Greensill Capital Tumbles Into Insolvency, Spreading Financial Pain

Link: https://www.wsj.com/articles/greensill-capital-tumbles-into-insolvency-spreading-financial-pain-11615216346

Excerpt:

Greensill Capital filed for insolvency protection Monday, days after regulators took over its banking unit and Credit Suisse Group AG froze investment funds that were critical to the startup’s operations.

The unwinding has rippled to holders of the Credit Suisse funds, German municipalities that deposited money with Greensill’s bank, and a high-profile duo of venture-capital investors.

Greensill specialized in supply-chain finance, a type of short-term cash advance to companies to stretch out the time they have to pay their bills. The firm was once worth $4 billion based on investments from SoftBank Group Corp.’s Vision Fund. The collapse marks a high-profile blow for the mammoth Japanese investor.

Author(s): Julie Steinberg, Duncan Mavin, Patricia Kowsmann

Publication Date: 8 March 2021

Publication Site: Wall Street Journal

U.S. Set to Power Global Economic Recovery From Covid-19

Link: https://www.wsj.com/articles/u-s-set-to-power-global-economic-recovery-from-covid-19-11615129203?mod=djemwhatsnews

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The world economy is likely to grow by around 6% this year, according to Oxford Economics, the fastest rate in almost half a century, as vaccine campaigns allow pandemic restrictions to be lifted and businesses to snap back.

For the first time since 2005, the U.S. is expected this year to make a bigger contribution to global growth than China, said the research firm. After the 2008 financial crisis, the global economic recovery was powered by China, as the U.S. experienced the weakest revival since the Great Depression.

Author(s): Tom Fairless

Publication Date: 7 March 2021

Publication Site: Wall Street Journal

EU and Italy Block Export of AstraZeneca Covid-19 Vaccine to Australia

Link: https://www.wsj.com/articles/eu-and-italy-block-export-of-astrazeneca-covid-19-vaccine-to-australia-11614875649?mod=djemwhatsnews

Excerpt:

Italy blocked the export of AstraZeneca PLC’s Covid-19 vaccine to Australia, in a move coordinated with European Union authorities, reflecting mounting frustration in Europe with slow deliveries of vaccines.

The move was prompted by the persisting shortage of vaccines in Italy and the EU, delays in the supply of vaccines by AstraZeneca and the fact that Australia is considered a “nonvulnerable country” to Covid-19 under EU regulations, Italy’s Ministry of Foreign Affairs said.

The decision affects 250,700 doses, a number the ministry said was high compared with what has been delivered so far by AstraZeneca. The doses were bottled at a factory near Rome that is part of the company’s supply chain. AstraZeneca has delivered around 1.5 million doses to Italy, according to the government.

Author(s): Giovanni Legorano,  Jenny Strasburg

Publication Date: 4 March 2021

Publication Site: Wall Street Journal

Cuomo Advisers Altered Report on Covid-19 Nursing-Home Deaths

Link: https://www.wsj.com/articles/cuomo-advisers-altered-report-on-covid-19-nursing-home-deaths-11614910855?mod=djemwhatsnews

Excerpt:

New York Gov. Andrew Cuomo’s top advisers successfully pushed state health officials to strip a public report of data showing that more nursing-home residents had died of Covid-19 than the administration had acknowledged, according to people with knowledge of the report’s production.

The July report, which examined the factors that led to the spread of the virus in nursing homes, focused only on residents who died inside long-term-care facilities, leaving out those who had died in hospitals after becoming sick in nursing homes. As a result, the report said 6,432 nursing-home residents had died—a significant undercount of the death toll attributed to the state’s most vulnerable population, the people said. The initial version of the report said nearly 10,000 nursing-home residents had died in New York by July last year, one of the people said.

The changes Mr. Cuomo’s aides and health officials made to the nursing-home report, which haven’t been previously disclosed, reveal that the state possessed a fuller accounting of out-of-facility nursing-home deaths as early as the summer. The Health Department resisted calls by state and federal lawmakers, media outlets and others to release the data for another eight months.

