|
The government is set to borrow billions of pounds from its emergency Bank of England overdraft.
OPEC and other oil producers led by Russia will discuss their largest ever output cut on Thursday in talks complicated by recent animosity and U.S. resistance to mandating cuts. 
Oil prices rose on Thursday on expectations the world's largest oil producers would agree to cut production at a meeting later in the day as the industry grapples with a coronavirus-driven collapse in global oil demand. 
Swiss banks UBS and Credit Suisse will postpone paying out part of their 2019 dividends until later this year after mounting pressure from authorities over lenders' payouts during the coronavirus epidemic. 
Virgin Australia Holdings Ltd said on Thursday it would ground all domestic flights, except a single daily Sydney-Melbourne service through June 15, as it continues to seek government aid to weather the coronavirus crisis. 
Nissan Motor has requested a 500 billion yen ($4.6 billion) commitment line from major lenders after sales were battered by the coronavirus outbreak, two people with knowledge of the matter told Reuters on Thursday. 
Coronavirus-related travel restrictions have left a labour shortage as the picking season starts.
Asian shares rose on Thursday on hopes the COVID-19 pandemic is nearing a peak and that governments would roll out more stimulus measures to support their economies, while expectations of a deal to cut oil production bolstered crude prices. 
From Rupert Murdoch's News UK to McClatchy's chain of local newspapers across the United States, news publishers are attracting record numbers of readers as people in lockdown seek information about the coronavirus pandemic. 
A California retail developer claims the state's coronavirus lockdown was an act of God that prevented it from completing a $4.2 million property acquisition, asking a court to prevent owner Exxon Mobil Corp from selling to any other buyers. 
The number of Americans seeking unemployment benefits in the last three weeks likely totaled a staggering 15 million as tough measures to control the novel coronavirus outbreak abruptly ground the country to halt, which would cement views the economy was in deep recession. 
Swiss financial watchdog Finma said on Thursday it welcomed a decision by UBS and Credit Suisse to pay out half of their dividends for 2019 in the fourth quarter of 2020 despite their strong capital decisions. 
Commodity currencies drew support on Thursday from hopeful signs the coronavirus pandemic may be peaking and that major oil producers may agree to cut output to stem a plunge in oil prices. 
UN research warns the coronavirus pandemic could put a further 8% of world's population in poverty.
Global automakers reeling from the COVID-19 pandemic are accelerating efforts to restart factories from Wuhan to Maranello to Michigan, using safety protocols developed for China and U.S. ventilator production operations launched in recent weeks. 
Zoom Video Communications Inc was slapped with a class action suit by one of its shareholders on Tuesday, accusing the video-conferencing app of overstating its privacy standards and failing to disclose that its service was not end-to-end encrypted. 
Zoom Video Communications Inc has tapped former Facebook security chief Alex Stamos as an adviser as safety and privacy concerns about its fast-growing video-conferencing app drive a global backlash against the company. 
U.S. Senator Kelly Loeffler said on Wednesday she would liquidate her individual stock share positions after the wealthy Republican and her husband were criticized over sales of millions of dollars in stock during the coronavirus outbreak. 
Exxon Mobil Corp used economic uncertainty tied to the coronavirus pandemic to urge workers at its lubricants and packaging plant in Paulsboro, New Jersey, to vote for a proposed contract, according to two sources familiar with the matter. 
Home rental firm Airbnb will block British bookings on its platform for the vast majority of customers on Thursday, allowing only key workers to stay in properties for as long as emergency government coronavirus restrictions are in place. 
Mexico's president threw himself into a new confrontation with businesses on Wednesday, accusing big companies of not paying taxes and upbraiding others for laying off workers during the coronavirus crisis. 
Mexican President Andres Manuel Lopez Obrador said on Wednesday the domestic auto sector can resume operations shortly after the U.S. industry gears up from a coronavirus-led halt, to avoid further disruption to closely interconnected supply chains. 
The CEO of a social care firm says there is a surge in demand for live-in carers due to coronavirus.
Some dairy farmers are throwing away thousands of litres amid supply chain disruption due to coronavirus.
- Some startups may get loans from the $350 billion Small Business Administration program created by the new stimulus package.
- Late last week and over the weekend, the SBA and Treasury Department issued some rules and guidance that seem to make it easier for startups to apply and qualify for the aid.
- The vast majority of startups have fewer than 500 employees and so would be considered small businesses, but the SBA's rules concerning the ties companies have to their investors and their investors' portfolio companies seemed to disqualify most venture-backed companies from applying for the new loans.
- Even with the new rules and guidance, there's still a good deal of uncertainty about whether startups will qualify for the loans and some investors are being cautious about the program, a representative of the National Venture Capital Association told Business Insider.
- Click here for more BI Prime stories.
Startups may get access to a key piece of the new $2 trillion stimulus package after all.
One of the central components of the law, meant to stabilize a US economy that's been throttled by the response to the coronavirus epidemic, is a $350 billion loan program for small businesses. Immediately after Congress passed the act, venture capitalists and startup advocates raised concerns that startups would be excluded from the program, due to rules that would seem to bar certain companies.
But late last week and over the weekend, the Treasury Department and the Small Business Administration, which will oversee the loan effort, issued rules and guidance for the program that could make it easier for startups to apply for and receive the aid, advocates for Silicon Valley said.
"There were a couple things that moved last week that did matter," said Justin Field, senior vice president of government affairs at the National Venture Capital Association, an industry trade group. He continued: "It's messy, but we think that ... there's a path forward for a certain number of these companies to apply."
The new guidance and draft rules set aside or relax some of the SBA's regulations around so-called affiliations, which were the biggest collective obstacle facing startups from participating in the stimulus package's loan program. Under the SBA's affiliation rules, many startups could be deemed too big to qualify for the loans.
Most startups are small in size, but may have lots of affiliates
The loan program in question, dubbed the Paycheck Protection Program, offers a pool of money for small business — defined as those with 500 or fewer employees — to use to pay workers, mortgages and rent, utilities, and interest payments on debt. The federal government is promising to forgive the loans if companies maintain their workforces and their employees' salaries.
At first glance, the vast majority of startups would seem to qualify as small businesses and be eligible for loans. Some 97% of venture-backed startups for which employment information was available had 500 or fewer employees, according to data from the NVCA and PitchBook.
But in determining how many employees companies have, the SBA looks not just at their own workforces but also those of any entities with which they are affiliated. So, if a company is majority-owned by another company, the parent company would be considered an affiliate of the first company, and the parent company's employee base would be counted toward that of the first company.
And the SBA can consider a company or person to be an affiliate of another even if one doesn't have majority control over the other. If a company has one large shareholder or several shareholders with large and relatively equal amounts of control, it could be considered affiliated with those investors — and with every other company over which those investors exercised similar control.
Those affiliation rules are problematic for venture-backed startups. Many of them have investors that have large, effectively controlling stakes. And many of those investors have similar power over lots of other startups. Instead of having just 50 employees, say, a startup under the SBA rule could be considered to have hundreds, once all of the employees at its affiliated startups and investors are combined.
Lenders don't have to check on affiliations
The NVCA and other Silicon Valley advocates had been hoping Congress or the Treasury Department and the SBA would set aside those affiliation rules for the new loan program and clarify that startups are eligible for the it. Thus far, neither Congress nor the Treasury Department or the SBA have done so.
But the Treasury Department and the SBA did take four important steps that should open the program to at least some startups, Silicon Valley advocates said.
