washingtonpost--2020-05-14--Analysis | Want a Beach Break? You’ll Need the Right Passport

What seemed like some rare good news for travelers and desperate airlines was tempered by Britain ’ s and Spain ’ s announcements this week that they will now ask arriving passengers to observe a two-week quarantine .
Prime Minister Boris Johnson ’ s about-turn — the U.K hadn ’ t bothered with the requirement before now — raised the obvious questions about a country with the highest virus death toll in Europe closing the gate after the horse had bolted .
Johnson ’ s discussions with neighboring France and Ireland to exempt their citizens from quarantine prompted yet more @ @ @ @ @ @ @ quarantine policies .
The French and Irish exemptions would be political , rather than scientific , decisions .
Michael O ’ Leary , the boss of budget airline Ryanair Holdings Plc , called the U.K. ’ s position “ nonsense.
” When you look at the hodgepodge of baffling and often contradictory national solutions that are emerging , you can understand the frustration .
Like his peers , O ’ Leary is desperate to get back in the skies and he ’ s aware that telling visiting tourists and business travelers that they @ @ @ @ @ @ @ Airbnb accommodation or a hotel , would be the kiss of death for his industry .
Unless things change , a Brit holidaying in Spain might have to isolate on arrival and then again on their return home , meaning they could spend almost a month in isolation .
That ’ s not many people ’ s idea of a holiday .
IATA , the global airline body , warned this week that international travel “ can not restart under such conditions.
” National governments have begun teaming up with countries they consider @ @ @ @ @ @ @ virus outbreaks might be left out , with no realistic option for their citizens other than a staycation .
As beauty contests go , it ’ s become a pretty ugly one .
Instead of a clear and synchronized international approach , the confusing patchwork of policies will be difficult for holidaymakers and travel companies to navigate .
One can ’ t forget that Covid-19 was only able to spread so swiftly because infected travelers brought it with them on planes and ships .
Places such as Hong Kong and New Zealand , @ @ @ @ @ @ @ might undo that good work if infected tourists seeded lots of new cases .
Some governments may decide that keeping people alive is more important than guaranteeing tourists their two weeks in the sun , whatever the consequences for the travel industry .
It ’ s certainly not for the airlines to decide how and when flying restarts .
Still , as lockdowns are gradually lifted , the quarantining of international arrivals is starting to look arbitrary .
While people can move around more freely within their home countries , if you cross @ @ @ @ @ @ @ minutes , you risk having to self-isolate .
Yet within national borders there are often big differences in regional infections rates .
Some parts of countries are clearly much safer than others .
Quarantine is a particularly sensitive topic in the European Union because free movement is a cherished principle .
The bloc is urging countries not to discriminate and for places with similar virus-risk profiles to open up together .
Ultimately , however , national governments will decide — another example of the limits of European unity .
Some states may be @ @ @ @ @ @ @ holiday locations , as the U.K. appears to want to do with France .
Tourism accounts for about 10 % of the EU ’ s economic output , so there ’ s plenty at stake .
Simply checking passengers ’ temperature on arrival won ’ t identify asymptomatic virus cases but there are other suggestions on how quarantines can be avoided .
“ Travel corridors , ” or the more evocative “ travel bubbles , ” offer one solution .
Baltic neighbors Estonia , Latvia and Lithuania will form one ; Germany , @ @ @ @ @ @ @ countries are edging toward another , but hard-hit Italy hasn ’ t been invited yet .
And everyone wants to be friends with faraway virus conquerors such as New Zealand and Australia ( they ’ ll probably bubble up with each other ) .
Another option is for passengers to take a virus test , either a few days before they travel , as Greece is proposing , or on their arrival , which is Iceland ’ s preferred approach .
But this depends on countries having enough testing kit and on passengers @ @ @ @ @ @ @ at at Vienna airport can already avoid quarantine if they take a test , but it costs 190 euros ( $ 205 ) to have your nose or throat swabbed .
That ’ s more expensive than some return flights .
Once air travel picks up again , having thousands of passengers waiting around airports for their test results may become impractical .
If you want to take an international trip but avoid quarantine in 2020 it looks as though you ’ ll have to get quite tactical about the destination you pick @ @ @ @ @ @ @ and get very familiar with government travel advice .


washingtonpost--2020-05-14--Analysis | The WTO Is Dead. Long Live the WTO

That decision is hardly surprising .
The kingdom over which he presides is crumbling .
Global trade liberalization — the original purpose of the WTO and its predecessor , the General Agreement on Tariffs and Trade , or GATT — hit a wall more than a decade ago when the Doha round of talks collapsed , thanks in part to the perennial sticking points of agriculture and services .
The so-called free trade deals that have been signed since are better described as preferential agreements , serving as much to constrain as to open up global commerce by creating in- @ @ @ @ @ @ @ often do worse than if no pact had been signed at all .
The biggest regional agreements that have been worked on over the past decade , the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership , are more or less explicitly treated not as instruments to free up trade but as fronts in the long-term soft-power fight between the U.S. and China .
That same rivalry last year put paid to the Appellate Body , the WTO ’ s most important remaining function after the fall of the Doha round .
The @ @ @ @ @ @ @ members , solved one of the most glaring problems with GATT , the inability of the trading system to bind its most powerful members .
Still , it had always had its discontents — both in emerging economies , which often saw it as a tool to force open their markets to powerful multinationals , and in the U.S. , which equally didn ’ t appreciate coming in on the losing side of cases .
With the rise of China as an export powerhouse and the arrival of long-standing WTO skeptic Robert Lighthizer @ @ @ @ @ @ @ representative , the Appellate Body ’ s disintegration last year was all but inevitable .
Right now , global trade seems under threat in a way it hasn ’ t been since the Cold War .
In the short term , the coronavirus has brought swathes of international commerce to a halt : The WTO expects trade could decline this year by as much as 32 % .
World merchandise volumes , which almost always grow once you smooth out month-to-month volatilities , had been in decline for nearly a year even before @ @ @ @ @ @ @ deal announced with great fanfare in January isn ’ t worth the paper it ’ s written on , as we ’ ve argued .
Worse still , its main deliverable outcome ended up being a $ 200 billion-over-two-years increase in Chinese imports from the U.S. that would lean heavily on farm produce and petroleum .
That ’ s now at the mercy of both Chinese demand and rickety virus-hit U.S. supply chains , not to mention plummeting prices and production of American oil , which will push the headline dollar target even @ @ @ @ @ @ @ recently been signaling deep discontent with the agreement as he ramps up anti-Chinese rhetoric around the coronavirus .
In the current moment , January ’ s deal risks becoming less a balm for U.S.-Chinese relations than an irritant .
While all that seems quite grim , the course of liberalizing trade never did run smooth .
GATT was born from the ashes of the International Trade Organization , which John Maynard Keynes had envisioned as a global body to eliminate trade surpluses and deficits .
The WTO itself arose to fix GATT ’ @ @ @ @ @ @ @ , when a young lawyer named Robert Lighthizer assisted in a previous round of might-is-right trade diplomacy between the U.S. and Japan .
Few suspected , as the WTO ’ s 1999 Seattle meeting attracted enormous anti-globalization protests , that China ’ s coming membership would kick off one of the richest periods for trade the world had ever seen .
That ’ s reason to hope that despite the current pre-dawn darkness , international commerce will some day find a way to rise above its current problems and open anew .
The @ @ @ @ @ @ @ helped the rich is justified — yet that was a shortcoming not of the WTO , but of the governments that failed to use the benefits of open commerce to improve the welfare of working people .
Perhaps it requires the fall of the existing regime for the world to build a new trading system fit for the 21st century .

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washingtonpost--2020-05-14--American Business Is Split on Partisan Lines Over Virus Recovery

The survey of around 90,000 firm shows that , while every U.S. region is affected by the outbreak , the extent of financial damage and people ’ s attitudes toward it vary widely by state .
About 40 % of respondents in blue-leaning states of Vermont and Hawaii , as well as Washington , D.C. , see it taking more than half a year for business to return to normal .
However , only 18 % of those surveyed in the GOP strongholds of West Virginia and Idaho see it taking so long , the data show .
The Census @ @ @ @ @ @ @ policy makers and decision makers in the private sector more timely information about what ’ s happening in the economy and how the pandemic is shaping it .
The bureau collected the information from April 26 to May 2 .
Not surprisingly , small businesses in states with the most severe Covid-19 outbreaks had some of the most worrying responses , while states in less affected places were more optimistic .
About 39 % of respondents in hard-hit New Jersey reported having fewer employees over the past week , the second highest rate @ @ @ @ @ @ @ that island territory also reported some of the most severe financial effects of all U.S. states and territories , including the most respondents saying the virus has had a “ large negative effect.
” Also , business people in industries crippled by the virus , such as accommodation and food services , reflected outsize pain .
For example , more than 47 % of small businesses in lodging and restaurants nationwide reported a decrease in their number of paid employees during the past week , compared with 27.5 % of all respondents .
@ @ @ @ @ @ @ about politics , the results indicate businesses in blue-leaning states have more pessimistic outlooks , while respondents in red-leaning states were more bullish .
That could stem from the more severe outbreak in the Northeast , but also could reflect partisan differences over the issue .
Among the 10 states where the highest percentage of businesses expect it to take longer than six months to fully recover , eight voted for Hillary Clinton in the 2016 election ( including the District of Columbia ) .
Among the 10 states where the fewest expect @ @ @ @ @ @ @ voted for President Donald Trump .


washingtonpost--2020-04-23--Luxury Hotelier Who Backed Trump Wins Big in Small-Business Aid

