Clusterstock

Syndicate content Business Insider
The latest news from Finance

Dow erases 937-point gain and closes negative, as investors weigh new coronavirus developments

Tue, 04/07/2020 - 4:06pm

  • US stocks slid Tuesday as investors continued to weigh new coronavirus developments.
  • All three major indexes surged in early trading before paring gains throughout the afternoon and closing in negative territory.
  • New COVID-19 cases appear to be decelerating in the US, Spain, and Italy.
  • On Monday, China reported no new deaths from the virus for the first time since the outbreak began.
  • Visit Business Insider's homepage for more stories.

US stocks slid Tuesday as investors weighed signs that the coronavirus pandemic is slowing in major economies. Sharp early gains were reduced in afternoon trading before all three indexes closed in negative territory.

Recent gains have been driven by an apparent slowdown in coronavirus cases. New cases appear to have fallen from peaks in the US, Italy, and Spain, three countries with severe outbreaks. New York Gov. Andrew Cuomo said Tuesday that hospitalizations were slowing, even though the state reported its highest one-day jump in deaths.

There are also positive signs in Asia: China on Monday reported no new deaths from the virus for the first time, and new cases in South Korea have slowed.

"The world has finally seen a glimpse of light at the end of this dark tunnel," Hussein Sayed, the chief market strategist at FXTM, told Business Insider.

Here's where major US indexes stood at the market close at 4 p.m. ET on Tuesday:

Read more: 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

Despite finishing the day lower, all three major US indexes jumped into a technical bull market early in Tuesday's trading session, marking a 20% rally from recent lows.

"I would call that a bear market rally," Randy Frederick, the vice president of trading and derivatives for Charles Schwab, told Business Insider. "If we rebound so quickly from the bottom and go right back into a sharp upturn, which frankly we've almost done, it concerns me that we're going to have a second downturn."

US airlines and cruise lines gained. United Airlines edged 2% higher, while American Airlines climbed 8%. Royal Caribbean surged nearly 14%, Norwegian Cruise Line gained more than 10%, and Carnival spiked as much as 27% after Saudi Arabia bought a stake in the company on Monday.

Still, uncertainty remains around the pace of recovery from the coronavirus-led economic slowdown. In March, requests to suspend or reduce mortgage payments increased more than 3,000% as homeowners scrambled for relief, according to a Tuesday report from the Mortgage Brokers Association. 

Small-business optimism also plummeted by the most on record in March, according to the National Federation of Independent Business. At the same time, a measure of small-business uncertainty rose to the highest level since 2017.

Read more: The US stock chief at UBS breaks down his 5-part strategy for investors looking to dominate the most uncertain earnings season in years

Treasury Secretary Steven Mnuchin said Tuesday afternoon that he spoke with congressional leaders about adding an additional $250 billion to the small-business-loan program. A vote is planned for Thursday. Last month, Congress approved $350 billion for small businesses as a part of the record $2 trillion Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.

Sayed said he thinks markets are repricing the worst-case scenario because of the virus outbreak and that investors' moves into risk assets show they believe a "V-shaped" recovery is coming.

"Attractive valuations, 'fear of missing out,' and extraordinary stimulus packages also exaggerate the upside moves in prices," he said. "However, no one yet knows the exact damage this virus has already done to the global economy, corporate earnings, and what kind of exit strategies countries will follow in the weeks ahead."

It's also likely that markets will remain choppy as the coronavirus pandemic continues on. Even though the Cboe Volatility Index has fallen from recent highs, it's still at "panic level," according to Frederick. 

"Remember that when you're in a period of time like this that you're going to get big moves up and down," he said.

Read more: Gavin Baker has navigated through 4 bear markets. He shares exactly how to invest in 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

US cuts oil production forecast through 2021 — padding the crushed market before a critical OPEC meeting

Tue, 04/07/2020 - 3:32pm

  • The US's oil production will slow to an average of 11.8 million barrels per day in 2020 and 11 million barrels per day in 2021, the Energy Information Administration announced Tuesday.
  • The production cuts aim to prop up demand for the battered commodity market and arrive days before OPEC, Russia, and other producers meet to negotiate collective pumping reductions.
  • President Trump recently threatened to impose "very substantial tariffs" on Russia and Saudi Arabia if the two nations don't de-escalate their oil-price war and keep the market from sliding even further.
  • Watch Brent crude oil trade live here.

The US is slashing its forecasted oil output as demand tanks and investors hope for Thursday's OPEC+ meeting to bring further easing.

The world's most traded commodity faces unprecedented pressure as Russia and Saudi Arabia flood the oil market with unwanted inventory. Travel restrictions and stay-at-home orders have kept consumers from capitalizing on historically low prices.

US production is projected to average 11.8 million barrels per day through the rest of the year, the Energy Information Administration announced Tuesday, down from its previous 12.99 million barrel-a-day forecast. The EIA's 2021 forecast was revised lower by 1.6 million barrels per day to roughly 11 million barrels per day on average.

The agency sees the price of Brent crude — oil's international benchmark — averaging out to $33 per barrel through 2020, its lowest level in four years and roughly half of its 2019 average. The average price will recover to $46 per barrel in 2021, the EIA added.

"Despite recent news of OPEC+ emergency meetings within the next few days to discuss production levels, without an agreement actually in place, EIA assumes no re-implementation of an OPEC+ agreement during the forecast period," the agency said in its Tuesday report.

Read more: The US stock chief at UBS breaks down his 5-part strategy for investors looking to dominate the most uncertain earnings season in years

The global price war began after Russia declined to cut production and support the coronavirus-hammered commodity market. Saudi Arabia retaliated in early March by slashing its official selling price and increasing its production activity in an attempt to take market share from Russia. An upcoming meeting of OPEC, Russia, and other producers could result in a collective pumping cut to shore up demand, but fears of another price-war spat linger.

President Donald Trump has called on the dueling producers to make peace and end their streak of price cuts and production hikes. In a Sunday press briefing, the president threatened to impose "very substantial tariffs" on Russia and Saudi Arabia if the countries couldn't coordinate on a de-escalation of their price conflict.

President Trump foreshadowed the lowered US production forecast on Monday, telling reporters that prices were pressuring oil firms to slow their pumping.

"The cuts are automatic if you're a believer in markets," Trump said, according to Bloomberg. "It's supply and demand. They're already cutting back and they're cutting back very seriously."

Brent crude traded at $32.12 per barrel at 3 p.m. ET Tuesday, down roughly 52% year-to-date.

Now read more markets coverage from Markets Insider and Business Insider:

UBS: Nearly $1 trillion in mortgage debt could be delinquent this year as a 'prolonged credit crunch' looms

'The shut down is not good for anyone': Famed 'Big Short' investor Michael Burry unloads on coronavirus lockdowns, says the response has been worse than the disease itself

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

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

Small business optimism falls by the most ever in March, ending a record run as coronavirus worry sets in

Tue, 04/07/2020 - 3:14pm

  • The National Federation of Independent Business optimism index fell 8.1 points in March to 96.4, the largest decline in the survey's history, according to a Tuesday statement.
  • The report also ended a record 39-month streak of positive small business optimism.
  • "The COVID-19 outbreak and regulatory responses to curtail its spread shook the small business sector in March," NFIB chief economist William Dunkelberg wrote in the report. "Small business owners' outlook is bleak as they wrestle to adjust quickly to rapidly changing economic conditions."
  • Visit Business Insider's homepage for more stories.

A measure of optimism among small business owners fell by the most ever in March amid the coronavirus pandemic.

The National Federation of Independent Business optimism index fell 8.1 points in March to 96.4, the largest decline in the survey's history, according to a Tuesday statement. The dismal monthly report ended a 39-month streak of strong small business optimism. Nine of the 10 index components declined during the month.

"The COVID-19 outbreak and regulatory responses to curtail its spread shook the small business sector in March,"  NFIB chief economist William Dunkelberg wrote in the report. "Small business owners' outlook is bleak as they wrestle to adjust quickly to rapidly changing economic conditions."

He continued: "Many owners have had to close their doors and others are scaling back operations dramatically." 

Read more: 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

Efforts to curb the spread of COVID-19 have meant many states have shut off major parts of the economy, banning non-essential business and telling people to practice social-distancing. In an effort to boost the economy, the Federal Reserve and the White House have taken unprecedented actions to get relief to businesses through the CARES Act and new lending facilities. 

Still, small business owners are worried about the future. The NFIB uncertainty index rose 12 points in March to 92, the highest since 2017. A measure of business conditions in the next six months slumped 17 points to net 5%, the largest monthly decline since November 2012. 

Real sales expectations tanked 31 points to net negative 12%, the largest monthly decline ever. Only 13% of firms said in March that it was a good time to expand, down from 26% in February. Job openings also fell to 35% from 38% in the previous month. 

The NFIB survey doesn't include substantial data from the second half of March, when 10 million Americans filed for unemployment insurance amid mass coronavirus layoffs, as most responses were collected in the beginning of the month.

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

Meet the 15 youngest billionaires in America

Tue, 04/07/2020 - 3:14pm

Some people don't need to spend a lifetime building wealth.

Forbes just dropped its World's Billionaires List, which ranks and profiles the richest people in the world. The 2,095 billionaires on the list are worth a collective total of $8 trillion, down $700 billion from their collective worth in 2019. The youngest billionaire in America is 22-year-old Kylie Cosmetics founder Kylie Jenner, followed by Snapchat cofounder Evan Spiegel.

Together, the 15 youngest billionaires in America are worth over $100 billion. Here they are, listed in order from oldest to youngest:

SEE ALSO: 5 billionaires who never graduated from high school

DON'T MISS: The life and career rise of Snap CEO Evan Spiegel, one of the youngest billionaires in the world

15. Brian Armstrong is the cofounder and CEO of Coinbase.

Age: 37

Net worth: $1 billion

Industry: tech

Armstrong is the CEO and cofounder of the cryptocurrency exchange Coinbase. The company was launched in 2012 and was valued at $8 billion in 2018.



14. Drew Houston is the cofounder and CEO of Dropbox.

Age: 37

Net worth: $1.3 billion

Industry: tech

Houston is the CEO and cofounder of DropBox, which has more than 500 million current users. He launched the company in 2007 while he was just 24. The company went public in 2018. Houston still owns over 20% of the company, making him the company's largest individual shareholder. 



13. Lynsi Snyder is owner and heiress to In-N-Out Burger.

Age: 37

Net worth: $3.6 billion

Industry: fast food

Lynsi Snyder received her full inheritance to West Coast fast-food chain In-N-Out Burger, founded by her grandparents, on her 35th birthday. Her father and uncle passed away young, and Snyder was the last family heir at age 18. In 2010, she became president and has since expanded In-N-Out.

As Business Insider's Áine Cain reported in October 2018, Snyder is very popular with her employees: At the time, she had a 96% approval rating on Glassdoor.



12. Scott Duncan is an heir to Enterprise Products Partners.

Age: 36

Net worth: $3.6 billion

Industry: oil

Along with his three siblings, Scott Duncan inherited a stake in his father Dan Duncan's pipeline firm, Enterprise Products Partners, in 2010. The company owns natural gas processing plants, oil and gas storage facilities, and oil and gas pipelines. Duncan isn't actively involved.

The Duncans are one of America's wealthiest families: In 2018, they had a collective net worth of $24.8 billion.



11. RJ Scaringe is the founder of the electric car company Rivian Automotive.

Age: 36

Net worth: $1 billion

Industry: automotive

Scaringe is the founder of electric car manufacturer Rivian Automotive. He launched the company in 2009 and debuted his first cars in 2019. He expects the models to be produced later this year.