The biggest step is that the draft rules for the loan program — officially called an interim-final rule — remove from lenders the obligation of having to determine whether the affiliation rules apply to particular loan applicants, Field said. Without that move, the lenders could be held liable by the government if they handed out a loan to a company that didn't actually qualify because of the affiliation rules. Now, the lenders can simply rely on the certification of the company's CEO or owners that it qualifies.
The change means that more startups will likely be able to get loans than they otherwise would and in more timely fashion. Checking into startups' affiliation likely would have been a painstaking, time-consuming task. And in questionable or marginal cases, the lenders would have had an incentive to deny the loans.
"We do think that did get rid of a major gating factor, in that now banks can process these applications," Field said.
The SBA has at least two sets of rules regarding determining a company's affiliations. In its draft rules for the lending program, the agency made clear that it will rely on the set of rules that appear to offer more leeway for venture-backed startups. That was another important step for Silicon Valley, Field said.
The disregarded rules spell out in some detail situations where an investor would be considered to have control of a company and therefore be an affiliate of it. The rules the SBA will use are a bit more vague — and open to interpretation — on when minority investors would be deemed to have enough control to be considered affiliates.
Only the company has to certify that it qualifies
A third step taken by the SBA and the Treasury Department that was helpful for Silicon Valley was to eliminate a requirement that investors who owned as little as 20% of a company certify that any loan funds the company received would be used for payroll and other purposes specified by the program, Field said. Under the draft rules, only the company itself has to make that certification.
That was important to the venture community, because otherwise startup backers may have been placed in a situation where they had to guarantee the funds would be used for legitimate purposes but have no control or ability to ensure that they were, Field said. Without that change, minority investors could have been held criminally liable if founders they backed embezzled the funds or used them go on a big party, he said.
"That's not really a fair place to be," Field said. "But they fixed that."
The last helpful step the SBA took was that it clarified it won't use its so-called "totality of circumstances" principle to determine whether a company has affiliates, he said. That principle works as a kind of catch-all in the agency's affiliation rules that allows it to determine that certain companies or investors are linked, even if one doesn't have substantial ownership or control over the other. With the SBA setting aside that principle, fewer startups are likely to get tripped up by the affiliation rules, Field said.
"They have gotten rid of some of the uncertainty around the rules," he said.
There's still a lot of uncertainty
Still it's not clear how many startups will be able to apply for the loans or how many actually will. Even if lenders won't be checking whether startups are ineligible due to their affiliations, the SBA likely will do some kind of assessment after the fact, Field said. It could retroactively find that certain startups weren't qualified for the loans and force those companies to repay them and potentially hold their representatives criminally liable.
Many startups are looking into the loan program, Field said. But many of their venture backers are being more cautious about it — precisely because there's still uncertainty about whether their startups really qualify, he said.
For now, the NVCA is willing to wait and see if and how well the program works for venture-backed companies rather than continuing to press for changes that would make clear that they can participate, Field said.
"This is where we just got to give policy makers some breathing room. Let them do what they're going to do, let the process play out and understand what's really happening on the ground," he said. "If it's messy but workable for a large percentage," he continued, "we're in a crisis, that's good enough."
Got a tip about startups or the venture industry? Contact this reporter via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.
SEE ALSO: The coronavirus stimulus package will be doomed to fail if it can't pass this simple 3-question test
Join the conversation about this story » NOW WATCH: 8 weird robots NASA wants to send to space 
Hello!
Business Insider has a suite of weekly newsletters designed to get the top stories of the week in key industries directly to you, our readers. These are written by our top editors and reporters in areas ranging from tech to investing, advertising to cleantech. Check out the list below and sign up!
Insider Today
Insider Inc. CEO Henry Blodget provides you with information and insight about the big stories of the day, along with some inspiration.
Tech: Trending
Whether you work in Silicon Valley or compete with its denizens, Trending aims to deliver the info you need to stay ahead of the pack, with exclusive, fly-on-the-wall reporting from inside tech's most innovative companies. Trending is sent every Tuesday and written by Business Insider's West Coast Bureau Chief Alexei Oreskovic.
Finance: Wall Street Insider
Olivia Oran, a deputy editor at Business Insider, delivers a behind-the-scenes look at the stories dominating banking, business, and big deals each week in this newsletter delivered Saturday.
Investing Insider
Get your weekly fix of markets and investing news and analysis every Monday with this newsletter from Joe Ciolli, Business Insider's investing editor.
Advertising and Media Insider
From Madison Avenue to Hollywood, the advertising and media business is changing rapidly. Lucia Moses, a deputy editor at Business Insider, makes sense of it all with a weekly newsletter sent every Wednesday.
Healthcare: Dispensed
Get a weekly dose of pharma, biotech, and healthcare news from our healthcare team in this email, written by healthcare reporter Lydia Ramsey every Friday.
Retail: The Drive-Thru
Sign up for a weekly serving of the biggest stories in fast food, shopping, and more in this email, written by retail reporters Shoshy Ciment and Kate Taylor every Friday.
Energy: Power Line
Get the latest news on the energy industry from Benji Jones every Friday.
Join the conversation about this story » NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money. 
- A "Black Swan" hedge fund posted a 4,144% return last quarter after the novel coronavirus outbreak tanked markets.
- Universa Investments' chief, Mark Spitznagel, trumpeted the massive gain in a letter to clients, The Wall Street Journal reported on Wednesday.
- Spitznagel — a protégé of Nassim Nicholas Taleb, the author of "The Black Swan: The Impact of the Highly Improbable" — recently predicted markets would fall further.
- "For people who are worried about having missed it, this sell-off has only taken back a few months of gains. I expect a true crash to take back a decade."
- Visit Business Insider's homepage for more stories.
A "Black Swan" hedge fund that specializes in profiting from market shocks posted a 4,144% return last quarter thanks to the coronavirus sell-off.
Mark Spitznagel, the chief of Universa Investments, touted the stunning fortyfold gain from the fund's tail-risk hedging strategy in a recent letter to clients, The Wall Street Journal reported on Wednesday.
If an investor had just 3.3% of their assets in Universa and the balance in a S&P 500 tracker fund, they would have made a 0.4% return last month despite the benchmark slumping more than 12%, the newspaper said.
Spitznagel is a protégé of Nassim Nicholas Taleb, the author of "The Black Swan: The Impact of the Highly Improbable." Spitznagel worked at Taleb's now closed Empirica Capital, and Taleb is Universa's scientific adviser.
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
The Universa boss said in the letter that after a record bull run, markets have further to fall, The Journal reported.
"If the pandemic doesn't pop this bubble then, of course, it will be something else that eventually accomplishes this," Spitznagel said.
A Universa representative declined to comment in an email to Business Insider.
Spitznagel made a similar observation in The Journal in March after a "great month" for Universa in February.
"For people who are worried about having missed it, this sell-off has only taken back a few months of gains," he said. "I expect a true crash to take back a decade."
Read more: C.T. Fitzpatrick has ranked in the top 1% of value managers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-hit market — and names 6 companies that will benefit from the fallout.
Spitznagel has scored outsize returns in the past. Universa netted more than $1 billion in a day — a 20% return at the time — when the Dow plunged by over 1,000 points in August 2015, The Journal reported.
The hedge-fund boss is a veteran at stomaching small losses for years in anticipation of the next market crash. Malcolm Gladwell quoted him in "Blowing Up," his 2002 New Yorker profile of Taleb.
