washingtonpost--2020-06-09--Analysis | Why Europe Had to Get Creative to Pay Pandemic Bills

The typical method in Europe for raising funds is via an auction -- think Sotheby ’ s -- whereby a country sells an amount of debt at a given time on a given day .
Like at an art auction , investors make bids and prices fluctuate according to demand .
Far less common is the private placement , in which debt management offices sell directly to investors , often for more obscure issues such as a 100-year Irish bond .
The other way is via syndication , which involves appointing a group of banks to underwrite a sale .
@ @ @ @ @ @ @ new or ultra-long bonds to the market and have become a popular choice for funding coronavirus recovery plans .
They cost a nation more but are guaranteed to raise the cash .
After a country ’ s Treasury works out its borrowing needs , its debt management office plans how to fund it -- usually through a mix of auctions and syndications .
The latter involves finding a set of banks who will take responsibility for securing investors and who agree to purchase any unsold securities .
There is a premium to pay @ @ @ @ @ @ @ stash will move .
A recent Italian syndication racked up more than 100 billion euros ( $ 113 billion ) of orders , mainly because the bonds were offered with yields nearly 10 basis points more than those in the market .
The process is a highly profitable one for banks , assuming they manage to sell everything .
Europe is facing unprecedented borrowing needs .
Bond sales across the 19-nation euro area are set to total around 1.2 trillion euros this year , according to Bloomberg Intelligence , up from around 870 @ @ @ @ @ @ @ countries still easing their way out of lockdown , governments can ’ t afford to come up short in providing the desperately needed support to businesses and citizens .
Conventional auctions can be unreliable , potentially failing to sell all the bonds on offer , hence the demand for syndications .
JPMorgan Chase & Co. estimates they account for around 30 % of this year ’ s government debt issuance , a third more than usual for the time of year .
For now it seems like they can , and then some @ @ @ @ @ @ @ record demand , largely thanks to the European Central Bank .
While the institution can not buy bonds straight from a Treasury , its growing presence in the secondary market means that investors know they can always offload securities .
At its June meeting , the ECB increased its pandemic purchase program to 1.35 trillion euros .
This doesn ’ t guarantee syndications will continue to be meet with strong demand , of course .
A second wave of the coronavirus pandemic , for example , might make such sales more challenging for @ @ @ @ @ @ @ are often used by companies to sell bonds , as well as by emerging-market nations , regional governments and development funds .
But the world ’ s biggest seller of bonds -- the U.S. -- doesn ’ t offer them at all .
While the U.S. Treasury has considered syndications , citing the success of other countries , concerns have been raised over the possible appearance of playing favorites with particular banks and to disrupting the predictability of market supply .
What ’ s more , there hasn ’ t really been a @ @ @ @ @ @ @ the world ’ s largest and most liquid government bond market has underpinned demand , including from foreign investors .
Right now , the syndication process is working .
Even on a day when the U.K. , Spain , Ireland and Greece all conducted such sales , investors laid down nearly $ 300 billion of offers , showing that fixed-income demand is remaining robust for the time being .
There may be longer-term risks to how the market functions , with central banks mopping up so much of the supply .
Japan ’ @ @ @ @ @ @ @ to such an extent that there have been days when not a single bond traded on the open market .
If Europe went the same way , a bigger proportion of the day-to-day work for rates desks may be conducting profitable syndications , rather than actually buying and selling securities .
The danger is liquidity could all but dry up .


washingtonpost--2020-06-09--Analysis | Stock Market Has Almost Always Ignored the Economy

But the stock market is not a barometer of the country ’ s health — politically , socially or even economically .
Its sole function , as wonky as it may sound , is to quickly , accurately and unemotionally tabulate investors ’ consensus view about the health and prospects of publicly traded companies .
In that regard , the market has ably done its job throughout this crisis , regardless of opinions about the outcome .
Granted , investors ’ views about individual companies are often informed by the broader environment , but there ’ s never been a @ @ @ @ @ @ @ economy .
For example , the correlation between annual changes in real , or inflation-adjusted , gross domestic product and annual real returns for the S & P 500 , including dividends , was 0.09 from 1930 to 2019 , the longest period for which overlapping numbers are available .
In other words , there was no correlation at all .
( A correlation of 1 implies that two variables move perfectly in the same direction , whereas a correlation of negative 1 implies that two variables move perfectly in the opposite direction @ @ @ @ @ @ @ and the economy is no more reliable over other periods .
Their correlation was a negative 0.04 over rolling 10-year periods — here again , no correlation at all .
In fact , if there ’ s any reliable relationship between the two , it ’ s that the market and the economy have a habit of parting ways , and for long periods .
The S & P 500 , for instance , outpaced GDP growth by 13 percentage points a year after inflation during the 1950s and then lagged it by @ @ @ @ @ @ @ More recently , the S & P 500 trailed GDP growth by 5 percentage points a year during the 2000s , and then beat it by 10 percentage points during the last decade .
The periods when the two have moved in tandem are rare exceptions .
Nor is there any discernible relationship between the market and the broader political or social environment .
Pick your tumultuous decade .
The S & P 500 returned 3 % a year after inflation during the 1930s , even as the Great Depression transformed the American @ @ @ @ @ @ @ % a year during the 1940s , despite a horrific world war .
And it returned 5 % a year during the stormy 1960s .
Or pick any year — you ’ ll find no pattern of the market wilting in the face of turmoil .
In 1968 , for example , perhaps the most turbulent year in modern American history before the current one , the S & P 500 handed investors a real return of 6 % .
Still , the jarring juxtaposition of a booming market amid the current chaos @ @ @ @ @ @ @ what ’ s behind the rally , few of which stand up to scrutiny .
One pervasive theory is that the Federal Reserve is propping up the stock market .
In an effort to revive the economy and avert a financial crisis , the Fed lowered short-term interest rates to near zero , injected roughly $ 3 trillion of stimulus into the economy , mostly by purchasing Treasuries and other bonds , and committed to spending as much as necessary to keep bond markets running smoothly .
Those moves no doubt had a @ @ @ @ @ @ @ there ’ s scant evidence that they affected stocks .
This Fed theory isn ’ t new .
It was circulated widely during the bull run that followed the 2008 financial crisis .
Then as now , the Fed lowered rates to near zero and spent roughly $ 3 trillion .
But as I ’ ve pointed out before , 94 % of the S & P 500 ’ s return from 2010 to 2019 could be attributed to dividends and earnings growth and only 6 % to valuation expansion , or the @ @ @ @ @ @ @ stocks .
In other words , stocks went up because companies made more money , not because the Fed induced a stock-buying binge .
That ’ s consistent with the experience of Europe and Japan during the same period , when a flood of stimulus by central banks failed to overcome tepid earnings growth and lift stock markets .
Another prominent theory is that a handful of sought-after stocks have hijacked the market and pulled it higher .
It ’ s true that the NYSE FANG+ Index , which includes investor favorites such @ @ @ @ @ @ @ Netflix and Google parent Alphabet , notched a record on Monday and is up 49 % since March 23 .
It ’ s also true that seven of the 10 stocks in the FANG index account for 16 % of the S & P 500 by market value .
( Of the remaining three , two are Chinese companies and Tesla hasn ’ t yet been invited to the club . )
But the median return among all S & P 500 companies was 52 % during the same period .
In that @ @ @ @ @ @ @ remarkable .
So what is behind the stock market rally ?
The answer is a bold and unequivocal consensus that a robust earnings recovery is on the way .
To see that , one must look deeper than the headline numbers .
Consider this : The top 20 best-performing stocks in the S & P 500 since March 23 posted a median return of 151 % , more than triple the return of the FANG index .
Ten of them , including four of the top five , are energy companies , a @ @ @ @ @ @ @ two months ago .
The remaining stocks are financial services , cruise lines , casinos and retailers — many of them businesses that were widely expected to have gone bust by now .
The rest of the S & P 500 tells the same story .
Among the top half of best-performing stocks in the index since March 23 , 70 % are from sectors that were hit hardest by the coronavirus and related shutdown — consumer discretionary , energy , financials , industrials and materials — and 30 % are from sectors @ @ @ @ @ @ @ it — consumer staples , health care , technology , real estate , communications and utilities .
The bottom half is exactly the opposite .
That doesn ’ t mean the consensus is right to expect a surge in earnings , of course .
Some prominent investors have already expressed their skepticism , including David Tepper , Bill Miller and Paul Tudor Jones .
As did I. Jeremy Grantham joined the chorus last week , writing in a note that the “ market seems lost in one-sided optimism when prudence and patience seem @ @ @ @ @ @ @ surge in earnings necessarily translate into a broader surge for the economy , as the last decade and many before it have demonstrated .
Right or wrong , it ’ s useful to bear in mind that the stock market ’ s job is to impart the consensus around companies , not opine on or account for the broader political , social or even economic environment .
And a good thing , too .
It has rarely been good at it .