10. Kevin Systrom is the cofounder of Instagram.

Age: 36

Net worth: $1.3 billion

Industry: tech

Systrom cofounded Instagram with Mike Krieger in 2010. In 2012, the company was bought by Facebook for $1 billion. At the time, Systrom owned 40% of the company. He stayed on as Instagram's CEO until leaving the company in 2018.



9. Nathan Blecharczyk is the cofounder and chief strategy officer of Airbnb.

Age: 36

Net worth: $4.1 billion

Industry: tech

Nathan Blecharczyk co-founded Airbnb with Gebbia and Chesky. He was the company's first engineer. Airbnb now operates in more than 100,000 cities and has 7 million listings worldwide



8. Chris Wanstrath is the cofounder of GitHub.

Age: 35

Net worth: $1.4 billion

Industry: tech

Wanstrath cofounded the software company Github in 2008. In 2018, Microsoft announced it was going to buy the company for $7.5 billion in an all-stock deal. At the time, Wanstrath was the largest individual shareholder. He now works at Microsoft as a technical fellow, according to Forbes.



7. Dustin Moskovitz cofounded Facebook and Asana.

Age: 35

Net worth: $9.3 billion

Industry: tech

Dustin Moskovitz cofounded Facebook with Mark Zuckerberg in 2004. He left Facebook in 2008 to launch workflow software company Asana, which earned more than $100 million in revenue in 2018. Moskovitz still owns an estimated 2% stake in Facebook and has given $1.4 billion away to charity.

As Paige Leskin previously reported for Business Insider, Moskovitz numbers among the many successful tech moguls who never graduated from college: He dropped out of Harvard along with Zuckerberg to pursue Facebook.



6. Mark Zuckerberg is the cofounder and CEO of Facebook.

Age: 35

Net worth: $54.7 billion

Industry: tech

Mark Zuckerberg created Facebook in 2004 and took it public in 2012. Zuckerberg still owns about 15% of the stock. In 2015, he and his wife, Priscilla Chan, pledged to donate 99% of their Facebook stake during their lifetimes.



5. Julio Mario Santo Domingo III is an heir to one of the world's biggest beer fortunes.

Age: 34

Net worth: $1 billion

Industry: beverage

Julio Mario Santo Domingo III's late grandfather owned a large stake in SABMiller after it was acquired by his brewer Bavaria. In 2016, Anheuser-Bush InBev acquired SABMiller for $100 billion. Santo Domingo is an heir to the fortune and a DJ for the NYC-based group Sheik 'N' Beik.



4. Lukas Walton is heir to the Walmart fortune.

Age: 33

Net worth: $18.4 billion

Industry: retail

Lukas Walton is the grandson of Sam Walton, who founded Walmart. When his father, John Walton, died in a plane crash in 2005, he inherited about one-third of John's estate. While he owns a stake in Walmart, he doesn't work for the company and devotes time to philanthropic causes.

The Waltons are the richest family in the US: Three of Lukas' relatives are among the top 15 wealthiest billionaires in the world.



3. Bobby Murphy is the cofounder and Chief Technology Officer of Snapchat.

Age: 31

Net worth: $1.9 billion

Industry: tech

Bobby Murphy cofounded Snapchat with his Stanford fraternity brother Evan Spiegel. As of January 2019, Snap Inc. was worth under $8 billion, Keris Lahiff reported for CNBC.

As Alex Heath reported for Business Insider in 2017, Murphy keeps a relatively low profile and has only given a handful of interviews.



2. Even Spiegel is the cofounder and CEO of Snapchat.

Age: 29

Net worth: $1.9  billion

Industry: tech

Evan Spiegel cofounded multimedia messaging app Snapchat with Murphy. He and Murphy each own roughly 18% of Snap, but have voting shares that allow them control over the board. He's only one of three self-made billionaires in the world not yet 30 and as of 2019 had donated nearly $65 million in Snap stock.

Spiegel is married to supermodel Miranda Kerr.



1. Kylie Jenner is the founder of Kylie Cosmetics.

Age: 22

Net worth: $1 billion

Industry: Cosmetics

Kylie Jenner founded Kylie Cosmetics in 2015. By 2019, Forbes had dubbed her the "youngest self-made billionaire" ever. Having previously owned 100% of her business, in late 2019, Jenner agreed to sell a 51% stake in her company to beauty conglomerate Coty Inc. for $600 million. The deal valued Kylie Cosmetics at $1.2 billion.



Dow jumps 700 points as investors see signs of coronavirus outbreak slowing

Tue, 04/07/2020 - 3:00pm

  • US stocks rose Tuesday, continuing Monday's rally, as investors were encouraged by signs that the coronavirus pandemic is slowing in major economies.
  • New COVID-19 cases appear to be decelerating in the US, Spain, and Italy. On Monday, China reported no new deaths from the virus for the first time since the outbreak began.
  • US airlines gained in early trading, as did cruise lines. Oil climbed on hopes that OPEC and its allies will meet later in the week to discuss production cuts.
  • Read more on Business Insider.

US stocks rose Tuesday, continuing gains from a day earlier, as investors were encouraged by signs that the coronavirus pandemic is slowing in major economies.

New cases of COVID-19, the illness caused by the coronavirus, appear to have fallen from peaks in the US, Italy, and Spain, three countries with severe outbreaks. There are also positive signs in Asia: China on Monday reported no new deaths from the virus for the first time, and new cases in South Korea have slowed.

"The world has finally seen a glimpse of light at the end of this dark tunnel," Hussein Sayed, the chief market strategist at FXTM, told Business Insider.

Here's where major US indexes stood at 3:00 p.m. ET on Tuesday:

Read more: 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

US airlines and cruise lines also gained. United Airlines jumped 11%, American Airlines gained 19%, and Delta Air Lines also advanced. Royal Caribbean surged nearly 25%, Norwegian cruise lines gained more than 18%, and Carnival spiked 27% after Saudi Arabia bought a stake in the company Monday

Meanwhile, oil prices edged higher early Tuesday but pared those gains later in the day over worries that output cuts being weighed by OPEC and its allies won't be enough to offset cratering demand amid the coronavirus pandemic. 

Still, uncertainty remains about the pace of recovery from the coronavirus-led economic slowdown. Sayed said he thinks that markets are repricing the worst-case scenario because of the virus outbreak and that investors moving into risk assets show that they believe a "V-shaped" recovery is coming.

"Attractive valuations, 'fear of missing out,' and extraordinary stimulus packages also exaggerate the upside moves in prices," he said. "However, no one yet knows the exact damage this virus has already done to the global economy, corporate earnings, and what kind of exit strategies countries will follow in the weeks ahead."

Read more: Gavin Baker has navigated through 4 bear markets. He shares exactly how to invest in 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

Chase Coleman's Tiger Global tells investors that SARS created 'an incredible backdrop for prospective returns' and reveals why it likes TikTok's parent DanceByte even more during the coronavirus pandemic

Tue, 04/07/2020 - 2:59pm

  • Chase Coleman's Tiger Global, the secretive $36 billion fund manager, told investors in its latest private fund that the SARS breakout in China in 2003 created an "incredible backdrop for prospective returns."
  • In the letter, the manager disclosed the biggest holdings in its private funds include Flipkart, Juul, TikTok parent ByteDance, DiDi, and Stripe.
  • Tiger Global said it warned its portfolio companies that it will be harder to raise money due to the pandemic.
  • "Based on our discussions, we have already seen negative net revisions to the 2020 revenue forecasts" for portfolio companies, the firm wrote.
  • Visit Business Insider's homepage for more stories.

Billionaire Chase Coleman's Tiger Global begins a recent letter to investors in his firm's private equity fund by saying the $36 billion fund manager is "deeply sympathetic to the human toll this virus is taking." 

It ends the letter, dated March 23, by reminding investors that some of the firm's "most impactful" private investments were boosted by the 2008 housing crisis — such as Facebook, Flipkart, and JD — and that the SARS outbreak in 2003 created "an incredible backdrop for prospective returns."

While "no one knows how long coronavirus will affect our lives or the impact it will have on the economy," the firm is identifying winners and losers.

"Many publicly traded and privately held companies, including some [portfolio companies], are seeing their businesses negatively impacted in the short term. Some businesses, particularly online retailers, digital content platforms, and online education providers, appear to be relative beneficiaries," the firm wrote. Tiger Global declined to comment.

Currently, the firm has $1.7 billion in software-as-a-service companies, the letter states, naming unicorn Toast as a portfolio company. Tiger Global also has high praise for TikTok's parent company ByteDance.

"Our research suggests that ByteDance will represent 19% of China's online advertising market in 2020, up from roughly 4% in 2017. The company has expanded globally and has nearly 300 million daily users outside of China," the manager wrote. Some of the firm's other large holdings include Juul, DiDi, Stripe, and Flipkart.

The letter was sent to investors roughly two months after the firm closed its 12th private fund, at $3.75 billion. The letter states that the fund was oversubscribed and that more than 90% of the assets come from existing investors.

The secretive fund manager, which originally invested in just public technology companies before launching its first iteration of a private fund in 2003, said it has distributed more than $4 billion since the beginning of 2019 thanks to pre-IPO positions in companies in like Spotify, Peloton, Uber, and more. 

As the pandemic progresses, Tiger Global has spoken with its portfolio companies and has "already seen negative net revisions to the 2020 revenue forecasts for the [private investment] portfolio in aggregate."

"As always, we have been encouraging our management teams to make disciplined choices about where and how they invest and to expect that it will be more difficult to raise capital in the future."

Tiger Global, of course, is not the only investment manager looking for opportunities as economies stall due to the pandemic.

Maverick Capital, run by fellow Tiger Cub and billionaire Lee Ainslie, told investors he was hoping to take advantage of the volatility in the marketplace at the beginning of March, while distressed investors like Marc Lasry have been waiting for the market to fall off so more opportunities will appear.

Tiger Global and Maverick though were not immune to the losses many suffered in March, when equity markets dropped rapidly: The firms' hedge funds both fell double-digits

SEE ALSO: Julian Robertson's Tiger Management is at the center of a quarter-trillion-dollar web linking billionaires, the Pharma Bro, and a 'Big Short' main character

SEE ALSO: Billionaire-run hedge funds Tiger Global, Maverick, and Coatue all lost double-digits in a tough month

SEE ALSO: How a brain-zapping device can calm hedge-fund traders' nerves when markets are chaotic, according to a veteran performance coach

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.

Requests to suspend or reduce mortgages surged more than 3,000% in March as homeowners sought relief from the coronavirus slowdown

Tue, 04/07/2020 - 2:00pm

  • Requests for forbearance, which temporarily suspends or reduces mortgage payments, surged more than 3,000% in March, a survey released on Tuesday by the Mortgage Bankers Association found.
  • The report also found that loans in forbearance increased to 2.66% April 1 from 0.25% on March 2. Mortgages backed by Ginnie Mae showed the largest jump, to 4.25% from 0.19%.
  • "It is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors," said Mike Fratantoni, chief economist at the MBA.
  • Read more on Business Insider.

Homeowners are scrambling to get answers about relief as the coronavirus pandemic wears on.

Requests for forbearance, which temporarily suspends or reduces mortgage payments, surged more than 3,000% in March, a survey released on Tuesday by the Mortgage Bankers Association found. From March 2 to March 16, forbearance requests increased 1,270%. That momentum picked up, with requests gaining 1,896% from March 16 to March 30.

"MBA's survey highlights the immediate relief consumers are seeking as they navigate the economic hardships brought forth by the mitigation efforts to stop the spread of COVID-19," Mike Fratantoni, MBA's chief economist, said in a statement.

