
” The sooner oversight begins , the better , according to Christy Goldsmith Romero , special inspector general for the Troubled Asset Relief Program -- the program known as TARP that Congress passed in 2008 to help recover from what was then the worst slump since the Great Depression .
In its decade-plus of work , Romero ’ s office has brought investigations resulting in the @ @ @ @ @ @ @ 300 defendants sentenced to prison , according to its tally .
“ The other thing that ’ s really important to jump on right away are the scams , ” Romero said in an interview .
“ There ’ s bound to be fraud whenever there ’ s that much money going out the door.
” Already , the Small Business Administration said a $ 349 billion relief program for small businesses has run out of money after approving more than 1.6 million applications .
Direct payments are flowing to tens of millions @ @ @ @ @ @ @ Federal Reserve have joined forces to push $ 4.5 trillion in stimulus to combat the coronavirus crisis , with the central bank lending directly to main street businesses for the first time since the Great Depression .
No confirmation hearing has been set in the Senate for Trump ’ s choice for special inspector general for pandemic relief , Brian Miller , a White House lawyer .
The Republican chairman of the Banking Committee , Idaho Senator Mike Crapo , said in a statement Thursday that he would convene a hearing “ as @ @ @ @ @ @ @ Similarly , nobody ’ s been named to head the Pandemic Relief Accountability Committee , a body made up of inspectors general from throughout the government .
It was to be headed by an inspector general who drew praise from Democrats before being removed by Trump .
The sole person named to the congressional commission , Bharat Ramamurti , is doing what he can .
In a letter to Federal Reserve Chairman Jerome Powell on Wednesday , Ramamurti asked for information on the trillions in emergency loans that the central bank plans to @ @ @ @ @ @ @ law terminates the special inspector general ’ s office in five years .
That temporary nature is one barrier to attracting and retaining staff , said Neil Barofsky , the first special inspector general for the Troubled Asset Relief Program .
The coronavirus legislation lets retirees keep benefits if they join the office , and that ’ s a help , he added .
“ Investigations can take a long time , particularly criminal investigations , to be able to investigate and then work with DOJ or others to prosecute , ” Romero @ @ @ @ @ @ @ Justice .
“ So it ’ s been very helpful for us that we ’ ve been able to have the time we need.
” In 2010 , before a single dollar flowed to homeowners , the North Carolina Housing Finance Agency acting as middleman for federal funding , staged an evening reception for housing counselors , according to the March 2019 audit .
Charges included $ 855 for the carved beef station with an additional $ 153 for serving by a uniformed chef ; $ 346 on cake bites ; strawberry shortcake @ @ @ @ @ @ @ the season ” ; $ 507 on imported and domestic cheeses ; and $ 415 on fruits and berries with a dipping sauce , according to the report .
The culture at the housing finance agency was such that officials could use almost any justification to charge TARP for barbecues , parties , celebrations , restaurant outings , gifts , gym memberships , regular employee meals , and employee cash bonuses , according to the audit that questioned almost $ 130,000 in spending .


washingtonpost--2020-04-17--Shopify Leapfrogs Brookfield to Become No. 3 Stock in Canada


washingtonpost--2020-04-17--Analysis | The Giant WFH Experiment Has One Winner


washingtonpost--2020-04-17--SBA’s Herculean Pandemic Response Was Swift, But Not Smooth

Questions remain about the handling of the loans , including potential inequities between states -- for example , why Texas got more than California , according to the most recent figures available -- and whether the rapid pace at which money is being approved raises questions about the potential for fraud .
The SBA ’ s already outsized role in pandemic assistance will get even bigger if Congress passes another round of aid for small firms , in response to demands from the business community and the administration .
President Donald Trump has hailed the program , part of the @ @ @ @ @ @ @ as “ a tremendous success.
” Advocates say any initiative this large , created so quickly , was bound to have flaws .
The SBA has said that working closely with the Treasury Department , it launched an unprecedented program in just one week and quickly resolved issues identified by lenders and borrowers .
Administrator Jovita Carranza tweeted that in less than 14 days , the agency had processed more than 14 years ’ worth of loans .
Now that funds have run out , lawmakers are debating whether to add another $ @ @ @ @ @ @ @ SBA ’ s first-come , first-served system has left behind many of the neediest companies , often those lacking a relationship with a bank .
Carranza a former Treasury official who was just three months into her new job when the pandemic hit , worked with almost 5,000 lenders to approve more than 1.6 million applications for about $ 339 billion in loans that the SBA will guarantee .
Another $ 10 billion went for processing and fees .
The SBA has more than 3,000 employees and is increasing staffing with an additional @ @ @ @ @ @ @ package enacted last month for salaries and expenses .
The agency , with a fiscal 2019 budget of $ 1 billion , had been singled out for an 11 % funding cut in Trump ’ s most recent budget proposal , according to the Washington Post .
The goal of the Paycheck Protection Program is to help companies with fewer than 500 workers maintain payrolls and cover expenses , like rent , for two months .
The program offers loans of as much $ 10 million , which convert to grants if the @ @ @ @ @ @ @ maintain salaries .
When the program began on April 3 , the SBA ’ s overloaded computer system froze intermittently and some banks weren ’ t ready to issue loans because guidance hadn ’ t been released until the night before .
At first , lenders didn ’ t know what loan documents to use .
Banks sought guidance on forms called promissory notes that are necessary to complete any loan .
On April 8 , the banks were told they could use their own forms or one from the SBA .
But @ @ @ @ @ @ @ caused more confusion because it was dated 2002 and mentioned “ collateral , ” which the coronavirus aid program doesn ’ t require .
Lenders also said they had to ask multiple times for clarification on important details such as loan-forgiveness criteria .
Clayton Legear , president of Merchants & Marine Bank in Pascagoula , Mississippi , said the repeated changes delayed his ability to lend to struggling businesses in the Gulf Coast region .
He said customers who had already filled out one application had to submit new ones .
Legear said @ @ @ @ @ @ @ process whenever the SBA revised its guidelines .
The SBA was asked to build an airplane while “ hurtling through the air , ” Legear said .
“ They have worked very hard and very diligently , ” he added , “ but unfortunately , in a lot of cases , the bandwidth just wasn ’ t there.
” As part of its plan to police relief efforts , the SBA inspector general ’ s office said it would examine the agency ’ s rollout of the Paycheck Protection Program and vet the @ @ @ @ @ @ @ The office will also look into how borrowers used proceeds from the Economic Injury Disaster Loan program , a separate relief effort .
Bill Shear , the Government Accountability Office ’ s director of Financial Markets and Community Investment , on Wednesday said the watchdog agency also would be reviewing the SBA ’ s performance in the pandemic , including whether it evaluated the ability of its technology to handle application surges and prepared for such high-risk episodes .
One reason for the problems may have been that the SBA ’ s technology @ @ @ @ @ @ @ to handle the traffic generated by the onslaught of applications .
Without mentioning that system specifically , the GAO reported in June 2019 that several of the SBA ’ s programs relied on computer systems dating to 2002 .
Their hardware and software are no longer supported by vendors , and they reside on a platform that had been scheduled to be decommissioned soon , the GAO said .
“ We ’ re two weeks behind in helping businesses stay open , ” Johnson said .
“ God only knows how many small @ @ @ @ @ @ @ permanently and are still trying to figure out how to get out of this themselves .
”


