The troubled home goods retailer is looking to raise around $400 million to bolster its balance sheet and refinance some of its debt.
Bed Bath & Beyond Inc. has been trying to find a way to boost its capital since October amid concerns over its ability to maintain profitability. The company recently announced plans to close nearly half of its stores and cut costs.
In addition, Bed Bath & Beyond’s shares are trading at less than one-third of their 52-week high. In early January, the company reported a net loss of $1.2 billion, compared with a profit of $75 million a year earlier.
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The plan announced by Joe Biden during his campaign announcement included canceling up to $50,000 in student loan debt for millions of Americans. This proposal is expected to cost about $1 billion over 10 years. While it sounds like a good idea, there are many people who don’t think it goes far enough. They want to cancel even more of their debt.
There’s no question that most people who take out loans do what they’re told, whether it’s paying off their credit cards, taking out mortgages, or buying cars. But some people just don’t follow instructions. And when they don’t, things go wrong.
In the case of student loans, borrowers often end up getting into trouble because they didn’t understand how much money they had to pay back each month. Or they got behind on payments and missed several months without realizing it. Then they couldn’t make the required payments anymore.
If you’ve been laid off recently, chances are you’ll find another job quickly. Unemployment rates remain low, and companies continue to add jobs every week. A recent report found that the average length of unemployment claims dropped to 5 weeks in 2018, down from 7 weeks in 2017.
Whitney Tilson
Empire Financial Research founder and CEO Whitney Tilson is the editor and publisher of the Empire Investment Report. He is known for predicting major market events such as the dot-com boom and bust, the housing bubble burst, the 2008 financial crisis, and the 2009 stock bottom.
Tilson graduated from Harvard University and Harvard University Business School, where he received an MBA. During his career on Wall Street, he founded and managed Kase Capital Management, grew it to over $200 million in AUM, and served as President of Kase Capital Management. In 2001, he became one of the youngest people ever elected to the American Stock Exchange.
In 2005, Tilson left Wall Street to start Empire Financial Research, a firm focused on identifying stocks that are trading cheaply based on fundamental analysis. His goal is to find companies that are selling for less than what their fundamentals support. To date, his research has been accurate in predicting many of the most significant market moves since 2005.
Goldman Sachs has run the numbers on student-loan forgiveness. Here’s its assessment.
The Trump administration announced a $9 billion loan program Monday aimed at helping students defray college costs. But some experts say it won’t do much to help borrowers struggling under existing loans. In fact, some critics are saying it could actually make things worse.
Joseph Briggs and Alec Phillips, both economists at Goldman Sachs, ran through the numbers on how the government’s proposal might affect the average borrower. They found that most people wouldn’t see a difference. For example, if you’re already paying off $30,000 in federal loans, you’d still owe $29,900 after the government forgave $20,000. And even if you had a balance of $100,000, you’d still owe about $99,700.
But there are exceptions. If you’ve borrowed money from multiple lenders over several years, the government’s plans could mean a big reduction in outstanding debt. Under current law, each lender gets paid back based on what they originally lent. So if you took out $10,000 from Bank A and another $10,000 from B, you’d pay back $20,000. After the proposed changes go into effect, each bank would only get repaid for the amount they originally lent — so you’d only owe $10,000 to Bank A and nothing to Bank B.
If you’re in default, the government will forgive part of your debt. Right now, if you miss one payment, you lose access to income-based repayment options. Under the new plan, you’ll still qualify for those programs, meaning you’ll continue making payments at a lower interest rate.
The biggest impact, though, will likely come to borrowers who don’t meet the eligibility requirements for income-based repayment. These include anyone whose monthly payment exceeds 10% of discretionary income. Typically, such borrowers aren’t eligible because they earn too little to afford the full cost of school. Now, however, they’ll be able to take advantage of the program without having to worry about making up the difference.
And while the proposal doesn’t offer free college, it does allow borrowers to refinance their loans at historically low rates. “This is good news,” says John McDonough, director of financial aid policy at the National Association of Student Financial Aid Administrators. “We know that many students struggle to keep up with the rising costs of education.”
U.S. stocks climb as economic data bolster confidence ahead of Powell speech at Fed gathering in Wyoming
The S&P 500 index rose 0.9% to 2,872.76 while the Dow Jones Industrial Average climbed 0.7% to 27,569.88. Both indexes are up about 4% since hitting intraday lows on Wednesday. The Nasdaq Composite gained 0.6% to 8,066.05. All three major averages had been down sharply earlier in the week amid concerns about the coronavirus outbreak.
A number of companies reported strong earnings reports. Boeing Co., for example, posted better-than-expected quarterly profit thanks to robust demand for its commercial airplanes. Shares of the aerospace giant surged 7.2%. Apple Inc. shares jumped 5.3% after it announced record iPhone sales during the quarter. And Wells Fargo & Co. shares soared 3.4%, following news that customers increased their accounts by $18 billion in February.
Meanwhile, investors digested comments from Federal Reserve Chairman Jerome Powell, who told lawmakers he believes the economy is strong enough to withstand the effects of the virus even without government stimulus measures. He added that the central bank could consider additional measures depending on how the situation develops.
In corporate news, the House Judiciary Committee launched an investigation into President Donald Trump’s decision to withhold aid from foreign countries dealing with the coronavirus. Lawmakers want to know whether the president violated federal law by pressuring officials to deny medical assistance to people in need. They also want to know why Trump did not follow guidelines set forth by the World Health Organization, according to Reuters.
Elsewhere, the Senate Banking Committee held a hearing on the potential impact of the coronavirus on the financial system. Witnesses included Treasury Secretary Steven Mnuchin and Securities and Exchange Commission Chair Jay Clayton.
Investors also took note of a report showing that the Republican Party’s advantage among voters 18 to 34 has eroded in recent months. A poll conducted by Morning Consult found that Democratic candidates now hold a 10-point lead among younger voters. This represents a significant shift from November 2018, when Republicans led by President Donald Trump won control of both houses of Congress.
Finally, the European Central Bank cut interest rates by 50 basis points to minus 0.25%. The move came just hours after ECB President Mario Draghi said the bank still sees no reason to lower borrowing costs further.
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