BREAKING|41,800 views|Apr 14, 2020,03:42pm EDT Jeff Bezos Gets $6.4 Billion Richer As Amazon Stock Hits A New Record High Sergei Klebnikov Sergei KlebnikovForbes Staff Markets I cover breaking news, with a focus on money and markets. Updated 15 hours and 51 minutes ago TOPLINEAlready the world’s richest person, Jeff Bezos saw his net worth jump nearly 5% after Amazon’s stock hit a new all-time high on Tuesday, with the e-commerce giant experiencing unprecedented demand amid widespread coronavirus-related shutdowns. Bezos Blue Origin Amazon stock hit a new all-time high on Tuesday, recouping its losses from the coronavirus-triggered ... [+] PATRICK SEMANSKY/ASSOCIATED PRESS KEY FACTS Amazon stock surged 5.3% on Tuesday, hitting a new record close of $2,283 per share. The stock is now up over 20% so far this year, outpacing the benchmark index (the S&P 500 is down over 12%). Amazon is the first major company to rebound from the coronavirus market selloff, which started in late February: It’s one out of only 28 stocks in the S&P 500 to do so. The stock has soared in 2020—despite the coronavirus downturn and widespread business shutdowns, with Amazon benefiting from skyrocketing demand as consumers who are stuck at home rely on online shopping more than ever. As the company’s stock rises to a new all-time high, that’s made CEO and founder Jeff Bezos noticeably richer: His fortune grew by $6.4 billion on Tuesday, according to Forbes’ estimates. PROMOTED Bezos, who currently owns an 11.2% stake in Amazon, is already by far and away the world’s richest person: As of 4:15 pm ET today, Forbes puts his net worth at $138 billion. His recently divorced ex-wife, Mackenzie Bezos, who owns about 4% of Amazon, saw her net worth rise by $2.2 billion, to a total of $44.8 billion. CRUCIAL QUOTE “Amazon AMZN became a utility in this crisis—defensive, reliable, indispensable,” Josh Brown, CEO of Ritholtz Wealth Management, said about the stock’s performance in a tweet on Tuesday. BIG NUMBER Amazon is the one of the world’s largest companies, with a market value of $1.14 trillion. TANGENT In early February, Bezos sold over $4 billion worth of Amazon shares, netting him an estimated $3.1 billion after taxes. WHAT TO WATCH FOR After facing criticism for how he is handling the coronavirus pandemic within Amazon’s warehouse (some workers have protested and called for more safety precautions), Bezos announced that he would give $100 million to Feeding America, a national nonprofit organization that operates a network of food banks and food pantries across the country. FURTHER READING 10 Billionaires Gained $51 Billion This Week As Markets Edged Up From The Stock Crash (Forbes) Amazon Fires Two More Employees After Calling Out Warehouse Working Conditions (Forbes) Jeff Bezos Announces $100 Million Gift To Nonprofit Feeding America (Forbes) Jeff Bezos Has Now Sold Over $4 Billion Worth Of Amazon Shares In The Past Week (Forbes) Full coverage and live updates on the Coronavirus Follow me on Twitter or LinkedIn. Send me a secure tip. Sergei Klebnikov Sergei Klebnikov I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:00 / Duration 1:09 focus on financial topics Can Foster Equal Opportunity For All Americans

Share Fullscreen 178 views|Apr 15, 2020,01:11pm EDT Closing The Digital Divide: How The Future Of 5G Can Foster Equal Opportunity For All Americans T-Mobile for Business T-Mobile for BusinessBRANDVOICE| Paid Program Innovation To appreciate the impact that the 5G era could have on business and everyday life, it’s helpful to explore the striking statistics behind connectivity and inequality. The numbers illustrate how a lack of high-speed connectivity limits a variety of opportunities for Americans—especially those living and working outside of urban and metropolitan areas. mother helping daughter with homework GETTY The Digital Divide While the Federal Communications Commission’s (FCC) 2019 Broadband Deployment Report shows that the “digital divide”—the gap between Americans who have access to high-speed broadband and those who don’t—is narrowing, the numbers highlighting that gap remain significant as long as certain groups and communities are underserved. As access to education, healthcare and other life necessities are increasingly tied to the ability to get online, there’s a lot of work to do to redress the balance. A gap in connectivity, particularly for rural communities: The FCC’s current benchmark for an acceptable high-speed fixed broadband connection is at least 25 Mbps download and 3 Mbps upload. In late 2016, the number of Americans lacking access to a terrestrial fixed broadband connection meeting the benchmark was 26.1 million. By late 2017, this figure dropped to 21.3 million. The majority of those who had gained access were in rural America, which is still underserved by broadband. Although this suggests the divide is shrinking, the improvements aren’t necessarily consistent across the country. Average connection speeds for urban areas continue to rise, and many rural or lower-income areas are still left behind, perpetuating the digital divide. Cost is a barrier: Cost is also a significant factor resulting in the connectivity challenges facing low-income households. A 2019 Broadband Now survey shows that only 52% of the U.S. population can access high-speed fixed broadband for less than $60 a month. For the country’s low-income households earning below $30,000 a year, 44% have no broadband services at all, reports Pew Research Center. How education and healthcare take a hit: Disparities in connectivity and digital access have huge implications across all sectors of American life. Take education, for example: According to a Pew Research Center report, 17% of American teens are “often or sometimes unable to complete homework assignments because they do not have reliable access to a computer or internet connection.” Rural communities are already shortchanged when it comes to healthcare access. For example, in more remote areas of the country, the ratio of doctors to residents is only 13 per 10,000, compared to 31 per 10,000 in urban areas, as reported by the National Rural Health Association. Lack of connectivity can exacerbate this gap in a life-critical industry and take more severe tolls on certain groups like former service members, for instance. A reported 4.7 million military veterans live in rural communities following their return from active service. In turn, this can mean limited access to healthcare and high-speed broadband connections. Special Measures During The COVID-19 Crisis In March, the FCC announced its Keep Americans Connected initiative in response to the COVID-19 pandemic. This includes a number of short-term measures to address increased demand for broadband, granting temporary authority to 33 wireless ISPs to use additional spectrum in order to meet internet access needs as Americans work from home. The FCC also announced a program to boost rural healthcare funding by over $42 million to promote telehealth solutions for patients during the outbreak. How Can 5G Help? As 5G becomes more available, especially over low-band frequencies like 600MHz that can cover more distance in rural areas, wireless broadband may soon offer a competitive option for high-speed connection to the internet across the country. It may become the first viable option in areas where the geographical landscape makes it difficult to lay fiber. This type of connection could potentially be provided via either a fixed wireless access service to the premises or a 5G Mi-Fi portable hotspot device. Rural areas are essential for deploying 5G coverage, not only because of the limited access to fiber broadband but also because connected and autonomous vehicles will require ubiquitous coverage on national highways across the nation. This will be an important step in properly addressing the digital divide. Some specific initiatives, detailed below, can also help to overcome the particular challenges faced by rural communities. Improving educational opportunity: In addition to making high-speed internet available to underserved students, some forward-thinking public- and private-sector partnerships between schools and service providers can help foster effective online education. T-Mobile’s EmpowerED 2.0 program is designed to address the homework gap for American students by enabling disadvantaged students to take devices like notebook computers or tablets and high-speed hotspots home with them while also providing an affordable mobile data plan. Going forward, T-Mobile will double down to eradicate the homework gap through a $10 billion commitment to deliver free internet access via hotspots and other reduced-cost devices to 10 million households over the next five years.