washingtonpost--2020-04-17--Stock Market Investors Are Too Optimistic

The S & P 500 lost one-third of its value between its record high on Feb. 19 and March 23 .
It has clawed back half of that as the Fed chucked out its rule book and went on a shopping spree for assets .
Equities are pretty much the only type of security that it won ’ t be adding to its ballooning balance sheet , although a fresh bout of market mayhem might change that too .
America ’ s central bank is already snapping up exchange-traded funds and junk bonds , after all .
A 27 % @ @ @ @ @ @ @ we still have no idea of the virus ’ s lasting impact on economic output , with only a very partial return to business activity planned and no vaccine in sight .
The surge in jobless claims and companies furloughing staff makes forecasting more art than science , much like Covid-19 statistics .
As Torsten Slok , Deutsche Bank AG ’ s chief economist , points out , a decade of U.S. employment gains have been reversed in a month .
The International Monetary Fund ’ s global economic predictions this week signaled @ @ @ @ @ @ @ The monetary and fiscal response has been spectacular but can it prevent a permanent loss of growth if people ’ s consumption , travel and working practices have been altered fundamentally ?
A wave of defaults , credit downgrades into junk territory , bankruptcies and price drops in real assets such as aircraft and property would change the more positive stock market narrative quickly , as would a second wave of the virus .
Parts of the world , Europe in particular , were at risk of recession before the outbreak .
Crude @ @ @ @ @ @ @ don ’ t suggest global demand will come roaring back .
The equity market is meant to reflect anticipated corporate earnings , and although it ’ s often given to wild optimism , this is an entirely new situation .
How can anyone say with a straight face that they can estimate future earnings right now ?
There ’ s little point scouring through first-quarter results apart from looking at how much provisioning the banks are putting in place for loan losses and how much credit has been drawn down .
Any crisis @ @ @ @ @ @ @ have hit new highs — but most companies are losing .
More than half of workers are employed by small- and medium-sized enterprises , which will struggle to get all the financial assistance on offer .
The latest Fed stimulus package adds another $ 2.3 trillion of support and from this week corporates can go directly to the central bank for commercial paper funding .
The ability of the Fed to really sustain stock prices is going to be tested like never before .
More stimulus is always being promised but after a @ @ @ @ @ @ @ be a limit to its effectiveness .
Catastrophe has been avoided but most of the emergency measures are geared toward liquidity and borrowing costs .
Growth is the thing that matters most for equity valuations in the medium term , and no one can guarantee that .
Consumers will only return to familiar spending habits if they have regular income and governments don ’ t raise taxes to pay for the current splurge .
More dividends will be cut or cancelled .
The hit to earnings will only be partially recoverable as most @ @ @ @ @ @ @ as cars and electrical goods can be put off for other years .
Equity markets are betting big on the lasting results of all the stimulus .
A swifter end to lockdowns or a promising vaccine development would be something to get excited about .
Until we have that , the confidence looks overdone .


washingtonpost--2020-04-17--Here Are the Companies Getting Federal Funds for Covid Relief


washingtonpost--2020-04-17--Fed Readying Plan to Publish Transactions in Crisis Programs

The Fed says it is working on a system of robust reporting , though it ’ s not clear if that will include specific details on which companies received aid .
Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will face intense congressional scrutiny on who got money and why .
Mike Crapo , the Idaho Republican who chairs the powerful Senate Banking Committee , wrote to Powell and Mnuchin on Thursday to highlight the panel ’ s role in providing “ robust ” oversight of the programs , while urging that they work quickly to get them up @ @ @ @ @ @ @ day after the sole member of a congressional oversight board -- a former top staffer for Democratic Senator Elizabeth Warren -- asked Powell directly for information on who was getting cash .
Bharat Ramamurti said in a letter to Powell that the central bank had not “ announced what information it will publicly release ” about its dealings with private companies , or even whether it would release the names of individual beneficiaries .
The Federal Reserve Act requires the central bank to report the identities of the borrowers to the House Financial @ @ @ @ @ @ @ it allows Powell to request confidentiality , in which case only the chairs of those committees would see the information .
The Fed has long considered the trade off between transparency and what they consider a “ stigma , ” or reluctance to use the facilities if names are revealed .
With taxpayer funds at risk , however , demands for accountability are likely to be high .
The Fed launched its initial emergency facilities on March 17 when it offered support to primary dealers in U.S. government bonds and the commercial paper @ @ @ @ @ @ @ aid as pressure mounted from the virus lock-down .
On April 9 it unleashed more measures , including a Main Street loan program , and announced it would buy certain types of high-yield debt .
By Thursday , four of the nine programs were fully operational .
Bharat , who previously led Warren ’ s investigations into Wells Fargo & Co. , is already preparing for the committee ’ s first public report on Powell and Mnuchin ’ s work , due around May 8 .
The legislation requires the report 30 days @ @ @ @ @ @ @ emergency lending authority .
The committee is subsequently required to provide an update monthly .
But the committee ’ s investigation contains what critics view as an irony .
Congress could have set up its own lending board made up of Fed officials and other technocrats to oversee and dole out money .
Instead , they gave the Treasury and Fed wide discretion .
Congress attached strings to any funding Mnuchin doles out in some programs , ranging from prohibitions against interfering with union organization to limitations on off-shoring jobs .
The Fed @ @ @ @ @ @ @ , asking companies to adhere to limitations in the law on stock buybacks , dividends , compensation , and to make “ reasonable efforts ” to retain employees during the term of the loan .
“ As Congress contemplates loan forgiveness or direct support to firms that are on the brink , it ’ s reasonable for some conditionality to be attached , ” said Nathan Sheets , who has worked at both the Fed and the Treasury Department and is now chief economist at PGIM Fixed Income .
But lending by the @ @ @ @ @ @ @ of firms , not to a single sector , and with an explicit expectation that the firms are otherwise solvent and that the lending will be repaid , ” he said .
Fed programs that buy securities directly in the market are aimed at a broad universe of companies , and it would difficult to apply constraints .
“ As businesses get larger , the struggles to apply the regulations to the international aspects ” of their operations “ becomes more difficult , ” said Charles Morton , a partner at the law @ @ @ @ @ @ @ Fed programs , they can claim to be one step removed and the assistance is provided through a facility rather than being directly negotiated with each company , ” the way Treasury ’ s loans and loan guarantees are set up , according to Stephen Myrow , a former Treasury official during the global financial crisis .
Congress ’ limitations on aid from Treasury or the Fed were hotly debated between lawmakers and the Trump administration , according to another person familiar with the matter .
Congress had the opportunity to change some @ @ @ @ @ @ @ were imposed under the 2010 Dodd-Frank Act -- specifically a provision that banned bailouts of individual companies -- but lawmakers ultimately decided against it .


washingtonpost--2020-04-10--Analysis | Hong Kong’s the Canary in the Coronavirus Economy

In February , Hong Kong announced a one-time payment equal to $ 1,290 to every adult permanent resident .
That now looks hopelessly insufficient .
The cash drop ( not technically helicopter money since it isn ’ t financed by central-bank money printing ) was always problematic , as my colleague Andy Mukherjee noted .
Besides being too small , it will also arrive too late — perhaps not until the third quarter or later .
And there ’ s nothing to stop people from saving it , which would defeat the object of trying to stimulate the economy .
@ @ @ @ @ @ @ the government Wednesday .
This one is targeted at employers , with the wage subsidies aimed at dissuading them from mass layoffs that would cause the economy to tank even further .
The government seems to be more efficient at doling out cash to companies than to individuals : The subsidies will be distributed in two batches , with the first starting in June .
Hong Kong ’ s relief package isn ’ t the biggest around by any means .
Its total fiscal stimulus amounts to around 10 % of GDP , @ @ @ @ @ @ @ s plan and 20 % for Japan .
On its own , the $ 10.3 billion job security package amounts to 2.8 % of the city ’ s GDP , according to Bloomberg China economist Ashley Qian .
The duration is what makes it stand out .
Singapore is doling out 75 % of salaries capped at the equivalent of $ 3,231 for the month of April .
The U.K. is covering 80 % of wages for three months with a ceiling of $ 3,107 , starting at the end of April .
@ @ @ @ @ @ @ out enhanced unemployment benefits and a one-time check of $ 1,200 as part of its $ 2 trillion stimulus bill .
It isn ’ t aiming directly to keep people in work .
Australia is one exception : The government there will pay wage subsidies of about $ 948 every two weeks per employee for six months .
The contrast is instructive .
As a low-tax financial center and trade entrepot , Hong Kong has a history of minimal state intervention in the economy .
The city has prided itself on topping the @ @ @ @ @ @ @ world ’ s freest economies ( though it has now been displaced by Singapore ) .
Wealth disparities are extreme .
Granted , there may be political factors at play .
The Hong Kong government and its leader , Chief Executive Carrie Lam , are deeply unpopular , and there are legislative elections slated for September .
Even so , the type of wholesale , sustained government action that Hong Kong is now undertaking runs counter to its laissez-faire DNA .
If the city ’ s venture into direct cash distributions to individuals @ @ @ @ @ @ @ coal mine for the global economy , this may be another .
Expect the recovery from the coronavirus pandemic to be slow and painful — and to require government support for much longer than many countries are currently anticipating .


washingtonpost--2020-04-10--Analysis | Why National Pension Systems Are a Ticking Time Bomb