"It's like you're playing the piano for ten years and you still can't play 'Chopsticks,'" Spitznagel told Gladwell, "and the only thing you have to keep you going is the belief that one day you'll wake up and play like Rachmaninoff."
Read more: Gavin Baker has navigated 4 bear markets. He shares his exact investment strategy for today's volatile environment — and explains why he's laser-focused on 2 areas in particular. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- Glenmede's Jason Pride and Michael Reynolds say it's possible to identify three types of bear markets. And so far, the current downturn matches the shortest and least severe type.
- However, they say that if anti-pandemic measures stay in place long enough, the result would be the longest and most severe type of bear market, associated with recoveries that take almost a decade.
- In the face of that frightening prospect, they're telling investors to think very long-term.
- Visit Business Insider's homepage for more stories.
If investors didn't have enough to worry about already, they might have to contend with a bear that won't stay in its lane.
Jason Pride, the chief investment officer for Glenmede's private wealth division, and investment strategy officer Michael Reynolds say it's possible to put stock market downturns in three categories. For now, the current coronavirus-driven downturn is in the briefest and mildest type, but that might not last.
The team categorizes this bear market as "event-driven," brought on by the pandemic and the dramatic efforts to stop it — which have amounted to shutting down about a third of the global economy. In the past, event-driven bear markets have been brought on by oil shocks and wars.
Those downturns are the shortest, and the subsequent market recoveries are the fastest, according to the Glenmede team. It's an outcome that matches Wall Street's fondest wish. Investors have hoped that the global economy would quickly improve and markets would heal when this crisis passes.
But Pride and Reynolds warn that this bear market might break out of the event-driven category.
"If the economic fallout from quarantine efforts proves to be more material and persistent than expected, it could cause the type of imbalances consistent with structural bear markets, which tend to be longer and of greater magnitude," they wrote.
In an interview, Reynolds said we may know one way or the other around the four-month mark. If COVID-19 case counts start falling and there are signs the economy can get back to normal after two or three months, a quicker recovery is more likely.
"If it takes a longer period of recovery and people staying at home, that could lead to more structural problems in the economy," he said, adding that if the shutdown passes that four-month mark, more businesses are likely to fail.
Structural bear markets have historically been caused by problems like financial bubbles. And Pride and Reynolds say a structural problem is what enforced social distancing, high unemployment, reduced spending, and business bankruptcies could eventually become.
According to a chart they created, that would bring about a three-year bear market and, in percentage terms, stocks fall twice as far as they do in other slumps. An average recovery for stocks would take almost nine years.
While a protracted lockdown would bring more economic pain, it would also create a larger bounce-back afterward.
"Containment efforts may need to remain in place for longer to sustain any improvement," they say. "The magnitude of economic decline increases with the expected length of the containment periods, but the magnitude of the expected rebound in the quarters that follow increases as well."
Reynolds says there is evidence that markets in China and South Korea bottomed when data showed new infections were peaking, as investors reacted strongly to hints the worst of the outbreak was behind them. He says that could happen in the US as well.
Where Pride and Reynolds say to invest
For an investor willing to endure a lot of volatility and stay on course for the long-term, they offer these tips.
"US small-cap and emerging market stocks tend to have relatively high sensitivity to economic prospects, so they may contain some of the larger beneficiaries of a potentially consequent market rebound," they wrote. "Long-term investors should value equities – investments in companies – according to their longterm ability to generate earnings."
Investors can apply those recommendations using exchange-traded funds. Two well-known small-cap offerings are the iShares Core S&P Small-Cap ETF and the SPDR S&P 600 Small-Cap ETF. Options that provide broad exposure to emerging markets include the Schwab Emerging Markets Equity ETF and Goldman Sachs ActiveBeta Emerging Markets Equity ETF.
Reynolds adds that it will be good news for small-caps if the government delivers more support for small businesses. And Glenmede is especially attentive to the growing middle class in Asia as a source of investment opportunities, as people in that group are gaining wealth and could drastically outnumber the US middle class in time.
"Middle class emerging Asia is going to be a force to be reckoned with over the next couple years, if not decades," he said. "We've seen some pretty attractive buying opportunities in that space." SEE ALSO: Coronavirus investing 3-1-1: A global fund manager beating 98% of his peers shares 3 stocks that are must-haves, one he'll buy when opportunity strikes, and one he doesn't trust anymore
Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- The consensus economist estimate is that 5 million Americans filed for unemployment insurance in the week ending April 3. The report will be released by the Labor Department on Thursday.
- During the week ending March 21, 3.3 million Americans filed for unemployment benefits. And in the following week, 6.6 million more filed, bringing the total to nearly 10 million in just two weeks.
- "There were broad signs that state governments were increasing hiring or shifting resources to better process filings for unemployment benefits given the deluge in recent weeks," Bank of America economists wrote Wednesday. "Some states believed the worst was yet to come."
- Visit Business Insider's homepage for more stories.
Economists expect another week of jarring unemployment insurance claims as the coronavirus pandemic wears on.
The consensus estimate among economists is that the US will have 5 million jobless claims for the week ending April 3, according to Bloomberg data. Estimates range from 2.5 million to as high as 7.5 million.
In March, the number of Americans filing for unemployment skyrocketed to record levels as coronavirus-induced layoffs began suddenly as the US shut down parts of its economy to curb the spread of COVID-19. During the week ending March 21, 3.3 million Americans filed for unemployment benefits, and in the following week, 6.6 million filed. That brought the total to nearly 10 million in just two weeks.
"We believe risks are tilted to the upside," wrote Bank of America economists Alexander Lin and Michelle Meyer in a Wednesday note. The bank's estimate is that weekly jobless claims will be 6.5 million.
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
"While scanning through the news, there were broad signs that state governments were increasing hiring or shifting resources to better process filings for unemployment benefits given the deluge in recent weeks," the economists wrote. "Some states believed the worst was yet to come."
Thursday's report from will be the first glimpse at the labor market since Friday's nonfarm payroll report showed that the US lost 701,ooo jobs in March, more than economists expected. The report also only included data before March 14, leaving out two key weeks of job losses.
Economists, including those at Bank of America and JPMorgan, have also pointed to Google trend data that shows that searches for "unemployment benefits" and "filing for unemployment" continue to climb, which could mean that weekly claims come in higher than expected.
Read more: C.T. Fitzpatrick has beaten 99% of his peers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-hit market — and names 6 companies that will benefit from the fallout.
Unemployment insurance claims could also be boosted by the $2 trillion coronavirus stimulus package, according to Bank of America. The CARES Act — which was passed on March 27 — expands benefits to those who may not have previously been eligible, including those who are self-employed or gig workers. The act also extends the number of weeks one can receive benefits and adds up to $600 per week through July.
It remains to be seen if the report, due Thursday from the Labor Department, will show a record surge in Americans applying for unemployment benefits for the third week in a row. Even if it shows claims below the consensus estimate, it will take another week or more of data to see if the trend of coronavirus layoffs is actually slowing.
If jobless claims have peaked, it will be the most rapid uptick on the books. The two previous peaks in unemployment claims — during the financial crisis in 2008 and in the 1980s— happened "more gradually over time," Barclays chief economist Michael Gapen told Business Insider.
But this is a different scenario, he said, as the coronavirus pandemic lock-downs and social distancing measures have led to a near-halt of all business activity.
