Archives for March 2020

US stocks rise despite growing risks to global economy from coronavirus outbreak

March 30, 2020 by NewsMaker Leave a Comment

The Dow opened 227 points higher before giving up most of its early gains. Both the SP 500 and the Nasdaq Composite climbed 1.5 percent during early trading.

Asian and European stocks sank earlier in the day as the global coronavirus pandemic situation worsened. Oil prices continued to tank, crashing to their lowest level since 2002 amid falling demand.

Last week the Dow posted its biggest weekly gain since 1938, surging more than 12 percent. The SP 500 and Nasdaq are coming off their best week since 2009, after growing 10.3 percent and 9.1 percent, respectively. The sharp gains were sparked in part by the prospect of massive fiscal and monetary stimulus, as US lawmakers put together a $2 trillion package aimed at cushioning the blow of the pandemic.

Also on rt.com US unemployment shatters record, surpassing 3 MILLION claims

“Bulls staged an epic comeback,” Ken Berman, strategist at Gorilla Trades, told CNBC. “Despite the rally … the uncertainty regarding the length of the necessary but economically damaging global lockdowns continues to weigh on risk assets.”

Berman added that “The technical picture continues to be bearish across the board, despite the mid-week surge in stocks, with all of the key trend indicators still pointing lower.” He noted that the major averages are still below their respective moving-day averages, even after last week’s strong gains.

UBS strategists said on Monday that “selling fatigue” may have kicked in as investors were no longer reacting as wildly to incremental bad news as they have been in recent weeks. “However, both because infection rates are likely to keep rising for some time, and also because in cash equity markets we have not yet seen a capitulation in the core positions in growth-style stocks, it may be early to say a firm bottom has already been made,” strategists said, in a note seen by MarketWatch.

Also on rt.com Drum roll please! And the BIGGEST WINNER of the deadly global virus is…

US President Donald Trump said on Sunday that he had extended social-distancing guidelines through April 30. He had earlier indicated a desire to begin lifting restrictions by Easter Sunday, on April 12. The death rate is likely to peak in two weeks, Trump said, adding that the US would be “well on its way to recovery” by early June.

Worldwide, the number of coronavirus cases continue to climb. There are now more than 739,000 cases of Covid-19 and at least 35,000 people have died. The United States overtook Italy and China as the country with the most cases at 142,000. Nearly half of all the US cases occurred in New York.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/484489-us-stocks-fall-global-economy/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Canadian drillers face nightmare scenario as oil crashes to $5

March 30, 2020 by NewsMaker Leave a Comment

Hit by the pandemic-driven demand shock and the price war-induced supply shock, Canadian oil prices have already crashed to below $10 a barrel.

This year’s oil price crash will hit Canada’s oil patch harder than the 2014 price collapse, analysts say.

Following the double supply-demand shock of the past weeks, the industry had to quickly switch back to survival mode, just as it was expecting an uptick in upstream investments this year, for the first time in five years.

Canada’s oil and gas sector now faces an existential threat – losing even the little competitiveness it held onto in the wake of the previous oil crash.

Ontario police arrest First Nations protesters amid standoff with Canadian government over pipeline

The pain in the coming months could become worse before the companies that manage to survive this oil price rout start making any money.

Calls for a federal government bailout are growing. However, so are calls from environmentalists for the government to help the workers who will be (or already are) out of a job instead of pouring billions into saving corporations that destroy the environment with oil sands operations.

The government of Alberta—the heart of Canada’s energy industry—has adopted some emergency relief measures to help the sector.

And a federal government action in support of the sector could be imminent, Kelly Cryderman writes for The Globe and Mail.

Environmental organizations wrote a letter to Canada’s Prime Minister Justin Trudeau this week, calling on the government to focus on helping workers, not bailing out corporations.

“Giving billions of dollars to failing oil and gas companies will not help workers and only prolongs our reliance on fossil fuels,” organizations including Citizens for Public Justice (CPJ), Climate Action Network Canada, Greenpeace Canada, and Extinction Rebellion wrote.

“Oil and gas companies are already heavily subsidized in Canada and the public cannot keep propping them up with tax breaks and direct support forever. Such measures benefit corporate bottom lines far more than they aid workers and communities facing public health and economic crises,” the environmentalists said.

Support for Canada’s energy sector is coming within “hours, possibly days,” Canada’s Finance Minister Bill Morneau said at Senate committee meeting on Wednesday, as carried by CBC News.