Because the clock is ticking and the math does not add up .
By 2035 , the basic U.S. system known as Social Security will no longer be able to cover payments , forcing a 20 % reduction in benefits , according to its trustees .
On a global scale , pension shortfalls will be the equivalent of about 23 % of world output by 2050 , the Group of 30 consultancy estimated .
The financial strain is challenging old-age support systems and leaving many countries facing tough choices about raising the age of retirement , cutting benefits or lifting @ @ @ @ @ @ @ proposals in France that would boost the retirement age in some professions spurred national strikes and fed violent “ gilets jaunes ” anti-government protests .
Plans to increase Brazil ’ s pension age prompted a general strike .
Chile abandoned a pledge to expand the private pension system after mass protests .
And Russians took to the streets after President Vladimir Putin attempted to lift the pension age .
There ’ s been less fuss about similar moves in countries such as Germany and the U.K .
Demographics .
The number of over-64s @ @ @ @ @ @ @ billion in 2050 , according to United Nations forecasts , while fertility rates are in long-term decline .
A key measure is the old age dependency ratio -- the number of older people divided by the population that is working age .
In Europe and North America , that ratio will be about 50 per 100 by 2050 , according to UN forecasts , a rise from 30 per 100 in 2019 .
Japan ’ s ratio is already around 50 per 100 and is on course to breach 75 per 100 around @ @ @ @ @ @ @ re on a trajectory toward a smaller share of people paying taxes and a higher proportion drawing pension benefits .
With the world ’ s oldest population , Japan is treading a path others may follow ; it increased a deeply unpopular sales tax to boost revenue and has pushed the manager of its giant state pension fund to take a riskier approach buying more equities and overseas assets .
According to a World Economic Forum analysis , a bigger challenge than the struggle for adequate investment returns is persuading people to put @ @ @ @ @ @ @ almost half of U.S. households 55 and older have nothing saved for retirement .
There ’ s a lot more money chasing returns ; PricewaterhouseCoopers LLP predicts assets under management will rise to $ 145.4 trillion in 2025 from $ 64 trillion in 2012 .
Pension managers have traditionally favored lower-risk investments such as government bonds , since the goal is to provide stable , predictable income .
But yields on such bonds have fallen to around zero or even below in the major economies -- the result of central banks slashing interest @ @ @ @ @ @ @ bonds to spur economic growth following the 2008 global financial crisis .
In the immediate aftermath of the coronavirus outbreak , central banks again rushed into rate-cutting and bond-buying mode .
Some are taking riskier bets .
The pension board of the Church of England , for example , began making loans to small and medium companies , while the U.K. rail workers ’ pension plan invested in distressed debt -- an area that was once the realm of hedge funds .
APG Asset Management , which invests the Netherlands ’ biggest pension @ @ @ @ @ @ @ in the U.S. and a Belgian airport .
Those moves were made before the coronavirus brought much of the global economy to a grinding halt .
Governments are ramping up debt , potentially crimping their ability to pay pensions down the line .
Australia , with one of the world ’ s most robust pension systems , is allowing workers to take some money out of their pensions early .
Companies have asked to delay making pension payments , while falling bond yields mean pensions that pay fixed amounts must make up the @ @ @ @ @ @ @ assets .
The market meltdown in early 2020 also demonstrated the perils of putting more onus on individuals to manage their own pensions and investments .
Pensions date back to the 1870s in the U.S. and 1889 in Germany , where Chancellor Otto von Bismarck introduced Europe ’ s first scheme .
People aged 70 or over qualified when the U.K. ’ s first state pension was paid in 1909 -- only a quarter of the population then reached that age .
In Japan , the workers ’ pension insurance law didn ’ @ @ @ @ @ @ @ at the height of World War II , while a universal pension system only followed in 1961 .
Even as a relatively recent phenomenon , many people have come to expect the same benefits as older generations .
As well as needing to set aside more cash , people will stay in the workforce longer , depriving younger workers of jobs .
The share of Americans age 65 or over working or seeking employment breached 20 % in 2019 for the first time in 57 years .
According to the Group of 30 @ @ @ @ @ @ @ raising retirement ages in line with life expectancy , increasing financial literacy and offering lower-cost private pensions .
Another recommendation : Reduce people ’ s expectations that a pension will come close to their working-life income .


washingtonpost--2020-04-10--Analysis | ‘Coronabonds’ Could Bail Europe Out, Tie It Together

Pre-coronavirus they were known as euro bonds , and they were something many EU leaders have argued for since the creation of the euro in 1999 : a shared debt instrument to finance borrowing , where the money can be directed to the countries that need it most .
National governments currently sell their own debt to fund projects and annual budgets , but do so at wildly varying costs .
Germany can effectively be paid to borrow , due to its impeccable credit rating and tight spending rules , while Italy -- with its less-stellar credit rating -- has @ @ @ @ @ @ @ at least a full percentage-point more .
Though the idea has failed to garner sufficient support , a coronabond could “ mutualize ” risk among nations , possibly cutting borrowing costs .
While the 19-member euro area has long battled with how to narrow differences between rich and poor members , the coronavirus has exposed those inequalities like never before .
Some of the most indebted nations such as Italy and Spain have been hardest hit , with deaths spiraling into the thousands .
At the same time , the European Central Bank @ @ @ @ @ @ @ by purchasing more than 1 trillion euros ( $ 1.1 trillion ) of bonds this year through its so-called quantitative easing programs .
It also scrapped its self-imposed purchasing limits .
But it may still need to take further steps to calm the volatile markets for government bonds .
A new debt instrument could allow the central bank more flexibility .
President Christine Lagarde is a huge proponent .
Italy is , too .
Germany .
Europe ’ s economic powerhouse has long opposed the idea of euro bonds , wary that it @ @ @ @ @ @ @ financing of poorer nations in Europe ’ s south , and 57 % of the population is supposedly against the idea .
It ’ s less than a decade since the region ’ s sovereign debt crisis threatened to sink the common currency .
Back then , with Greece requiring a series of bailouts , Germany resisted calls for euro bonds .
Those fears have come back to the surface with finance ministers across the bloc squabbling over even a hint of possible joint issuance to come .
Any move now to issue @ @ @ @ @ @ @ by Germany ’ s legislature and there are doubts over whether Chancellor Angela Merkel would be able to secure the required support .
Proponents of coronabonds contend the current crisis is an external shock that requires a joint solution .
The idea is for a jointly backed bond sale of up to 1.5 trillion euros that would fund government action to contain the virus and reboot euro-area economies .
The leaders of Spain , Italy , France , Portugal , Greece , Belgium , Luxembourg Slovenia and Ireland said the bloc needed to @ @ @ @ @ @ @ size in order to ensure “ stable long-term financing for the policies required to counter the damages caused by this pandemic.
” Germany and the Netherlands were notable absentees .
There ’ s no clear understanding of whether such a bond sale would be a one-off measure or a gateway to recurring sales .
But they could possibly help the ECB find more bonds to buy , given there are still constrained by the capital key , which dictates purchases according to the size and population of each country .
Richer countries like @ @ @ @ @ @ @ long complained that their southern neighbors don ’ t use the good times of solid economic growth to put their houses in order , arguing it ’ s not their fault those countries lack the means to battle their way out of a crisis .
The “ moral hazard ” argument -- that bailouts encourage further bad behavior -- has long been a roadblock .
This time , though , the damage was not caused by profligate spending but by an unforeseen global health crisis .
That ’ s unclear .
Borrowing costs @ @ @ @ @ @ @ converge , with yields on German bonds rising and those of riskier nations ’ debt such as Italy ’ s falling .
Much would depend on the size of the program , though .
For James Athey , a money manager at Aberdeen Standard Investments , the first tranches are likely to be small so Germany could retain control over its fiscal liabilities .
Longer term , Athey says holders of Italian government debt could lose out if coronabonds were judged as being superior , meaning that the holders of those securities would @ @ @ @ @ @ @ of any default .
Governments can of course sell their own debt to fund crisis-response measures , and the ECB ’ s huge bond-buying program will likely keep borrowing costs in check .
But spending domestically to combat a disease that does not respect national borders may not be the most efficient strategy .
EU finance ministers have agreed on a 540 billion-euro package of measures that include a joint employment insurance fund and as much as 240 billion euros from the European Stability Mechanism .
Ministers have also agreed to work on @ @ @ @ @ @ @ start the recovery and will be financed by “ innovative ” instruments .
Joint issuance could , in theory , be one way of doing it .
Still , much remains undecided , including what strings may be attached to any support .
Countries may also be reluctant to take the money , worried they ’ ll be stigmatized as weak and potentially subjected to demands for changes in local regulation and other economic reforms .
Another tool in the ECB arsenal is its crisis-era program known as Outright Monetary Transactions , which @ @ @ @ @ @ @ program , the ECB could theoretically buy unlimited amounts of sovereign bonds in the secondary market from currency-bloc members that have signed bailout agreements with the ESM .