Author(s): Joe Palazzolo, Jimmy Vielkind, Rebecca Davis O’Brien

Publication Date: 4 March 2021

Publication Site: Wall Street Journal

Doses of AstraZeneca’s Covid-19 Vaccine Pile Up in Europe Amid Government Restrictions

Link: https://www.wsj.com/articles/doses-of-astrazenecas-covid-19-vaccine-pile-up-in-europe-amid-government-restrictions-11614715968

Excerpt:

Europe’s reluctance to distribute millions of doses of AstraZeneca PLC’s Covid-19 vaccine is coming under pressure after the French government authorized use of the shot for some older people.

The French government announced it would allow people with comorbidities between the ages of 65 and 74 to receive the vaccine developed by Oxford University and AstraZeneca. New data from the U.K. on Monday showed just one dose of the vaccine was effective in preventing disease and deaths among adults aged 70 and older who had received it.

France’s move was a sharp departure from a month ago when President Emmanuel Macron told reporters that the vaccine was quasi ineffective for people older than 65, without providing evidence to back up his claim. The comments helped sow doubts across the European Union that still persist.

Author(s): Stacy Meichtry, Bojan Pancevski

Publication Date: 2 March 2021

Publication Site: Wall Street Journal

Greensill Capital planning to file for insolvency in U.K. this week

Link: https://www.marketwatch.com/story/greensill-capital-planning-to-file-for-insolvency-in-u-k-this-week-11614789098

Excerpt:

Embattled financial startup Greensill Capital plans to file for insolvency in the U.K. this week, as it simultaneously moved toward a deal to sell its operating business to Apollo Global Management APO, -1.69%, according to people familiar with the matter.

The deal with Apollo, which could be struck by the end of the week, would be part of a Greensill insolvency, similar to the U.S. bankruptcy process, the people said.

The Wall Street Journal previously reported the two sides were in talks for a deal that would pay Greensill around $100 million. Through the acquisition Apollo would take over Greensill’s core operations and inherit clients that generate around $7 billion in assets, according to the people familiar with the matter.

Author(s): Julie Steinberg and Ben Dummett

Publication Date: 3 March 2021

Publication Site: MarketWatch

More Rate Scares Ahead for Stocks

Link: https://www.wsj.com/articles/more-rate-scares-ahead-for-stocks-11614772800

Excerpt:

Expectations of a stronger economy count as a positive development for companies’ earnings prospects, but they are pushing long-term interest rates higher, with the 10-year Treasury recently yielding 1.41% versus 0.93% at the start of the year. That isn’t unusual, since long-term rates typically go up as the economy’s prospects improve, but then again stocks haven’t tended to be as expensive at the start of recoveries as they are now.

The S&P 500 trades at about 22 times analysts’ expected earnings over the next year, according to FactSet, which is close to its highest forward price-earnings ratio in 20 years. In December 2009, six months after the last recession ended, the S&Ps forward P/E ratio was about 14.

As a result, even relatively modest moves upward in Treasury yields, and therefore the relative attractiveness of bonds to stocks, can cause market spasms. This is particularly true of the richly valued technology shares that have been among the biggest market winners since last spring.

Author(s): Justin Lahart

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

The Culture Wars Are Coming to the SEC

Link: https://www.wsj.com/articles/the-culture-wars-are-coming-to-the-sec-11614813925

Excerpt:

At Tuesday’s confirmation hearing, Sen. Pat Toomey pressed Gary Gensler on the scope of the SEC’s authority to regulate politics. Let’s say “a publicly-traded company spends a financially insignificant amount of money on, let’s say, electricity,” Mr. Toomey proposed. “Is it material whether that electricity came from renewable sources or not?”

Mr. Gensler resisted answering, saying “it may not be material or it may be material.” This isn’t reassuring. The concept of materiality is crucial to securities regulation because it defines the transparency required for investors to make prudent decisions. The SEC is supposed to protect investors from fraud by making sure they have access to accurate information about a firm’s performance.

But progressives want to use the agency’s watchdog responsibilities as a guise to bend finance in service of unrelated political goals, like climate. Mr. Gensler seemed to reserve the right to impose such politicized disclosure requirements, even when the information is “financially insignificant.”