Without provincial and federal government support, many in the industry who survived the 2014 price crash may not survive this time, as oil prices are plunging, storage is approaching full capacity, and demand in Canada’s key oil export market, the United States, is plummeting.

Also on rt.com Trudeau confirms US border closure, promises aid to Canadians businesses of up to C$27bn

As a result, the price of Western Canadian Select (WCS), the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta, nosedived to a record low this week, and this may not be the bottom yet.

As of Thursday, WCS was selling for US$6.45 a barrel, or C$9.08. This price compares to an average WCS price of US$36.82 for January and US$27.28 for February, according to Alberta government figures.

Bitumen prices are probably negative already.

“Looking at bitumen pricing, it is zero to negative. So, it’s as worse as it gets,” Martin Pelletier, a portfolio manager at Calgary-based TriVest Wealth Council, told CBC News this week.

Faced with plummeting oil prices, Canadian companies rushed to cut spending, curtail operations, defer investments and start-ups, cut executive salaries, and lay off workers.

Husky Energy cut its budget and production, Cenovus Energy slashed its 2020 capital spending by around 32 percent, Suncor cut capital guidance, and so did Canadian Natural Resources. Athabasca Oil Corporation also cut its CAPEX and proactively curtailed heavy oil production at Hangingstone.

“I expect to see cuts everywhere … It’s a survival game right now,” Athabasca Oil’s CEO Rob Broen told Calgary Herald columnist Chris Varcoe two weeks ago.

“Being price takers has made us uniquely vulnerable to dramatic shifts in the oil price and what we’re seeing today will have immediate negative impacts on Canada’s economy,” Tim McMillan, President and CEO at the Canadian Association of Petroleum Producers (CAPP), said on the day on which international oil prices crashed 25 percent.

Also on rt.com Coronavirus pandemic could wipe $1.1 TRILLION off global economy — Oxford Economics

The COVID-19 pandemic and the resulting recession will hit every province in Canada in 2020, with Alberta the worst hit, RBC said in a note this week.

“The collapse in oil prices will be another massive blow to oil-producing regions of the country—most of which had not fully recovered from the previous collapse in 2014-2016. It will drastically reduce cash flows in the energy sector and slice government royalty revenues,” RBC Senior Economist Robert Hogue and Economist Ramya Muthukumaran wrote.

The entire Canadian economy faces massive job losses, with the energy sector particularly hit, RBC economists warned.

“In Alberta and Saskatchewan, even the oil-price crash in 2014-16 will prove milder in terms of its effect on the labour market – we are expecting employment losses 2-4 times larger. The combined losses in these two provinces are likely to be in the order of 200,000 – 20% of the overall hit to employment in the country,” RBC said.

Canada’s oil and gas firms that survived the previous price crash will find this oil price collapse, combined with a recession, even harder to overcome.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/484470-canadian-drillers-face-nightmare-scenario/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Oil price drops to 18-year low on crashing global demand

March 30, 2020 by NewsMaker Leave a Comment
US crude benchmark West Texas Intermediate (WTI) hit a low of $19 per barrel overnight, before picking up slightly to over $20 per barrel as of 11:50 GMT.

Oil prices have tanked by more than half in the past month, with companies cutting back and closing production as a result of the COVID-19 pandemic, combined with the OPEC+ disagreement over production cuts. Traders expect global surplus to approach 25 million barrels a day next month, which could overwhelm storage capacity worldwide within weeks.

Also on rt.com Russia says OPEC+ deal revival possible if other countries join in

“This is a historic oil price collapse, and it is not done yet as the system physically runs out of places to put all the oil,” Jason Bordoff, former energy adviser to the Obama administration and the founder of the Center on Global Energy Policy at Columbia University, was cited as saying by the Financial Times.

“The pain in the shale patch is going to be severe. We will see production shut-ins accelerate,” Bordoff warned.

Oil prices have been tumbling since the beginning of this month, as the OPEC+ nations failed to agree on production cuts, and Saudi Arabia threatened to flood the market with oil.

Also on rt.com Russia’s unexpected advantage in the oil price war

On Saturday, the head of the Russian Direct Investment Fund (RDIF) Kirill Dmitriev said that a new agreement to stabilize oil markets is possible if more nations support the initiative. He told Reuters that the coronavirus pandemic has become a “perfect storm” to trigger a new global financial crisis that will result in a recession. To offset the economic fallout of the outbreak, countries should come together, including in imposing new output curbs to end the oil market turbulence.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/484465-oil-plunge-lowest-level-coronavirus/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

EasyJet grounds entire fleet as Covid-19 hammers global travel industry

March 30, 2020 by NewsMaker Leave a Comment
According to the company, it has worked out an agreement with cabin crew, who will get 80 percent of their pay under a government program. EasyJet said it is looking for ways to increase its access to cash, adding that the company has a strong balance sheet and no maturities until 2022.