The uptick in requests came as the coronavirus pandemic hit the US economy hard, sending millions of Americans into lockdown and spurring record layoffs. While the housing industry was first helped by the market meltdown, which sent mortgage rates to record lows, it's now seeing the impact of the economic fallout related to the virus.

Read more: 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

Still, the industry is "committed to providing this much-needed forbearance as mandated by law under the CARES Act," Fratantoni said, adding that requests are expected to "continue to skyrocket at an unsustainable pace in the coming weeks," putting "insurmountable cash flow constraints on many servicers."

The huge spike in requests pushed call-center hold times to 17 1/2 minutes from less than two minutes in just three weeks, the report said. In addition, abandonment rates grew to 25% from 5%.

Tuesday's report also showed an increase in loans in forbearance to 2.66% April 1 from 0.25% on March 2. Mortgages backed by Ginnie Mae had the largest jump, to 4.25% from 0.19%, the report said. Independent mortgage bank services now hold 3.45% of loans in forbearance, the highest percentage, the MBA said. This reflects their focus on low- to moderate-income borrowers, including Federal Housing Administration and Veterans Affairs home-loan programs.

"To ensure that millions of Americans receive the support they need during the pandemic, it is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors," Fratantoni said.

Read more: Gavin Baker has navigated through 4 bear markets. He shares exactly how to invest in 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

Goldman Sachs is delaying and shortening its summer internship, but will pay interns their full original offer (GS)

Tue, 04/07/2020 - 1:37pm

Goldman Sachs told its incoming summer interns on Tuesday that it will delay the start of its vaunted internship program to July 6 and shorten the program to five weeks due to the coronavirus. 

Interns will still be paid for the full length of the originally intended length of the program, Goldman said in an email sent to incoming interns around the world excluding India. 

"In light of the current environment... we have decided to revise the start date of your 2020 Summer Internship Program to the provisional date of July 6, 2020 and shorten the program duration to five weeks in total," Goldman said in the email. 

"Please know that we intend to honor the full financial commitment of your original program duration," it told interns. "We will provide further information on how and when payment will be distributed." 

Goldman Sachs also said that it is exploring alternative formats for the internship, including "virtual components." 

Citigroup is similarly planning to delay its start to July 6, but pay interns for the full summer, the Financial Times reported

College students can receive a discounted $29 subscription to Business Insider Prime, where we take you inside the companies and topics that matter to you. Sign up using your .edu address here.

Join the conversation about this story »

UBS: Nearly $1 trillion in mortgage debt could be delinquent this year as a 'prolonged credit crunch' looms

Tue, 04/07/2020 - 1:20pm

  • The late-March spike in unemployment stands to drive more than $1.1 trillion in debt delinquency across credit card, mortgage, and auto loans, UBS strategists said Monday.
  • The bank's consumer credit health gauge hit its worst reading since late 2009 in the first quarter due to the jump in joblessness and weakening economic sentiment.
  • The sharp increase in jobless claims suggests $950 billion in mortgage debt will reach delinquency in 2020, the firm said.
  • Up to $110 billion in credit card payments and $60 billion worth of auto debt can also run late should the unemployment rate reach UBS's 12.6% estimate.
  • Visit Business Insider's homepage for more stories.

The soaring US unemployment rate is placing $950 billion in mortgage debt at risk of delinquency, UBS highlighted in a Monday note.

The nationwide coronavirus shutdown is placing a significant burden on consumer debt. UBS's credit health indicator posted to its worst reading since late 2009 in the first quarter, driven higher by spiking unemployment and weakening consumer sentiment. Slowing car and home sales will further drag on the metric in the coming weeks, UBS said.

The firm's biggest questions now focus on how bad the debt market fallout might be. A survey of 2,000 households showed early signs of stress brewing for consumer credit, with 14% of homes saying they'll likely miss a payment. Credit card debt was listed as most likely to default, followed by mortgage and auto loans.

To estimate how much debt could become delinquent, the team of strategists led by Matthew Mish compared unemployment rate changes to 90-day delinquency rates from 1999 onward. The late-March spikes in jobless claims stand to push the unemployment rate to 12.6% by the end of the year, UBS said, and bring the delinquency rate for mortgage loans to 10%, or roughly $950 billion in debt.

Read more: Gavin Baker has navigated through 4 bear markets. He shares exactly how to invest in today's volatile environment — and explains why he's laser-focused on 2 areas in particular.

Up to $110 billion in credit card debt and $60 billion worth of auto debt would reach delinquency in such a scenario, UBS added.

Private-sector lenders will face smaller losses due to government collateral, but defaults and lender stresses "risk a prolonged credit crunch" as the coronavirus's economic toll escalates, the team wrote. The systemic risks posed by the pandemic aren't as drastic as those seen during the global financial crisis. Yet UBS fears overdependence on low-quality lenders and high potential losses can create lasting barriers in the lending market when cash is needed most.

If a drastic credit market collapse is to be avoided, the government needs to issue additional aid to businesses, lenders, and consumers, the team wrote. A debt crunch stands to exacerbate the already dire economic situation, and issuing targeted stimulus can give the US better chances for a surging recovery.

"Policymakers likely have more work to do to unclog and resuscitate these credit channels to properly facilitate credit intermediation. The alternative is a more prolonged and slower recovery," UBS said.

Read more: 'I was a single mother with 2 small kids': How Ashley Hamilton flipped a $20,000 waitressing salary into real-estate-investing success and a 10-unit portfolio

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

Real-estate brokerage Redfin is furloughing agents and laying off 7% of staff as housing demand plunges

Tue, 04/07/2020 - 1:17pm

  • Redfin CEO Glenn Kelman said in a blog post that the brokerage is furloughing 41% of its agents. 
  • In a regulatory filing, the company also said that it would be laying off 7% of its staff. 
  • The coronavirus has slowed the US housing market, prompting layoffs at other brokerages like SoftBank-backed Compass. 
  • Corporate employees were spared the bulk of the layoffs and furloughs, but will take a 10-15% pay cut. 
  • Click here for more BI Prime stories.

A sudden slowdown in residential real estate due to the coronavirus has prompted more job cuts. 

Redfin Chief Executive Glenn Kelman said in a blog post on Tuesday that the residential-brokerage company is furloughing 41% of its agents and their support staff until September 1.

In an SEC filing, the company also said that it would be laying off 7% of its staff. 

The company is laying off new hires who haven't completed training or worked with any customers, according to the blog post. Most corporate employees at the brokerage's Seattle headquarters aren't being laid off, but they are taking a 10-15% pay cut. As of December 31, 2019, Redfin had 3,377 employees.

Furloughed employees were offered a "transition bonus" and health care benefits through the summer. According to the filing, the total cost of termination bonuses and severance payments ranges from $2.9 million to $3.3 million. 

"To those who have been asked to leave Redfin today, thank you," Kelman wrote."I can't imagine the grief we've caused you. I'm sorry we let you down. We'll fight like wild animals to bring everyone on furlough back."

Kelman cited the federal stimulus's $600 weekly increase in unemployment insurance as one of the deciding factors behind the company's choice to furlough employees. The company estimates that 75% of employees who are furloughed will earn more from unemployment insurance than they did working for Redfin. 

At the end of last month, Kelman elected to forgo his base salary for 2020. Executive officers are electing to not receive bonus payments. 

The coronavirus has caused a major slowdown in the once-healthy US housing market. Redfin is not the only residential brokerage to lay off employees: SoftBank-backed Compass laid off 15% of its staff last month.

Redfin also paused its iBuying program last month, joining Zillow and Opendoor in halting new home-flipping activity.

SEE ALSO: The coronavirus is slamming iBuyers, and firms like Zillow and SoftBank-backed Opendoor are halting their capital-intensive home-flipping businesses

SEE ALSO: SoftBank-backed real estate brokerage Compass just slashed 15% of staff and is pausing marketing as coronavirus slams the housing market

SEE ALSO: 7 charts show how the coronavirus could clobber real estate, from retail vacancies of nearly 15% to plunging office rents in Texas cities

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.

Airbnb could run out of cash in one year, even with the $1 billion it just raised, because of how devastating the coronavirus is on its business

Mon, 04/06/2020 - 9:03pm

  • The $1 billion in cash Airbnb announced Monday that it has raised likely won't last the company very long.
  • Even before the coronavirus epidemic hit, the travel startup was losing money; thanks to the crisis, its losses and cash burn have likely exploded.
  • In a worst-case scenario, it might not have enough cash to last a year, despite the new funding.
  • More likely, thanks in part to some cost cuts, it can extend its life beyond that, but not by much, particularly if the crisis and associated economic downturn linger.
  • Click here for more BI Prime stories.

The $1 billion financing that Airbnb said it secured Monday gives it a vital resource as the coronavirus squeezes its business. But even with the 10-figure cash infusion, the company's long-term survival remains in question so long as the pandemic and the associated economic downturn persist.

Indeed, Airbnb could still run out of cash in as little as a year, depending on how hard its revenue is being hit and how much it's able to control its expenses, according to Business Insider's interpretation of some of the company's financial figures which news organizations have previously reported.

The question of just how much cash Airbnb has and how long that stockpile will last the company has become an urgent one because of the coronavirus pandemic. The outbreak has disrupted the travel industry as a whole, as governments around the world have urged or required citizens to stay home to try to limit the spread of the disease. Those steps have halted economic activity throughout the US and in large parts of the world.

It's unclear how long the epidemic will last or when the US or global economy will recover. Worryingly, in the US, there have been massive numbers of layoffs over the last two weeks and a growing number of business closures, both of which could portend an extended economic downturn. So, companies of all kinds and sizes are having to assess whether they have enough cash on hand to see them through the crisis.

Airbnb has experienced a sharp reversal of fortune

That Airbnb should be in a position where its survival is in question represents a sharp change of fortunes for the company. As recently as a few months ago, the company was widely considered one of the standouts among the group of jumbo-sized venture-backed startups. With a proven business model and a past history of profits, Airbnb was gearing up for a widely anticipated initial public offering.

Those plans having almost certainly been shelved, Airbnb turned to private investors for new funding. As part of the deal announced Monday, Airbnb will raise $1 billion from Silver Lake and Sixth Street Partners through a combination of debt and equity financing. The company didn't say exactly how it would use the funds, but said $5 million of it would go into a fund it created to offer grants to its superhosts — property managers who offer popular and highly rated accommodations through its service — to help them pay their mortgages, rent, and utilities.

The San Francisco startup is almost certainly reserving the bulk of the funds to pay its ongoing operating costs. To understand why — and why the company's still in danger of running out of cash — it's helpful to look at Airbnb's finances, to the extent that they are known. As a still-private company, Airbnb does not publicly release its financial statements, and a company representative declined to answer questions about its finances and cash stockpile.

But before the latest funding, Airbnb likely had somewhere between $1 billion and $3 billion in cash on hand. In February, in a story about the company's third-quarter results, The Wall Street Journal reported that Airbnb had $3 billion in cash. Last month, in an article about Airbnb's fourth-quarter results, Bloomberg reported the company had more than $2 billion. However, neither story made clear when Airbnb had the amount of reported cash, whether that amount was current as of the end of the third or fourth quarter, respectively, or as of the date of the articles.

With Monday's cash infusion, Airbnb, at worst, now has less than $3 billion on hand. At best, it likely has somewhere around $4 billion.

No one is travelling, but Airbnb still has lots of expenses

That's a lot of money, but it doesn't amount to even a year's worth of revenue for Airbnb. Last year, the company posted about $4.8 billion in sales, according to figures compiled from The Information, The Journal, and Bloomberg. 