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washingtonpost--2020-06-24--Democrats Want to Block Stimulus for Companies Moving Offshore

The legislation would give companies the option to qualify for the relief money if they revert to a U.S. company , which would require them to retroactively be treated as a domestic corporation beginning in 2017 , and pay back taxes and penalties for those years .
The proposal , which doesn ’ t yet have any Republican sponsors , could be a long-shot to be included in the next stimulus bill , which lawmakers are considering in July .
“ These companies , which have schemed their way out of paying U.S. taxes , shouldn ’ t get a @ @ @ @ @ @ @ financial relief , ” Illinois Senator Dick Durbin , the No .
2 Senate Democrat , said in a statement .
Texas Representative Lloyd Doggett , the sponsor in the House , also said that companies that renounced American citizenship “ want to be treated as foreign when it comes time to pay for vital services , but claim they are as American as apple pie when it comes time for a handout paid for by the American households actually suffering.
” Congress passed a $ 2.2 trillion stimulus bill known as the @ @ @ @ @ @ @ households , small businesses and large corporations from an economy reeling from shutdowns to slow the spread of the coronavirus .
The legislation has helped buoy struggling businesses , but the quickly negotiated bill created some openings for companies to access money that lawmakers said in hindsight should have been more restricted .
The U.S. central bank in guidance for two bond buying programs allows U.S. subsidiaries of foreign companies , which includes inverted companies , to qualify for the public money .
Whether any companies that have left the U.S. have benefited @ @ @ @ @ @ @ .
For more articles like this , please visit us at bloomberg.com


washingtonpost--2020-03-23--Trump Urges Senate to ‘Make a Deal’ on Stimulus: Congress Update

The U.S. Travel Association supports increasing the maximum loan amount offered to small businesses to four times the borrowers ’ monthly operating costs from 2.5 times the borrowers ’ monthly payroll expenses , according to Tori Emerson Barnes , who heads public affairs and policy for the group .
The American Hotel & Lodging Association also supports that position , according to a person familiar with the matter .
The draft includes about $ 350 billion in loans for small businesses that would convert to grants if the companies retain their employees .
According to an official summary of the @ @ @ @ @ @ @ and the unemployed would receive $ 1,500 , compared with $ 1,200 in the Senate bill .
The House proposal would also create a $ 600 per week payment for any worker laid off or for self-employed people who have lost contracts due to the pandemic .
There are currently no plans for House members to return to Washington to vote on the bill , expected to be released later Monday .
At this point , it appears to be a list of demands Democrats want to see included in the Senate bill @ @ @ @ @ @ @ scheduled to have a caucus-wide call on Tuesday afternoon .
If the House and Senate pass different versions of the stimulus bill , it will take more time to reconcile the differences and get the bill to President Donald Trump for his signature .
The House measure would fund hospitals ’ virus response and would call for the president to use the Defense Production Act to shore up critical supplies .
It would also increase funds for schools , food assistance and to help states expand early and absentee voting , according to @ @ @ @ @ @ @ .
A demand for greater oversight of the fund to assist companies and state and local governments has been a key sticking point for Democrats .
Coons said the details were still being worked out and put into the legislation.
“ I don ’ t see that there is yet final agreement on the language of what is the scope of that accountability board , ” he said .
Coons said the most recent draft version he saw still granted the Treasury secretary “ very broad discretion.
” For example , he said @ @ @ @ @ @ @ loan and simply uses it for bailouts and executive compensation , there is “ no clear mechanism ” for that to be resolved .
Democratic Senator Elizabeth Warren said in a separate Bloomberg Television Interview that she wants an oversight panel with “ real teeth ” to monitor that the money is spent according to the law and according to the promises that companies made when they took the funds .


washingtonpost--2020-03-22--Social Distancing Makes Sense Only With Extraordinary Fiscal Stimulus

• Second , the disruption is so vast — the economy in many sectors and areas has effectively come to a standstill — that government failure to act will result in an avalanche of bankruptcies and extended unemployment that will , in turn , inflict lasting damage on businesses and families , even after the health crisis passes .
Economists call this phenomenon hysteresis ; others call it not being able to put Humpty Dumpty back together again .
It is why government intervention can not be limited to the sectors most directly affected ( airlines and hotels , for @ @ @ @ @ @ @ beyond the conventional tools ( such as rebates to individuals ) .
While many existing stimulus measures are necessary and helpful — especially support for unemployed workers and state governments — they are terribly inadequate given the scale of the economic damage already occurring .
• Third , given governments ’ adoption of social distancing , the dilemmas we face will continue until an effective anti-viral or therapeutic can be found that allows us to contract the disease without suffering significant harm .
In the meantime , even if current efforts are successful @ @ @ @ @ @ @ over the next several weeks , social distancing will need to be re-imposed in cycles .
Given the plausible timetable for developing a vaccine , and unless we get very lucky and the virus itself mutates in a less harmful direction , these cycles could continue for well more than a year .
• Fourth , a proper response to the Covid-19 crisis will stress test the increasingly popular proposition that government deficits don ’ t matter .
This is a fiscal risk worth taking .
Indeed , those who argue that the @ @ @ @ @ @ @ stunning increase in the deficit is too risky need to return to the first point above , because the budget impact reflects the economic consequences of social distancing .
If you don ’ t like the fiscal cost but you favor social distancing , what you ’ re really saying is that you are willing to accept millions of bankruptcies and the ripping apart of corporate and social fabrics across the world .
• Fifth , the economic harm comes mostly from the sudden stop in business activity due to social distancing , @ @ @ @ @ @ @ or dying from Covid-19 .
The demographics of those suffering from coronavirus and those suffering from the economic virus are quite different .
Governments around the world are awakening to these truths , and beginning to debate how to assist businesses suffering from the downturn .
The U.K. is considering making grants to companies for up to 80 % percent of salary , capped at 2,500 pounds ( $ 2,900 ) a month ; offering loans to small and medium-sized businesses ; and taking equity stakes in airlines and other companies .
Denmark @ @ @ @ @ @ @ 75 % of payroll for companies facing a need to cut jobs by 30 % or more .
France is considering equity injections and loan guarantees .
The economists Emmanuel Saez and Gabriel Zucman have proposed that governments simply pay companies to cushion the shock : “ In the context of this pandemic , we need a new form of social insurance , one that directly targets and works through businesses , ” they wrote earlier this month .
“ The most direct way to provide this insurance is to have the government @ @ @ @ @ @ @ .
If the government fully replaces the demand that evaporates , each business can keep paying its workers and maintain its capital stock , as if it was operating under business as usual.
” One thing is clear about stimulus measures in this crisis : Bigger is better .
To my mind , the least-worst option is a large and comprehensive program of loans to businesses , as Sorkin has proposed , which could be extended quarterly and limited in the first instance to a share of 2019 revenue .
( 1 ) @ @ @ @ @ @ @ principles : • All companies and sole proprietors should be eligible , given how hard it is to quickly assess which industries are affected and the feedback loops across sectors and businesses .
The only condition should be that the companies maintain payroll and payments at some threshold relative to 2019 .
• The program can most effectively be administered through banks , with the government then buying the loans and borrowers repaying through the tax code .
Repayment could take the form of allowing a company or individual to deduct only a @ @ @ @ @ @ @ debt is repaid .
This approach in effect provides an auto-stabilizer for the repayments : They will be accelerated if the economy starts booming and delayed if doesn ’ t .
Repayments will also be faster for firms that get back on their feet faster and that spend a smaller share of their budgets on labor .
By having the government take loans off banks ’ balance sheets up-front , this strategy also avoids further capital stresses on banks .
• In the event an effective therapeutic against Covid-19 is delayed , causing @ @ @ @ @ @ @ the loans could be transformed into grants ( thus moving from Sorkin ’ s idea to Zucman and Saez ’ s ) .
It is nonetheless better to start with loans , and then forgive those loans ( thus shifting to grants ) if necessary , because we don ’ t know how long or severe the downturn will be , and it may turn out that the loans are sufficient to attenuate the economic damage .
Even broad-scale loans would be an unprecedented fiscal experiment — but pose much less long-term fiscal @ @ @ @ @ @ @ features of this program are matters for debate ( including whether the banks should bear some share of the risks ) , and the right approach undoubtedly will vary from country to country .
But the basic realities are the same everywhere : It makes no sense to impose social distancing without socializing the costs .
And if we want to avoid irreversible economic damage , we can ’ t afford to wait .
( 1 ) Some have suggested simply delaying payments rather than injecting liquidity into companies .
Delaying payment for @ @ @ @ @ @ @ payments is wise , but a broader payment halt across companies offers only the mirage of a solution .
It would push the problem into the future , but comes with the significant cost of building up arrears that will ultimately come due .
In addition , delaying payments to any entity other than the government merely shifts the cash-flow problem somewhere else — it doesn ’ t eliminate even the short-run problems from the collapse in demand .


washingtonpost--2020-03-27--Sad About a Buyback Ban and Pay Cuts? Deal With It

A key question is why publicly traded companies alone warrant restrictions .
Nobody ’ s clamoring for workers to pledge not to buy a car or smartphone until they pay back whatever assistance they get from the government .
There ’ s not even a requirement that they repay .
The same goes for small businesses that have been forced to close because of voluntary or state-ordered mitigation efforts in the fight against Covid-19 .
What makes American Airlines any different ?
The most common complaint about airlines seeking assistance is that they spent tens of billions of dollars buying @ @ @ @ @ @ @ .
If they hadn ’ t done that , the argument goes , they ’ d have the money to survive this shock .
This specific argument against buybacks has only come about in response to the crisis .
For most of the decade , the argument against buybacks was that it was shortchanging investment , and hence , economic growth .
I ’ m not aware of anyone arguing in 2016 that airlines and hotels should hoard cash in preparation for a pandemic rather than buy back their shares .
Stockpiling cash @ @ @ @ @ @ @ have spent much of the past decade pushing companies to take more shareholder-friendly actions .
Just this month Elliott Management Corp. successfully pressured Twitter to agree to buy back $ 2 billion of its shares .
Companies that hold excess cash quickly find themselves under assault from activist investors demanding that spare cash be returned to shareholders .
Perhaps the public just hates stock buybacks .
Maybe the tax code should be changed so that buybacks and dividends are treated equally because there doesn ’ t seem to be the same level of @ @ @ @ @ @ @ pays more than $ 10 billion a year in dividends without earning the wrath of the public .
In all likelihood , the public anger over aiding large companies stems from both the level of buybacks during the past decade , and lingering resentment over taxpayer assistance to Wall Street in the financial crisis .
Banks and investors got bailed out while Main Street was left with a jobless recovery and a decade of subdued wage growth .
And during the ensuing decade , the public has rightly felt that big companies went @ @ @ @ @ @ @ focusing on shareholders and executive compensation rather than workers and the common good .
It ’ s not hard to see why there might be an uneasy sense of déjà vu , with critics of the financial-crisis bailout seeing an opening to exact some revenge for bad corporate behavior .
So it ’ s understandable why there are demands that publicly traded companies seeking government relief should have strings attached to that assistance .
What we ’ re going through isn ’ t a typical recession .
It ’ s a forced cessation @ @ @ @ @ @ @ a lethal virus .
Congress is close to wrapping up a third bill to help the economy weather this storm , but in all likelihood it won ’ t be the last .
States and local governments are experiencing a large decline in tax revenue and it may turn out that the $ 2 trillion in the current package is insufficient .
Keeping the public engaged and supportive of new rounds of legislative aid is critical .
If part of that effort means shortchanging some investors and limiting executive compensation , that ’ @ @ @ @ @ @ @ this fight , everyone ’ s going to have to give up something .
Medical workers are accepting great risk to their own health to treat sick patients .
Families are having to cancel vacations and postpone weddings .
Parents are working at home while taking care of their kids as schools close for weeks or months .
Millions of workers are losing their jobs .
Fiscal conservatives are having to stomach trillions of dollars in new spending .
Progressives have to accept large companies getting government assistance .
If that means executive @ @ @ @ @ @ @ restrained for a while to shore up public support for fiscal bills , nobody should shed any tears .