washingtonpost--2020-04-10--Analysis | OPEC+ and the G-20 Say ‘Yes’ To Duress

By Friday afternoon , as a meeting of the energy ministers for the Group of 20 countries wound down , an agreement of sorts was in place .
But Mexico ’ s role remained unclear and the G-20 ’ s draft statement offered only vague support for efforts to stabilize the oil market .
If this is the cavalry riding to the rescue , it is just as well the market isn ’ t open .
There is one salient point to focus on : Even the headline OPEC+ cuts can ’ t prevent a big buildup in inventories .
@ @ @ @ @ @ @ to flatten the curve on that and avoid storage space running out altogether , which would likely push prices into single digits .
OPEC estimates demand is down roughly 12 million barrels a day for the quarter .
Under that scenario , the agreed cut of almost 10 million barrels a day for May and June would still mean half the remaining onshore storage capacity filling up by July 1 .
As it is , that 10-ish million figure likely overstates the true immediate cut , given Mexico ’ s ambivalence and the @ @ @ @ @ @ @ production levels from last fall .
Russia ’ s commitment to cut 2.5 million barrels a day — beyond what the market forces upon it — looks especially ambitious .
Meanwhile , OPEC ’ s estimate for demand destruction may well be optimistic and , in any case , there ’ s no telling how quickly demand will recover .
This may well explain the planned set of tapered cuts adding up to five billion barrels over two years .
But who ’ s really buying a two-year target set by a group @ @ @ @ @ @ @ ago and was held hostage by Mexico over a few hundred thousands of barrels a day ?
This is a coalition formed under duress and now reformed under yet greater duress ; picture a giant feuding family suddenly forced to quarantine together for at least two months .
OPEC+ shouldn ’ t be willing to tolerate Mexico ’ s intransigence and Mexico shouldn ’ t want to belong to a group that would .
Yet here they are .
This should temper the bullishness that got going a week ago after President Donald @ @ @ @ @ @ @ .
It has been astonishing to watch the rally of almost 30 % in exploration and production stocks since then .
Production in the shale fields is starting to roll over already , with the sharp drop in fracking crews a leading indicator ( see this ) .
The resulting natural decline was all the U.S. “ offered ” at Friday ’ s damp squib of a G-20 meeting .
Trump also indicated market forces had already taken care of the other oil “ cuts ” he offered , seemingly without success , @ @ @ @ @ @ @ translation : don ’ t bank on any actual incremental barrels leaving the market ) .
Trump will no doubt spin all this as art-of-the-deal anyway .
Like the OPEC+ cuts , though , it is just a demand shock doing its thing .
Trump ’ s threatened tariffs on barrels if no OPEC+ deal was forthcoming were bluster , given they would raise consumer costs in a recession and ahead of an election ; hurt oil majors and refiners ; and might not even do much for frackers , whose light crude @ @ @ @ @ @ @ jet-fuel demand tanking .
Regardless of long-term targets , adherence to cuts beyond June , particularly on the part of Russia , will be determined by the pace of recovery in demand and the pace of decline in supply from other countries — especially the U.S .
Meanwhile , Saudi Arabia may be suffering in absolute terms ( see this ) but it also has worked assiduously not merely to bring Moscow to heel but to tighten screws on the more ebullient members of the fracking crowd .
This is a temporary truce @ @ @ @ @ @ @ three oil powers .
So anyone piling back into E & P stocks on hopes for this OPEC+ agreement should know their sector ’ s continued suffering is critical to its maintenance .
Frackers now face an oil market where the old supposed certainties of demand growth , easy financing and the OPEC+ put can no longer be taken for granted .
Restructuring and rationalization are unavoidable .
After a week of high drama , expect this reality to reassert itself .
Liam Denning is a Bloomberg Opinion columnist covering energy , mining @ @ @ @ @ @ @ 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--2020-04-10--Lenders Struggle to Deliver Virus Relief to Small Business

“ We ’ re all for the program -- everything about it in theory is right , ” said Heidi Brown , executive vice president of Citizens State Bank in Iowa .
“ But it ’ s like being sent out to build a house with only three tools in the tool box.
” Customers are coming in or calling constantly because they have either been forced to close or dramatically reduce hours , Brown said , and they ’ re concerned .
“ They ’ re desperate to get in line for the help .
Unfortunately we can ’ @ @ @ @ @ @ @ Paycheck Protection Program , run by the U.S. Small Business Administration , is a signature part of the $ 2.2 trillion stimulus enacted in March to contain the economic damage from the pandemic .
It offers loans of as much as $ 10 million that become grants if the money is used for payroll and certain other expenses in the next two months .
The SBA said that more than 661,000 loan applications , totaling more than $ 168 billion , have been approved as of Friday afternoon , but there are no @ @ @ @ @ @ @ business owners desperate to stay afloat .
The initiative , which was created and launched in a matter of days , is more than 10 times what the SBA ’ s flagship loan program oversaw last year .
Advocates said the agency is trying to get it running smoothly and there were bound to be glitches .
JPMorgan Chase & Co. and other banks weren ’ t ready to lend money initially after the Trump administration didn ’ t provide guidance on processing loans for the program until hours before it started on @ @ @ @ @ @ @ take applications from borrowers who didn ’ t have an existing lending account .
Wells Fargo & Co. , historically one of the largest lenders for small businesses , had to stop taking applications for a time because of a regulatory cap , which was eased on Wednesday .
Treasury Secretary Steven Mnuchin assured borrowers during a White House briefing April 2 : “ You get the money .
You ’ ll get it the same day .
You use this to pay your workers .
Please bring your workers back to work @ @ @ @ @ @ @ .
You have eight weeks plus overhead .
This is a very important program.
” Bankers warned the Trump administration it had failed to provide sufficient guidance on how lenders should draft critical documents .
They wanted the fine print on rules that business owners must follow to get their loans forgiven , and banks held off completing financing because of uncertainty about loan documents , called promissory notes .
Guidance from Treasury finally came on Wednesday that they could use their own form or an SBA one .
The main holdup has @ @ @ @ @ @ @ , Granchelli said .
Historically , bankers that make loans through the SBA ’ s loan program use a guidebook that ’ s more than 300 pages , she said .
Bankers have yet to see any such specific guidance for the new loans , including how to ensure the government will forgive them , she noted .
The system could be further strained as the self-employed and independent contractors can start applying Friday , raising even more questions about how the rules apply to them .
For many banks , taking applications @ @ @ @ @ @ @ .
Lenders reported that the legacy SBA E-Tran system has crashed or been inaccessible for long periods of times due to the flood of applications , even as SBA is working to increase capacity .
The program also was initially limited to SBA lenders , meaning 60 % of financial institutions couldn ’ t participate and faced delays trying to get certified , said Paul Merski of the Independent Community Bankers of America .
Online and other non-bank lenders can apply to lend , but the application form was just released on Wednesday @ @ @ @ @ @ @ Department really pushing some banks , ” billionaire Mark Cuban said Thursday in a Bloomberg Television interview .
“ I really truly expected that forward-thinking banks would use this as a way to attract new customers because it ’ s a unique opportunity , but they just haven ’ t. ” But small business owners are also wary about whether they ’ ll be able to get the loan forgiven at the end of the eight-week period and be stuck with a loan they can ’ t repay , even with payments deferred @ @ @ @


washingtonpost--2020-05-15--Skipping the Bailout Leaves Love to Pay the Bill for Shopkeepers