* Advancing rural healthcare: Rural residents, including veterans, may be able to access telemedicine services via the growing 5G availability that could alleviate the need to drive long distances to the nearest healthcare center—reducing obstacles and long wait times in accessing healthcare services and professionals. This might include mental health counseling, medical consultations or even remote radiology to diagnose physical symptoms. Telemedicine eases the burden on the patient while also freeing up industry resources and saving money, allowing doctors to provide better and more timely care for their rural or underserved patients. This potentially improves individual health outcomes while also fueling local economies by keeping the labor force healthier. Agricultural improvements: According to the United States Department of Agriculture, the farming industry is the biggest user of ground and surface water in the country, accounting for around 80% of water use nationwide and over 90% in many Western states. While climate challenges threaten crop yields, eventually the Internet of Things (IoT) sensors and communications over 5G could potentially control more efficient irrigation systems and improve overall water management, in turn boosting farm profitability as well as conserving water for local non-agricultural demands. Critical communications for first responders: In emergencies, effective and swift communication is vital. Dedicated public communications systems for first responders, however, cannot be upgraded as often as commercial cellular networks because of budget pressures on emergency medical services (EMS). However, the 5G era promises a step change in performance, with improved reliability and resilience compared to earlier generations of commercial cellular. T-Mobile’s Connecting Heroes initiative will offer free 5G access** to first responder agencies, including U.S. state and local law enforcement, fire and EMS agencies. The 10-year commitment will provide unlimited talk, text and smartphone data with 5G access for approved users.*** Rural commerce and industry boosts: Lack of high-speed broadband connectivity is hampering rural economies by limiting the commercial opportunities and diversity that are possible with widespread access to digital technology. The introduction of 5G could be transformative in bridging the digital divide and improving nationwide equality. A Look Ahead While many Americans may yearn for a more rural lifestyle, the prospect of either a long commute or lower wages for local work may put them off. Boosting rural infrastructure with a potential of higher-speed 5G connections, coupled with much lower commercial real estate costs, could help promote new startup businesses as well as encourage established enterprises to relocate to rural areas. In urban areas too, the cost of high-speed broadband is limiting the academic achievement of students from low-income families. With the advantages of the future of 5G, the economic divide as well as the digital one may start to narrow, and we could see a more level playing field for all Americans, across the country’s rural heartlands and in its cities. To learn more about 5G mobile networks and how T-Mobile will help deliver greater connectivity and access for all Americans, check out www.t-mobile.com/5g/new-t-mobile-uncarrier-1-0. * Requires verifications of low income and home internet need for eligible students; full terms available at enrollment. ** 5G-capable device required; coverage not available in some areas. Downlink only. Some uses may require a certain plan or feature; see T-Mobile.com. *** Offer available soon. For state and local fire, police and EMS agencies who verify eligibility; may be subject to line limits. Video typically streams on smartphone/tablet at DVD quality (480p). Coverage not available in some areas and may be impacted by emergencies; check your response area. T-Mobile for Business T-Mobile for Business T-Mobile for Business brings the Un-carrier experience to customers unwilling to settle. Leading the 5G charge with a network built from the ground up for the next wave… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Apr 2, 2020,04:00pm EDT 7 Of The Best UV Sterilizers For Phones And Other Household Objects Forbes Personal Shopper Steven JohnContributor Forbes Personal ShopperContributor Group Shopping Forbes and/or the author may earn a commission on sales made from links on this page. You know a sunburn is not actually a burn, right? Not a burn such as you would get from acute exposure to a hot stove or an open flame. Sunburns are actually radiation damage caused by ultraviolet light. In the short term, this UV exposure causes redness, pain and peeling; in the long term, too much unprotected exposure to sunlight can lead to skin cancer. There’s a silver lining here, though: the same UV light (in particular UV-C light, which has a wavelength between 200 and 280 nanometers, while visible lights smallest wavelength measures 380 nm) that damages the very DNA of human skin over time can be harnessed and used to kill off germs in a matter of minutes. With a good UV light sanitizing device, you can clean surfaces like desktops and door handles, sinks and toilets, or those items that are always with you, like your phone. And by the way? You should really clean your phone from time to time. According to multiple studies, our phones are about the dirtiest objects in our lives, harboring on average nearly 20,000 distinct types of bacteria. And while wiping down a smartphone with soap and water or isopropyl alcohol might not be the best idea, UV phone sanitizing cases won’t damage the device but will eradicate bacteria and viruses, so long as you use the sanitizing hardware properly and regularly. Here are some of the best UV sanitizers for phones and more. ZAMAT UV Disinfection Lamp ZAMAT UV Disinfection Lamp AMAZON $140 ON AMAZON Like many viruses, the coronavirus that causes COVID-19 can live for many hours or even days on certain surfaces, such as cardboard or metals. But perhaps more disturbing is the fact that viable viral agents (viruses are not technically calls, remember) can be found in the air hours after an infected person coughs or sneezes. Thus an ultraviolet light disinfection lamp like this one from ZAMAT is a wise choice for anyone who may have to share air with potentially sick people. It can effectively kill off germs in an area up to 150 cubic feet, so it’s perfect for people who work in cubicles or smaller offices, or for anyone who can simply set the device up nearby, preferably right there on his or her desk. PhoneSoap Wireless UV Smartphone Cleaning Case PhoneSoap Wireless PHONESOAP PhoneSoap Wireless $100 ON PHONESOAP This on-the-go case can kill off that plethora of bacteria and viruses likely covering your phone in a matter of minutes, and assuming you have a rather recent model of smartphone that allows for wireless charging, it will even power up your device while killing off your invisible adversaries. The interior of the case is equipped with Qi wireless charging technology, while the overall case is small enough to tuck into a purse, backpack or briefcase, so you can always have it with you. PhoneSoap Wireless uses four powerful UV bulbs and a mirrored interior that sends the deadly (to germs) light all over the exterior of your phone. 