washingtonpost--2020-04-29--Analysis | Negative Oil Scars Will Linger for Frackers

Most obviously , May-day was the prelude to the June contract ’ s current suffering : It ’ s under $ 16 a barrel , and that ’ s after a big rally on Wednesday morning .
Even if it doesn ’ t eventually settle in the red , there ’ s a decent chance it will fall as we head into next month .
There ’ s too much oil supply facing too little demand and trying to squeeze into too little storage ; hence , the agonizing long-squeeze of April 20 .
Shut-ins of wells , the last @ @ @ @ @ @ @ have begun already and will accelerate from here .
Beyond the immediate physical issue , the technical , contract-rolling stuff matters , too .
The June contract ’ s plunge earlier this week was partly due to S & P Global Inc. , which runs the biggest commodity index , telling clients to roll quick-smart into the July contract in case the June one ends up mimicking May ’ s .
Not to be outdone , the biggest oil ETF , the United States Oil Fund LP , or USO , announced it @ @ @ @ @ @ @ start spreading positions as far out as 12 months forward .
This matters because the futures market is where anyone in the business of producing or using oil comes for insurance against price swings .
The fracking boom relied on third-party capital to feed it , and that capital relied on the relative certainty on cash flows afforded by producers hedging their output .
You can ’ t sell ( or short ) future barrels if there isn ’ t someone on the other side willing to go long .
Energy economist Philip @ @ @ @ @ @ @ “ Beyond Greed Redux , ” that the oil market long had an imbalance of too many commercial operators seeking to hedge and not enough speculators to take the other side of the trade .
That changed to some degree in the supercycle of the early 2000s as pension funds piled in , lured by influential research touting commodities ’ high returns and portfolio-diversification benefits ( 1 ) .
As returns eroded , exacerbated by the 2008 crash , some traders began to drift away but others , such as hedge funds or @ @ @ @ @ @ @ stepped up .
John Hyland , the former chief investment officer for United States Commodity Funds LLC ( which runs the USO ) , recalls that when natural gas prices tanked in 2009 , trading of the sister product , the United States Natural Gas Fund LP , soared , stoking concerns similar to today ’ s around the impact of passive products on price formation .
Since then , the gas futures curve has settled at low levels and in persistent contango ( seasons aside ) — upward-sloping , which is terrible @ @ @ @ @ @ @ in the USG has dwindled commensurately .
It ’ s too early to say if the USO will mimic that .
Trading volume has been very high so far this year ; annualized , it would be on a par with levels not seen since 2009 .
However , we are now into our third oil crash in 12 years , and the old bullish narrative of peak oil has given way to murkier considerations of climate change and price wars .
Covid-19 ’ s demand shock is an extreme situation , but @ @ @ @ @ @ @ ’ t leave scars .
Talking about the recent turmoil , John Lothian , a former commodities trader who now runs his own eponymous financial media business , observes “ the public has a bias to the long end [ of markets ] because prices can only go down to zero .
Well guess what ?
” While the USO has historically been owned more by institutions than individuals , according to Hyland , as such products rejig positions , they move further away from the original premise of passive money parked at @ @ @ @ @ @ @ .
That makes it harder to know what you are actually buying .
Meanwhile , regulators and market managers spooked by negative oil prices may decide to impose constraints of their own .
But when exploration and production firms eventually seek to stabilize and raise production , hedging will enter the equation once more .
As it stands , E & P companies tracked by BloombergNEF had hedged just over a third of their anticipated oil production in 2020 at the start of the year .
The corresponding figure for 2021 , which @ @ @ @ @ @ @ to seriously roll in , was just 3 % .
E & P firms tend to hedge further out on the futures curve , so any lasting migration of speculative cash out of near-term contracts might appear to have less of an impact .
However , as Professor Craig Pirrong at the University of Houston ’ s Bauer College of Business points out , spread trades linking near and deferred contracts provide some of that long-dated liquidity .
Such trades account for roughly half the open interest of money managers in the Nymex @ @ @ @ @ @ @ may rise as another cohort of speculators learns a hard lesson about futures .
Certainly , the lingering glut of inventories and economic damage from the current crisis should keep oil prices low and the curve in contango for a while , suppressing animal spirits .
This may add to a broader theme : a rising cost of capital for fracking and the eclipse of the small , independent model that has long relied on the OPEC put and accommodating financial markets .
One day of negative oil prices isn ’ t an @ @ @ @ @ @ @ well be a sign of , and catalyst for , fundamental change coming for this industry .


washingtonpost--2020-06-01--Analysis | JPMorgan’s Traders Race Ahead in the Pandemic

After a record trading performance in first three months of 2020 , JPMorgan Chase & Co. is on course to post a 50 % jump in trading revenue in the second quarter , when compared with the same period a year ago , the New York giant ’ s co-president , Daniel Pinto , said last week .
The reserved Argentine banker , who has helped JPMorgan move to the top of Wall Street ’ s rankings , was “ very pleased ” by the performance .
That tells you how well things are going .
Other trading firms are @ @ @ @ @ @ @ handsomely as Pinto ’ s employer .
Bank of America Corp. expects bond- and stock-trading revenue to rise close to 10 % in the period ; Citigroup Inc. is seeing “ very good momentum ” in the fixed-income business after a 40 % jump in the first quarter .
Citi is still playing catch-up with its rivals in equities trading .
JPMorgan might also be edging further ahead of its European rivals on their home patch .
The bank is the favored dealer in Europe for both interest-rate and credit trading , ahead @ @ @ @ @ @ @ , according to a poll of bond investors by Greenwich Associates at the end of April .
European banks barely made it into the top three in some of Greenwich ’ s subcategories on fixed-income trading .
“ It ’ s a balance sheet , scale and electronification game now , and the bigger you are , the better you do , ” Greenwich Associates said when the report was published .
That ’ s propelling JPMorgan — which spends more than $ 11 billion a year on technology — ahead of its @ @ @ @ @ @ @ added 2.5 percentage points to its share of trading revenue among its top peers between 2015 and 2019 .
It has a 12 % share of trading in fixed-income , currencies and commodities , an 11 % share of equity trading , and a lead in derivatives .
That places it at the center of the world ’ s financial markets .
Its ability to move large volumes of inventory is unrivaled , competitors and clients say .
Last year , JPMorgan added 25 % to its hedge-fund balances , bringing them to @ @ @ @ @ @ @ been targeting $ 1 trillion .
This growth in hedge fund clients has allowed it to build its stock-trading business , with equity derivatives powering a surge in revenue .
It helps too that borrowers have been tapping the bond markets at a record pace .
Crucially , it ’ s the bank ’ s market dominance — which lets it take on more risk relative to its size — that appears to have become self-perpetuating .
“ We don ’ t need to take a huge amount of risk for the franchise @ @ @ @ @ @ @ a conference last week .
“ At our scale , the franchise is perfectly profitable .
So , the only thing we need to do is to always be in a position where we can monetize the franchise.
” For Chief Executive Officer Jamie Dimon , a roaring trading division is just what he needs to make up for the inevitable problems in the lending business caused by the Covid-19 pandemic , with companies and households struggling to repay their loans amid the worst recession in decades .
Credit losses will pile up @ @ @ @ @ @ @ will erode profit margins in the business over time .
JPMorgan ’ s profitable consumer business won ’ t be such a cash cow .
But when the wave recedes , the Wall Street trading titan could be in a league of its own .
The question then becomes : Is that healthy for the banking system ?

Why did this happen?
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washingtonpost--2020-06-01--Analysis | I Wish Hong Kong Were Just Another Chinese City

Hong Kong is defined by its financial hub .
With a common law system , a currency pegged to the U.S. dollar , and sitting at the gate to mainland China , the city ’ s banking industry has blossomed , especially since the global financial crisis .
Seeking exposure to China ’ s great economic engine , investors have funneled billions of dollars into the city .
For evidence , look no further than its monetary base .
The so-called aggregate balance has swollen to as much as $ 51 billion since the collapse of Lehman Brothers Holdings Inc. @ @ @ @ @ @ @ surprise the economy has morphed .
Financial services now contribute about 20 % of gross domestic product , from 10 % two decades earlier .
Meanwhile , manufacturing has become almost nonexistent .
Once we include real-estate services , the finance industry would overtake trading and logistics — Hong Kong ’ s traditional bread-and-butter — as the city ’ s most important sector .
But such economic growth hasn ’ t been matched by a surge of good jobs .
In the decade after the 2008 crisis , the added value from financial @ @ @ @ @ @ @ but employment rose only 2.5 % .
As of 2018 , the sector comprised 6.8 % of the workforce , or 263,000 people .
Tourism , which constitutes only 4.5 % of GDP , employed almost as many .
This is because finance is capital intensive , not labor intensive .
An experienced banker can arrange a mega initial public offering just as well as a mid-cap listing , and a star trader can execute a $ 1 billion order just as efficiently as a $ 100 million one .
As the industry @ @ @ @ @ @ @ and access to China , not more headcount .
Across the border , Shenzhen has taken a very different turn .
A dozen years ago , it was a still a small city , where Hong Kong residents went for cheap food and shopping .
Now , its economy is bigger than Hong Kong ’ s .
Industrials , a labor-intensive sector , remains prominent , accounting for about 40 % of the city ’ s GDP .
Many technology companies made Shenzhen their home : Tencent Holdings Ltd. , Huawei Technologies Co. @ @ @ @ @ @ @ Corp. , Warren Buffett-backed electric-vehicle maker BYD Co. , to name a few .
Along the way , billions were made and millionaires were minted .
Publicly listed companies headquartered in Shenzhen now command $ 1.5 trillion in total market cap , almost three times as much as those based just across the border .
Hong Kong is where bankers live , but Shenzhen — China ’ s Silicon Valley — is where they spend their time , searching for the next Tencent .
This is the outcome of a deliberate decision made @ @ @ @ @ @ @ recent five-year land plan says it all .
Just like Hong Kong , the city has vowed to keep at least half of its land in its natural ecological condition .
Of the space allocated for urban use , at least 30 % is intended for industrial development , such as traditional manufacturing and science parks .
By comparison , Hong Kong ’ s planning department reserves only 3.6 % of its usable land for such purposes .
Along with big plots came generous subsidies .
Always keen to lure tech firms , @ @ @ @ @ @ @ the Qianhai free trade zone be lower than Hong Kong ’ s .
To weather the coronavirus-induced slowdown , the local government is offering to reimburse up to 70 % of tech startups ’ bank-loan interest repayments .
Most likely , Hong Kong ’ s high-finance industry will survive all the negative headlines , because the conditions that have spurred its prosperity remain .
U.S. President Donald Trump ’ s China rant at his press conference Friday has been seen as all bark , no bite .
The billions of dollars unleashed by @ @ @ @ @ @ @ easing programs will once again find their way to Hong Kong , and bankers and corporate lawyers have shown some willingness to stomach Beijng ’ s new security law .
The industry may even thrive from a great divorce between the U.S. and China .
Mega IPOs are on the horizon again , this time not from China ’ s state-owned giants , but its U.S.-listed technology titans such as JD.com Inc. and Netease Inc .
Both are seeking refuge in Hong Kong in case they get kicked out off U.S. stock exchanges @ @ @ @ @ @ @ , index provider MSCI Inc. said last week it would move licensing for 37 derivatives from Singapore to its rival financial hub , simply because Hong Kong Exchanges & Clearing Ltd. has “ the access to Chinese institutional and retail investors.
” Hong Kong is still the gateway to China .
But this is bad news for the rest of the city .
It takes a crisis for a government to devise drastic measures .
If its key industry remains intact , Carrie Lam ’ s administration has no incentive to seek new @ @ @ @ @ @ @ of finance has created a social mobility problem in Hong Kong .
The industry naturally favors bilingual “ sea turtles ” like me over local university graduates , for our business and cultural connections to China .
But in Shenzhen , your socioeconomic background doesn ’ t matter as much .
Oftentimes , all it takes is a product prototype , a PowerPoint presentation , and suddenly you ’ ve got office space — and subsidized housing nearby , too .
Hong Kong has a lot to learn from its tech savvy neighbor @