Read more: A Wall Street wealth chief breaks down why the coronavirus bear market may be unique in history — and pinpoints the areas where traders should be buying right now Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- Attractive entry prices and new details about the economic toll of the coronavirus pandemic make for an appealing investing environment, Oaktree Capital founder Howard Marks said in a memo to clients on Monday.
- Those who aren't willing to take on risk will miss out on a likely uptrend when the virus threat subsides, he wrote.
- Even the most cautionary buyers should take on more offensive strategies to capture value while it lasts, Marks added.
- Investors aiming to time the market bottom are using an "irrational" strategy and should instead "buy on the way down," the billionaire investor said.
- Visit Business Insider's homepage for more stories.
Widespread virus fear and depressed asset prices make for a promising investment opportunity, Oaktree Capital founder Howard Marks told clients in a memo on Monday.
The "uncertain, low-return environment" seen throughout the financial sector before the coronavirus pandemic tanked markets has given way to one rife with value, he said.
Marks said that returns on bonds had rotated "from paltry to attractive" and that economic risks are now broadly recognized among investors. Those who can't see the value in taking on moderate risk stand to lose out on a major upswing when the virus threat ends, he said.
"I no longer feel defense should be favored. Yes, the fundamentals have deteriorated and may deteriorate further, and the disease makes for risk (remember, I'm the one who leans toward the negative case)," Marks wrote. "But there's a big difference between a market where no one can find a flaw and one where people have given up on risk-taking."
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
The billionaire investor's latest advice followed weeks of cautionary notes. Memos sent throughout March advised Oaktree clients to take the defensive as news about the coronavirus pandemic and its economic consequences trickled in.
Uncertainty clouding the outbreak's future and the lack of relevant guidance created a troublesome investing environment. But as markets tanked and investors fled for safe-haven assets, Marks' outlook skewed further to the buy side.
Fund managers' jobs are increasingly focused on the balance between offense and defense, he said in his most recent memo. The exodus from risk assets leaves a hole for braver investors to fill; even the most cautionary buyers "can reduce their overemphasis on defense" and take on a more aggressive strategy, he said.
Read more: C.T. Fitzpatrick has beaten 99% of his peers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-hit market — and names 6 companies that will benefit from the fallout.
"One way to think about the balance between offense and defense is to consider the 'twin risks' investors face every day: the risk of losing money and the risk of missing opportunity," Marks wrote. "At least in theory, you can eliminate either one but not both. Moreover, eliminating one exposes you entirely to the other."
Grasping at value doesn't require precise timing, the founder added. Marks debunked investors aiming to buy at markets' bottom, deeming it an "irrational statement." Market troughs are discovered only in retrospect, and buying "on the way down" gives impatient investors the best chance of capturing bargain prices before they're gone.
"To insist on buying only at bottoms and selling only at tops would be paralyzing," he said.
Now read more markets coverage from Markets Insider and Business Insider:
Goldman Sachs is looking to raise a fund of up to $10 billion to serve cash-strapped companies hit by coronavirus, new report says
US cuts oil production forecast through 2021 — padding the crushed market before a critical OPEC meeting
Coronavirus investing 3-1-1: A global fund manager beating 98% of his peers shares 3 stocks that are must-haves, one he'll buy when opportunity strikes, and one he doesn't trust anymore Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
Sen. Kelly Loeffler will divest from her ownership in individual stocks, following controversy over her investments and stock sell-off following a confidential coronavirus briefing.
The Georgia Republican said in a Wall Street Journal op-ed on Wednesday that she is making the decision "because the issue isn't worth the distraction."
"Although Senate ethics rules don't require it, my husband and I are liquidating our holdings in managed accounts and moving into exchange-traded funds and mutual funds," she said.
Loeffler was widely criticized after the Daily Beast reported in March that she dumped stocks likely to fall due to the coronavirus, and bought shares in a company that makes telecommuting software. A second report from the Atlanta Journal-Constitution earlier this month showed she sold shares in Lululemon and TJ Maxx and bought stock in a company that makes protective equipment.
The senator says that she did not make the trades herself, and that they were executed by third-party managers.
"My family's investments are managed by third-party advisers at Morgan Stanley, Goldman Sachs, Sepio Capital and Wells Fargo," she said. "These professionals buy and sell stocks on our behalf. We don't direct trading in these accounts."
"I have never used any confidential information I received while performing my Senate duties as a means of making a private profit," Loeffler said in the op-ed. "Nor has anyone in my family."
Loeffler is married to the CEO of Intercontinental Exchange, which owns the New York Stock Exchange.
The senator is up for reelection this fall, facing Republican Rep. Doug Collins. Collins is ahead of Loeffler in internal polling, Politico reported.
Join the conversation about this story » 
- US stocks gained on Wednesday as investors cheered a slowdown in new US coronavirus cases and the White House's early plans for economic recovery.
- The gains came after Tuesday's wild reversal that saw all three major US indexes erase sharp early gains and close lower.
- The Trump administration said on Tuesday that it planned to reopen economies in smaller cities and towns less harmed by the outbreak before allowing larger, heavily hit cities to resume activity.
- Oil surged as much as 12% amid mounting expectations that an upcoming OPEC+ meeting will lead to production cuts.
- Watch major indexes update live here.
US stocks gained on Wednesday as traders mulled Tuesday's market whipsaw and President Donald Trump's plans for economic recovery.
Investors continued to buy risk assets amid hopes of coronavirus cases slowing throughout the US. The number of daily new reported cases has fallen since Friday's highs, according to data collected by Johns Hopkins University.
The White House said on Tuesday that it planned to first reboot the nation's economy in smaller cities and towns less affected by the outbreak before reopening larger, heavily hit cities. The plan is still being developed but gave investors the first signs of how the crippling economic shutdown could end.
Here's where major US indexes stood at the 4 p.m. ET market close on Wednesday:
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
"The difference between now and the start of the pandemic is that we can at least see the end," Brad McMillan, chief investment officer at Commonwealth Financial Network, told Business Insider. "We can see that we have flattened the curve, and we can reasonably project when the pandemic will be brought under control. We are not at that point yet, but at least we can see it."
WTI crude oil spiked 12% at intraday highs as investors continued to monitor developments in a price-war truce. Production hikes and price cuts from Saudi Arabia and Russia have pushed oil's price near two-decade lows. A meeting of OPEC, Russia, and other producers may usher in the first major de-escalation in the global conflict.
The US on Tuesday slashed its oil-production forecast through 2021 to boost demand during the virus-driven supply glut. The Energy Information Administration said it sees the price of Brent crude averaging out to $33 per barrel through 2020 before rebounding to an average of $46 per barrel the following year.
The EIA also expects the US to become a net importer of oil by the third quarter of 2020 for the first time since 2019, returning to net-exporter status in 2021.
Read more: C.T. Fitzpatrick has beaten 99% of his peers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-hit market — and names 6 companies that will benefit from the fallout.
Minutes from the Federal Open Market Committee's emergency March 15 meeting published Wednesday revealed the central bank's view of the pandemic as it first began gripping the US. The Board saw either a short-lived outbreak giving way to recovery in the second half of 2020 or a prolonged pandemic placing the rebound in 2021.
The current economic downturn is "temporary," and the "healthy state of the US banking system" differentiates the coronavirus-induced slump from the 2008 financial crisis, the directors said in the mid-March session.