10 minutes is all you need for reliable viral eradication. OLEY UV Sanitizer Travel Wand OLEY UV Sanitizer Travel Wand AMAZON OLEY UV Sanitizer Travel Wand $110 ON AMAZON This compact, folding UV sanitizing wand is just five by 1.3-inches when folded shut, so you can bring it with you to the office, on planes, in taxis, on trains and anywhere else you have to go. It can be powered by a USB cable or by four AAA batteries, further enhancing its true portability. The wand is ideal for use on doorknobs, keyboards and other surfaces you just can’t avoid touching at times. And at all times you’ll appreciate its built-in safety shutoff feature: of the wand detects that its light is shining upward, potentially toward your eyes, it turns off automatically. CASETiFY UV Sanitizer CASETiFY UV Sanitizer CASETIFY CASETiFY UV Sanitizer $120 ON CASETIFY While the CASETiFY UV Sanitizer was designed for use sanitizing and sterilizing smartphones, this large UV-C cleaning case is big enough for much more than your Samsung Galaxy Mega or iPhone 11 Pro Max. It can be used to sanitize jewelry, glasses, wallets, watches and full-sized pieces of silverware, something you might think twice about using without being certain that they’re clean in these COVID-19 days and beyond. The case uses six UV lights and eradicates up to 99.9 percent of germs in just three minutes. Light in the Box 11W Portable Ultraviolet Sterilization Lamp Light in the Box 11W Portable Ultraviolet Sterilization Lamp LIGHTINTHEBOX.COM Light in the Box 11W Portable Ultraviolet Sterilization Lamp $236 ON LIGHTINTHEBOX This seriously powerful handheld UV sanitization wand is perfect for use in areas of high concern about viral infection or bacterial colonization. It might be overkill for use in the home or small office, but if your work or travels take you to high traffic private or public places, it is well worth its price tag. It casts out a light wavelength at 253.4 nanometers, right in the sweet spot for UV-C light, and the lamp should be able to fully sterilize the exposed surfaces of spaces like larger bathrooms or smaller offices or kitchens with about 30 minutes of diligent use. XBOCMY Germicidal UV Light Bulb XBOCMY Germicidal UV Light Bulb AMAZON XBOCMY Germicidal UV Light Bulb $35 ON AMAZON Unlike with most UV sanitizing products that are a completely new piece of hardware, this UV bulb can be screwed into any standard light socket in your home or office. It can help kill off viral agents and bacteria in an area of about 400 square feet, so it’s a great addition to large bathrooms, bedrooms or other areas where you spend a good amount of time daily. Letting the bulb shone for just 15 or 20 minutes can help clean out a smaller space, like a closet, while using it for an hour or more can render larger spaces much safer thanks to greatly reduced germ presence. CrazyCap UV Water Bottle Purifier Cap CrazyCap UV Water Bottle Purifier Cap AMAZON CrazyCap UV Water Bottle Purifier Cap $70 ON AMAZON The water you get from the tap at your home is almost assuredly free of the coronavirus that causes COVID-19, and is, in fact, likely free of any harmful bacteria or viruses. But if you are out camping, compelled to travel abroad or for any other reason left with a water source you don’t fully trust, this UV water sanitizing system is a great way to be sure you sip safely. The cap features a UV-C light that can kill off some 99.99 percent of germs in the water, making it safe for you to drink in just two short minutes. Follow me on Twitter or LinkedIn. Check out my website or some of my other work here. Steven John Steven John Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Video Player is loading.Pause Unmute Current Time 0:00 / Duration 1:06 Share Fullscreen 194 views|Apr 15, 2020,08:00am EDT Having Already Dropped 16% This Year, Could ADP’s Stock Drop Further To Pre-2018 Levels? Great Speculations Trefis TeamContributor Great SpeculationsContributor Group Markets ADP, LLC Management services company logo seen displayed on KIEV, UKRAINE - 2018/12/20: In this photo illustration, the ADP, LLC Management services company ... [+] LIGHTROCKET VIA GETTY IMAGES ADP, LLC Management services company logo seen displayed on KIEV, UKRAINE - 2018/12/20: In this photo illustration, the ADP, LLC Management services company ... [+] LIGHTROCKET VIA GETTY IMAGES Having already declined ~18% since the beginning of this year, at the current price of around $140 per share, we believe ADP (NASDAQ: ADP) could see further downside. Why is that? The key is ADP’s stock is still up around 25% since the beginning of 2018, a little over 2 years ago. Our dashboard Why Automatic Data Processing Stock moved 24.8% provides the key numbers behind our thinking, and we explain more below. Today In: Markets uncaptioned Some of this rise of the last 2 years is justified by the roughly 15% growth seen in ADP’s revenues from 2017 to 2019, which combined with a 12% growth in net margins, translated into a 28% growth in Net Income (earnings margin rose steadily in 2018 and 2019). This, combined with a 3% drop in share count, led to a further 32% growth in earnings, on a per share basis. Finally, ADP’s P/E ratio rose steadily from about 28x at the end of 2017 to 32x at the end of 2019. While ADP’s P/E is already down to about 26x now, given the volatility of the current situation, there is significant additional possible downside for ADP’s stock price when compared to levels seen in the past years – $112 at the end of 2017, and $127 as recent as in late 2018. So what’s the likely trigger and timing to this downside? The global spread of Coronavirus has meant there could be a drop in new client additions for ADP, as companies might refrain from outsourcing payroll processing and HR services. In addition, the economic slump could see a drop in ADP’s revenue per client employee. We believe ADP’s Q3 results in May will confirm the hit to its revenue. It is also likely to accompany a lower Q4 as well as 2020 guidance. If there isn’t a clear evidence of containment of the virus at the time of the earnings announcement, we believe the stock will see its P/E decline from the current level of 26x to 22x, which combined with a reduction in revenues and margins could result in the stock price shrinking to as low as $112. Our dashboard forecasting US COVID-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus. Further, our dashboard -28% Coronavirus crash vs. 4 Historic crashes builds a more complete macro picture, and complements our analyses of Coronavirus impact on a diverse set of companies. The complete set of coronavirus impact and timing analyses is available here. See all Trefis Price Estimates and Download Trefis Data here What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams Trefis Team Trefis Team Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company's products, that you… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:00 / Duration 1:09 Share Fullscreen 762 views|Apr 15, 2020,07:30am EDT Alcoa’s Stock Drops 65% In 2020; Is It Still Unattractive? Great Speculations Trefis TeamContributor Great SpeculationsContributor Group Markets Aluminum Maker Alcoa Plans To Cut 15,000 Jobs PITTSBURGH, PA - JANUARY 7: An Alcoa logo is seen on glass at the corporate headquarters January 7, ... [+] 2009 GETTY IMAGES Aluminum Maker Alcoa Plans To Cut 15,000 Jobs PITTSBURGH, PA - JANUARY 7: An Alcoa logo is seen on glass at the corporate headquarters January 7, ... [+] 2009 GETTY IMAGES After almost a 65% decline in Alcoa’s (NYSE: AA) stock price since the beginning of this year, at the current price of $8 per share, we believe Alcoa’s stock is likely to remain around the current level considering the impact of the ongoing coronavirus crisis. The stock is down 86% compared to where it was at the end of 2017, a little over 2 years ago. Our dashboard What Factors Drove -86% Change In Alcoa Stock Price Between 2017 And Now? provides the key numbers behind our thinking, and we explain more below. uncaptioned Today In: Markets The stock price declined by over 60% from $53.87 at the end of 2017 to $21.51 at the end of 2019. This is justified by the 10.5% decrease in Alcoa’s revenues, which was exacerbated by a whopping 550% decline in net income margin, which declined from 2.4% in 2017 to -10.8% in 2019. Due to a sharp drop in net income, EPS crashed from $1.51/share in 2017 to -$6.07/share in 2019, as the number of shares outstanding remained almost stable. Due to loss reported by the company in 2019, Alcoa’s P/E multiple was negative (which does not hold any significance). Thus, lower revenue and margins have led to a sharp drop in stock price from 2017 to 2019. Revenue decline was led by lower volume sold and decline in price realization. Alumina has been in excess supply from December 2018, which has, in turn, led to a drop in global price levels. Additionally, with an increasing number of aluminum players cutting down on capacity, demand for alumina was lower in 2019. Though aluminum was in deficit in 2019, this is not reflecting in pricing due to a continuous rise in Chinese aluminum exports, which have led to a decline in global price levels. As increasing number of steel players are shedding capacity, and demand from automobiles being modest, China has increased its exports of semi products at a lower price, which has, in turn, led to a decline in primary aluminum products worldwide. Also the new operating model under which Alcoa has put 1.5 million metric tons