The PPP has come under fire after big restaurant chains like Potbelly Corp. and Ruth ’ s Chris Steak House got loans , while many mom-and-pop firms were left stranded when the initial $ 349 billion in funding for the program ran out of money last week .
The House is expected to vote Thursday on a bill approving an additional $ 320 billion for the initiative .
The loans to Bennett ’ s companies underscore how large firms were able to take advantage of the small business program because of a loophole nestled in the bailout package that allowed @ @ @ @ @ @ @ loans that can convert to grants if they maintain employees and payrolls at certain levels .
That provision was inserted after lobbyists for hotels and restaurants pleaded with lawmakers designing the program , especially Republican Senator Marco Rubio of Florida , for special consideration .
The carveout allowed hotels and restaurants to apply for the funds regardless of how many workers they had , so long as each location employed fewer than 500 .
Bennett donated $ 150,000 in the last six months to a fundraising committee for Trump ’ s reelection campaign @ @ @ @ @ @ @ Election Commission records .
He also gave to Trump in 2016 , and has made donations to prominent allies such as House GOP leader Kevin McCarthy and Senator Lindsey Graham .
Ashford said in a statement that PPP “ is working exactly as intended by providing much needed capital to small businesses and larger businesses that have been the hardest hit -- hotels and restaurants ” with fewer than 500 employees per location .
Another Trump supporter and hotelier -- Gordon Sondland -- was also a beneficiary of the small-business relief package .
@ @ @ @ @ @ @ founded , received a PPP loan , according to a spokeswoman .
Sondland is the former ambassador to the EU who played a starring role in the Trump impeachment proceedings .
The group has more than a dozen properties , including three in Washington state , which has been hard-hit by the virus .
The Portland Business Journal reported earlier on Sondland ’ s hotel group winning a PPP loan .
Ashford Hospitality said in a regulatory filing Tuesday that it expects to receive additional loans .
The $ 30 million it received @ @ @ @ @ @ @ public company yet -- was in 42 PPP loans to company affiliates that own hotels .
Braemar , which also owns the Ritz-Carlton in Lake Tahoe , California , received $ 15.8 million in eight loans .
Ashford Inc. , which manages properties for Ashford and Braemar Hotels , got six loans totaling $ 12.8 million .
Major hotel brands like Marriott International Inc. , Hilton Worldwide Holdings Inc. , and Hyatt Hotels Corp. didn ’ t apply for the small business loans .
The companies make most of their money by selling @ @ @ @ @ @ @ who own hotel properties .
Restaurants and hotels together account for less than 10 % of the PPP loans , according to the SBA , which administers the program .
They ’ ve said the requirement to use the money in eight weeks to get loan forgiveness isn ’ t long enough and the program ’ s emphasis on keeping workers employed doesn ’ t give them enough flexibility to cover other costs .
A spokeswoman for Marriott , which owns five hotels in the U.S. , said that while it didn ’ @ @ @ @ @ @ @ of its franchisees , which could qualify as small businesses , are pursuing loans .
Marriott , which has temporarily closed about 1,000 U.S. hotels and furloughed thousands of workers , has had little trouble accessing credit markets .
On April 14 , Marriott raised $ 1.6 billion in five-year bonds in a move the company said would substantially replace a $ 1.5 billion revolving credit facility that the company announced earlier the same day .
Hilton and Hyatt have each raised hundreds of millions of dollars in debt since the Federal Reserve @ @ @ @ @ @ @ earlier this month .
The hotel brand companies have a menu of options for raising cash , including selling loyalty points or borrowing against real estate portfolios .
A Hilton spokesperson said that the company , which owns no U.S. hotel properties , has no plans to seek financial support from the U.S. Treasury Department .
A Hyatt representative also said it has no plans to apply for any small business loans under the SBA program , although some third-party owners of properties it operates have .


washingtonpost--2020-04-23--In the Land of Dollywood, a Mayor Faces a Life-or-Death Decision

The danger can seem far away .
While New Orleans , Detroit and New York count their dead by the hundreds and thousands , only one of the 33 patients in Gatlinburg ’ s Sevier County has died , according to state figures .
“ The influx of tourists has stopped , but once it starts up again , we may have different numbers , ” said Werner .
“ The last thing we need to do is open in a rush and have a spike of cases and that could hurt our summer , which is what people are @ @ @ @ @ @ @ ’ s mind-boggling .
You want to do the right thing for the majority of people.
” Trump has left many weighty decisions about the pandemic to the states , and some Republican governors -- particularly in the South -- have been eager to plunge ahead .
In Georgia , Brian Kemp plans to reopen bowling alleys , gyms , hair salons and tattoo parlors on Friday .
Ron DeSantis named a Florida reopening task force that includes executives from Disney , AT & T , the state bankers association and a hospital @ @ @ @ @ @ @ ’ s Lee said “ social distancing works , ” but nonetheless is allowing the vast majority of businesses to reopen .
The task of figuring out how falls to officials like Werner , 69 , who raised seven children in Gatlinburg .
In addition being mayor , he ’ s a Friday-night high-school football announcer and a Sunday-morning deacon at First Baptist Church .
When forest fires swept through nearly four years ago , he reminded residents that they ’ re “ mountain tough.
” Now he ’ s trying to balance @ @ @ @ @ @ @ the health of businesses that support their livelihoods .
“ I have the feeling that unless they wait another four weeks we ’ re going to have another outbreak , ” she said .
“ I think what you ’ re going to see is another peak when everyone is going back out.
” But Moore plays a different role in the community than Werner , who measures the success of his daily neighborhood walks by how many people he talks with .
A few weeks ago , many residents were fearful .
@ @ @ @ @ @ @ ready for a return to normality .
Tourists define Gatlinburg .
Once a subsistence farming community , it gained prominence when the national park was established in 1934 .
Tourism soared with the opening of Dolly Parton ’ s theme park in 1986 .
On a typical spring day , families gridlock downtown , which is filled with souvenir shops , attractions like Ripley ’ s Mirror Maze and Believe It or Not exhibit and moonshine distilleries , all set against a backdrop of gently rolling , foggy mountains .
This week , @ @ @ @ @ @ @ has made its living from a pop culture and nostalgia store called Buckboard Too on Parkway , the main street , selling wares like Coca-Cola posters and Elvis Presley magnets .
The Northcotes shut down March 17 .
They ’ re still paying their handful of employees , some of whom they ’ ve had for more than 20 years .
The landlord is still demanding rent .
Many business owners and employees have no backup plan or alternative source of income .
Last year , before the pandemic , Sevier County ’ @ @ @ @ @ @ @ compared with 3.7 % for the nation as a whole .
Now , many are without jobs .
Over a four-week period , more than 324,000 Tennesseans applied for unemployment benefits .
Others are still trying to apply on the state ’ s overloaded website .
On April 17 , the state asked the jobless to stagger their applications according to the last digit of their social security number .
Even with businesses back in action , it ’ s unclear how many people will travel to the mountain town -- and how @ @ @ @ @ @ @ an almost certain recession .
Danger lies in a second virus wave causing shutdowns in autumn , when tourists visit to see leaves change colors .
“ The silver lining is that this is not happening in our biggest revenue generating months in the fall , ” said Tammy Yaksic , who owns three downtown gift shops .
She ’ s planning to reopen as soon as possible , wearing a face mask .
There ’ s no other choice , considering that her family is burning through savings after applications for government @ @ @ @ @ @ @ county ’ s leanings are largely Republican -- more than 79 % of residents voted for Trump -- citizens have yet to receive much help from the federal government .
Many small-business owners applied for the Paycheck Protection Program , designed to keep workers on their payrolls , but the $ 349 billion fund ran out of money last week .
The U.S. Senate recently approved legislation , which the House is expected to pass Thursday , that includes a $ 320 billion infusion for the program .
Isaac Ogle , director of @ @ @ @ @ @ @ ’ s businesses downtown , isn ’ t giving a break to any stores that haven ’ t applied for the program .
He ’ s ready for reopenings , mostly because he thinks visitors are going to descend anyway , anxious to escape their homes .


washingtonpost--2020-04-23--Analysis | Are Your Ears Ringing, Wall Street Dealmakers?

As millions of businesses struggle to stay afloat , private equity firms and dominant corporations are positioned to swoop in for a buying spree .
This is not complicated .
Our country can leave room for merger activity that is necessary to ensuring that distressed firms have a fresh start through the bankruptcy process or through necessary divestitures while also ensuring that we do not undergo another period of rampant consolidation .
The U.S. is in a recession because a virulent disease has forced the economy to stall , leaving droves of businesses weakened and vulnerable in its wake and @ @ @ @ @ @ @ time for corporations to be prioritizing the safety and well-being of all stakeholders , including workers and the communities in which they operate .
Some mergers and buyouts would seem be the antithesis of doing that — deals that exploit the frailty of smaller disruptive competitors , or that are likely to result in even more mass layoffs or troubling levels of debt .
But an outright ban is unlikely to pass , nor is it the right solution .
First , where Cicilline is right : Private equity ’ s so-called dry @ @ @ @ @ @ @ accumulated since the last recession to about $ 1.5 trillion , according to researcher Preqin .
Blackstone Group LP alone said during its earnings call Thursday that it ’ s sitting on $ 150 billion of unused cash .
With so many beaten-down businesses — including larger companies that may resort to raising money by carving out units — a feast is awaiting private equity firms .
It would behoove government leaders and antitrust authorities to not allow a repeat of the last private equity buying binge , in which dozens of retailers @ @ @ @ @ @ @ the burden .
Take Toys “ R ’ Us : Many have lamented the sad tale of Amazon.com Inc. crushing the iconic toy-store chain , but to accept that simplistic explanation is to rewrite history .
Though online competition was inevitable , debt from a long-ago leveraged buyout hastened the demise of the Wayne , New Jersey-based retailer and left so many without jobs , as its own financial data showed .
Revenue at Toys “ R ” Us held up during the last recession and in the years that followed .
It @ @ @ @ @ @ @ have had more years left in it — but its interest payments overtook operating profit , leaving the brand unable to invest in its future .
On the corporate side , it ’ s been all about megamergers the last few years — deals of $ 20 billion , $ 50 billion and even $ 100 billion proportions .
In so many of those cases , the gargantuan valuations hinged on ambitious estimates of synergies , a euphemism for staff reductions .
It ’ s clear why Cicilline would want to prevent more @ @ @ @ @ @ @ s not clear any companies are even pursuing such risky transactions at this point .
M & A activity is down 35 % globally and 50 % in the U.S. this year , and the deals that are getting done tend to be smaller .
Plus , being unable to travel and meet in person really throws a wrench in things for dealmakers : Verizon Comunications Inc. struck a $ 400 million deal for videoconferencing-software company BlueJeans Networks last week , but executives had to negotiate the terms over BlueJeans video calls .
@ @ @ @ @ @ @ ready for that .
What the country needs more than a ban on dealmaking are better regulators and more consistent oversight .
Damage from the lack of both has already been done .
The Justice Department , Federal Communications Commission and a federal judge all backed T-Mobile US Inc. ’ s takeover of Sprint Corp. , a deal which closed on April 1 in the midst of the pandemic .
That merger is likely to result in large numbers of job losses and , eventually , a level of pricing power that harms @ @ @ @ @ @ @ cracking down on acquisitions by tech giants for the same reasons .
Cicilline said the only exceptions to his proposal would be companies in bankruptcy or “ on the brink of failing.
” But a company doesn ’ t need to be on the verge of collapse to want a rescue .
Warren Buffett , the chairman and CEO of Berkshire Hathaway Inc. , is known for buying undervalued businesses and giving them new life within his conglomerate .
While even his operations have been impacted by the pandemic and some have furloughed @ @ @ @ @ @ @ is never informed by synergies or opportunities to reduce headcount .
If Buffett ’ s on the prowl , the government doesn ’ t have a legitimate reason to stand in the way .
An outright stop to M & A may not be all that effective .
Instead , let it serve as a wake-up call to regulators who created conditions that may be making this moment worse for Americans , regardless of the color of their state .


washingtonpost--2020-04-23--Sushi Chain Returning $6 Million Small-Business Loan to U.S.

