BP Reports a Deep Loss and Cuts Its Dividend: Live Business Updates
BP Reports a Deep Loss and Cuts Its Dividend: Live Business Updates
Black-owned businesses have been hit particularly hard by the pandemic and the resulting economic crisis, a new study by the Federal Reserve found, underlining how minority communities have borne a disproportionate cost of the virus.
The analysis, from the Federal Reserve Bank of New York, shows that Black-owned businesses are heavily concentrated in areas that were hard-hit by the outbreak. And those businesses were already vulnerable before the crisis began, according to the briefing, written by Claire Kramer Mills and Jessica Battisto.
“Counties with the highest concentration of COVID-19 are also the areas with the highest concentration of Black businesses and networks,” the authors wrote, noting that “weaker cash positions, weaker bank relationships, and pre-existing funding gaps left Black firms with little cushion entering the crisis.”
Black-owned businesses now appear to be closing at a faster rate than those owned by other minority groups.
While the overall number of active business owners fell 22 percent between February and April, the number of active Black business owners dropped by 41 percent. Other minority groups also saw a major cost: The number of Latinx business owners fell by 32 percent and Asian business owners dropped by 26 percent. Those figures are based on a University of California Santa Cruz analysis of census data.
Even as minority communities shouldered heavier burdens amid the coronavirus crisis, they have sometimes failed to access federal help amid what the authors call “stark” coverage gaps.
In counties with the densest Black-owned business activity, Paycheck Protection Program loan coverage rates were typically lower than 20 percent, the report found. That was “not too different” from the national coverage rate of 17.7 percent, according to the authors, but there was big variation across counties.
For instance, only 7 percent of businesses in the Bronx, 11.3 percent in Queens, and 11.6 percent in the county that is home to Detroit received the forgivable loans.
Probably at play: Black communities often lack access to banks in the best of times. Black-owned businesses are far less likely than white-owned businesses to have stable banking relationships.
Lack of credit access in communities of color reality raises “questions that have heightened significance when banks are relied on to administer federal, taxpayer-supported relief programs, as is the case with PPP,” the brief said.
Ford Motor said its chief executive, Jim Hackett, will retire on Oct. 1, ending a three-year run in which the automaker has worked with mixed results to streamline its operations and focus its business on electric cars, trucks and sport-utility vehicles.
Mr. Hackett, 65, will be succeeded by James D. Farley Jr., who had been named chief operating officer in February.
“I am very grateful to Jim Hackett for all he has done to modernize Ford and prepare us to compete and win in the future,” said William Clay Ford Jr., Ford’s executive chairman. The company, he added, is becoming “much more nimble.”
Mr. Hackett, a former chief executive of Steelcase, an office furniture manufacturer that is much smaller and less complex, was named to the top job at Ford in May 2017, as the company’s business was slumping. He promised to revitalize Ford’s operations and steer the company toward vehicles that would generate profits and invest in emerging technologies like electric and self-driving vehicles.
The company is starting to introduce some of the models developed under Mr. Hackett, including a redesigned F-150 pickup truck and the Mustang Mach E, an electric S.U.V. styled to resemble the storied sports car.
But so far the turnaround has had little effect on the company’s bottom line and stock price. Ford shares were trading at about $11 when he arrived. The stock was trading at about $6.88 Tuesday morning, up more than 2 percent after news of the Mr. Hackett’s retirement.
Investors value Ford at about $27 billion, just one-tenth the market capitalization of Tesla, the electric automaker that makes far fewer cars and has been around only since 2003.
Mr. Farley, 58, joined Ford in 2007 from Toyota Motor, and has held a variety of jobs, including running the company’s marketing, its European operations and a new business strategy group.
European Union authorities on Tuesday announced an investigation of Google’s $2.1 billion purchase of the fitness-tracking company Fitbit, raising alarms about the health data the internet giant would be acquiring as part of the deal.
The inquiry shows the increased scrutiny Google and other large technology companies are facing from regulators in Europe and the United States about their growing dominance over the digital economy. Officials have raised concerns that the biggest tech platforms buy up smaller companies to solidify their dominance and limit competition.
