Monday , July 22 2019
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Tag Archives: Companies & Markets

Is Digital Bling Propping up China’s Stock Market?

Tencent is a giant. Its stock, after plunging 50% in 2018, was a big winner earlier this year. Now the uptrend is broken. Revenue is primarily from mobile video game microtransactions, and warning signs are emerging. By Adam H. Williams, Senior Associate at E911-LBS, LBSglobe.com, for WOLF STREET: Tencent is one of the top ten companies by stock market valuation worldwide, at around $441 billion. Its finances are a complex web, and its products are the backbone of urban Chinese digital...

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I’m in Awe of How Long Zombies Like J.C. Penney Keep Getting New Money to Burn. But Bankruptcy Beckons

In 2013, I called Goldman Sachs a “snake-oil salesman” for underwriting a $1 billion J.C. Penney stock offering. Investors got wiped out. Now the bonds, including a 100-year bond, which has collapsed. J.C. Penney, which just took another step toward what will eventually be a bankruptcy filing and likely liquidation of the company, can be summarized this way: 860 stores, down from 1,100 stores in 2011; 95,000 employees; $4 billion in debt, with some coming due later this year and more...

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Everything’s Fine Until Suddenly it Isn’t: How a “Leveraged Loan” Blows Up

Kudos to the private equity firm. These things don’t happen overnight for companies. They happen overnight only for investors. Golden Gate Capital – the private equity firm now infamous for asset-stripping its portfolio company Payless ShoeSource into bankruptcy and liquidation – strikes again with another of its portfolio companies, Clover Technologies, whose $693-million leveraged loan has suddenly gone to heck. Slices of that leveraged loan are traded like securities. But because...

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Trucking, Rail Plow into “Transportation Recession”

After the boom comes the bust. And now is the bust. Freight shipments in the US across all modes of transportation – truck, rail, air, and barge – fell 5.3% in June compared to June last year, after having fallen 6.0% in May, the seventh month in a row of year-over-year declines, according to the Cass Freight Index for Shipments. This decline, along with other freight indicators, including orders for heavy trucks, now clearly outline the new Transportation Recession – number 2 since...

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Liquidity Crisis at Woodford Equity Fund Is Symptomatic of Systemic Problem, Bank of England Warns

$30 trillion of assets globally are held by similar open-ended funds. By Nick Corbishley, for WOLF STREET: The Bank of England warned on Thursday that “financial stability risks are increasing” from giant open-ended funds, which are estimated to hold some $30 trillion in assets globally. These funds are vast sources of financing for the real economy but can pose a systemic risk since the money often goes into assets that are hard to sell quickly, the central bank said in its latest...

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Truck Makers Are Going to Have to Fess Up Soon

“Orders” of Heavy Trucks Collapsed by 70% but “Sales” Rose to Highest Level Since 2006: There’s a Lag. And Sales Are Next Now there is this phenomenon: Orders for Class 8 trucks – the heavy trucks that move a big part of the goods across the US – have collapsed by about 70% in May and June compared to a year earlier, to just over 10,000 truck-orders per month, the lowest in years. But sales of Class 8 trucks in June, as measured by deliveries to trucking companies and truckers, reached...

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Liquidity Fears Hit Other UK “Equity Funds” as Investors Remain Trapped in Woodford Fund

Shares of one fund plunged 22% on Friday. Other funds under pressure, raising serious questions about just how liquid “equity funds” in the UK are. By Nick Corbishley, for WOLF STREET: There’s still no sign of relief for the hundreds of thousands of investors whose money is trapped in one of the UK’s biggest equity funds, the Woodford Equity Income Fund. The fund is supposed to offer its shareholders daily liquidity, meaning they can take part or all of their money out any day of the...

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Boeing, Airbus and Airline Overcapacity in Asia & Europe

And 200 miracle orders — well, just a letter of intent — for the Boeing 737 MAX at the Paris Air Show. By MC01, a frequent commenter on WOLF STREET: Airlines and aircraft manufacturers usually announce large deals during the big air shows to add an air of glitz and glamour to their dealings. With the growing importance of Asian markets, air shows such as Aero India and the Dubai Airshow have gained in importance over the past decade. But the most important worldwide are still the Paris...

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When the Music of the “Wealth Effect” Stops

The phenomenon has reached historically huge proportions in the Everything Bubble era. But it comes in cycles – with a big impact on the real economy. This is the transcript from my podcast, THE WOLF STREET REPORT: OK, so here we have a phenomenon that has taken on historically huge proportions in the era of the Everything Bubble: More or less wealthy people with liquid assets are plowing their money into cash-burning companies, and not just startups, but big companies too, that have...

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Trucking is Infamously Cyclical, But This is a Tad Extreme

After truck manufacturers eat up their backlogs, then what? Orders for heavy trucks plunged by 69% in June compared to June last year, to 13,000 units, after having plunged by 71% in May, to just 10,400 units, FTR Transportation Intelligence reported today. It was the eighth month in a row of year-over-year declines. So far in 2019, the year-over-year declines in orders for Class-8 trucks ranged from -52% to -71%, which, as FTR said in the statement, makes it “the weakest six-month...

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