washingtonpost--2020-03-27--Analysis | Junk Bonds Need a Little Love Too

The ECB ’ s Quantitative Easing bond-buying programs may exceed 1 trillion euros ( $ 1.1 trillion ) this year , but it won ’ t buy from companies beyond the lowest rung of investment grade debt-rating , BBB .
The central bank should think seriously about widening the remit of its corporate sector purchasing program to include junk bonds .
Yes , there ’ s the moral hazard of offering safety to the riskiest group of company borrowers , but these are extraordinary times and these businesses employ people too — and will play a valuable part in any @ @ @ @ @ @ @ European investment-grade and high-yield debt has ballooned to levels not seen since the euro crisis of 2012 , following the bigger U.S. junk bond market into double-digit yield territory — and even wider for the weaker names .
That ’ s hardly surprising when you look at the wall of support that ’ s been made available to protect the higher grade stuff .
One key funding avenue , the new issue market for euro-denominated high-yield notes , has been shut firmly since February .
Trading in the secondary market is very limited @ @ @ @ @ @ @ are asking for and what people are bidding now several percentage points apart .
The market has split in two , with companies that have defensive qualities trading by appointment .
Those exposed to the cyclical nature of the economy ( if we can even term this a cycle ) are barely trading at all .
Most high-yield names are being treated as default risks because of the abrupt stop to Europe ’ s economy .
Leverage is the real killer : Companies that have a lot of debt or who ’ ve @ @ @ @ @ @ @ .
Some who are too reliant on super-cheap financing , which has been abundant until now , will fail .
Before Covid-19 struck it was halcyon days for euro high-yield bonds , with historically low servicing costs as negative benchmark rates and super-tight credit spreads allowed many companies to extend the maturity of their debt and build resilience to the ( normal ) economic cycle .
Credit-rating standards had steadily relaxed , letting the new-issue market tolerate ever higher levels of leverage .
No longer .
February was a record month for redemptions @ @ @ @ @ @ @ about 68 billion euros , and March will almost certainly be worse .
According to data from JP Morgan Chase & Co. , more than 10 % of the money in European high-yield funds cashed out between the start of the year and March 25 , with more than 8 billion euros redeemed .
Redemptions from high-yield exchange-traded funds ( ETFs ) have exceeded 15 % , which is causing real problems .
ETFs are often invested in the larger , more liquid junk-bond issues , which are being sold first .
This @ @ @ @ @ @ @ appears to be three possible outcomes from high-yield issuers : they plunge into the distressed-debt ranks ; they ’ re bailed out ; or they ’ re sufficiently well-funded to ride this out .
Loxam SAS , a French construction machinery renter , has seen its 5.75 % 2027 bond more than halve in price this month , pushing the yield on offer to more than 20 % .
That ’ s well into the distressed debt category .
The operator of Eurotunnel , Getlink SE ’ s 3.625 % 2023 bond has @ @ @ @ @ @ @ yield is relatively robust at about 6 % .
Its leverage is very high , but it can rely on a strong revenue stream — at least when people are allowed to travel again .
Although traffic through the Channel Tunnel has dried up , it ’ s a critical part of Europe ’ s infrastructure .
A French packaging company , Crown European Holdings SA , secured the lowest ever coupon on a euro junk bond back in October , at just 0.75 % ( that ’ s how heady times were @ @ @ @ @ @ @ better than the rest of the sector recently , having bought itself more breathing room through such fantastic terms .
The ECB ’ s unprecedented stimulus is having some knock-on effect in controlling spreads for everybody ( even junk bonds ) ; and with investment-grade corporate issuance roaring back into life this week , there ’ s some prospect of relief for the new issue high-yield market this year .
BBB-rated companies such as Koninklijke Ahold Delhaize NV and Compagnie de Saint-Gobain both saw huge demand for their new bond deals in recent @ @ @ @ @ @ @ the higher quality end of the junk bond market , especially if its higher yields attract investors who still can ’ t squeeze great returns from investment-grade bonds .
There ’ s clearly cash available if confidence can be extended to the unloved parts of the corporate sector .
But nothing can be left to chance ; time for the ECB to widen its scope .


washingtonpost--2020-03-27--Analysis | For Once, Monoprix’s Owner Has Something Right

While Casino ’ s complex financial structure has long been a source of consternation , there are some jewels in its highly leveraged crown .
These are the Monoprix and Franprix chains , both of which have strongholds in Paris .
Between its brands , Casino has more than 40 % of the Paris market , compared with 11.5 % nationally , according to Charles Allen , an analyst at Bloomberg Intelligence .
Much of French capital is served by small supermarkets , such as Franprix , which average around 5,300 square feet .
This format has been particularly strong @ @ @ @ @ @ @ like city dwellers worldwide , don ’ t want to venture too far from their homes to stock up on groceries .
And while Monoprix ’ s clothing range will be under pressure , demand for food has rocketed .
Casino should be able to capitalize on a boom in home delivery too .
The company sells through Amazon and it just began testing an online grocery service with Ocado Group Plc .
Its online non-food business Cdiscount is also expanding its grocery offer , and may benefit from increased demand for all @ @ @ @ @ @ @ to work from home .
Although free cash flow before disposals improved , the company ’ s ability to deliver cash in France has been disappointing over the past couple of years .
While frantic shoppers in today ’ s environment should give Casino a boost , its weak cash generation and high leverage shouldn ’ t be overlooked .
Moves to sell and lease back stores over the past two years add rental payments to its financial obligations .
Net debt in France fell from 2.7 billion euros to 2.3 billion euros @ @ @ @ @ @ @ sales .
But overall borrowings rose from 3.4 billion euros to 4.1 billion euros , after Casino used debt to finance the simplification of its structure in Latin America .
What ’ s more , Casino has decided to hit pause on its disposal program as it grapples with “ unprecedented demand , ” both in its stores and online .
Still on the list to be offloaded is the Geant hypermarket business.The company is in the midst of a 4.5 billion-euro divestment program , having struck 2.8 billion euros of deals so @ @ @ @ @ @ @ billion euros worth have been signed , but not yet completed .
When these transactions cross the finish line , Casino should be able to repay bonds due in 2021 and 2022 .
Still , Casino must agree another 1.7 billion of disposals to reach its targets .
It ’ s confident it will still achieve them in time and it ’ s done a good job so far , with a better-than-expected price just this month from selling its Leader Price chain to German discount rival Aldi for example .
But conditions @ @ @ @ @ @ @ economic fallout from the coronavirus .
The disposal program is important for both Casino and its parent Rallye , Naouri ’ s investment group .
The proceeds are key for Casino to be able to resume paying dividends , and Rallye , which owns 52 % of Casino , is counting on them .
The debt-laden Rallye agreed a restructuring plan with the French courts last month that gives it 10 years to pay back 2.9 billion euros .
Although the shares initially fell as much as 7.75 % on Thursday , they @ @ @ @ @ @ @ outperformance over the past month .
So investors seem convinced it will continue to benefit from the current crisis .
But as long-time followers of Casino know , even when the chips are looking up , there are always more spins to come .


washingtonpost--2020-05-15--Analysis | Lessons From a Quarter We’d Like to Forget