That comparison is important, because the company's business — like those of other travel companies — has been pummeled by the pandemic. Some 90% of reservations made through its service with check-dates of between March 18 and April 7 have been cancelled, according to data from AirDNA, an industry research firm. And few new bookings are being made, AirDNA's data indicates. 

"They've probably got close to 0 revenues or very, very low revenues," Siegel said.

While Airbnb's revenue has been slashed, it still has ongoing expenses. Among other things, it has thousands of employees, office space in San Francisco, and the costs involved in keeping its online service up and running. Last year, those costs exceeded the company's revenue. All told, the company appears to have had $5.1 billion in expenses for all of 2019, at least on an EBIDTA — earnings before interest, depreciation, taxes, amortization — basis, based Business Insider's back-of-the-envelop analysis of the select financial figures reported in The Information, The Journal, and Bloomberg. That would amount to expenses of about $1.3 billion a quarter.

There's little information available about Airbnb's recent cash burn rate. But EBIDTA is supposed to be a proxy for that, because it excludes certain non-cash charges. 

So, if you assume that Airbnb has no revenue right now and it continued to spend at the same rate it did last year, its cash outflow would equal its EBIDTA expenses of $1.3 billion a quarter. At that rate, it would blow through the $1 billion in new funding it just got in less than 90 days. If you figure it has less than $3 billion in the bank even after that new funding, its coffers would be empty within three quarters at that spending rate.

But Airbnb's revenue probably hasn't completely disappeared... 

To be sure, that's a worst-case scenario. Airbnb is almost certainly in better shape and will likely will last longer than that scenario suggests, even if it doesn't raise any more money and even if the pandemic lingers on.

While cancellations have soared and new bookings have fallen off a cliff, Airbnb is still seeing some activity on its site. Some consumers, particularly city dwellers hoping to get out of hard-hit urban areas, have used its service to book accommodations in more rural areas for 30, 60, or even 90 day stays, according to AirDNA CEO Scott Shatford. Those kinds of long-term reservations now make up nearly half of all bookings on Airbnb's service, he said. So, it does have some revenue — potentially a significant amount — coming in.

Meanwhile, the company is reportedly cutting its expenses. It's stopped all of its marketing spending, largely frozen new hiring, and is delaying paying out bonuses, according to a report last month in The Information. Cutting the marketing budget alone will save the company $800 million this year, according to the report.

Those two factors — some amount of revenue coming in and less cash going out than before — should allow Airbnb to extend its life well beyond the worst-case scenario. But that doesn't mean it's out of danger.

It's still likely burning lots of cash

Let's generously say Airnb's sales are now one-third of what they were a year ago. That would mean that it's pulling in about $300 million in revenue quarterly. Let's also say that thanks to cost-cutting measures it's managed to slash its expenses by about $300 million a quarter — $900 million over the last three quarters of this year. That would mean that its quarterly expenses would be about $1 billion. So, its cash burn rate would now be around $700 million a quarter.

At that rate, it will gobble up its new $1 billion in funding within two quarters. And if you generously assume it has $4 billion total cash, it would eat that up within six quarters. If it has less than $3 billion, that stockpile would last it little more than a year.

It's quite possible the economy will rebound or Airbnb will be able to attract more funding if its current cash starts to run low. And many analysts think it's likely, if it gets through this crisis, that the company will bounce back stronger than ever.

Still, a month or two ago, few would have thought that Airbnb — of all startups — would be in position where its survival was even theoretically on the line.

Got a tip about Airbnb? Contact Troy Wolverton 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: Airbnb hosts are furious that the company is sticking them with the cost of letting guests cancel due to the coronavirus crisis

Join the conversation about this story »

NOW WATCH: Jeff Bezos reportedly just spent $165 million on a Beverly Hills estate — here are all the ways the world's richest man makes and spends his money

Jamie Dimon tells shareholders he expects the coronavirus to cause a 'bad recession' and 'financial stress similar to the global financial crisis,' at a minimum (JPM)

Mon, 04/06/2020 - 7:52pm

In his annual letter to JPMorgan shareholders, published Monday, CEO Jamie Dimon said that while the bank is strong, it won't be untouched by the fallout from the coronavirus pandemic.

The pandemic will be damaging to the US economy, Dimon said. "At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008," he said.

"Our bank cannot be immune to the effects of this kind of stress," he added.

The US is grappling with the economic consequences of the pandemic, which has roiled global markets and shut down much of the country in an attempt to curb the spread of the disease.

Most firms agree that the US is either already in a recession or will soon be in one, marked by massive slowdowns in output and an elevated unemployment rate — in the past two weeks alone, 10 million Americans have filed for unemployment benefits as coronavirus layoffs persist.

Read more: 14 Wall Street experts told us the single metric they're each watching to assess coronavirus market fallout — and give their portfolios a leg up

In response to the crisis, JPMorgan has stopped buying back its own stock, Dimon said, adding that halting buybacks "was simply a very prudent action." Dimon also said the board would consider suspending the bank's dividend only in "an extremely adverse scenario" that would include a 35% contraction of gross domestic product in the second quarter and an unemployment rate of 14%.

"If the Board suspended the dividend, it would be out of extreme prudence and based upon continued uncertainty over what the next few years will bring," Dimon wrote.

Still, Dimon said that the bank's capital resources and liquidity remained strong and that JPMorgan is lending or plans to lend an additional $150 billion for client needs.

Read more: GOLDMAN SACHS: These 13 cheap stocks are poised for years of better-than-expected profits — and they're must-haves as the coronavirus wipes out earnings in 2020

JPMorgan is "working closely with all levels of government during this crisis" but has not asked for any regulatory relief, Dimon said. But he said that the financial system needed an overhaul when the crisis subsides.

Next, there needs to be a solid plan to "carefully" return Americans to work, with precautions that include testing, Dimon said.

"The country was not adequately prepared for this pandemic — however, we can and should be more prepared for what comes next," he wrote. "Done right, a disciplined transition would maximize the health of Americans and minimize the time, extent and suffering caused by the economic downturn."

Dimon briefly thanked people who wished him well after his emergency heart surgery in March, but he didn't give any further updates on his health.

Read more: 'Still too high': Goldman's global equity chief lays out 4 reasons why the stock market will melt down further before it fully captures the coronavirus crisis

Join the conversation about this story »

NOW WATCH: 6 creative strategies to deal with student loan debt

Buybacks have long been the stock market's biggest source of buying power — but they're quickly fading and won't come back for years, a new report says

Mon, 04/06/2020 - 7:51pm

  • Corporate stock buybacks — the biggest driver of equity demand — are fading and may not return for several years, analysts at Sanford Bernstein said on Monday.
  • The repurchase programs face threats from weakened revenue streams, restrictions tied to government loans, and cash protection amid the coronavirus outbreak's economic turmoil.
  • A debate about whether buybacks are "socially unacceptable" could place a more permanent drag on the programs, the team wrote.
  • Buybacks were a key source of fuel for the 11-year bull market, as such programs reduce the number of shares outstanding and boost each individual unit's value.
  • Visit Business Insider's homepage for more stories.

Corporate buybacks will lag for years and leave a multibillion-dollar hole in stock demand, Sanford Bernstein said Monday.

Analysts are already projecting what financial markets will look like after the coronavirus outbreak, and Bernstein sees a collection of factors wiping out repurchase activity. The market's biggest driver of demand will be "severely curtailed" for several years, leaving stocks "unlikely to return to their pre-crisis valuation multiples," the firm wrote in a note to clients.

Buybacks played a key role in keeping the 11-year bull market afloat when other positive drivers for stock prices dried up. When firms buy their own stock, it reduces the number of shares outstanding and lifts the value of each remaining unit. Last year saw roughly $730 billion spent on buybacks, according to S&P Dow Jones Indices.

The revenue slowdown firms are experiencing during the pandemic will directly hit their ability to buy back stock, the team led by Inigo Fraser-Jenkins said. Other firms had relied on debt issuance to buy back shares, but that path "now seems impossible" as firms bolster cash holdings for the likely recession ahead, the team added.

Read more: A stock chief at $7.4 trillion BlackRock shared with us his coronavirus-investing playbook: How to keep money safe, what he's avoiding, and some surprising contrarian bets

Even if they had the means to, several companies would be legally blocked from stock buybacks for years to come. The government's $2 trillion stimulus plan set aside hundreds of billions of dollars for corporate loans, but firms tapping the relief pool won't be able to buy shares or pay dividends until one year after they pay off the borrowed sum. The widespread damage caused by the virus outbreak will leave firms across all industries taking out loans and further stifling buyback activity, Bernstein said.

Read more: 'I was a single mother with 2 small kids:' Here's how Ashley Hamilton flipped a $20,000 waitressing salary into real-estate-investing success and a 10-unit portfolio

Possibly the most "intriguing" factor fueling buybacks' demise is the social stigma against them, according to the firm. Such programs could become "socially unacceptable" alongside dividend payments as the public calls for focus to shift from the shareholder to the stakeholder. The debate is already picking up steam in Europe, and a shift in how companies deploy cash could bring a permanent change to buyback frequency, Bernstein said.

"Over the last week this has moved from being a purely economic question to an ethical question," the analysts said.

Despite the new headwinds, some repurchase programs will continue, Bernstein said. Companies flush with capital without government-loan constraints are poised to resume buybacks. Firms facing temporary blockages may also defer buybacks years down the road, the team wrote, but investors should still anticipate a broad decline in activity throughout the market.

Now read more markets coverage from Markets Insider and Business Insider:

Dow surges 900 points on latest signs that the coronavirus death rate is slowing around the world

Economists think coronavirus could push unemployment above Great Depression levels. Here's why the pain won't be as prolonged this time.

Layoffs, furloughs, and spending cuts: We're tracking how oil giants from Exxon to Halliburton are responding to the historic price shock

Join the conversation about this story »

NOW WATCH: Why bidets are better than buying countless rolls of toilet paper

A stock chief at $7.4 trillion BlackRock shared with us his coronavirus investing playbook: How to keep money safe, what he's avoiding, and some surprising contrarian bets

Mon, 04/06/2020 - 7:51pm

  • Tony DeSpirito of BlackRock told Business Insider about the blend of safety and risk he's targeting after an unprecedented bout of volatility and economic uncertainty.
  • With the economy possibly frozen in place for months, and amid the threat that similar measures will be imposed again, he's looking for companies that can outlast their peers.
  • DeSpirito is the chief of BlackRock's fundamental-active-equity business and the manager of a $35 billion fund.
  • Visit Business Insider's homepage for more stories.

In an unprecedented crisis, Tony DeSpirito of BlackRock is working on a road map.

DeSpirito is the chief investment officer of fundamental active equity for the largest asset manager, which oversees $4.7 trillion. He also manages its $35 billion equity dividend fund.

In an exclusive interview, he told Business Insider how he's thinking about the meltdown spurred by the coronavirus pandemic.

The core of DeSpirito's approach is finding companies that are highly profitable, which means they steadily earn more than their cost of capital. After the February and March sell-off, he's applying that focus to companies that have abruptly become undervalued.

"Stocks that have done the worst, which are the value stocks, will do the best," he said. "The only times when we've been at spreads this wide (between the most expensive and least expensive stocks) ... over the last hundred years that are similar are the global financial crisis and the Great Depression."

Also at a historic level is the yield gap between dividend-paying stocks and Treasury bonds, which hasn't been this wide in 65 years.

"I think you're going to see demand for dividend-paying stocks grow" as investors continue to seek yields, he said.

One group of stocks fitting that description is the Vanguard Dividend Appreciation Index Fund ETF.

That hunt for value comes with the realization that a company's financial strength is more important than ever and shocks to the system can be even more severe than he had expected.