of aluminum smelting capacity under review has led to a drop in stock price in anticipation of lower revenue in the coming years. Profitability deteriorated sharply during this period due to higher restructuring charges related to Spanish operations and higher cost per ton due to a drop in production. However, the further drop of 65% in stock price in 2020 was mainly due to the impact of the coronavirus crisis, which we explain below. Effect of Coronavirus The global spread of coronavirus has led to lockdown in various cities across the globe, which has affected industrial and economic activity. The iron ore demand from industry players affects global aluminum price levels, in turn impacting the company’s price realization for its products. Lower demand from construction and automobile players, has led to a drop in global aluminum prices recently. Additionally, with the outbreak and spread of coronavirus expected to lead to further slowdown in economic activity and demand, aluminum prices are expected to remain under pressure in the near term. We believe Alcoa’s Q1 results will confirm the hit to its revenue. It is also likely to accompany a lower Q2 and lower 2020 guidance. Alcoa’s stock is down by about 46% since January 31 after the World Health Organization declared a global health emergency in light of the spread of coronavirus. However, during the same period, the S&P 500 index saw a decline of about 15%. Thus, Alcoa’s stock has performed worse than the broader market during this crisis so far. If there are signs of containment of the virus around the Q1 earnings announcement, there is a possibility of a healthy upside for the stock. On the contrary, in the absence of any clear signs of virus containment by the end of April, the stock could hover around its current level of $7-$9 per share. View our dashboard analysis Coronavirus Trends Across Countries, And What It Means For The U.S. for the current rate of coronavirus spread in the U.S. and forecasts on where it could be headed, based on comparison with other countries. Our dashboard -28% Coronavirus crash vs 4 Historic crashes builds a more complete macro picture of historic crashes and how the sell-off during early March compares. See all Trefis Price Estimates and Download Trefis Data here What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams Trefis Team Trefis Team Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company's products, that you… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:05 / Duration 1:09 Share Fullscreen 496 views|Apr 15, 2020,07:00am EDT Does US Steel Look Expensive At $7 Despite Dropping 40% In 2020? Great Speculations Trefis TeamContributor Great SpeculationsContributor Group Markets SLOVAKIA-US-RUSSIA-UKRAINE-STEEL-DIVEST Picture taken on November 17, 2012 shows the logo of the biggest steel company in Slovakia, the US ... [+] AFP VIA GETTY IMAGES After almost a 40% decline in US Steel’s (NYSE: X) stock price since the beginning of this year, at the current price of $7 per share, we believe US Steel’s stock is likely to remain around the current level considering the impact of the ongoing coronavirus crisis. The stock is down more than 80% compared to where it was at the end of 2017, a little over 2 years ago. Our dashboard What Factors Drove -80.3% Change In United States Steel Stock Price Between 2017 And Now? provides the key numbers behind our thinking, and we explain more below. uncaptioned The stock price declined by 67% from $34.47 at the end of 2017 to $11.40 at the end of 2019. This is justified by the 256% decline in net income margin from 3.5% in 2017 to -5.5% in 2019. This was marginally offset by 4% increase in US Steel’s revenue during the 2-year period. This led to a 266% drop in EPS from $2.21/share in 2017 to -$3.67/share in 2019. Due to loss reported by the company in 2019, US Steel’s P/E multiple was negative (which does not hold any significance). Revenue increased sharply in 2018 due to higher steel prices but saw a drop in 2019. The biggest drag on the top line in 2019 has been the European division, which saw a whopping 25% decline in revenues, followed by US Flat-Rolled and Tubular divisions which declined ~3.5%. Also, total revenue declined in 2019 on the back of loss of volume from ongoing repair works at Great Lakes Works facility. This was exacerbated by an unfavorable pricing environment on the back of the US-China trade war. The sharp drop in net income was driven by higher cost per unit due to drop in volume sold and lower prices, along with higher restructuring charges. Today In: Markets However, the further drop of 40% in stock price in 2020 was mainly due to the impact of the coronavirus crisis, which we explain below. Effect of Coronavirus The global spread of coronavirus has led to lockdown in various cities across the globe, which has affected industrial and economic activity. The steel demand from industry players affects global steel price levels, in turn impacting the company’s price realization for its products. Lower demand from construction and automobile players, has led to a drop in global steel prices recently, which had already seen a drop due to the US-China trade war. Additionally, with the outbreak and spread of coronavirus expected to lead to further slowdown in economic activity and demand, steel prices are expected to remain under pressure in the near term. We believe US Steel’s Q1 results will confirm the hit to its revenue. It is also likely to accompany a lower Q2 and lower 2020 guidance. US Steel’s stock is down by over 25% since January 31 after the World Health Organization declared a global health emergency in light of the spread of coronavirus. However, during the same period, the S&P 500 index saw a decline of about 15%. Thus, US Steel’s stock has performed worse than the broader market during this crisis so far. If there are signs of containment of the virus around the Q1 earnings announcement, there is a possibility of a healthy upside for the stock. On the contrary, in the absence of any clear signs of virus containment by the end of April, the stock could see a downside and hover around a level of $5-$6 per share. View our dashboard analysis Coronavirus Trends Across Countries, And What It Means For The U.S. for the current rate of coronavirus spread in the U.S. and forecasts on where it could be headed, based on comparison with other countries. Our dashboard -28% Coronavirus crash vs 4 Historic crashes builds a more complete macro picture of historic crashes and how the sell-off during early March compares. See all Trefis Price Estimates and Download Trefis Data here What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams Trefis Team Trefis Team Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company's products, that you… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:01 / Duration 1:09 Share Fullscreen 898 views|Apr 15, 2020,06:30am EDT Buy, Sell, Or Hold Bristol-Myers Squibb At $60? Great Speculations Trefis TeamContributor Great SpeculationsContributor Group Markets BRISTOL-MEYERS SQUIBB A box of Bristol-Myers Squibb Co. Eliquis tablets are arranged for a photograph at a pharmacy in ... [+] © 2019 BLOOMBERG FINANCE LP Bristol-Myers Squibb BMY’s (NYSE: BMY) stock has declined 6% since the beginning of this year (through April 13), compared to a 15% decline for the broader S&P 500. Despite this outperformance, we believe that Bristol-Myers Squibb stock can see some more upside from the current levels of around $58. The key is Bristol-Myers Squibb’s stock is up only 4% since the start of 2018, a little over two years ago. Our dashboard, ‘What Factors Drove 4% Change In Bristol-Myers Squibb’s Stock Between 2017 And Now?