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washingtonpost--2020-04-22--Small Business Rescue Cash Isn’t for Lobbyists, Judge Rules


washingtonpost--2020-04-23--Analysis | What’s the Point of an ETF That Goes Off-Script?

Your first thought might be a large oil producer , or a bank active in trade financing .
But most of the drama has circled around exchange traded funds .
It turns out , passive funds — big winners from the global financial crisis — aren ’ t so different from active funds after all .
Take a look at the world ’ s largest oil ETF , the $ 3.7 billion United States Oil Fund , which has been anything but passive lately .
For a second straight day , it reshuffled the mix of futures it owns to @ @ @ @ @ @ @ plans to reduce its holdings in near-term contracts — June futures , in this case — to about 20 % , with the rest divided roughly among July ( 50 % ) , August ( 20 % ) and September ( 10 % ) .
In a better world , all of its portfolio would be in June contracts right now .
The USO fund simply wanted to cut its own losses .
If June futures also go negative , its investors would suffer a total wipeout .
But at least they won @ @ @ @ @ @ @ pockets to close positions : An ETF can ’ t trade below zero .
Someone else — the clearing exchanges or even the fund provider — will have to soak up the losses .
There ’ s good reason to suspect this possibility .
Unlike Brent , the West Texas Intermediate contract is settled through physical delivery , and storage units are getting full .
So if the coronavirus outbreak rages on , sapping end demand , investors in June futures could end up in tears , too .
This active portfolio management @ @ @ @ @ @ @ investing .
When fund managers rejigger methodology on-the-go — which the fine print allows — we just don ’ t know how to calculate returns .
More specifically , longer-term investors end up buying oil at much higher prices than necessary .
We live in what the USO fund calls a “ super contango ” world , in that long-dated futures value oil at a much higher price than front month contracts .
So instead of buying oil via June futures at about $ 14 a barrel , we ’ re potentially gaining @ @ @ @ @ @ @ on Thursday morning pricing in Asia .
The USO ETF at least has the good sense to rebalance its portfolio into a basket with various maturity dates .
The Hong Kong-listed Samsung S & P GSCI Crude Oil ER Futures ETF said in a filing Wednesday that it will roll over all of its June contracts to September futures “ shortly after ” the announcement , without providing a time frame .
The September contract costs 85 % more .
Granted , fund managers could say this flurry of activity aims to protect @ @ @ @ @ @ @ passive fund ’ s job .
We buy ETFs because we fancy ourselves active managers .
If we ’ re worried about negative June oil , we could just liquidate our holdings .
And what if we think this week was a one-time event ?
A great buy-on-the-dip opportunity was stripped from us .
By tweaking their portfolio compositions , passive funds can no longer meet their investment objective , which is to reflect the daily percentage changes of the crude spot price , as USO eloquently said in a filing itself .
@ @ @ @ @ @ @ nasty surprises .
But fund managers panicked , and lost their investment mandate along the way .
We , in turn , lost our confidence in these cheap products , too .


washingtonpost--2020-04-23--U.S. Toughens Guidance on Who Can Get Small-Business Funds

New guidance released Thursday by the Treasury Department and the U.S. Small Business Administration emphasizes that companies must “ certify in good faith ” the economic need for financing under the Paycheck Protection Program , or PPP .
The guidance was issued after small businesses complained that large , publicly traded companies and big chains were getting loans while they were shut out in the initial $ 349 billion in funding for loans .
That money ran out in just 13 days , and the U.S. House approved a relief bill Thursday that includes an additional $ 320 billion for @ @ @ @ @ @ @ in bank fees and processing costs .
“ It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith , and such a company should be prepared to demonstrate to SBA , upon request , the basis for its certification , ” the guidance says .
Lenders may rely on a borrower ’ s certification , and borrowers that previously applied for a PPP loan and repay it in full by May 7 “ will be deemed @ @ @ @ @ @ @ certification in good faith , ” according to the guidance .
Mnuchin said he ’ s giving other companies the benefit of the doubt that they didn ’ t understand the conditions of the program .
“ If you pay back the loan right away , you won ’ t have liability to the SBA and to Treasury , ” Mnuchin said at the White House briefing on Tuesday .
“ But there are severe consequences for people who don ’ t attest properly to this certification.
” Republican Senator Marco Rubio of @ @ @ @ @ @ @ company that doesn ’ t need a PPP loan but got one made a false representation.
” He also announced that the Senate Committee on Small Business and Entrepreneurship that he leads will conduct “ aggressive oversight ” of the program this fall , including subpoena power to determine whether companies made false certifications to obtain loans .
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 @ @ @ @ @ @ @ businesses get by until the economy reopens .
Dallas hotel executive Monty Bennett , who is also a major donor to President Donald Trump has emerged as the biggest winner from the coronavirus bailout for small businesses .
A combined total of $ 59 million from the small business lending package went to three lodging companies chaired by Bennett , according to regulatory filings .


washingtonpost--2020-04-23--Fed to Name Participants in Cares Act-Backed Loan Programs

“ The Federal Reserve is committed to transparency and accountability by providing the public and Congress detailed information about our actions to support the economy during this difficult time , ” Chairman Jerome Powell said in a statement .
Lawmakers from both parties had been pressing the Fed to spell out which companies were getting assistance , in an effort to make sure that taxpayer money was going where it was intended .
There has also been growing public frustration that small businesses had been beaten to funds by bigger companies with better access to banks and lawyers .
Congress @ @ @ @ @ @ @ to re-start that program , which is not being run by the Fed .
“ This is a significant victory for the public , ” tweeted Bharat Ramamurti , a member of the Congressional watchdog appointed to scrutinize implementation of the Fed and Treasury ’ s virus-relief work .
“ We will need to look carefully at the first report to see if other information is needed but this is a very good step.
” As part of the Cares Act signed into law late last month , the Fed established programs aimed @ @ @ @ @ @ @ , states and municipalities .
Several of those six facilities are not yet up and running .
It will not apply the same disclosure terms to the three Fed facilities launched prior to the passage of the Cares Act -- the Primary Dealer Credit Facility , the Money Market Mutual Fund Liquidity Facility and the Commercial Paper Funding Facility -- which collectively have lent out more than $ 80 billion as of April 22 , the latest date for which data is available .
Congress appropriated $ 454 billion in the Cares Act @ @ @ @ @ @ @ bank that can be leveraged into trillions of dollars of credit .
The Fed is setting up its emergency programs under Section 13-3 of the Federal Reserve Act , which outlines rules for disclosure of loan details to Congress .
The Fed did not disclose individual borrower details in its facilities following the 2008 financial crisis until it was forced to do so by the courts after a lawsuit brought by Bloomberg LP , the owner of Bloomberg News .
Its reluctance to make such information public stems from the concern that it @ @ @ @ @ @ @ from taking advantage of the programs for fear of resulting stigma .
“ If the threshold for them is that they won ’ t take the money if people know they took the money , then it seems like they don ’ t need the money , ” Marcus Stanley , policy director of Americans for Financial Reform , said before the Fed ’ s announcement .
The PDCF loans to U.S. government bond dealers .
The MMMLF is working with banks to help money funds meet redemption demands .
The CPFF is @ @ @ @ @ @ @ corporations .
The Fed regards the markets around these programs as systemically critical to financial stability .
Powell will request confidentiality for those three when he submits information to Congress and the Fed will eventually disclose borrowers when the programs close , according to the Fed .
The Fed is still working on disclosure policies for the Term Asset-Backed Securities Loan Facility , designed to assist the flow of credit to consumers and the Paycheck Protection Program Lending Facility , which supports loans to small businesses to encourage them to keep workers on @ @ @ @ @ @ @ lending facilities , aimed at firms with 10,000 employers or less , the Fed will disclose both borrowers and bank intermediaries .
The same approach will hold for the TALF if the Fed chooses immediate disclosure .


washingtonpost--2020-04-23--Analysis | The ECB Prepares the Way for Buying Junk Bonds

The biggest immediate question , as revealed by my Bloomberg News colleagues , was whether the central bank should relax its eligibility criteria to accept sub-investment grade debt as collateral in its funding facilities .
That was answered on Wednesday night , when the ECB said it would accept junk bonds as long as they were rated at least BBB- as of April 7 .
It said it may decide on further measures , if needed .
The ECB might well follow the U.S. Federal Reserve ’ s example and start buying high-yield bonds in its pandemic Quantitative Easing programs @ @ @ @ @ @ @ before , it makes sense to show a little love to some of the higher-quality junk-rated companies .
They employ plenty of people too .
This is the time for the ECB to get out of its own way and not allow the coming wave of credit-rating downgrades for European government and corporate debt to blunt its stimulus response .
Should Christine Lagarde ’ s institution really be barred from buying the bonds of companies and nations that have only fallen slightly below investment grade because of the pandemic ?
This might also @ @ @ @ @ @ @ pandemic QE package .
Analysts at ABN Amro Bank NV reckon it could be raised without much difficulty by 500 billion euros ( $ 544 billion ) to 1.25 trillion euros .
While the European Union ’ s political leaders haggle over their fiscal package at a meeting on Thursday , the real heavy lifting will have to be done by the ECB , as usual .
The central bank signaled on April 7 that a loosening on junk-rated debt might be coming when it said it would “ assess further measures to @ @ @ @ @ @ @ collateral availability from rating downgrades.
” Wednesday ’ s decision allows for a comprehensive plan to be unveiled at the ECB ’ s Governing Council meeting next week .
The situation is urgent .
S & P Global Ratings is set to review Italy ’ s BBB ( negative outlook ) rating on Friday .
The expected one-notch downgrade would still leave Rome on just the right side of the investment grade boundary , but it would push the debt of many other Italian issuers — effectively tied to their country ’ s @ @ @ @ @ @ @ create liquidity constraints in the Italian banking system if a raft of bank and corporate debt became ineligible for use as collateral with the ECB .
This is far from being an Italian-only problem .
Bloomberg Intelligence points out there is more than 200 billion euros of European corporate debt that ’ s close to entering the “ fallen angel ” category .
There ’ s little the ECB can do to prevent the downgrades but it can soften the impact .
As the ECB already accepts as collateral Greek government debt , @ @ @ @ @ @ @ , the Rubicon had already been crossed .
The central bank is also buying Greek sovereign bonds so why not match the Fed ’ s response by acquiring corporate bonds recently downgraded to junk ?
The Fed ’ s move tightened U.S. spreads on BB-rated debt by more than 300 basis points .
A similar ECB approach would help lower corporate borrowing costs across Europe too .
That ’ s a noble aim .
As with the Fed , it ’ s a worrying thing for the ECB to be holding ever more @ @ @ @ @ @ @ dangerous times for the economy .
We ’ ll just have to fall back on the hope that these are temporary measures until the world recovers .


