43% of small businesses say they’ll be forced to close permanently if they don’t get help soon, survey says


Small businesses are suddenly hanging on by a thread.

Forty-three percent of small businesses say they will have to permanently close within six months without some sort of quick cash infusion or fast improvement in economic conditions, according to a Friday survey that gives another look into the coronavirus outbreak’s swift and severe economic damage.

Coming the same day as a “devastating” jobs report revealing the loss of 701,000 jobs in March — which some economist said is only a glimpse of the carnage to come — a survey by the U.S. Chamber of Commerce and MetLife

MET, -2.43%

 revealed:

• 24% have already shut down on a temporary basis, and 40% of the small businesses that are still open say they will probably have to close temporarily close within the next two weeks.

• Though 43% of the 500 polled businesses say they can’t survive without some sort of government assistance and/or change in economic conditions, 46% say the economy needs between six months and a year to return to the way it was.

• 54% said the American economy is in “poor” health.

Friday’s poll results are a special edition of an ongoing index that the national business trade association and the insurer MetLife have been using since 2017 to gauge small-business attitudes and economic conditions.

The index reached a record high of 71.7 out of 100 when researchers talked to businesses about their confidence in local economies and other factors in December and January; those same results showed a record 60% of businesses saying they were optimistic about the national economy.

See also: These small-business owners made their dreams come true — and then the coronavirus hit

Friday’s survey arrives during a key date in the federal government’s effort to help the country’s approximately 30 million small businesses.

Friday is the first day it will start accepting applications for $350 billion in forgivable small-business loans. The loans are one part of a $2 trillion stimulus package that includes $1,200 direct checks to individuals and an extra $600 per week for unemployment claims.

More than half of the businesses (56%) said direct cash payments are the best way to help, and 30% favor Small Business Administration loans, the survey said.

Cash flow and customer foot traffic are grinding down as consumers stay indoors and states impose shelter-in-place orders that temporarily close “nonessential” business and require restaurants to operate only on a delivery and takeout basis.

Almost 460,000 of the 701,000 vanishing jobs in March were in the hotels, restaurants and the hospitality industry, according to Friday’s nonfarm-payrolls report from the Bureau of Labor Statistics.

Don’t miss: Here’s how small business owners are dealing with COVID-19

Other observers say there’s a limited time to help small businesses because many small businesses only have cash buffers to last them several weeks.

Commercial bankruptcy filings could start increasing as soon as this month, according to a prediction by one bankruptcy expert.



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3M hits back at Trump, says ceasing exports of N95 masks will have ‘opposite’ effect, humanitarian consequences


3M Co. responded Friday to criticism from President Donald Trump, saying the request to cease exports of much-needed N95 masks to fight the COVID-19 pandemic will not only have the “opposite” effect of what is needed, but also “significant humanitarian” consequences.

The company, which makes safety, industrial and consumer products, including Post-it Notes and Scotch tape, as well as face masks, said that it has been working closely with the Trump administration to supply N95 respirators to fight the spread of the novel coronavirus, and appreciates the authorities in the Defense Production Act that were invoked on Thursday, but indicated that some of the administration’s requests could be counterproductive.

For example, under the DPA, the administration requested 3M to cease exports of respirators made in the U.S. to Canada and Latin America.

The company

MMM, -2.58%

 said that would have “significant humanitarian implications” as 3M is a critical supplier to those countries, and would also likely provoke other countries to do the same, as some have already done.

“If that were to occur, the net number of respirators being made available to the United States would actually decrease,” 3M said in a statement. “That is the opposite of what we and the Administration, on behalf of the American people, both seek.”

The company pointed out that after a request from the administration to increase respirators imported from its overseas operations, it was able to secure approval from the Chinese government earlier this week, with help from the administration, to export 10 million N95 respirators that it made in China to the U.S.

The company’s response comes after Trump tweeted late Thursday that he “hit 3M hard,” and that the company will have a “big price to pay,” as many in his administration were surprised with what 3M was doing with their masks.

The administration formally invoked the DPA, to require 3M to prioritize orders from the Federal Emergency Management Agency (FEMA) for N95 masks.

Earlier this week, 3M said it has boosted production of N95 masks to 100 million per month, including 35 million masks per month in the U.S. By June, the company said it expected to make 50 million masks in the U.S.

3M’s stock

US:MMM

 slumped 2.4% in morning trading Friday. It has lost 24% year to date, while the Dow Jones Industrial Average

DJIA, -1.73%

 has shed 26%.

