Ford says it will let buyers return cars if they become unemployed
Reprising a sales strategy some automakers used during the last recession, Ford Motor said on Monday it would let new car buyers return their vehicles if they lose their jobs.
Ford said it would allow customers who buy new cars or trucks before Sept. 30 to return those vehicles within a year. The vehicles must be leased or financed through Ford’s credit arm. For a buyer seeking to return cars, Ford said it would subtract the trade-in value of returned cars against what the buyer still owes and waive up to $15,000 of what was still due.
“We feel like right now, the economy is at the stage of recovery where people want things back to normal, they want to buy, but they’re still a little nervous about what the future holds,” Mark LaNeve, Ford’s vice president of U.S. marketing, sales, and service, said in a statement.
The policy, which the company calls Ford Promise, is the latest effort by automakers to entice people to buy new cars during the coronavirus pandemic. Ford, General Motors and other companies previously offered no-interest loans for 84 months and other incentives.
Ford’s car-return program is not the first such effort. In March and April, Hyundai and Kia put out a similar offer. Such programs date back to the recession in 2009 when auto sales plunged and banks all but stopped providing car loans. At the time, Hyundai was among the first automakers to gain attention for giving customers a means of returning cars. — Neal E. Boudette
How costly is the Facebook advertising boycott?
Facebook’s share price has been hit hard by the growing boycott of advertisers on its platform, which are pausing their spending to protest the network’s policies on misinformation and hate speech. As ever-larger companies joined the movement, the social network’s stock has fallen more than 10 percent from the record high it reached last week. Some $80 billion in market value (and counting) has been erased in the process.
In the past few days, big companies like Coca-Cola, Diageo and Starbucks have announced a halt to ads on all social networks, of which Facebook is the largest. Others, like Honda America, Levi Strauss and Patagonia have boycotted Facebook specifically. Together, these companies spend hundreds of millions of dollars with Facebook every year.
But as today’s DealBook newsletter notes, Facebook generated more than $17 billion in advertising revenue in the first quarter alone. Losing big brands is painful, but the bulk of the company’s sales come from millions of smaller businesses that rely heavily on the platform. And some major advertisers, like Procter & Gamble — the world’s largest advertiser — haven’t yet taken a position on the boycotts.
Can Facebook turn things around? It has rolled out new measures to flag problematic political posts and expand its policies around hate speech. Attention now turns to Facebook’s founder, Mark Zuckerberg, who is often criticized for policies that are viewed by his detractors as driven by business interests more than any moral code.
But if he were always trying to placate advertisers, the boycott wouldn’t have happened. Facebook’s recent reversal on misinformation could be proof of Mr. Zuckerberg’s malleable principles. (By extension, his prior permissiveness could be seen as placating the Trump administration in hopes of keeping regulators at bay.) But anyone who knows Mr. Zuckerberg knows that he believes in his positions — until he is forced to abandon them. — Andrew Ross Sorkin and Jason Karaian
The Fed says its direct bond-buying program is up and running.
The Federal Reserve’s primary market corporate credit program is up and running, the central bank said on Monday, giving relatively healthy companies a last-ditch option to sell bonds straight to the central bank if they are struggling to raise funding.
The Fed’s announcement, which also set out pricing terms for the program, called it a “funding backstop” that will support market liquidity and “the availability of credit for large employers.”
The Fed’s decision to buy corporate debt has already calmed markets and analysts don’t expect heavy use of the program unless market conditions take a turn for the worse.
The Fed first announced on March 23 that it would buy both newly-issued bonds on the primary market and corporate bonds on the secondary market — the one for already-issued debt. On April 9, it said the two programs would be supported by $75 billion in money given to the Treasury Department as part of Congress’ recently-passed coronavirus economic response package. The money was meant to support up $250 billion in secondary market purchases and $500 billion in primary market buying.
Although the Fed’s primary bond-buying program was initially expected to be the larger effort, that now seems unlikely.
