(Bloomberg) — The Trump administration said firms that took loans that they didn’t need from a small business aid program will be allowed to repay the money without legal consequences, reversing an earlier threat that the government could pursue them criminally.New guidance issued Wednesday for the Paycheck Protection Program by the Small Business Administration and the Treasury Department also said that companies that took loans of less than $2 million will automatically be determined to have done so in good faith because they’re less likely to have access to other resources.The SBA will review all loans above $2 million to check whether firms properly certified they needed the money. If the SBA determines the company shouldn’t have gotten the money, the loan won’t be forgiven and if the borrower returns it, no further action will be taken, according to the new guidance.Assuming that loans of less than $2 million were taken in good faith will allow SBA to focus its resources on reviewing larger loans given the massive size of the program, the agencies said.Last month, following a backlash after large firms swooped in and collected millions from the PPP program — which was intended to cast a lifeline to small firms that didn’t have access to capital markets — Treasury Secretary Steven Mnuchin had said that firms could face criminal charges for taking loans they didn’t need.Meanwhile, borrowers who commit fraud in taking relief loans are already being prosecuted. The Justice Department last week brought the first criminal case related to the program when it charged two New England businessmen with fraud and alleged that their applications falsely claimed employees they don’t have.The PPP program allows loans of as much as $10 million that can be become grants if proceeds are spent mostly on payroll for two months after they are received. It’s meant to keep workers employed and firms ready to re-open when state stay-at-home orders are lifted.After firms such as Shake Shack Inc. and the Los Angeles Lakers got loans at the expense of mom-and-pop shops, SBA and Treasury issued guidance April 23 saying companies with “substantial market value and access to capital markets” would be unlikely to qualify. Borrowers had to certify on their applications that “current economic uncertainty makes this loan request necessary to support the ongoing operations” of the business.Companies had been given until May 7, later extended to Thursday, to return loans without any penalty. (Shake Shack and the Lakers did return the money). But there was confusion about eligibility, and some firms said they returned their loans “out of an abundance of caution” even if they believed they qualified for it.The SBA and Treasury haven’t disclosed how many companies have returned or canceled loans and in what amounts. Public companies have reported returning 61 loans worth $411 million as of Wednesday morning, according to data compiled by FactSquared.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.

from Yahoo Finance https://ift.tt/3fKUyNE

Airbus is drawing up plans for a restructuring involving the possibility of “deep” job cuts as it braces for a prolonged coronavirus crisis after furloughing thousands of workers, industry sources said. Chief Executive Guillaume Faury is expected to update managers on Thursday after warning staff last month that the firm’s survival was at stake due to a slump in demand. Under French law, Toulouse-based Airbus cannot disclose restructuring plans internally before consulting trade unions through a formal exercise provisionally expected around end-May.

from Yahoo Finance https://ift.tt/2zv8Jpn

The stock market could get stuck in the mud soon. This top strategist explains why.

from Yahoo Finance https://ift.tt/2T5pu1s

The Stifel strategist who predicted April’s market rally says the best strategy right now is to be like the Road Runner: “Step out of the way and let anvil hit Wile E. Coyote — the economy. And then after that, the Fed will act and then you can move on, if you're the investor.”

