Displaying items by tag: coronavirus

Monday, 04 May 2020 14:55

Don’t Hope for an Airline Recovery


If you have any hope for a quick airline recovery post-coronavirus, take that idea, crumple it into a little ball and throw it away. The reality of air travel’s recovery is looking bleaker by the week. On the one hand, additional safety measures are going to be necessity for a long time—and they will be costly. Extra screening, spacing out passengers etc all have significant costs. Additionally, many airlines will have to forego middle seating to create adequate distance between passengers, cutting down on capacity. All of this will come as demand for air travel remains low in the short-term and secularly weaker in the long-term. For instance, business travel for meetings, conferences etc all looks likely to be very slow to recover because companies don’t want to put their workers in harm’s way. Videoconferencing has also proven very effective.

FINSUM: There is likely to be a big clearing out of weaker airlines and several years of losses/less profit for larger ones.

Published in Eq: Value
Thursday, 30 April 2020 10:53

Job Losses hit 30m

(New York)

The job losses keep coming week over week. Thursday morning has become a repetitive and gloomy event as millions of job losses hit the tape when weekly jobless claims are released. This morning the figure was 3.3m. That number means the total figure is now over 30m jobs lost in the last six weeks. The fastest drop in history by a gigantic margin. What is even more troubling is that the data underrepresents the true figure, as call centers have been unable to cope with the demand and thus have been underreporting true figures.

FINSUM: The job loss figures are absolutely staggering. California is paying $1bn in jobless insurance per day. We think the market is underestimating how deep of a recession this hit to consumer spending might represent.

Published in Eq: Total Market
Tuesday, 28 April 2020 14:57

Goldman’s Best Stocks for the Recovery

(New York)

So who is going to benefit most in the inevitable reopening of the economy? It is a tricky question to sort out. The most obvious companies are already seeing very stretched valuations, so those probably aren’t a good buy. Accordingly, here are some interesting names to look at in a category Goldman Sachs is calling “quality-at-a-reasonable-price”: Texas Instruments, Facebook, Mastercard, Alphabet, Home Depot, Ross Stores, Colgate-Palmolive.

FINSUM: Nice range of names. On the tech side, we love Facebook and Google. They are going to make more and more money as this lockdown accelerates the shift to ecommerce. On the retail side, discount stores like Ross seem like a good bet.

Published in Eq: Value

COVID Loan Tracker, a union of over 17,000 small business owners representing billions of dollars in Paycheck Protection Program applications, demands that the federal government increase the funding for PPP to $1tn within 48 hours. 


The first round of the Paycheck Protection Program has proven that the initial conception of the distribution of funds was flawed from top to bottom. The program has done very little to help genuine small businesses and instead has benefited large companies who have used subsidiary entities to benefit disproportionately and unfairly. The examples abound. Banks have incentivized large and important customers—those who need PPP money least—at the expense of the backbone of the nation: genuine small business owners, or those who run “small” small businesses and are an intimate part of the communities they inhabit and serve. These are the people whom the program was designed to protect, and those whom have been most failed by it. 93.3% of US small business owners have received no money from the first phase of PPP, amounting to 28,000,000 businesses. This is a wrong that must urgently be made right.

In addition to increasing funding to $1 tn, we propose the following rules:

1. 50% of the total dollars funded through the program must go to businesses with 50 employees or less (with the employee count taken as of February 15th, 2020)
2. The next 25% of the total dollars funded through the program must go to businesses with less than 150 employees (with the employee count taken as of February 15th, 2020)
3. The next 25% of the total dollars funded through the program must go to businesses with less than 250 employees (with the employee count taken as of February 15th, 2020)
4. Businesses with less than 50 employees will have their applications processed first, with applications for funding larger businesses only being approved once the full 50% has been allocated to those businesses with less than 50 employees.
5. Any remaining funding that exists after these disbursements will be allocated to those businesses with less than 50 employees.
6. No entity with any ownership association to any business with more than 250 employees may be given funding.
7. Every lender which takes part in the Paycheck Protection Program must make every effort to process and disburse all loan applications within 14 days of application receipt. Those lenders which are found to be routinely in failure of this standard shall have their processing fees reduced by 50% at a minimum.

This plan will ensure that the small business owners who need this money most—the smallest of small business owners—will get the funding they deserve. These small businesses are the heart and soul of every village, town, and city in this nation. What will our country become if we fail them?

Please back our proposal and help genuine small business owners.

Duncan and Rita MacDonald-Korth
Small business owners and founders of COVID Loan Tracker

Published in Wealth Management

Small business owners around the country are scratching their heads amidst their broader panic about the news that the Paycheck Protection Program funding has run out. According to COVID Loan Tracker, which has tracked the applications of 15,000 small businesses totaling over $5 bn in PPP loans, only around 6% of companies have actually had loans deposited in their accounts. Many small businesses are wondering “where is the money?”, says COVID Loan Tracker co-founder Rita MacDonald-Korth.


COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand when PPP and EIDL advance money starts flowing. The site works by crowdsourcing knowledge on applications and loan disbursements. Our goal is to help the small business community and empower journalists with the data they need to keep the government accountable.

The two founders of the site report that they have had extensive communication with banks and lenders over the last ten days and the huge difference between “approved” loans and disbursed loans can be accounted for by the behavior of borrowers, the banks, and the SBA.

“The speed with which the PPP program was designed led to inherent flaws and misaligned interests that have caused huge bottlenecks in deploying funds to small businesses”, says Duncan MacDonald-Korth. According to MacDonald-Korth, the problem is that the poor initial guidelines for banks and the “first come first serve” nature of the program, made borrowers apply to many banks/lenders at once. Because of that “there was double to triple the volume of applications as actual businesses applying”. This caused an apparent cascade of issues.

Firstly, it compelled banks to submit applications to the SBA for approval before they were actually complete. Because banks get paid a 1-5% fee for processing the loan, they want to make sure they process it and not a competitor. Accordingly, with so many duplicate applications, it made sense for the banks to urgently submit applications to the SBA—in order to win approval versus other lenders—even if all the paperwork was not in order. The SBA, in turn, had to make sure it was not approving duplicate applications, so it had double check each application flowing in, slowing down the process. All of this leads to the situation we have today—money entirely exhausted, but the vast majority of it not paid out because banks are still getting the proper paperwork from borrowers.


Published in Wealth Management
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