That’s because the primary market program is designed to be a backstop. To use it, a company must check several boxes: It must be unable to get “adequate credit” from banks and markets. It must be investment grade — meaning it is seen as a safe bet — or have been downgraded to junk-bond status only after March 22. Even the so-called “fallen angels” cannot use the program if they are now insolvent.
The program could help out if markets gum up again, as they did in March. Its sister program, the one that buys already-issued securities, has been active since mid-May and had made $8.7 billion worth of exchange-traded fund and bond purchases through June 24, based on the latest data.
On Sunday, the Fed detailed the corporate bonds it will buy in that secondary market program. A total of 12 sectors are represented in the index. The most heavily-represented individual companies listed in the index include automotive and technology companies: Toyota Motor Credit Corp., Volkswagen Group America, Daimler Finance, AT&T Inc., Apple Inc., Verizon Communications and General Electric round out the top issuers. — Jeanna Smialek
Every January for 36 years, the Sundance Film Festival has been staged in Park City, Utah, an affluent ski town tucked 7,000 feet up in the Wasatch Range. Attendees fill theaters to capacity, huddle together in crowded wait-list tents, ride on jam-packed shuttle buses and hot-tub hop with boozy abandon — at the height of flu season.
But the coronavirus pandemic is forcing organizers to rethink Sundance. On Monday, Tabitha Jackson, the festival’s director, unveiled her preliminary plans for the 2021 edition, a gathering expected to take place under social distancing restrictions and with a Covid-19 vaccine still unavailable. It will simultaneously be held in Park City and at least 20 other locales: Exploratory talks are underway with independent cinemas in California, Colorado, Georgia, Kentucky, New York, Michigan, Minnesota, Tennessee and Texas. Mexico City is also on the list.
Participating theaters will chose a “bespoke” selection of Sundance 2021 offerings that make sense for their community, Ms. Jackson said, augmenting those choices with complimentary programming of their own.
She said that Sundance’s “full curated program” would also be made available online.
“It will be the nucleus of the festival,” she said of an online platform that Sundance is developing, “a one-stop point of access, designed to create a participatory experience which brings all the elements and locations of the festival together.” — Brooks Barnes
Stocks rallied Monday, rebounding from a week of losses, even as a resurgence in coronavirus cases that had alarmed Wall Street last week continued to grow.
The S&P 500 rose more than 1 percent, after having fallen nearly 3 percent last week. A jump in shares of Boeing helped lead the Dow Jones industrial average to a gain of nearly 2 percent. Shares in Europe had also ended higher, after rebounding from a decline earlier in the day.
Companies that have come to reflect investor sentiment toward the return of normal spending by American consumers — retailers and airlines — were among the best performing stocks in the S&P 500. Southwest Airlines rose nearly 9 percent, and Simon Property Group, which operates shopping malls, jumped more than 8 percent.
And oil prices rose, with West Texas intermediate futures approaching the $40 a barrel mark.
Boeing surged more than 6 percent after the F.A.A. cleared the company to begin test flights of its beleaguered 737 Max jet, a critical step that could mean the aircraft is back in service by the end of the year.
Investors have been watching nervously as coronavirus cases rise in the United States and in places where the pandemic had seemed to be under control, like Europe. Florida, Nevada and South Carolina broke daily records for new cases over the weekend. The global death total reached 500,000 on Sunday, according to a New York Times database. The number of confirmed cases passed the 10 million level.
Here’s the business news to watch this week.
💸 The biggest U.S. banks publish their capital plans after the market closes Monday, responding to last week’s stress tests by the Fed. Regulators forced banks to forgo share buybacks in the third quarter, and put a limit on dividends that analysts think will be toughest on Wells Fargo.
🗣 The House Financial Services Committee holds a hearing Tuesday to review the government’s coronavirus response programs, featuring testimony from the Fed chairman, Jay Powell, and Treasury Secretary Steven Mnuchin. It is also the last day to apply for loans from the Paycheck Protection Program, the $660 billion rescue program aimed at small businesses that has been revised several times, and still has well over $100 billion left to lend.
