Luckin Coffee <LK.O> Chairman Charles Zhengyao Lu and Chief Executive Jenny Zhiya Qian have handed over shares in the embattled Chinese coffee chain to lenders after a company controlled by Lu's family defaulted on a $518 million margin loan, one of the banks said on Monday. The default comes after Luckin, a major rival to Starbucks in China, said last week that much of its 2019 sales were fabricated, sending its shares plunging as much as 82% in U.S. trading and sparking an investigation by China's securities regulator. Luckin declined to comment.
Futures rose Sunday. The choppy market rally is riskier for active investors than the coronavirus stock market crash. AMD, Nvidia, Amazon and Microsoft are stocks to watch.
Wells Fargo's news will stun millions of small business owners and nonprofits that had planned to file applications for the SBA Paycheck Protection Program this week.
Shares of Carnival, the largest cruise operator, and its peers were making a strong showing Monday morning amid a broad market rally.
What should you do with your stimulus check? Robert Kiyosaki, the best-selling author of “Rich Dad, Poor Dad,” offered a bit of advice to his 1.3 million followers on Twitter for when that cash finally arrives.
(Bloomberg) -- Jamie Dimon said the coronavirus pandemic will lead to a major economic downturn and stress mirroring the meltdown that nearly brought down the U.S. financial system in 2008.“At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” the chief executive officer of JPMorgan Chase & Co. said Monday in his annual letter to shareholders. “Our bank cannot be immune to the effects of this kind of stress.”The 23-page letter, his shortest since 2008, came less than a week after Dimon told staff he’d returned to work after undergoing emergency heart surgery. It was his first public commentary about the coronavirus since the bank’s investor day on Feb. 25. At the time, the outbreak still seemed a distant threat, with fewer than 60 cases in the U.S. and none in New York.Dimon, the only current CEO who steered a major U.S. bank through the financial crisis, said JPMorgan’s earnings will be “down meaningfully” this year, though the bank is “unlikely” to cut its dividend. Such a move would only result from “extreme prudence,” he said, adding that JPMorgan will give more details on the impact when it reports first-quarter earnings later this month.The 64-year-old CEO outlined initiatives his bank is taking to support employees, businesses and the community, but refrained from offering long opinions about public policy that marked previous missives.Read more: What to Know About Recessions as World Heads Into One: QuickTakeHe said 180,000, or about 70%, of the firm’s employees are working from home, and the bank is giving payments of $1,000 to those whose jobs don’t allow them to work remotely.JPMorgan has been waiving fees for some loans, allowing customers to defer payments on mortgages and auto loans, and removing minimum payment requirements on credit cards. It’s also extended $950 million in new loans to small businesses over the past 60 days, and is planning to lend an additional $150 billion to clients across the world.Regulatory ReviewAfter the crisis, “we should use the opportunity to closely review the economic response and determine whether any additional regulatory changes are warranted to improve our financial and economic system,” Dimon wrote. “There will be a time and place for that -- but not now.”Dimon has become a spokesman for Wall Street thanks to his frequent public appearances, outspoken nature and nearly 15-year tenure at the biggest and most profitable bank in America. His absence while he recovered from surgery was felt across the industry as policy makers grappled with dire warnings about the economic effects of the pandemic and governments stepped up efforts to keep millions of people at home to stem the spread of the highly contagious virus.Dimon was more pessimistic about prospects for the economy than some industry figures were when the scale of the crisis was first becoming clear. A month ago, as stock markets were sliding, former Goldman Sachs Group Inc. CEO Lloyd Blankfein said in a tweet to “expect quick recovery when health threat recedes.” He said the economy “will avoid systemic damage” that takes years to work through.‘Forever Lost’Dimon said JPMorgan has been working closely with the government during the crisis, but the bank “will not request any regulatory relief” for itself. Still, regulators could change capital and liquidity requirements to help more capital flow through the system, he said.