"In the short run, we're spending a lot of time stress testing balance sheets," he said. "We're now doing a case where we say, 'What if the capital markets are closed?' All you have is your cash and your revolver, and your sales go to essentially zero. How long can you last?"

Because the expansion ended so abruptly, DeSpirito said he was applying that focus on quality to the cyclical stocks that will benefit the most as the US economy gets up off the mat and starts growing again in the next cycle.

"We want high-quality businesses that grow over time," he said of his approach. "Finding the quality cyclicals that have good balance sheets over the next three years is going to prove tremendously valuable."

Those elements are telling him to steer clear of companies with too much leverage, and DeSpirito said companies would make different choices now that they know a pandemic could bring the global economy to a halt.

"Coming out of this, I think corporate America is going to rethink what's an inappropriate level of debt, and so that means probably means less M&A," he said. "It may mean less buybacks."

However, he said the few companies that have a ton of cash on their balance sheets would have a rare opportunity to snap up their competitors at low prices.

DeSpirito also identified two areas he sees as safe, steady investments and two areas where the balance of risks and rewards has become much more appealing than it was. The first of those stable areas is tech, which he said was "the new staple."

"Everyone has to build out their home office, and to the extent you didn't have a good home office, you now need one, and so you're spending on equipment there," he said. "Companies spend more on security because all the people working from home. They spend more on the networking telecommunications side."

Interested investors could implement those ideas through funds like the SPDR S&P Technology Hardware ETFFirst Trust Nasdaq Cybersecurity ETF, and iShares North American Tech-Multimedia Networking ETF.

Meanwhile, he said drugmakers weren't suffering from a big drop in demand like the more consumer-focused businesses, and their stocks are holding up relatively well because of it. One way to invest in that sector is the Invesco Dynamic Pharmaceuticals ETF.

For investors comfortable with more risk, DeSpirito said bank stocks looked appealing despite record-low interest rates. 

"Dodd-Frank was built for the environment we're going through. So I think you're going to see banks come on the other side of this relatively unscathed," he said. "The financial system is in so much better shape today."

There are also risks worth taking in energy stocks, provided they meet his other criteria. The key, he said, is to find the companies that can endure oil prices of $20 a barrel or less for a time.

"Within oil, there's a range of quality," he said. "I would say a high-quality company has diverse supply of oil plus, low cost of production. And then you want to look at the quality of the balance sheet."

SEE ALSO: GOLDMAN SACHS: These 13 cheap stocks are poised for years of better-than-expected profits — and they're must-haves as the coronavirus wipes out earnings in 2020

Join the conversation about this story »

NOW WATCH: 6 creative strategies to deal with student loan debt

14 Wall Street experts told us the single metric they're each watching to assess coronavirus market fallout — and give their portfolios a leg up

Mon, 04/06/2020 - 7:51pm

  • Business Insider asked 14 investment strategists and analysts to share one crucial metric, index, or signal they're closely tracking as the novel coronavirus throws markets and economies into disarray.
  • Their answers illustrate where experts are looking to gauge when the worst may be over for investors.
  • "What matters for the market right now is the cresting of virus cases — not PMI data, not earnings revisions, and certainly not GDP estimates," one chief investment strategist said.
  • Visit BI Prime for more investing stories.

The novel coronavirus, with the devastation it's inflicted on economies around the world, has created a chaotic environment for investors that's virtually unparalleled.

In the US, the longest bull market in history ended, but then the Dow Jones Industrial Average reentered one within weeks. Amid those price swings, a widely used measure of expected market volatility jumped to its highest level on record.

The Federal Reserve attempted to stabilize the market with two emergency interest-rate cuts in March. That lowered borrowing costs and was designed to stimulate economic activity at a time when officials mandated quarantines, businesses shuttered, and experts forecast a skyrocketing unemployment rate.

Now, as markets whip around into early April, and the investment community expects further deterioration of economic growth, investors are on edge in a highly uncertain environment. After all, there is no real COVID-19 playbook to consult.

For a window into how strategists are judging the unprecedented macroeconomic environment, Business Insider asked 14 investment strategists and analysts to share one crucial metric, index, or signal they're closely tracking as they assess the ultimate damage the coronavirus will inflict.

For the sake of drawing from a wide variety of economic and market gauges, we asked experts to provide a response other than the widely cited US jobless claims, which hit 6.6 million last week for a two-week total of almost 10 million.

Their answers illustrate how they're gauging when the worst may be over for investors. Several told us the number of new coronavirus cases is the most important figure to watch — even more so than any core measure of the US economy.

"The current environment has us paying less attention to economic data and laser-focused on the virus data," Ed Campbell, a portfolio manager and managing director at QMA, told Business Insider.

Their responses come just ahead of corporate earnings season, which will give investors early evidence of how the virus has negatively affected a wide variety of public companies. First-quarter earnings for S&P 500 companies are expected to decline 7.3%, the largest year-over-year drop since falling 15.7% in the third quarter of 2009, according to FactSet. 

Here are the singular measures 14 experts told us they're watching:

Lisa Emsbo-Mattingly, Fidelity: the Commodity Research Bureau's raw-industrials spot-price index

Lisa Emsbo-Mattingly, the director of research for global asset allocation at Fidelity Investments, is keeping a close watch on commodities of all kinds. 

She's carefully monitoring the Commodity Research Bureau's raw-industrials price index, which tracks the direction of widely used commodities such as copper scrap, lead scrap, steel scrap, cotton, burlap, and rubber, according to Yardeni Research.

The index, which was constructed in the 1950s, takes a look at the price of commodities harnessed in overall industrial activities. On Friday, the measure was near a four-year low.

Emsbo-Mattingly considers the measure reliable because it's a real-time indicator of global economic activity and the strength of the US dollar.

"When we see the CRB raw industrials begin to move consistently up, we will feel more confident on the outlook for US and global growth," she told Business Insider.

 



David Aurelio, Refinitiv: semiconductor equipment

Digital dependency has exploded in recent years, but the pace has picked up through the pandemic. Consumers are relying heavily on technology for connection as they spread away from peers and their workplaces. 

"At the heart of this expansion are semiconductors," David Aurelio, the senior equity-markets-research manager at Refinitiv, said, referring to the components and circuits found in many of our devices and computers. 

"If semiconductor-equipment companies are expected to grow, then expect to see economic expansion to follow," he said.

The S&P 500 semiconductor-equipment subindustry is expected to report a rise in earnings this year of 16.8%, and nearly 24% next year, outpacing the broader market's earnings expectations, Aurelio said.

With analysts' expected growth of 5G capabilities, too, the overall health of the semiconductor sector indicates "there is reason to be optimistic about economic expansion," Aurelio told Business Insider. 

The VanEck Vectors Semiconductor ETF has fallen about 22% this year, about in-line with the S&P 500's decline. 

He's also keeping a close watch on analysts' earnings revisions for companies' first-quarter earnings results.



Solita Marcelli, UBS Wealth Management: areas of the market that may be oversold

The old saying "throwing the baby out with the bathwater" refers to getting rid of something valuable in an unavoidable — yet mistaken — fashion while trying to reject something more broadly unfavorable.

There's been a lot of that during the severe market sell-off, said Solita Marcelli, the deputy chief investment officer for the Americas at UBS Global Wealth Management.

She pegged that dynamic — companies of all fundamentals being bought and sold indiscriminately, regardless of underlying strength — as one major theme she is closely monitoring to gauge the sell-off's condition. 

"Many stocks that have strong balance sheets and long-term cash-generation power have been hit just as much as those that are much weaker," she wrote in a recent note to clients. "This has created an enormous opportunity to own high-quality names that will differentiate themselves once dust settles."

Just consider the median return for names with varying S&P quality rankings from the market's high on February 19 through March 20. They show a brutal sell-off that hasn't spared many.

For instance, stocks with A+, A, and A- rankings have returned about -32 to -36% during that time — a showing not much better than names with the far weaker B- and C rankings, which have returned -44 and -31% during the same time, according to a UBS and FactSet analysis. 



Sam Stovall, CFRA Research: the S&P 500's rolling 15-day average intraday percentage price change

One popular way to measure stock-price swings is the Cboe Volatility Index, known as the VIX — and even better known as the market's "fear gauge." 

The forward-looking index takes the S&P options' implied moves and conveys the level of expected volatility over the next 30 days, rather than "realized," or actual, volatility. 

As the markets have gone haywire, the VIX spiked just above 80 last month in its highest reading on record and fell in recent weeks to about 50 on Friday.

Still, these figures are elevated; the index stayed below 20 for most of 2019. For a more granular look, the VIX is hardly the only way to look at how wildly stock prices are moving. 

Sam Stovall, the chief investment strategist at CFRA Research, told us he was looking to another measure of equity-market swings to gauge "when the worst may be behind us." He watches the rolling 15-day average intraday percentage price change on the S&P 500. 

We checked in with Stovall on March 30, when US stocks rose on the back of the Trump administration's expanded social-distancing measures.

During that Monday session, his measure was "still on the ascent," so he didn't think the worst was over "just yet." The index's average intraday change on a percentage basis stood at 6%, the largest such mark since the 2007-09 financial crisis. 

On April 3, we checked in for an update. 

"My volatility measure has been on the descent" since March 27, "implying that the worst may be behind us," Stovall said. 



Frank Cappelleri, Instinet: the NYSE Tick index

As a technical analyst, Frank Cappelleri spends a lot of time examining the minutiae of markets.

Cappelleri, Instinet's chief market technician, regularly sends clients market snapshots throughout the trading session, detailing key levels to watch on the S&P 500 and providing historical context around the market's moves.

He told Business Insider that lately he's paying attention to one investors might be missing out on: the NYSE Tick index, which measures the difference between stocks listed on the New York Stock Exchange moving higher and those moving lower at any point in time.

During periods of relative market calm, the index is generally between minus 1,000 and plus 1,000, he said. For instance, the average tick range between October and February 19 — the S&P 500's closing high — was 1,700.

Since then, the average has been 2,700, marking a rise of nearly 60%, he said. As long as that range remains wide, investors can expect conditions to remain stressed. 

By design, the index can highlight a situation that the widely used VIX may not fully be able to show. 

While investors know volatility as measured by the VIX has "exploded," Cappelleri said, it spikes only during severe market sell-offs, while the NYSE Tick index "reveals acute intraday activity in both directions by displaying outsized movement in both buying and selling surges."



Emily Roland, John Hancock Investment Management: the US dollar's direction

Through the market's recent chaos, Emily Roland — the co-chief investment strategist of John Hancock Investment Management — told us she was closely watching the US dollar's direction. 

"It will provide important clues to cross-asset class performance," Roland said.

The US dollar index measures the greenback's value against a basket of other currencies, most heavily against the euro. In March, it shot up to the highest point in more than three years as "investors frantically raised cash," Roland said. It has risen by about 4% this year. 

The strategist believes the US will emerge from the coronavirus crisis in a more resilient fashion than other economies and expects the dollar to maintain strength as volatility subsides across currency markets.



Amanda Agati, PNC Financial: sub-investment-grade bonds

Last month, alongside two emergency interest-rate cuts, the Federal Reserve announced a laundry list of new measures to aid the economy through the economic damage the coronavirus crisis is causing.

Among other programs, the US central bank created credit facilities to support credit going to large employers. One was formed to purchase corporate bonds issued by investment-grade US companies, as well as US-listed exchange-traded funds whose purpose is to provide "broad exposure to the market for US investment grade corporate bonds."

But "none of the Fed's tools directly support the below-investment-grade fixed-income market," Amanda Agati, the chief investment strategist at PNC Financial, told Business Insider.

