| Oil Is Plunging Again. The Stock Market Couldn’t Care Less. |
| Oil prices plunged again on Monday, with West Texas Intermediate crude falling more than 20%.
Yet oil company stocks, after falling along with the commodity, rebounded later in the morning. The disconnect is striking, given that oil stocks would normally plunge when futures were down this much.
West Texas Intermediate futures fell 25%, to $12.64 a barrel. Brent crude, the international benchmark, fell 8.4%, to $19.65 a barrel. The SPDR S&P Oil & Gas Exploration & Production exchange-traded fund was down just 1.1%. |
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| Diamond Offshore Bankruptcy May Portend Oil-Services Shakeup |
| Offshore oil-services firm Diamond Offshore filed for bankruptcy protection on Monday, a move that wasn’t a big surprise but nonetheless caused the stock to plunge. The company expects to continue operations and doesn’t plan to need more financing, it said in a statement.
Other drillers may follow Diamond into bankruptcy, or otherwise try to negotiate their debt. Oil production is likely to fall more before rebounding. In a few years, the industry is likely to be whittled down to a few larger players after the remaining companies merge, predicts Evercore analyst James West. |
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| Apple Is Delaying 5G iPhone Production by a Month, a News Report Says |
| For months now, Wall Street has been assuming that Apple would introduce the next generation of iPhones—the first with the ability to use 5G wireless networks—in September. That would be consistent with Apple’s timing in recent years. Recently some analysts have speculated that the timing could be a little delayed by complications related to Covid-19, such as the difficulty in getting Apple engineers based in the U.S. to supervise production of contract manufacturing in China.
Monday morning, The Wall Street Journal reported that the company is pushing back production of the new phones by about a month. Worth noting is that a production push-out doesn’t necessarily delay any planned announcement date. The story said Apple was pushing ahead with plans for four new iPhone models in three sizes: 5.4 inches, 6.1 inches and 6.7 inches. Some would have 5G; all will have OLED displays. The Journal said Apple is cutting its production plans for the second half of the year by about 20%. |
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| Boeing Is Jilting Embraer to Save Billions, but It Needs More Money |
| Boeing wants to walk away from its $4 billion agreement to purchase a controlling interest in the Embraer regional-jet business
Boeing’s announcement isn’t the end of the story. Not by a long shot. For Embraer, now comes arbitration. For Boeing, now come more questions about remaining cash. The original deal between the U.S. and Brazilian aerospace firms was struck in 2018, shortly after Boeing rival Airbus purchased a controlling stake in the Bombardier C-series program. |
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| Boeing CEO Sees Slow Airline Rebound, No Dividend for ‘Years’ |
| Boeing’s head said Monday that restoring the dividend could take three to five years as the company girds for a slow air travel recovery in the wake of the coronavirus crisis.
The comment from Chief Executive David Calhoun was a signal that paying back debt and keeping up Boeing’s manufacturing supply chain were bigger priorities than paying dividends for the foreseeable future. |
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| Tesla’s Plan to Reopen Its U.S. Factory in California Is Bullish for the Stock |
| Tesla is reportedly bringing back workers to its Fremont, Calif. plant this week. It is one of the first signs of life for the automotive industry. And the move is bullish for Tesla stock, because it shows electric vehicles are selling despite the Covid-19 pandemic.
The Fremont plant is outside of San Francisco, where a stay-at-home order remains in place until at least May 4. It isn’t clear under what authority Tesla plans to recall workers, and the company didn’t respond to a request for clarification. There are still a few thousand Covid-19 cases diagnosed in that region. |
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| GM Suspends Its Dividend to Shore Up Its Balance Sheet |
| General Motors has suspended its dividend and halted share buybacks as part of a deal with lenders to extend a debt repayment timeline.
The auto maker had been paying a 38-cents-a-share quarterly dividend, for an annual dividend of $1.52, giving the stock a yield of 6.9%. In 2017, the company’s board approved a $5 billion increase in the company’s share buyback program. In all, the program authorized up to $14 billion of repurchases. So far under that program, it has bought back $10.6 billion. |
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| Zoom Shunned by a Growing List of Banks |
| A growing list of the world’s largest investment banks is joining the backlash against Zoom, limiting or outright banning staff from using the video conferencing app over fears about security and compliance.
Bank of America, BNP Paribas, Citigroup, Deutsche Bank, JPMorgan, Standard Chartered, and UBS have all advised their employees to use alternative video conferencing tools for client communication, according to people familiar with the matter. |
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| Saudi Arabia Bought Big Stake in Live Nation |
| The Public Investment Fund, Saudi Arabia’s sovereign-wealth fund, recently purchased a large stake in Live Nation Entertainment, a promoter of concerts and other events.
Live Nation stock has been hit hard as lockdowns to fight the coronavirus pandemic have forced the company to cancel events. Its executives have taken pay cuts. Most stocks have been volatile, but Live Nation has taken a bigger hit than most. The company’s share price has been cut nearly in half so far in 2020, compared with a 12.2% drop in the S&P 500 index, a measure of the broader market. |
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| Investors to Get a Look This Weekend at Warren Buffett’s Likely Successor |
| Berkshire Hathaway investors will get their first extended look at Greg Abel, a Berkshire vice chairman and potential successor to CEO Warren Buffett, when he and Buffett take questions on Saturday at Berkshire’s annual meeting in Omaha.
Buffett, who is 89 years old, and Abel, who is 57, will be the only directors present at the meeting, Berkshire said in a statement on Monday. |
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