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Suze Orman’s money do’s and don’ts for the coronavirus pandemic
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Merkel Says Lufthansa Deal in View as Airline Warns on Urgency
(Bloomberg) — Chancellor Angela Merkel said Germany’s talks to bail out Deutsche Lufthansa AG are nearing completion, providing hope for positive resolution just as the embattled airline’s management warned that a multibillion-euro rescue was becoming urgent.“A decision can be expected shortly,” Merkel said late Wednesday in Berlin, adding that “intensive talks” were ongoing with the company and the European Commission, which would need to approve a deal. She declined to go into details, saying: “I would give the advice: wait for the talks to end.”In a letter to employees, the airline warned cash reserves continued to shrink while it negotiates the 9 billion-euro ($9.9 billion) rescue package. Lufthansa’s board said it hoped the government would find the “political will” for a deal that would keep the carrier competitive against international airlines.Spiegel magazine reported that Merkel, Finance Minister Olaf Scholz and Economy Minister Peter Altmaier had reached a decision over the Lufthansa package, ending weeks of internal wrangling over the government’s position.Lufthansa gained 4.3% to 8.28 euros in late trading after regular Frankfurt hours. The stock has lost half its value this year.The German government and Lufthansa have been locked in intense negotations for weeks over the rescue plan. While the Economy Ministry internally agreed on taking a stake of 25% plus one share, the company had opposed the move, people familiar with the matter said earlier.Under German law, a 25% plus one share stake would enable the government to block motions at the company’s annual general meetings, giving it a veto over major decisions.Government StakeTo break the impasse, one scenario that’s been under discussion would see the airline sell 9.3% of new shares to the government at a steep discount. An additional convertible bond could then give the government a blocking minority, if required. Such a move would also give the state upside potential from a rebound in Lufthansa shares.Lufthansa executives have raised concerns that the terms on offer would hamstring it against international competitors who’ve received less stringent bailout conditions, a point the management board repeated in the letter. The carrier declined to comment.Lufthansa is meanwhile running out of time and money, burning through 800 million euros each month after the coronavirus grounded most of its fleet. Chief Executive Officer Carsten Spohr said on May 5 that the company had about 4 billion euros in cash remaining.300 PlanesThe letter to employees gave further details of Lufthansa’s expected fleet reductions for the coming years. The board said it expected 300 of its aircraft would remain grounded in 2021 as demand for flying recovers only slowly, with 200 remaining out of service into 2022.Lufthansa had previously said it expected its pre-crisis fleet of around 760 aircraft to be around 100 smaller once normality returns around 2023, a forecast it stuck to in the letter.Spohr earlier this month said the airline is in “intense” talks with Airbus SE and Boeing Co. about postponing plane deliveries as he set out plans for surviving the coronavirus storm.(Recasts with Merkel comments, Lufthansa latest)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Should You Abandon Index Funds During the Coronavirus?
When it comes to investing, you should be confident in the assets you’re purchasing. In recent years, a lot of investors have been turning to index funds instead of stocks or active mutual funds.
Index funds are collections of stocks or bonds designed to match the stock market’s performance rather than beat it. When the stock market is doing well, index fund investors will reap great rewards. However, when the stock market as a whole is tanking, index fund investors won’t be experiencing great payouts.
The appeal of index funds is clear: they are passive investments. As a holder, you don’t have to worry about moving your money around to make it work for you. The passive nature of an index fund takes all of the work off of your hands. They also tend to be low-cost so that you won’t be spending your life savings on hefty fees.
However, this passivity comes at a cost. In a poor economic environment, index funds don’t perform well. Their value can decline steeply in just a couple of days, even after years of steady growth.
If you’re wondering how to invest during coronavirus, we’ve got you covered. Learn more about why you should avoid index funds during this time and put your money into individual stocks instead.
The Diversification that Can Put You at Risk
Jack Bogle was the man who first introduced the idea of index funds in 1975. He saw a way to give amateur investors a fair chance to compete with financial gurus. While his intentions were pure, index funds are not the way to go during all types of market conditions.
By their nature, index funds offer diversification. They expose you to the market as a whole. When you buy an index fund, you own a tiny part of every company in the fund. This diversification minimizes your risk and allows you to grow your profile during economic upturns.