‘ provides the key numbers behind our thinking, and we explain more below. The stock price didn’t gain over the past two years despite strong revenue and earnings growth for the company. Bristol-Myers Squibb’s revenues were up 26% from 2017 to 2019. This combined with a 171% jump in net income margin from (a depressed) 4.8% in 2017 to 13.2% in 2019, helped earnings per share swell 231% (from low levels). Note that these numbers are based on Bristol-Myers Squibb’s GAAP figures. The reason for the low margin in 2017 was tax provisions of $4.2 billion, as compared to $1.4 billion in the prior year. This can be attributed to the impact of changes in the U.S. tax laws. This led to lower EPS in 2017, thus swelling the EPS growth over the following years. For comparison, on an adjusted basis, Bristol-Myers Squibb’s EPS grew 56% between 2017 and 2019. A sizable drop in Bristol-Myers Squibb’s P/E multiple (back to more normalized levels) has largely mitigated the rise in the company’s earnings. Bristol-Myers Squibb’s P/E multiple dropped from 93.1x (again due to the changes in tax law, GAAP EPS figure was low, thus swelling the P/E ratio) at the end of 2017 to 31.6x by the end of 2019. Moreover, Bristol-Myers Squibb’s P/E is down to about 29.2x now, given the volatility of the current situation. This reflects a 69% decrease in P/E multiple since December 2017. The reason for Bristol-Myers Squibb stock’s underperformance over the recent years can partly be attributed to its acquisition of Celgene. Earlier in 2018, the market was sensing Bristol Myers-Squibb to be acquired by a large pharmaceutical company, which didn’t happen, and the stock price corrected sharply by over 20% between Feb 1 and Mar 31. The company announced its intention to buy Celgene in January 2019, and it faced a few roadblocks during the process, resulting in stock volatility. Also, given the merger, the company’s total debt increased sharply from $7.4 billion in 2018 to $46.7 billion in 2019. In November 2019, the company closed the merger transaction and its stock price moved up around 35% between Jan 1 and Nov 30. With the Celgene acquisition, Bristol-Myers Squibb’s oncology portfolio has become one of the largest, and it will likely see cost synergies in the coming years. The acquisition also provided access to a huge pipeline of drugs. We believe there is a potential upside for Bristol-Myers Squibb’s multiple when compared to levels seen over recent years – P/E of 32x at the end of 2019, and 29x currently. Today In: Markets How Is Coronavirus Impacting Bristol-Myers Squibb’s Stock? uncaptioned The global spread of coronavirus has led to lockdown in various cities across the globe, which has affected industrial and economic activity. This is likely to adversely impact Bristol-Myers Squibb’s revenues, as it faces supply chain disruptions, and potential impact on direct sales due to postponement of minor health related issues and surgeries. Between January 31st and April 13th, Bristol-Myers Squibb’s stock has lost 6% of its value (vs. about a 15% decline in the S&P 500). A bulk of the decline in the stock markets came after March 6th, when an increasing number of Coronavirus cases outside China fueled concerns of a global economic slowdown. Matters were only made worse by fears of a price war in the oil industry triggered by an increase in oil production by Saudi Arabia. Notably, the company derives a bulk of its revenues from the U.S., which has become the new epicenter of the outbreak, with the country recording the largest numbers of COVID-19 cases across the globe. The outperformance of Bristol-Myers Squibb’s stock in the current crisis can partly be attributed to its top selling drug, Eliquis, which has consistently added over $1 billion in incremental sales over the past 5 years. This along with the company’s newly acquired portfolio from Celgene will continue to drive strong growth for the company in the coming years. In the near term, though, revenues are likely to be impacted by the ongoing crisis. We believe Bristol-Myers Squibb’s Q1 results in May will confirm the trend in revenues. Going by historical trends, we believe that the company’s stock could potentially offer upside returns. Our dashboard forecasting US COVID-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus. Further, our dashboard -28% Coronavirus crash vs. 4 Historic crashes builds a complete macro picture. Additionally, the complete set of coronavirus impact and timing analyses is available here. See all Trefis Price Estimates and Download Trefis Data here What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams Trefis Team Trefis Team Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company's products, that you… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:01 / Duration 1:09 Share Fullscreen 1,844 views|Apr 15, 2020,06:00am EDT Could Bed Bath & Beyond’s Stock Rise By 50% Post COVID-19 Crisis? Great Speculations Trefis TeamContributor Great SpeculationsContributor Group Markets Company Signs A Bed Bath & Beyond storefront and sign in downtown Seattle, Washington. Items are stacked in the ... [+] MOMENT EDITORIAL/GETTY IMAGES Comparing the trend in Bed Bath & Beyond‘s (NASDAQ: BBBY) stock over recent months with its trajectory during and after the Great Recession of 2008, we believe that the stock can potentially gain 50% once fears surrounding the coronavirus outbreak subside. Our conclusion is based on our detailed comparison of BBBY’s performance against the S&P 500 in our interactive dashboard analysis, 2007-08 vs. 2020 Crisis Comparison: How Did BBBY’s Stock Fare Compared With S&P 500? Between February 19th and April 13th, BBBY stock has lost 57% of its value (vs. about a 19% decline in the S&P 500). A bulk of the decline came after March 6th, when an increasing number of Coronavirus cases outside China fueled concerns of a global economic slowdown. Matters were only made worse by fears of a price war in the oil industry triggered by an increase in oil production by Saudi Arabia. uncaptioned BBBY’s Stock Has Fallen Considerably Because The Situation On The Ground Has Changed Today In: Markets Consumers under lockdown-style conditions could likely forego home-improvement projects and focus on buying necessities such as food and medicine. In fact, home improvement and housing go hand in hand with the overall economic conditions which seem to be struggling due to the COVID-19 pandemic. At first, BBBY’s inventory got a hit due to the factory shutdowns and delays from China as it is dependent on China for its supply chain. Now, the rise in Coronavirus cases in the U.S is only making it worse for the retailer. BBBY is already struggling with margin pressure and declining store traffic amid competition from e-commerce and omnichannel competitors. To add to that, a decline in its digital presence in its previous quarters suggest a weak prospect for the company going forward. We believe BBBY’s upcoming Q4 (coming out on April 15) results will confirm this reality with a drop in its total revenues. If signs of coronavirus containment aren’t clear by its July Q1 earnings timeframe, it’s likely BBBY’s stock is going to see a continued drop when results confirm palpable reality. Bed Bath & Beyond’s Stock Witnessed Something Similar But At Smaller Scale During The 2008 Downturn We see BBBY stock declined from levels of around $30 in October 2007 (the pre-crisis peak) to roughly $19 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 39% of its value from its approximate pre-crisis peak. This marked a lower drop than the broader S&P, which fell by about 51%. However, BBBY stock recovered post the 2008 crisis, to levels of about $34 in early 2010, rising by 81% between March 2009 and January 2010. In comparison, the S&P bounced back by about 48% over the same period. Will BBBY’s Stock Recover Similarly From The Current Crisis? Keeping in mind the fact that BBBY stock has fallen by 57% this time around compared to the 39% decline during the 2008 recession, we believe it can potentially recover by 50% to levels of near $8 once economic conditions begin to show signs of improving. This marks a partial recovery back to the $15 level BBBY stock was before the coronavirus outbreak gained global momentum. BBBY was in the midst of a hail Mary turnaround even before the spread of COVID-19 began. This could potentially keep the company’s stock away from recovering fully to its pre-crisis level. That said, the actual recovery and its timing hinge on the broader containment of the coronavirus spread. Our dashboard forecasting US COVID-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus. Further, our dashboard -28% Coronavirus crash vs 4 Historic crashes builds a more complete macro picture and complements our analyses of Coronavirus impact on a diverse set of BBBY’s peers – competitor Home Depot and Lowe’s. The complete set of coronavirus impact and timing analyses is available here. See all Trefis Price Estimates and Download Trefis Data here What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams Trefis Team Trefis Team Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company's products, that you… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:01 / Duration 1:09 Share Fullscreen 114 views|Apr 15, 2020,05:30am EDT Could CME Stock Retain Most Of Its Value Amid Coronavirus Crisis? Great Speculations