Triple-digit gifts from customers won ’ t cover expenses during the pandemic , but for many entrepreneurs , neither will a government bailout .
Almost two thirds of small employers haven ’ t gotten any aid from the Small Business Administration ’ s $ 669 billion Payroll Protection Program , known as PPP .
Some say they don ’ t need the money .
Others believe they ’ d be violating their personal convictions by taking a handout .
Or , like Carroll , they say the chaotic application process would be a waste of time .
The independent streak @ @ @ @ @ @ @ proud to go it alone .
As America cautiously reopens after two months of staying at home to stem the spread of the coronavirus , estimates vary of how many small businesses will end up so damaged by the shutdown they ’ ll permanently close .
It could be as many as one in four .
Beyond the numbers , mom-and-pop shops are the soul of many communities , in-kind donors to local charity fundraisers , sponsors of kids ’ soccer teams and the first employers of high-school students .
Many of them @ @ @ @ @ @ @ in small ways are trying to help fill the gap in revenue caused by stay-at-home directives .
“ A lot of people are worried about what their towns and communities are going to look like , ” said Theda Skocpol , a Harvard University government and sociology professor .
“ There ’ s a human impact as well as an economic impact.
” “ Hyperlocal programs to connect small businesses to resources they need will be incredibly important , ” she said .
“ It ’ s in the best interests of state @ @ @ @ @ @ @ .
It means sustaining tax rolls.
” She said she sketched out what her PPP loan amount would be based on her net earnings as a sole proprietor .
Figuring in all her recent studio-renovation expenses , she came up with $ 87 .
Gift cards are also helping Amanda Weig ’ s Chrome Restaurant and Catering in Algona , Iowa , which stayed open for carry-out during the shutdown .
Weig , 35 , said one customer spent $ 3,500 to distribute cards to food pantries and police stations .
About 38 @ @ @ @ @ @ @ U.S. Census Bureau survey have received loans from the PPP , meaning a majority of the respondents aren ’ t relying on the government ’ s centerpiece relief program to stay afloat during the unprecedented health crisis .
On a recent cloudy morning , he had two .
Both of them were regulars at Gilan ’ s other cafes , closed due to the coronavirus .
Each of them had driven past at least a half-dozen other coffee sellers to get to Gilan ’ s American Bulldog Roasters in Ramsey , New Jersey @ @ @ @ @ @ @ City .
Both said they wouldn ’ t have bothered going out of their way if it weren ’ t for Gilan .
There may be life , but maybe not enough .
Gilan , 65 , said revenue is less than 10 % of what it was before a statewide shutdown on March 21 .


washingtonpost--2020-05-15--Analysis | Your Kids May Never Return to Normal Schooling

This rupture in traditional education could end very badly — or surprisingly well .
It ’ s easier to make the pessimistic case , as I did in March , seemingly an eternity ago .
The optimistic scenario , by contrast , dares imagine that we use the pandemic to reinvent our school systems .
But how exactly ?
To get some ideas I called Sal Khan .
He ’ s the eponymous founder of Khan Academy , a nonprofit in Silicon Valley that provides free online education tools .
Since the outbreak started , its servers have been running @ @ @ @ @ @ @ log on for help with distance learning and homeschooling .
But I wasn ’ t interested in how Khan Academy is doing right now .
I wanted to talk about how schools might evolve .
I ’ ve been following Sal for more than a decade , mainly as a parent — I use his video lectures , usually about five minutes in length , and the accompanying exercises to tutor my children in math .
You wouldn ’ t believe how many “ meteorite badges ” ( don ’ t ask ) @ @ @ @ @ @ @ .
But I ’ ve also followed Khan Academy as a journalist .
Almost a decade ago , I wrote about what Sal back then called “ flipping the classroom.
” In normal school , as we ’ ve known it since the industrial revolution , teachers often waste a lot of time by lecturing students who are mostly passive , sometimes distracted , and not necessarily following along .
Then they send the kids home to fill out worksheets , before pushing ahead with the curriculum whether the kids are caught up @ @ @ @ @ @ @ to a standardized test .
In a flipped classroom , teachers shake things up .
The children watch online lectures at home , either those of their teacher or of the best instructors in the world .
Still at home , the kids also begin doing online exercises which the teacher can monitor .
By the time the youngsters show up in class , they ’ re ready for individual tutoring , as the teacher splits them into small groups or sits down one-on-one to extend knowledge here or fill gaps there .
@ @ @ @ @ @ @ Sal now calls “ blended ” ( between online and offline ) rather than “ flipped , ” human connections pack more oomph , not less .
The teacher makes better use of class time to help children wherever they are in their learning .
Note also that a previously passive experience now becomes active .
Even lectures , when viewed at home , can be paused , rewound , annotated and commented upon in the chat .
And class time is interactive throughout .
Best of all , the kids now learn @ @ @ @ @ @ @ the hypothetical rate of their grade level .
Technologically , all of this is already possible , not only with Khan but with any number of other “ edtech ” tools .
If you don ’ t see it in your own kids ’ school , that ’ s because teachers still haven ’ t adjusted , especially if they ’ re of a certain age and logging on to this stuff for the first time .
Many still use the internet only to “ hand out ” worksheets , not to interact @ @ @ @ @ @ @ retrain teachers .
But teachers and their unions must be open to the change .
After all , that ’ s what crises are for : to get us out of old and stale thinking and into new and better habits .
So Sal and I brainstormed about where blended learning could lead .
In an ideal world , we would use the internet to learn and drill basic concepts and facts , then use Zoom meetings and what little time we still have in person to do creative and social projects , @ @ @ @ @ @ @ and question .
We would be having Socratic dialogues again , Sal said spontaneously .
Socrates , you recall , never wrote anything down and never had a classroom , but he ambled with his students around Athens , asking them questions until they understood something better , or at least less badly .
Some of his students , such as Xenophon and Plato , turned out rather well .
I don ’ t want to romanticize this , because today ’ s reality is harsher .
Since the virus outbreak , some @ @ @ @ @ @ @ dropped off their teachers ’ radar screens , by simply not logging on .
But with the new shrunken schedules , why not have teachers do house calls , as some doctors do ?
Moreover , with blended learning , there ’ s no longer any need for today ’ s rigid and unnatural timetables .
Online work can be done whenever , and synchronous instruction , on Zoom or in person , could take place at civilized hours when even teenage brains are cognitively awake .
Long summer breaks , a relic @ @ @ @ @ @ @ needed in the fields to harvest , have always been a bad idea because students forget much of what they ’ ve learned .
Now they ’ re simply unconscionable .
Children , who were already too stressed before Covid-19 , need shorter breaks more frequently throughout the year .
This vision doesn ’ t solve the huge problems of the digital divide , a modern form of inequality linked to your access to high-quality broadband .
This must now become the priority of government policy .
But by blending more online learning @ @ @ @ @ @ @ we can nudge education from teaching to mentoring and coaching , from collective to individualized learning and from fixed to flexible timetables .
The habits and skills thus honed will help children throughout their lives .
As it happens , they can do exactly the same for adults .


washingtonpost--2020-05-15--Firms That Left U.S. to Cut Taxes Could Qualify for Fed Aid