washingtonpost--2020-05-29--Powell Says Fed Crossed Red Lines When Virus Demanded Action

Powell ’ s remarks will probably be the last from a Fed policy maker before officials enter a blackout period at midnight Friday leading up to the June 9-10 meeting of the Federal Open Market Committee .
Officials are widely expected to leave interest rates just above zero at that gathering and re-commit to using their full range of tools to support the U.S. economy during the coronavirus pandemic .
The Fed chair responded to questions about one of its most complex and riskiest programs intended to support the economy -- the Main Street facility -- which has been slow @ @ @ @ @ @ @ bank is “ days away ” from getting it up and running .
The loan program is designed to help small and medium-sized businesses that don ’ t have access to public markets , he said .
Main Street is one of nine Fed emergency lending programs opened or under construction that are aimed at mitigating the economic impact of the virus .
The Treasury Department has sent the Fed $ 75 billion in funds to backstop the facility , according to a person familiar with the matter .
Powell said the announcement @ @ @ @ @ @ @ companies secure funding in financial markets .
“ They ’ ve been able to avoid big layoffs , ” Powell told session moderator Alan Blinder , a former Fed vice chair .
“ That is the point of all this .
I think we have to keep our focus really tightly on that goal of the labor market and supporting the labor market.
” Powell and his colleagues have warned the pandemic may leave deep and lasting scars on the economy even as the U.S. and other countries begin to emerge from lock-downs @ @ @ @ @ @ @ than 40 million U.S. workers have filed for unemployment benefits in the past 2-1/2 months as businesses shuttered and Americans stayed home .
Data released earlier on Friday showed U.S. consumer spending , which accounts for about two-thirds of the world ’ s largest economy , plunged in April by the most on record .
Powell said a full economic recovery “ will really depend on people being confident that it ’ s safe to go out.
” But he reiterated his skepticism around following other central banks in forcing rates into negative @ @ @ @ @ @ @ not clear to my colleagues and to me on the Federal Open Market Committee that this is a tool that would be appropriate to deploy here in the U.S. , ” he said .
“ There are clearly some negative side effects .
”


washingtonpost--2020-05-29--Analysis | Covid-19 Reinforced Our Coffee Addiction

The biggest European IPO this year , pulled off in a swift 10 days , is a remarkable feat for a consumer business in the midst of a pandemic and a looming global recession .
But JDE Peet ’ s has been uncannily well-placed to capitalize on changing consumer habits during lockdown , the prospects for reopening and a resurgence in equity markets .
The Dutch company was floated by JAB Holding Co. , the investment fund backed by Germany ’ s billionaire Reimann family .
Cornerstone investors , including funds run by George Soros ’ s firm , had @ @ @ @ @ @ @ the offering , setting the tone .
In a world crowded with coffee chains , JDE Peet ’ s gets 80 % of its sales from coffee that is drunk at home .
That meant it benefited as corner cafes shuttered and people working from home were forced to become their own baristas .
Now that they can start going out again , it ’ s ready to serve them their favorite hot beverage too at the Peet ’ s Coffee chain .
And just as Nestle SA benefited from people looking to @ @ @ @ @ @ @ sells in supermarkets , so JDE Peet ’ s may gain new customers at its cafes if they discovered its products in the grocery store during lockdown .
As consumers navigate post-lockdown life , JDE Peet ’ s looks well insulated .
That may explain why the valuation , as of mid-morning trading , is approaching that of Starbucks Corp. on a calendar 2019 enterprise-value-to-Ebitda basis .
With consumers likely pulling in their purse strings , homemade coffee may be more popular than pricey takeaway lattes .
Yet the valuation may also reflect @ @ @ @ @ @ @ people will be eager to get out and about .
Early indications from U.S. retailers , such as discount-chain owner TJX Cos Inc. and even department store Macy ’ s Inc. , are that sales have been stronger than expected since Americans were able to shop in person once again .
And let ’ s not forget about the IPO timing with stock markets gaining from their lows in March .
That may be one reason why Peet ’ s was so keen on an accelerated book build : to avoid any sudden @ @ @ @ @ @ @ factors may not come together for other consumer-facing groups looking to float or spin off a division .
L Brands Inc. ’ s desire to eventually separate its Victoria ’ s Secret lingerie chain comes to mind .
It was grappling with a tired image and too many stores even before the Covid-19 outbreak .
As for Peet ’ s , the successful float leaves it with firepower for further acquisitions .
It plans to use the proceeds to cut debt — it aims to reduce the leverage ratio from 3.6 times to @ @ @ @ @ @ @ the first half of 2021 — but it gets an acquisition currency in the form of equity .
Competition for coffee assets has been intense .
There was a flurry of deals two years ago with JAB ’ s $ 2 billion purchase of Pret A Manger , which sells coffee as well as food to go ; Coca-Cola Co. ’ s $ 5.1 billion swoop on Costa Coffee ; and Nestle ’ s $ 7 billion deal for the rights to sell Starbucks coffee in supermarkets .
But JDE Peet ’ s @ @ @ @ @ @ @ particularly in the market for drinking coffee outside the home .
With the lockdown-induced distress in malls and on main streets , it may be able to grab something to go for a better price .


washingtonpost--2020-03-10--Analysis | What’s Really Weighing on Aramco’s Stock

Aramco ’ s stock had been drifting lower on very thin volume even as coronavirus-shaped clouds gathered over the global economy .
Something changed this weekend , though : The stock dived following the bust-up between Saudi Arabia and Russia .
Leaving aside its peculiarities , Aramco is now cheaper than it was .
Or is it ?
The Kingdom , which still owns about 98.5 % of the company , guaranteed dividends to minority shareholders for five years at a minimum of their share of $ 75 billion .
At IPO , that implied a yield of 4.4 % @ @ @ @ @ @ @ , that had ticked up to 5 % ( the stock recovered some ground on Tuesday ) .
Before you wannabe Buffetts dive in on that value , though , consider that the average yield of the big five Western majors has jumped from 5.5 % to 8.6 % in that time .
So in relative terms , Aramco ’ s premium has tripled .
More importantly , Aramco doesn ’ t look cheaper when you consider the number that ’ s supposed to support the dividend : free cash flow .
Under @ @ @ @ @ @ @ dividend payment — collectively a minimum of $ 1.13 billion — and the state takes whatever ’ s left , regardless of whether it reaches $ 75 billion .
When I last valued Aramco just before the IPO , I noted its production of 9.74 million barrels a day — in line with December ’ s OPEC+ agreement — implied about $ 70 billion of free cash flow in 2020 under my assumptions , including a Brent crude oil price of $ 65 a barrel .
Now Brent 2020 swaps trade below $ @ @ @ @ @ @ @ .
So what does more oil but lower prices do ?
Under my assumptions ( 2 ) , if Aramco ’ s crude oil production averages 11.4 million barrels a day in 2020 and Brent averages $ 40 , then free cash flow falls to about $ 45 billion .
Using that number — still , let us acknowledge , gargantuan — Aramco ’ s free cash flow yield has actually dropped from 4.1 % at IPO to 3 % at Monday ’ s close ( the consensus estimate implies 3.6 % ) @ @ @ @ @ @ @ still get their dividend , the state eats a lot less .
It isn ’ t just their share of free cash flow ; the government also gets royalties and income tax from Aramco .
Under my December assumptions , the government ’ s total take for 2020 added up to almost $ 200 billion .
Opening the spigots drops that to $ 130 billion .
The difference is equivalent to about 14 % of Saudi Arabia ’ s official reserves .
In theory , despite the immediate mayhem , opening the taps @ @ @ @ @ @ @ value of Aramco ’ s oil reserves by undercutting competitors like Texas and encouraging more demand .
Yet a world where OPEC is clearly dead on its feet and OPEC+ clearly has its limits is also one where oil prices should stay much closer to the marginal cost of production — and pressure on Saudi Arabia ’ s public finances and economy intensifies .
Just as several of the oil majors are borrowing or selling assets to fund their obligations at current oil prices , so Saudi Arabia ’ s finances don ’ @ @ @ @ @ @ @ should mean a higher risk premium .
Assuming long-term output of 11.5 million barrels a day but Brent at $ 50 and a free cash flow yield of 5.5 % , the implied valuation is about $ 1.1 trillion , 27 % below where Aramco closed on Monday .
If anything , the yield demanded should be higher than that ; at 6.5 % , the value drops to just over $ 900 billion .
Exact numbers from a model may be about as useful as that quarantined stock price on any given @ @ @ @ @ @ @ think of them , as well as the weekend ’ s dive in Aramco ’ s market value , more in terms of their direction than absolute figures .
The forces that have underpinned the position of Saudi Arabia and its national champion — primarily , outsize influence over an ever-expanding oil market twinned with security guaranteed by a distant superpower — are disappearing .
The weekend ’ s events , including further palace intrigue , add to a growing list of surprises demonstrating how the world has changed .
The bear case @ @ @ @ @ @ @ of oil prices and more about fear of the rug being pulled out from under it .
( 1 ) For the full set of assumptions , see this .
For the 2020 scenario , I trim capex by $ 5 billion and cut net income per barrel in the refining business to $ 2 .
In addition , It was reported on Tuesday that Saudi Arabia seeks to quickly boost sales to north of 12 million barrels a day , implying it means to liquidate some inventory .
This would tend to @ @ @ @ @ @ @ on prices further .
For the purposes of this analysis , I have left out the uncertain impact of liquidating inventory .