Wall Street analysts expect things to get worse before they get better , with earnings forecast to plunge about 41 % in the second quarter , decline 24 % in the third quarter and drop 11 % in the final three months of the year .
Add them up and Wall Street forecasts a 20 % tumble for the year to $ 127 a share .
Coming into 2020 , the consensus was that members of the S & P 500 would produce earnings of about $ 175 a share .
Bankers are the good guys ?
The message from @ @ @ @ @ @ @ their earnings in mid-April , just as the pandemic was escalating across America ?
We are well-capitalized , made a lot of money from trading in extremely volatile markets , and have the capacity to help our clients get through the crisis .
Unlike the financial crisis just over a decade ago , big banks have a chance to be the good guys now , processing U.S. Small Business Administration loans and allowing individuals and families to delay payments on credit cards , auto loans and mortgages in certain cases .
Yet banks @ @ @ @ @ @ @ U.S. stock markets .
The KBW Bank Index has fallen about 42 % this year , compared with just 12 % for the S & P 500 , suggesting the economic recovery might be slower and more punishing than the broader markets for equities may be signaling .
—Brian Chappatta Gorging on comfort food .
As panic-ridden consumers stock up on essentials , Big Food brands of yesteryear , from Kellogg ’ s Frosted Flakes to Kraft macaroni and cheese , that had been struggling to find their place in a new health-conscious @ @ @ @ @ @ @ explains the resurgence of companies such as General Mills Inc. , whose brands include Betty Crocker , Pillsbury and Totino ’ s pizza rolls .
Its U.S. retail sales surged 45 % in March and 32 % in April .
The question : Is this only a moment ?
We ’ re also noticing some quirky consumer habits .
Unilever NV said we are using less deodorant , skin care and shampoo , as much of this use is associated with work and socializing .
Henkel AG enjoyed strong demand for home hair @ @ @ @ @ @ @ long one , expect these habits to continue .
—Tara Lachapelle and Andrea Felsted Big Tech divergence .
Shares of Facebook Inc. and Google parent Alphabet Inc. rose post-earnings following better-than-feared commentary on April digital ad market trends .
Even so , Facebook cautioned the future economic recovery may be worse than expected .
And Google said not to extrapolate the stabilization that seemed to occur in April .
Both internet ad giants may face business pressures going forward if companies cut their marketing budgets in coming quarters .
In contrast , Amazon @ @ @ @ @ @ @ shift spending to e-commerce and watch more streaming video content .
Finally , Apple Inc. uncharacteristically failed to give sales guidance for its current quarter for the first time since 2003 , signaling the lack of visibility it has for iPhone demand .
—Tae Kim Covid-time tech winners .
Best-of-breed cloud software makers are surging as companies accelerate the spending shift away from traditional on-premise equipment to the cloud ’ s more scalable and cost-efficient offerings .
Some of the biggest earnings winners included Datadog Inc. , Okta Inc. and Twilio Inc. Video-game @ @ @ @ @ @ @ this year as it has become a key in-home entertainment choice under shelter-in-place orders .
Both Activision Blizzard Inc. and Electronic Arts Inc. posted strong results and confirmed accelerating sales for its offerings in April .
Investors also bid up Zoom Video Communications and Slack shares as the two companies benefited from the workforce-collaboration software trend and revealed strong accelerating business metrics .
—Tae Kim Cashing in on Covid cures ?
During Gilead Sciences Inc. ’ s first-quarter earnings call , an analyst asked CEO Daniel O ’ Day if investors should expect @ @ @ @ @ @ @ confirmed Covid treatment remdesivir that the company produces for other drugs .
O ’ Day responded that “ there ’ s been no other time like this in the history of the planet ” and that “ we understand our responsibility.
” In other words , probably not .
Gilead announced on Tuesday a temporary royalty-free license that will allow five generic drugmakers to make a presumably cheaper version for more than 100 low-income nations .
Other companies will face pressure to follow its example and price moderately in developed countries , which @ @ @ @ @ @ @ pandemic-focused drugmakers .
—Max Nisen Going local .
Still spending .
Coronavirus shutdowns have snarled industrial-supply chains already facing strain from the U.S.-China trade war .
While no one envisions an abandonment of China as a manufacturing hub , there are early signs of work being brought back to the U.S .
Unfortunately , this is unlikely to mean much in terms of jobs , at least not for humans .
Rockwell Automation Inc. said it ’ s seen an uptick in interest from companies that might have previously manufactured products out of @ @ @ @ @ @ @ but are now rethinking that economic calculus .
When it comes to investment , discretionary spending on things like travel has been cut across the board at many manufacturers .
Most CEOs and top executives have taken pay cuts .
Buybacks are off the table but for a few brave souls , including Eaton Corp .
But many manufacturers are continuing to fund projects they view as essential to their future growth .
For United Parcel Service Inc. , that means investments in automation that can help make e-commerce deliveries more profitable .
@ @ @ @ @ @ @ services work and expanding its product lineup .
“ I ’ m not planning on sacrificing the future just to cut back on capex , ” Honeywell International Inc. CEO Darius Adamczyk said on a recent earnings call .
—Brooke Sutherland Pink slips or paychecks ?
While aerospace manufacturers such as Boeing Co. and General Electric Co. have moved swiftly to announce large layoffs amid a collapse in the industry , other industrial companies have been more surgical , at least for now .
Caterpillar CEO Jim Umpleby has said his company ’ @ @ @ @ @ @ @ even as revenue climbed the past few years means there ’ s less slack in the system and the company doesn ’ t have to be as ruthless on job cuts during the pandemic .
Others , such as railroad Union Pacific Corp. , are worried about having enough labor at the ready whenever a recovery does occur so prefer furloughs when possible .
“ We don ’ t want to cut the talent so deep that when the recovery happens , we don ’ t have the right people , ” said @ @ @ @ @ @ @ Corp. , whose robust balance sheet and defense business give it more flexibility to weather the commercial aerospace downturn .
Companies can still save costs without cutting employees : Trash-hauler Waste Management Inc. is guaranteeing 40 hours a week of pay for full-time employees through the pandemic , but the redistribution of its workers has helped it reduce more costly overtime hours by half .
—Brooke Sutherland Staying safe .
Most manufacturers have kept their doors open through the pandemic because their work is considered essential .
That has come at a cost @ @ @ @ @ @ @ 3 million in the first quarter on actions to keep its employees safe , including providing them with protective gear and doing enhanced cleaning .
To keep Emerson Electric Co. ’ s factories humming , Chief Operating Officer Steve Pelch had to rent aircraft to bring in crucial supplies and double the number of buses used to transport workers in Mexico so they can safely spread out , according to an interview with Bloomberg News ’ s Thomas Black .
Automated doors have been installed , as have hand-washing stations .
Plexiglass partitions @ @ @ @ @ @ @ Siemens AG digitally redesigned an Airbus SE factory that ’ s been repurposed for ventilator manufacturing to ensure social distancing , and workers must pass through a sanitization tent to gain access .
In what could be a key test for the reopening of other parts of the economy , automakers with large union workforces including General Motors Co. and Ford Motors Co. are bringing their factories back to life this week in preparation for a May 18 official restart .
Ford said it will require face masks for anyone entering its facilities @ @ @ @ @ @ @ side or face shields for those employees whose jobs don ’ t allow for social distancing .
It ’ s spacing out production shifts to allow more time for cleaning and requiring employees to complete daily health and temperature checks .
—Brooke Sutherland Oil , oil everywhere .
At a primeval level , the oil business is all about sinking money into the ground .
When the barrel gods are smiling , even more money comes back up .
In 2020 , it feels like the gods aren ’ t happy .
Hence @ @ @ @ @ @ @ odd .
While exploration and production companies are always careful to talk up efficiency , what really gets the juices flowing are spending plans for new wells .
Not this time .
Parsley Energy Inc. , which fracks in America ’ s oil heartland , the Permian basin , suspended drilling , declaring bluntly ( and correctly ) that right now , “ the world does not need more of our product.
” At the other end of the scale , Exxon Mobil Corp. also slashed spending this year to as little as @ @ @ @ @ @ @ 23 billion !
While Exxon recognizes the immediate impact of Covid-19 , it doesn ’ t think “ events like this change basic human nature or people ’ s wants and desires.
” The jury remains out on that notion .
And in any case , the switch from budget boasting to public prudence offers a glimpse of what peak oil could mean for what ’ s ahead .
Expect dissonance .
—Liam Denning


washingtonpost--2020-05-16--Fed Releases Loan Details on Paycheck Protection Facility

New York , the nation ’ s fourth most populous state and the epicenter of the coronavirus pandemic in the U.S. , got a relatively paltry $ 804 million , coming in 15th .
The PPP is designed to encourage small businesses to keep workers on their payrolls for eight weeks , while much of the U.S. economy is shuttered to limit virus spread .
The result has been historic plunges in sales , manufacturing output and employment , threatening the viability of thousands of enterprises .
The Fed , in an unusual act of fiscal cooperation , is providing @ @ @ @ @ @ @ to help free up bank balance sheet capacity .
The Fed system had $ 40.6 billion PPP loans on its balance sheet as of May 13 .
The program went operational on April 16 .
The spreadsheet -- published as part of the Fed ’ s effort to be transparent about where virus assistance backed by taxpayer money is going -- shows more than 3,000 individual advances by regional Fed banks to almost 600 lenders located across the nation .
Provided the terms of the loan are met , the loans will be @ @ @ @ @ @ @ turn into grants , they represent a low risk for the Fed so long as the businesses meet government requirements .
The Fed has launched nine emergency lending programs to keep credit flowing during the pandemic , including direct purchases of corporate debt .
It plans to share monthly details on several of these facilities .
But the beneficiaries of programs aimed at easing strain in the commercial paper market , money markets and among dealers in U.S. Treasuries will be kept under wraps .
The Fed argues that naming borrowers from those @ @ @ @ @ @ @ institutions tapping the facilities , and create the risk of a run .
For more articles like this , please visit us at bloomberg.com


washingtonpost--2020-06-20--On Black Wall Street, Hope and Fear as Trump Comes to Tulsa