“ Under no circumstance should a company that has moved overseas to avoid U.S. taxes get a bailout , ” said Senator Ron Wyden of Oregon , the top Democrat on the Senate Finance Committee .
“ The Fed is kicking dirt in the face of American workers with this move.
” Whether any companies that have benefited from such maneuvers would seek the Fed ’ s help isn ’ t yet clear .
Nonetheless , politicians ’ bipartisan distaste for inversions , in which U.S. companies merge with foreign firms and then take offshore tax addresses , stands to @ @ @ @ @ @ @ Obama called them “ unpatriotic , ” and President Donald Trump has said they ’ re “ disgusting.
” Allowing “ inverted ” companies to use the Fed ’ s facilities makes sense because the firms are still largely American and retain U.S.-based workforces , despite their new legal addresses in places like Bermuda or Ireland , said Reuven Avi-Yonah , a corporate and international taxation profession at the University of Michigan Law School .
“ I don ’ t see any good economic reason to exclude inverted companies , ” said Avi-Yonah @ @ @ @ @ @ @ a tax-avoidance technique for decades .
“ They are just as American as other companies -- that is , in fact , the problem with inversions in the first place.
” The U.S. central bank has said it plans to enhance and update its guidance for the two bond-purchasing facilities with , among other things , “ issuer certification requirements.
” Yet the New York Fed ’ s existing guidance says that to be eligible , a company must have “ significant operations in and a majority of its employees based in the @ @ @ @ @ @ @ companies .
Tax lawyers created corporate inversions in the early 1980s as a way for companies to escape what was then a 35 % corporate tax rate in the U.S .
The deals , which allow companies to book income offshore while retaining much of their American workforce and corporate structure , became popular in the 1990s and 2000s .
But they largely stopped after the Obama administration issued regulations making inversions less profitable in 2016 , and Trump signed a 21 % corporate tax rate into law in 2017 .
The White @ @ @ @ @ @ @ who have left the U.S. or outsourced workers to bring back jobs , operations and assets , though success has been limited .
Trump on Thursday floated levying additional taxes on companies that manufacture products outside the U.S. Larry Kudlow , the president ’ s top economic adviser , suggested on Friday cutting the 21 % corporate income tax rate to 10.5 % for companies that repatriate .
Some countries have taken steps to withhold virus aid from companies that practice aggressive tax avoidance .
In France and Denmark , governments have said @ @ @ @ @ @ @ ’ t qualify for taxpayer-funded bailouts .
The Fed ’ s two corporate credit programs have a combined size of $ 750 billion , and and they ’ re backed by allocations of $ 75 billion from the Treasury Department .
In the U.S. , questions regarding which firms should be able to tap portions of the massive federal bailout have persisted as the Fed , the Treasury Department and the Small Business Administration have quickly shoveled hundreds of billions of dollars into an economy largely paralyzed by Covid-19 .
The Fed facilities @ @ @ @ @ @ @ begin disclosing aid recipients .
The central bank has announced plans to publish the names of participants in various facilities and such details as amounts and interest rates on its website at least every 30 days .
While the Cares Act doesn ’ t explicitly require the Fed to impose restrictions such as payroll retention on companies it lends to , some members of the oversight panel expect the bank to answer to how it is helping American families .
In cases where the U.S. Treasury or the Fed have broad discretion over @ @ @ @ @ @ @ a right to ask why those decisions are being made and what the impact is of those decisions on American families , ” Bharat Ramamurti , a Democratic member of the panel , said in an interview with PBS .
“ My concern is that we seem to be helping the corporations and their creditors , which in many cases are banks , rather than the people that are actually employed by those companies , ” he said .
That panel , however , has yet to begin much oversight work .
House @ @ @ @ @ @ @ Mitch McConnell haven ’ t named a chairman to oversee it , and the group missed its first legally-mandated reporting deadline this month , raising questions about the group ’ s nimbleness to examine what could amount to trillions in loans .
Earlier this month , Ramamurti was one of the first observers to raise questions about the wisdom of letting inverted companies qualify for Fed aid .
In a Twitter posting , he said the central bank ’ s guidance “ opens the door to providing US taxpayer support to companies that @ @ @ @ @ @ @ s a question of do you want to give relief to companies that employ U.S. workers or are these bad guys we never want to help ?
” said Steven Rosenthal , a senior fellow at the Urban-Brookings Tax Policy Center .
“ The Fed wants to shovel as many dollars out the door as it can .
They are not being very discriminant .
”


washingtonpost--2020-05-15--Analysis | Why Mortgage Market Bailout Left Everyone Confused

When stay-at-home orders began in early March , prices on commercial properties fell as investors factored in empty malls and months without brick-and-mortar retail activity .
That forced real estate investment trusts , which focus on commercial properties , to start selling off their most liquid mortgage-backed securities ( MBS ) to meet margin calls , driving yields up and further undermining the market .
The U.S. Federal Reserve responded by announcing in mid-March that it would purchase “ at least ” $ 500 billion in U.S. Treasuries and $ 200 billion of mortgages backed by government agencies , so-called @ @ @ @ @ @ @ , the bank has bought over $ 640 billion of agency MBS , a torrid rate averaging about $ 15.2 billion per day .
While this pace has slowed to a target of about $ 5 billion per day now , Morgan Stanley pointed out that the Fed ’ s pace of buying at first was eight times as fast as any previously seen .
For many mortgage bond investors , the Fed buying spree has been a welcome intervention .
One measure that compares the market ’ s sense of risk for @ @ @ @ @ @ @ return has tightened 60 basis points since the Fed went to work .
The Bloomberg Barclays U.S. MBS index has gained 2.43 % ( besting corporates ’ 2.16 % ) and excess return versus Treasuries over that time has equaled 1.42 % .
In particular , those lenders who use short selling in what ’ s known as the To-Be-Announced market for agency MBS to hedge risks on the mortgages they are in the process of issuing were put under significant stress .
The sudden surge in MBS prices driven by the Fed @ @ @ @ @ @ @ , threatening their capital position as they dealt with margin calls .
This partly explains why the Fed has considerably slowed its buying pace of late .
Some of them can benefit from two government actions .
In tandem with the MBS purchases , the Fed has also bought about $ 1.5 trillion of Treasury debt , sending yields to historic lows .
This is good news for U.S. homebuyers as well as homeowners able to refinance their mortgages , who can save money by locking in the new lower rates .
And @ @ @ @ @ @ @ being helped by a provision in the coronavirus relief legislation passed by Congress ( known as the CARES Act ) , that allows them to demand mortgage forbearance , meaning they can put their monthly home loan payments on hold for up to a year .
There are no financial penalties imposed for those who demand forbearance .
A wave of refinancings and filings for forbearance would be good for consumers but not for mortgage bond investors .
Homeowners refinancing their mortgages return money to MBS holders earlier than expected and at par @ @ @ @ @ @ @ .
That would hurt investor returns , since 30-year MBS are currently trading higher than par .
Similarly , when homeowners go into forbearance , that loan could eventually be bought out of the MBS pool , which for an investor has the same effect as a refinancing -- money back at par and earlier than expected .
The last two months have seen refinancings for conventional 30-year mortgage bonds rise 26 % and 42 % , respectively .
Meanwhile , forbearance requests have risen to about 8 % of outstanding loans from @ @ @ @ @ @ @ The blowback can mean that lending rates for home loans aren ’ t as cheap as current Treasury yields would suggest they should be , and that borrowing may be harder than normal for those at the lower end of the credit spectrum .
While the yield on the 10-year Treasury note has dropped 1.2 percentage points since the start of the year , mortgage rates have fallen by less than half that amount , reflecting the added risk from higher refinancings and forbearance .
And the cost that forbearance places on mortgage @ @ @ @ @ @ @ ’ payments to bondholders -- will push mortgage rates higher than they otherwise would be .
( JPMorgan recently estimated that if 10 % of the mortgages demand forbearance , servicers would need to front up to $ 3 billion per month to bondholders . )
Lenders are also expected to react by making it harder for people with lower credit scores to borrow , since they present a higher than average chance of asking for a forbearance .


washingtonpost--2020-05-01--SEC Troubles Are No Bar to Getting Small-Business Relief Funds