“We are in ongoing discussions with liquidity providers who recognize our strength of balance sheet and business model,” said Europe’s second-largest budget airline. The timing of a restart of scheduled flights is uncertain and will depend on government restrictions as well as demand, the carrier added.

Also on rt.com Which businesses can survive the greatest financial crisis of our lifetime?

The global aviation industry has been hammered by the coronavirus pandemic. International Air Transport Association chief Alexandre de Juniac appealed to world governments this month for cash bailouts and emergency loans, claiming that the virus could see airline revenues worldwide drop by up to $113 billion.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/484448-easyjet-grounded-fleet-coronavirus/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

Deteriorating economic conditions sink global stock markets

March 30, 2020 by NewsMaker Leave a Comment
Japan’s Nikkei 225 dropped almost four percent at the opening, Hong Kong’s Hang Sang Index slid 1.9 percent and China’s Shanghai Composite fell about 1.4 percent.

All the European stocks also tanked in early trading, with shares in France off the most. The CAC 40 was down 2.6 percent while London’s FTSE 100 nosedived two percent. Germany’s DAX was lower by 1.5 percent and the pan-European Stoxx 600 tumbled 2.2 percent.

The downbeat tone to the start of the week suggests “that the false rally in a super bear market won’t last for too long, as investors continue to evaluate deteriorating economic conditions and an escalating pandemic situation,” Margaret Yang, an analyst with CMC Markets, said, as cited by CNN.

Also on rt.com US unemployment shatters record, surpassing 3 MILLION claims

The ongoing pandemic threatens, among other things, jobs, corporate earnings and the travel industry, despite massive bailout pledges by governments across the globe. Last week US jobless claims hit a historic record level, surging to over three million. The country now has more coronavirus cases than any other in the world, with more than 142,000 infections and 2,489 deaths as of Monday.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/484447-global-stock-markets-plunge-coronavirus/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

Scary Times for U.S. Companies Spell Boom for Restructuring Advisers

March 30, 2020 by NewsMaker Leave a Comment
A restructuring can happen in out-of-court talks. But when a company’s debts are complex or the parties start vying over who will be paid first, the company may seek protection in bankruptcy court, where all the debts are renegotiated under the watch of a judge. In bankruptcy, the company would also seek new financing and a fresh start.

In anticipation of demand, many law firms are redirecting their lawyers into restructuring and bankruptcy-related assignments from other areas. Frank Aquila, a corporate attorney at Sullivan Cromwell who typically focuses on merger and acquisition work, said he’s been spending a lot of time with clients seeking to strengthen their cash position, either by reducing debt, selling assets or considering federal aid.

But Mr. Aquila and other advisers said that businesses generally prefer to work with banks rather than seek a government loan — especially if it means giving up the ability to buy back stock or dealing with restrictions on how the money can be used.

Michael C. Eisenband, a co-leader of corporate finance and restructuring at FTI Consulting, echoed the sentiment. “If you get $100 million, what happens when the company starts to turn around?” he said. “Do the first profits have to pay the government back first?”

Still, some companies — in particular, airlines — will get targeted relief from the $2.2 trillion economic lifeline bill that President Trump signed on Friday, and another $2 trillion that the Federal Reserve is using to keep the bond markets functioning properly.

Corporate failures are inevitable in the current crisis, especially given that there is $6 trillion in U.S. corporate debt that remains outstanding — near record levels. Particularly vulnerable is the $760 billion in junk bonds issued by U.S. companies, with $178 billion of that coming due over the next 12 months, according to Dealogic. Junk bonds pay investors higher interest rates.

Article source: https://www.nytimes.com/2020/03/30/business/coronavirus-companies-restructuring-bankruptcy.html
Filed Under: Economy News

Bail Out Journalists. Let Newspaper Chains Die.

March 29, 2020 by NewsMaker Leave a Comment
The time is now to make a painful but necessary shift: Abandon most for-profit local newspapers, whose business model no longer works, and move as fast as possible to a national network of nimble new online newsrooms. That way, we can rescue the only thing worth saving about America’s gutted, largely mismanaged local newspaper companies — the journalists.