However, in the world’s current economic state, index funds are not what you want to be buying.
In late February of this year, the U.S. stock market experienced historic lows. The Dow Jones dropped more than 10% in a single week, and the rest of the world’s stock markets also experienced trouble. If you bought index funds during this time, you know those stocks were not able to outperform these poor economic conditions.
Instead, you should consider buying individual stocks. It’s no secret that some companies are performing better than others. For example, a lot of airlines and restaurants are losing money due to a lack of business. On the other hand, supermarkets and certain online retailers are thriving due to increased demand.
Do your investment portfolio a favor during coronavirus by building it with handpicked stocks.
Buying Stocks During the Coronavirus
Financial experts often frown upon picking stocks. They say it is irresponsible or reckless. Some even go as far as to equate it to a more sophisticated form of gambling. After all, how can you possibly know which individual companies will outcompete others?
However, investing in individual stocks during a recession is an excellent way to stay ahead of the game. You’ll have a better chance of beating the market, especially given its current unfavorable conditions. Instead of settling into the market’s downward turn, you have the opportunity to come out on top.
However, not every individual stock will give you the gains you’re seeking. You’ll need to set aside some time to research thoroughly. This way, you can make informed decisions that will contribute to your long-term financial future.
Select Dividend-Paying Stocks
So what’s our advice for how to invest during coronavirus? Although we can’t tell you which stocks are right for you, we can steer you in the right direction. When it comes to picking stocks, consider buying ones that pay out dividends.
Dividend-paying stocks can help you grow a predictable and sustainable income stream. You can use this consistent stream to cover some of your expenses now or fund your investing goals in the future.
You want to select stocks that pay out dividends historically. Some companies will increase their dividends every year to keep up with inflation, which is especially beneficial to investors looking to build a reliable income stream. When it comes to buying stocks, try to choose companies known for being well-managed and generally immune to the downs of economic cycles.
Some financial experts will argue that index funds often pay dividends, too. While this point is true in some cases, these dividends are usually pretty low. Plus, the payment amounts are often inconsistent.
Save on Expenses
During this time, you may be unemployed or not receiving your regular flow of income. In any case, you should be looking to save as much money as possible. You can do this by purchasing individual stocks.
Depending on your specific approach, you can save a lot of money on fees by investing in individual stocks. If you use a low-cost broker, you can expect to pay a meager one-time fee no matter how many shares you buy. Once you own the stock, it’s yours to keep for no extra costs. Just make sure you pay any pertinent taxes that you owe on your dividends until you sell your shares.
Index funds come with a recurring annual fee, known as an expense ratio. Even though index funds are infamously “low-cost,” these fees can still add up. While new investors won’t feel the impact of index fund fees as much, you should still keep them in mind. Every dollar you can save during an event like the coronavirus will help you meet your financial goals in the long run.
Pick the Companies You Like & Trust
When picking individual shares, stick with the companies that you like and trust. Even with the world in an unpredictable state during COVID-19, you can still stick to your guns when supporting certain businesses.
For example, if you regularly shop at Target and believe in its long-term success, buy stocks in it instead of a competing store that you don’t like. Investing in stocks is an excellent way to stay loyal to certain brands and stay true to your values.
Also, try to avoid companies whose practices you don’t support. By sticking to this mindset, no matter the current economic environment, you can be a conscientious investor.
Strive to Beat the Market
During coronavirus shutdowns, some companies will be more successful than others. If you put your money into diverse industries through an index fund, you risk losing out on significant profits.
Through some research, you should be able to determine the best individual shares to purchase during COVID-19. Find companies that have a reliable track record for paying their investors. You should also select companies that:
- Operate primarily remotely
- Don’t require face-to-face contact to make profits
- Offer essential food or healthcare products or services
The Arguments Against Individual Shares: Debunked
In this section, we’ll explore some of the common arguments against buying individual shares. We’ll also outline why these don’t apply during global events like the coronavirus outbreak:
“Picking Individual Shares Takes a Lot of Time and Research”
The U.S. Department of Labor reported that more than 25 million Americans lost their jobs as of April 23rd. If you are one of these people or have otherwise experienced a reduced workload, you likely have a lot of time on your hands. Take advantage of your newfound free time to educate yourself on the best stocks to buy based on your unique situation.