Two other recipients of PPP funds , MiMedx Group Inc. and CV Sciences Inc. , have paid fines to settle SEC investigations .
In early April , MiMedx , a Marietta , Georgia-based maker of skin grafts and other biomaterials , also agreed to pay $ 6.5 million to end a Justice Department probe into claims it defrauded the federal government .
The companies neither admitted nor denied wrongdoing.The ability of these publicly traded companies to secure loans while many other small businesses couldn ’ t demonstrates the haphazard nature of the relief program .
Loan applications ask only whether @ @ @ @ @ @ @ engaged in illegal activity , or if a principal or senior executive has been indicted or convicted in the past seven years , or is on parole .
There are no questions about a company ’ s history with law enforcement or other regulatory bodies .
“ The Trump Administration should have a plan in place to prioritize scarce PPP funds so that real small businesses get priority , not large publicly traded firms and companies that are under active investigation for fraud , ” Democratic Senator Jack Reed of Rhode Island said @ @ @ @ @ @ @ reached out to Treasury and SBA urging them to fix glaring weaknesses in these programs and will continue pressing Republican lawmakers to allow needed reforms.
” Several large , public companies generated public criticism for securing PPP loans .
Some , such as Shake Shack Inc. and the operator of the Ruth ’ s Chris steakhouse chain , returned the money .
The Treasury Department and SBA issued new guidance last week , warning companies with large valuations and access to capital markets that it ’ s unlikely they could certify in good @ @ @ @ @ @ @ support the ongoing operations of the applicant.
” Treasury Secretary Steven Mnuchin has also said the SBA will audit all loans of more than $ 2 million for any criminal liability .
MiMedx , which won approval for a $ 10 million PPP loan , spent the past three years dealing with federal investigations into accounting fraud and allegations that it bilked U.S. Department of Veterans Affairs .
Once a promising small-cap company with a market value of $ 1.2 billion , MiMedx was delisted from Nasdaq in 2018 after its board uncovered @ @ @ @ @ @ @ a multiyear earnings restatement and ousted the company ’ s top executives .
MiMedx ’ s fortunes hit bottom in November , when former Chief Executive Officer Parker Petit and Chief Operating Officer William Taylor were indicted in New York on charges of accounting fraud .
The SEC extracted a $ 1.5 million settlement from the company to resolve a parallel investigation .
The two former executives have entered not guilty pleas and are fighting the charges .
Under a new CEO hired last year , MiMedx secured $ 75 million in financing @ @ @ @ @ @ @ in March , the company published restated earnings through 2018 , reflecting an overstatement of at least $ 70 million in revenue over several years .
Its report for 2019 has been delayed.MiMedx entered into an agreement with the Justice Department on April 6 to settle a civil investigation into claims that it defrauded the government by overcharging for skin-graft products .
Combined with its $ 1.5 million SEC settlement five months earlier , the company has agreed to pay $ 8 million to resolve claims of bad behavior.On April 21 , the @ @ @ @ @ @ @ the loan , it announced it renegotiated several covenants from its Blue Torch credit facility , allowing the company to reduce the amount of liquidity it needed on hand to $ 20 million from $ 40 million .
The amended agreement cost MiMedx $ 725,000 in fees , which were added to the principal , and the interest rate of the loan increased.MiMedx said in an emailed statement that the PPP funds would be used for their intended purpose , to keep its 710 employees on the payroll , and that the money @ @ @ @ @ @ @ calculations for Blue Torch .
The change in the covenant prevented the company from going into technical default , MiMedx said.
“ We need operating funds on hand at a time when we can not access the public markets , owing to our financial restatement process , ” the company said .
“ These funds are being used as designed –- to fund payroll .
We are in compliance with the PPP program as it stands.
” Cool Holdings is under investigation for fraud by the SEC , which has asked for documents @ @ @ @ @ @ @ in September 2018 .
Two early investors in the Miami-based company , Barry Honig and John O ’ Rourke , were sued by the regulator that same month for their roles in orchestrating market manipulation in the shares of other penny stocks .
The SEC alleged that the two participated in pump-and-dump schemes , where insiders buy shares of cheap stocks , push them higher through promotions and then sell .
Both men settled with the SEC without admitting or denying the allegations and were banned from penny stock companies .
O ’ @ @ @ @ @ @ @ $ 1.2 million penalty .
Vern LoForti , senior vice president of Cool Holdings , said the company is cooperating with the SEC and that Honig and O ’ Rourke haven ’ t been investors since September 2018 .
He said Cool Holdings met all the SBA requirements for a loan and that the money would be used for payroll costs , rent and utilities at its 44 U.S. stores .
CV Sciences , which sells oils extracted from cannabis plants , received a $ 2.9 million PPP loan .
In a case @ @ @ @ @ @ @ the San Diego-based company agreed to pay a $ 150,000 penalty to resolve claims it overstated its assets .
CEO Michael Mona resigned , agreed to pay a $ 50,000 fine and was suspended from serving as an officer or director of a publicly traded company for five years .


washingtonpost--2020-05-01--Five Things You Need to Know to Start Your Day

The European Central Bank added the latest layer of monetary policy response to the pandemic downturn , further easing funding costs for banks but declining to add to the bond-buying program .
President Christine Lagarde stuck to the script but the takeaway remains that the ECB can not solve the crisis on its own .
The ECB reiterated its call for governments to provide more fiscal support .
Part of that could be a push for European companies to combine to create national champions once the region emerges from the crisis , according to dealmakers at Citigroup Inc .
The @ @ @ @ @ @ @ government is equally daunting , with states and cities alone seeking $ 1 trillion in the next virus relief package .
President Donald Trump is seeking a payroll tax cut but is running into opposition from both Republicans and Democrats who would prefer to send money to those out of work , with the virus now having wiped out 30 million jobs .
The Federal Reserve is expanding the eligibility for its small and medium-sized business aid program and has opened the door for rescue loans to oil companies crushed by the recent @ @ @ @ @ @ @ be a quiet day for earnings in Europe , but that leaves more time to scrutinize the results from two U.S. giants .
Apple Inc. didn ’ t provide a forecast for the first time in more than a decade , raising concerns for its supply chain of chipmakers in Asia and Europe that the iPhone maker will suffer later in the year .
Amazon.com Inc. , while a big beneficiary of people staying home and ordering online , said it may make a loss in the current quarter due to the extra @ @ @ @ @ @ @ Note also numbers from Gilead Sciences Inc. , currently spending big on a potential Covid-19 treatment , and a bleak view from payments giant Visa Inc. , which expects to face challenges for multiple quarters .
The sobering comments from Apple and Amazon pushed stocks in Asia lower , while most European markets are closed for a public holiday today .
Oil headed for its first weekly gain in a month , but gold is set for a week in the red on more optimistic virus numbers .
Insurer Allianz SE withdrew its @ @ @ @ @ @ @ , in the U.K. , house prices , manufacturing data and results from Royal Bank of Scotland Group Plc are coming up .


washingtonpost--2020-05-01--Outsourcing Is No Barrier to Tapping U.S. Small-Business Fund

The program , whose explicit purpose is to safeguard American jobs at companies with a maximum of 500 workers , gave a $ 6.3 million loan to SigmaTron , which woos customers by touting its factories inside and outside the U.S .
The company has about 500 U.S. employees , who by the lending rules would benefit from the money ; SigmaTron ’ s other 2,600 workers are located in Mexico , Taiwan , China and Vietnam .
The loan , which would be forgiven if certain guidelines are followed , was arranged by U.S. Bancorp .
“ We believe @ @ @ @ @ @ @ to support our U.S. employees and factories as they work through the current pandemic and the volatile economy it has created , ” Fairhead said in a statement last week .
“ We appreciate the government ’ s foresight in creating this program.
” The PPP is currently making $ 320 billion available to small businesses for relief from the economic devastation of the coronavirus .
An initial installment of $ 349 billion was drained in less than two weeks .
The first-come-first-served program has come under fire for making loans to large @ @ @ @ @ @ @ and the parent of Ruth ’ s Chris Steakhouses , while many mom-and-pop shops were shut out .
Amid public outrage , both the Lakers , which Forbes values at more than $ 4 billion , and Ruth ’ s Chris , which operates 83 restaurants , returned the money .
In all , more than $ 2 billion has been declined or returned to the pool of funds , SBA Administrator Jovita Carranza said Monday .
Trump Administration officials have asked publicly traded firms with access to other capital to return PPP @ @ @ @ @ @ @ Steven Mnuchin said this week that all loans of more than $ 2 million would be audited .
“ If the economy is ever going to recover , the administration needs to start prioritizing small operators that drive our economy , not companies that ship U.S. jobs overseas , ” said Derek Martin of Accountable.US , a government-watchdog group that often criticizes the Trump administration .
On its website , SigmaTron says it provides engineering , design and manufacture of electronic parts for everything from aerospace products to home appliances made by Whirlpool @ @ @ @ @ @ @ to outsource regionally allows it to provide lower prices , and having large operations in Mexico , which is home to the majority of its workforce , gives it “ access to cost-effective labor resources.
” SigmaTron , based in Elk Grove Village , Illinois , stretches the definition of what constitutes a small business .
It reported sales of $ 216.3 million , for a profit of $ 805,169 , in the nine-month period that ended in January , securities filings show .
Its second-biggest shareholder is Renaissance Technologies , one of @ @ @ @ @ @ @ funds , with some $ 75 billion under management .
SigmaTron shares have gained 7.7 % in the past year through Thursday .
The coronavirus pandemic has slowed some of SigmaTron ’ s operations , but various facilities have remained open because local authorities deemed them essential , the company said in an April 23 statement .
Two of its three sites in Mexico are shut down , but its facility in China , after closing for a week in February , is functioning again .
There were no interruptions to its operations @ @ @ @ @ @ @ said .
At job sites in California and Illinois , about 80 % of its workers are on the job .
Like all PPP loans , the money SigmaTron received from the SBA through U.S. Bancorp becomes a grant if 75 % of the loan goes to what ’ s called payroll-related expenses , which include interest on outstanding debt .
SigmaTron said it intends to use funds to maintain payroll or make interest payments on other loans from U.S. Bancorp .
It owed the bank $ 31.8 million as of Jan. 31 @ @ @ @ @ @ @ U.S. Bancorp is being sued by PPP applicants who say the lenders favored big companies when arranging government small-business loans .
U.S. Bancorp , the fifth-biggest U.S. commercial bank by assets , said the characterization was inaccurate .
It declined to comment on the SigmaTron loan .