Trump ’ s insistence on bringing thousands of supporters to Tulsa on Saturday has stunned many .
After the coronavirus and nationwide protests over police violence , the spotlight turns to the place where mobs killed hundreds of Black people during the Tulsa Race Massacre of 1921 .
“ It just feels like the perfect recipe for chaos , ” said Venita Cooper , a former educator who last year opened Silhouette Sneakers & Art , a shoe store and gallery steps from where workers are building the Greenwood Rising History Center .
“ As a business owner , I @ @ @ @ @ @ @ show off Greenwood and Tulsa .
I ’ m also incredibly scared.
” Trump has threatened violence against the left , tweeting Friday that protesters and “ lowlifes ” would be treated more harshly in Tulsa than in Minneapolis , Seattle and New York .
“ It will be a much different scene !
” he wrote .
But Black business owners have spent weeks worrying that Greenwood , because of its increasingly well-known history , would become the target of White supremacists .
During Black Lives Matter protests sparked by the killing @ @ @ @ @ @ @ kept Cheyenne McKinney up at night .
“ On Greenwood , the environment is such a friendly vibe .
No matter what color you are , we ’ re going to say hi , ” said McKinney , who opened Cheyenne ’ s Boxing Gym last year .
But , as for Trump , she said , “ he ’ s not welcome.
” “ I want it to feel like a festival or block party , so we can ignore the fact that he ’ s here , ” said organizer Tykebrean @ @ @ @ @ @ @ ’ t want to be so riled up that we forget to have fun and eat a hot dog.
” Protests in Tulsa since Floyd ’ s death have been mostly peaceful , with one jarring exception : On May 31 , several were injured when a truck drove through a crowd of protesters marching on a highway to mark the 99th anniversary of the Greenwood massacre .
While segregation is no longer the law as it was in 1921 , Black residents , who make up 15 % of the population , @ @ @ @ @ @ @ The city is also divided economically .
The median Black family income in Tulsa County is $ 28,262 , Census data show , about half that of the typical White family — a gap even wider than national disparities .
Only about a third of business loans sought by African-Americans are approved , compared with more than half for Whites .
African-Americans are more likely to rely on personal wealth when starting a business , and home ownership -- a major mechanism of wealth accumulation and transfer -- also falls along racial lines @ @ @ @ @ @ @ Black home ownership rate fell , while Whites and Hispanics gained .
Residential segregation , discriminatory pricing , and de facto redlining continue to this day .
In the early 1950s , there were more than 6,000 black-owned grocery stores , said Maggie Anderson , a Chicago author who wrote “ Our Black Year : One Family ’ s Quest to Buy Black in America ’ s Racially Divided Economy.
” Now , there are about about 20 .
The steepest falloff began with integration , she said .
“ African-Americans fought so @ @ @ @ @ @ @ to eat and shop wherever they want that we unintentionally abandoned our responsibility to maintain the community , ” Anderson said .
“ We abandoned our perfectly top-quality department stores and restaurants and hotels.
” And then there ’ s Black Wall Street .
More people , both in Tulsa and around the world , are now aware of the 1921 massacre , set off by the arrest of a Black man under dubious premises .
White citizens rampaged , burning , looting and killing as many as 300 people .
African-American citizens @ @ @ @ @ @ @ .
Very little remains of the original neighborhood .
Though survivors quickly rebuilt in the 1920s , much was later paved over by redevelopment schemes and a highway built through its heart .
“ They bounced back from the massacre , but they didn ’ t bounce back from urban renewal , ” said Freeman Culver , chief executive officer of the Greenwood Chamber of Commerce .
A block-long stretch of businesses on Greenwood Avenue north of Archer Street is almost all that remains .
In April , Culver ’ s Chamber was @ @ @ @ @ @ @ National Park Service to help repair 10 buildings , which need new roofs , heating and cooling systems and brickwork .
Greenwood is a short walk from a budding arts district that includes the Woody Guthrie Center and the future home of the Bob Dylan Center , scheduled to open next year .
Both were bankrolled by Kaiser , who also helped finance the Gathering Place , a $ 465-million , almost 100-acre “ park for everyone ” along the Arkansas River in 2018 .


washingtonpost--2020-06-20--Trump Administration Flips on PPP Disclosures After Backlash

In a joint statement on Friday night , the Treasury Department and the Small Business Administration said the company names , addresses , demographic data and other information would be disclosed in five ranges -- starting with $ 150,000 to $ 350,000 , and going up to between $ 5 million and $ 10 million .
For loans below $ 150,000 , only totals will be released and will be aggregated by zip code , by industry , by business type , and by various demographic categories , the agencies said .
The loans above $ 150,000 account for almost @ @ @ @ @ @ @ approved , they said .
The statement didn ’ t say when the data would be released .
Lawmakers demanded the disclosure of details about Paycheck Protection Program loans after Mnuchin said at a Senate committee hearing on June 10 that the names of companies that received forgivable loans and the amounts were proprietary or confidential .
The administration had previously said the details would be disclosed , and the PPP application said such data would “ automatically ” be released .
Officials had expressed concerns about releasing the details because a company @ @ @ @ @ @ @ the loan amount , and some independent contractors and small businesses use their home addresses that would then be disclosed .
“ We have been able to reach a bipartisan agreement on disclosure which will strike the appropriate balance of providing public transparency , while protecting the payroll and personal income information of small businesses , sole proprietors , and independent contractors , ” Mnuchin said in a statement on Friday .
Critics said the public has a right to know how taxpayer dollars were being spent , and that more detail was @ @ @ @ @ @ @ businesses that need help .
Eleven news organizations , including Bloomberg News , sued to make details of the loan recipients public .
The SBA reported that as of Friday night , loans had been approved for almost 4.7 million small businesses totaling $ 514.5 billion .
As of June 12 , there were 3.9 million loans of less than $ 150,000 totaling $ 136.7 billion and almost 650,000 larger loans worth $ 375.6 billion .
Releasing details about companies with loans of more than $ 150,000 is a step in the right @ @ @ @ @ @ @ enough because it means the identities of more than 85 % of loan recipients will still be withheld , said Democratic Representative James Clyburn of South Carolina , chairman of the Select Subcommittee on the Coronavirus Crisis .
Democrats on the House panel have sent letters to several banks , including JPMorgan Chase , Bank of America , Wells Fargo & Co and Citigroup Inc. , asking whether they favored larger , well-connected companies over smaller firms from rural or minority communities when making PPP loans .
The Democrats also demanded that the @ @ @ @ @ @ @ PPP borrowers .
Friday ’ s action “ is an overdue step toward securing the transparency needed to ensure struggling small businesses , particularly minority , women and veteran-owned businesses , are getting the vital assistance they need to survive and retain their workers , ” House Speaker Nancy Pelosi said in a statement on Saturday .
Republican Senator Marco Rubio of Florida , chairman of the Small Business & Entrepreneurship Committee , said the public deserves to know how effective the PPP has been , but that there are legitimate concerns about @ @ @ @ @ @ @ have also called on Treasury and the SBA to provide details about its coronavirus relief loans to the Government Accountability Office , which is preparing a report about how relief dollars were spent .


washingtonpost--2020-06-22--What the Next Stimulus Should Look Like

What the Next Stimulus Should Look Like

In designing the next package , Congress would be wise to lean heavily on the plan advanced recently by Jason Furman , Timothy Geithner , Glenn Hubbard and Melissa Kearney — distinguished economists and former policy makers from both political parties .
Their proposal not only meets the needs of the moment by extending support where required .
It also redesigns several of the main instruments of fiscal stimulus so they ’ ll work more effectively both now and in future recessions .
The plan includes extended income support for the unemployed and underemployed ; new temporary subsidies for low-wage @ @ @ @ @ @ @ medium-sized businesses ; and additional support for state and local governments .
The eventual cost isn ’ t certain .
It might range between $ 1 trillion and $ 2 trillion , say the authors , depending on whether the recovery is fast or slow .
But note that this elasticity is a good thing .
Settling on a number for additional public spending regardless of how things work out makes little sense , because the slower the recovery , the more support will be needed .
It ’ s better to specify @ @ @ @ @ @ @ outlay .
The CARES Act supplemented existing unemployment-insurance programs with several new measures , including an extra payment of $ 600 a week for those out of work .
That ’ s one of the provisions due to expire next month .
Furman and colleagues propose to extend the extra support , but in the form of an addition to state unemployment benefits that ’ s capped at 40 percent of covered wages up to a maximum of $ 400 a week .
The idea is to replace , in all , about @ @ @ @ @ @ @ who were making the median wage or less .
This avoids the financial penalty that the flat $ 600 , if renewed , would impose on low-wage workers returning to their jobs .
In addition , the plan would help these workers directly by temporarily boosting the Earned Income Tax Credit .
And it would permanently link federal support for extended unemployment insurance to state jobless rates .
That way , workers in areas with high unemployment get more help , and the additional support phases out automatically as more people get back @ @ @ @ @ @ @ the scheme strikes a better balance , as the recovery proceeds , between helping low-wage workers and supporting the unemployed .
In the same vein , the plan both extends and modifies other aspects of the existing fiscal-support measures .
For instance , instead of the forgivable loans of the Paycheck Protection Program , it favors loan subsidies .
This kind of support is better targeted at firms that will be viable and capable of expanding as the recovery advances , as opposed to those that are likely to fail regardless .
The @ @ @ @ @ @ @ support for state and local governments — in the form of block grants ( with strings attached ) , expanded Medicaid assistance linked to state unemployment rates , and additional support for K-12 and higher education .
A scheme like this has a narrow purpose .
It shouldn ’ t rule out other additions to public spending , least of all investments that would pay for themselves , such as funding for infrastructure and clean energy .
And it shouldn ’ t sideline broader fiscal reform , including the need for a fairer @ @ @ @ @ @ @ a plan for securing long-term budgetary control .
For the moment , though , an effective response to the pandemic has to come first .
That means supporting demand , boosting employment and protecting the most vulnerable from economic harm .
If the existing instruments for achieving those goals can be made more powerful at the same time , so much the better .


washingtonpost--2020-06-22--Analysis | If U.S. Stocks Are a Bubble, They’re Hardly Alone

