July 07, 2021

What We’re Reading This Week [July 5, 2021]


CNBC analyzes the Labor Department’s latest jobs report, which showed 850,000 jobs gained in the U.S. in June, much higher than economists expected.  The hospitality sector, particularly bars and restaurants, accounted for the largest share of employment gains, with education and professional services also seeing increased employment.  The article notes that hiring has accelerated as Americans continue to “return to normal,” and GDP growth for the second quarter of 2020 may end up approaching a staggering 10%. [CNBC; July 2, 2021]

The Wall Street Journal discusses the resurgence of coal as an energy source.  Electricity consumption has surged as many countries emerge from the worst of the pandemic, and the shift towards electric vehicles has further increased demand.  With prices of alternatives like natural gas rising, and renewables still unable to meet demand, countries are turning to coal as a reliable energy source to satisfy consumer needs and avoid outages.  [Wall Street Journal; July 7, 2021]

Yahoo Finance shares Bloomberg’s reporting on Hertz’s emergence from Chapter 11 following a contentious thirteen months in bankruptcy court.  Riding a surge in prices for used cars and competition among investors to finance the reorganized entity, Hertz was able to emerge from bankruptcy with a clean balance sheet, paying its bondholders in full.  In addition to being a success for the car rental company and its creditors, equityholders, particularly “Reddit traders” who kept buying Hertz stock while the company said its equity was likely worthless, benefit from the receipt of cash, new equity, and warrants for stock in the reorganized company. In particular, since trading of the new stock commenced, Hertz’s stock price has been well above the $13.50 strike price of the equity warrants, a potential windfall to those stockholders.  [Yahoo Finance; June 30, 2021]

In other post-bankruptcy news, The Wall Street Journal discusses Authentic Brands’ forthcoming IPO.  Over the past couple of years, Authentic Brands has partnered with shopping mall owner Simon Property Group to acquire a variety of retail brands out of their bankruptcy proceedings.  At a time when brick-and-mortar retail is on the decline, Authentic Brands is betting on improved fortunes for formerly bankrupt retailers in its portfolio, including Brooks Brothers, Nine West, Forever 21, and JCPenney.  [Wall Street Journal; July 7, 2021]

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