Author(s): Editorial board

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

New U.S. Cases Ease, but Deaths Tick Higher

Link: https://www.wsj.com/livecoverage/covid-2021-03-03/card/18LFgjsjQkJOdGZpqjYK

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There were 55,071 new cases reported in the U.S. for Tuesday, according to the latest data compiled by Johns Hopkins University. That was down from 58,810 a day earlier, and 71,436 a week earlier.

Reported U.S. deaths related to Covid-19 increased Tuesday to 1,924, from 1,566 a day earlier, according to the latest Johns Hopkins data.

While both new cases and deaths are down from January’s highs, deaths have begun to trend upward in the past week. The seven-day moving average of daily reported deaths, which smooths out irregularities in the data, was 2,046 as of Monday, according to a Wall Street Journal analysis of Johns Hopkins data. The 14-day average was 1,984. When the seven-day average is higher than the 14-day average, as it has been since last Wednesday, it indicates deaths are on the rise.

Author(s): Adam Martin

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

The Covid-19 Baby Bust Is Here

Link: https://www.wsj.com/articles/the-covid-19-baby-bust-is-here-11614853803?mod=hp_lead_pos10

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A year into the pandemic, early data and surveys point to a baby bust in many advanced economies from the U.S. to Europe to East Asia, often on top of existing downward trends in births.

A combination of health and economic crises is prompting many people to delay or abandon plans to have children. Demographers warn the dip is unlikely to be temporary, especially if the pandemic and its economic consequences drag on.

“All evidence points to a sharp decline in fertility rates and in the number of births across highly developed countries,” said Tomas Sobotka, a researcher at the Wittgenstein Center for Demography and Global Human Capital in Vienna. “The longer this period of uncertainty lasts, the more it will have lifelong effects on the fertility rate.”

Author(s): Margherita Stancati

Publication Date: 4 March 2021

Publication Site: Wall Street Journal

Wall Street Lobbies to Bring More ESG Funds Into 401(k)s

Link: https://www.wsj.com/articles/wall-street-lobbies-to-bring-more-esg-funds-into-401-k-s-11614767400?mod=djemwhatsnews

Excerpt:

Money managers are lobbying to scrap a Trump-era rule that makes it difficult for 401(k) plans to invest in socially focused funds.

The Labor Department ruleannounced in October, imposed restrictions on what can and can’t be offered as company 401(k) funds. One result is that plans can’t use funds with nonfinancial goals as default investments for employees.

That means 401(k) overseers and managers need to show that environmental, social and governance strategies can boost financial returns—a challenge for the nascent industry. ESG-focused funds are a growing profit center for asset managers.

Lobbyists representing managers, pensions and retirees began making calls to the Biden transition team in the weeks after the rule was announced. Some lobbyists urged the incoming administration to agree not to enforce the rule and place it under review, said people familiar with the matter.

Author(s): Dawn Lim

Publication Date: 2 March 2021

Publication Site: Wall Street Journal

America Went on a Borrowing Binge, but Banks Were Left Out

Link: https://www.wsj.com/articles/america-went-on-a-borrowing-binge-but-banks-were-left-out-11612953008

Excerpt:

Large U.S. lenders saw their loan books shrink in 2020 for the first time in more than a decade, according to an analysis of Federal Reserve data by Jason Goldberg, a banking analyst at Barclays. The 0.5% drop was just the second decline in 28 years.

Bank of America Corp.’s loans and leases dropped by 5.7%. Citigroup Inc.’s loans dropped by 3.4% and Wells Fargo & Co.’s shrank by 7.8%. Among the biggest four banks, only JPMorgan Chase & Co. had more loans at the end of the year than the start.

Lenders are flush with cash that they want to put to use, and executives say they are hopeful loan growth will pick up in 2021. Brisk lending typically suggests there is enough momentum in the economy to give companies and consumers the confidence to borrow. But the current weakness suggests questions remain about the vigor of the economic recovery.

Author(s): Ben Eisen

Publication Date: 10 February 2021

Publication Site: WSJ