washingtonpost--2020-03-10--Analysis | Blackstone Spies a Gem Amid the Virus Rubble

Blackstone is bidding HK $ 6 per share to take the owner of office buildings in Beijing and Shanghai private , according to a Reuters report Tuesday .
That ’ s more than double the stock ’ s HK $ 2.98 closing price Monday .
Soho China shares surged 38 % after the report , before being halted from trading at the company ’ s request pending an announcement under the takeovers code .
Its HK $ 21.3 billion ( $ 2.74 billion ) market capitalization on suspension is still a third below Blackstone ’ s offer .
At first @ @ @ @ @ @ @ a developer that has passed its glory days .
Founded in the 1990s by husband-and-wife team Pan Shiyi and wife Zhang Xin , the company switched strategy in 2012 from developing and selling projects to becoming an office landlord focused on recurrent income streams .
The stock has never regained its pre-global financial crisis high of HK $ 11.92 , reached shortly after listing in 2007 , and has traded on average at less than a quarter of that level over the past year .
There ’ s value in its assets , @ @ @ @ @ @ @ surge , Soho China is trading at only 0.54 times forward book value — far lower than when it began its shift to a build-and-hold model eight years ago .
Prestige developments include the Bund SOHO in Shanghai ’ s city center and the futuristic Wangjing SOHO in Beijing , designed by Zaha Hadid , the first woman to receive the Pritzker Architecture Prize .
The $ 4 billion price tag , which translates to 0.78 times forward book , is a bargain , according to analysts at Bloomberg Intelligence .
In October @ @ @ @ @ @ @ majority of its commercial property holdings for as much as $ 8 billion , Bloomberg News reported , citing people familiar with the matter .
Blackstone will also assume Soho China ’ s debt , which stood at the equivalent of $ 4.7 billion at the end of June , Reuters reported .
Granted , the office market has been struggling .
Vacancy rates in 17 major cities were already at their highest levels since at least 2008 in the third quarter , according to a report from CBRE Group Inc. Shanghai ’ @ @ @ @ @ @ @ Beijing ’ s was 10.9 % , the report said .
Measures to contain the coronavirus , which shut down as much as two-thirds of the economy in February , have damaged the outlook for growth , already damped by the trade war with the U.S. last year .
Soho China hasn ’ t escaped trouble .
First-half profit fell almost half .
Meanwhile , a push into office sharing has failed to impress investors , especially after the fiasco of WeWork ’ s scrapped U.S. IPO last year .
Blackstone will be @ @ @ @ @ @ @ developments prove relatively immune to the declining rents and increased supply afflicting the Beijing and Shanghai commercial markets .
Average office occupancy at Soho China ’ s buildings was 94 % in the first half of 2019 , though that was down from 97 % a year earlier , according to analysts at HSBC Holdings Plc .
New York-based Blackstone , which raised $ 7.1 billion in its largest ever Asian property fund late last year , has a record of making big wagers at times of turmoil that turn out well .
@ @ @ @ @ @ @ for $ 26 billion in 2007 , just before the financial crisis , and sold it for a $ 14 billion profit 11 years later .
Don ’ t bet against it repeating the trick .


washingtonpost--2020-03-10--Analysis | Why $3.6 Trillion of Roads Will Never Be Enough

Much of the spending is intended to address an impending hit to growth from the virus and the latent effects of the trade war with the U.S .
It comes as the central and local governments race to meet targets under the current five-year plan while heading into a new one .
But attempting to prop up growth numbers won ’ t return workers to the parts of the economy that need it most or get companies the parts they need.The headline numbers might not even be met .
A 1 % increase in infrastructure investment can lift nominal gross @ @ @ @ @ @ @ according to HSBC Holdings Plc analysts .
That means , they say , that such spending needs to grow by 10 % to 12 % , from 6 % to 8 % previously , to help reach the growth target of at least 5.7 % .
( 1 ) Home-bound investors have cheered the prospect of infrastructure stimulus , China ’ s fallback in tough times .
Stock prices of domestic construction machinery makers Sany Heavy Industry Co. and Jiangsu Hengli Hydraulic Co. , which should benefit from a push to build , @ @ @ @ @ @ @ Exchange Composite index over the last month , even as large parts of China were effectively shut .
The foundations of such hope-based bets are flimsy .
Spending doesn ’ t directly translate to growth because it includes outlays on land acquisition , for instance .
In addition , a look at machine-operating rates as of February shows that activity has increased most in the already built-up southern and coastal regions .
Meanwhile , the companies that are back to work are mainly state-backed .
The country needs factories to be up and @ @ @ @ @ @ @ of what ’ s driving these stocks to multi-year highs is that Beijing is pulling out all the stops .
They ’ re off by a few percentage points in the latest rout , but heading up again .
Hundreds of billions of yuan are being funneled to local governments with pressured finances .
The issuance of special bonds amounts to directly injecting cash into the construction sector .
Approval for the new projects comes straight from the top , arguably ensuring better quality .
Yet even if all this building takes off @ @ @ @ @ @ @ come from if parts factories aren ’ t operating ?
Demand was already high pre-virus as old machines were being replaced , but growth was coming down from double-digits .
None of these measures address the problem at a hand : an economy with broken supply chains .
Beijing ’ s reflex to build its way out of trouble is the wrong one for this crisis .
President Xi Jinping says the government will back “ new infrastructure ” that includes 5G telecom networks and data centers .
Those plans may yield results @ @ @ @ @ @ @ in the next two quarters , when the hit to growth and manufacturing will likely be severe .
China has been through this before .
If there ’ s one lesson from its state-sanctioned discretionary spending , it ’ s that public investment is no longer efficient in China and real return rates have dropped .
Each yuan does less for the economy as debt piles up and deepens China Inc. ’ s existing balance sheet problems .
The benefits end up with the state sector , not the smaller and more fragile @ @ @ @ @ @ @ soon as possible , to alleviate the pain from the supply shock that is spilling over and worsening demand .
Trucks and excavators can only do so much .
To all this , add fiscal constraints .
The virus has brought extra costs , with public expenditure totaling at least 90 billion yuan , according to HSBC ’ s analysts .
But revenues are slowing , thanks to tax cuts and measures to boost demand .
( 1 ) In their base case scenario , the analysts assume that the virus outbreak will @ @ @ @ @ @ @ expect real GDP growth to slow to 4.1 % from a year earlier in the first quarter , and 5.1 % the second quarter , before recovering to 6.0 % in the third quarter .
They have cut their 2020 real GDP growth forecast to 5.3 % from 5.8 % previously.They also assume that China ’ s “ around 6 % ” target indicates that growth should be no lower than 5.7 % this year .


washingtonpost--2020-03-10--Analysis | What Hoarding Toilet Paper Teaches Us About Stocks

Pinched by the virus and an oil price war , fundraising in the U.S. junk bond market is getting harder , with spreads over Treasuries rising sharply .
A renewed focus on credit quality is now spilling into stocks .
During Monday ’ s sell-off , companies with lower leverage fared better .
In an analysis of U.S.-listed companies , the least indebted — as measured by leverage ratio — outperformed the most indebted by 3.2 percentage points , according to data compiled by Bloomberg .
( 1 ) For now , balance sheet health doesn ’ t appear to @ @ @ @ @ @ @ .
And why would it ?
The Federal Reserve ’ s monetary policy has stayed loose since the collapse of Lehman Brothers Holdings Inc .
In the last seven years , investors have favored growth stocks and those with share-price momentum — electric vehicle maker Tesla Inc. , for instance — while value names got the kiss of death .
Leverage , on the other hand , hasn ’ t featured much either way .
As the virus spreads , however , credit quality will start to matter more in the U.S. During @ @ @ @ @ @ @ companies that offered good income in the form of share buyback yield , dividend yield or even free cash flow yield , analysis from Bernstein Research shows .
But what ’ s the point of looking at historical free cash flow if the coronavirus disrupts the supply chain ?
No matter how profitable a business model , a company won ’ t be able to sell anything with entire regions on lockdown .
When a black swan arrives , only those well-stocked with cold , hard cash can survive .
In the past @ @ @ @ @ @ @ of China hasn ’ t been as generous as the Fed , alternating between opening and closing the money tap , and experimenting with all sorts of lending facilities to target liquidity to pockets of the economy .
Starting in late 2017 , officials declared war on shadow financing , an important funding channel for private enterprises .
As a result , a company ’ s leverage ratio is what really matters .
In the past year , the least indebted companies on the benchmark CSI 300 Index outperformed the most leveraged by @ @ @ @ @ @ @ to data compiled by Bloomberg .
To be sure , the Fed wants to keep liquidity flowing , having already cut 50 basis points this month , and is expected to slash its policy rate further at its next meeting .
But as we ’ ve already witnessed this week , with credit spreads soaring , a lower benchmark rate doesn ’ t necessarily mean financial conditions will ease .
In the fall of 2018 , when Beijing was in the throes of its shadow-financing crackdown , real estate titans hoped they would @ @ @ @ @ @ @ , treating stocks more as a call option on survival than a bet on earnings growth .
While the U.S. is by no means at that level of distress , it ’ s time for investors to factor in leverage as well .
As we all know , only the most diligent squirrels hoarding nuts will make it through a long , harsh winter .