“We need to accept that what local news is today is already dying,” said Ms. Green, 35.

She had that realization 12 years ago when she was a local education reporter. Her newspaper, The New York Sun, went under, and she created a new nonprofit organization to stay on the beat she loved. Now, her vision has expanded. She has co-founded the American Journalism Project, which aims to create a huge network of nonprofit outlets, some organized around subjects like education or criminal justice, others focused on covering a town, a city or a state. She wants to replace the hundreds of local newspapers now owned by hedge funds that are slowly being bled dry.

“We need to keep the values, keep the people, keep the lessons learned — and get rid of the shareholders and get a better business model,” she said.

Ms. Green has been working to expand one obviously needed coverage area, public health, to all 50 states, working with the nonprofit news service Kaiser Health News.

And on the local level, she and John Thornton, the other founder of the American Journalism Project, are working on a new project: backing a nonprofit outlet in West Virginia. It will be led by Greg Moore, a former Charleston Gazette-Mail executive editor, and Ken Ward, a reporter at the paper who won a MacArthur “Genius” grant for his coverage of damage done by the coal and gas industries to people’s lives. The not-yet-named new outlet (candidates include “Mountain State Muckraker”) will begin with a staff of about 10, seven of them journalists, a news team on the same scale as the diminished local paper.

Article source: https://www.nytimes.com/2020/03/29/business/coronavirus-journalists-newspapers.html
Filed Under: Media Business

Facebook, Google and Twitter Struggle to Handle November’s Election

March 29, 2020 by NewsMaker Leave a Comment
Mark Zuckerberg, Facebook’s chief executive, ordered a “lockdown” for hundreds of employees late last year.

A lockdown is Facebook-speak for a period of intense, focused effort on a high-priority project. The workers, who included engineers and policy employees, were ordered to drop other projects and build tools to prevent interference in the 2020 election, said two people with knowledge of the instructions.

For Mr. Zuckerberg, who once delegated the messy business of politics to his lieutenants, November’s election has become a personal fixation. In 2017, after the extent of Russia’s manipulation of the social network became clear, he vowed to prevent it from happening again.

“We won’t catch everyone immediately, but we can make it harder to try to interfere,” he said.

Facebook has since required anyone running U.S. political ads to submit proof of an American mailing address, and included their ads in a publicly searchable database. It has invested billions to moderate content, drawn up new policies against misinformation and manipulated media, and hired tens of thousands of safety and security workers.

In the 2018 midterm elections, those efforts resulted in a relatively scandal-free Election Day. But 2020 is presenting different challenges.

Last year, lawmakers blasted Mr. Zuckerberg for refusing to fact-check Facebook posts or take down false ads placed by political candidates; he said it would be an affront to free speech. The laissez-faire approach has been embraced by some Republicans, including President Trump, but has made Facebook unpopular among Democrats and civil rights groups.

Still, Facebook’s rank-and-file workers are cautiously optimistic. In late January, just before the Iowa caucuses, a group of employees gathered at the company’s headquarters for a party to celebrate the end of the lockdown.

Article source: https://www.nytimes.com/2020/03/29/technology/facebook-google-twitter-november-election.html
Filed Under: Media Business

Trump Said He Was the President of Manufacturing. Then Disaster Struck.

March 29, 2020 by NewsMaker Leave a Comment
“If we don’t flatten the curve, we’re on a trajectory currently to exceed our capacity in the New Orleans area for ventilators by about April the 4th, and all beds available in hospitals by about April the 10th,” Gov. John Bel Edwards, Democrat of Louisiana, said Sunday on “Meet the Press on NBC. “So we’re doing everything we can to surge capacity. It’s very difficult.”

Industry executives made the point that while the Defense Production Act enabled the White House to create the illusion of decisive executive action, it did not solve the nuts-and-bolts problem of gearing up scores of suppliers or creating Made-in-America production lines where few exist. That is the problem G.M. and Ventec, and other companies involved in the effort like Ford and Medtronic, are facing — often seeking parts from the same suppliers.

“We are moving full steam ahead on ventilators because they know there is an immediate need for increased production,” said Chris Brooks, Ventec’s chief strategy officer, even if it is still unclear whether the customers are hospitals, states or the Federal Emergency Management Agency, which the White House has delegated to take charge of the effort.