“Some rules can improperly prevent healthy, well-capitalized banks from lending freely in times of stress,” Dimon said. “This can hurt customers as the crisis deepens. Leaving high-quality, available liquidity undeployed in times of need is an opportunity forever lost.”He applauded recent actions by U.S. Department of Treasury and the Federal Reserve, which he said helped mitigate the economic impact of the virus.Shares of JPMorgan rose 6.3% to $89.36 at 9:48 a.m. in New York, more than the 4.1% gain in the S&P 500 index, which rallied after virus hot spots New York, Italy and Spain posted improvements in death rates over the weekend. JPMorgan’s stock has tumbled 36% this year, less than the 43% slump in the KBW index of bank stocks.Until last year, Dimon’s annual missives had gradually gotten longer, more than tripling in length since he took over as CEO at the end of 2005. He writes the letters himself, but drafts are reviewed and edited by the bank’s legal, accounting, compliance, public-relations and government-affairs teams before they’re published.Other HighlightsJPMorgan has been stress-testing the impact that adverse scenarios, such as a jump in unemployment to 10% and a 50% drop in the stock market, would have on the bank. The firm’s $48 billion in pretax earnings last year would enable it to remain profitable even if revenue fell 20% and credit costs rise $20 billion from 2019, he said.Companies have drawn more than $50 billion of their revolvers -- more than they did during the global financial crisis -- to shore up liquidity, Dimon said. In March, the firm provided more than $25 billion of new credit extensions to companies that requested it.Dimon said people could return to work more quickly if governments made tests widely available to determine who has recovered from the disease. “The country was not adequately prepared for this pandemic,” he said. “Done right, a disciplined transition would maximize the health of Americans and minimize the time, extent and suffering caused by the economic downturn.”(Updates with share price in 14th paragraph, bullet points at end.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Investors say there’s no one chart that will signal when the stock-market bottom is in. But technical analyst Chris Kimble is keeping his eye on a commodity index that is testing a very important level of support.
The government has introduced several temporary changes that could help people shore up their finances and manage their retirement accounts.
(Bloomberg Opinion) -- In documents published alongside Carnival Corp.’s $6.25 billion debt and equity offering last week, the beleaguered cruise ship operator showed why it might not keep much of that cash for long.Carnival held $4.7 billion in customer deposits at the end of February for trips that passengers paid for in advance but hadn’t yet taken. Because their cruises have been cancelled amid the coronavirus outbreak, many customers will want their money back. As such, Carnival could soon find itself short of cash again.Carnival’s predicament is shared by hundreds of travel, airline, sports, education and entertainment businesses — all of which depend on advanced payment from customers to fund their operations. People probably don’t realize it, but when they pay for a ticket months in advance they’re effectively extending these companies an interest-free loan. The world’s airlines might have to repay $35 billion in customer cash during the next three months, according to industry body IATA; the largest of these companies each held close to $5 billion in customer advance payments at the end of December, corporate filings show. What happens to this customer money is a hugely important question that could determine whether businesses will remain solvent or will need a government bailout. Tour operator Tui AG, for example, secured a 1.8 billion-euro ($1.9 billion) rescue loan from the German government last month, even though it had taken in about 2.9 billion euros of advance payments from customers — it had spent much of this cash.There are sound reasons why companies should be allowed to hold onto customer money: Taxpayers would foot a rescue bill, which doesn’t seem very fair when it’s estimated that just 15% of Brits take 70% of the country’s international flights. By pulling their cash out now — rather than waiting for rescheduled holidays, flights and events, or accepting a credit voucher to book a future alternative — customers’ risk destabilizing businesses that they admire and depend upon. But it’s essential too that customer money is adequately protected and people who urgently need their money back, such as those who’ve recently lost their jobs, can get it.That’s why there’s such disagreement around the travel industry’s preferred solution to the problem: the credit voucher. Like the airlines, Carnival hopes that people will accept these to put toward a future trip in lieu of cash. So far about 45% of customers have chosen this option. But the travel industry is worried that this voluntary uptake isn’t enough. Hence it is furiously lobbying governments to allow companies to insist on making the vouchers non-optional.This would require the suspension of consumer protection laws. While governments like Germany and the Netherlands are sympathetic to their domestic companies’ plight and are encouraging the use of vouchers, the European Union and the