“There Are a Lot of Risks When It Comes to Picking Out Stocks”
Right now, the whole market’s performance is nowhere near its best. At the start of 2020, it would’ve been nearly impossible to beat the market due to its record high performance. However, the coronavirus has since humbled the stock market, so why not try to beat it now?
The risk that comes with buying individual shares is negligible now. Buying “safe” index funds is a passive decision that won’t let you experience significant financial gains in the current environment.
Final Thoughts
A lot of investors shy away from purchasing new assets amidst economic crises. You may find it intimidating to invest during a period of such uncertainty. Especially if you’re young or new to investing, your investing strategy has likely never felt the impact of such a big change before. However, you should invest as much as you can. You want to be proactive and smart about how to invest during coronavirus. If you don’t actively work to protect your investments, you’ll be kicking yourself in the future for not taking action now.
Even if you’re eager to start picking stocks, don’t be quick to rush into making purchases—research individual stocks before buying. Consider if you want to invest in one or two stocks or buy multiple different ones with various companies. No matter your financial goals, individual stocks can help you meet them even during a pandemic.
Bio: Chris Muller
Chris Muller is a financial writer and digital marketer – he started a digital marketing business in 2015 that focuses on freelance writing, content marketing, and SEO – all while working full-time and playing dad to two kids.
The post Should You Abandon Index Funds During the Coronavirus? appeared first on Wall Street Survivor.
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HBO Max announces more launch partners; no deals yet with Amazon, Comcast, Roku
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How do negative interest rates work?
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Someone just moved a block of bitcoins first mined in February 2009
Fifty early bitcoins have been moved from a wallet that's been dormant since 2009.The post Someone just moved a block of bitcoins first mined in February 2009 appeared first on The Block.
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Inovio Pops Almost 10% on ‘Positive’ Preclinical Results For Its Covid-19 Vaccine
Inovio Pharmaceuticals (INO) surged almost 10% after the company said that preclinical study data results of its potential vaccine candidate showed “robust” neutralizing antibody and T cell immune responses against coronavirus.Shares rose 9.5% to $15.94 in midday U.S. trading. The value of the stock has this year gone up five-fold with investors excited about Inovio’s potential Covid-19 vaccine INO-4800. The vaccine drug candidate targets the major antigen Spike protein of SARS-CoV-2 virus, which causes Covid-19 disease."These positive preclinical results from our Covid-19 DNA vaccine not only highlight the potency of our DNA medicines platform, but also build on our previously reported positive Phase 1/2a data from our vaccine against the coronavirus that causes MERS, which demonstrated near-100% seroconversion and neutralization from a similarly designed vaccine INO-4700,” said Kate Broderick, Inovio's Senior VP of R&D. “The potent neutralizing antibody and T cell immune responses generated in multiple animal models are supportive of our currently on-going INO-4800 clinical trials."The study found that vaccination with INO-4800 generated robust binding and neutralizing antibody as well as T cell responses in mice and guinea pigs. What’s more Inovio now expects in June to receive preliminary safety and immune responses data from Phase 1 clinical trial.“We are planning to utilize these positive preclinical results along with our upcoming animal challenge data and safety and immune responses data from our Phase 1 studies to support rapidly advancing this summer to a large, randomized Phase 2/3 clinical trial,” said Dr. J. Joseph Kim, Inovio’s President & CEO.Inovio is currently preparing to initiate a larger Phase 2 vaccine trial for INO-4700 in the Middle East where most MERS viral outbreaks have occurred. Phase 2/3 trial is now planned to start in July or August pending regulatory approval.Five-star analyst Jason McCarthy at Maxim Group this month raised his price target on the stock to $18 from $12 and maintained a Buy rating.