washingtonpost--2020-06-15--Analysis | J.C. Penney Faces a Tricky Rescue

Covid-19 , of course , has turned the commercial real estate and retail worlds upside down .
Thanks to an accelerated post-pandemic pace of e-commerce adoption , analysts at UBS now forecast that the U.S. will see about 100,000 store closures by 2025 .
Against that backdrop , Simon and Brookfield have even more incentive than usual to do whatever it takes to simply preserve occupancy of their shopping centers .
J.C. Penney may not currently be paying its landlords huge sums since anchor tenants typically enjoy relatively low rents , but mall operators generally want to keep the lights @ @ @ @ @ @ @ to keep their centers feeling vibrant and bustling .
J.C. Penney has already pledged to shutter more than 150 of its 800-plus stores .
The chain likely needs to close many more than that to become a healthy business .
But doing so could be at odds with what ’ s good for Simon and Brookfield at this perilous moment .
Plus , J.C. Penney isn ’ t just any mall retailer : it ’ s an anchor tenant , meaning it has huge footprints with their own entrances .
Those boxes could @ @ @ @ @ @ @ say , Aeropostale-sized stores , even in the best of economic times .
But , as Bloomberg Intelligence analyst Lindsay Dutch points out , the kinds of tenants that might be good fits for one-time J.C. Penney stores — hotels , gyms , or even offices — might be harder to line up now that we ’ re in a recession and the pandemic is making every one of those businesses rethink their formats .
The result could be that Simon and Brookfield get control over what replaces empty J.C. Penney stores , @ @ @ @ @ @ @ mall profiles .
But in the meantime , J.C. Penney may suffer brand damage if some of its locations are allowed to limp along with little investment for a long time while it undertakes that process .
There would be some upsides to this potential buyout for J.C. Penney : The group ’ s rescue of Aeropostale is widely perceived as a success .
And Brookfield had earlier pledged to put $ 5 billion toward helping retailers recover from the devastating effects of stay-at-home orders and a recession , a sign that J.C. @ @ @ @ @ @ @ that is deeply invested in saving not just the struggling retailer , but the entire mall ecosystem .
Meanwhile , the CEO of Authentic Brands , Jamie Salter , told CNBC recently , “ I think there is a play for J.C. Penney .
I think J.C. Penney needs a purpose .
And I have my ideas on what it should be.
” It ’ s good that Salter understands returning J.C. Penney to health would have to be more than a cost-cutting exercise ; it has to be a holistic reimagining of @ @ @ @ @ @ @ Still , J.C. Penney would do well to consider the tricky dynamics of this moment for the retail and real estate industries .
They might point to another suitor – Sycamore Partners is reportedly one – being its best shot at protecting its storied brand .


washingtonpost--2020-06-15--Fed Encourages Banks to Start Making Main Street Loans

“ Lenders can find the necessary registration documents on the program site and are encouraged to begin making Main Street program loans immediately , ” said the Boston Fed .
The program will lend up to $ 600 billion through the three facilities , each of which will make slightly different loans to businesses with up to 15,000 employees or $ 5 billion in revenue last year .
Loans will range in size from $ 250,000 to $ 300 million for an expansion of existing debt .
The Main Street facilities were first announced at the end of March as @ @ @ @ @ @ @ response to the coronavirus pandemic .
The program has been expanded twice since , in attempts to make sure it would be utilized by a broad swathe of American companies after facing criticism from lawmakers and business groups that said it wouldn ’ t have wide enough reach .
The facilities mark the first time the Fed will directly support America ’ s so-called Main Street firms .
The loans are meant to reach those that may not be able to easily access capital markets for borrowing or to raise equity , but @ @ @ @ @ @ @ Business Administration ’ s Paycheck Protection Program loans , which are meant for businesses with fewer than 500 employees .
The program has taken time to set up and presents new challenges to the Fed , such as how to lend to companies that don ’ t have official designations from ratings companies .
Fed Chair Jerome Powell said in May that the Main Street facilities were the most challenging to set up .
It ’ s backed by a $ 75 billion investment from the Treasury Department that ’ s part of @ @ @ @ @ @ @ in the CARES Act for the Fed ’ s emergency-lending programs .
The central bank has said it will disclose lender , borrower and loan details of the CARES Act programs on a monthly basis .
For more articles like this , please visit us at bloomberg.com


washingtonpost--2020-06-15--College Towns Fear Covid Will Leave Them as Ghost Towns

That all dried up in March , when Lafayette and most other U.S. colleges sent students home and canceled sports for the remainder of the school year to limit contagion of the novel coronavirus .
With all but 200 of Lafayette ’ s roughly 2,650 students gone , Easton ’ s restaurants and shops never saw the influx they usually expect at Mother ’ s Day and graduation , nor from other visitors .
High school juniors toured the liberal arts college by video instead of walking through the hilly campus nestled in the Lehigh Valley .
The pain kept @ @ @ @ @ @ @ sales tax revenue for government , and then local businesses and the city of Easton began laying off and furloughing employees , hurting sales further and cutting into income tax revenue .
Lafayette announced its own furloughs of about 40 employees for June and July , in addition to some salary reductions .
Businesses that have survived aren ’ t sure how much more they can take , even though as of June 5 restaurants are allowed to resume limited outdoor service .
Davis said he is not sure whether the finances of @ @ @ @ @ @ @ half-capacity to maintain social distance .
Of course , he points out , if people can ’ t afford to go out to eat because they have lost jobs , it won ’ t be the capacity limit that breaks his business .
“ We ’ re hoping there aren ’ t significant and lasting impacts on the city , ” said Mark Eyerly , a college spokesman whose office is downtown .
“ Easton ’ s renaissance has become a key advantage for us in recruiting students and faculty to the college @ @ @ @ @ @ @ t 20 years ago.
” The school announced Monday that it intends to open for in-person classes from August through Thanksgiving , beginning and ending its fall semester early .
However , for health reasons Lafayette will encourage students to stay on campus — which would hurt that downtown comeback .
Colleges are among the largest employers in their towns .
They helped drive economic growth for decades and were seen as stable sources of jobs .
Easton was making a comeback until the pandemic , on track to hit a population of @ @ @ @ @ @ @ s census for the first time since the 1960s .
A cluster of new restaurants , shops and housing — led by the Alehouse about 25 years ago — had revived the downtown after decades of decline .
“ Easton ’ s recent redevelopment means it has only a thin cushion to sustain its economic base against the shock of this crisis , ” said John Kincaid , a professor of government at the school since 1994 and director of the Meyner Center for the Study of State and Local Government .
Students @ @ @ @ @ @ @ Easton ’ s population .
In Chapel Hill , North Carolina , home to a big state school , students are estimated to make up a far larger share — roughly a fourth .
Economies like that are almost unimaginable without the colleges at their heart .
The losses from even the current pause have been steep .
Total small business revenue in Easton ’ s Northampton County was down about a quarter as of early June compared with January , according to the Opportunity Insights Economic Tracker , a platform that pulls @ @ @ @ @ @ @ and small business revenue from private companies to offer a real-time picture of economic activity .
In Orange County , North Carolina , home to Chapel Hill , small business revenue is down more than 20 % as of early June compared with early 2020 , far worse than the state of North Carolina ’ s roughly 5 % decline .
The University of North Carolina at Chapel Hill has said it plans to hold in-person classes this fall , with social distancing precautions .
However , the uncertainty of a pandemic — @ @ @ @ @ @ @ full campus reopenings and the all-important football seasons in jeopardy .
The University of Nebraska-Lincoln also has said it plans to welcome students back this fall and resume football .
The Cornhuskers hold the record from the National Collegiate Athletic Association for consecutive sold-out Saturday football games , a streak that began in 1962 and has run for 375 games so far .
The Huskers ’ venue , Memorial Stadium , swells with about 90,000 fans each time .
Each game , about half a dozen per season , brings in an economic @ @ @ @ @ @ @ Lincoln metropolitan area , according to Eric Thompson , a professor of economics at the University of Nebraska-Lincoln .
Forgoing more than $ 31 million from a skipped season would be devastating .
Even a best-case scenario , with a return to normal operations in the fall , looks disastrous to many businesses hurting from lost revenue from spring and summer .
As Julie Jennings , owner of the clothing boutique Uniquities , put it : “ It ’ s tons of people and tons of money that is gone that we ’ @ @ @ @ @ @


washingtonpost--2020-06-15--Analysis | Quibi Quibbles as TikTok Burns Up the App Charts

For Quibi , a startup trying to compete with established media giants in the streaming wars , its first few weeks have been more difficult than most .
Quibi ’ s pitch was that it was taking Netflix Inc. ’ s reinvention of television viewing one step further : It would be mobile , and its name — an attempt at a clever portmanteau of “ quick bites ” — alludes to the fact that all the content is split into episodes that are no longer than 10 minutes each .
It was looking to attract on-the-go viewers who are @ @ @ @ @ @ @ suddenly , no one was going anywhere .
The Covid-19 pandemic hit and Quibi quickly bit the dust .
While TikTok , YouTube and Instagram are near the top of Apple ’ s app charts , Quibi is near the bottom .
Other services such as Netflix and Disney+ , which are more suited to longer periods spent binge-watching on a proper TV set , have also experienced a surge in subscribers during the crisis .
It ’ s not only that Quibi ’ s short-form videos are more tailored to pre-pandemic life @ @ @ @ @ @ @ of its content just isn ’ t that enticing .
As the only app of its kind , it might have been good enough before the crisis , as it wouldn ’ t necessarily have had to compete head on with Netflix types .
But it ’ s clear now that the company could have produced a better catalog of shows and movies , instead of placing so much emphasis on the app ’ s use cases and Turnstyle tech feature .
In trying to become a mashup of Netflix and Instagram , @ @ @ @ @ @ @ and left out the human-connection aspect just as people were craving more of both .
Even as the U.S. reopens , it may be too late for Quibi to spend what would be needed to make another big push at luring subscribers .
Built by Jeffrey Katzenberg , a Walt Disney Co. movie veteran who co-founded DreamWorks SKG ( with Steven Spielberg ) , and Meg Whitman , a longtime technology executive known for growing EBay Inc. and leading Hewlett-Packard , there were high hopes for Quibi under their leadership .
That didn @ @ @ @ @ @ @ target of ridicule early on in some corners of Twitter for its name and for having the audacity to charge $ 5 a month while serving advertisements ( or $ 8 without ads ) .
For comparison , Disney+ costs $ 7 and has no ads .
Even so , enough boldface names from Hollywood and the entertainment world had signed on to Quibi to create the sense that it was perhaps an underestimated challenger .
There was Spielberg , Reese Witherspoon , Idris Elba , Laura Dern , Jon Favreau , Liam @ @ @ @ @ @ @ Johnson , Chrissy Teigen , Steph Curry , and on and on .
Quibi also managed to raise nearly $ 2 billion from large investors including Alibaba Group Holding Ltd. and some of the top movie studios .
The pandemic ’ s resulting stay-at-home orders didn ’ t cause Quibi ’ s problems as much as they exposed them .
The Wall Street Journal article pointed to Katzenberg and Whitman ’ s clashing leadership styles as one ongoing source of tension .
The need to conserve cash is another , with the company @ @ @ @ @ @ @ % pay cut .
Some advertisers including PepsiCo Inc. , Taco Bell , Anheuser-Busch InBev SA and Walmart Inc. are already seeking to renegotiate their terms in part because of concerns over low viewership on Quibi , the article said .
The Quibi team saw the app ’ s Turnstyle feature as a big selling point — “ groundbreaking , ” as Whitman has described it .
When a user rotates their phone between portrait and landscape mode , they get different viewing angles of the same scene .
It ’ s a @ @ @ @ @ @ @ s just as easy for the average user to overlook or forget about , or just get lazy about using .
The company is also facing a patent lawsuit over that same technology , and the suit is being financed by Paul Singer ’ s hedge fund , Elliott Management Corp. Before its launch , Quibi was the talk of the town , even if it was a punchline in some cases .
More than two months into its launch , Quibi is forgettable .