U.S. have held firm, saying that if customers want their money back, they should get it. They worry that if a company goes bust, customers with vouchers would join a long queue of unsecured creditors.In theory, European holidaymakers’ prepayments are protected if a tour operator becomes insolvent. But when Thomas Cook collapsed last year, the Air Travel Trust Fund that’s used to repay U.K. customers was drained of most of its cash. Similarly, Thomas Cook’s insurance didn’t adequately protect German customers; German taxpayers ended up refunding those customers. There are other ways for consumers to get their money back if a company goes bust. Some travel insurance policies will pay out for an insolvency, as will credit-card processors. Still, the safest way to protect your money is to not allow a distressed company to keep the cash in the first place.In the hope that governments will come round to their point of view, some airlines have reportedly been complicating the refund process for customers. By stonewalling, they’re able to keep the cash a bit longer but at the cost of alienating customers and travel agents. A much better approach is to offer customers an incentive to take the voucher option. Finnair Oyj customers can get vouchers worth 10% more than their cancelled booking.To make sure holidaymakers can get their money back when needed or are protected in the event of a company’s collapse, governments also need financial safety nets and insolvency guarantees. Germany has proposed something like this, without providing details. It also plans a hardship clause for customers that can’t afford to accept a voucher. As an alternative, governments might consider a travel emergency fund to cover reimbursement of flights and other services so businesses don’t immediately have to foot the bill. By taking a voucher, customers can help prevent scores of unnecessary insolvencies. But they mustn’t be punished for showing a little love. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
After dozens of companies suspended or cut their dividends in recent weeks amid the coronavirus-driven business slowdown, some analysts believe dozens more are vulnerable across a variety of sectors in the days ahead.
The Public Investment Fund, Saudi Arabia’s sovereign-wealth fund, disclosed it bought 43.5 million shares of the embattled cruise line. The fund now owns more than 8% of Carnival stock.
Brokerage Credit Suisse downgraded Zoom Video Communications Inc's stock to "underperform" from "neutral". "While implied new customer growth may seem undemanding compared to recently disclosed 20x participant growth, we expect much of the recent surge will prove ephemeral, and/or comes from free users or education, which are very difficult to monetize," Credit Suisse analysts wrote in a note. Last week, at least two U.S. state attorneys had sought information from Zoom following multiple reports that questioned its privacy and security.
Coronavirus has substantially wiped out the personal wealth of India’s rich. Ritesh Agarwal of hospitality group Oyo, for instance, fell out of the global dollar-billionaires club after his company’s valuation reportedly dropped to around $6 billion from $10 billion in the two months ending March 31, 2020, according to data from Shanghai-based Hurun Research. The 26-year-old Oyo founder and CEO was named the world’s second-youngest billionaire (Rs8,362 crore or $1.1 billion) by Hurun earlier this year.
DEEP DIVE The COVID-19 pandemic has taken the U.S. economy from near-record-low unemployment to mass layoffs and firings. It’s too soon to predict a rebound, but there are quality companies available now at discounted prices, setting up money-making opportunities for patient investors.
Financial pain for U.S. households triggered by the coronavirus pandemic is starting to show, according to a new survey.
Get ready for some incredible price moves in the metals markets and congrats to all the Gold and Silver bugs out there. Our analysis says our patience and accumulation of physical metals will soon pay off in a big way.
The payback, which will apply to 18 million policies issued by Allstate and its Esurance and Encompass units, follows a data analysis by the insurer that showed mileage is down between 35% and 50% in most states, Allstate Chief Executive Officer Tom Wilson said during a call with reporters on Monday. The analysis, based on data that Allstate collects from tracking products that some customers agree to use in exchange for discounts, and other sources, showed no difference between states that had "shelter in place" orders in effect and those that did not, Wilson said.
Back in the days of British rule in India, Delhi was overrun with cobras. Frustrated colonial officials put a bounty on them, paying out for every snake head the locals could deliver. The possibly apocryphal tale was made famous by German economist Horst Siebert in his book The Cobra Effect, on how poor policies can lead to negative unintended consequences.