That's why she's keeping a close watch on how bonds with sub-investment-grade ratings, an area which includes the high-yield segment, are faring without that extra injection of support. 

For instance, more than 10% of the Bloomberg Barclays High Yield index is made up of names in the energy sector, Agati said.

The $2 trillion fiscal stimulus package that passed in the US last week did not include language around relief for shale-oil producers — a particularly challenged industry with plunging oil prices and slowing global economic growth, she said.

Agati is also closely watching the Cboe Volatility Index and new cases of COVID-19. Her team believes that number must slow in countries like Italy and the US before the market finds a bottom.

"In other words, what matters for the market right now is the cresting of virus cases — not PMI data, not earnings revisions, and certainly not GDP estimates," she said.



Liz Ann Sonders, Charles Schwab: the case curve of COVID-19

The most important metric for investors to pay attention to is COVID-19's case curve, Liz Ann Sonders, the chief investment strategist at Charles Schwab, said.

That's "for every reason, including the health of Americans, the health of our economy, and the health of the stock market," she told Business Insider.

"Until we start seeing a bending of the curve, it's hard to envision a light at the end of the tunnel for either the economy or stocks," she said.

The US has the largest reported virus outbreak, representing more than one-fifth of cases worldwide, Business Insider has reported

 



Deepak Puri, Deutsche Bank Wealth Management: broad US financial-market conditions

A selection of readings reflecting broad US financial-market conditions — funding-market stress, financial-market liquidity, and US corporate-credit spreads — are top of mind for Deepak Puri, the chief investment officer for the Americas at Deutsche Bank Wealth Management. 

As spreads across the investment-grade- and high-yield-credit markets have widened to levels not seen since the global financial crisis of 2007-09, "fixed-income investors have shown a very little appetite for credit risk," Puri told Business Insider. 

"So far, we are encouraged that the 'do whatever it takes' approach by monetary policymakers has helped restore confidence in the credit markets, along with the added liquidity," he added.

 



Tony Roth, Wilmington Trust: declines in gross domestic product

Tony Roth, the chief investment officer of Wilmington Trust, the investment-advisory arm of M&T Bank, is closely watching for declines in US gross domestic product.

Roth estimated that the precautions states are taking across the US to mitigate COVID-19's spread could lead to a 34.4% annualized rate of decline for the second quarter if the current conditions persisted for three months from early April. 

"That would be by far the worst rate witnessed in US history of GDP data, going back to 1949," he told Business Insider, adding a slow resumption in economic activity during the second half of 2020 would lead to a decline of 2.6% for the year.

If the entire US were to operate under stay-at-home orders for the next three months, that could lead to a more severe scenario with businesses remaining closed and consumers continuing to curb spending, Roth said.

That would lead to a 61% annualized rate of decline for the second quarter and a drop of 8.5% for the year, according to his projections. Roth sees markets higher nine months to a year from now.

"Currently, our recommendation to clients is to rebalance, avoid selling if you don't need immediate liquidity, and if you have new cash, average this into the market on a slightly accelerated time frame," he said.



Katie Stockton, Fairlead Strategies: a key technical range on the S&P 500

Katie Stockton, the founder and managing partner of Fairlead Strategies, an independent-research provider with a focus on technical analysis, is laser-focused on key levels for the benchmark S&P 500.

"As a technical analyst, support and resistance levels are incredibly important as a gauge of risk/reward," she told Business Insider.

Stockton sees the index's risk framed by long-term support of about 2,300 to 2,350.

She arrived there after considering a 38.2% Fibonacci retracement level (a term in technical analysis referring to areas of support or resistance), the S&P 500's low in December 2018, and another technical metric called the monthly cloud model.

"This level is key toward the preservation of the uptrend that began in 2009, in my opinion," she said. 

The dip below that area in March was not a technical breakdown, she said. For that kind of damage, she requires consecutive weekly closes below support, "especially in emotionally charged environments, which are prone to shakeouts," or "false breakdowns," Stockton said.



Ed Campbell, QMA: COVID-19 data

"The current environment has us paying less attention to economic data and laser-focused on the virus data," said Ed Campbell, a portfolio manager and managing director at QMA, the quantitative-equities and asset-allocation business at PGIM, Prudential's investment-management arm. 

With the lockdown measures in place during the coronavirus outbreak, economic data will "cease to have value for markets," so he's watching for the trajectory of new infections to indicate when quarantines will end and economic activity will pick back up.

He believes the path of cases in the US is closely tracking cases in Italy — which has the highest reported death count — with a two-week lag.

"Should Italy's decline in new cases continue and point in the direction of containment, it may lead to the expectation that an apex and containment for other Western countries are not far behind," Campbell said. "This could be an important inflection point for markets."



John Stoltzfus, Oppenheimer: how the spread of COVID-19 is being contained

John Stoltzfus, Oppenheimer's chief investment strategist, told Business Insider that the most important indicator for a sustainable stock market rally is the progress made in stemming COVID-19's spread.

"At the end of the day, it's a health-risk story with economies on lockdown," he said.

The coronavirus has spread to nearly all of the world's countries and territories, according to data from Johns Hopkins University.



Ryan Detrick, LPL Financial: a peak in US coronavirus cases

Ryan Detrick, the senior market strategist at LPL Financial, said the biggest factor he's been watching is a peak in the number of coronavirus cases in the US. 

"While US cases continue to climb, the more countries that reach their peak, the more clarity we gain into what that timing may look like for the United States," Detrick said.

The US has recorded the highest number of cases, with just over 337,000 confirmed, according to Johns Hopkins University's database. More than 1.2 million people around the world have been sickened by the coronavirus. 

"Investors have historically been rewarded for investing during these crisis events, and we believe the time for suitable investors to consider adding some risk to their portfolios may be approaching," he said. 



One research firm thinks the coronavirus-roiled stock market could fall another 20% this year

Mon, 04/06/2020 - 7:50pm

  • The research provider TS Lombard predicted on Monday that the S&P 500 would fall below 2,000 in 2020.
  • That would mark a 20% drop from where the index closed on Friday, and a drop of about 40% from its all-time high reached in February.
  • The firm said it sees more market declines during the coronavirus pandemic because it doesn't believe a V-shaped recovery is possible.
  • TS Lombard also thinks there will be further economic pain in the third quarter after a brutal second quarter.
  • Read more on Business Insider.

The stock market has a lot further to fall as the coronavirus pandemic continues, according to analysts at TS Lombard.

The research firm on Monday predicted that the S&P 500 would fall below 2,000 in 2020, marking a 20% drop from where the index closed on Friday. Such a decline would bring the index more than 40% below its all-time high of 3,386.15, reached on February 19.

TS Lombard lowered its outlook for stocks because it doesn't believe that a "V-shaped" recovery — indicating a swift rebound and strong snap-back momentum — is possible for the US, even after the coronavirus pandemic subsides.

"The idea that Americans are simply going to snap back as if what's going on had not happened suggests Wall-Street has 'herd immunity' to common sense," analysts led by Charles Dumas wrote in the note.

An early sign of pain to come was in last week's jobs numbers, according to Dumas. On Friday, the March nonfarm-payrolls report showed that the US had lost 701,000 jobs during the month. That the losses were so much deeper than the 100,000-job contraction forecast by economists suggests that damage is more widespread than originally thought, he said.

Read more: A stock chief at $7.4 trillion BlackRock shared with us his coronavirus-investing playbook: How to keep money safe, what he's avoiding, and some surprising contrarian bets

"There is worse to come, hard though that may be to imagine," Dumas wrote, adding that labor income could fall through the second quarter and then the third. This conflicts with the V-shaped recovery that many economists have predicted.

"The world will not just snap back to normal," he wrote. "Leaving aside the 'how' and the 'when' of any return to normal from the current lock-down, people are said going to be the same."

Further, Dumas said, at the end of 2019, US households had more assets in the stock market than their own houses — but those assets have since been cut by a third.

Small businesses — the "mom and pop" shops that are the backbone of the economy — are also likely to struggle to stay afloat during the coronavirus-induced recession, Dumas said.

Read more: 'I was a single mother with 2 small kids:' Here's how Ashley Hamilton flipped a $20,000 waitressing salary into real-estate-investing success and a 10-unit portfolio

"A little bit of government help may tide them over, of course — but who would bet that cutbacks in capex do not get triggered sooner than with the usual lag of six months or more?" Dumas wrote, adding that the Philadelphia Federal Reserve's survey of capital expenditure intentions was slumping before the COVID-19 outbreak hit the economy hard.

Aside from potential spending cuts, "the first call on any revival of business cash flow will be to pay back whoever has tided them over — not much will be left for dividends even, let alone capex," Dumas said.

Overall, Dumas said, the situation is a "stock market in denial, very far from any sign of capitulation."

He concluded: "The second leg down of this bear looks as if it will be worse than the first ... and always, the last leg down hurts most."

Read more: 14 Wall Street experts told us the single metric they're each watching to assess coronavirus market fallout — and give their portfolios a leg up

Join the conversation about this story »

NOW WATCH: We tested a machine that brews beer at the push of a button

The best no-fee checking accounts right now

Mon, 04/06/2020 - 5:30pm

A good checking account is a necessity. It's a temporary home for the money you earn and soon spend on your needs, wants, and future goals — and it shouldn't cost you anything.

These days, most (if not all) banks offer conditional no-fee checking accounts. That is to say, your monthly service fee can be waived if you meet minimum balance or recurring deposit requirements.

In this list, we want to highlight the checking accounts that charge zero monthly maintenance fees, no matter where your balance lies. You might notice this list is similar to our list of best checking accounts — that's because we value no-fee products and have mentioned many of the best already.

Below you'll find our picks for the best no-fee checking accounts available right now. Each of these accounts comes with a debit card, FDIC insurance, and mobile app access. 

Capital One 360: Best no-fee checking account overall

Why it stands out: Access to over 39,000 Capital One and AllPoint ATMs; no monthly service, overdraft, or foreign transaction fees; mobile check deposit available; connects to Zelle for digital money transfers; multiple overdraft protection options; and all balances earn 0.20% APY. Plus, Capital One ranks No. 4 on J.D. Power's US National Banking Satisfaction Study.

What to look out for: Minimal branch locations. Though Capital One Cafés are popping up in big cities around the US, the bank only operates about 470 branches in nine states.

Discover CashBack Debit: Best no-fee checking account for rewards

Why it stands out: Access to over 60,000 ATMs; no monthly service or overdraft fees; mobile check deposit available; connects to Zelle for digital money transfers; and earns 1% cash back on up to $3,000 in debit card purchases every month.

What to look out for: Location restrictions. You can only use your Discover debit card in the US, Canada, Mexico, and the Caribbean.

US Bank Student Checking: Best no-fee checking account for students

Why it stands out: Access to 4,700 US Bank ATMs, 28,000 ATMs in the MoneyPass Network, and 3,000 US Bank branch locations; no monthly service fees for students; no overdraft transfer fees when linked to a deposit account; fee reimbursement for up to four non-US Bank ATM transactions per statement cycle; connects to Zelle for digital money transfers; and mobile check deposit available.

What to look out for: Minimum opening deposit of $25. Also, although US Bank ranked above Wells Fargo, Bank of America, and CitiBank on J.D. Power's US National Banking Satisfaction Study, it's categorized as "about average."