washingtonpost--2020-06-15--Analysis | Iran’s Coronavirus Fight Collides With U.S. Sanctions

It ’ s now clear that by the time the government made public Iran ’ s first virus deaths in Qom on Feb. 19 , the disease had been filling hospital beds for weeks .
The government hesitated to quarantine the city , home to the nation ’ s largest theological seminary , describing such a step as “ medieval.
” It was also slow to halt flights from China , its main economic and geopolitical partner , and to close holy sites such as Qom ’ s shrine of Fatima Masumeh , from which Shiite pilgrims carried the virus @ @ @ @ @ @ @ movement restrictions , it was quick to allow people to return to work , in April , which may have contributed to the rebound in infections .
By June Iran was reporting record daily numbers of new cases .
The pandemic struck after a series of missteps had already shaken confidence in the government and its security pillar , the Islamic Revolutionary Guard Corps .
In November , as U.S. sanctions reduced Iranian oil revenues to a trickle , the government slashed fuel subsidies , prompting protests that it suppressed at the cost @ @ @ @ @ @ @ at least 304 lives .
In January , the U.S. killed Iran ’ s most powerful military general , Qassem Soleimani , in a targeted drone strike in Iraq .
The surge of national unity that followed was cut short when authorities initially sought to cover up the IRGC ’ s mistaken shooting-down of a civilian airliner on Jan. 8 .
With trust in government at an all-time low , millions boycotted parliamentary elections in February , and ignored directives not to travel during the Persian New Year , in late March .
@ @ @ @ @ @ @ .
As with China , Iran ’ s figures suggest the country of about 83 million brought a rampant outbreak under control .
It was quick to boast of success relative to richer countries .
But that was before the second surge of infections , which took Iran ’ s official totals of cases and deaths to 189,876 and 8,950 respectively , by June 15 .
At the same time , Iran ’ s data may be even less accurate than elsewhere .
Low testing rates mean the Tehran government has likely understated @ @ @ @ @ @ @ figures in mid-March , after hard-hit areas posted numbers that were multiples of official data .
Media interviews with doctors and nurses , including by Bloomberg , and an Iranian parliament report suggest systematic misdiagnosis and under-reporting of deaths .
After two years of U.S. President Donald Trump ’ s “ Maximum Pressure ” campaign , following on earlier sanctions , Iran entered the virus crisis with 41 % inflation , rising unemployment and an economy estimated by the International Monetary Fund to have shrunk by 5.4 % in 2018 and a further @ @ @ @ @ @ @ exports , Iran ’ s biggest source of foreign exchange , are about 7 % of their level just before the U.S. withdrew from a multilateral nuclear agreement in May 2018 .
Under that accord , reached in 2015 , Iran forfeited some 97 % of its enriched uranium , which if processed further could fuel a nuclear weapon , and mothballed some three-quarters of the centrifuges needed to refine the heavy metal .
The Trump administration says its sanctions aim to pressure Iran ’ s leadership into abandoning its nuclear program , @ @ @ @ @ @ @ such as Hezbollah and halting the development of ballistic missiles .
U.S. sanctions mean the country is now largely cut off from the international financial system and has little foreign currency to purchase imports , including medical supplies .
Where other nations borrowed or dug into reserves to cushion the impact , Iran had little capacity to do either .
Despite exceptions to U.S. sanctions for food , medicines and medical equipment , the U.S. government has frequently warned businesses and banks to avoid any trade with Iran , making it difficult for @ @ @ @ @ @ @ U.S. leverage rests with the central role American banks , and the U.S. dollar , play in the global economy .
Anyone violating the sanctions could see their U.S.-based assets blocked or lose the ability to move money via the U.S. banking system .
There ’ s no sign of this so far , with both sides using the crisis to pursue geopolitical advantage .
The U.S. blocked Iran ’ s request for a $ 5 billion IMF loan , the first Iranian application since 1960 .
Although the U.S. offered Iran “ @ @ @ @ @ @ @ Ali Khamenei refused it , citing Iran ’ s lack of trust in the leadership in Washington .
Iran sought to pin blame for the virus on the U.S. , with Khamenei promoting a theory that the U.S. had engineered it to target people with the genetic make up of Iranians .
There ’ s little sign of that , either .
Some right-wing Washington think tanks and commentators argue the coronavirus is piling pressure on Tehran to capitulate to U.S. demands , making this the wrong time to ease sanctions .
Yet @ @ @ @ @ @ @ the IRGC and Bonyads -- charities-cum-industrial conglomerates linked to the Supreme Leader and religious bodies -- which have distributed welfare to supplement government aid .
Iran ’ s goading of Washington also continues .
In March , Iran-backed militias shelled a U.S. base in Iraq ; in April , Iranian gun boats swarmed a U.S. naval ship and coast guard cutter in the Persian Gulf ; and in May , the country launched its first military satellite with rocket technology the U.S. said could power ballistic missiles .
Iran has sought to stir @ @ @ @ @ @ @ Minister Javad Zarif slammed as “ medical terror.
” Calls for Trump to lift them have come not just from Russia , China and other Iran-friendly nations , but also former U.S. and European officials , four former NATO secretaries general , human rights groups and some lawmakers in Congress .
The Trump administration says Iran can access medicines , food and other humanitarian goods , and that it could afford more for the pandemic if it spent less on military adventures .
This remains about as contentious as ever .
Iran , @ @ @ @ @ @ @ of nuclear weapons in 1968 , insists it ’ s developing atomic technology only for non-military purposes .
The U.S. disputes that .
The IAEA said it made a record number of site visits in Iran last year , although some relating to Iran ’ s past activities were blocked .
Covid-19 has since made the process more reliant on digital monitoring .


washingtonpost--2020-06-15--Analysis | BP Submits to Brutal Reality on the Future of Oil

The British oil giant has a new chief executive officer and a new finance director and it was already trying to break with the past before the impact of the Covid-19 crisis became fully apparent .
The outbreak has prompted a more radical reassessment of BP ’ s future role and what its assets are worth .
BP ’ s assumption is that the long-term price of Brent crude will be about $ 55 per barrel , up to 30 % lower than it thought previously .
Among its oil major peers , the company ’ s management is shifting @ @ @ @ @ @ @ .
On that basis , some fields won ’ t earn adequate returns , and some of the world ’ s fossil fuels that would have been extracted and burnt now won ’ t be .
It ’ s a moment to be compared not only with peers ’ comments of late , but with the seismic revaluations the industry has inflicted on investors over the past two decades — think ConocoPhillips ’ s $ 34 billion of asset impairments in the financial crisis .
The shift partly reflects the near-term reduction in @ @ @ @ @ @ @ by gross domestic product and that ’ s expected to be sharply lower this year and next .
BP also sees the pandemic accelerating the move to cleaner forms of energy as policymakers look to restart economies using less conventional energy , pushing up the cost of emitting carbon .
Equities may have recovered from their lows on the expectation that many countries are returning to work .
But oil stocks have not , and manufacturers such as Tesla Inc. , squarely focused on the transition to cleaner forms of power , have @ @ @ @ @ @ @ begins to address the economic conundrum that has hampered the energy transition : the relative competitiveness of dirty and clean energy .
The higher returns from putting another dollar into the development of conventional energy assets have simply been too tempting for oil majors to allocate serious funds to renewables .
It may be some time before the returns BP makes from clean energy can compare with those from oil .
Perhaps it can make a virtue of diversification , offering large business clients energy from multiple sources in a way that combines @ @ @ @ @ @ @ of renewable provision .
For now , the immediate impact on BP of the writedowns will be to weaken its balance sheet by inflating gearing , which measures net debt as a percentage of total capital .
This was 36 % at the end of the first quarter ( against a long-term target of 20 % to 30 % ) .
How significant this is will depend on the view of the credit-rating firms .
But the pressure to lower leverage will be intense .
That , in turn , forces a rethink @ @ @ @ @ @ @ A few weeks ago , CEO Bernard Looney was unapologetic about maintaining the payout amid the pandemic , suggesting the board would wait and see how the crisis developed .
The contrast between that message and the hard conclusions aired on Monday couldn ’ t be more stark .


washingtonpost--2020-04-19--Mnuchin, Democrats Say Aid Package May Be Passed in Days

