Today's big stories

Bankrupt car rental company Hertz suspended its controversial share sale
Our analysts look at the long-term prospects of one of the most popular gaming giants – Read Now
The Bank of England announced $125 billion more in economic support for the UK

1/3

Them’s The Brakes

What’s Going On Here?

Hertz – the bankrupt car rental company – stopped just short of going ahead with its share sale after US financial regulators began asking questions about the deal.

What Does This Mean?

Hertz was yet another business to fall victim to the coronavirus pandemic, which led the company to declare bankruptcy back in May. That meant its shares theoretically weren’t worth a penny. But that didn’t seem to put off “retail investors”, who stumped professional investors by buying up Hertz’s stock and boosting its share price. So the company figured it’d use all this newfound popularity to sell a bunch of new shares.

But companies usually call it quits when regulators start asking questions, and Hertz was no exception. All this attention on Hertz is notable because buyers – even willing ones – would likely have been left with shares worth nothing. After all, Hertz would’ve been obliged to use any cash it did raise to repay its debt-holders – and there’d probably have been nothing left for shareholders.

Why Should I Care?

For markets: We’re in charge now.
Retail investors don’t usually have enough cash to make a difference to the share price of a big company. But when firms go bankrupt, they shrink sharply, fewer investors buy and sell their shares, and smaller investors can now single-handedly bump prices up and push them back down. Case in point: Hertz planned to raise $1 billion from 250 million new shares, implying a share price of $4. But given its share price has halved since, selling the same number would now only net the company around $500 million.

For you personally: You Only Lose Everything Once.
The “YOLO day-traders” who’ve used so-called hot tips to inform their investments have been blamed for the peculiar rises in bankrupt companies’ shares lately. Some traders claim to have made a lot of money riding these waves, but other, much quieter folks have lost huge sums. If only they’d had a certain app…

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2/3 Premium

Party Animal

What’s Going On Here?

Nintendo’s share price has now risen 17% this year, but as old rivals gear up for next-generation console releases, could the company soon shed its pandemic premium?

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3/3

Playtime’s Over

What’s Going On Here?

The Bank of England (BoE) isn’t here to mess around: it announced on Thursday it’d increase its support for the UK economy by an extra $125 billion.

What Does This Mean?

The BoE’s been buying up bonds in the UK since coronavirus struck, but it would’ve exhausted the money it’d earmarked by next month if it kept going at its current rate. So the Bank’s now extended its runway by bolstering the program with more cash. That’ll help keep borrowing costs in the UK low: the BoE’s ever-present demand for bonds should buoy their prices and keep their yields low, which will in turn help provide low interest rates to new borrowers (since lenders use existing bond yields as a benchmark for new rates). The improved access to cheap money should help the UK get back on its feet as lockdown continues to loosen and businesses reopen.

Why Should I Care?

For markets: See? Everything’s fine.
The BoE chose not to cut the UK’s record low interest rates, which makes sense considering the Bank pointed to growing evidence that the economic damage would be less severe than initially thought. But try telling that to April – which saw the British economy shrink by the most ever, according to data out last week – or to the more than 600,000 workers who lost their jobs between March and May. Over 1.5 million more Americans filed for unemployment benefits last week too – a smaller-than-expected drop from the multiple-millions of weekly new additions we’ve seen recently.

The bigger picture: Super Thursday.
Across the channel, analysts and economists witnessed a busy Thursday for the European Central Bank (ECB). Commercial banks borrowed a record $1.3 trillion from the ECB’s program that provides them with super-cheap loans in the hopes it’ll keep them lending and the eurozone economy bubbling (tweet this). Having since upped its Europe-wide support, the ECB’s now probably just hoping to shorten the economic downturn, rather than avoid one altogether.

Beyond the headlines: How central banks make the financial world go round.

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💬 Quote of the day

“Anyone can be a father, but it takes someone special to be a dad.”

– Wade Boggs (an American former professional baseball player)

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🔥 Sustainability is lit

Investing ethically is a hot topic right now, so it’s a good thing Finimizer Anna Wolf’s hands are made of rubber: she’s not afraid to hold a discussion with BlackRock’s sustainable investing expert Sarah Lee Kjellberg in her bare hands.

🇭🇺 Hungary: What’s Next For The Energy Market? – 6.00pm CET, June 23rd
🇺🇸 USA: Making Sense of Sustainable Investing – 10am PT, June 25th
🌍 Global: Finimize Live AMA – 1.30pm UK Time, June 30th

📚 What we're reading

Vet detectives are heroes too (Inverse)
Try harder, Silicon Valley (The Baffler)
The Earth’s got secrets – shhh (The Cut)

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Finimize - 🤕 Hertz to be a retail investor

Today's big stories

Them’s The Brakes

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Party Animal

🏆 The award-winning experience for serious traders

Playtime’s Over

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🌊 Ride the next big wave with CMC

🔥 Sustainability is lit

Older messages

📈 Stocks are a rip-off, say investors

🇯🇵 Japan’s IPO frenzy

😎 Morgan Stanley: ignore the recession

😭 Uber goes hungry

💪 Activism really works

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