Wayfair Inc. stock soared 38.3% in Monday premarket trading after the e-commerce home retailer said business skyrocketed amid the coronavirus pandemic. Wayfair went into March with gross revenue up just below 20%, consistent with January and February. However, business more than doubled toward the end of March with that run-rate maintained in early April. The company says its office staff is working from home, while its fulfillment, transportation and logistics facilities are fully operational with coronavirus-related precautions in place. The company is scheduled to announce fiscal first-quarter results on May 5. Wayfair also announced a private placement of convertible senior notes in the amount of $535 million. These notes will will bear an annual interest rate of 2.5% and have a $72.50 conversion price, a 46% premium to the 30-day average stock closing price. The notes will mature in five years if they aren't redeemed sooner. Wayfair is postponing its annual shopping day, Way Day, in favor of a promotional event with a charitable component. Wayfair stock has tumbled 66.8% over the past year while the S&P 500 index is down 14% for the period.
Luckin Coffee on Sunday apologised and pledged to strengthen controls after an internal investigation found hundreds of millions of dollars of alleged fake sales last year, wiping about 75 per cent off the company’s market value. Lu Zhengyao, the company’s chairman, said on social media that he was “ashamed” and “accepted all questions and criticisms”, while promising to do his best to recover the losses. Mr Lu backed the start-up in 2017 as it aimed to take on Starbucks in China and remains one of its largest shareholders.
Mortgage rates slide, as risk aversion and a slide in applications weigh. A 3rd weekly decline could be on the cards as COVID-19 hits the labor market.
Many tech stocks have held up relatively well during the coronavirus crisis. Mark Grant of B. Riley FBR says long-term investors can make money ‘with a little patience.’
Less than a month after a polarizing CNBC interview, hedge fund billionaire Bill Ackman is starting to feel differently about the near-term future of the market and the coronavirus (COVID-19) pandemic."I am beginning to get optimistic," Ackman began in a series of tweet Sunday afternoon. "Cases appear to be peaking in NY. Almost the entire country is in shutdown. Hydroxychloriquine and antibiotics appear to help. There is increasing evidence that the asymptomatic infection rate could be as much as 50X higher than expected."If this is true, the severity and death rate could be much lower than anticipated, and we could be closer to herd immunity than projected."Ackman cited the fact that nationwide health institutions are doing everything they can to combat the spread of the coronavirus: "One could imagine a world in the next few months where everyone is tested and all but the immune compromised go back to a socially distanced but more normal life," he said in another tweet.See Also: Bill Ackman Bet On Market Plummet, Turned M Into .6BChange Of HeartOn March 18, the founder of Pershing Square Capital said on CNBC that at the rate the coronavirus is spreading, the American economy will enter a "depression-era period."In February, Ackman's Pershing Square funds purchased credit default swaps (CDS) on various investment grade and high yield credit default swap indices. Pershing Square completed the exit from Ackman's bets against the market on March 23 and generated $2.6 billion compared with premiums paid and commissions totaling $27 million.> so are you saying that you're optimistic, placed some secret trade and you'll be on @CNBC first thing tomorrow to pump and dump?> > -- firstname.lastname@example.org (@Jason) April 5, 2020The S&P 500 kicked off the second quarter on a low note last week as investors remain uncertain about how long the economic shutdown will last. Futures were trading modestly higher at time of publication Sunday night."Massive stimulus is being injected globally to backfill the economy and bridge us through the crisis," Ackman said in another tweet on Sunday. "Most corporations, banks and consumers entered the crisis reasonably well capitalized. Rates are extremely low. There is no housing or commercial real estate overhang."While it is hard to be positive when we know that tens of thousands more will die and many more will get severely sick, I have no choice but to be more optimistic about the intermediate future based on the data and facts I have seen recently. I hope I am right.'See Also: 2008 Playbook Suggests Current Period Is Calm Before The Storm For Stocks> One of the biggest economic risks is rebooting small businesses once this is over. The Administration and the Congress appear committed to supporting small businesses. We will have to do more to solve this problem.> > -- Bill Ackman (@BillAckman) April 5, 2020Image source: CNBC appearanceSee more from Benzinga * Trump Extends Coronavirus Social Distancing Guidelines To April 30 * 'Dusting Off The Financial Crisis Playbook:' Dow Futures Point To Drop After Fed Announces Emergency Rate Cut(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.