While the Senate has a pro forma session scheduled for Monday , passage of any measure then is unlikely .
Leaders of both parties must check with all senators to ensure they would agree to approve something by unanimous consent , and text of legislation is usually provided first .
The Senate ’ s next scheduled session is currently set for Thursday .
Discussions are focused on adding an additional $ 300 billion to the Paycheck Protection Program , or PPP , designed to help small businesses keep workers on their payrolls as much of the country remains under stay-at-home @ @ @ @ @ @ @ Leader Chuck Schumer , also on CNN , said he was hopeful the framework of the small-business deal could be reached on Sunday night or early Monday , including tweaks to the program designed to make money more available to the smallest of businesses .
Congress is “ very close ” to a bipartisan deal , Pelosi said on ABC ’ s “ This Week , ” adding that the Democratic caucus backed her approach to dig in and demand additional money for hospitals and other segments in the current round .
On @ @ @ @ @ @ @ “ making a lot of progress ” on another $ 300 billion in small business funding .
The deal will include $ 75 billion of the $ 100 billion Democrats have demanded for hospitals , and $ 25 billion for virus testing , he said .
House Republicans have scheduled an 8 p.m. conference call for Sunday to get an update from the their leaders on the status of negotiations on replenishing the tapped-out PPP , according to multiple party officials .
One Republican lawmaker familiar with the situation said there ’ s @ @ @ @ @ @ @ on a possible deal .
The call Sunday is being billed as catching members up on the status of talks , the lawmaker said .
“ Overwhelmingly , my caucus , and we ’ re working closely with the Senate Democrats , know that we have an opportunity , and an urgency , to do something for our hospitals , our teachers and firefighters and the rest , right now , ” Pelosi said .
Pelosi on Saturday penned a progress report to Democrats -- a “ Dear Colleague ” letter -- that @ @ @ @ @ @ @ Chairs and the overwhelming support of our Members to strengthen ” and broaden the availability of the PPP .
“ It is very urgent though that we support our police and fire , first responders , teachers , ” Pelosi said in a “ Fox News Sunday ” interview .
“ Everything we ’ re doing is about the coronavirus .
Not going afield into anything else.
” It ’ s come under fire for payouts made to certain operations like large chain restaurants .
More than a dozen publicly traded companies with @ @ @ @ @ @ @ , including Shake Shack Inc. , Potbelly Corp. and a Tex-Mex restaurant chain with more than 10,000 employees , received loans .
The National Federation of Independent Business , the largest group representing small businesses in the country , is calling on Congress to reserve $ 200 billion in the next tranche of funds for firms that have 20 or fewer employees .
“ Most of the money now is going to people who have hundreds of people working for them , and millions of dollars in their accounts , ” Summers said @ @ @ @ @ @ @ rules.
” The PPP offers loans of as much as $ 10 million that convert to grants if proceeds are used to keep workers on the payroll and cover rent and other approved expenses for about two months , a stopgap designed to help businesses get by until the economy reopens .


washingtonpost--2020-04-19--Analysis | These Landlords Don’t Want Us to Go to Work

The Asian financial center had a much-publicized early success in containing the pandemic before an outbreak in dormitories densely packed with foreign workers , sending numbers soaring .
The government , which banned tourists last month but kept schools , restaurants and bars open , has now shut down social gatherings and closed all businesses except essential services .
Even as retail , commercial and hospitality properties struggle , shares in Keppel DC REIT , the island ’ s largest landlord of data centers by market value , have recouped most of their March losses .
Put it down to @ @ @ @ @ @ @ Bloomberg Intelligence analyst Michael Tan has noted , widespread adoption of cloud storage and external data centers could allow employers to shrink their office-based server rooms .
That would boost demand for leasing space from the likes of Keppel DC .
But there ’ s more to the story .
Singapore and Hong Kong , rivals in many other spheres , also compete to host computer servers .
With Covid-19 deepening the rift between Washington and Beijing , there ’ s a strong likelihood that Hong Kong ’ s prospects will fall victim @ @ @ @ @ @ @ .
U.S. officials recently refused permission to Google to turn on a high-speed internet link with the Chinese territory on national security grounds , while allowing a similar connection to proceed with Taiwan , the Wall Street Journal reported .
In this fraught environment , it should be very clear to Alphabet Inc. and Facebook Inc. that Singapore is a safer choice .
Outside of China , the potential market for digital consumption in India and Indonesia is large because of the sheer size of their populations .
But they also happen to @ @ @ @ @ @ @ hosting data centers , according to Cushman & Wakefield Plc .
Measured by power supply , Singapore is now the world ’ s largest repository for storing and processing data , with Facebook alone setting up an 11-story facility , its first such custom-built center in Asia .
In retail-crazy Singapore , owning malls was looking like a bad idea even before the virus .
E-commerce was hollowing out physical stores , hurting segments like electrical goods , electronics , home furnishings and telecommunications especially hard .
The coronavirus has further buttressed the @ @ @ @ @ @ @ need footfalls to pay rent .
As long as the existing data centers hold their value , REITs can take advantage of collapsing global interest rates to shop for factories that can be modified as server farms .
Their retail and commercial peers , meanwhile , could be bumping up against their 45 % regulatory leverage limit , should their real-estate values drop by 15 % to 30 % .
They won ’ t be going out to expand any time soon .
Their home-bound customers , too , may be stuck in @ @ @ @ @ @ @ meeting .
The wealthy but aging chunk of Singaporeans who invest in data center REITs will be happy landlords , collecting a decent rent .
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services .
He previously was a columnist for Reuters Breakingviews .
He has also worked for the Straits Times , ET NOW and Bloomberg News .


washingtonpost--2020-04-18--A Month of Lockdowns on Main Street and Aid Already Ran Out

At 9.25 a.m. on April 3 , Bobby Lance got an email from his bank telling him to get ready for the government ’ s small business lending program that was about to go live online in five minutes .
He then spent the next 60 minutes at his computer furiously clicking on his mouse to submit his application .
“ It was an anxious time , ” he said of the early days in April , adding that he sometimes drank two glasses of wine to help calm his nerves .
Those days almost seems a distant memory now @ @ @ @ @ @ @ Ice Cream Café and two other food businesses just outside Disney World in Orlando , Florida , has since applied for another government loan , got up to speed with everything from pathogens to virus testing , and shared what he has learned with other business owners .
And now he ’ s focusing on business in a post-lockdown world .
While Lance waits to hear whether he ’ ll get federal funding , the 66-year-old is preparing for an eventual reopening .
He has ordered masks and plastic face shields for his @ @ @ @ @ @ @ temperatures and looked into “ hospital quality ” sanitation training for them , he said .
Lance has also got quotes from sanitation companies to perform more regular deep-cleaning of his 1950s-style ice cream cafe and he ’ s started designing plexiglass dividers for its back-to-back seating booths .
Now the CEO and co-founder of Torch & Crown Brewing Co. has morphed his restaurant property into a distribution hub , and is so far keeping his 20 employees busy with beer deliveries in New York .
Dantzler himself also is bringing brews to @ @ @ @ @ @ @ Lexus SUV -- an old car that “ roars ” and already has 215,000 miles on it .
Delivering 4-packs of brew is helping for now , but revenue is just 40 % of what it would have been .
Dantzler has been approved for between $ 150,000 and $ 200,000 through the payroll protection program , but says he ’ s unsure if it will come through because he keeps reading about how all the funding has been used up .
And even if he does get a check , it will @ @ @ @ @ @ @ of staff salaries .
John Naekel co-owns four bars with two other partners in Portland , Oregon .
All of the bars have be closed with all hourly staff laid off since March 16 .
Initially he kept salaried managers for two weeks with the hope that it would be brief but had to lay them off as well .
The process of applying for the federal rescue loans has been confusing and frustrating .
The loans in the payroll protection program , designed as a short-term stopgap until the economy reopens , @ @ @ @ @ @ @ to cover salaries over about two months and other approved expenses such as rent .
It created a conundrum for many business owners whose locations are shut down under state orders : Shall they rehire their workers ?
“ We can ’ t pay them to do nothing and we don ’ t know when are going to reopen , ” Naekel said earlier in April .
“ What if we come back and the new rule for bars and restaurants is they need to operate at half capacity and stay six feet @ @ @ @ @ @ @ can ’ t operate at half capacity .
If that ’ s where we are headed , then it may not make sense to ever reopen .
I don ’ t care what amount of money if we can ’ t reopen .
That part of it is really frightening.
” “ I ’ m very grateful for it , and I understand that these things take time , but there ’ s a clock that ’ s ticking for my business and I have to take different steps to hold back time @ @ @ @ @ @ @ he said .
“ The lender I work with couldn ’ t be nicer , couldn ’ t be more responsive , but she ’ s in front of a system that you can ’ t see behind .
The money is coming from the Wizard of Oz.
” The way her business operates is she usually gets a budget from a client and money in advance , and then pays people to do the job .
At this time last year , she had brought $ 70,000 in gross for the month @ @ @ @ @ @ @ the month , she had brought in $ 13,000 and is now stuck trying to come up with the $ 50,000 she estimates she owes .


washingtonpost--2020-04-17--Analysis | 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--2020-03-15--Analysis | India Can Use Yes Bank Debacle to Chase China in Crypto