from Yahoo Finance https://ift.tt/2Loy1br

(Bloomberg Opinion) — Federal Reserve Chair Jerome Powell made two things clear during much-anticipated remarks on Wednesday. First, fiscal policy might need to do more to combat the lasting economic damage from the coronavirus pandemic. Second — in what markets were most eager to hear — he’s not about to steer the central bank down the path to negative interest rates.“The evidence on the effectiveness of negative rates is very mixed,” Powell said Wednesday in a webinar hosted by the Peterson Institute for International Economics. To hammer home the point: “This is not something that we’re looking at.”“It’s an unsettled area, I would call it,” he said. “I know that there are fans of the policy, but for now it’s not something that we’re considering. We think we have a good toolkit, and that’s the one we’ll be using.”What was left unsaid, of course, is that one such fan is President Donald Trump, who tweeted on Tuesday that “as long as other countries are receiving the benefits of Negative Rates, the USA should also accept the ‘GIFT’. Big numbers!” Given his background in real estate (and racking up debt), it’s hardly a surprise that he’s enamored by the concept of being paid to borrow. This wasn’t the first time he endorsed the policy, and it certainly won’t be the last. Still, markets have largely become accustomed to tuning out the president’s off-the-cuff musings on monetary policy.  Recently, however, the interests of bond traders and Trump have aligned. For days, fed funds futures have been pricing in a policy rate that’s below zero as soon as next year, even though current officials have widely indicated such a move is not in the cards. Here’s what that looked like before Powell spoke:The hedges gained traction on May 7, the day after DoubleLine Capital Chief Investment Officer Jeffrey Gundlach said on Twitter that pressure will build to take the fed funds rate negative because the Treasury was borrowing so much with short-term bills (some of those rates have already fallen below zero in secondary trading). Then, Atlanta Fed President Raphael Bostic vowed the central bank would deploy its full arsenal to aid the economy and would err on providing too much support, not too little. “It is really a whatever-it-takes scenario,” he said, echoing the famous phrase from Mario Draghi when he was president of the European Central Bank.The impulse makes some sense logically. If a trader had to bet on the direction of the fed funds rate in the coming year, it would have to be down. As Powell made clear after last month’s Federal Open Market Committee meeting, the central bank will be in no hurry to tighten monetary policy. He hinted during his remarks Wednesday that it could be a “few years” before the economy has truly recovered. More immediately, U.S. unemployment is at levels not seen since the Great Depression. It all would seem to add up to Fed officials pressured to do “more.”In a somewhat unusual stance for a Fed leader, Powell is imploring lawmakers to take further action, rather than the central bank. “This is the time to use the great fiscal power of the United States to do what we can do to support the economy and try to get through this with as little damage to the longer-run productive capacity of the economy as possible,” he said after the April FOMC meeting. The federal stimulus law has allocated some $454 billion in equity funding already for the Fed’s various lending facilities.He reiterated that view on Wednesday. “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” Powell said at the end of his prepared remarks. “This trade-off is one for our elected representatives, who wield powers of taxation and spending.” He added later that the goal should be boosting the economy such that it’s growing at a faster pace than the national debt. Powell didn’t entirely erase the negative fed funds pricing in futures markets — “for now” implies there’s a chance down the road. But he slammed the door as forcefully as he could on the policy while still preserving the central bank’s coveted “optionality.” It’s not that he wants to eradicate negative-rate bets, per se, he just doesn’t want to get boxed in by the markets.His comments should be put in the context of those from other Fed officials this week, who seemed committed to playing down the appeal of a negative fed funds rate. “I am not a big fan of going into the negative rate territory,” Bostic said on Monday. As if to clarify his point from last week: “Negative rates is one of the weaker tools in the tool kit. I am not anticipating supporting that anytime soon.” Just for good measure, Chicago Fed President Charles Evans added: “At best, we’d have to study it more, but I don’t anticipate that being a tool that we would be using in the U.S.” Minneapolis Fed President Neel Kashkari insisted “there are other tools we would go to first.”In truth, this is not a new stance. Powell said during congressional testimony in February that negative interest rates can damage bank profitability, which worsens overall credit expansion. He brought up that issue again on Wednesday. Back in November, Fed Governor Lael Brainard made it clear that the central bank would first opt for enhanced forward guidance and some form of yield-curve control at the zero lower bound. Importantly, as I pointed out last month in a column arguing against negative interest rates, rather than stimulate economic activity, the policy might actually be disinflationary. That’s a scary proposition for Fed officials given that a report Tuesday showed the core U.S. consumer price index fell 0.4% in April from a month earlier, the biggest drop on record.There’s a long road to a full economic recovery, and missteps will be costly. The Fed has already pledged to support the credit markets to avoid turning “liquidity problems into solvency problems.” It still has to get lending facilities up and running to support municipalities and Main Street, which will have tangible and obvious economic benefits. Powell is no gambler, which is why negative interest rates will remain buried deep in the central bank’s toolkit.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