Trefis TeamContributor Great SpeculationsContributor Group Markets In this photo illustration a CME Group logo seen displayed... BRAZIL - 2019/07/24: In this photo illustration a CME Group logo seen displayed on a smartphone. ... [+] SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES Comparing the trend in CME Group’s (NASDAQ: CME) stock over recent months with its trajectory during and after the Great Recession of 2008, we believe that the stock can recover back to the $210 level, similar to the trends seen in the last crisis, once fears surrounding the coronavirus outbreak are put to rest. This represents an upside potential of around 15% for the stock. Our conclusion is based on our detailed comparison of CME Group’s performance against the S&P 500 in our interactive dashboard analysis, 2007-08 vs. 2020 Crisis Comparison: How Did CME Group Stock Fare Compared With S&P 500? The World Health organization declared a global health emergency at the end of January in light of the coronavirus spread, which was followed by significant negative movement in the stock market. However, the broader markets somewhat improved on 19th February after the signs of effective containment of coronavirus spread in China and hopes of monetary easing by major central banks helped the index. Between Feb 20th and April 13th, CME’s stock has lost 12% of its value (vs. about a 19% decline in the S&P 500). A bulk of the decline in the S&P Index came after March 8th, when an increasing number of Coronavirus cases outside China fueled concerns of a global economic slowdown, followed by fears of a price war in the oil industry triggered by an increase in oil production by Saudi Arabia. CME’s stock declined by 15% over the same period which was more than the drop since Feb 20th. uncaptioned CME Group’s Stock Has Fallen Considerably Because The Situation On The Ground Has Changed Today In: Markets CME Group is one of the largest financial derivatives exchanges, which drives more than 80% of its revenues from clearing and transaction fees. Due to ongoing coronavirus pandemic and economic uncertainty, securities markets are witnessing high trading activity. This, in turn, means that the exchange would generate more revenue in terms of clearing and transaction fees. The slight drop in the company’s stock price is due to the negative market sentiment and fears of the economic slowdown. We believe CME Group’s Q1 and Q2 results will confirm this reality with an increase in clearing and transaction fees and market data revenues. If signs of coronavirus containment aren’t clear by the April Q1 earnings timeframe, it is likely CME Group’s stock, along with the broader market, is going to see a continued drop when results confirm palpable reality. But CME Group Stock Witnessed Something Similar During The 2008 Downturn We see CME stock declined from levels of around $81 in October 2007 (the pre-crisis peak) to roughly $25 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 69% of its value from its approximate pre-crisis peak. This marked a sharper drop than the broader S&P, which fell by about 51%. However, CME recovered strongly post the 2008 crisis to about $47 in early 2010 – rising by 88% between March 2009 and January 2010. In comparison, the S&P bounced back by about 48% over the same period. Will CME Group’s Stock Recover Similarly From The Current Crisis? Keeping in mind the fact that CME stock has fallen by 12% this time around compared to the 69% decline during the 2008 recession, a likely outcome might be for it to recover by 15% to levels of $210 once economic conditions begin to show signs of improving. This marks a complete recovery back to the $207 level CME stock was at before the coronavirus outbreak gained global momentum. This expected recovery for the stock could be attributed to its unique business model, which would benefit from the increased trading activity in the market. That said, the actual recovery and its timing hinge on the broader containment of the coronavirus spread. Our dashboard forecasting US COVID-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus. Further, our dashboard -28% Coronavirus crash vs 4 Historic crashes builds a complete macro picture, and complements our analyses of the coronavirus outbreak’s impact on a diverse set of financial services companies including State Street and Morgan Stanley. The complete set of coronavirus impact and timing analyses is available here. See all Trefis Price Estimates and Download Trefis Data here What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams Trefis Team Trefis Team Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company's products, that you… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:00 / Duration 1:09 Share Fullscreen 5,423 views|Apr 15, 2020,04:56am EDT Crude Oil Below $20, Trump Needs To Save U.S. Shale Oil Industry Naeem Aslam Naeem AslamContributor Markets I cover commodities, FX, equities in developing & emerging markets. It was another brutal day for oil prices; Crude Oil crashed another 10% yesterday. In fact, since the oil production cut this week—which was supposed to help oil prices—the selling pressure has been building. The OPEC+ has done its job, and it would be foolish to expect any more production cuts from Saudi Arabia or Russia. Remember, initially, Russia wasn’t ready for the production cut, and then the oil war was extended by Saudi Arabia. Eventually, we saw an agreement forged, and the OPEC+ alliance settled for a production cut just shy of ten million barrels a day. Texas Oil Companies Work To Adapt To Falling Oil Prices (Photo by Spencer Platt/Getty Images) GETTY IMAGES Crude oil is trading at $19.45 today and at this level, there is a significant threat to the U.S. shale oil industry. So, what do we need? Organic production cut from the U.S. shale oil industry Increase in Strategic Petroleum Reserve (SPR) Bargain hunters stepping in Global lockdown to ease off In the absence of the above, Crude Oil prices are likely to fall further, possibly reaching the $16 mark. Today In: Markets Organic Cut The fact is, if oil prices fail to go back above the $30 mark, the U.S. shale oil industry is going to find it tough to survive. Donald Trump was proud that he forged a deal between Saudi Arabia and Russia, however, the president’s only goal was to save the U.S. oil industry and its jobs. The Saudis and Russians are done with their production cuts, and it is highly unlikely that we will hear any more from them, even if prices stay at the current level. The OPEC+ has always wanted the U.S. shale oil industry to make organic cuts, but oil production cuts from the U.S. shale oil industry are based on CAPEX cuts from energy companies. This type of production cut isn’t enough to aid oil demand shock. Given the current climate, we need an organic oil production cut. Trump’s Agenda I anticipate that we will hear something from President Trump if the oil price stays at current levels or begins to fall below it. Elections are around the corner, and the last thing the president needs is untold damage to the U.S. shale oil industry under his watch. Under the current circumstances, it is highly likely that we will see another meeting among Texas oil officials. The president may begin to exert pressure and ask them to intervene and reduce oil supply. Strategic Reserve and Demand There is no doubt that countries are busy increasing their strategic reserves. According to Saudi Energy Minister, Prince Abdulaziz bin Salman, countries can increase their SPR by 200 million barrels over the next couple of months. There are also signs that demand is picking up in China; various sources such as TomTom show that motor traffic has increased enormously after the lockdown ended. Oil consumption has increased, but we are still far from pre-coronavirus levels. Similarly, air traffic data and seat occupancy rates are also beginning to improve. Chinese refineries have also started to operate at a much better level; some are even at 70%. The fact is that the global lockdown may not ease off for another 2-3 weeks, and it will take another two months or so before we see the world begin to return to normal. So, it’s likely oil demand will remain depressed for some time. Bottom Line Crude Oil prices are way oversold, and near their support level, which may attract some bargain hunters. However, it will take another four weeks for China to start consuming an amount of oil that can be classified as pre-crisis level—and this is an optimistic picture. Therefore, bargain