It will be both difficult and costly to revive the public ’ s dwindling faith .
A nuclear option is to nationalize the banks and non-bank finance firms that provide $ 1.75 trillion in annual funding .
Doing so would be a doomed throwback to the late 1960s , when India lurched toward stultifying socialist-style state controls.Similarly , it would be unrealistic to assume that the Yes Bank embarrassment would trigger an improvement in the status quo .
The crony-capital relationships between financiers and borrowers in India are steeped in its colonial history .
Putting on the gloss of Basel @ @ @ @ @ @ @ to make lenders less prone to failure , doesn ’ t make corruption in banking go away .
Not all is lost .
Blockchain technology , which the Indian establishment is trying to snuff out in finance , offers hope .
Prime Minister Narendra Modi ’ s government should consider an official crypto to obviate the need for trusted intermediaries , which are in short supply , anyway .
Before the coronavirus outbreak , China was widely expected to start its own central bank digital currency this year .
But India ’ s @ @ @ @ @ @ @ very different from Beijing ’ s desire to shake the hegemony of the dollar .
After the Yes Bank debacle and botched rescue , deposits in India will probably gravitate toward four or five large lenders , whose managers may be emboldened to make risky bets with other people ’ s money .
The remaining banks will struggle for liquidity .
A perennially unstable credit delivery network will always be one misstep away from the next blowup .
While every country has its share of manias , panics and crashes , to be @ @ @ @ @ @ @ years is not an environment where growth can flourish .
A legal defeat has provided the opportunity to think afresh .
Earlier this month , India ’ s highest court set aside the Reserve Bank of India ’ s directive that asked banks to not offer services to cryptocurrency traders and exchanges .
But in parallel , the government is considering a blanket ban on private virtual tokens .
Crypto activity could get slammed again , says Tanvi Ratna , chief executive of advisory firm Policy 4.0 .
To be sure , one @ @ @ @ @ @ @ laundering .
But to kill an industry and send practitioners packing would be to lose out on a valuable innovation at a time when India needs to build on the globally recognized successes of its digital payments industry , which has gained users ’ trust just as banks and shadow banks have lost it .
After surveying 17 projects around the world — from Norway and Sweden to China , Cambodia and South Africa — the Bank for International Settlements has identified four possible pathways for a central bank digital currency .
Of @ @ @ @ @ @ @ ’ t require the holder to have an account with anyone but has value guaranteed by the Reserve Bank of India could be a starting point .
Cryptography ( “ I know a secret , therefore I own the funds ” ) rather than an account relationship ( “ I am who I say I am , therefore I own the funds ” ) would be used to enable transfers .
Later , the RBI can open up the validation of transactions to authorized parties on distributed ledgers .
Currently a deposit holder @ @ @ @ @ @ @ bank ’ s management and board to the auditors , the rating firms and the regulator to do their jobs .
When they all fail , as in the case of Yes , the bank ’ s checkbook , ATM card , and online banking password cease to generate liquidity .
Deposits stop being the same as cash , even if the state guarantees their safety .
It would be far less painful if deposit owners only had to trust the RBI , not as a banking regulator but as a money-printing authority @ @ @ @ @ @ @ to settle its IOUs .
China wants the yuan to take over from the dollar as the world ’ s reserve currency .
A tech-enabled global alternative to the greenback — of the kind that Facebook Inc. ’ s proposed Libra had threatened to be — would have been an obstacle .
Hence , Beijing accelerated its tokenized currency initiative .
India needs to jump on the bandwagon for self-preservation.If the RBI doesn ’ t make easy-to-transact digital rupees available , and leaves ordinary folks at the mercy of poorly run and supervised @ @ @ @ @ @ @ store their wealth in Silicon Valley-sponsored tokenized money — or Beijing ’ s digital yuan — whenever they arrive .
If that happens , good luck running an independent monetary policy .


washingtonpost--2020-03-15--Iran to Roll Out Tax, Insurance Breaks for Virus-Hit Economy

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washingtonpost--2020-03-15--U.S. Treasury Says Coronavirus Bill to Support Small Businesses


washingtonpost--2020-04-30--Justice Department Sees Early Fraud Signs in SBA Loan Flurry

The review has already turned up several red flags in the data prosecutors have examined over the past week , Benczkowski said Thursday in a telephone interview .
Issues were found in both approved and rejected applications .
“ Whenever there ’ s a trillion dollars out on the street that quickly , the fraudsters are going to come out of the woodwork in an attempt to get access to that money , ” said Benczkowski , a former partner at Kirkland & Ellis LLP in Washington who has been running the criminal division for almost two years .
He @ @ @ @ @ @ @ businesses that are sending in loan applications for large amounts of money that are overstating their payroll costs , overstating the number of employees they ’ ve had , overstating the nature of their business.
” The criminal division has tapped the fraud section ’ s market integrity unit to oversee PPP-related investigations and coordinate with various U.S. attorneys , Benczkowski said .
That unit has been responsible for prosecuting Wall Street crime , most notably allegations of market rigging at major banks including JPMorgan Chase & Co. and Deutsche Bank AG .
@ @ @ @ @ @ @ general and other monitors , he said .
The Justice Department ’ s efforts to investigate fraudulent use of Covid-19 aid is drawing on the model used by its health-care fraud strike force , which for more than a decade has been using data analytics to identify criminal activities tied to Medicare and other federal programs .
In those cases , prosecutors determine whom to investigate by monitoring for spikes in Medicare billing in certain geographic areas .
Every year they charge hundreds of doctors , caregivers and others for bilking taxpayers , @ @ @ @ @ @ @ annually .
The Justice ’ s Department ’ s interest in the coronavirus stimulus funds comes as criticism mounts over the loan program , which was intended to help small businesses but has also sent multimillion-dollar checks to large corporations .
Still , outright examples of fraud or legally questionable behavior have yet to emerge publicly .
Banks were given wide discretion to issue the loans , and the guidelines for the program were drafted loosely .
As long as borrower applications conformed to standards -- and the money was used for its @ @ @ @ @ @ @ -- it may be difficult to accuse borrowers or lenders of intentionally abusing the program .
The inquiries are general in nature , asking for information about borrowers and whether there was anything amiss with loan applications or the loan application process , according to a person familiar with the inquiries to banks .
The inquiries have been broad-based and not centered on any specific borrowers .
As of now , the inquiries seem to be focused on clients , not the banks themselves .
Several authorities will be empowered to watch how @ @ @ @ @ @ @ distributed , including the Government Accountability Office , the nonpartisan congressional watchdog ; a separate congressional panel that has yet to form ; and an inspector general who is awaiting confirmation by the Senate .
The Justice Department can open investigations on its own or in partnership with those inspectors general or other overseers .
One of the first prosecutions to come out of the massive aid package during the 2008 financial crisis involved Taylor , Bean & Whitaker Mortgage Corp. , a loan originator based in Ocala , Florida .
Its owner @ @ @ @ @ @ @ involving mostly Freddie Mac loans , was discovered after an Alabama bank the company was using sought a half-billion dollars from the Troubled Asset Relief Program .


washingtonpost--2020-05-04--Analysis | Your Air Travel Experience Will Never Be the Same

How to get passengers off their plane and through passport control , baggage reclaim and arrivals without putting them in close proximity to each other is just one of countless air-travel challenges created by Covid-19 .
Assigning the necessary space for people on flights won ’ t be any easier .
Years of airline cost cuts and rigorous counterterrorism checks have made flying a frustrating experience for passengers .
Even those fortunate enough to turn left when boarding often complain about the indignities and delays of modern airports .
Hygiene measures , health checks and social distancing will only make @ @ @ @ @ @ @ you ’ re in economy or business .
Unless accompanied by higher ticket prices , the new health measures could also make flying less profitable , regardless of whether demand returns .
That ’ s bad news for the world ’ s airlines , which are currently burning through vast amounts of cash .
In some cases , companies ’ net borrowings will far exceed their revenues by the end of 2020 .
Besides China , where domestic services have restarted , airlines have pretty much grounded their entire fleets .
The few @ @ @ @ @ @ @ almost empty .
The silver lining of this near hibernation is that it provides a less pressured environment for testing out new hygiene measures .
These will be essential to reassuring passengers and governments that more flights won ’ t lead to a second wave of infections , but they ’ re unlikely to make flying any more fun .
The biggest American carriers say customers will have to wear face masks .
Armrests , tray tables and seat-belt buckles are being disinfected after every journey ; and in-flight magazines have been removed @ @ @ @ @ @ @ staff and other passengers , we ’ ll scan boarding passes ourselves and we ’ ll be offered less food and drink on board .
Instead of boarding first , business class passengers may have to wait till last .
It ’ s not yet clear how passengers will be screened for Covid-19 until there ’ s a vaccine .
At a minimum we ’ ll probably have our temperatures checked when we arrive at the airport , but this won ’ t weed out the high proportion of asymptomatic virus cases .
@ @ @ @ @ @ @ ” may be required for international travel but even these have limitations .
Passengers who disembark from a high-risk location may still have to enter quarantine , which could put many off from booking a ticket in the first place .
Health checks will slow down getting through immigration and you can probably forget arriving only two hours before a flight .
This could mean even more passengers waiting inside ( or outside ) the terminal .
Imagine the parking queue at your local grocery or hardware store right now , only much @ @ @ @ @ @ @ boss , John Holland-Kaye , thinks keeping the required two meters gap at all times will be “ physically impossible ” at large airports .
A less palatable alternative for Holland-Kaye and his peers , though , is that governments cap the number of departing flights to prevent crowding .
European airlines , chief among them Ryanair Holdings Plc , say much the same thing about physically distancing inside the aircraft .
Some carriers are leaving the middle seat unoccupied but the health benefits are dubious .
Modern aircraft have air-filtration systems that @ @ @ @ @ @ @ protect you if the person in the seat in front or behind has a cough .
Leaving seats empty also creates more carbon pollution per passenger carried .
Naturally , airlines worry how they ’ ll make money if they ’ re only allowed to sell two-thirds of their seats .
European carriers typically need to fill about 80 % of them to break even .
To compensate they ’ d have to cut costs or raise prices .
Doing the latter won ’ t be easy until demand recovers .
Quick turnarounds @ @ @ @ @ @ @ the longer time needed to clean the cabin between flights and to load passengers onto the aircraft isn ’ t good news either .
Hygiene rules could make it harder to generate so-called ancillary revenues from things like food sales and priority boarding .
And Ryanair and its low-cost peers can forget about holding passengers at cramped departure gates that feel like cattle pens , or packing them into just a couple of buses to reach the plane .
It will probably take years for demand to recover fully because millions of potential @ @ @ @ @ @ @ travel will be an especially tough sell .
Companies will worry about protecting employee health and videoconferencing has proven itself a viable alternative during the lockdowns .
Trade shows and conferences won ’ t recover quickly .
Hence airlines are already reducing expenses and retiring older aircraft to prepare for structurally lower demand .
British Airways is poised to cut about 30 % of its workforce ; U.S. and European peers will no doubt do similar once government furlough subsidies expire .
Airports may have to rethink plans for shiny new terminals and @ @ @ @ @ @ @ — for the aviation industry , if not the planet — cheaper jet fuel will help everyone .
But , in Europe , only a privileged few airlines are benefiting from lavish government bailouts , which could distort competition .
If weaker airlines collapse , the survivors will face less rivalry and may eventually be in a position to raise fares .
Consolidation transformed U.S. airline profits and even convinced Buffett to abandon his aversion to investing in the sector — until coronavirus came along .
Customers whose taxes rescue the airlines , @ @ @ @ @ @ @ a ticket refund when they ’ ve asked for one during the pandemic , may wonder why they ’ re paying more for a worse experience .