Wednesday's rebound came after Tuesday ended with mild losses after surging more than 3% early in the day. All three indexes jumped into a technical bull market on Tuesday morning before reversing gains. Stocks have moderately rebounded from late-March lows as fewer new virus cases and trillions of dollars in government stimulus eased concerns of economic collapse.
Now read more markets coverage from Markets Insider and Business Insider:
'I no longer feel defense should be favored': Billionaire investor Howard Marks urges clients to take advantage of bargains in the market
UBS: Nearly $1 trillion in mortgage debt could be delinquent this year as a 'prolonged credit crunch' looms
A Wall Street wealth chief breaks down why the coronavirus bear market may be unique in history — and pinpoints the areas where traders should be buying right now Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
Oil gained Wednesday on hopes that Saudi Arabia and Russia will soon agree to a historic production cut, lowering supply as demand craters amid the coronavirus pandemic.
US West Texas Intermediate crude spiked as much as 12% to $26.45 per barrel on Wednesday before paring some of those gains to trade about 8% higher. International benchmark Brent crude gained nearly 4% to $33.87 per barrel the same day.
Oil prices have plummeted with demand amid the coronavirus pandemic, which has led to canceled non-essential travel around the world. At the same time, a price war between OPEC and Russia threatened to boost supply to record levels.
Read more: C.T. Fitzpatrick has ranked in the top 1% of value managers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-stricken market — and rattles off 6 companies that will benefit from the fallout.
The US Energy Information Administration on Tuesday slashed its 2020 outlook and said it would again be a net importer of oil in a move that could pave the way for a global deal to reduce oil production.
Now, all eyes are on OPEC and its allies as they work on the details of what could be a historic production cut plan. The group will meet virtually on Thursday and Friday and is reportedly considering slashing output by as much as 10 million barrels a day or more, Bloomberg reported, citing a delegate.
The meeting was originally scheduled to take place Monday but was postponed as a dispute between Russia and Saudi Arabia intensified, Reuters reported.
Still, Russia is skeptical of US involvement in the deal as the output decline proposed is being driven by market forces, Bloomberg reported Wednesday.
Despite recent gains, oil is trading down more than 50% year-to-date.
Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- The Federal Reserve's directors envisioned two economic scenarios of differing intensity as the coronavirus began driving business shutdowns and layoffs, Federal Open Market Committee meeting minutes released Wednesday showed.
- A short-lived outbreak would bring an economic recovery in the second half of the year, the board said in the emergency session, while a prolonged crisis would push a rebound into 2021.
- Several directors agreed that the "healthy state of the US banking system" and the virus's "temporary nature" set the current downturn apart from the 2008 financial crisis.
- The March 15 meeting yielded a 100 basis-point rate cut that brought interest rates near zero, as well as up to $700 billion worth of Treasury purchases.
- Visit Business Insider's homepage for more stories.
In the month before the Federal Reserve's emergency March meeting, the coronavirus took the US by storm, the 11-year bull market ended, and the economy was dragged into a likely recession.
Minutes for the March 15 session released Wednesday revealed the central bank's directors envisioned two economic scenarios before the harshest lockdown measures were announced. A calmer outbreak would bring an economic recovery in the second half of the year, while its "more adverse scenario" saw the rebound taking longer to arrive and "not materially under way until next year."
Members of the Fed board emphasized that the coronavirus-induced downturn was crucially different from the 2008 meltdown, according to the minutes. The current slump is "temporary," and the "healthy state of the US banking system" sets the pandemic apart as an unprecedented drag on the US economy, the directors said.
The Fed's March 15 meeting yielded a "forceful" policy response, the minutes stated, including a 100 basis-point rate cut that brought the benchmark interest rate close to zero for the first time since 2008. Additional purchases of up to $700 billion in Treasury notes lifted the liquidity-parched market, and bank reserve requirement ratios were lowered to zero percent.
Read more: A Wall Street wealth chief breaks down why the coronavirus bear market may be unique in history — and pinpoints the areas where traders should be buying right now
The relief measures signal a "whatever it takes" attitude from the central bank not seen since the global financial crisis, but the Fed's policy playbook is also markedly different from the last recession, Bob Miller, head of Americas fundamental fixed income at BlackRock, said.
"We expect the FOMC will do what is necessary to maintain accommodative financial conditions for the balance of this year," Miller said in an email to Business Insider. "When attempting to judge extraordinary crisis measures of this kind, it's natural to try to find historical analogies to ground expectations, but even the economic rescue measures put in place during the 2008/09 financial crisis are unlikely to serve as an adequate analog."
The mid-March FOMC session arrived before the Fed took its most drastic steps to prop up the ailing economy. The central bank announced later in the month it would lift the limit on its asset purchases to further boost liquidity in financial markets. Three new lending facilities would provide monetary aid to employers, small businesses, and companies amid the virus-fueled shutdown.
The Fed is now coordinating with the Treasury Department to ensure aid set aside in the government's $2 trillion stimulus bill reaches businesses in need. Investors expect the central bank to extend aid to local governments as states and cities face weakening tax revenues and risk of budget deficit.
The previous FOMC meeting's minutes were published on February 19, the same day the S&P 500 reached an all-time high.
Now read more markets coverage from Markets Insider and Business Insider:
Hedge-fund titan Crispin Odey says the coronavirus meltdown will most closely resemble the Great Depression
'I no longer feel defense should be favored': Billionaire investor Howard Marks urges clients to take advantage of bargains in the market
Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
Hello! I'm Joe Ciolli, and I oversee the investing and markets coverage at Business Insider. Listed below are some of the great stories we have available to subscribers.
Each one of them highlights single stock picks recommended by some of the smartest minds on Wall Street. Click here to claim a 20% discount on an annual subscription to BI Prime.
But before we get into the lists, allow me to set the scene...
The stock market has been shaken to its very core by the novel coronavirus.
The record 11-year bull market came to an abrupt end, while profit-growth forecasts have crumbled under the weight of a widespread economic lockdown.
At their very worst, major US indexes were 35% below record highs reached in February. And a disturbing number of big-money investors think stocks could still travel lower from current levels.
Wall Street strategists have surveyed the damage and concluded that there are still opportunities in the market — assuming an investor knows where to look. Many of them have created baskets of stocks possessing qualities that make them attractive choices to outperform the broader market.
Some of these groups of stocks have been historically resilient during market downturns, while others simply look too cheap to pass up. Each list has its own unique set of criteria.
Without further ado, here's a running compliation of stock-pick lists compiled by Business Insider since the coronavirus sell-off began in earnest:
Stocks to buy as coronavirus whipsaws markets
Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- US stocks gained on Wednesday as investors cheered a slowdown in new US coronavirus cases and the White House's early plans for economic recovery.
- The gains came after Tuesday's wild reversal that saw all three major US indexes erase sharp early gains and close lower.
- The Trump administration said on Tuesday that it planned to reopen economies in smaller cities and towns less harmed by the outbreak before allowing larger, heavily hit cities to resume activity.
- Oil continued to slide as traders held their breath for the upcoming OPEC+ meeting to offer new details on a price-war truce.
- Watch major indexes update live here.
US stocks gained on Wednesday as traders mulled Tuesday's market whipsaw and President Donald Trump's early plans for economic recovery.
Investors continued to buy risk assets amid hopes of coronavirus cases slowing throughout the US. The number of daily new reported cases has fallen since Friday's highs, according to data collected by Johns Hopkins University.