Mr. Trump came to this crisis belatedly, but once he did he has tried to portray himself as a wartime president, one who is making use of all of America’s talents to fight an invisible but devastating enemy. And in that regard, the best analogy may be Franklin D. Roosevelt’s “arsenal of democracy,” the phrase he used in a Dec. 29, 1940, fireside chat, as he tried to get American industry to support Britain in its fight with Nazi Germany, without getting the United States into the war.

It turned out to be prescient, because industry was already getting onto a wartime footing by the time Japan attacked Pearl Harbor a year later, plunging the United States into a manufacturing frenzy. That is when Ford began churning out B-24 bombers and Sherman tanks.

But in this case, Mr. Trump sought the language of wartime action without the responsibility for making it happen. He welcomed voluntary efforts that were already underway, as manufacturers like Medtronic and the Dutch manufacturing giant Phillips promised to ramp up production. The problem was that it was uncoordinated — as if the Pentagon had announced it needed more missiles, more artillery shells and more nuclear weapons but left unclear how many or where they should be delivered.

That was the situation Mr. Kushner found when he entered the effort, at the request of Vice President Mike Pence. He moved the authority to deal with the issue from the Department of Health and Human Services to FEMA, saying that the latter agency knew how to act in a “battle rhythm.” But still, no one knew how many ventilators were already in the market, where they would be needed first or how many more companies could be expected to make. And it was complicated by the fact that many of the largest manufacturers had moved operations offshore, to Ireland, Switzerland and, of course, China.

Article source: https://www.nytimes.com/2020/03/29/us/politics/coronavirus-trump-ventilators-manufacturing-gm.html
Filed Under: Economy News

Coronavirus emergency plan could cut Russia’s economic growth

March 29, 2020 by NewsMaker Leave a Comment
On Wednesday, Russian President Vladimir Putin addressed the nation to roll out emergency policies aimed at battling the deadly virus and its impact on the economy. According to the plan, most Russians will get a week of paid leave, except those working in the medical, pharmaceutical, and banking sectors, as well as in government bodies, essential stores, and transportation.

“The ballpark figure is one fifty-second of annual GDP,” Sergey Kopylov, a junior partner at consulting company BSC, said in an interview with RT, adding that he expects the impact to be smaller as not all the production facilities will have to be shut down.

Also on rt.com Russia’s gold near-zero debt give it best chance of thriving in post-coronavirus apocalypse – Max Keiser

The nationwide holidays and closures for one week could cost around two percent of GDP. In real terms, the losses may amount to over US$28 billion, judging by last year’s results, when the nation’s GDP stood at around US$1.41 trillion (109.3 trillion rubles).

“It will be rather expensive. I think we can forget about economic growth this year,” Kopylov said.

Prior to the coronavirus outbreak and the oil price crash, the Russian economy was projected to grow 1.9 percent in 2020. The Russian government is now bracing for a budget deficit and expects annual GDP growth to miss the target.

IMF warns coronavirus recession could be worse than 2009

Earlier this month, both Moody’s and Fitch rating agencies cut Russia’s economic growth forecast, citing turbulence in oil markets, global slowdown, and the impact of the pandemic. Both agencies expect that GDP growth will be one percent lower than they had previously said, with Moody’s estimating it at half a percent this year, while Fitch projects one-percent growth.

While some economists warn that Russia will enter (or already has entered) a recession amid the coronavirus outbreak, others say that many global powers are facing the same challenges as the pandemic has hit global trade.

“Recession is inevitable not only in Russia, but also in the United States and in other countries in Europe,” said Alexander Kalinin, the president of OPORA RUSSIA (All-Russian Non-Governmental Organization of Small and Medium-sized Business). He added that as part of the global market, Russia has vast exports to those regions and the economic troubles there will have an impact.

Russian exports have already felt the bite of the global slowdown and the pandemic has made it worse, according to Kopylov. The strategist warned that the decline in exports could be another blow to economic growth and the nation’s revenues, eventually resulting in the devaluation of the ruble and spurring inflation.

Also on rt.com Recession is here! World economy facing great uncertainty ahead, SP says

On the bright side, the plan includes a support package for businesses, including tax breaks and protection from bankruptcy. Small and medium-sized enterprises (SMEs) will be spared from paying taxes, except for VAT, for the next six months, while micro businesses will be granted a deferral on their contributions to social insurance funds. Bank loans held by struggling SMEs and micro businesses will also be deferred for the next six months.

“The measures the president announced are absolutely suitable, right and can cushion all this negative [effect],” Kopylov told RT. However, everything will now depend on how the plan is implemented by the government, he added.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/484177-russia-coronavirus-plan-costs/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business