from Yahoo Finance https://ift.tt/3boKTsx

Shares in home-fitness cycling company Peloton Interactive (PTON) have surged 10% in trading on May 12, bringing the stock’s year-to-date gain to over 65%. That’s after the company informed investors that it surpassed 1 million aggregate Connected Fitness subscribers.And now Andrew Left of Citron Research argues that enough is enough and investors should put Peloton into perspective: “This is retail mania – you can love the product, but stock has peddled its way to stupidity” tweeted the well-known activist short seller on May 12.As Left points out Peloton’s market cap has surged $5B this year; and with 300K connected subscribers that translates to $17K per subscriber.In contrast, the 2020 market cap for Teladoc (TDOC\- the telemedicine and virtual healthcare company) is up $8B vs. paid members up 6.2 million or $1300 per subscribers, Left tweeted.Nonetheless, five-star Stifel Nicolaus analyst Scott Devitt at Stifel Nicolaus has just raised his price target to $50 from $42, indicating 6% upside potential lies ahead. He also reiterated his Peloton buy rating.“Elevated demand for the company’s products has continued thus far into F4Q, with demand outpacing supply in most geographies,” Devitt explained, describing Peloton as “an unstoppable juggernaut to be stopped only by way of self-inflicted wound from here”.Indeed Wall Street analysts have an uniformly bullish outlook on Peloton stock. The Strong Buy consensus is due to 18 Buys ratings, vs just 1 Hold and 1 Sell.However, due to the recent rally, the $46.65 average price target now indicates that shares could pull back 1% from current levels- suggesting that, in this case, Left could be right. (See Peloton stock analysis on TipRanks).Related News: Peloton Shares Increase on 1 Million Fitness Subscriber Milestone Tesla’s Elon Musk to Reopen California Plant Despite Coronavirus Restrictions Microsoft to Splash $1.5 Billion on Italy’s Cloud Business Transformation More recent articles from Smarter Analyst: * CyberArk Software Shares Sink 6% on Weak Sales Outlook * Uber Announces $750M Notes Offering, As GrubHub Takeover Reports Swirl * Twitter Won’t Reopen Offices Before Sept., Allows Permanent Work From Home * Waymo Raises $3 Billion In Extended Financing Round

from Yahoo Finance https://ift.tt/2WuzhjP

from Yahoo Finance https://ift.tt/2WVLU6n

On Wednesday, Jerome Powell shared prepared remarks regarding the future outlook for the U.S. economy, but admits there are ‘longer-term concerns.’ Andrew Slimmon, Morgan Stanley Investment Management Managing Director and Sr. Portfolio Manager, joins Yahoo Finance to discuss.

from Yahoo Finance https://ift.tt/3cvQb6T

Last week saw the newest first-quarter earnings release from UnitedHealth Group Incorporated (NYSE:UNH), an important…