Margrethe Vestager, the European Commission’s top antitrust regulator, said a preliminary investigation of the Fitbit deal had raised concerns about how Google would use data collected from Fitbit for its online advertising services, a market where Google is already dominant. The health and fitness data could be used to more narrowly target ads, she said.
“By increasing the data advantage of Google in the personalization of the ads it serves via its search engine and displays on other internet pages, it would be more difficult for rivals to match Google’s online advertising services,” the commission said in a statement announcing the investigation.
Google defended the acquisition, saying it competes with companies like Apple, Samsung and Garmin that offer fitness tracking devices. “This deal is about devices, not data,” Rick Osterloh, Google’s senior vice president for devices and services, said in a blog post. The company said it would not use Fitbit health and wellness data for advertising services and offered to make a legally binding commitment to the commission to limit its use of the data.
BP reported a $16.8 billion quarterly loss on Tuesday, and cut its dividend in half for the first time since the Deepwater Horizon disaster a decade ago, as lower oil prices and plunging demand from the effects of the coronavirus pandemic took a toll on the London-based energy giant.
At the same time, the company took $17. 4 billion in write-offs in exploration and other activities, and cut its forecasts for oil and gas prices.
In cutting its dividend to 5.25 cents a share, BP said that it would prioritize keeping the payout at that level. The company has previously said it would cut about 10,000 jobs, with the majority expected to leave this year.
On a call with journalists on Tuesday, the company’s chief executive, Bernard Looney, outlined an effort to shift BP away from its focus on oil to what he called an “integrated energy company.”
Among the highlights of his presentation: BP will increase its investments in low-carbon energy, like solar and wind power, by tenfold in a decade, while cutting its oil and gas production by 40 percent. He also said BP would not begin exploration in any new countries.
By the end of the decade, he said, oil and gas would make up about half of the company’s capital investments, with renewables and other non-oil investments accounting for the rest.
After months of negotiations, Argentina has reached a deal with its creditors, including the asset managers BlackRock and Greylock Capital Management, to restructure about $65 billion in foreign debt, the economy ministry said on Tuesday.
The deal between Argentina and its largest creditors would grant “significant” debt relief to the country, the ministry said. In May, Argentina missed a bond payment and entered into its ninth default since the country’s independence and third in the last 20 years.
Under the agreement, creditors will be paid 54.8 cents on the dollar, according to an Argentine government official who has taken part in the negotiations who spoke on condition of anonymity to discuss private negotiations.
Argentina would offer creditors new bonds in exchange for defaulted debt and unpaid interest. Investors who hold euro-denominated and Swiss franc-denominated bonds would also be able to swap these for new U.S. dollar-denominated bonds. The agreement also includes changes to payment dates.
A range of prominent people, including Pope Francis, Senator Elizabeth Warren and the Nobel-winning economist Joseph E. Stiglitz, called on Argentina’s bondholders to come to a favorable agreement quickly with the cash-strapped nation.
The International Monetary Fund has forecast that Argentina’s economy will fall nearly 10 percent this year, deepening a yearslong economic crisis which has been compounded by the coronavirus pandemic and extremely high levels of inflation.
BlackRock, the world’s largest asset manger, had rejected an earlier proposal from Argentina and pushed other creditors to also hold out for a better deal. The government and its creditors — the Ad Hoc Group of Argentine Bondholders, the Argentina Creditor Committee and the Exchange Bondholder Group and other investors — were only three pennies on the dollar apart on their proposed terms.
The country has also been in talks with the International Monetary Fund, after restoring ties to the institution with a 2018 bailout. The I.M.F. said Argentina’s debt pile was unsustainable as its currency plummeted and economic output kept falling. Martín Guzmán, Argentina’s economy minister, had told local media that he would look to the I.M.F. for an alternative way out of its debt crisis if the talks with private creditors failed.