“Inovio and its deep pipeline of DNA vaccines for infectious diseases, including other coronaviruses, has demonstrated safety and induced robust immune responses, more than any in the space, in our view,” McCarthy wrote in a note to investors. “Yet, from a valuation perspective INO lags its nucleic-acid vaccine peers MRNA and BNTX.The Street has a cautiously optimistic outlook on Inovio, with a Moderate Buy consensus based on 4 Buys and 3 Holds. As share prices have skyrocketed so quickly, the $14.14 average analyst price target now indicates more than 10% downside potential. (See Inovio stock analysis on TipRanks).Related News: Bluebird Prices New Shares At $55, Seeks To Raise $500 Million Moderna Spikes 21% Amid “Positive” Early-Stage Covid-19 Vaccine Data AstraZeneca-Merck Lynparza Prostate Cancer Treatment Gets FDA Approval More recent articles from Smarter Analyst: * Clorox Bumps Up Dividend By 5%; Shares Rise In Pre-Market * Urban Outfitters Reports Slow Quarter, Predicts More Dramatic Sales Decline in Upcoming Quarter * Facebook Canada Faces C$9 Million Fine Over ‘False’ Privacy Claims * Revance Acquires HintMD In All-Stock Deal, Analyst Praises Bold Step Forward
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3 “Strong Buy” Dividend Stocks Yielding at Least 10%
With unemployment rising to 15%, and the grim corporate earnings seasons wrapping up, investors may struggle to keep up the relatively buoyant mood that has boosted markets in recent weeks. Writing from JPMorgan, global market strategist Samantha Azzarello has commented on the apparent performance disconnect between the markets and the economy. “I think the volatility right now is tied to a bunch of different things whether we’re going up or going down — right it’s vaccine news, it’s treatment news, it’s Jay Powell speaking… I still think though there’s a little bit of a disconnect between the real side of the economy and what’s happening with the macro data, in particular the labor market…”It’s a situation tailor made for defensive stocks. High-yield dividend plays are getting lots of love from Wall Street’s corps of stock analysts, and are showing high upside potential as investors move toward them. These are the stocks that pad a portfolio, providing an income stream capable of compensating for low share appreciation. Using TipRanks database, we’ve found three low-cost dividend plays that are yielding 10% or better. If that's not enough, all three received enough support from Wall Street analysts to earn a “Strong Buy” consensus rating.Starwood Property Trust (STWD)We’ll start with a real estate investment trust, a safe place to look for high-yield dividends. These companies are required by tax codes to return a certain percentage of profits and earnings directly to shareholders, and dividend payments are the common method. Starwood, which both originates and invests in commercial mortgage loans and other commercial real estate debt investments and instruments, is typical of the niche, as shown by the 90% dividend payout ratio.Starwood posted strong Q1 beat recently. Earnings came in at 53 cents against a 46-cent forecast. The 15% earnings beat came in a quarter when most companies were struggling to cope with the effects of the coronavirus pandemic, and reports of steep misses were common.The solid earnings have supported a solid dividend. We’ve already noted the high payout ratio – the actual dividend payment is 48 cents per share quarterly, and has been paid out reliably for the past seven years. The yield, at 15.2%, is simply excellent – and it shows the value of a reliable dividend stock. Dividend yields in the financial sector average 2.16%, so simple arithmetic shows that STWD returns more than 7x that rate.Deutsche Bank’s analyst George Bahamondes gives STWD shares a Buy rating, and his $17 price target suggests an upside potential of 32%. (To watch Bahamondes’ track record, click here)Justifying his bullish stance, the analyst noted, “We continue to believe STWD's diversified business model allows the company to allocate capital to strategies that generate the best risk adjusted returns for shareholders… Importantly, the company's business model has also been central to the STWD's diversified capital structure, insulating the company from liquidity issues to a better degree than peers. In an environment mired with uncertainty, capital allocation optionality is valuable…”The group wisdom on Wall Street is in concurrence with Bahamondes; STWD shares have a unanimous Strong Buy consensus rating, based on 5 recent Buy reviews. The average price target of $16.88 is also in line with Bahamondes’, and indicates about 32% upside for the coming year. (See Starwood stock analysis on TipRanks)Cherry Hill Mortgage (CHMI)Based in, and operating in, the state of New Jersey, Cherry Hill Mortgage is another REIT. Rather than buying properties directly, the company manages a portfolio of excess mortgage services rights, agency residential mortgage backed securities, and other mortgage assets.Unlike many companies in recent months, Cherry Hill has flat-out beaten expectations on