Despite the boost in production in masks, from 3M and others, there is still expected to be an alarming shortfall. As reported in The Wall Street Journal, 3M and a half-dozen smaller competitors were producing about 50 million N95 masks in the U.S. each month, compared with the Department of Health and Human Services’ estimate in March that U.S. health-care workers would need 300 million masks.

See related: Ford partners with GE, 3M to build ventilators, COVID-19 protective equipment.

And demand for face masks are likely to increase substantially after Trump and Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, appear to be close to recommending the general public wear face masks.

Don’t miss: Anthony Fauci: White House Coronavirus Task Force is giving ‘serious consideration’ to suggesting Americans wear face masks.

Mayor Bill de Blasio advised New York City residents to cover their faces before leaving their homes, and New York Gov. Andrew Cuomo said it “couldn’t hurt” to wear homemade face masks to stop the spread of coronavirus.





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The U.S. officially lost 701,000 jobs in March, but in reality millions vanished


Getty Images

The coronavirus has triggered 10 million or more layoffs in the U.S. in less than a month.

The numbers: The U.S. lost 701,000 jobs in March, the government’s official employment scorecard showed, but the real losses were much greater: At least 10 million jobs and counting as the coronavirus bore down on the economy.

The reported decline in employment was the biggest in 11 years and one of the largest ever, but it’s going to get dwarfed by the job losses in April. The Labor Department’s employment summary for last month was gleaned from a survey of business establishments completed in the second week of March, just before the COVID-19 pandemic began to devastate the economy.

A separate survey of households gave a more accurate view of what was really going on. Employment measured by the household survey showed a 3 million decline in the number of people who said they were working. And 1.6 million people just dropped out of the labor force.

Even those big declines underestimate the carnage, though.

The number of people nationwide who applied for unemployment benefits in the last two weeks of March alone soared by a record 10 million, according to the more recent data on initial jobless claims. Countless Americans have been laid off or furloughed with businesses shutting down across the country to slow the spread of the virus.

Read: Jobless claims leap a record 6.6 million as coronavirus triggers mass layoffs

Employment had risen for a record 113 straight months until the decline in March and now the U.S. is probably confronting an extended period of job losses. A fuller understanding of how badly the labor market has been damaged won’t be available until the April employment report that comes out about a month from now.

The unemployment rate, meanwhile, rose to 4.4% from a 50-year low of 3.5% in February. The huge increase in jobless claims, however, suggests the rate has actually surged to around 10%.

Also: Expanded unemployment benefits: Who qualifies, how to apply

In premarket trades, the U.S. stock market appeared headed for another decline.

What happened: The March employment forecasts were widely scattered in light of the sudden and shocking deterioration in the economy in the second part of the month. Estimates ranged from a gain of 100,000 to a loss of 700,000.

Job losses were higher at restaurants, hotels and related businesses in leisure and hospitality. Employment shrank by 459,000, though even that astonishingly large decline understates the actual number of layoffs.

Employment also fell in construction, manufacturing, education and even health care.

Notably, some 17,000 jobs in dental and 12,000 at doctor offices disappeared in March, at least temporarily. Many practices not directly dealing with emergencies or the coronavirus have been ordered closed in most of the states.

The government added 17,000 Census workers, partly scaling back the decline in employment.

Hours worked fell 0.2 hours to 34.2 hours, but that’s just the start of it. Many workers are losing hours and wages as Americans stick to their homes out of fear of the virus or under government orders.

The amount of money the average worker earns climbed 11 cents to $28.62 an hour last month, raising the increase in pay in the past year to 3.1% from 3%. Yet wage gains are also likely to shrink in the coming months, adding more strain to the economy.

Employment gains for February and January were revised down by a combined 59,000, but it’s all water under the bridge now. Hiring is unlikely to resume anytime soon except in a few jobs or industries that are benefiting from changing consumer behavior or surging demand for food or other household staples.

See: MarketWatch Economic Calendar

What they are saying? “Today’s numbers are shockingly bad and an understatement of the damage already done to the US economy,” said Nick Bunker, economic research director at Indeed Hiring Lab. “ If this is an indication of what was happening before the full force of the crisis hit, then it will be hard to come up with the words to describe the numbers in future months.”