The 40 % rally in the benchmark S & P 500 index , since it reached a low for the year on March 23 , is “ the fastest in this time ever , ” Grantham said , as well as the only one in history “ that takes place against a background of undeniable economic problems.
” Nobel Prize-winning economist Paul Krugman wrote in the New York Times about what he deemed “ market madness in the pandemic.
” And yet the gains in the past three months aren ’ t restricted to U.S. stocks .
Instead , they @ @ @ @ @ @ @ Even those that don ’ t have the benefit of a Microsoft Corp. ( which has a 5.74 % weighting in the S & P and is up 44 % since U.S. stocks bottomed ) , an Apple Inc. ( 5.69 % weighting , up 57 % ) , an Amazon.com Inc. ( 4.3 % of the index , 40 % gain ) or a Facebook Inc. ( 2.19 % weight , up 60 % ) have recovered .
The gains in Japanese stocks have matched those of the U.S. , driven in @ @ @ @ @ @ @ machinery , marine transport and oil and gas — “ an awful lot of dull , dirty , cyclical stuff , ” as Jonathan Allum , a London-based strategist at SMBC Nikko Securities Inc. , put it in a recent research report .
Even regional European benchmark indexes , including the U.K. FTSE 100 , Germany ’ s DAX index and France ’ s CAC 40 index , have staged rallies similar in size to the S & P 500 ’ s .
In fact , if you compare the price gains since @ @ @ @ @ @ @ for the year , Germany ’ s market index has even outpaced its U.S. counterpart .
All of which suggests that the recent blaming of the U.S. market renaissance on so-called Robinhood Bros — U.S. day traders seeking to replicate the thrill of sports betting by gambling instead on stocks — misses the broader picture .
There ’ s been a widespread comeback in equities across the geographical board .
Moreover , it ’ s not just stocks that have come roaring back .
In the debt markets , yields on non-government bonds @ @ @ @ @ @ @ as the pandemic started to trash the global economy .
For companies borrowing in dollars in the fixed-income market , money has never been cheaper , with the yield on the benchmark index covering $ 6.5 trillion of bonds declining to a record low in recent days , as the Federal Reserve began buying corporate debt as part of its quantitative easing program .
Skeptics of the rally in financial assets can point to the real and present danger that a resurgence of virus infections , and further lockdowns , would stymie an @ @ @ @ @ @ @ the potential for shockwaves surrounding the forthcoming U.S. election .
But more agnostic observers see the markets looking further ahead and weighing the massive intervention of central banks as the prime determinant of the outlook for equities .
“ While news headlines can make us think the second-wave and election stories are the biggest drivers for markets , it is the Fed story that will endure over the medium term , ” Mark Haefele , the chief investment officer at UBS AG ’ s global wealth management unit , wrote last week .
@ @ @ @ @ @ @ world ’ s central banks are willing to continue their prime-pumping efforts to stop the global economy from falling off a cliff , investors everywhere are happy to maintain their faith in the value of financial assets .
Only time will tell whether they ’ ll be rewarded for their market piety .
Mark Gilbert is a Bloomberg Opinion columnist covering asset management .
He previously was the London bureau chief for Bloomberg News .
He is also the author of “ Complicit : How Greed and Collusion Made the Credit Crisis Unstoppable @ @


washingtonpost--2020-06-22--Fed’s Main Street Faces Hurdles: Leery Banks and Few Borrowers

“ There is some interest , but nowhere near at all what we saw with the PPP program , ” said Brian Foley , president of the Texas market for Comerica Bank , describing client interest .
Comerica is planning to participate in Main Street , he said .
Under the Fed program , firms will make loans ranging in size from $ 250,000 to $ 300 million , and sell 95 % of them to the central bank .
The loans are for businesses that were too big for the PPP , which covered companies with fewer than 500 @ @ @ @ @ @ @ average size of $ 110,845 .
An executive at a large commercial bank said borrower demand may pick up by August or September , when the program is set to end .
The loans may not appeal to larger borrowers that can get better rates in the capital markets but are a “ phenomenal deal ” for smaller borrowers , said the executive , whose firm plans to take part in Main Street lending and so asked not to be identified .
PPP ’ s first round lasted only 13 days before the @ @ @ @ @ @ @ Its popularity stemmed from the fact that loans turned into grants if 75 % of funds were spent on payroll .
Main Street loans will have to be paid back in full and come with a complex set of rules .
“ There ’ s many terms to the program that are challenging for the borrower and for us , ” Foley said .
“ It ’ s complicated and we ’ re working to figure out the level of interest for those that are eligible.
” To be sure , big names @ @ @ @ @ @ @ Co , the nation ’ s largest lender and U.S. Bancorp have indicated on their websites that they ’ ll participate .
And Bank of America Corp. , with more than 4,000 branches , says it will , too , as does Wells Fargo & Co .
Some firms have been hampered by changes to the program , which has been modified twice since it was announced in March .
The minimum loan size has been reduced and the payment schedule altered , while the central bank has received thousands of comment letters @ @ @ @ @ @ @ Lenders must apply traditional underwriting standards to assess borrower creditworthiness for Main Street , while the PPP required only payroll information .
Foley said Comerica has had to assign 100 employees to work on getting the firm ready for the program .
“ I expect over the course of this next week we ’ ll see more and more pickup , ” Rosengren said in an interview .
“ I anticipate plenty of borrowers and plenty of banks participating.
” Rob Drobnak , a partner specializing in commercial finance law at Nixon Peabody @ @ @ @ @ @ @ time and money to meet Main Street ’ s complex terms .
And he said lenders might not get enough in return .
Borrowers are charged Libor plus 3 % .
Including fees , banks may get around 5 % from the loans .
“ There ’ s a lot of appeal to what the Fed has done , ” said Drobnak , who works with both businesses and lenders .
“ The devil ’ s in the details , though .
The rub is going to be that a lot of lenders @ @ @ @ @ @ @ participate in it.
” Main Street comes three months after the start of coronavirus-fueled shutdowns .
So lots of businesses have had time to secure lending to get them through the worst part of the downturn .
“ It is difficult to predict how large the program will turn out to be in its current iteration , ” the Bank Policy Institute , a trade group , said in a statement published Monday .
“ Whether through existing bank credit or other government programs , many creditworthy businesses have already found access to @ @ @ @ @ @ @ is able to buy up to $ 600 billion in Main Street loans .
It will lever up $ 75 billion appropriated by Congress in the CARES Act to Main Street .
The program is set to buy loans through the end of the September , with the possibility of an extension through the end of the year .


washingtonpost--2020-06-20--Analysis | There’s Nothing Exceptional About Any Country

For every commentator declaring the end of a given national exceptionalism , others pop up reasserting it .
This seems to be an iron law of history : Every nation at one point or another claims to be superior to others or endowed with a special mission .
Exceptionalism , ironically , is universal .
Notable examples include my own two countries ( I ’ m a dual U.S.-German citizen ) .
When John Winthrop , governor of the Massachusetts Bay Colony spoke of a “ city on a hill ” in 1630 , he was thinking of a smallish @ @ @ @ @ @ @ President Ronald Reagan in 1980 turned that phrase into a “ shining city upon a hill , ” Americans got the point .
Their country was not only a superpower but also the most virtuous nation in the world , morally superior to others and endowed with a special historical role .
This ideology transcended party politics .
In 2016 , Hillary Clinton also embraced American exceptionalism , in part as a way of attacking her opponent , Donald Trump , whom she considered strange for not believing in it .
She was @ @ @ @ @ @ @ ’ t convinced : Told that Russian President Vladimir Putin is “ a killer , ” Trump , by then president , merely shrugged : “ Well , you think our country is so innocent ?
” My other country got into the game earlier .
Two centuries ago , long before there even was a nation state called Germany , romantic philosophers such as Johann Gottfried Herder and Johann Gottlieb Fichte espied German exceptionalism in the unique spirit or soul of the “ Volk ” — the people or tribe .
These @ @ @ @ @ @ @ in Europe .
During the 19th century , this exceptionalism turned into a conviction that German “ culture , ” presumed to be very deep , was superior to Anglo-French “ civilization , ” a term used by German writers to connote shallowness .
The “ land of poets and thinkers ” was self-evidently different : equidistant between East and West and on a “ Sonderweg ” ( special path ) that would lead to something superior to monarchy , aristocracy or democracy .
After World War I this mutated into racist exceptionalism @ @ @ @ @ @ @ World War II .
Of the many exceptionalisms around today , one in particular resembles the 19th-century German variety .
Russia has long seen itself as a “ Third Rome , ” following the empires of the Caesars and the Orthodox Byzantines , whose role “ Holy Rus ” tried to take over .
Like the Germans of yore , Russians are sure their culture and soul is deeper than the West ’ s .
As expressed in the thought of scholars such as Aleksandr Dugin , this exceptionalism implies a manifest destiny @ @ @ @ @ @ @ ” Putin is said to subscribe to much of this worldview .
Japan also felt exceptional once , until its defeat in World War II .
It arguably still does , for instance in the intellectual tradition of Nihonjinron , which is based on Japanese uniqueness .
Next door , China ’ s “ middle kingdom ” has always felt special and currently calls this “ the China Way.
” From India ’ s Hindutva ( “ Hindu-ness ” ) to South Africa ’ s regional superiority complex and Poland ’ s narrative @ @ @ @ @ @ @ “ Christ among nations ” ) , everybody seems to be at it .
The problem is that exceptionalism leads to bad things .
The first is hypocrisy .
How , for instance , could the U.S. or U.K. ever have claimed to be morally superior when the first English ship carrying African slaves to America arrived in 1619 , a year before that other English ship , the Mayflower , brought the Pilgrims to their city upon a hill ?
And what would either country say if the anti-racism riots of recent @ @ @ @ @ @ @ legacy — had taken place in , say , China or Iran ?
Exceptionalism requires editing a country ’ s past , and indeed lying .
It also leads to double standards .
In the American case , it often becomes “ exemptionalism , ” when the U.S. doesn ’ t feel bound by international treaties or courts , even as it criticizes other countries for falling foul of them .
Such arrogance provokes resentment and conflict .
In the worst cases , such as Germany ’ s or Japan ’ s during @ @ @ @ @ @ @ a brutish ethnocentrism that leads to atrocities , tragedy and ruin .
That ’ s why the word “ Sonderweg ” has acquired an entirely negative connotation among historians in postwar Germany , as a delusion that culminated in the Holocaust .
“ It is extremely dangerous to encourage people to see themselves as exceptional , ” a world leader wrote in the New York Times in 2013 , enraged about the sense of special purpose in the foreign policy of Barack Obama , America ’ s then president .
That leader was @ @ @ @ @ @ @ after invaded Crimea and Ukraine .
Here it is in a nutshell : If we all claim to be exceptional , there will be trouble .
Nations are more like individuals .
In some respects they ’ re similar , in others different , but never exceptional , and they ’ re certainly wiser not to pretend to be .
Exceptionalism is an infantile and destructive idea .
The sooner we drop it , the better .


washingtonpost--2020-06-15--Analysis | The Great Decoupling? What’s Next for U.S.-China Rift