earnings. In Q4, the company reported 48 cents EPS against a 44-cent forecast; in Q1, despite the coronavirus, CHMI showed 47 cents EPS after a 43-cent forecast. Q1 revenues, at $6.23 million, beat the forecast by an impressive 19%, and also grew 6% year-over-year. Earnings are estimated at 32 cents per share for Q2.CHMI shares pay out a 40-cent dividend, after a downward adjustment from 49 cents in Q3 2019. The adjustment kept the payment in line with earnings; important, since the payout ratio is a high 85%. The annualized payout, of $1.60, gives a stunning yield of 21.5%. There is simply no point in comparing that to peer companies; that return is head-and-shoulders higher than anything else an investor is likely to find in the financial markets.In his note on this stock, Piper Sandler analyst Kevin Barker says, “We expect CHMI to remain defensive in the near-term by reducing leverage and holding cash. We also assume prepay speeds will continue to accelerate over the next couple of quarters as mortgage rates push closer to 3.0% or lower. Meanwhile, the bump higher in interest expense to 2.33% should moderate with market volatility settling down.”Barker gives CHMI a $12 price target, which suggests room for a 52% upside to the stock. (To watch Barker’s track record, click here)Cherry Hill is another stock, like Starwood above, with a unanimous analyst consensus rating. In this case, the Strong Buy rating is based on 4 recent Buys. Shares are priced low, at $7.85, and the average price target of $11.41 implies a 12-month upside potential of 45%. (See Cherry Hill Mortgage stock analysis on TipRanks)Solar Capital, Ltd. (SLRC)Next up is a business development company, focusing on debt and equity investment in leveraged companies, generating income by pumping capital into client companies existing investment-grade loans. Solar Capital is one of the scores of financing companies that makes liquid capital available to mid-market firms.After a remarkably stable earnings run from Q3 2018 through Q3 2019, SLRC saw a sudden drop-off in EPS in Q4 and Q1. Both quarters missed expectations and saw sequential drops. Q4 EPS came in at 41 cents, against a 44-cent forecast, while Q1, hit by the coronavirus-inspired shutdowns, saw EPS slip again to 38 cents. It’s important to note, however, that SLRC remains in positive earnings territory, in contrast to the well-publicized earnings losses that have made headlines since Q1. Looking ahead, Solar Capital is expected to remain profitable in Q2, with a 35-cent EPS projected.Solar Capital uses its earnings to fund a generous dividend. The company has been growing the payment very gradually over the past seven years, and the current quarterly payment is 41 cents per share. At $1.64 annualized, this gives a yield of 10.6%. With dividend yields among S&P companies averaging 2%, and Treasury bonds down below 1%, the attraction of SLRC’s yield is obvious. The only bit of cloud is the 107% payout ratio, indicating that earnings do not cover the dividend – but with $60 million cash available, and a further $545 million on a revolving credit facility, the company sees no problem in maintaining the payments.Covering SLRC for JMP Securities, Christopher York sees SLRC taking a proactive role generating income moving forward. He writes, “[We expect] that the company will be very active in new originations in 4Q20 and 1Q21. We believe Solar continues to be a strategic buyer of niche commercial finance businesses, which could be an immediate use of investment capacity.”York’s Buy rating is supported by an $18.50 price target, which suggests a one-year upside of 19% for the stock. (To watch York’s track record, click here)The Wall Street analyst corps is bullish on SLRC, giving the stock 7 Buys against just one Hold. This adds up to an analyst consensus rating of Strong Buy. The average price target is a bit more cautious than York’s, at $17.57, and implies an upside of 13% for the coming year. (See Solar Capital stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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Why positive results from Moderna’s coronavirus vaccine is raising questions
Scientists are raising questions about Moderna’s COVID-19 vaccine trial and results, as the company has yet to reveal data that supports how its drug is successfully producing antibodies in human trials. Yahoo Finance’s Anjalee Khemlani joins the On the Move panel to discuss. from Yahoo Finance https://ift.tt/3cOTkiv
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Facebook and Instagram rolls out shops, hits all time high at 226.45
Facebook is up nearly 5 percent Wednesday morning after the announcement of Facebook and Instagram Shops. Yahoo Finance’s Heidi Chung breaks down details. from Yahoo Finance https://ift.tt/2AECNzk