Big picture: The U.S. is sliding into recession. Of that there’s no doubt. What’s less clear is how deep the economy sinks and how long the downturn lasts. And the answers won’t be forthcoming for awhile.

Next’s month employment report should show job losses concentrated in the industries hurt the most by business closures and changing consumer behavior: Airlines, hotels, restaurants, travel agencies, retailers, theaters and personal-care shops have borne the brunt of the damage.

Indeed, the outlook for April is quite grim. The U.S. is looking at the loss of as many as 20 million jobs, potentially pushing the unemployment rate toward 20%.

The last time the country saw unemployment like that was in the 1930s during the Great Depression.

Read: Trillions in coronavirus spending could explode deficits to World War II levels

Market reaction: The Dow Jones Industrial Average

DJIA, +2.24%

and S&P 500

SPX, +2.28%

were set to open lower in Friday trades. The 10-year Treasury yield

TMUBMUSD10Y, +0.15%

slipped to 0.59%.



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20 technology stocks with low debt to consider owning in a down market


Mark Grant, the chief global strategist for fixed income at B. Riley FBR, is usually focused on the bond market, but he had an interesting suggestion for long-term investors that he shared with Stuart Varney on Fox Business:

After quoting the adage, “You buy when there’s blood on the streets,” Grant suggested that for “appreciation plays,” investors look “in technology,” where there are some “good names without any debt … you can make some money on, with a little patience.”

The S&P 500 Index

SPX, +2.28%

 has tumbled 27% since its closing high Feb. 19, while the S&P 500 information technology sector has declined 25%.

A tech-stock screen

There are 70 companies in the S&P 500 information technology sector. However, the sector excludes several companies that the typical investor would consider technology players. So we added social-media companies, video-game developers and internet-services companies to bring our “technology” list up to 80 companies.

Here are the 20 companies on the list with the lowest ratios of long-term debt to equity, per their most recent financial reports, according to FactSet:

Company Ticker Long-term debt/ equity Total return – Feb. 19 through April 1 Total return – 2020 Total return – 2019 Date of most recent financial report Industry
Fortinet Inc.

FTNT, +0.45%

2.2% -16% -6% 52% 12/31/2019 Computer Communications
IPG Photonics Corp.

IPGP, -2.72%

2.4% -26% -27% 28% 12/31/2019 Semiconductors
Arista Networks Inc.

ANET, +0.69%

2.8% -14% -5% -3% 12/31/2019 Computer Communications
Skyworks Solutions Inc.

SWKS, +1.12%

3.4% -31% -32% 84% 12/27/2019 Semiconductors
Jack Henry & Associates Inc.

JKHY, +2.77%

3.8% -15% 1% 16% 12/31/2019 Information Technology Services
Take-Two Interactive Software Inc.

TTWO, +2.73%

5.9% 2% -5% 19% 12/31/2019 Recreational Products
Alphabet Inc. Class A

GOOGL, +1.35%

6.8% -28% -18% 28% 12/31/2019 Internet Software/Services
Alphabet Inc. Class C

GOOG, +1.38%

6.8% -27% -17% 29% 12/31/2019 Internet Software/Services
Paycom Software Inc.

PAYC, -3.30%

8.4% -42% -29% 116% 12/31/2019 Software
Facebook Inc. Class A

FB, -0.88%

8.9% -27% -22% 57% 12/31/2019 Internet Software/Services
Cognizant Technology Solutions Corp. Class A

CTSH, +4.19%

11.5% -38% -31% -1% 12/31/2019 Information Technology Services
Synopsys Inc.

SNPS, +2.14%

11.6% -24% -10% 65% 01/31/2020 Software
Ansys Inc.

ANSS, +2.34%

12.7% -29% -18% 80% 12/31/2019 Software
Micron Technology Inc.

MU, +3.01%

13.3% -34% -26% 69% 02/27/2020 Semiconductors
Salesforce.com Inc.

CRM, +0.19%

13.6% -30% -18% 19% 01/31/2020 Software
Electronic Arts Inc.

EA, +4.88%

13.7% -11% -9% 36% 12/31/2019 Recreational Products
Accenture Plc Class A

ACN, +1.03%

14.1% -28% -26% 51% 02/29/2020 Information Technology Services
Intuit Inc.

INTU, +3.26%

14.7% -29% -17% 34% 01/31/2020 Software
F5 Networks Inc.

FFIV, +3.27%

15.1% -20% -26% -14% 12/31/2019 Computer Communications
Cadence Design Systems Inc.