The White House said on Tuesday that it planned to first reboot the nation's economy in smaller cities and towns less affected by the outbreak before reopening larger, heavily hit cities. The plan is still being developed but gave investors the first signs of how the crippling economic shutdown could end.
"The difference between now and the start of the pandemic is that we can at least see the end," Brad McMillan, chief investment officer at Commonwealth Financial Network, told Business Insider. "We can see that we have flattened the curve, and we can reasonably project when the pandemic will be brought under control. We are not at that point yet, but at least we can see it."
Here's where major US indexes stood at 3 p.m. ET Wednesday:
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
Equities closed Tuesday's session with mild losses after surging more than 3% in early trading. All three indexes jumped into a technical bull market on Tuesday morning before reversing gains. Stocks have moderately rebounded from late-March lows as fewer new virus cases and trillions of dollars in government stimulus eased concerns of economic collapse.
WTI crude oil climbed roughly 12% as investors continued to monitor developments in a price-war truce. Production hikes and price cuts from Saudi Arabia and Russia have pushed oil's price near two-decade lows. A meeting of OPEC, Russia, and other producers may usher in the first major de-escalation in the global conflict.
Read more: C.T. Fitzpatrick has beaten 99% of his peers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-hit market — and names 6 companies that will benefit from the fallout.
The US on Tuesday slashed its oil-production forecast through 2021 to boost demand during the virus-driven supply glut. The Energy Information Administration said it sees the price of Brent crude averaging out to $33 per barrel through 2020 before rebounding to an average of $46 per barrel the following year.
The EIA also expects the US to become a net importer of oil by the third quarter of 2020 for the first time since 2019, returning to net-exporter status in 2021.
Minutes from the Federal Open Market Committee's emergency March 15 meeting published Wednesday revealed the central bank's view of the pandemic as it first began gripping the US. The Board saw either a short-lived outbreak giving way to recovery in the second half of 2020 or a prolonged pandemic placing the rebound in 2021.
The current economic downturn is "temporary," and the "healthy state of the US banking system" differentiates the coronavirus-induced slump from the 2008 financial crisis, the directors said in the mid-March session.
Now read more markets coverage from Markets Insider and Business Insider:
'I no longer feel defense should be favored': Billionaire investor Howard Marks urges clients to take advantage of bargains in the market
UBS: Nearly $1 trillion in mortgage debt could be delinquent this year as a 'prolonged credit crunch' looms
Chase Coleman's Tiger Global tells investors that SARS created an 'incredible backdrop' for returns and reveals why it likes TikTok parent ByteDance even more during the coronavirus pandemic Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- A Small Business Administration official was recorded chastising big banks, accusing them of purposefully slowing down a program to lend to small businesses hurt by the coronavirus.
- Joseph Amato, a district director in Nevada, made the comments on a webinar hosted by a Las Vegas attorney.
- "Some of the big banks that had no problem in taking billions of dollars of free money as bailout in 2008 are now the biggest banks that are resistant to helping small businesses so that should tell you something," he said.
- Visit Business Insider's homepage for more stories.
A district director for the Small Business Administration chastised Wall Street banks' handling of the $349 billion loan program for small businesses.
In a webinar recording posted online by Faith Jones, a lawyer and speaker in Las Vegas, Joseph Amato, who joined the SBA in 2017, accused banks of dragging their heels.
"Some of the big banks that had no problem in taking billions of dollars of free money as bailout in 2008 are now the biggest banks that are resistant to helping small businesses so that should tell you something," he said in the video first reported by The Washington Post.
The Paycheck Protection Program was authorized by Congress in March as part of the $2 trillion financial stimulus package designed to prop up the American economy, which was largely left reeling by the coronavirus pandemic. In contrast to government aid to entities like airlines, small business loans are being funneled through private banks, which already have the infrastructure in place to process such credit.
However, when the program launched on Friday, April 3, many small businesses who attempted to apply for the program ran into delays and described the rollout as "chaotic."
"I can't tell you how many phone calls I've gotten where a doctor will call me or a business owner will call me and say 'I've been with such-and-such bank for 25-, 40-, 50 years' or whatever 'and they said they're not taking my PPP applications. They're not involved in the program,'" Amato said. "That should tell you a lot about what that bank is focused on."
"But that's my editorializing," he added.
Neither Amato nor the SBA immediately responded to a request for comment from Business Insider.
Jones, the host of the webinar, commended lawmakers for their efforts despite the bumpy rollout.
"The government is doing something right in focusing on getting this money to individuals and struggling business owners," she told Business Insider. "The SBA is working around the clock and has been the fastest I've seen for a government agency to turn around application procedures and technology on their website."
On Tuesday, Treasury Secretary Steven Mnuchin and President Donald Trump announced an agreement with congressional leaders for an additional $250 billion in funding for the program.
The increase in funding comes after the government doubled the interest rate on the loans — which can be completely forgiven if the program conditions are met — after some of the participating lenders, including the largest of Wall Street banks, complained the rules did not make economic sense for them to participate.
"There is really no risk to the bank," Amato, the Nevada SBA official, said in the video. Join the conversation about this story » NOW WATCH: Extremists turned a frog meme into a hate symbol, but Hong Kong protesters revived it as an emblem of hope 
- A top federal official in the Small Business Administration blasted big banks that took bailout money in 2008 for not quickly loaning money to struggling small businesses weathering the fallout from coronavirus.
- SBA official Joseph Amato's comments reflect concerns that banks aren't moving fast enough to deepen their involvement in a new small business aid program.
- "Some of the big banks … and this is just editorial … that had no problem taking billions of dollars of free money as bailout in 2008 are now the biggest banks that are resistant to helping small businesses," Amato said.
- Visit Business Insider's homepage for more stories.
A top federal official blasted large banks for not lending to small businesses quickly enough to help them weather the economic fallout from the coronavirus, The Washington Post first reported.
Joseph Amato, the Nevada district director for the Small Business Administration, made the blunt comments in a recorded Zoom teleconference call about the Paycheck Protection Program — a $350 billion initiative that's serving as a critical lifeline to small businesses within the $2 trillion economic stimulus President Trump signed into law.
The SBA official said he believed financial institutions that accepted bailout money during the financial crisis a decade ago were turning their backs on small businesses now.
"Some of the big banks … and this is just editorial … that had no problem taking billions of dollars of free money as bailout in 2008 are now the biggest banks that are resistant to helping small businesses," Amato said.
The critical comments from Amato underscore frustration that large banks are not moving fast enough to lend to small businesses. He said the agency was instead trying to build new relationships with "non-bank lenders."
"We are trying to work quickly with national non-bank lenders and other sources that may make up the difference for the companies like, sadly, BofA, Wells Fargo and Chase that haven't really stepped up to the plate to take on all the small businesses they can," Amato said.
Read more: Goldman's credit-investing chief told us how investors can profit from the Fed's mammoth stimulus — including a strategy that would reasonably earn 15% within a year
The Small Business Administration did not immediately respond to a request for comment.
Under the program, federal money is used to guarantee private bank loans for businesses with fewer than 500 employees and cover eight weeks of expenses. The loan is forgiven if those companies keep workers on payrolls and avoid laying them off.
The window for loan applications opened on Friday, though it was a bumpy start as many major lenders reported they weren't ready to process them, The Wall Street Journal reported.
Bank of America started processing them last week, according to The Post. JPMorgan has taken 375,000 applications for loans of $40 billion so far, and Citigroup has not accepted any yet.
