 By Andrew Shi
Raised after the 2008 financial crash, the idea of deploying EU bonds has recently received attention as European states find themselves bordering on financial collapse. Covid-19 has sunken many of the largest economies of the world, and Europe predicted “recession of historic proportions” is expected for the ears to come. In addition to the upcoming financial hardships, greater federal spending has been deemed necessary with investment in both unemployment insurance and healthcare costs rising. The 19 nations within the EU are all expected to face contractions of 7% or higher over the following years, with Italy and Spain, being the hardest hit, likely to experience far larger. As a response, a policy alternative to traditional bonds would be EU-wide bonds. This would group less safe southern European bonds with those of stronger northern European economies. For southern states, the hope would be that access to EU bonds would bring in necessary capital at a critical moment for lower interest rates than if they were to issue bonds themselves. The main opposition however, has been northern economies, as Germany and France would shoulder much of the risk for default. Recently though, Merkel has backed proposals to issue such bonds, and other states are likely to follow suit. We may be seeing a future where EU bonds are a critical part of the European financial landscape.  By Eric Liu
In the documents submitted to the US Securities Regulatory Commission last week, Uber said it will lay off 3,700 people, accounting for 14% of the total number of employees of 26,900. The layoffs are concentrated in the departments of customer support and recruitment. On Friday, at least 3,500 Uber employees learned that they were being laid off in a three-minute Zoom call last week. Uber notified them that it will be their last day working there. Lyft just had a significant layoff of 982 employees recently two weeks ago. However, in the past two days, there were employees who were laid off and returned to work. It is said that Lyft's previous layoffs are determined by the VP. VP’s position is too high to know the details of what employees actually do and how they support the company ’s key business. As a result, after the layoffs, the company found that some of their crucial businesses were not maintained because of the empty positions, and had to recruit a few employees back. Airbnb laid off 1900 employees last week accounting for about one-fourth of 7,500 employees. The influence will affect all major departments of the company, more or less. Airbnb CEO Chesky indicated in his speech that the LUX (luxury high-end tourism) department will be a big part of this round of lay off. Source: CNBC, DailyMail, Techcrunch  By Yihan (Bradley) Tian
Despite recent initiations of the reopening plan, Larry Finx, CEO of Blackrock Investments, warns the public of another incoming wave of bankruptcy and economic hardship. Although the economy and commercial units are already struggling, the Fed will have to raise corporate taxes to sustain costs for rescuing endangered sectors and other acts of emergency. The pandemic has led to reduced consumer activities and general anxiety towards air travel that will likely remain for a long time, Finx mentioned earlier this week. Fink also suggested the potential advent of a rise in corporate tax rate from 21% - the result of the 2017 tax overhaul - to as much as 29%. He also mentioned that individual income taxes could rise as well. This major shift in the distribution of federal funds may pave way for an accelerated demise of state & municipal financing. In addition, the heightened tax rate will likely extinguish the hopes of many smaller businesses to reopen effectively. Source: CNBC, Bloomberg, Investing.com  Image Source: Reuters By Yihan (Bradley) Tian Two months ago, Boeing requested a federal bailout of $60 billion. Subsequent federal purchases of Boeing’s corporate bonds proved to be pivotal; as of now, Boeing has been able to accrue over $25 billion from private investors, effectively voiding its need for federal aid.
The concrete assurance from the Fed to provide unlimited support to the credit market has brought surges in April’s debt offering cap far beyond the $259 billion recorded at the end of March. Companies, regardless of their income, have ready access to the debt market and to the seeming unlimited balanced sheet of Federal government. Source: CNBC, Reuters, Bloomberg, Reuters, NYSE |
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