washingtonpost--2020-04-23--Analysis | Fed Denies Active Bond Managers a Star Turn

For a moment , Covid-19 looked as if it would produce such an opening .
The scale and severity of the crisis are undeniable , and U.S. financial markets fell sharply when it became clear the virus would not spare the U.S .
Active managers no doubt looked on eagerly .
The record-long economic expansion that followed the 2008 financial crisis carried markets ruthlessly higher , leaving managers little opportunity to stand out .
The recent turmoil must have been particularly enticing to active bond managers .
Investors have already given up on stock pickers , pivoting instead to so-called @ @ @ @ @ @ @ cheaply replicate popular styles of active management .
Stock investors have handed roughly $ 350 billion to factor exchange-traded funds since 2015 while pulling $ 700 billion from actively managed mutual funds , according to Bloomberg Intelligence .
But investors ’ faith in bond managers appears to be intact — for now .
Factor investing is still new to bond investors , so it hasn ’ t yet attracted big money .
Actively managed bond mutual funds have taken in roughly $ 700 billion since 2015 , compared with just $ 30 billion @ @ @ @ @ @ @ dazzle bond investors might keep them in the fold , or at least slow the march of factor funds .
The Federal Reserve , however , had other ideas .
When panic around the virus took hold , bond markets began showing worrisome signs of distress .
Junk bonds tumbled , as one would expect , but higher-quality bonds were hit even harder .
During the 23 trading days from Feb. 20 to March 23 , the difference in yield between intermediate-term corporate bonds and Treasuries spiked 2.8 percentage points , the biggest @ @ @ @ @ @ @ for their respective Bloomberg Barclays indexes began in 1973 .
Few corners of the bond market escaped harm .
The difference in yield between intermediate-term municipal bonds and Treasuries , to take another example , spiked 2.9 percentage points during those 23 trading days , by far the biggest 23-day move on record and well above the highest spread recorded during the financial crisis .
The Fed saw bond markets seize up just a decade earlier and wasn ’ t about to let a health crisis turn into another financial crisis .
It @ @ @ @ @ @ @ needed to keep debt markets stable , and bonds promptly reversed course .
The yield spread between corporate bonds and Treasuries has shrunk to 2.3 % from 3.8 % on March 23 , and the spread between municipal bonds and Treasuries has narrowed to 0.9 % from 2.4 % .
Bond markets are not yet back to their pre-coronavirus levels , but the Fed appears to have foreclosed any hope for a grand buying opportunity .
It ’ s a missed opportunity for active bond managers in another important respect .
Star managers @ @ @ @ @ @ @ ’ re critical to the industry .
Just one star with a shiny track record and slick forecasts can obscure a mountain of evidence that most active managers fail to keep up with the broader market , mostly because of high fees .
Stock pickers once had a slew of them — such as Fidelity Magellan Fund ’ s Peter Lynch , who rose to prominence in the 1980s after a vicious bear market during the previous decade left the stock market littered with bargains — but they have long since faded .
@ @ @ @ @ @ @ of bond managers , none brighter than DoubleLine Capital LP ’ s Jeffrey Gundlach .
His journey illustrates the impact one epic buying opportunity can have .
Gundlach has wrestled with bond markets for three decades but only gained an advantage during the 2008 financial crisis .
Before co-founding DoubleLine , he managed the TCW Total Return Bond Fund , among other roles at TCW Group .
The fund ’ s retail share class trailed the Bloomberg Barclays U.S .
Aggregate Bond Index by 0.2 percentage points a year from July 1993 to @ @ @ @ @ @ @ , Gundlach specialized in mortgage-related bonds , and the fund also lagged the Bloomberg Barclays U.S. Mortgage Backed Securities Index by 0.4 percentage points .
Then the housing bubble popped and the prices of mortgage bonds collapsed .
Like Lynch before him , Gundlach pounced on the opportunity , scooping up mortgage-related securities initially at TCW and later at DoubleLine .
When markets recovered , Gundlach and his investors made a fortune .
Thanks to those deft moves , the retail share class of DoubleLine ’ s flagship Total Return Bond Fund has @ @ @ @ @ @ @ percentage points a year from May 2010 through March , and the mortgage index by 1.7 percentage points .
But a closer look reveals just how lucrative the financial crisis turned out be : Since 2013 , DoubleLine ’ s fund has lagged the aggregate bond index by 0.3 percentage points a year through March , and the mortgage index by 0.1 percentage points .
Nevertheless , Gundlach continues to regale investors with a winning track record and bold predictions .
For the industry , whether he ’ s right or wrong is @ @ @ @ @ @ @ fact that 94 % of mortgage bond managers failed to beat the mortgage bond index over the last 15 years through 2019 , according to the latest SPIVA U.S. Scorecard of active managers .
Still , without another big payoff , bond investors can only be distracted for so long .
The Fed saved bond markets , but in the process , it may have also dealt a serious blow to active bond managers .


washingtonpost--2020-05-11--Small Firms Join Rush to Return Loans After Rules Revisions

“ The guidances and interim rules are really changing the underlying law , ” said James P. Joseph , a partner at the law firm Arnold & Porter .
“ I have been a tax lawyer for 31 years , and I ’ ve never seen anything like it .
They are building the plane while it ’ s in the air.
” One example : As enacted on March 27 , the law that created PPP allowed borrowers to use its low-interest , forgivable loans of as much as $ 10 million for a range of expenses beyond just @ @ @ @ @ @ @ .
But since then , the Treasury Department and Small Business Administration have issued rules that limit spending mostly to payroll .
Also , the law itself contained no restrictions on public companies seeking relief .
But after public outrage over loans to public firms like the burger chain Shake Shack Inc. , Treasury and SBA issued new guidance on April 23 .
It said public companies with “ with substantial market value and access to capital markets ” would be unlikely to qualify for PPP .
Aquestive Therapeutics Inc. of Warren , @ @ @ @ @ @ @ seizures , addiction recovery , and to manage nausea from chemotherapy .
The company interpreted some of the new guidance to mean no publicly traded companies qualify -- even though the firm believed it was eligible as the program “ was originally written and intended.
” Bruce Davis , chief executive officer of technology services provider Digimarc Corp. in Beaverton , Oregon , came to the opposite conclusion .
He said he was also concerned about the administration ’ s guidance after his company , with 200 workers , took a $ 5 @ @ @ @ @ @ @ requirements with legal and financial advisers , he decided that Digimarc met the criteria .
Publicly traded companies have returned 48 loans worth more than $ 350 million so far , according to data compiled by FactSquared after the SBA and Treasury said firms that improperly certified that their loans were necessary could face legal trouble if they don ’ t give back the money by May 14 .
After the law was passed , the SBA and Treasury issued rules requiring borrowers to spend 75 % of PPP loans on payroll to @ @ @ @ @ @ @ after laying off employees , many firms said they needed cash more for expenses such as rent than payroll .
On Friday , a report issued by the SBA ’ s inspector general found that the rule “ did not align with the allowable use requirements for PPP loans ” under the law that created the program .
Mnuchin has said he thinks the rule reflects the intent of Congress to keep workers on payrolls .
But he signaled on Monday he ’ d be open to “ technical ” fixes if both @ @ @ @ @ @ @ are only now reopening .
One borrower , Zumasys Inc. , has sued the government over the guidelines .
The San Clemente , California-based software company says that even though it has access to other credit , it ’ s entitled to its $ 750,000 PPP loan under the terms Congress set , because it truly needs the funds .
“ We want the court to tell us whether or not this guidance , given by the SBA and Treasury , is valid , or is it in fact invalid and unenforceable , @ @ @ @ @ @ @ for Zumasys with the firm of Michelman & Robinson .
“ We need to know.
” Many companies would probably terminate workers or shut down completely rather than take on more non-forgivable debt , she said .
The SBA has said it intends to issue guidance before payback deadline about how it will review the loans to help firms “ evaluate whether they may have misunderstood or misapplied ” the standard for accepting them .
A spokesperson didn ’ t respond to a request for details about how the reviews would be conducted @ @ @ @ @ @ @ guidance to borrowers and lenders while approving loans of more than half a trillion dollars in just about five weeks .
While the government can clearly prosecute fraud , it ’ s more difficult to bring “ bad faith ” cases -- or those based on certifying that a loan is necessary when it really isn ’ t -- unless they ’ re egregious .
Bad-faith prosecutions would require proof that applicants knew they were making false statements , said Lisa Zornberg , a former chief of the criminal division of the U.S. @ @ @ @ @ @ @ District of New York .


washingtonpost--2020-05-11--Analysis | Nine Charts That Define Our New Covid World


washingtonpost--2020-05-11--Analysis | U.S. Won’t Tolerate Technology Fence-Sitters Any Longer