washingtonpost--2020-05-01--Analysis | People Have Stopped Taking Walks

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washingtonpost--2020-05-01--IRS Denies Deductions for Forgiven Paycheck Protection Loans


washingtonpost--2020-05-18--Powell Says Will Use Full Range of Tools to Support Economy

Powell is scheduled to appear before lawmakers for a virtual hearing at 10 a.m. Tuesday in Washington with U.S. Treasury Secretary Steven Mnuchin at the Senate ’ s first quarterly CARES Act Report .
“ We expect economic conditions to improve in the third and fourth quarters , ” Mnuchin said in prepared remarks posted on the Senate panel ’ s website Monday .
Working with the Treasury , the central bank has launched unprecedented support for markets and the economy since mid-March as U.S. businesses shuttered and Americans stayed home to limit the spread of the coronavirus .
It @ @ @ @ @ @ @ and unveiled nine emergency lending programs , supporting everything from corporate to municipal credit markets as it tried to stabilize access to financing .
Powell has also nudged Congress to consider more fiscal support beyond the $ 3 trillion in aid already passed , and has said the Fed is willing to do more if needed to support the economy .
“ We ’ re not out of ammunition by a long shot , ” the Fed chairman told CBS ’ s “ 60 Minutes ” show in an interview aired Sunday .
@ @ @ @ @ @ @ programs .
We can start new lending programs if need be.
” Much of Powell ’ s prepared testimony was a review of programs put in place by the central bank .
For all the support , just about every indicator of the U.S. economy shows history-making declines as economic activity slammed into a sudden stop as households sheltered in place .
Employers cut 20.5 million jobs last month , tripling the unemployment rate to 14.7 % , the highest since the Great Depression .
Powell said the scope and speed of the @ @ @ @ @ @ @ are significantly worse than any recession since World War II.
” The Fed is still trying to launch four of the nine facilities , including one aimed at Main Street that will buy bank loans extended to mid-size businesses .
The facility is one of the riskiest and most challenging programs the Fed has undertaken given the diversity of businesses that are likely to borrow .
For more articles like this , please visit us at bloomberg.com


washingtonpost--2020-05-18--Analysis | Let Libor Survive the Virus to Die Another Day

That explains the desire of market regulators , led by the Financial Conduct Authority in the U.K. , to dislodge Libor from its central role in markets .
Unfortunately , the international array of mooted replacements — including Sonia in the U.K. , SOFR in the U.S. and ESTR in the euro region — are also imperfect .
For one thing , their short maturities as overnight rates have made it difficult to reach a consensus about how to construct a matrix of longer-dated averages , given that the bulk of financial products are based on three-month Libor .
And @ @ @ @ @ @ @ , which is missing from the successor benchmarks .
Moreover , figures compiled by the International Swaps and Derivatives Association highlight the ongoing failure of the favored replacements for Libor to gain traction in the market for interest-rate derivatives .
In the U.S. , more than $ 2.1 trillion of derivatives tied to Libor traded in the week ended May 8 , compared with just $ 17.2 billion based on SOFR .
In the U.K. , Libor products worth $ 337 billion changed hands , almost double the $ 172 billion of Sonia @ @ @ @ @ @ @ , more than 4,000 derivatives worth $ 545 billion linked to Euribor traded , versus just two contracts worth a negligible amount tied to ESTR .
Market authorities are already allowing some deadlines to slip .
A U.K. prohibition against Libor-linked loans designed to halt their origination by the end of September , for example , has been relaxed until the first quarter of next year .
The FCA explicitly acknowledged the delay is needed to maintain what it called “ the smooth flow of credit to the real economy ” as the @ @ @ @ @ @ @ .
Earlier this month the Bank of England deferred a planned increase in the discount it applies to Libor-linked collateral for central bank loans , shifting the amendment to April from October .
Even before the coronavirus struck , market participants were struggling to adjust to the idea that Libor wouldn ’ t exist after the end of 2021 .
With banks at the forefront of efforts to avoid an economic meltdown , their already low appetite to tackle the complicated job of adopting new benchmark borrowing costs will have diminished even further @ @ @ @ @ @ @ , and leave Libor in place past the current deadline .
Changing to the new benchmarks is , frankly , a distraction the world of finance can do without for now .
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners .
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 : How Greed and Collusion Made the Credit Crisis Unstoppable .
”


washingtonpost--2020-05-18--Analysis | Time for SoftBank to Consider That Vision Fund IPO

An answer to both problems would be to list shares in the Vision Fund itself , a topic that has been given scant regard as people focus on the underlying investments .
The fund ’ s two biggest holdings right now are Chinese content-platform Bytedance Inc. and ride-hailing leader Didi Chuxing .
There ’ s slim chance that either will have an initial public offering this year , and probably not in the U.S. , where the mood toward Chinese companies has soured after the Luckin Coffee Inc. scandal .
Too bad for them : All the dollars printed by @ @ @ @ @ @ @ might mean there ’ s plenty of money sitting around waiting for a big new share sale .
Of the 88 investments in the Vision Fund ’ s portfolio , 50 had a cut in valuation during the 12 months to March 31 , and 19 were unchanged .
SoftBank told investors Monday that its startups are facing varying degrees of impact from the pandemic , which means it ’ s probably not an opportune time to try to sell any individual company in public markets.But as a collective , the portfolio makes @ @ @ @ @ @ @ SoftBank has on hand .
It ’ s possible that SoftBank will be able to offload some of the T-Mobile US Inc. shares that replaced its stake in Sprint Corp. after the operators merged .
According to the Wall Street Journal , T-Mobile ’ s parent , Deutsche Telekom AG , is considering a purchase .
But there are various lockup clauses and share price incentives built into the deal that probably limit the size of any such transaction .
I talked before about the need for SoftBank to sell down its $ @ @ @ @ @ @ @ Ltd. after it said that it would monetize as much as $ 41 billion in assets .
Let ’ s be clear : “ Monetizing ” doesn ’ t necessarily mean selling .
SoftBank ’ s strategy has largely been to take out loans backed by its assets , some of which are non-recourse .
( 1 ) There ’ s also British semiconductor maker Arm , which we already know is slated for an eventual IPO .
The current state of SoftBank ’ s finances make it likely this listing will be @ @ @ @ @ @ @ wrote recently , the net financial assets held by Saudi Arabia ’ s government have declined to just 0.1 % of gross domestic product , from 50 % in the four years through 2018 .
Being one of the world ’ s biggest oil producers helps only so much when a global pandemic grounds aircraft , sends economies into decline , and results in sliding crude prices .
Even if the PIF denies plans to take out loans against its Vision Fund stake , the kingdom ’ s rulers will be keen that @ @ @ @ @ @ @ The Vision Fund itself needs money .
It ’ s on the hook for at least $ 3 billion in preferred equity dividend payments every year , as well as the cash it needs just to operate , and in theory to service debt it ’ s already taken out .
It has already put some of the money raised aside to pay those dividends , but that won ’ t last forever .
With the book value of its assets dropping more than $ 17 billion in the past year , the @ @ @ @ @ @ @ to cover those requirements will diminish .
There are bound to be investors who believe in founder Masayoshi Son ’ s long-term plan to build a stable of companies that will change the world and provide huge profits in the process .
After all , many have already bought into SoftBank Group itself , which counts the Vision Fund as a key earnings driver ( or drag ) .
Given how illiquid the assets are , and the volatile nature of its earnings , a listing of the Vision Fund would certainly be @ @ @ @ @ @ @ to Son and his acolytes , it may well be seen as visionary .
( 1 ) Non-recourse means that if the debt can ’ t be paid , or other clauses are triggered , the creditor may take ownership of the pledged asset rather than forcing the debtor to pay up .