Wednesday , April 8 2020
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Tag Archives: Companies & Markets

Another U.S. IPO of a Chinese Company Goes Bust in 11 Months

Trading of Luckin shares now halted. Wall Street banks, which get big-fat fees, are all too happy to sell this stuff to the American public. By Wolf Richter for WOLF STREET. Luckin Coffee is a Chinese coffee chain, founded in 2017, that had sold American Depositary Shares (ADS) to the US public in an IPO in May 2019, thereby extracting $561 million from US investors. Each of those ADS represents eight actual shares. At the peak, on January 17, the market capitalization of the Luckin...

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Preparing for the Aftermath: China’s Airlines Try to Exit Crisis, Alitalia is Nationalized, Qantas Plans 21-Hour Direct Flights

The situation is very fluid. By MC01, a frequent commenter on WOLF STREET: On April 2, the Civil Aviation Authority of China (CAAC) held a press conference in Beijing to update the press about the aftermath of the Covid-19 lockdown. Internal air traffic more than doubled since the depth of the crisis but still operates at only 42% of the capacity it had before the crisis. The main drivers of this recovery have so far been migrant workers returning from their home provinces to their...

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New York Fed, FDIC Tout “Opacity in a Banking Crisis” to Keep Corporations, Hedge Funds, PE Firms & Counterparties in the Dark about Weak Banks

“Suppressing” bank balance-sheet data in a banking crisis to prevent the biggies from yanking their billions out of a weakened bank. By Wolf Richter for WOLF STREET. US banks are now finding themselves in a situation where homeowners don’t have to make mortgage payments for few months, and renters don’t have to pay rent for a while, which leaves many landlords unable to make their mortgage payments – not to speak of the many Airbnb hosts that have no guests and won’t be able to make...

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Trucking Skids Off the Road Entirely

“Only good news is that the number was still positive despite the high number of cancellations.” By Wolf Richter for WOLF STREET. Orders for heavy trucks in March collapsed by 52% from the already dreadfully low levels a year ago to 7,400 trucks, the lowest since 2010, driven by cancellations of existing orders “due to the sharp and sudden downturn in economic conditions,” according to preliminary estimates by FTR Transportation Intelligence. And so COVID-19 spirals through the...

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Estimates About the Collapse of Share Buybacks Emerge

“The leveraged share buyback game has ended, which also means an end to the phony earnings growth.” By Wolf Richter for WOLF STREET: HSBC and Goldman Sachs have now both come out with estimates about the extent of the collapse of share buybacks. So far into this crash, over 50 companies have suspended share buybacks, accounting for $190 billion in cash that is not flowing into the stock market, representing over a quarter of total share buybacks in 2019. HSBC estimates that over the...

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Post-Lockdown New Normal: Many Brick & Mortar Stores Will Not Reopen, CMBS will Default, Mess to Ensue

Neither the Fed nor the Treasury can bail out brick-and-mortar retailers. By Wolf Richter for WOLF STREET: Macy’s announced today that it would lay off “the majority” of its 123,000 employees after it had closed all its Macy’s, Bloomingdale’s and Bluemercury stores on March 18. Even before the lockdowns, its headcount was already down 17% from four years ago, in line with the decline of its brick-and-mortar operations. It said these stores would “remain closed until we have clear line...

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“Not All Airlines Will Go Bankrupt”: How Will Coronavirus Travel-Bans Impact Airbus, Suppliers, and Airlines?

All eyes are on China to see how air transport will change in the aftermath of the crisis. By MC01, a frequent commenter on WOLF STREET: Airbus CEO Guillaume Fleury and CFO Dominik Adam issued a joint statement on March 23, regarding the European aerospace giant’s plan to power through the Covid-19 crisis. These new provisions include a new €15 billion credit facility, cancelling the proposed €1.80 per share dividend, and “cutting operational costs where possible.” This gave Airbus €30...

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Four Mortgage REITs Collapse After Chaos Hit $16-Tn Markets for Residential & Commercial Mortgage-Backed Securities

In good Financial Crisis manner, stuff blows up despite the Fed’s effort to stem the chaos. Now hoping for taxpayer bailouts. By Wolf Richter for WOLF STREET: Mortgage REIT # 4 so far: This afternoon, March 24, MFA Financial announced that it had received “an unusually high number of margin calls from financing counterparties,” and that by the close of business on Monday, it couldn’t meet those margin calls. Its shares [MFA] had started out the day in the positive at just under $3 and...

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Share Buybacks Are Toast for 2020: Oops, that was the $4.6 Trillion Driver of the Stock-Market-Bubble

Even after the bottom is perceived to be in, “buybacks may be slow to come back” as companies struggle for cash amid potential government restrictions on buybacks and their dismal public image: S&P Dow Jones Indices. By Wolf Richter for WOLF STREET: Share buybacks by companies in the S&P 500 Index in the fourth quarter 2019, before the Coronavirus was even a factor, fell 18% from a year earlier, to $181.6 billion, after falling 13% and 14% year-over-year in the prior two...

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Leveraged Loans Blow Out. Distressed Corporate Debt Spikes

This is the moment when yield-chasing turns into a massacre. By Wolf Richter for WOLF STREET: Leveraged loans – they’re issued by junk-rated overleveraged companies with insufficient cash flows – are part of the gigantic pile of risky corporate debt that is now being brutally repriced as concerns over credit risk (the risk of default) are finally bubbling to the surface. Since February 22, the S&P/LSTA US Leveraged Loan 100 Index, which tracks the prices of the largest leveraged...

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