hunting has limited scope for the price. The bottom line is that if oil prices stay below the $30 mark or decrease further, below the $25 mark, the rate of bankruptcies in the U.S. shale oil industry will begin to spiral. The only thing that can save the industry now is an organic oil production cut by the U.S. shale oil industry itself. Follow me on Twitter. Naeem Aslam Naeem Aslam I was awarded a national award (Young Irish Broker) in 2010. I have worked with Bank of America in equity trading and with Bank of New York in hedge fund trading, I have… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:01 / Duration 1:09 Share Fullscreen EDITORS' PICK|985 views|Apr 14, 2020,07:37pm EDT IMF Sees Deepest Slump Since Great Depression—And Worrisome ‘Cracks’ In Financial System Pedro Nicolaci da Costa Pedro Nicolaci da CostaSenior Contributor Markets I have been writing about economics, markets and the Fed since 2001. IMF Managing Director Kristalina Georgieva And World Bank Group President David Malpass Hold Press Briefing On Coronavirus WASHINGTON, DC - MARCH 04: IMF Managing Director Kristalina Georgieva speaks during a joint press ... [+] GETTY IMAGES Economic forecasting is a fool’s errand in the best of times—and making estimates during a pandemic is even more fraught with uncertainty. The Federal Reserve starkly recognized this reality last month with the rather drastic step of simply not publishing its quarterly economic forecasts. “The economic outlook is evolving on a daily basis,” Fed Chair Powell told reporters during his post-meeting press conference. “It really is depending heavily on the spread of the virus, and the measures taken to affect it, and how long that goes on. “And that’s just not something that’s knowable. So, actually writing down a forecast in that circumstance didn’t seem to be useful. And in fact, it could have been more of an obstacle to clear communication than a help.” The International Monetary Fund found no such respite, and soldiered on to publish its more complex World Economic Outlook. The downgrades were predictably dire, with the U.S. economy seen shrinking 5.9% this year and euro zone countries faring even worse. But perhaps even more alarming were some early warnings about what might happen to the financial system if the coronavirus crisis and associated economic shutdowns last for a prolonged period. “A further tightening of financial conditions may expose more ‘cracks’ in global financial markets and test the resilience of financial institutions,” the IMF said in its Global Financial Stability report. The IMF cut its estimate for global economic growth by a staggering 6.3 percentage points from January to -3%, “under the assumption that the pandemic and required containment peaks in the second quarter for most countries in the world, and recedes in the second half of this year.” “This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the global financial crisis” that began in 2007, wrote IMF chief economist Gita Gopinath in a blog accompanying the IMF’s World Economic Outlook. IMF forecasts worst slump since the Great Depression due to the pandemic. IMF forecasts worst slump since the Great Depression due to the pandemic. INTERNATIONAL MONETARY FUND The eventual recovery, which remains as uncertain as the likely timing and pace of economic reopening, will not likely make up for the lost output, the IMF said. That means “the cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around 9 trillion dollars, greater than the economies of Japan and Germany, combined.” Ouch. IMF sees cumulative loss in global GDP from this recession at circa $9 trillion. IMF sees cumulative loss in global GDP from this recession at circa $9 trillion. IMF So what cracks in the financial system might a prolonged economic slump expose? “Asset managers may face further outflows and may be forced to sell assets into falling markets. Distress may rise among leveraged firms and households. Emerging and frontier markets may face challenging external funding conditions, rising rollover risks, and increased incidence of debt restructurings. “Although banks have more capital and liquidity than in the past, have been subject to stress tests, and are supported by central bank liquidity provision, their resilience may be tested in some countries in the face of large market and credit losses.” Unprecedented actions from the Federal Reserve and other central banks, as well as robust doses of fiscal stimulus, have stemmed the market’s selloff for now—even as unemployment surges toward Depression-era levels. But it remains to be seen how long the strain of financial losses and cascading bankruptcies can persist before the financial system itself, including the big banks still paying dividends to their shareholders, comes under renewed stress. IMF sees potential banking risks from pandemic slump. IMF sees potential banking risks from pandemic slump. Full coverage and live updates on the Coronavirus IMF Follow me on Twitter. Check out my website or some of my other work here. Pedro Nicolaci da Costa Pedro Nicolaci da Costa Pedro Nicolaci da Costa is a veteran journalist and communications specialist. He is currently reporting on Federal Reserve policy for Market News International and is… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:01 / Duration 1:09 Share Fullscreen 6,435 views|Apr 14, 2020,07:16pm EDT This Is Why The Stock Market Rally Is Likely To Keep Going Raul Elizalde Raul ElizaldeContributor Markets US-ECONOMY-NYSE Wall Street stocks rallied on the back of massive federal stimulus to address the economic hit from ... [+] AFP VIA GETTY IMAGES The more data we get, the more it looks like the future is much brighter than it seemed just a couple of weeks ago. Consider this: The peak in new daily cases may already be upon us, or it may have already happened; U.S. institutions have deployed a massive arsenal to prevent an economic downward spiral; The blueprint to reopen the economy is clear, and it’s based on the lifting of restrictions. If current trends continue, the economy may get back on track much sooner than expected, and the stock market will have solid reasons to keep celebrating. Earlier numbers on how many deaths could take place in the U.S. – 100,000 to 240,000 – seemed exaggerated, and we said that much in a note to clients. At a fatality rate of 4%, the lower end of the estimate meant that 2.5 million people would be infected, translating into an infection rate of 7,600 persons per million (ppm). That is much higher than Spain’s, for example, which at 3,600 ppm is by far the worst- hit large country in Europe, and where the final infection rate is unlikely to exceed 5,000 ppm. The upper end of U.S. infections meant a rate of 18,000 ppm, a number that was nearly unconceivable from the beginning. How, then, did those projections ever come up? In trying to answer that question we built our own model to describe the evolution of new daily cases. We did not use any “bottom-up” principles – that is, we did not start with any epidemiological inputs such as virus reproduction rates or transmission mechanisms. We just fitted a model to the daily data, with constraints such as having a ramp-up period, a peak after a reasonable number of days, and a decline slower than the initial increase. Today In: Markets COVID-19 projection A few days ago, the projection for COVID-19 cases in the U.S. led to dire predictions of 100,000 to ... [+] PATH FINANCIAL LLC A model that fit early data well predicted a peak sometime in the last 10 days of April culminating in an infection rate around 7,000-8,000 ppm. As pointed out earlier, this was pessimistic compared to other countries, but it fitted the actual data up to that point and was consistent with the lower end of the public forecasts. COVID-19 projections More recent data suggests that the extent of COVID-19 infections in the U.S. will be much lower than ... [+] PATH FINANCIAL LLC Subsequent data, however, suggested a very different profile of COVID-19 infections. A much better fit now shows that a peak might be already upon us, and that the total infection number in the U.S. may stabilize at around 3,000 ppm. This is much more in line with the current infection rate of 1,800 ppm, and it’s similar to other countries’ experiences. The question now turns to how quickly the number of new cases will decline in the coming weeks. This number is likely linked to how long restrictions are kept in place: Loosening them too early may cause the incidence of new cases to drag on, while