Stocks on Wall Street drifted between gains and losses on Tuesday, easing off a rally that had lifted technology shares to new highs as lawmakers in Washington continued to try to pin down a coronavirus relief package.
Investors have one eye on corporate earnings reports, and the other on lawmakers who are discussing the latest aid bill to help people and businesses hit by the economic crisis. Negotiators are set to reconvene on Tuesday, with top Trump administration officials scheduled to return for another meeting with congressional Democrats.
Tens of millions of Americans lost crucial unemployment benefits at the end of July and a federal moratorium on evictions has ended. Economists warn that permanent damage could be wrought on the economy without action.
On the earnings front, London-based oil giant BP reported a $16.8 billion quarterly loss, and cut its dividend in half for the first time in a decade. The company also said it would increase its investments in low-carbon energy, like solar and wind power, by tenfold in a decade, while cutting its oil and gas production by 40 percent. Its shares rose in response, despite the huge loss.
Tuesday’s pullback comes after a steady climb for stocks that has lifted the S&P 500 to within 3 percent of its record. That’s been fueled by government spending, the efforts of the Federal Reserve to backstop the economy, and a surge in shares of technology stocks like Apple, Amazon and Microsoft — which have reported surging profits as more people work and shop from home.
Caterers say they are taking a financial beating, with some expecting their business to be down between 80 and 90 percent this year. But many feel better situated than those in the restaurant business. Instead of paying often expensive rent in desirable locations like most restaurants, caterers typically pay less for large kitchens that can be off the beaten track.
Moreover, caterers tend to be a nimble group of entrepreneurs, adept at providing finicky brides with their every heart’s whim and overcoming the oddest of logistical challenges. Those traits have helped them during the pandemic.
“We have huge logistical expertise,” said Peter Callahan of Peter Callahan Catering, whose clients include some of New York’s wealthiest financiers and whose specialty is mini food like one-bite cheeseburgers and tiny grilled cheese sandwiches. “When you’re an off-premise caterer, you might be doing an event that requires barges to get to a private island with no vehicles.
“We’re creative thinkers, and right now people are thinking about how to shape their businesses for the need at hand,” he added.
Holly Sheppard started her Brooklyn catering business, Fig & Pig, in 2011. She was in the middle of preparing a meal for 600 people in mid-March when the client called, canceling the event. After that, the cancellations and postponements rolled in.
With her calendar now largely empty through the fall, Ms. Sheppard gave up the lease on her apartment in Brooklyn, worked out a deal with the landlord for her kitchen to pay what she can now and make it up next year, and moved to her house in Tillson, N.Y.
There, she bought a smoker and is honing her skills, planning to add barbecue to her catering options.
“I’m going to be a female pitmaster on the roadside in upstate New York until the weddings come back,” Ms. Sheppard said. “I’m going to make it through all of this. Closing isn’t even an option. I’m a scrapper.”
More than 800 craft distillers across the United States leapt into action to help in the first wave of the pandemic by producing hand sanitizer, urged on by federal agencies. But with demand for sanitizer fluctuating, distillers have faced unforeseen costs and excess supplies that they could not get rid of.
Their conundrum shows how life has become more complicated as the pandemic has persisted. What had been a no-brainer good Samaritan decision to help local communities and nurture a new business has instead devolved into a messy financial calculus as the hardships of the crisis continue piling up.
“It feels a little bit like no good deed is going unpunished right now,” said Spencer Whelan, the director of the Texas Whiskey Association, a trade group representing some of the state’s distillers.
The prospect of replacing liquor revenue with sanitizer sales piqued the interest of Jonathan Eagan, the co-owner of the Arizona Distilling Company in Tempe., Ariz. He spent $50,000 on alcohol to produce the disinfectant in the spring, and said he quickly sold enough of it to make up for two months in lost liquor sales.
That money was crucial, given that bars, restaurants and tours — the distillers’ main sources of income — were hobbled. But even as distillers ramped up sanitizer production, that lifeline also started petering out. As panic-buying of the disinfectant leveled off and production among larger companies stabilized, “the business just kind of dried up” in the last few weeks, said Mr. Eagan.