Bilateral trade sank by 15 % in 2019 after President Donald Trump began imposing tariffs on Chinese imports and China responded in kind .
It had surged by an annual average 11 % from 2001 to 2018 , a stretch that included China ’ s admission to the World Trade Organization and transformation into a global manufacturing powerhouse shipping cheap electronics , toys and clothes to American consumers .
The coronavirus and the lingering trade war will depress trade further in 2020 as tensions on multiple fronts provoke what some see as an unavoidable tumble into a new Cold War @ @ @ @ @ @ @ The U.S. sees China ’ s ambitions in advanced technologies and involvement in foreign communications networks as a threat to national security and has targeted Chinese companies including Huawei Technologies Co. , the world leader in 5G communications .
The Trump administration is planning to shake up its relationship with Hong Kong over China ’ s plans for new security laws there .
The U.S. has blocked Chinese takeovers of international companies and is passing legislation that could stop shares of large Chinese corporations from trading in the U.S. Trump ordered a federal @ @ @ @ @ @ @ equities in its portfolio .
On the other hand , China continues to open its financial sector to U.S. banks .
Besides a war of words ( Trump accused China of responding slowly to the virus as a ploy to harm his re-election chances ) , the shutdown of Hubei province following the initial outbreak in the city of Wuhan , a technology and auto hub , left international companies short of vital parts .
That prompted calls from politicians to repatriate production from China , echoing an order made by Trump during @ @ @ @ @ @ @ as countries desperately sought face masks and protective clothing .
China is the world ’ s biggest exporter of protective equipment .
Some U.S. politicians proposed paying companies to relocate operations from China , a move the Japanese government actually introduced .
Robert Lighthizer , the U.S. Trade Representative said the crisis demonstrated the need for “ strong and diverse supply chains with trusted trade partners ” and how “ depending purely on cheap imports for strategic products can make us vulnerable in times of crisis.
” The pandemic will probably push countries @ @ @ @ @ @ @ for health-security reasons .
But moves to reconfigure supply chains have been under way since at least 2011 , when the tsunami in Japan and floods in Thailand put a new premium on managing risks to production and diversifying suppliers .
The so-called “ China + 1 ” sourcing strategy adopted by many non-Chinese companies accelerated during the trade war .
Factories did leave China , but they moved to other countries rather than “ reshoring ” to America ’ s industrial heartland .
For example , the U.S. has increasingly turned to @ @ @ @ @ @ @ electrical machinery and to Vietnam for toys , furniture and footwear .
Still , China remains the dominant foreign supplier of those products , accounting for more than three-quarters of American toy imports .
Not for now .
More than 70 % of companies surveyed in March by the American Chamber of Commerce in China said they had no plans yet to relocate production and supply-chain operations or sourcing outside of China due to Covid-19 .
The Asian country has advantages that are likely to sustain its position as the world ’ s @ @ @ @ @ @ @ a massive market , well-built infrastructure and skilled labor .
Indeed , much of the production in China by American companies is aimed at the local market .
Even with the trade war raging in 2019 , U.S. companies plowed some $ 14 billion into new factories and other long-term investments in China , including Tesla Inc. ’ s new gigafactory near Shanghai .
China is also making efforts to attract overseas businesses such as a new law to protect foreign investment and a pledge to ease market access and deepen reform of @ @ @ @ @ @ @ for foreign firms .
Many executives worry they will be shut out of what remains the world ’ s most promising market .
The more the U.S. blocks the export of components like semiconductors and jet engines to China , and imposes tough sanctions on anyone who violates such bans , the more it will force not just Chinese companies to stop buying American components but those from third countries aiming to sell to China .
They fret that selling to China in the future could mean getting America out of the supply @ @ @ @ @ @ @ administration ’ s actions will serve to turbocharge China ’ s drive to become the dominant country in areas including artificial intelligence and biomedicine .
Trump brought his “ America First ” agenda to the White House just as President Xi Jinping was flexing China ’ s military , economic and technological muscle .
Having lambasted China for harming the U.S. economy and stealing American jobs during his 2016 campaign , Trump instigated the trade war two years later with the first imposition of tariffs that eventually applied to around $ 500 billion @ @ @ @ @ @ @ years -- along with other trading partners -- - accused China of playing loose with the rules of international business .
For instance , it complained that China forced foreign companies to hand over industrial and technological know-how , or simply stole it .
It ’ s possible that nothing much will change .
The desire to check China has been one of the rare unifying forces among America ’ s polarized politicians , including opposition Democrats .
And while former Vice President Joe Biden , Trump ’ s opponent in November , @ @ @ @ @ @ @ Xi as recently as 2016 , this was his take on the Chinese president in February : “ This is a guy who is a thug .
”


washingtonpost--2020-06-22--Analysis | India Must Not Drop Out of Crypto Arms Race

But instead of trying to match President Xi Jinping ’ s resolve to make blockchains the focus of China ’ s next big technological push , New Delhi wants to retreat — when it was just about to move forward .
Earlier , a central bank directive had ordered commercial lenders to stay away from customers dealing in digital assets .
But after the Supreme Court overruled the monetary authority in March , the Finance Ministry has decided to introduce a law to prohibit cryptos , the Economic Times reported recently .
Any such law might still get challenged .
@ @ @ @ @ @ @ exchange for virtual currencies by trading volume , is joining a crypto lobby group in India .
The industry doesn ’ t want to go down without a fight in an important future market .
Yet for a nascent local talent pool just beginning to feel hopeful about its prospects , an existential crisis has arrived instead .
A perverse outcome will be to drive Bitcoin and other private alternatives to fiat money underground ; transactions will occur outside the banking system and stay under the radar of regulators .
Money-laundering and terror-financing @ @ @ @ @ @ @ They ’ ll just become harder to detect .
Bad crypto will drive out good crypto .
Top brains will leave India or look for other problems to solve .
Who stands to lose the most ?
Last year , Indian families received $ 83 billion from members working overseas , more than any other country .
Capital controls make it harder to take funds out , but at $ 19 billion , outbound flows for education , travel , or overseas asset purchases by residents were still significant .
The coronavirus will @ @ @ @ @ @ @ for migrants .
The World Bank Is forecasting a 23 % slump in remittances to India .
In these times , every dollar saved by a nurse from Kerala who ’ s helping Covid-19 patients in the U.S. and supporting a family thousands of miles away matters more than ever .
Yet it costs in excess of $ 10 to send $ 200 to India .
And 5.3 % is the average .
Singapore-to-India transfers are cheap at 2 % because the two countries allow each others ’ major lenders a presence .
@ @ @ @ @ @ @ which requires handovers across a chain of correspondent banks , could cost 12 % .
Or $ 24 on a $ 200 transfer .
Expenses pile up as sending institutions must maintain idle liquidity with correspondent banks in foreign countries , earning little and running the risk of currency depreciation .
Cryptography is helpful in such situations .
Establishing ownership of funds with hard-to-crack secrets bypasses the need to establish trust with costly pre-funded accounts .
And if hackers can steal hundreds of millions of dollars of digital assets , blind trust in @ @ @ @ @ @ @ As the Wirecard AG scandal shows , investors can wake up one morning and realize that 1.9 billion euros ( $ 2.1 billion ) they thought had gone to the German payment processor ’ s accounts in the Philippines probably didn ’ t exist .
Meanwhile , the Philippines , which also gets large remittances , allows money to come in as XRP virtual tokens and get converted into pesos .
It takes seconds and is 40 % to 60 % cheaper than traditional means , according to Ripple Labs Inc. , the @ @ @ @ @ @ @ .
As Ripple argues , for crypto processors to operate in India , the government needs to follow the Singapore model of categorizing digital assets .
Some , like Bitcoin or Ethereum , are means of payment .
Others are security tokens that give the holder rights similar to stocks or bonds .
The regulatory noose around them has tightened after many initial coin sales defrauded investors .
In between are utility tokens , which are like in-store vouchers .
They give rights , but only on a blockchain .
Allowing rupees to @ @ @ @ @ @ @ regulated quantities , and for the latter to be used without contravening the country ’ s foreign-exchange management law , would be the logical next steps .
Instead , India ’ s regulators seem to be living in a fantasy land where they hold blockchain to be good , but crypto assets to be evil .
At first glance , they seem to be copying the Chinese playbook .
While elevating distributed ledgers to a “ strategic frontier technology ” since 2016 , Beijing has rejected the notion that bitcoin is legal tender @ @ @ @ @ @ @ banned people from holding it as a commodity .
This year , it even started piloting a central bank-issued digital yuan .
If U.S.-China relations continue to nosedive , Beijing wants to be prepared with an alternative to the Western financial system , a parallel track to Swift ( 1 ) .
Soon enough , Facebook Inc.-sponsored Libra will come in with its own vision of a modern payment system .
Even a small nation like Singapore is exploring the potential of central bank virtual currencies with its Project Ubin .
If New @ @ @ @ @ @ @ of two clashing superpowers , and competing networks for moving money as cheaply as information , it needs to build its own capabilities .
A ban will be self-defeating .
India needs crypto , both for financial inclusion today and strategic heft tomorrow .


washingtonpost--2020-03-19--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 .
The Fed also lowered the rate and added a longer maturity .
Four days later it expanded the swap line to nine @ @ @ @ @ @ @ Brazil , bringing the total to 14 .
The goal is to ease the panic for dollars and allow foreign-exchange markets to keep operating normally .
Surging volatility in stock and bond markets has spurred a rush to secure the U.S. currency for borrowers and as a haven against further turmoil .
The Fed says the lines are necessary at times because bank funding markets are global and can break down “ disrupting the provision of credit to households and businesses in the United States and other countries.
” That ’ s the @ @ @ @ @ @ @ ease pressures for banks , the effect is felt in the broader economy only if these lenders extend more dollar loans to companies and other financial institutions .
Banks also may shun a central bank swap line because of a stigma attached to tapping it .
Making dollars available to foreign nations -- even if it didn ’ t cost the Fed -- became a point of contention for some lawmakers in the U.S. Congress during the 2008 crisis .
The central bank had to repeatedly defend the action , saying U.S. taxpayers @ @ @ @ @ @ @ were swaps -- not loans -- and there was no risk of default .
The dollar shortage became acute as the greenback soared on March 18 , throwing other currencies from the British pound to the Brazilian real into free fall .
As stocks plunged and investors fled to U.S. Treasury bonds amid the global coronavirus pandemic , the currency derivative market showed signs of stress .
Notable is the move in cross-currency basis swaps , which shows investor preference to hold dollars , rather than euros or yen .
They ’ re @ @ @ @ @ @ @ 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 the Fed .
Dollar funding stress is particularly pronounced for @ @ @ @ @ @ @ 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 hedge funds and proprietary trading firms rank second .
The @ @ @ @ @ @ @ 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 in the U.S. may demand a stiffer rate to lend @ @ @ @ @ @ @ 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 ’ s historically been a good proxy for institutional funding @ @


washingtonpost--2020-03-19--Virus Could Bite Into Environmental Enforcement: Ex-Officials