The U.S. fear , as portrayed by the White House , Pentagon and Commerce Department , is that allowing China to procure the world ’ s best semiconductors while America is unable to make them at home is an urgent and critical national security threat .
That ’ s spurred a two-pronged strategy in recent years : Limit Chinese access to and development of chip technology , and bolster domestic prowess .
TSMC ’ s strategy has been to stay neutral .
It has most of its capacity in Taiwan , one new and one not-so-new factory in China , @ @ @ @ @ @ @ .
A year ago , I wrote that chairman Mark Liu had politely pushed back against pressure to expand in America , citing the steep costs .
I concluded : “ TSMC won ’ t be able to sit on the fence forever .
While Liu may want to just make chips , he ’ ll eventually have to make a choice.
” The coronavirus pandemic has highlighted Washington ’ s need to protect supply chains from disruption , and heightened concerns about reliance on Taiwan , as the Wall Street Journal reported @ @ @ @ @ @ @ , the administration is pushing hard to get chipmakers , including Intel Corp. , TSMC and Samsung Electronics Co. , to expand in the U.S. , and to use their best technology , the WSJ wrote .
Unsurprisingly , Intel is making the case that the U.S. should strengthen its domestic production for “ geopolitical ” reasons .
The company has most of its staff , and more than half its plants and equipment , in the U.S. , including manufacturing in Arizona , New Mexico and Oregon .
While best-known for supplying @ @ @ @ @ @ @ its own name , Intel also operates a foundry business that does contract manufacturing using clients ’ own designs .
Once the world leader in chip production , the Santa Clara , California-based company has fallen behind and now trails TSMC and South Korea ’ s Samsung .
Intel clearly sees an opportunity .
If it can convince defense and commerce officials that it ’ s in the interest of national security to mandate that at least some chips be made domestically , then it may have a shot at getting back into @ @ @ @ @ @ @ trying to push back , or at least to get a seat in the policy discussions .
It recently hired former Intel lobbyist Peter Cleveland to coordinate its efforts in Washington .
As the old saying goes , “ If you ’ re not at the table , then you ’ re on the menu.
” But the other aspect of American strategy may be harder for the Taiwanese company to negotiate .
Beyond expanding domestic capacity , Washington wants to limit Chinese access .
To do so , the Trump administration is @ @ @ @ @ @ @ of U.S. equipment and materials in making chips for the likes of Huawei , arguing that the Chinese company is a conduit for Beijing ’ s espionage .
That ’ s put TSMC and numerous other companies in a difficult position .
The American market accounted for 59 % of its sales last year , against 19 % for Chinese clients .
Yet the growth momentum clearly favors the world ’ s largest country , which is focused on developing components used in artificial intelligence , 5G communications , surveillance and possibly weaponry @ @ @ @ @ @ @ its foundry alone .
Pressure has ramped up significantly over the past year , with the long list of U.S. clients and significant revenue contribution being used as a battering ram to make the point that America is the side to choose .
Ten years ago , when Taipei-Beijing relations were friendlier , companies may have leaned toward China .
Today , with China showing increasing belligerence and the U.S. supporting a greater global voice for Taiwan , the mood has shifted .
It ’ s true that China is an important and @ @ @ @ @ @ @ momentum to bring global companies to its shores — yet it won ’ t replace the U.S. in terms of size or technology leadership in the next 20 years .
To assuage concerns , and win a reprieve on restrictions about supplying to China , TSMC has little choice but to offer something to the Americans .
After years of delay and resistance , it ’ s time for TSMC to build a shiny new factory in America .
Expect to hear the company announce concrete plans , and large dollar figures for @ @ @ @ @ @ @ or so .


washingtonpost--2020-04-01--Analysis | How the Fed’s Swap Lines Aim at Dollar Funding Stress

First used extensively during the 2007-2008 financial crisis , they ’ re temporary lending facilities that allow central banks around the world to borrow dollars from the Fed in exchange for an equivalent amount of their local currencies .
On March 15 , the Fed and five major central banks , including those in the euro zone and Japan , said they ’ d activate the program to ease a squeeze as demand for the dollar surged .
They subsequently increased the frequency of seven-day maturity operations to daily from weekly .
The Fed also lowered the rate and added @ @ @ @ @ @ @ the swap line to nine other central banks , including Australia and Brazil , bringing the total to 14 .
And then at the end of March it allowed foreign central banks to swap any Treasuries securities they hold for cash .
The goal is to ease the panic for dollars and allow foreign-exchange markets to keep operating normally .
Surging volatility in stock and bond markets has spurred a rush to secure the U.S. currency for borrowers and as a haven against further turmoil .
Central banks , sovereign wealth funds and @ @ @ @ @ @ @ invest their greenbacks have pulled their lending , creating a dollar vacuum .
The Fed says the lines are necessary at times because bank funding markets are global and can break down “ disrupting the provision of credit to households and businesses in the United States and other countries.
” That ’ s the big question .
While the measures can ease pressures for banks , the effect is felt in the broader economy only if these lenders extend more dollar loans to companies and other financial institutions .
Banks also may shun @ @ @ @ @ @ @ a stigma attached to tapping it .
Making dollars available to foreign nations -- even if it didn ’ t cost the Fed -- became a point of contention for some lawmakers in the U.S. Congress during the 2008 crisis .
The central bank had to repeatedly defend the action , saying U.S. taxpayers were not on the hook because these were swaps -- not loans -- and there was no risk of default .
Back to 2020 , the early signs were promising as banks in mainland Europe and the U.K. took @ @ @ @ @ @ @ central banks .
The dollar shortage became acute as the greenback soared on March 18 , throwing other currencies from the British pound to the Brazilian real into free fall .
As stocks plunged and investors fled to U.S. Treasury bonds amid the global coronavirus pandemic , the currency derivative market showed signs of stress .
There was a notable move in cross-currency basis swaps , revealing a preference among investors to hold dollars rather than euros or yen .
Japanese banks have taken more than $ 150 billion from these funding operations @ @ @ @ @ @ @ also to hoard dollars ahead of the end of the fiscal year .
The foreign claims of Japanese banks have increased substantially since the global financial crisis , while they have declined for their European counterparts , according to the Bank for International Settlements .
The European Central Bank can charge a fee for accepting collateral in return for lending dollars , which may make the transaction more expensive .
Some banks may in turn find it cheaper to access dollars in the open market , even when liquidity conditions are tight , @ @ @ @ @ @ @ They ’ re contracts where two sides agree to exchange interest payments in two different currencies .
During the life of the contract , floating interest-rate payments are exchanged , typically on a quarterly basis .
On March 17 , the premium paid to swap funding exposure from euros into the dollar surged to the widest since 2011 .
The premium narrowed in the days that followed , though it remained elevated .
That suggests investors were still struggling to get their hands on dollars despite injections of cash into financial markets by @ @ @ @ @ @ @ particularly pronounced for yen- and euro-based investors , based on cross-currency basis swaps .
While higher demand to swap funding exposure from the yen into the dollar was evident from the start of February -- coinciding with the rally in Treasuries -- the euro-denominated market was more resilient until mid-March .
The moves have also come at a time when financial companies become increasingly cautious about lending to each other and demand higher premiums on interest over risk-free rates , known as the FRA/OIS spread .
Banks are the biggest users , while @ @ @ @ @ @ @ second .
The favored currencies are the dollar , euro and yen .
Most contracts involve the dollar .
They typically range from 1 to 30 years , reflecting the length of the transactions they fund , such as loans .
What makes them unique in the world of swaps is that the parties agree to exchange notional principals , or the face amount used to calculate the payments .
Let ’ s say a European company needs a dollar loan .
While the firm may be well-established on the continent , banks @ @ @ @ @ @ @ rate to lend to a relatively little-known entity on the other side of the Atlantic .
Enter the cross-currency basis swap .
The European firm borrows in euros and swaps the payment into dollars with another entity that needs funds in Europe ’ s common currency .
That ’ s the million-dollar question .
If investors continue to seek the safety of Treasuries and stocks keep tumbling , the preference to swap out funding exposure into the dollar may persist .
The pressure may be more pronounced in the yen market because it @ @ @ @ @ @ @ for institutional funding stress .


washingtonpost--2020-04-01--Goldman’s Joseph Cohen Sees ‘Awful’ Data Before Growth

Goldman economists expect the U.S. economy to shrink an annualized 34 % in the second quarter before expanding by 19 % in the third , while forecasting that the jobless rate will soar to 15 % by mid-year as the lockdowns weigh on employers .
U.S. equities are coming off their worst quarterly slump since the aftermath of the Lehman Brothers collapse in 2008 on worries about the fallout from the pandemic .
The ADP Research Institute data on Wednesday showed employment at U.S. firms declined in March for the first time since 2017 and businesses ’ payrolls dropped by @ @ @ @ @ @ @ monitored non-farm figures from the Labor Department due on Friday .
“ The most accurate numbers we ’ ll get on a real-time basis most likely will be the labor market data , we ’ re expecting those to look pretty awful over the next several months , ” said Joseph Cohen , who in the 1990s was the most famous equity strategist in America .
Several major U.S. retailers are halting pay for hundreds of thousands of workers as they struggle to cope with the slump in demand caused by measures to @ @ @ @ @ @ @ President Donald Trump recently extended U.S. “ social distancing ” guidelines to contain the virus until the end of April , abandoning his ambition to return American life to normal by Easter .
Joseph Cohen praised the actions of the U.S. Federal Reserve , saying that monetary stimulus is “ having the desired effect.
” Since the start of the coronavirus crisis in the U.S. , Goldman strategists have been concerned about the availability of capital to small and mid-sized businesses and individuals as well as their solvency , according to her .
@ @ @ @ @ @ @ U.S. equities over the past week , tempering losses in the first quarter .
The Goldman strategist also noted that the U.S. banking system is now in a “ much better shape ” because of the measures that had been taken following the 2008 financial crisis .
The impact of the pandemic has highlighted economic and income disparities across the U.S. , she said .
“ This health crisis is unveiling a number of problems and stresses within the economy that perhaps were hidden , ” said Joseph Cohen .
“ We ’ @ @ @ @ @ @ @ to think about what we ’ ve learned in terms of variations in access to health care , variations in access to employment and so on .
”


washingtonpost--2020-04-02--Unemployment Insurance Isn’t Ideal for Helping Workers

