Welcome to the Weekly Scan. Here’s what we’re following for the week of May 4, 2020.
Make sure to check back as we update these stories.
Preppy handbook of problems. J. Crew, the mass retailer of polo shirts, chinos, and blazers, announced it would seek Chapter 11 bankruptcy protection. It is the first retailer to announce bankruptcy as a result of the pandemic, which has shut down the global economy since March, 2020. Chapter 11 allows troubled companies to reorganize while paying off debts. As part of its repayment plan, J. Crew will convert $1.65 billion worth of debt into equity, which it will hand over to its largest creditor, Anchorage Capital. New York Times.
Warren gets whacked. Warren Buffet, world-famous investor and the founder and chief executive of Berkshire Hathaway, said his company recently sold its entire portfolio of airline stocks, worth $6 billion. The company had previously owned a 10% stake in the four largest airlines: American, United, Delta, and Southwest. The airline industry has suffered as air travel has all but ceased, plummeting by 95%, during the pandemic. U.S. airlines are seeking up to $50 billion in bailout money from the federal government. Berkshire reported a $50 billion loss in the first quarter as stocks got hammered due to Covid-19. Axios and Forbes.
Who shrank the economy? The U.S. economy contracted in the first quarter by 4.8%. Some economists are forecasting it will shrink by as much as 30% in the second quarter, which ends June 30, 2020. As U.S. businesses have closed and Americans have responded to statewide orders to shelter in place to stem the spread of Covid-19, it has ushered in what some experts say will be the worst economic decline since the Great Depression. Washington Post.
Jobs, jobs, jobs. Approximately 4 million people filed for unemployment in the last week of April, bringing the total of people who have lost their jobs to 30 million. In the third week of April, 4.4 million people filed for unemployment. A total of 9 million people lost their jobs during the financial crisis of 2008. Approximately 18% of the workforce is now unemployed, compared to 3.5% earlier in the year. CNBC and NBC.
Find out what we covered in last week’s Weekly Scan.