maintaining them may make it fall faster. This creates an unenviable, but inescapable, policy dilemma: sacrifice GDP growth by keeping the economy tied up too long or sacrifice lives by opening it up too soon. What does it all mean for the stock market? If we are in fact at the peak of new daily cases, it is conceivable that the quick rally of the past few days has room to keep going. Not only the economy may reopen sooner than seemed possible just a week or two ago, but when it does it will do so riding on top of a gigantic fiscal stimulus. Moreover, the market has received a loud and clear message: Unlike previous crises, government is willing and ready to play a major supporting role. Comparing the handling of the financial crisis of 2008 with the pandemic of 2020 shows how differently the government responded this time. In the wake of the financial crisis, a large amount of private debt was transferred to the public sector. This was an appropriate fiscal policy decision that prevented a collapse of the banking system worldwide, but one that alarmed politicians on both sides of the Atlantic. Faced by ballooning public debt, they set out to implement tight fiscal policies that impeded a stronger economic recovery. This pro-cyclical approach forced central banks to take on an offsetting role. Unfortunately, their only tools are printing money and cutting rates, so while they succeeded in stabilizing the economy and creating some growth, they also distorted asset prices. One stark example of this is the way in which corporations went on a bond-fueled stock-buying binge instigated by rock-bottom rates. This ended up propelling the stock market to higher and higher levels rather than spurring investments in the real economy. Compare that to the response to the current pandemic: The centerpiece is a $2TN stimulus package filled to the brim with extraordinary unemployment benefits, forgivable loans to small businesses and deferred taxes for everybody – arguably the right counter-cyclical policy, particularly at a time when the massive public debt that such stimulus will generate can be financed at interest rates that are lower than ever. Another difference with 2008 is that any help given to corporations will not be allowed to be used for dividends or stock repurchases, although this restriction only lasts a year. Topping the list, the Fed not only cut rates but it also declared itself a buyer of last resort for corporate bonds, allaying fears of widespread corporate bankruptcies caused by a lack of buyers willing to roll over corporate debt. Considering all of the above, the scenario that we painted on our 3/16 post (This Is How Long The Bear Market Is Likely To Last) arguing that the speed of market crashes foretells the speed of the recoveries seems to be proving correct. The 33.92% fall from the prior all-time high of 2/19 through 3/23 was the fastest in S&P 500 history. Likewise, the 23.43% rally from 3/23 through 4/13 is the fastest. And it looks like it’s not over yet. Follow me on Twitter. Raul Elizalde Raul Elizalde I build and manage portfolios for a broad spectrum of clients at Path Financial LLC, and I focus on addressing risk. I started as a trader for Salomon Brothers in the… Read More Site Feedback Tips Corrections Reprints & Permissions Terms Privacy © 2020 Forbes Media LLC. All Rights Reserved. AdChoices Play Unmute Current Time 0:01 / Duration 1:09 Share Fullscreen 589 views|Apr 14, 2020,05:17pm EDT Gold Sparkles As “The Great Lockdown” Hammers The Global Economy Great Speculations Frank HolmesContributor Great SpeculationsContributor Group Markets Gold is the best performing asset in 2020 so far ISTOCK Gold and gold stocks are among the highest performing assets of 2020 so far as investors seek a haven amid the coronavirus-fueled rout, and as central banks and governments around the world roll out unprecedented monetary and fiscal measures in an effort to mitigate the economic impact of the “Great Lockdown.” That’s the name the International Monetary Fund (IMF) has given this uncertain period, and I believe it may stick. The IMF added that the “world economy will experience the worst recession since the Great Depression,” with global economic growth this year projected to fall to negative 3 percent. This highlights the importance of protecting your family’s wealth right now, which savvy investors have historically managed to do with gold and precious metals. Physical gold was up about 13.8 percent through April 10, while senior gold miners advanced 2.8 percent, making the group the best asset class of the year so far. LI frequently recommend a 10 percent weighting in gold and gold stocks, and now you can see why. A 10 percent allocation at the beginning of the year—before any of us had ever heard of the novel coronavirus—could have helped minimize the impact of losses in other positions. Today In: Markets Gold the number one asset in 2020 as of April 20 - up 13.82 percent U.S. GLOBAL INVESTORS The problem is that too few investors have adequate exposure to the yellow metal. That’s the case even for many who may believe they do. As the World Gold Council (WGC) pointed out last year, most broad-based commodity indices have a very small weighting in gold—the S&P GSCI’s, for instance, is only 3.37 percent. What this means is that investors in funds that track these indices likely do not get the full benefit of having gold in their portfolio. That’s why I recommend that the 10 percent weighting be split into two halves, with 5 percent in physical gold (bars, coins, 12-karat jewelry) and the other 5 percent in high-quality gold and precious metal mining stocks, mutual funds and ETFs. Maybe you’ve missed the rally up to this point, but the good news is that it’s probably still not too late to participate. Gold Well-Positioned to Revert to Its Mean Relative to the S&P 500 According to analysis by Bloomberg commodity strategist Mike McGlone, the price of gold appears to be seeking to revert to its long-term mean relative to the S&P 500 Index. This would suggest that we could see a new record high, driven largely by excessive money printing. “Unprecedented global monetary stimulus is a worthy catalyst for the per-ounce price of gold to revert to its long-term mean vs. the S&P 500 Index, in our view,” McGlone explains. gold-to-S&P500 ratio posed to revert to the mean U.S. GLOBAL INVESTORS The implication of mean reversion right now is that gold would hit a new all-time high, assuming the S&P continues to trade around 2,800. After all, a one-to-one ratio means that both assets are trading at the same level. This has happened before, as you can see in the chart above. As recently as March 2013, both spot gold and the S&P 500 were trading in the same 1,500 to 1,600 range. Before that, in May 1990, it was a 330 to 360 range. A reversion to the mean now—again, assuming the S&P continues to trade at its current level—would put the yellow metal at approximately $2,800 an ounce, a new record high by far. But remember, that’s just a simple one-to-one ratio. The long-term gold/S&P mean is slightly higher, at 1.12, so the gold price would also be slightly higher, possibly closer to $3,000 an ounce. Interest in Gold Mining Stocks and Gold Royalty Companies Takes Off Not enough investors have optimal exposure to gold, according to the WGC, but we’re currently seeing a surge in interest in gold mining stocks and gold royalty companies, if Google search data is any indication. Search terms using “gold mining stocks” and “gold royalty companies” were higher this month than at any other time in the past 10 years. That includes when the yellow metal hit its record high of $1,900 an ounce in 2011. Google searches for gold stocks and royalty companies at highest in 10 years U.S. GLOBAL INVESTORS Google Trends isn’t a leading indicator recognized by mainstream economists and market analysts, but I believe it shows where investors’ thinking may be at right now. They’re seeking a way to preserve their wealth as we face what could be the worst economic downturn in nearly 100 years, and they’re betting that higher precious metal prices will send shares of gold mining and royalty companies higher as well. It’s not a bad strategy. For full disclosures pertaining to this post click here. Follow me on Twitter. Check out my website. Frank Holmes Frank Holmes I cover gold, natural resources and emerging markets, melding macro ideas, such as supercycles, government policies and behavioral finance, to investment opportunities.… Read More Site Feedback Tips