But there are lingering questions about the bill ’ s unintended consequences .
Many of them involve the bill ’ s heavy reliance on the unemployment-insurance system .
The small-business lending program does reward employers for keeping workers on payroll through the shutdown and the bill does give them a modest universal payout .
But mainly the bill is designed to wait for people to lose their jobs and then giving them money .
One problem with this is that the unemployment-insurance system isn ’ t built to handle this many claimants .
Already the surge is unprecedented and it @ @ @ @ @ @ @ : Some legislators and commentators have identified another worry : that generous unemployment benefits will discourage work .
On top of normal unemployment benefits , the bill offers $ 600 a week to laid-off workers .
For many low-income Americans , this would amount to much more than their normal monthly income .
Does this mean that workers will find it rational to quit their jobs and receive government checks instead ?
Normally this isn ’ t an issue because only employees who are laid off qualify , not those who leave voluntarily @ @ @ @ @ @ @ to claim the $ 600 weekly benefit if they have to quit for any reason related to the coronavirus , including taking care of kids during school closures .
Whether this is necessary is up to the claimant to determine , via so-called self-certification .
Overburdened state unemployment systems probably won ’ t be up to verifying many of those claims .
This means some people really will be able to abandon their jobs and raise their incomes for a couple of months if they want to .
Still , a wave of @ @ @ @ @ @ @ worry .
First of all , it ’ s clearly not rational for most workers to resign in the face of a looming multiyear depression just to receive a couple of thousand dollars of extra income in the short term .
Second , for nonessential workers -- those not involved in food distribution , health care , utilities and basic maintenance and so on -- it ’ s not such a bad thing if they do quit .
Less crowded workplaces help slow the spread of the infection , which pays economic dividends @ @ @ @ @ @ @ is essential workers , such as grocery-store clerks , delivery workers and those in the medical field : If a large number quit , it could leave crucial industries short of labor .
It also might put a kink in these companies ’ hiring plans : If workers are too comfortable cashing their generous unemployment-insurance checks , they might be unwilling to fill growing numbers of jobs at grocery stores or delivery services .
The obvious response is for these employers to raise wages .
But coronavirus itself has made these jobs much @ @ @ @ @ @ @ need to rise even more .
Already this appears bound to happen , with workers at Amazon , Instacart and Whole Foods threatening or going on strikes .
Higher wages often are a good thing and stores and delivery companies can cope with having little or no profit temporarily .
But if they need to raise wages a lot to lure people away from generous jobless benefits and into dangerous working conditions , some essential companies might scale back or just shut down .
That could leave some people with reduced access to @ @ @ @ @ @ @ these companies could raise prices a lot , which would fall heaviest on low-income consumers .
It ’ s not clear how much of a shortage of essential workers the combination of coronavirus and the relief bill ’ s incentives might create .
But the government should act to avert the risk .
The most obvious approach is to allow laid-off workers to continue to collect pandemic unemployment benefits in addition to salary if they go back to work in an essential industry .
The downside of this approach is that it could @ @ @ @ @ @ @ quitting grocery stores or delivery services in order to start collecting unemployment insurance and then trying to get hired back .
A more efficient solution is to subsidize pay raises for workers in essential industries , perhaps through a program where the government matches a portion of wage hikes .
This would allow pay to rise to necessary levels while keeping companies out of bankruptcy .
It also would avoid straining the unemployment-insurance system further because it would involve direct payments from the government to companies .
As the pandemic unfolds , the @ @ @ @ @ @ @ unintended consequences and many situations in which initial efforts prove to be insufficient .
It ’ s important for legislators to be constantly adapting , learning and fixing holes .
Unemployment-benefit incentives are only one example .
It ’ s going to be a long , hard , fraught fight .


washingtonpost--2020-04-02--Analysis | Richard Branson Wants a Virgin Atlantic Bailout. Really?

Branson has referred to the transatlantic carrier as “ one of my children ” .
But with most of the Virgin Atlantic fleet now grounded because of the coronavirus restrictions , he probably wishes he ’ d taken Air France ’ s money .
The company is now consuming cash at a rapid clip .
To help alleviate a financial crunch , Virgin Atlantic is calling on Boris Johnson ’ s British government to provide 500 million pounds of government-backed loans and credit guarantees , so that credit card processors don ’ t hold onto its cash .
Airbus SE @ @ @ @ @ @ @ sold planes and engines to Virgin Atlantic , have also been lobbying the U.K. on Virgin Atlantic ’ s behalf , the Financial Times reported .
It ’ s hard to fathom why Johnson would throw Virgin Atlantic a lifeline before its American and British Virgin Islands domiciled shareholders have reached deeper into their own pockets .
Branson himself is worth $ 5.2 billion , according to the Bloomberg Billionaires Index .
So far , the tycoon has injected $ 250 million into his various Virgin companies , of which more than $ @ @ @ @ @ @ @ , according to Sky News .
But that clearly isn ’ t enough .
While Virgin Atlantic ’ s financial performance may have improved before the coronavirus hits , in total it lost more than $ 100 million during 2017 and 2018 — the two most recent years for which its accounts are available .
That ’ s one reason its balance sheet is weaker than its European peers .
Lease-adjusted net debt was five times higher than a comparable measure of earnings , according to the latest group accounts ( which includes @ @ @ @ @ @ @ Air France-KLM — by no means the strongest airline financially — has net debt of 1.5 times the same earnings measure .
While Virgin Atlantic had almost 500 million pounds of cash at the end of December 2018 , much of that money came from customers paying for tickets long before they traveled .
Its current liabilities far exceeded its current assets , which is a problem if customers start asking for their money back because they can ’ t fly .
It ’ s hardly surprising that Airbus and Rolls-Royce are taking @ @ @ @ @ @ @ of them were under any obligation to sell aircraft and equipment to a financially stretched airline .
Virgin Atlantic had 2.6 billion pounds of future capital commitments for things like planes and engines , according to the 2018 accounts , a pile it added to last summer by placing an order for 14 Airbus A330neos .
Pandemics are a known risk when you ’ re running an airline , but nobody could anticipate a shock as widespread and potentially long-lasting as this .
So some government assistance is probably justified — in view @ @ @ @ @ @ @ .
However , the British government ’ s offer to cover 80 % of the wages of furloughed workers is already pretty generous ; Virgin Atlantic ’ s yearly wage bill is more than 300 million pounds .
It ’ s harder to understand why a government should provide loans or guarantees to Virgin Atlantic , when its shareholders or commercial lenders don ’ t seem willing to — beyond what Branson has chipped in .
In fairness , the other big shareholder , Delta , is also in a tight spot .
@ @ @ @ @ @ @ 50 million of cash a day and Standard & Poor ’ s , a credit rating agency , has downgraded its debt to junk .
However , the U.S. airline successfully extended its credit lines and its government has promised $ 50 billion in assistance for the industry .
Delta ’ s market value remains above $ 15 billion .
If Branson is short of ready cash , there are other assets he could perhaps monetize , including a majority stake in space company Virgin Galactic Holdings Inc. , whose market capitalization is @ @ @ @ @ @ @ no more money is forthcoming from the owners , the British government should insist that Branson dilutes his ownership of Virgin Atlantic as originally planned ; only this time by signing over the equity to taxpayers .


washingtonpost--2020-04-02--Analysis | How Did Oxy’s Bosses Get Paid a Bonus?

One detects some uneasiness on Oxy ’ s part .
It took the trouble to lay out “ realizable ” pay for executives in its proxy ; the idea being that the actual value of stock-based awards plummeted with Oxy ’ s price .
Hence , while Hollub ’ s headline total compensation for 2019 clocks in at almost $ 16 million , the company calculates its value as of March 24 was a mere $ 4.4 million .
Salaries for 2020 have been slashed ( although these typically account for only 10-15 % of total compensation ) .
Plus @ @ @ @ @ @ @ , the head of strategy who played a leading role in the Anadarko deal , is no longer with the company .
Clearly , Hollub ’ s pay package isn ’ t worth what it was a couple of months ago .
On the other hand , compared with a shareholder who just had most of their dividend taken away , the CEO is still being paid to wait .
After all , the board presumably expects Hollub to preside over some sort of recovery in the share price ( and , thereby @ @ @ @ @ @ @ , while realizable pay may now be worth a fraction of what it was when the board met in February , the more pertinent question is why was it worth so much in February ?
It was clear by then , even before the corona-crash , that Oxy ’ s gamble had inflicted big losses on shareholders and forced it to cut spending and growth targets .
Total shareholder return in 2019 was negative 28 % — worse than the sector , the market and the year before .
Yet Hollub ’ s @ @ @ @ @ @ @ Then there are bonuses , typically adjusted to some percentage of a target level based on company performance .
Oxy ’ s percentage for 2019 : 175 % .
As is usual with these things , that number derives from a Rube Goldberg-esque set of performance metrics and weightings .
In this case , it was complicated further by being split between pre- and post-acquisition objectives .
Astoundingly , the executives were deemed to have exceeded expectations even more on the latter bit .
Defined in exceedingly narrow terms , I suppose one @ @ @ @ @ @ @ , judged on things like realizing synergies or whatnot , the executives were hitting their marks .
But context is everything , and the context here is a debacle .
So perhaps stuff like realizing synergies should have been redefined as the bare minimum rather than bonus-worthy .
Again , one detects a certain uneasy recognition of the dissonance here with the majority of Hollub ’ s bonus being paid in restricted stock units rather than cash .
Oxy isn ’ t alone in setting executive compensation at odds with investors ’ experience @ @ @ @ @ @ @ day it filed its proxy , Whiting Petroleum Corp. filed for chapter 11 .
While this Bakken-basin fracker cited Covid-19 and the Saudi-Russian oil price war , it already had an underlying ( and familiar ) condition of rising leverage and weak or negative free cash flow .
Announcing its bankruptcy , the company also disclosed bonuses for its top executives , approved just days before , worth $ 14.6 million .
That is actually two-thirds higher than Whiting ’ s cash balance at the end of December .
Doug Terreson , an @ @ @ @ @ @ @ beating the drum on this misalignment for years , calculates that 15 CEOs of the integrated oil and exploration and production companies he covers were paid more than $ 2 billion in aggregate over the past decade .
In exchange , shareholders netted a total return of zero , while the S & P 500 generated a positive total return of more than 250 % .
“ This pay for performance disconnect has not gone unnoticed by the buy-side and is part of the reason why investors avoid energy stocks .
The deck @ @ @ @ @ @ @ writes .
Still , the sheer drama of Oxy ’ s past year marks it out .
Consider that the same filing lauding Oxy ’ s “ enhanced ” value after swallowing Anadarko also details the company ’ s recent agreement with one Carl Icahn under the award-worthy euphemism of “ Board Refreshment.
” The dissonance is deafening .
Liam Denning is a Bloomberg Opinion columnist covering energy , mining and commodities .
He previously was editor of the Wall Street Journal ’ s Heard on the Street column and wrote for the @ @ @ @ @ @ @ was also an investment banker .