Large banks have complained the PPP has been hobbled by a confusing knot of rules and unclear instructions from federal officials.
Amato sought to address those criticisms in the call.
"There is really no risk to the bank," Amato said. "It just comes down to … the same banks that literally took billions of dollars with one page from [former Treasury Secretary Henry Paulson] are the ones saying the documentation isn't clear enough for them."
Former Federal Reserve Chair Janet Yellen told House Democrats in a call that banks would move more quickly if they were freed of liability from possible instances of fraud, The Post reported. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- The Federal Reserve will "temporarily and narrowly" ease its balance sheet restriction against Wells Fargo to allow the bank to provide additional emergency lending to small businesses, according to a Wednesday statement.
- The change only bolsters the bank's ability to lend through the Paycheck Protection Program and the Fed's upcoming Main Street Lending Program.
- Wells Fargo announced Tuesday it reached the $10 billion lending cap due to the Fed's restrictions and couldn't continue loan issuance through the coronavirus relief programs.
- All benefits made through the emergency loans will be transferred to the Treasury or to non-profits that support small businesses, the central bank said.
- Visit the Business Insider homepage for more stories.
The Federal Reserve announced Wednesday it will temporarily relax growth restrictions placed on Wells Fargo to bolster small business lending amid the coronavirus shutdown.
"Extraordinary disruptions" caused by the pandemic forced the central bank to "narrowly modify" Wells Fargo's balance sheet cap, according to a statement. The change will only expand the firm's ability to issue loans through the Paycheck Protection Program and the Fed's upcoming Main Street Lending Program.
Any profit made through the loans will be transferred to the Treasury or to non-profit organizations that aid small businesses, the Fed said.
Wells Fargo announced on Wednesday it stopped accepting small business loan applications, just two days after it opened its portal. The bank said it reached its $10 billion distribution limit due to the Fed's restriction, and that the applications received on April 4 and April 5 alone were enough to reach the threshold.
Technical issues plagued firms applying for the loans at other banks. Only Bank of America and JPMorgan Chase were able to accept loan applications on April 3, the day PPP launched.
Read more: C.T. Fitzpatrick has ranked in the top 1% of value managers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-hit market — and names 6 companies that will benefit from the fallout.
The Fed's growth restriction was put in place after Wells Fargo opened millions of fraudulent accounts on behalf of clients without their approval. The scandal led to the resignation of CEO John Stumpf, a Senate investigation, and several settlements between the firm and clients. Wells Fargo was barred from expanding its nearly $2 trillion balance sheet until overhauling its internal processes to a level approved of by the Fed board.
"The Board continues to hold the company accountable for successfully addressing the widespread breakdowns that resulted in harm to consumers identified as part of that action and for completing the requirements of the agreement," the Fed said.
Now read more markets coverage from Markets Insider and Business Insider:
Hedge fund titan Crispin Odey says the coronavirus meltdown will most closely resemble the Great Depression
'I no longer feel defense should be favored': Billionaire investor Howard Marks urges clients to take advantage of bargains in the market
Real-estate brokerage Redfin is furloughing 41% of agents until September, painting a dire picture for how long the US housing market will take to bounce back Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- A coronavirus-fueled recession and resulting hit to global gross national product will most closely mirror the Great Depression, the notoriously bearish fund manager Crispin Odey said, according to a Bloomberg report.
- Virus-induced lockdowns and the oil-price conflict place massive pressure on global markets and will push the world economy into a "different era" of weakened growth, he wrote in a note to clients.
- Odey's hedge fund posted a 21% gain in March amid heavy selling activity, according to Bloomberg. The fund has posted several consecutive annual declines in recent years as the bull market surged onward.
- Visit Business Insider's homepage for more stories.
The all-but-certain recession set to arrive in the coronavirus outbreak's wake will resemble the Great Depression, the notoriously bearish fund manager Crispin Odey said, according to a Bloomberg report.
The coming economic downturn "is not like 2008-9, nor 2001-2, nor even 1989-92," Odey told clients in a letter seen by Bloomberg. The virus-induced shutdowns and global oil-price war will push the world into a "different era" of stifled economic activity, he added.
"The fall in global gross national product for this year will echo 1931-2," the hedge-fund manager wrote. "That was a terrible time when countries and institutions disappeared and characters like Adolf Hitler seized their chance to take over Germany."
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
Odey's pessimism hasn't failed his fund amid recent market sell-offs. Odey European posted a 21% gain through March's chaotic sessions, its biggest monthly win since the financial crisis, according to Bloomberg. The fund manager's gains followed years of losses as the bull market surged through early 2020.
While central banks and governments around the world have issued trillions of dollars' worth of relief measures, restrictions attached to emergency loans threaten to curb a swift market recovery, Odey said. Multiple governments have required firms tapping into relief pools to cancel dividend payments and buyback programs until the debt is repaid.
Wiping out the powerful drivers of shareholder value places the onus of economic recovery on banks, which still need to maintain profits and appease investors, Odey said.
Read more: C.T. Fitzpatrick has beaten 99% of his peers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-hit market — and names 6 companies that will benefit from the fallout.
"The idea that shareholders should be sacrificed to allow banks to make unprofitable loans to the private sector to help them through a difficult period shows just why governments have no idea how to incentivize the right behavior to get the right outcome," the fund manager wrote.
A long-dated government debt issuance with a 1.5% yield would have served as a more effective way to encourage bank lending, he said, adding that firms would buy government debt and issue emergency loans without cutting into corporate profits.
Now read more markets coverage from Markets Insider and Business Insider:
Dow climbs 235 points after Trump administration shares COVID-19 recovery plan
'I no longer feel defense should be favored': Billionaire investor Howard Marks urges clients to take advantage of bargains in the market
C.T. Fitzpatrick has ranked in the top 1% of value managers since the financial crisis. He shares his 4-part strategy for dominating a coronavirus-stricken market — and rattles off 6 companies that will benefit from the fallout. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- C.T. Fitzpatrick — the founder, CEO, and chief investment officer at Vulcan Value Partners — approaches value investing differently than most by not exclusively focusing on cheap stocks.
- In today's coronavirus-stricken market, he's relying on time and strong balance sheets with net cash, free-cash-flow yield, concentration, and highly sustainable margins of safety in order to navigate and benefit from heightened volatility.
- Fitzpatrick shared seven companies that he said would benefit from the impending economic fallout and an accelerated move from physical to digital.
- Click here for more BI Prime stories.
C.T. Fitzpatrick, the founder, CEO, and chief investment officer at Vulcan Value Partners, doesn't fit nicely into the traditional value-investor mold.
"As our name would suggest, we're value investors at Vulcan Value Partners, but we do not look for cheap stocks," he said on the "Value Investing With Legends" podcast. "Instead, we put all of our energy into finding business with inherently stable values."
Before he started Vulcan Value Partners in 2007, Fitzpatrick enjoyed 17 years of double-digit returns as a portfolio manager by relying heavily on his differentiated, stability-focused way of viewing the world. Since then, he's ranked in the top 1% of value managers.
Today, he's taking full advantage of the volatility that's been prevalent in the market.
"This is more than three standard deviations away from the mean," he said. "This is an extraordinary event, and I think it's really important to make sure you're doing thorough analysis."
A recipe for success in today's environment
"Our goal in managing the portfolios is to drive our weighted average price-to-value ratio as low as we can," he said.