Now as Arizona deals with new virus cases, much of his remaining 1,000 gallons of sanitizer has sat idle.
The Federal Aviation Administration on Monday proposed changes that Boeing must make to the 737 Max, potentially clearing the way for the plane to start flying again by the end of the year.
The changes include updating the plane’s flight control software, revising crew procedures and rerouting internal wiring. Once formally published, the proposal will be open to public comment for 45 days, after which the agency will issue a final ruling.
The agency concluded in a related report published on Monday that its proposal was in line with Boeing’s recommendations. The report said the company’s recommendations had sufficiently addressed the problems that contributed to two fatal crashes, resulting in the worldwide grounding of the jet.
“The F.A.A. has preliminarily determined that Boeing’s proposed changes to the 737 Max design, flight crew procedures and maintenance procedures effectively mitigate the airplane-related safety issues that contributed” to crashes in Indonesia and Ethiopia that killed 346 people, the agency said.
The Max has been grounded since March 2019, costing Boeing billions of dollars.
Once the F.A.A.’s proposal is official, Boeing can begin to make the changes and ready the planes for flight, a process that could take more than a week per jet and involves system checks, deep cleaning and software updates. The company will have to do that for hundreds of planes that customers have already received and hundreds more that Boeing has made but not delivered.
Several other obstacles remain before the F.A.A. lifts its grounding order on the plane, including the development of pilot training requirements and the review and filing of additional documentation.
The president of the Federal Reserve Bank of Chicago said the central bank had limited room to do more and that Congress would need to support the economy if the United States faced a full-fledged second wave of coronavirus infections.
“The punchline ought to be that the ball is in Congress’s court,” Charles Evans, president of the Chicago Fed, said on a call with reporters.
The Federal Reserve cut its primary interest rate, the federal funds rate, to near-zero in March. Central banks abroad have cut borrowing costs into negative territory, but Fed officials have been consistently skeptical that such policies will be effective.
“We can’t lower the funds rate. Negative interest rates aren’t going to be the tool that we decide to use at this point, or probably at any point,” Mr. Evans said.
The Fed might be able to use a policy that would cap certain interest rates — an approach commonly called “yield curve control” — but Mr. Evans suggested that slightly higher medium-term rates are not the real economic problem. The Fed has the ability to offer emergency loans to backstop turbulent markets, but businesses and governments might need grants to make it through.
“At the moment, it’s really fiscal policy that needs to be addressing this,” he said. Even now, more congressional support is needed to shore up the economy as the pandemic wears on, Mr. Evans said.
The Chicago Fed chief was not alone in arguing that recently lapsed expanded unemployment benefits should be in some way addressed, as Congress debates the future of its pandemic response.
Thomas Barkin, president of the Federal Reserve Bank of Richmond, warned that the pandemic might be creating an economic “sinkhole,” rather than the pothole policymakers initially believed they were facing. Robert S. Kaplan, president of the Federal Reserve Bank of Dallas, said in an interview on Bloomberg television on Monday that the policies had helped to bolster consumers, adding that “it’s important that we see an extension of it.”
Booking.com plans to reduce its global work force of more than 17,500 employees by up to 25 percent as the coronavirus pandemic continues to take a devastating toll on the travel industry. Booking Holdings, the parent company of Booking.com, said it would finalize its plans and make announcements to employees beginning in September on a country by country basis, according to a securities filing. Booking Holdings, which also owns other travel websites including Kayak and Priceline.com, reported a 51 percent drop in gross travel bookings in the first quarter of 2020 compared to the same period last year. The company is set to report second quarter earnings on Thursday.
J.C. Penney, the cornerstone of American malls, was the latest retailer to announce it would not open Thanksgiving Day this year. Other major chains, including Walmart and Target, have said they would push the start of holiday shopping back to Black Friday, often casting the change as in honor of the work of their front-line employees. J.C. Penney, which filed for bankruptcy in May, said in a statement that the move was intended to allow both associates and customers “to stay safe, relax, and enjoy the day.”