The EPA also said Tuesday that it “ is taking appropriate steps to ensure the safety of EPA employees and members of the public with whom they may interact while continuing our mission-critical function to protect the public from threats to human health and the environment arising from violations of environmental laws.
” The White House Office of Management and Budget issued guidance March 15 instructing federal agencies to offer “ maximum telework flexibilities ” to all eligible employees , “ consistent with operational needs of the departments and agencies as determined by their heads.
” And President Donald Trump @ @ @ @ @ @ @ Americans to avoid gatherings of more than 10 people .
Cynthia Giles , who headed enforcement at the EPA under President Barack Obama , said the nationwide self-quarantine measures could cut into the number of inspectors venturing into the field .
It could also mean less capacity to do lab tests on samples , because lab work can ’ t be done from a technician ’ s home , Giles said .
“ Enforcement has just not been a priority of this administration , and I don ’ t see that changing any @ @ @ @ @ @ @ , the former governor of New Jersey who led the EPA under the George W. Bush administration .
“ To the extent that [ the EPA ] can ignore it now and have a pretty good claim as to why , I think they will.
” Brian Israel , a former trial attorney at the Justice Department ’ s environmental enforcement section during the Clinton administration , said his practice hasn ’ t changed , either .
But his phone has been “ ringing off the hook ” with corporate clients wondering if @ @ @ @ @ @ @ to delay permit obligations that don ’ t create an imminent risk , such as testing groundwater levels , because their contractors don ’ t want to enter facilities for fear of contracting the virus .
“ I suspect the big operators will continue to be honest .
They ’ re too afraid of the PR backlash of getting caught , ” said Mark Ryan , a former agency senior counsel who now has his own law firm , Ryan & Kuehler PLLC , in Washington state .
“ The small to mid-sized @ @ @ @ @ @ @ corners in the absence of any inspection.
” Most environmental enforcement work is done over email and phone calls , and that work can continue even if regulators are working from home , said Carlton Fields ’ McAliley .
Even if EPA employees need to collect a water sample , they can easily do so without contacting anyone else , he said .
Settlement negotiations between a company and an agency can also take place online or via conference call , Schaeffer said .
Information requests and notices of violation can still go @ @ @ @ @ @ @ down some as it may be a little harder to get review and approval with some people in , and some out , ” he said .
Nevertheless , some agencies may be expected to change their priorities in ways that could cut into enforcement .
For instance , the Corps—which plays a key role in regulating wetlands—may be asked to build hospitals , which could divert away from enforcement , McAliley said .
To illustrate , she pointed to companies that are required to sample for stormwater during normal business hours .
@ @ @ @ @ @ @ business hours , it may be able to argue it isn ’ t required to collect the same number of samples , she said .
“ This is something nobody ’ s ever dealt with before , ” Whitman said .
“ But nobody had ever dealt with anthrax .
Nobody had ever dealt with the kind of thing we faced on 9/11 .
So it ’ s not that it ’ s totally new to us , trying to deal with new things .
”


washingtonpost--2020-03-19--India Considers Easier Loan, Tax Rules to Help Economy Endure Virus

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washingtonpost--2020-03-19--Analysis | Virus Lockdown Is a $28 Billion Gig-Loan Buster

The cost of protecting against the virus will fall disproportionately on the poor .
India has more than 100 million microfinance accounts , serviced in cash every week by gig-economy workers , who hawk vegetables on street corners or embroider saris sold in malls , among other things .
Three out of four workers make a living by working casually for others or at their family firms and farms .
Prolonged shutdowns will impair their ability to repay loans of 2.1 trillion rupees ( $ 28.5 billion ) , putting the world ’ s largest microfinance industry at risk .
@ @ @ @ @ @ @ and Latin America also use microcredit to grease consumption at the bottom of the pyramid , India ’ s banks and shadow financiers are already reeling under a severe crisis of confidence .
Savers ’ accounts recently had to be temporarily frozen at a major institution , making people anxious about the health of others .
Microlenders have only now recovered from a nonperforming loan crisis sparked by Prime Minister Narendra Modi ’ s overnight 2016 ban on 86 % of cash .
More bad news would be hard to swallow .
With @ @ @ @ @ @ @ s , India could be the next global hotspot for the virus , with an avalanche of cases , Bloomberg News reported Tuesday .
As the currently low infection count rises with more testing , the curbs on economic activity that will be required to flatten the peak of the outbreak in a nation of 1.3 billion people may have to be harsh .
Shutdowns could become as widespread and prolonged as they have in East Asia.The forced social distancing is going to hit metropolises like Mumbai , New Delhi , Bangalore , @ @ @ @ @ @ @ centers like Goa .
But it comes at a time when the rural economy , which accounts for 45 % of gross domestic product , shrank in January for the seventh time in eight months , according to Bloomberg Economics ’ output tracker .
Should city jobs disappear , workers will move to villages , putting further strain on already weak rural wages .
Anemic corporate credit and lackluster economic growth were already pulling each other down ; a freeze in unsecured lending to the urban poor would make the situation a lot @ @ @ @ @ @ @ .
Financiers occasionally lose their heads and loosen their lending standards , leading to excessive borrowing and financial distress , which then becomes a political issue .
Toward the end of last year , this problem surfaced in India ’ s tea-growing northeastern state of Assam , which had witnessed annual growth of 43 % for seven years in loan values , before cash collections from small borrowers began to collapse .
Microfinance specialists like Bandhan Bank Ltd. , with its near 20 % return on equity , are profitable enough to deal @ @ @ @ @ @ @ a large market .
However , a pandemic that cuts across regions could end up being a far more serious threat than a localized flood or a drought .
Even with interest rates being slashed around the world , the Indian central bank kept its powder dry Monday , though deep cuts are bound to be in the cards .
Outright cash transfers from the government to the most vulnerable people would be more helpful .
Incentivizing small borrowers and women ’ s self-help groups to sustain timely repayments would help the industry @ @ @ @ @ @ @ open .
A further loss of sanity in India ’ s financial system would be prevented .
Before the coronavirus , New Delhi ’ s budgetary situation was parlous .
But a combination of interest rate cuts and plunging prices of imported crude oil will hopefully keep a lid on long-term bond yields .
Stepping up borrowings to protect livelihoods should be the preferred strategy to deal with the virus .
The informal nature of the economy means that relief can ’ t be targeted at firms — it has to reach households @ @ @ @ @ @ @ columnist covering industrial companies and financial services .
He previously was a columnist for Reuters Breakingviews .
He has also worked for the Straits Times , ET NOW and Bloomberg News .


washingtonpost--2020-03-19--Analysis | China’s Internet Stocks Can’t Hide From This Virus

Just as investors should have known in mid-February that there was trouble ahead , they ’ d be well-advised to look at the reality that ’ s presented to them now and be just as circumspect .
China may have gotten past the worst of Covid-19 , but the world is just starting to grapple with it and a major economic shock is looming .
Now , as we digest Tencent ’ s fourth-quarter numbers and muddy outlook , these stocks have continued to drop .
As have group-buying outfit Pinduoduo Inc. and internet companies Sina Corp. and Weibo Corp.Yet @ @ @ @ @ @ @ in market value , some of China ’ s internet darlings are trading at levels seen as recently as three months ago .
Tencent , for example , is back where it was Dec. 5 .
This indicates that investors aren ’ t pricing in a big economic jolt , but merely a minor bump on the highway of fast growth and climbing profits .
In its investor conference call late Wednesday , Tencent didn ’ t give explicit details on what to expect this quarter .
The company did note that the @ @ @ @ @ @ @ fastest-growing units , will post a drop in revenue , offset by a reduction in marketing costs .
By comparison , Baidu , Weibo , and Sina all gave specific sales guidance — each predicted declines of 15 % to 20 % from a year earlier .
It ’ s clearly going to be a tough first quarter , but executives spent much time on their conference calls talking up their future prospects in the belief that this is a minor blip .
Robin Li , Baidu ’ s chairman and chief executive @ @ @ @ @ @ @ expenditure will merely be delayed : “ If you plan to get married , you are still going to marry .
If you ’ re trying to buy a car , you are still buying a car.
” I can ’ t help wondering if these business leaders are looking too closely at China ’ s Covid-19 case count , and correlating a decline in new patients to an immediate rebound in revenue .
Certainly , the mood on the ground has brightened and workers are returning to their posts .
However , @ @ @ @ @ @ @ board that the disease has gone global .
The disparate attempts in Europe and the Americas to bring it under control mean that any resolution won ’ t come quickly .
It may be the case that with their revenue coming almost exclusively from domestic consumers , they believe a wider meltdown won ’ t cause much pain.That may be a little naive .
Exports account for an important portion of China ’ s gross domestic product and occupy a significant part of its labor force .
Foxconn Technology Group , for example @ @ @ @ @ @ @ China and gets more than half its revenue from Apple Inc .
If orders at these businesses dry up , Chinese consumers will need to reduce expenditure .
Last year , I noted that what may save Chinese internet companies is their shift to a post-growth era by trimming costs such as marketing , which some pragmatic executives have done .
They ’ re going to need to adapt again , this time to reflect a world that truly is connected , and where an external shock could quickly become a local problem @ @ @ @ @ @ @ ’ ve got through the worst of the storm .
They ’ d better brace themselves for the fact that there is nowhere to hide .