from Yahoo Finance https://ift.tt/2WP3oRR

(Bloomberg Opinion) — As panic-ridden consumers stock up on essentials, kitchen pantries are looking like a blast from the processed-food past: boxes of Kraft macaroni and cheese, cans of Bumble Bee tuna, Kellogg’s Frosted Flakes, Shake ‘N Bake, etc. Brands of yesteryear that had been struggling to find their place in a new health-conscious society are suddenly having a moment once again. But a moment is probably all it will be, not a new normal, which is why packaged-food companies shouldn’t get too comfortable about their comfort food.The Covid-19 pandemic and shelter-in-place orders have led consumers to revert to old ways of shopping in search of ready-made meals and foods with long shelf lives. Parents who are working from home during this time are multitasking like never before, taking on the role of cook, housekeeper, teacher, disciplinary and full-time employee all at once in a Groundhog Day-like loop. As such, traditional meal times have blurred, and in some cases snacks are replacing them, according to research by Euromonitor International. This explains the resurgence of companies such as General Mills Inc., whose brands include Annie’s, Betty Crocker, Cheerios, Pillsbury and Totino’s pizza rolls. Its U.S. retail sales surged 45% in March and 32% in April. To put that into context, the company’s average annual growth rate was just 1.5% over the last decade.In the U.S., the food category that saw the biggest uptick in demand during the week ended April 25 was bread crumbs and other mixes for coating foods, followed by dough and batter products, according to Nielsen tracking. That bodes well for brands such as Shake ‘N Bake, whose parent company, Kraft Heinz Co., just reported its first quarterly sales boost in more than a year.In recent years leading up to this crisis, Campbell Soup Co. was perhaps the hardest hit by changing consumer tastes and demand for fresher foods. The company lost $8.6 billion of shareholder value between mid-2016 and mid-2018, a performance that saw its last CEO out. But amid the shutdowns, Campbell’s stock has been staging a recovery and is trading near its highest price in three years. Kellogg Co. has called this a “reappraisal opportunity” for cereal — a chance to persuade shoppers to give its sugary products another try. Speaking during Kellogg’s recent earnings call, CEO Steve Cahillane said: “Consumers rediscovering these benefits could be very positive for this category, and we plan to seize this opportunity.”But careful, Kellogg. The fact of the matter is, even if the coronavirus leaves a lasting impression on certain aspects of consumer behavior, the dislocation taking place at supermarkets is shaping up to be more of a temporary phenomenon driven in part by food shortages and fear. Consider the absurdity that about 20% of store-bought noodles have been out of stock in the U.S. since mid-March, when the earliest lockdowns began, according to Euromonitor. That’s on the same level as toilet paper shortages. Even baker’s yeast, of all things, is still sold out in many places. But just like we’re not all going to turn our YouTube-taught hair-cutting skills into new careers, most of us won’t keep up such rigorous home training for “The Great British Bake Off,” either.Consumers generally still want fresh, less-processed and healthier-sounding foods. Nielsen is already seeing this in surveys of other countries: In France, shoppers continue to seek out organic items, while Asian consumers say healthy eating has become more of a priority after the virus. And if the post-virus rise of virtual fitness classes is any indication, health and wellness is still top of mind for lots of people.It’s true, families need convenience right now and many are looking to save money as the U.S. dips deeper into a recession and the unemployment rate soars above 14%. That’s partly why seemingly dated grocery products are coming back into favor. They also provide a sense of nostalgia and familiarity at a time when life has been thrown off course.Another significant factor is all the bulk-buying: Wholesale stores such as Costco and BJ’s offer a much more limited variety that tends to be dominated by big-name food brands (although new trendier products are increasingly making their way in). Buying fresh and organic also usually costs more and sells in smaller packages. Over the next few months, Euromonitor analysts expect a greater shift toward more affordable items, private-label brands and bulk purchases.That does create an opportunity for the food giants. A downside to stocking up is all the packaging and cardboard that accumulates, taking up space. It’s an annoyance that companies could try to resolve if sheltering at home is to become a more regular part of life over the next couple of years rather than a distant memory. As U.S. states reopen, though, consumers will probably start to go back to their old routines — or at least some version of them. A bit of the doomsday-prepper mentality may remain, leading more households to keep their cupboards stocked with nonperishables, just in case. But it’s fair to say that the future of the supermarket isn’t Kraft mac and cheese or Campbell’s canned soup. It would be short-sighted to interpret this moment as a rebuke of their innovation efforts. If anything, it’s a time to step it up. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

from Yahoo Finance https://ift.tt/2T40O9p