washingtonpost--2020-04-02--Analysis | Another 5 Billion Reasons to Walk Away From WeWork

After a $ 1.5 billion lifeline late last year , the next step in SoftBank ’ s bailout of the office rental company — predicated on completing the share purchase — was to be a further $ 5 billion in debt financing .
With WeWork bonds trading at around 36 cents on the dollar and the global economy in upheaval over the coronavirus pandemic , there ’ s no price in the world that could have made SoftBank ’ s double-down on the shares look smart .
Pouring $ 5 billion into WeWork debt would be a poor use of @ @ @ @ @ @ @ ’ s Corp. cut its debt by two notches , citing SoftBank ’ s planned offload of assets that amounts to little more than a fire sale .
Son wants to monetize them through sales or loans to repurchase the company ’ s own shares and pay down debt .
SoftBank fired back at Moody ’ s .
It claimed that the downgrade would “ cause substantial misunderstanding , ” and then asked Moody ’ s to remove its rating altogether .
That temper tantrum merely proved the ratings provider correct .
Despite @ @ @ @ @ @ @ in the Vision Fund , its domestic telecommunications operator , a U.S. telco , and a semiconductor company , the only asset that SoftBank has of significant value is its 25 % stake in Alibaba Group Holding Ltd. Those shares aren ’ t very liquid and could take months to sell .
Son doesn ’ t have time .
Many Alibaba investors believe that the e-commerce company has gotten through the worst of the Covid-19 crisis and will benefit from a return to normalcy in China .
What they aren ’ t reckoning @ @ @ @ @ @ @ could have a profound impact on the spending power of Chinese consumers , who drive revenue .
We ’ re in the eye of the storm now , where things seem calm but soon won ’ t be .
Selling a massive chunk of Alibaba shares at any price is going to become more difficult .
Bad as things might get for an internet giant , they ’ re going to be a whole lot worse for a shared office company .
Co-working spaces are anathema to the wave of social distancing that @ @ @ @ @ @ @ of WeWork ’ s clients are freelancers or startups and likely to be hardest hit in any downturn .
The company is trying to soften the blow by seeking rent reductions from its own landlords , who are showing reluctance .
Walking away from its pending $ 5 billion investment in WeWork debt is not only an honest verdict on that outlook , it also means $ 5 billion of shares in Alibaba that SoftBank doesn ’ t have to sell to cover its funding needs .
Ask any investor in the world @ @ @ @ @ @ @ a chunk of money right now , and I am sure WeWork bonds won ’ t be their choice .
Masayoshi Son isn ’ t the type to follow what others might do , but perhaps this time he should .


washingtonpost--2020-04-01--Analysis | Mask or No Mask? This Is What the Virus Experts Say

Precedent explains part of the difference .
In eastern Asia , the practice of wearing medical masks in public is well-established .
It emerged as a convention during the 2002-2003 epidemic of severe acute respiratory syndrome ( SARS ) , which also was caused by a coronavirus .
For another thing , there ’ s no scientific consensus on the value of wearing a mask in public .
A few small studies have suggested that widespread use of face masks by the public may have reduced transmission in outbreaks of influenza and SARS , which like Covid-19 are respiratory diseases @ @ @ @ @ @ @ generally considered conclusive .
Many medical specialists say one should , especially in light of evidence that a significant portion of those infected with the novel coronavirus don ’ t show symptoms and so may remain out and about .
Others argue that it ’ s irresponsible for members of the public to buy up masks that are in short supply .
U.S .
Surgeon General Jerome Adams tweeted Feb. 29 , “ Seriously people - STOP BUYING MASKS !
” The scarcity among health-care providers , he said , raises the overall @ @ @ @ @ @ @ can spread the virus to the uninfected and once sick can ’ t look after patients .
The argument is that everyone is better off if masks are reserved for those who certainly require them and who can ’ t avoid exposure to people who are infected or might be .
As long as medical masks remain in short supply , some health specialists are proposing that people cover their faces with home-made masks , made from a bandana or scarf , for instance , when out in public .
Scott Gottlieb , @ @ @ @ @ @ @ Drug Administration in the Trump administration , endorsed that idea in a plan he co-authored for the American Enterprise Institute .
Adams said in a television interview April 1 that U.S. officials were reexamining their guidance , and that mask-wearing by the public shouldn ’ t come at the expense of health-care professionals .
Yes : if they are coughing or sneezing .
A cough is a common symptom of Covid-19 , and the novel coronavirus spreads in respiratory droplets -- spatters of liquid expelled with an infected person coughs , sneezes or @ @ @ @ @ @ @ heavy enough to fall immediately to the ground or surrounding surfaces .
Infection can occur if the droplets reach the mouth , nose or possibly the eye of someone nearby , either directly or from an unwashed hand that ’ s touched a contaminated object or surface .
When patients diagnosed with Covid-19 are recovering at home , they and their caregivers are advised to wear masks when in the same room .
Medical protocols prescribe that patients suspected of infection with the virus that causes Covid-19 be isolated and given a mask @ @ @ @ @ @ @ the type worn by surgeons -- the loose-fitting , one-size-fits-all kind that ’ s rectangular when flat .
This is to protect other people by trapping virus-containing respiratory droplets .
Health-care providers who deal with such patients or with confirmed cases are directed to wear a more sophisticated mask called a respirator , which is designed to protect the user .
They come in different sizes so they can be fit to the wearer ’ s face to provide a tight seal .
That forces the user to pull air through the device @ @ @ @ @ @ @ on the sides .
They are designed to keep out not only respiratory droplets but also smaller aerosolized particles that can carry infectious agents and float for a time through the air .
Airborne transmission has not been reported for Covid-19 , but there is a risk that certain medical procedures , such as tracheotomy and airway suction , can generate virally contaminated aerosols .
Respirators are uncomfortable to wear for a long period of time .
They generate heat and exert pressure on the face , and some people find they make @ @ @ @ @ @ @ make them unsuitable for those with cardiac and respiratory conditions .
The U.S. Centers for Disease Control and Prevention issued guidance on how to conserve limited gear and what to do if it runs short .
The measures , which don ’ t meet usual standards , include using respirators beyond their designated shelf life and wearing the same one to attend to several patients without removing it .
The agency said that limited reuse of respirators might become necessary but counseled caution .
It said a last resort would be to turn @ @ @ @ @ @ @ .
Some U.S. hospitals have already adopted these options , with several recruiting the public to sew masks .
Adams said that people who aren ’ t trained in how to use them tend to touch their faces a lot , which could increase their chances of becoming infected with the coronavirus .
Health care professionals emphasize that if you ’ re going to use a mask , it ’ s vital to do so correctly or you could become infected through contact with it : put it on with clean hands , @ @ @ @ @ @ @ damp , remove it from behind without touching the front , wash your hands afterward , and dispose of the mask properly .
The WHO counsels against reusing masks that are made for a single use .


washingtonpost--2020-04-02--Analysis | Trump’s 10 Million Barrel Tweet Is Performance Art

So , as often these days , it ’ s necessary to hold at least two realities in one ’ s head at once .
One is that Trump misheard , jumped the gun , was misled , or — and I hope you ’ re sitting down for this — wasn ’ t being wholly truthful .
In that case , let ’ s hope you timed your trade well on Thursday .
If , on the other hand , we assume Trump did manage to secure an agreement of a big supply cut from Saudi Arabia and Russia @ @ @ @ @ @ @ What could he offer in return ?
For Russia , the obvious candidate would be relief from sanctions , both existing ones related to the annexation of Crimea in 2014 and potential further sanctions lurking in Congress .
This seems highly unlikely , though .
Venezuela remains a point of friction between the White House and the Kremlin .
Meanwhile , Trump will be relying on Congress to pass stimulus measures this side of November , and efforts by the White House to ease up on Russia could provide the impetus for Congress @ @ @ @ @ @ @ Saudi Arabia , Trump could offer reassurance on general U.S. support , which has looked more and more ambivalent for at least a decade , especially given the tepid U.S. response to September ’ s attack on Abqaiq .
He might also offer to play good cop versus the growing crowd of “ bad cops ” in Congress calling for punitive tariffs or legislation against Saudi Arabia .
Like sanctions with Russia , though , these don ’ t seem to rise to the level of getting Saudi Arabia to reverse course and @ @ @ @ @ @ @ its oil production .
There ’ s an implacable mathematical problem confronting all oil producers : The world will soon run out of places to store excess barrels .
Trading house Trafigura now estimates 35 million barrels a day — or one-third — of global oil demand has disappeared amid Covid-19 related distancing .
When storage maxes out , oil prices will crash further .
That will wreak havoc on frackers , but will also accelerate the burn rate on Russia ’ s and Saudi Arabia ’ s financial reserves .
When refiners @ @ @ @ @ @ @ production will be cut anyway .
Far better for Moscow and Riyadh to do that in the context of a grand bargain , especially if , as some in the oil industry are calling for , the U.S. agrees to contribute some cuts of its own .
To be clear , U.S. oil production will start dropping after the summer anyway .
But if oil is to avoid hitting the storage wall , then deep cuts would have to begin almost immediately ; as Kevin Book of ClearView Energy Partners put it to @ @ @ @ @ @ @ at the speed of light ; barrels move at 10 knots.
” Trump , never a market purist , would no doubt love to play the dealmaker and earn brownie points with oil producing states ( and donors ) while he ’ s at it .
Beware , though : Numbers viewed in a tweet can appear larger than they actually are .
Similarly , Putin and Prince Mohammed bin Salman derive a great deal of prestige from acting as power-brokers .
Strutting the global stage offers one way of masking the fundamental @ @ @ @ @ @ @ timing also shouldn ’ t be lost on anyone : With Saudi Arabia due to set official selling prices for May sales any day now , a bump to oil benchmarks on the back of a presidential tweet and talk about talks offer a reasonable return on a small investment .
For those very same reasons , the U.S. shouldn ’ t be jumping into such a deal at all ( see this ) .
Yet with a further oil crash looming , and political goodies to be derived from being seen to @ @ @ @ @ @ @ performative aspect to all this that holds great allure for three practiced performers .
Liam Denning is a Bloomberg Opinion columnist covering energy , mining and commodities .
He previously was editor of the Wall Street Journal ’ s Heard on the Street column and wrote for the Financial Times ’ Lex column .
He was also an investment banker .