🇺🇸🇲🇽🇨🇦 The “new NAFTA” — formally known as the United States-Mexico-Canada Agreement, or U.S.M.C.A. — comes into force on Wednesday. The trade agreement hasn’t exactly spurred greater continental camaraderie: the U.S. recently threatened to reimpose tariffs on Canadian aluminum.
📈 Thursday is a big day for economic data, with monthly payrolls and weekly unemployment claims coming out. Economists expect that the U.S. economy added a net 3 million jobs in June, following the unexpectedly strong 2.5 million gain in May. At the same time, the latest week’s unemployment claims are forecast to come in at 1.3 million, the 15th week in a row above one million.
🗓 Noteworthy corporate earnings include the chip maker Micron Technology and the high-end office furniture seller Herman Miller today; Mrs. Butterworth’s parent, ConAgra, and the package deliverer FedEx tomorrow; and the Corona brewer Constellation Brands, the cereal giant General Mills and the troubled department store chain Macy’s on Wednesday. — Jason Karaian
Chesapeake Energy, a pioneer in extracting natural gas from shale rock across the country, filed for bankruptcy protection on Sunday, unable to overcome a mountain of debt that became unsustainable after a decade of stubbornly low gas prices.
The company helped convert the United States from a natural gas importer into a major exporter under the swashbuckling leadership of Aubrey McClendon, a company co-founder and former chief executive.
But Mr. McClendon overextended the company and amassed over $20 billion in debt before he was forced out in 2013, and Chesapeake, based in Oklahoma City, never fully recovered.
Chesapeake lost $8.3 billion in the first quarter of this year, and had just $82 million in cash at the end of March. With $9.5 billion in debt at the end of last year, it has bond payments of $192 million due in August.
In a statement, Chesapeake said it was filing for Chapter 11 protection to facilitate a complete restructuring. As part of its agreement with lenders, the company said it had secured $925 million in financing under a revolving credit facility, and eliminated roughly $7 billion of debt. It also secured a $600 million future commitment of new equity.
“We are fundamentally resetting Chesapeake’s capital structure and business to address our legacy financial weaknesses,” said Doug Lawler, Chesapeake’s president and chief executive. “Chesapeake will be uniquely positioned to emerge from the Chapter 11 process as a stronger and more competitive enterprise.” — Clifford Krauss
Three months after the coronavirus pandemic shut down offices, corporate America has concluded that working from home is working out. Many employees will be tethered to Zoom and Slack for the rest of their careers, their commute accomplished in seconds.
Richard Laermer has some advice for companies rushing pell-mell into this remote future: Don’t be an idiot.
A few years ago, Mr. Laermer let the employees of RLM Public Relations work from home on Fridays. This small step toward telecommuting proved a disaster, he said. He often could not find people when he needed them. Projects languished.
IBM came to a similar decision. In 2009, 40 percent of its 386,000 employees in 173 countries worked remotely. But in 2017, with revenue tumbling, management called tens of thousands back to the office.
Even as Facebook, Shopify, Zillow, Twitter and many other companies are developing plans to let employees work remotely forever, the experiences of Mr. Laermer and IBM are a reminder that the history of telecommuting has been strewn with failure. The companies are barreling forward but run the risk of the same fate.
“Working from home is a strategic move, not just a tactical one that saves money,” said Kate Lister, president of Global Workplace Analytics. “A lot of it comes down to trust. Do you trust your people?” — David Streitfeld
Catch up: Here’s what else is happening.
The first in a series of crucial test flights of Boeing’s 737 Max jet took off from a Seattle-area airport just before 10 a.m. on Monday. The flights, which are expected to take about three days, represent a significant milestone in returning the plane to service after it was grounded last year following two fatal crashes.
Reporting was contributed by Jeanna Smialek, Niraj Chokshi, Neal E. Boudette, Carlos Tejada, Clifford Krauss, Salman Masood, Jason Karaian, Eve Edelheit, Paul Sullivan, David Streitfeld, Andrew Ross Sorkin, Mohammed Hadi, Katie Robertson and Brooks Barnes.