CDNS, +1.06%

16.5% -18% -6% 60% 12/28/2019 Software
Nvidia Corp.

NVDA, +5.10%

17.2% -23% 3% 77% 01/26/2020 Semiconductors
Source: FactSet

You can click on the tickers for more about each company, including news coverage.

Scroll the table to see all the data.

The table actually includes 21 stocks, with both common share classes for Alphabet

US:GOOGL

US:GOOG.

 

The stock screen is only a starting point for further research. The debt-to-equity ratios are as of the dates indicated on the table, to the right. A company may have issued more debt since that date or made other announcements of importance to investors.

If you see any companies of interest here, you not only need to make sure you are familiar with the most recent announcements, you need to consider the company’s strategy and form your own opinion about it’s ability to remain competitive for the next decade.

Grant indicated there were opportunities in the tech space for investors “with a little patience,” but these are really long-term plays. What does “a little patience” mean to you? If you scoop up discounted shares now, you may need to wait a few years to make money.

Don’t miss: These 60 large U.S. companies are ‘susceptible to a dividend cut,’ according to Jefferies



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Steel billionaire Gupta shuffles reporting dates at GFG Alliance


Since October 2019, several executives from Sanjeev Gupta’s sprawling GFG Alliance have promised in media interviews a set of consolidated accounts for the group’s Liberty steel businesses, due in early 2020, which would provide greater transparency and enhanced governance. Recent public filings show that the group is still fine-tuning the details.

In particular, in early March, several of the group’s entities changed their financial year-ends from Mar. 31 to Jun. 30, according to filings with Companies House. This week, they changed the year-ends back again.

While companies can change their reporting year-end dates, it is unusual to do so twice in such quick succession.

A spokesperson for the group said, “As part of the global consolidation of Liberty Steel Group, we began a process of synchronizing accounting to a June year-end. However, a decision has subsequently been made to bring forward the combined year-end to March.”

A person familiar with the decision said that management very recently changed its mind on the reporting period due to the impact of coronavirus on the business. This person said that top executives believed the sudden economic changes ushered in by the global pandemic meant that reporting figures to March would give a better reflection of the business before the crisis hit the business.

The move is “certainly odd,” said Chris Higson, associate professor of accounting practice at London Business School. Businesses sometimes change their reporting periods — to align new subsidiaries with a parent company, for instance — but it’s unusual for companies to switch back and forth, he said.

Commodities magnate Gupta, 48, has built a global metals empire in just a few years, largely by picking up failed steel mills and other distressed businesses. The result is a complex global conglomerate — with operations in countries including Australia, the U.K. and the U.S. — which has also often been backed by opaque financing. The group’s companies have received billions of dollars, for instance, from Greensill Capital, a U.K.-based firm that specializes in so-called receivables financing arrangements. Under this form of financing, also known as factoring, the lender pays a company’s supplier invoices early, at a discount, and the borrower repays the amount later. Gupta was previously a shareholder in Greensill for several months.

Read: GAM scandal: inside the probe into star trader’s conduct

The company has previously eyed a public listing in Australia and the UK. Last year, Gupta made the promise to deliver consolidated accounts for the Liberty Steel Group of GFG companies. GFG said at the time that the group had 30,000 staff in 10 countries and annual sales of $15 billion.

Speaking at a conference in Italy last year, Gupta said “Our integrated group will stretch around the world, with a financial and governance structure suitable for an intercontinental business of our size.”

In January, the group appointed Neil Barrell — a former partner at accountants Grant Thornton — as group chief operating officer, saying his initial focus would be on consolidating the steel business as part of an effort to enhance governance and “move towards broader financial transparency.” However, Barrell died suddenly last month. Gupta said “Neil’s death has come as a devastating shock,” and paid tribute to his impact on the firm and on his colleagues.

More recently, GFG executives have given an update on the impact of coronavirus on its business. A statement issued by the group last week said it “continues to adjust production to demand on a plant by plant basis with its highest priority being the safety of its employees.”

The group has furloughed employees at some engineering businesses in response to the economic crisis brought on by the global pandemic, according to a person familiar with the matter.

Reuters reported last week that Liberty said the group’s steel mills in Britain, Poland and Romania would reduce production and that it had idled smaller rolling mills in Belgium, Luxembourg and Italy as well as three businesses in the U.K. that make components for the automobile industry.

Read also: An audience with Lex Greensill



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