washingtonpost--2020-04-24--Analysis | We’re Pampering Our Pets More Than Ourselves

Food is usually the sleepy cousin of faster-growing personal-care products , such as skin creams and shampoo .
However , the Covid-19 crisis has turned this on its head .
Nestle , which generated about 15 % of its sales from pet care in 2019 , has doubly benefited from an embrace of our furry friends in this unsettling time .
Not only did people panic buy for their cats and dogs , but they ’ re pampering them more now that they ’ re spending more time with them .
Pet food sales helped Nestle ’ s overall organic @ @ @ @ @ @ @ % in both the Americas and Europe .
By contrast , Americans and Europeans are spending less time worrying about their own appearance , be it tinkering with their hair , shaving or applying makeup and moisturizer .
With nowhere to go , the change in behavior is so radical that , according to Unilever , a typical day stuck at home entails on average 11 fewer “ personal care moments.
” That ’ s a big problem for Unilever .
The company generates 42 % of sales from its beauty and personal-care @ @ @ @ @ @ @ Timotei shampoo .
And it ’ s absent from some categories that have been performing well , such as hair dye for use at home .
But this isn ’ t just the corporate equivalent of being in the right place at the right time .
Nestle ’ s chief executive officer , Mark Schneider , has made some canny changes to the Swiss firm ’ s portfolio , which includes coffee , bottled water and frozen food .
Of course , no one had a crystal ball , but those decisions now @ @ @ @ @ @ @ skin-health business that makes Botox , which looks very wise now that nobody can get to the beauty salon .
It completed the sale of its U.S. ice cream business at the end of January , so it didn ’ t suffer as much Unilever from the decline in demand in this category .
Nestle has really scored from its $ 7 billion deal two years ago for the right to sell Starbucks products outside of cafes .
The pandemic has turned people into their own baristas forcing them to stock up on @ @ @ @ @ @ @ continuing to reshape Nestle , with a strategic review of the Yinlu business that makes traditional Chinese porridge and peanut milk .
Change at Unilever hasn ’ t been as dramatic .
The Anglo-Dutch company has made small bolt-on acquisitions in what have been fast-growing categories such as plant-based meat and premium beauty products like Hourglass cosmetics .
This is sensible given long-term trends , but these products are facing headwinds right now .
For example , a large proportion of the company ’ s beauty offerings are sold through North American retailers @ @ @ @ @ @ @ are currently closed .
Now led by company veteran Alan Jope , Unilever has also been more reticent about big disposals .
It sold its spreads business in 2017 , and is reviewing its tea division , which includes brands such as PG Tips and Lipton .
Investors certainly seem to be backing Schneider ’ s approach over that of Jope .
On a price-to-earnings basis , Unilever is at its biggest discount to Nestle for more than a decade .
How Unilever performs during the crisis should spur a rethink of the @ @ @ @ @ @ @ in one sense with many of its brands in the mass-market segment .
In the downturn that will inevitably follow the pandemic consumers will trade down .
But some brands also look tired .
Will a large number of people really turn to Brut aftershave and V05 shampoo or Toni & Guy when supermarkets and discount retailers do a good job in cheaper alternatives ?


washingtonpost--2020-04-24--Analysis | What’s the Point in Downgrading Italy’s Debt?

It ’ s unlikely that Italy will be cut to junk .
Even if it is , the European Central Bank will keep buying Rome ’ s debt .
But an eventual loss of the country ’ s investment-grade rating would matter .
Many bond funds would have to sell Italian sovereign debt and other related credits .
It could cause financial distress to the nation ’ s finances , and to the European Union .
Both the U.S. Federal Reserve and the European Central Bank appreciate the dilemma and are making efforts to either purchase higher-quality junk-rated debt , @ @ @ @ @ @ @ but we need to change the way we rigorously evaluate credit risk .
What ’ s the point of creating “ fallen angels ” — the name given to bonds that have dropped below investment grade since the pandemic struck — if the world ’ s biggest bond buyers then have to implement special measures to ignore the downgrades ?
S & P downgraded six times more companies in the first quarter of 2020 than it upgraded .
Moody ’ s has taken negative rating action against nearly a quarter of the companies @ @ @ @ @ @ @ because of the coronavirus .
It expects the gap in creditworthiness between junk and investment grade to widen .
This deluge needs to be managed before it overwhelms even the best efforts of the world ’ s central bankers .
Credit ratings are too blunt an instrument right now , given the vast — and necessary — escalation of debt .
The requirement of investment-grade bond indexes to only allow specifically rated bonds is an accident waiting to happen .
A wave of more downgrades is coming .
The agencies could help by @ @ @ @ @ @ @ binary for bond indexes and fixed-income funds when credit is downgraded .
With so much debt being reclassified downward , we need a system that considers creditworthiness relative to other sovereigns and corporates , rather than looking at individual cases in an absolute way as we do now .
With half of America ’ s investment-grade companies sitting in the BBB bucket ( just above the junk divide ) and more than 200 billion euros ( $ 216 billion ) of European credits close to the edge , there ’ s an overwhelming @ @ @ @ @ @ @ penalty for falling on the wrong side of the divide is too severe .
It has a sizable effect on credit spreads ( the difference between a bond ’ s yield and that of its benchmark ) , with a one-notch downgrade often being punitive .
The average spread between junk BB-rated European credits and investment grade BBB stuff blew out to almost 400 basis points from an average of about 100 basis points at one point during this crisis .
The credit markets themselves function pretty well in determining how a bond @ @ @ @ @ @ @ for example , managed to achieve its lowest-ever yield Thursday for a $ 1 billion debt sale despite only having a relatively lowly BB- junk rating .
That makes sense for a company whose business model is suited to people staying at home .
Investor demand was more than 10 times what was on offer .
On the flip side of the coin , Carnival Corp. , the ailing cruises company , had to pay nearly 12 % to raise funds in March despite being technically still investment grade .
Investors know how @ @ @ @ @ @ @ , the ratings agencies can ’ t provide real-time credit validation when they rely on actual data rather than presumption .
But they need to adapt to the changing reality of Covid-19 — and quickly .


washingtonpost--2020-04-24--One Tiny Manufacturer’s Struggle Shows Just How Difficult Reopening the Economy Will Be

But getting cash is just one of the many hurdles Aznavorian has to overcome as Detroit ’ s automakers prepare to restart production after weeks of shutdowns .
He needs hundreds of masks .
Cleaning supplies are scarce .
Customers are bombarding him with emails about how he ’ ll prevent the virus ’ s spread among his 52 workers .
“ It ’ s got me nervous about going back to work , but we ’ ve got to do it somehow , ” said Aznavorian , 46 .
“ If we don ’ t , there won ’ @ @ @ @ @ @ @ people anymore.
” The global auto industry is going through the biggest disruption since at least World War II , and in order to recover from the billions in lost sales and profit triggered by the economic shutdown , it needs every link in the supply chain to survive , right down to a small metal-forming company about 30 miles west of Detroit .
Manufacturers have a lot more to worry about than just making parts .
To avoid spread of the disease , factories have got to be spotless , and workers @ @ @ @ @ @ @ s a patchwork of state and local quarantine orders to abide by , and an intricate supply chain to navigate in order to ship the roughly 30,000 components that go into a vehicle .
That ’ s a daunting challenge for an already stressed global auto industry , but it ’ s even tougher for a tiny business like Clips & Clamps.
“ Smaller companies don ’ t have big balance sheets and a lot of working capital , and they ’ re pretty lean in terms of their ability to absorb these @ @ @ @ @ @ @ Gaurav , chief executive officer of Llamasoft , a supply-chain analytics company .
In non-pandemic times , he ’ s usually out of the house by 7 a.m. , driving his black Ram 1500 pickup truck the three miles to Clips & Clamps .
But the factory shut on March 23 , the day Michigan Governor Gretchen Whitmer had ordered all non-essential businesses in the state to close .
On Friday , she extended the order to May 15 and left carmakers and their suppliers in limbo as to whether the longer shutdown @ @ @ @ @ @ @ time churning through a mountain of emails , tuning into webinars to try and estimate just how low North American auto production will go this year -- 12.7 million units is the best-case scenario , a 20 % drop -- and comparing notes with peers from his industry trade group on how to keep a plant hygienic enough to operate during a pandemic .
Snaring precious supplies and the personal protective equipment everyone is clamoring for isn ’ t easy .
Aznavorian sent his maintenance team to Home Depot to buy cleaning agents @ @ @ @ @ @ @ , but all that was left was bleach .
Purell refills are on indefinite back order.He ordered between 600 to 800 surgical masks from three different companies , including a vendor who usually sells him cardboard boxes , in the hopes at least some will arrive by next week -- but that ’ s in question .
He found two non-contact infrared temperature guns online at Walmart , for $ 81.99 a pop .
Those safety measures are becoming more crucial .
Fiat Chrysler Automobiles NV , Clips & Clamps ’ s biggest @ @ @ @ @ @ @ May 4 , pending approval from governments and unions .
Whitmer , under pressure from protesters to reopen the state ’ s economy , said Wednesday she ’ s closely monitoring talks between carmakers and the United Auto Workers union on new safety protocols to let them “ slowly re-engage in a safe manner.
” Aznavorian ’ s design and tooling teams are making brass rings -- he calls them knuckle extenders -- so workers can open doors or press buttons without having to touch them .
Still , he frets over whether @ @ @ @ @ @ @ .
During a recent factory visit to check on a small production run , he snapped after encountering two employees chatting about 5 and a half feet apart.
“ My first word to him was , ‘ Jeff back up !
’ ” he said of the employee .
“ They ’ re so used to doing that -- it ’ s hard to change.
” Beyond keeping workers safe , Aznavorian needs to make sure he can pay them .
As March was ending , the company was closing out a record @ @ @ @ @ @ @ million – and “ decent ” profitability , Aznavorian said .
But after a month of nearly zero revenue , securing the PPP loan was critical .
The call from his banker last week provided much-needed relief , since he initially missed the cutoff due to an IT glitch at his bank .
After a mad rush -- including 45 minutes spent on a meeting app helping his tech-challenged parents and aunt , who are co-owners in the company , to e-sign the application -- Aznavorian got what he calls “ the golden @ @ @ @ @ @ @ the Small Business Administration .
“ There are tons of hard choices we ’ re going to have to make over the next weeks and months , ” he said .
“ But it gives us breathing room to make those decisions .
”