washingtonpost--2020-03-04--The Fed’s Guns Have Been Spiked By Reluctant Friends

The Covid-19 epidemic is a truly global shock with truly global consequences .
There are , of course , differences in timing : The outbreak originated in China , which may now be past the worst .
Most new registered cases are coming from South Korea , Italy and Iran .
Other countries , including France , Germany , the U.K. and the U.S. , have just started to prepare for a steep increase in contagion .
The World Health Organization may have not have labelled the disease a “ pandemic , ” but we don ’ t look far @ @ @ @ @ @ @ and central bankers from the world ’ s seven main economies held a conference call on Tuesday .
For all the choreography , the meeting produced little .
The officials reaffirmed their boilerplate commitment to “ use all appropriate policy tools , ” including fiscal policy , but they fell short of taking action .
The response to the emergency is undoubtedly complex .
It is not clear how long the damage will last , nor whether it will have more impact on supply chains than on consumer demand ( which matters hugely @ @ @ @ @ @ @ a time of severe crisis , this was a spectacular failure of international coordination .
The Fed ’ s move was therefore a lot less powerful than it might have been .
Imagine if all central banks had chosen to take action simultaneously , as they did during the global financial crisis or after the tsunami in Japan in 2011 .
Finance ministers should have also joined in , outlining their plans for a coordinated fiscal response .
Clearly , this would not solve a medical emergency .
But it would have assuaged @ @ @ @ @ @ @ to stand united to protect the world ’ s economy and to act fast in a crisis .
Europe ’ s top officials bear a large chunk of the blame .
On Monday , Ursula von der Leyen , European Commission President , set out plans for a task force to combat the epidemic .
But most governments — with the laudable exception of Italy — have yet to explain how much money they ’ re willing to commit to fighting this emergency .
Euro zone finance ministers will hold a conference call @ @ @ @ @ @ @ result is less disheartening than the one from the G-7 gathering .
The European Central Bank is also looking behind the curve .
The ECB was the last of all the major central banks to state its willingness to intervene if needed — and its choice of wording was especially feeble .
The fear is that President Christine Lagarde may have caved in to the traditional stubborn reluctance of some national central banks , such as Germany ’ s Bundesbank , to expand monetary policy .
Mario Draghi , Lagarde ’ s predecessor @ @ @ @ @ @ @ order to act decisively .
When the ECB governing council meets next week for its regular policy meeting , Lagarde — who is more of a politician than Draghi — may need to show whether she ’ s willing to do the same .
A large-scale scheme to provide liquidity to small- and medium-sized enterprises is the least the ECB can do .
An interest rate cut and an increase in the size of asset purchases should also be on the cards .
There is no guarantee that these policy responses would actually @ @ @ @ @ @ @ take any dramatic steps from policymakers as a sign that the outlook is worse than feared — as it seemed to do on Tuesday following the Fed ’ s announcement .
However , as the human and economic cost of the coronavirus spreads , a bigger risk is minimizing what is happening and acting too late .
Europe should lead from the front , not hide at the back .
Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion .
He is also an economics columnist for La Repubblica and was a @ @ @ @ @ @ @ Financial Times .


washingtonpost--2020-03-04--Analysis | Italy’s Billionaire Agnelli Family Gets Another Windfall

The promised proceeds are 50 % more than PartnerRe ’ s last reported tangible book value of $ 6 billion .
Other shareholders in Exor NV , the Agnellis ’ investment vehicle , may have desired something closer to $ 10 billion .
European reinsurers were trading at about 1.7 times tangible book value earlier this year and there was a case for a premium on top .
However , the backdrop is very different now .
The sector is trading on 1.4 times tangible book value , according to Bloomberg data .
Getting a top-up for an all-cash deal @ @ @ @ @ @ @ would have been a Herculean task .
The Agnellis have locked in the prospect of making $ 3 billion in dividends and capital gains on an asset that cost them $ 6.7 billion in 2016 — not a stellar return over almost five years , but they may not get a better chance to underwrite their gain .
Given Covea probably faced few rivals willing to enter into an auction for PartnerRe , the question is why it didn ’ t drive a harder bargain .
The probable answer is that it ’ @ @ @ @ @ @ @ pushing for financial discipline .
It ’ s also keen to diversify its business and is short of options after failing in a 2018 attempt to buy French reinsurer Scor SE .
Moreover , the Agnellis are scarcely forced sellers .
This deal isn ’ t completed yet , but the fact that it has been agreed in this market environment suggests a commitment on Covea ’ s side .
The proceeds aren ’ t due until the fourth quarter .
That precludes an immediate bout of bargain hunting for new assets by @ @ @ @ @ @ @ large scale .
That ’ s maybe just as well .
It ’ s hard to see much upward pressure on company values this year given the impact of the virus outbreak on global demand and supply chains .
As for Covea , it has a deal when rival bidders may have been shy .
It ’ s not clear how much of the business disruption attributable to the virus could lead to a burst of insurance claims .
The outbreak may even create demand for new areas of cover for the industry @ @ @ @ @ @ @ loser in all this , it is most likely Scor — now worth 25 % less than Covea was dangling and , for the present , left on the shelf .
Chris Hughes is a Bloomberg Opinion columnist covering deals .
He previously worked for Reuters Breakingviews , as well as the Financial Times and the Independent newspaper .


washingtonpost--2020-03-04--Analysis | The Retail Apocalypse Isn’t Over Yet

The failure leaves the company in a bind .
Some of its borrowings are at a corporate level , but others are against individual properties .
It has almost 1 billion pounds falling due in 2021 .
Intu can pay the interest on its debts , but covenants look tight .
Intu said it was still within its borrowing limits right now , but there was a risk that it could breach covenants at its next test in July .
Susan Munden , an analyst at Bloomberg Intelligence , estimates that a 10 % fall in the value of its @ @ @ @ @ @ @ 300 million pounds of liquidity .
And that ’ s before any impact on Intu ’ s tenants from the Covid-19 scare .
As I have noted , there is already anecdotal evidence that footfall has been hit by worries about contracting the disease in shops and malls .
So far Intu said that it had not seen a meaningful drop .
Intu could look to sell more assets .
It has already offloaded its interest in two Spanish sites and part of a mall in Derby .
It still owns 100 % @ @ @ @ @ @ @ so it could bring in partners there too .
But given the scale of the crisis , some form of debt-for-equity swap looks inevitable .
The shares , which have fallen more than 90 % over the past year , traded at less than 10 pence on Wednesday .
At this level , they are pricing in expectations that there ’ s a chance of the equity being wiped out .
That ’ s a boon for short sellers , including Crispin Odey , but a worry for long-suffering shareholders , as well @ @ @ @ @ @ @ haircut in a radical restructuring .
For all its woes , Intu has some decent assets .
Some malls have adjoining land , which could be used for residential development .
One wild card could be Mike Ashley , majority owner of Frasers Group Plc , formerly Sports Direct .
He is no stranger to a bargain , and will have many stores in Intu malls .
Frasers shareholders likely wouldn ’ t welcome his intervention , especially after his debacle at Debenhams .
But Intu investors and bondholders might .
The property @ @ @ @ @ @ @ .


washingtonpost--2020-03-04--JPMorgan Asset Sees Rush Into U.S. Bonds in Negative-Yield World


washingtonpost--2020-03-04--Analysis | OPEC’s Capacity for Shock and Awe Is Limited

OPEC+ is having a hard time responding to a black swan that threatens a repeat of the global financial crisis .
IHS Markit , which shelved CERAWeek , now estimates oil demand in the first quarter will fall by 3.8 million barrels a day , sharper even than in early 2009 .
It now also expects 2020 will record an annual decline , an exceedingly rare occurrence .
OPEC+ has inherent weaknesses , exemplified by the fact that it had to add that “ + ” in the first place .
Of the 20 members subject to supply curbs , @ @ @ @ @ @ @ Saudi Arabia and the United Arab Emirates — account for 70 % of the oil being withheld ( 1 ) .
Of those four , Russia has never really put the “ us ” in “ plus ” and has resisted calls for even deeper cuts this year .
The rest of the gang mostly offer the comfort of numbers and a periodic boost for Viennese hotels at this point .
Saudi Arabia is now reportedly pushing for further supply cuts of more than 1 million barrels a day .
As it is @ @ @ @ @ @ @ pushed OPEC ’ s crude oil output to less than 28 million barrels a day as of February , according to Bloomberg data .
More cuts would take it below the level reached in early 2009 , when the group agreed to rapid cuts to shore up prices amid the financial crisis .
In several crucial respects , however , this time is different .
Back then , both the U.S. and , especially , China unleashed enormous fiscal stimulus to counteract the economic disruption .
This time , the crisis emanates in @ @ @ @ @ @ @ relying on the Federal Reserve to shore things up — which seems like a big ask , if the initial reaction to Tuesday ’ s surprise rate cut is any indication .
Moreover , while marginally cheaper money may offer some extra economic cushioning , it is unclear how far this will offset sheer physical disruption if fears of coronavirus widen .
Consider : If you hold off on taking a flight because you ’ re worried about catching a novel disease , would a cheaper air ticket necessarily persuade you to risk @ @ @ @ @ @ @ shooting bullets from a depleted magazine , so OPEC+ is discussing further cuts barely three months after the last set were unveiled at a fractious meeting .
Brent crude is trading in the low $ 50s per barrel , which is where it was when the whole OPEC+ show first got going more than three years ago .
This is despite the fact that , as of January , more than 5 million barrels a day of potential supply were either being held back by OPEC or suffering some sort of disruption , @ @ @ @ @ @ @ Administration .
And these numbers don ’ t include voluntary cuts by non-OPEC members .
Given the EIA data tracks only crude oil , January ’ s figure of 5.6 million barrels a day being offline actually equates to almost 7 % of this year ’ s refinery throughput , according to International Energy Agency estimates — which are now likely out of date and too high .
In light of that , it ’ s unclear how much of an impact moving another million barrels a day of supply into the spare @ @ @ @ @ @ @ in that chart how the balance between OPEC ’ s spare capacity and its disrupted capacity has shifted , primarily because of Libyan and Venezuelan collapse and the resumption of U.S. sanctions on Iran .
The ignominious truth of OPEC+ is that a large part of its success to date in supporting oil prices — such as that is — is owed to the degradation of several of its key members .
This matters because those barrels have been genuinely removed from the market , in the sense that it ’ s doubtful @ @ @ @ @ @ @ .
Voluntary cuts from the likes of Saudi Arabia , on the other hand , would likely take time to implement , and production could resume quite quickly when prices rise — and the oil market knows this .
We may get another big cut at the end of this week .
All along , though , these cuts have been a signal of fundamental weakness .
Like the Fed , OPEC+ may be shocked at how little awe it inspires .
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 .