Hi Newsletterest, here's what you need to know for May 13th in 3:08 minutes.

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Today's big stories

Saudi Aramco saw its first-quarter profit drop 25% as the collapse in oil prices hit the oil giant’s sales
Our analysts track down a few overlooked exchange-traded funds which might offer both safety and strength – Read Now
Toyota forecast an 80% tumble in earnings, saying COVID is proving a bigger shock than the 2008 crisis

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Prime The Thumps

What’s Going On Here?

Saudi Aramco – the biggest company in the world – saw its first-quarter profit drop 25% on Tuesday, as the one-two punch of collapsing oil prices and falling demand battered the Saudi oil giant’s sales.

What Does This Mean?

Aramco’s first-quarter earnings came in below expectations, but the worst may be yet to come. It was only in April, after all, that oil prices hit a 34-year low, suggesting the impact will probably be even more pronounced next quarter. And that may be why Aramco’s decided to slash its 2020 spending by 25% (tweet this).

Fortunately for Saudi Arabia, the oil giant didn’t do the same to its dividend. The Kingdom – which owns around 98% of Aramco – relies heavily on those payouts to cover its spending. So if they vanish – and the oil price collapse continues to wreak havoc on the country’s finances – the austerity measures announced on Monday could be just the beginning…

Why Should I Care?

For markets: Parental supervision.
Big Oil’s generous dividends have long been a key attraction for investors, but they’re increasingly under threat. Exxon Mobil, for one, recently froze its payouts, while Royal Dutch Shell’s were slashed by two-thirds. So investors might simply be relieved Aramco held its ground. Then again, other oil majors aren’t under their governments’ thumbs like Aramco is: Saudi Arabia told the state-owned company to pump at maximum capacity in March, only to insist it cuts production by more than 40% two months later.

The bigger picture: No way, Norway.
It’s not just Saudi Arabia feeling the heat: Norway, western Europe’s largest oil exporter, is facing its worst economic slump since World War II due to the collapse in oil price and demand. The country revealed on Tuesday that it’s withdrawing a record $37 billion from its gigantic investment fund. That would in turn force the fund – the biggest in the world – to sell a significant chunk of its bond holdings, which could add pressure to global bond markets.

Learn more: Why oil stocks like Aramco might still make a good bet.

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Cash Me If You Can

What’s Going On Here?

Vodafone gave investors a welcome boost on Tuesday as it kept its dividend steady, which got our analysts thinking about one dividend-focused index – and its related exchange-traded funds you can invest in – that’ve been performing particularly well lately…

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Fury Road

What’s Going On Here?

As Toyota desperately tries to make it across this coronavirus-ravaged landscape in one piece, the carmaker warned investors on Tuesday that its profit will fall by as much as 80%.

What Does This Mean?

The Japanese company reckons it’ll sell 15% fewer vehicles this year – an even bigger drop than after the 2008 financial crisis. And since carmakers have high fixed costs, profits get hit hard even if sales slow just a little.

Still, at least Toyota made a forecast at all: plenty of rivals – from General Motors to Honda – have declined to in the face of COVID confusion. Better yet, thanks to the $74 billion cash stockpile it’s accumulated, the company has an enviable cushion if the economy gets even worse. And it may need it: some analysts are expecting global vehicle sales to slide by a third, compared to the 11% drop after the last crisis.

Why Should I Care?

For markets: Top of the tree.
Falling car sales like those Toyota’s experiencing will be having consequences further down the supply chain too. Just look at tiremaker Bridgestone, which announced a 65% drop in quarterly profit on Tuesday. Things could be worse, mind you: they could be in the coronavirus-hammered car rental business like Hertz, which this week outlined dramatic measures in a bid to avoid bankruptcy. Too right it hurts…

The bigger picture: Lend us your fears.
Companies like Toyota don’t just make cars nowadays: most also have financing arms that lend money to prospective buyers. These segments can be left on the hook if customers stop paying them back, which is why Toyota set aside nearly $500 million to cover those losses in the first quarter of 2020. With Americans already falling behind on their auto loan payments before COVID hit – and a record 20 million Americans losing their jobs in April – more losses from loans seem inevitable.

Take action: How to (accurately) value a carmakers’ share price.

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“I’ve been absolutely terrified every moment of my life – and I’ve never let it keep me from doing a single thing I wanted to do.”

– Georgia O'Keeffe (an American artist)

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📚 What we're reading

One for all the new runners out there (Outside)
To be Mackenzie Bezos, or not to be (Wired)
You call that a bookcase? (Twitter)

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Finimize - 📉 Aramco takes a huge hit

Today's big stories

Prime The Thumps

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Cash Me If You Can

Five rules for the new normal

Fury Road

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🕺 Ah, ah, ah, ahhh, stayin’ AMA Live

Older messages

👎 WeWork won’t pay

🤮 20 million jobs lost

🤭 The biggest recession ever

⚠️ UBS says don’t sell

📈 Whoa, Microsoft and Facebook

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