HMBradley: Best checking account/savings account hybrid

Why it stands out: When you deposit money into your HMBradley account, the platform tracks how much you spend vs. how much you save over the course of the quarter. HMBradley has a tiered APY based on the percentage of deposits you save. The tiers are as follows:

  • Tier 1: Earn 3.00% APY when you save at least 20% of your deposits
  • Tier 2: Earn 2.00% APY when you save 15% to 19.99% of your deposits
  • Tier 3: Earn 1.00% APY when you save 10% to 14.99% of your deposits
  • Tier 4: Earn 0.50% APY when you save 5% to 9.99% of your deposits

You have to set up direct deposits to earn interest with HMBradley, but there's no required initial deposit or minimum account balance. 

Monthly fee: $0

What to look out for: Percentage of deposits saved. You have the potential to earn more than you would with other checking accounts or even high-yield savings accounts, but if you don't save at least 5% of your deposits, you won't earn any interest the following quarter.

Simple Online Checking: Best online-only checking account

Why it stands out: Access to 40,000 AllPoint ATMs; mobile check deposit available; built-in budgeting feature that automatically portions out fixed expenses after each paycheck is deposited and leaves you with a "safe to spend" amount; and the ability to open and easily transfer excess funds into a high-yield companion account that earns 1.75% APY.

What to look out for: Limited overdraft options. If you attempt to make a purchase with your debit card that requires more funds than are available in your account, Simple will decline the transaction. At this time, there are no other options for overdraft protection.

Other no-fee checking accounts we considered and why they didn't make the cut:
  • Charles Schwab High-Yield Investor Checking Account: This no-fee checking account earns just 0.03% on all balances, and you have to open a brokerage account at the same time.
  • Ally Interest Checking Account: This no-fee account is comparable to Simple's online checking account, although Simple has a budgeting feature and offers a higher-earning savings account than Ally. However, Ally does have more overdraft options and earns 0.10% APY on balances under $15,000, if that's important to you.
  • CIT Bank eChecking: The minimum opening deposit for this account is $100 and it only offers up to $15 of fee-free ATM visits a month, otherwise it's a fine account earning 0.10% APY on balances below $25,000.
  • Betterment Everyday: This is still in beta, but it has the makings of a solid checking account: ATM fees reimbursed worldwide, no monthly service fees or overdraft fees, and a boosted rate on your savings account.
  • TD Bank Student Checking: While TD Bank ranked No. 1 on J.D. Power's US National Banking Satisfaction Study, its only ATM and branch locations are on the East Coast, and there's a $3 fee each time you use a non-TD ATM.
  • Axos Essential Checking: A solid online-only checking account with unlimited ATM fee reimbursement, but nothing extra special.
  • Axos Cash Back Checking: This account offers up to 1% cash back on purchases (up to $2,000 per month), but doesn't count transactions from grocery stores and requires an average daily balance of $1,500 to earn the cash back. If your balance falls below that limit, you get 0.50% cash back.
  • Axos Rewards Checking: This account touts up to 1.25% APY, but to get the full rate you need to have monthly direct deposits totaling $1,000 or more and a total of 15 transactions per month (min $3 per transaction) on your debit card. You also need $50 to open the account.
  • Chime: A solid online-only, no-fee checking account with overdraft protection options, quick direct deposit, and access to over 38,000 ATMs, but additional features are not as good as Simple.
  • TIAA Yield Pledge Checking: No monthly service fees and all balances earn 0.50% APY for the first year; after that, the rate drops to between 0.20% to 0.35%. To enjoy unlimited ATM reimbursement you need to keep an average daily balance of at least $5,000. You also need at least $100 to open the account.
  • SoFi Money: This hybrid checking account/savings account offers 20% cash back on Lyft rides and unlimited ATM reimbursements worldwide, but its 0.20% APY is less than what you could earn with HMBradley.
Frequently asked questions: Why trust our recommendations?

At Personal Finance Insider, we strive to help smart people make the best decisions with their money. We spent hours comparing and contrasting the features and fine print of nearly three dozen checking accounts available at over 20 national and online-only banks so you don't have to.

We understand that "best" is often subjective, however, so in addition to highlighting the clear benefits of a checking account — no fees, for example — we outline the limitations, too.

How did we choose the best no-fee checking accounts?

To find the best no-fee checking accounts, we consulted our list of the best checking accounts, many of which are completely free for all accountholders, regardless of their balance. To compile that list, we considered offerings at over 20 financial institutions, as well as reviews at popular comparison sites like Bankrate and Nerdwallet, to determine the strongest options.

We also polled Business Insider employees for their favorite picks and considered J.D. Power's US National Banking Satisfaction Study for 2019, which measures customer satisfaction at America's largest retail banks.

While big retail banks in the US have the most widespread ATM and branch location access, they typically do not offer completely free checking accounts, so we didn't name a winner for ATM and branch access.

Unlike a savings account, a checking account doesn't need to have a high interest rate to be good. In fact, the annual percentage yield (APY) shouldn't matter much if you're using your checking account to pay your monthly bills and cover expenses in short order. If your money is constantly flowing in and out of your checking account, it won't get a chance to earn much interest anyway.

What banks offer free checking accounts?

You can find completely free checking accounts at Ally, Betterment, CIT Bank, US Bank, TD Bank, Capital One, Charles Schwab, Discover, Axos, and SoFi Money, to name a few.

Which banks have the best checking accounts?

Through our extensive research, we've concluded that the best checking accounts available right now are at Chase, Capital One, Discover, Simple, and SoFi Money. Some of these may offer to waive service fees if certain requirements are met, but most charge none at all.

Which banks have free checking with no minimum balance?

Several banks offer free checking accounts with no minimum balance or opening deposit requirement, including Ally, Charles Schwab, Betterment, and Capital One.

Tanza Loudenback has been writing about money every day for more than three years. She is an expert on strategies for building wealth and financial products that help people make the most of their money. She is in the process of becoming a licensed CERTIFIED FINANCIAL PLANNER™ (CFP).

Join the conversation about this story »

NOW WATCH: Pathologists debunk 13 coronavirus myths

Everything we know about the coronavirus stimulus checks that will pay many Americans up to $1,200 each

Mon, 04/06/2020 - 5:25pm

  • Part of the $2 trillion stimulus package from the US government is one-time cash payments of up to $1,200 to Americans who qualify.
  • Those payments — coronavirus stimulus checks, let's call them — will be paid automatically to Americans with Social Security numbers.
  • If you filed taxes in 2018 or 2019, or you don't file taxes but do get Social Security payments, you don't have to do anything to get a payment.
  • If you don't file taxes or get Social Security, the IRS has mentioned it will set up a "simple web portal" to submit your information, though details on that are still coming. In the meantime, TurboTax has launched its own free web portal to submit direct-deposit information to the IRS.
  • Americans who have set up direct deposits should get their payments by mid-April. Americans who are receiving paper checks may have to wait considerably longer.
  • Read more personal finance coverage.

When President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, into law, he initiated a $2 trillion stimulus package, the largest emergency relief bill in American history.

Part of that package is one-time cash payments of up to $1,200 to Americans who qualify.

An extra $1,200 is always welcome. But with the announcement of the cash came the questions: What is it? Who gets it? How much will I get? Is it taxable? What do I have to do to get it?

Below, we've answered those questions and more. Read on for everything you need to know about your coronavirus stimulus check.

What is a coronavirus stimulus check?

The payment — which the IRS is calling an "economic impact payment," the government has named a "recovery rebate," and many people are calling a "stimulus check" — is technically an advance tax credit meant to offset your 2020 federal income taxes.

Am I going to get a check?

You will get a check if you:

  • Have a Social Security number.
  • Have filed taxes in 2018 or 2019, or don't earn enough to file but receive Social Security payments.
  • Earned less than $99,000 for single filers, $136,500 for heads of household, or $198,000 for married filers according to the most recent tax return filed.
  • Are not claimed by someone else as a dependent.
If I get a check, will it affect my tax refund?

No. Even though the stimulus payment may feel and look like a tax refund, it's not. You'll still get your full tax refund next year (and this year too, for that matter), as long as you file a tax return.

The stimulus check is a tax credit, which reduces your tax bill on a dollar-for-dollar basis. It's like having store credit at your favorite clothing shop — when you apply it to your total bill, it reduces what you owe. 

You usually can't claim a tax credit until you file your taxes since you don't know what you owe until the year is over. Because of the severity of this national crisis, the government is giving qualifying taxpayers their credit early in the form of a cash payment. It will not affect your refund this year or next.

How much will I get?

The IRS bases the amount of your payment on the adjusted gross income (AGI) listed on your most recent tax return: 2018 or 2019.

The maximum payment is $1,200 for single filers with an AGI below $75,000 or single parents (heads of household) with an AGI below $112,500. Married couples who file jointly and have an AGI below $150,000 will get a total of $2,400.

Payments will begin to phase out at a rate of $5 for each $100 over the AGI threshold before ceasing at an AGI of $99,000 for single filers, $136,500 for heads of household, and $198,000 for married filers. There's also an additional $500 allotted to parents who have an AGI within the phaseout range for each child younger than 17.

You can use an online calculator to figure out how much your check will be if you're unsure.

Do I need to do anything to get a stimulus check?

You do not have to sign up to receive a stimulus check. The process is automatic for most Americans who qualify.

To get a check, you must have a Social Security number (nonresident aliens, people without a Social Security number, and adult dependents are not eligible). If you filed taxes in 2018 or 2019, that tax return must reflect an adjusted gross income below $99,000 for single filers, $136,500 for heads of household, and $198,000 for married filers.

Note that if you've moved, and you haven't provided the IRS with direct-deposit information, you should make sure the agency has the correct address on file to receive a paper check in the mail.

If you don't file taxes but do get Social Security payments, the government will use that information for your payment. If you don't file taxes or get Social Security payments, the IRS has announced it will set up a "simple web portal" for you to submit your information on (more to come on the details of that). On Saturday, TurboTax launched a free web portal for people who don't file taxes to submit direct-deposit information to the IRS, although a PR representative for TurboTax confirmed to Business Insider that its stimulus registration webpage is not the web portal to which the Treasury had previously alluded.

Who won't get a stimulus check?

Dependents older than 16, people without a Social Security number, and those with incomes above $99,000 (or $136,500 if you file as a head of household) won't get a stimulus check.

How will I get the money?

Most people will get the money deposited directly into their bank accounts.

People who do not set up direct deposits with the federal government will be mailed a paper check.

People who don't file taxes but do get Social Security payments will get a payment the same way they get their Social Security payments.

People who don't file taxes or get Social Security payments will need to send the IRS their information through a "simple web portal" (more details to come). They may also use TurboTax's free web portal to submit direct-deposit information to the IRS.

When will I get my stimulus check?

"If we if have your information, you'll get it within two weeks," Treasury Secretary Steven Mnuchin said in a White House press briefing, according to The Washington Post. "Social Security, you'll get it very quickly after that. If we don't have your information, you'll have a simple web portal. We'll upload it. If we don't have that, we'll send you checks in the mail."

For taxpayers who can use direct deposit, the payment should be deposited mid-April.

However, NBC News reported that for Americans who haven't set up direct deposits with the federal government, it could take much longer: up to five months for about 60 million Americans to receive a paper check.

Business Insider's Bryan Pietsch wrote: "In early May, the IRS will send out paper checks to those without direct deposit, and it could take around 20 weeks to issue all of the checks, the report said. Those with lower incomes will reportedly be prioritized, and those on Social Security will receive their payments as they would their Social Security checks."

Read more: Where is my stimulus check? Here's when your payment should arrive

How does the IRS know where to send the money?

In most cases, the IRS will take direct-deposit information or a mailing address from your most recent tax filing. For people who receive Social Security payments but don't have enough income to file taxes, the IRS will use the information from the Social Security payments.

If neither of the above situations applies to you, but you qualify for a payment, the IRS has said it will set up a "simple tax return" in an online portal, through which you'll be able to give the IRS your contact details. More information is coming on this feature. Those who want to submit direct-deposit information to the IRS may also use TurboTax's free web portal.