But before we dive into the specifics of his investment approach, it's important to note how Fitzpatrick is thinking about the coronavirus-driven stock sell-off.
"If you look out five years from now — while this current situation is terrible ... we certainly will not have forgotten it — we will be back to normal," he said. "Companies' earnings should be growing very nicely. We should be back to full employment. Everything should be — not that this never happened — but things should be back to normal."
These views inform Fitzpatrick's four-part checklist for achieving outsize returns — which he's using to take advantage of a market destabilized by the coronavirus. Each element is highlighted in bold.
At the heart of Fitzpatrick's investment strategy is a long-term time horizon. Every prospective investment is viewed through the lens of an at least five-year holding period. This way, he's able to ride out bouts of unruly market volatility without undermining his original thesis.
"We were buying companies that had net cash on their balance sheet during the financial crisis — and they were really, really discounted. We're doing the same thing today," he said. "Our companies have double-digit free-cash-flow yield, with net cash on the balance sheet — and that free-cash-flow yield is going to grow over time."
With an emphasis on stable values, the long term, free-cash-flow yields, and strong balance sheets with net cash, Fitzpatrick is also leveraging concentration — his firm has 22 positions — in this market to take advantage of juicy opportunities.
"When you get into periods like this and periods like the financial crisis, we tend to become more concentrated," he said. "When this started, we were selling 80-cent dollars and buying 60-cent dollars — and as it progressed, we've been selling 60-cent dollars to buy 40-cent dollars."
Because he employs this methodology, Fitzpatrick's portfolios look almost nothing like the market, he said. Buried within the indexes are companies and industries that he says have taken on more leverage than they can handle — and he has no interest in owning them.
"What we love to see is seeing what a company is supposed to do, and that is invest for the long term, strengthen their competitive position, and maybe miss earnings for a year or so — or more because they're doing the right things to strengthen the business," he said. "We're giving you points for that; we're very supportive of that."
As you would expect, most investors would probably view prolonged earnings misses as a sign to vacate a position, but not Fitzpatrick. In fact, he said he and his firm "find a lot of opportunities like that."
Who's going to benefit?
Against that backdrop, Fitzpatrick is quick to relay a swath of companies he says should benefit from the economic fallout from the crisis.
"In the long run, someone like Facebook is a real beneficiary of this," he said. "Alphabet, with YouTube, is a big beneficiary of this. Their cloud business is a big beneficiary."
In addition to Facebook and Alphabet, Fitzpatrick's names Nvidia, Visa, Mastercard, and American Express as companies that should reap the rewards of an accelerated move from physical to digital. SEE ALSO: Gavin Baker has navigated 4 bear markets. He shares his exact investment strategy for today's volatile environment — and explains why he's laser-focused on 2 areas in particular.
Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
- The US home loan purchase index fell 12% in the week ending April 3 to its lowest point since 2015, according to a Wednesday survey from the Mortgage Bankers Association.
- Mortgage applications also declined nearly 18% last week on an adjusted basis, and refinancing applications fell 19% in the same period but are still up on the year.
- "Given the ongoing rate volatility, along with the persistent lack of liquidity in certain sectors of the MBS market, we expect to see continued weekly swings in refinance activity," said Joel Kan of the MBA in a statement.
- Read more on Business Insider.
Economic fallout due to the coronavirus pandemic is weighing on potential homebuyers in the US.
The US home loan purchase index fell 12% in the week ending April 3, according to a Wednesday survey from the Mortgage Bankers Association. The index is now at its lowest level since 2015, and down 33% on the year.
In addition, mortgage applications declined nearly 18% last week on an adjusted basis, and refinancing applications fell 19% in the same period but are still up on the year.
"Mortgage applications fell last week, as economic weakness and the surge in unemployment continues to weigh heavily on the housing market," said Joel Kan, MBA's associate vice president of economic and industry forecasting, in a press release.
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
The housing market was initially boosted as the coronavirus pandemic led to a market rout that sent mortgage rates plummeting. But as the crisis has worn on, housing has taken a hit as consumers are told to stay home and practice-social distancing to curb the spread of the disease. In addition, potential homebuyers may be rethinking purchases as economic data shows severe damage amid the crisis and points to high unemployment and a US recession.
Existing homeowners are also seeking relief as the coronavirus outbreak continues. Requests for suspending or reducing mortgage payments skyrocketed more than 3,000% in March, according to a survey from the MBA.
"Given the ongoing rate volatility, along with the persistent lack of liquidity in certain sectors of the MBS market, we expect to see continued weekly swings in refinance activity," Kan said. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
The World Trade Organization (WTO) predicts a contraction of between 13% and 32% this year.
- Top congressional Democrats are calling for $500 billion in emergency coronavirus relief spending to aid hospitals, state governments, and the food stamp program.
- It comes after the Trump administration sought another $250 billion in additional funding for an initiative benefiting small business owners.
- Democrats suggested they might tie additional conditions on federal aid to small businesses so it benefits underserved communities.
- Visit Business Insider's homepage for more stories.
Democrats are calling for at least $500 billion in new emergency spending to ramp up federal aid to hospitals and state governments and to shore up food stamps.
The demand came shortly after the Trump administration sought another $250 billion in additional relief for small businesses. The recent $2 trillion stimulus law already included around $350 billion in aid under the Paycheck Protection Program.
But the request acknowledges that funding could run out much sooner than expected as small businesses scramble to file applications and obtain federal aid. Since the program's rollout on Friday, nearly $70 billion in loans has gone out.
Read more: Morgan Stanley handpicks the 18 best US stocks to buy now while they're cheap to enjoy profits for years to come
Under the program, businesses that use the money to keep workers on payrolls and not lay them off will have the loans forgiven. Small business owners, though, have criticized the initiative for the difficulty in applying for the money, The New York Times reported.
House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said the current crisis would likely require another round of immediate legislative action.
"The heartbreaking acceleration of the coronavirus crisis demands bold, urgent and ongoing action from Congress to protect Americans' lives and livelihoods," the top congressional Democrats said in a statement.
Their proposal includes:
- $250 billion in additional aid to small businesses, with at least half the money directed to community-based financial institutions that aid families, as well as minority and veteran-owned businesses.
- $100 billion for hospitals and community health centers battling the outbreak.
- $150 billion for state and local governments to bolster their safety nets and make up for lost tax revenues.
- A 15% increase in the maximum SNAP benefit for families to help them purchase more food.
Stay-at-home orders across the US have financially hit small businesses hard, given that they account for around half of all employment in the country, Bloomberg reported. Restaurants, bars, and retailers have closed their doors to keep the coronavirus from spreading.
Senate Majority Leader Mitch McConnell said in a statement that he hoped to quickly approve the Trump administration's request for more small business money later this week.
Yet the timeline for new legislation is still not clear. In a CNN interview, Pelosi suggested Democrats might seek to add more conditions to ensure any further aid to small businesses is used to also benefit underserved communities.
"We want to make sure the program is administered in a way that does not solidify inequality in how people have access to capital, but instead, benefit to everyone who qualifies," she said. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption 
New analysis underlines a surge in demand for the government's Job Retention Scheme.
Three people react to the furloughing scheme put in place in response to the coronavirus outbreak.
US shares shed gains after a global stock market rally.
The global economic impact of coronavirus could leave nearly 200 million people jobless, a UN agency says.
With the UK economy in crisis, many sectors are still demanding further help from the government.
|