Is the money from the check taxable?

No, the money is not taxable.

What if my 2018 income qualifies, but my 2019 income doesn't?

The IRS bases the amount of your payment on the AGI listed in your most recent tax return: 2018 or 2019. In some cases, when your income changed between 2018 and 2019, your 2018 income might qualify for a larger payment than your 2019 payment, or perhaps it might qualify for any payment while your 2019 does not.

In that case, because the IRS has extended the federal tax filing and payment deadline to July 15 (all states that tax income have also their deadlines, in most cases until July 15), you could hold off filing your 2019 income taxes until after the IRS has issued your payment, forcing the organization to use your 2018 income for your payment.

Waiting to file has a few downsides, like waiting longer to get your refund and giving identity thieves more time to try to prey on your taxes. But Riley Adams, a public accountant, previously told Business Insider if you'd qualify for a stimulus check under your 2018 income but not at all under 2019, it might be worth holding off filing for a few weeks (assuming you haven't already).

What if I owe back taxes right now?

You'll still get a check if you qualify.

These payments are treated differently than your tax refund. Typically, you can have your refund seized if you owe back taxes, but that's not the case here. Even people with tax debt should be getting a stimulus payment if they're under the income thresholds. The only people who could get their check reduced because of debt are parents with outstanding child support.

I got a phone call, email, or Facebook message about my check. Should I answer?

No. The US government isn't calling, emailing, Facebook-messaging, or otherwise contacting you about your stimulus check — and if someone does, it's probably a scam.

The IRS generally gets in contact with taxpayers through snail mail, and in the case of stimulus checks, it doesn't need to contact you for any type of additional information. The process is automatic for any American who qualifies. If someone is calling or emailing you to confirm personal details or asking for bank information or money, it's a scam.

Unfortunately, scammers are taking advantage of this opportunity to steal people's identities, money, or both. These scams include fake stimulus checks that arrive immediately with an unusual denomination and ask you to verify the receipt online, as well as someone claiming that paying a "processing fee" will get your money to you sooner.

What if I get my check and it's too big?

You don't need to do anything.

Technically, this payment is a tax credit. A tax credit reduces your tax bill on a dollar-for-dollar basis. It is one of the last steps in calculating your annual tax liability and can be claimed regardless of whether you itemize your deductions. Some tax credits, like the coronavirus recovery rebate, are refundable. That means you'll still get the money even if you don't have enough tax liability to offset it.

There aren't any clawback provisions outlined in the law, so you wouldn't be expected to repay any of the money if you wind up getting too much.

What if I get my check and it's too small?

While it won't help you today, experts say the IRS will allow taxpayers to reconcile underpayment on next year's tax return.

"If you should have gotten a check and didn't, or if you should have gotten more than you did because the IRS didn't know something important (like you have a kid), you should get more money" next tax season, Kelly Phillips Erb, a tax lawyer, wrote for Forbes.

Correction: This article has been updated to correct the age for which an additional $500 is allotted to parents: That payment is for those who have an AGI within the phaseout range for each child younger than 17, not 16.

Join the conversation about this story »

NOW WATCH: Why electric planes haven't taken off yet

Tiger Global, Maverick, and Coatue all lost double-digits in a tough month for Tiger Cubs

Mon, 04/06/2020 - 5:10pm

  • Tiger Global, Maverick Capital, and Coatue all fell double-digits in March. Viking lost money as well.
  • The Tiger Cubs, all founded by former members of Julian Robertson's Tiger Management's staff, focus on public equities; which were hit hard by the novel coronavirus pandemic.
  • The average hedge fund fell nearly 6% in March, according to Hedge Fund Research's global index of hedge-fund strategies.
  • Visit Business Insider's homepage for more stories.

Some of the biggest names in the hedge-fund game were not spared from the coronavirus selloff that tanked global markets. 

Coatue, Tiger Global, and Maverick all lost double-digits in March, sources told Business Insider, while Viking fell 5% for the month. Bloomberg first reported the Coatue and Viking losses. 

The funds, all run by billionaires, are considered Tiger Cubs, which is the first generation of funds to come from Tiger Management, the legendary hedge fund founded by Julian Roberson. 

Maverick's losses were the worst of the funds, with Lee Ainslie's fund down 11.7% for March and 13.6% for the year. The firm declined to comment.

In a note sent to investors right as the coronavirus was beginning to spread to the US, Ainslie had said his plan was to take advantage of the volatility in the markets and buy up stocks of companies he liked at a discount. 

Tiger Global, the fund founded by Chase Coleman that invests heavily in both public and private markets, fell 10.8% in March and is down 5.8% for the year. The firm declined to comment.

Bloomberg reported that Philippe Laffont's Coatue dropped 10% in March and is down 6% for the year. Viking's losses are at 2% for the year, after the 5% drop in March, according to Bloomberg. 

The average hedge fund fell nearly 6% in March, according to Hedge Fund Research's global index of strategies, and is down 6.85% for the year.

Stephen Mandel Jr.'s Lone Pine meanwhile lost tens of millions on an investment into Luckin Coffee, filings showed, after the China-based company's stock dropped 80% on the news that its COO falsified about $310 million of sales. Lone Pine declined to comment on Luckin and declined to provide a performance update.

SEE ALSO: Julian Robertson's Tiger Management is at the center of a quarter-trillion-dollar web linking billionaires, the Pharma Bro, and a 'Big Short' main character

SEE ALSO: Macro hedge funds are soaring while quants and stock-pickers tank. Here are the biggest winners and losers.

SEE ALSO: How a brain-zapping device can calm hedge-fund traders' nerves when markets are chaotic, according to a veteran performance coach

Join the conversation about this story »

NOW WATCH: We tested a machine that brews beer at the push of a button

Read the full memo Goldman Sachs just sent to staff announcing its new head of regulatory affairs. The former White House counsel will be tasked with helping clean up the bank's 1MDB drama.

Mon, 04/06/2020 - 4:19pm

  • Goldman Sachs has named Kathryn Ruemmler as its new global head of regulatory affairs, according to an internal memo reviewed by Business Insider.
  • Ruemmler joins as a partner and becomes the 34th member of CEO David Solomon's management committee, Goldman's most powerful decision-making group. 
  • Goldman Sachs is engaged in discussions with global authorities, including the Justice Department, over its role in selling debt for the Malaysian sovereign wealth fund.
  • Click here for more BI Prime stories.

Goldman Sachs has named a new head of regulatory affairs, bringing in a woman with considerable government experience and political connections as a partner and member of the management committee. 

The bank said Kathryn Ruemmler will start later this month and become the 34th member of the company's management committee. Ruemmler joins as a partner from elite law firm Latham & Watkins LLP, where she chaired the firm's white collar defense and investigations practice. 

Prior to joining Latham in 2014, Ruemmler served in the Obama administration, in roles at the Department of Justice and in the office of the president. She will work with John Rogers, the firm's chief of staff and a longtime player in Washington circles, on the firm's regulatory agenda, according to the memo.  

Ruemmler will oversee Michael Richman, an almost three-decade veteran who gets a promotion to chief compliance officer. Richman had been helping to set strategy and oversee operations in the compliance function. 

Goldman Sachs is engaged in discussions with global authorities, including the Justice Department, over its role in selling debt for the Malaysian sovereign wealth fund known as 1MDB. The Wall Street Journal reported in December that the firm was in talks to pay a settlement of less than $2 billion and admit guilt. Nothing has been announced since. 

Goldman CEO David Solomon has been filling out his management committee since taking the top job in October 2018. In the time since, he's added roughly a dozen new people to the firm's most powerful governing body. 

Here's the full text of the memo: 

We are pleased to announce that Kathryn H. Ruemmler will join the firm this month as global head of Regulatory Affairs and a member of the Management Committee.  In this capacity, Kathy will oversee the management of the firm's regulatory infrastructure, including Goldman Sachs' interactions with banking regulators, securities regulators and supervisory authorities globally. Kathy will also be responsible for overseeing the firm's compliance policies and procedures.

Kathy will join John Rogers as co-chair of the Regulatory Reform Steering Group, and will work closely with him on the firm's regulatory agenda.  She will also join Gwen Libstag as co-vice chair of the Firmwide Reputational Risk Committee.

Michael Richman will become chief compliance officer and report to Kathy in that capacity.  Michael has been with the firm for nearly three decades, and brings deep knowledge and invaluable expertise in risk management to his expanded role.  Most recently, he has helped set the strategy and manage the day-to-day operations of Global Compliance. 

About Kathy

Kathy brings to the firm significant experience in policy development, regulatory and agency enforcement matters, and corporate governance.  She joins Goldman Sachs from Latham & Watkins, LLP, where she served as global chair of the White Collar Defense & Investigations Practice and a partner in the Litigation & Trial Department. 

Kathy rejoined Latham & Watkins in 2014 after serving for almost six years in the Administration of US President Barack Obama, first in the Department of Justice and later as counsel to the President.  In that role, she provided counsel on all legal matters related to domestic and foreign policy and national security, and advised on all significant litigation matters, including key cases heard by the United States Supreme Court. Kathy also managed the administration's response to congressional and other investigations, and was responsible for the selection and nomination processes of federal judges.

Prior to serving in the White House, Kathy was principal associate deputy attorney general at the Department of Justice, joining on the first day of the Obama Administration as its highest-ranking political appointee.  In that role, she was the deputy attorney general's primary advisor on a range of criminal policy, law enforcement, national security and civil litigation matters. She worked closely with the attorney general and the deputy attorney general in the overall management and supervision of the Department of Justice, including the United States Attorney's Offices.

Kathy is a fellow in the American College of Trial Lawyers. She worked for six years as a federal prosecutor, including as an assistant United States attorney in Washington, DC and as deputy director of the Enron Task Force.  Earlier in her career, Kathy served as associate counsel to President Bill Clinton, defending the White House and the Office of the President in independent counsel and congressional investigations.

Kathy began her career as a law clerk to Judge Timothy K. Lewis of the United States Court of Appeals for the Third Circuit.

About Michael

Previously, Michael held several leadership roles, including most recently as deputy head of Global Compliance, global head of Investment Management Division Compliance and global head of Private Wealth Management (PWM) Compliance. 

Prior to that, Michael served as co-legal director for the PWM Group in the US, senior counsel to GS.com and general counsel for Goldman Sachs Asset Management's US Mutual Funds Group.

Michael joined Goldman Sachs in 1992 in the Legal Department.  He was named managing director in 2000 and partner in 2008.

Michael serves as co-chair of the Firmwide Suitability Committee and the Firmwide Volcker Oversight Committee.  He is a member of several additional committees, including the Firmwide New Activity Committee, the Firmwide Client and Business Standards Committee and the Firmwide Enterprise Risk Committee.

Please join me in welcoming Kathy to the firm, and in congratulating Michael on his expanded role.  I wish them both continued success.

SEE ALSO: Read the full memo Goldman Sachs' top brass just sent to staff announcing 2 heads of the bank's private-investing arm are out as it's gearing up to raise billions

SEE ALSO: Goldman Sachs CEO David Solomon just sent a firm-wide voicemail about the coronavirus crisis. Here's what he told employees.

SEE ALSO: Goldman Sachs just announced its first partnership for transaction banking as it looks to build a new $1 billion business moving money around the world

Join the conversation about this story »

NOW WATCH: Here's what it's like to travel during the coronavirus outbreak



About Value News Network

Value is the only commonality in an increasingly complex, challenging and interdependent world.
Laurance Allen: Editor + Publisher

Connect with Us