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Money

What a WeWork collapse represents for startup era

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In a stark reflection of WeWork Inc.’s current financial challenges, the company’s corporate bonds have taken a severe hit in the market.

The hourly office-rental giant issued a cautionary statement regarding its solvency, leading to a sharp decline in bond prices, far surpassing the dip in its stock value.

The 7.875% notes due on May 1, 2025, with a total value of approximately $165 million, experienced a precipitous drop in value, trading at around 12.55 cents on the dollar.

This represents a staggering 63% decline from their previous value of 34.13 cents on the dollar. The decline is illustrated in a chart provided by BondCliQ Media Services.

The bond-market turmoil hasn’t spared WeWork’s equity either.

The company’s stock price, trading under the ticker symbol WE, plummeted by about 40% to reach 12.6 cents a share. This significant decrease follows WeWork’s admission of substantial doubts about its ongoing viability.

Survival plan

WeWork’s survival now hinges on successfully executing a plan aimed at enhancing liquidity and profitability over the next year. The company’s stock has languished below $1 per share since February.

Despite narrowing its second-quarter loss to $397 million, or 21 cents a share, WeWork remains under pressure.

While revenue increased to $844 million, up from $815 million during the same period, the company’s financial performance fell short of analyst estimates.

The market reaction is evidenced by WeWork’s bonds, which have faced ten consecutive days of decline leading up to the company’s quarterly update. This decline has signaled to investors that the market sentiment around WeWork’s financial prospects has grown increasingly negative.

Ongoing struggle

The situation underscores WeWork’s ongoing financial struggles, as the company has been grappling with overdue payments, accumulating 402 late-paid bills, with a total of $799,000 in late bills.

These financial issues have prompted concern among investors and analysts, who are questioning the company’s long-term viability.

While equity investors bear the brunt of a company’s failure, bondholders typically retain a portion of their principal even in a bankruptcy scenario.

WeWork’s predicament serves as a cautionary tale, raising questions not only about the flexible office space market but also about the company’s internal management and growth strategies.

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Money

Divorce spike in Australia triggers hidden tax risks

Australia sees increased divorce filings amid emotional challenges, with many couples overlooking significant tax pitfalls in their settlements.

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Australia sees increased divorce filings amid emotional challenges, with many couples overlooking significant tax pitfalls in their settlements.


Australia is facing a sharp rise in divorce filings over the past two months — but as couples navigate emotional breakups, many are missing major tax traps hidden in their settlements.

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Stocks rebound despite tariff concerns and earnings anticipation

US stocks rebound amid tariff uncertainty; key earnings reports and economic data loom as volatility persists in the market.

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US stocks rebound amid tariff uncertainty; key earnings reports and economic data loom as volatility persists in the market.

In Short

The stock market recovered after an early decline, led by companies like Boeing and IBM.

Investors are cautious ahead of upcoming economic data and potential trade developments, with projections of a 7% drop in S&P 500 earnings by 2025 due to tariffs.

A late recovery in the stock market reversed an early decline as dip buyers entered during a volatile day.

On Monday, the S&P 500 completed its fifth reversal of 1% or more in a month, matching the total seen throughout 2024. Gains were led by Boeing and IBM, while Nvidia fell following Huawei’s announcement regarding a new chip. Major tech companies, including Microsoft and Apple, are expected to report earnings soon.

Short-term Treasuries performed better, and the dollar weakened amidst ongoing economic data releases.

Economic data

The upcoming week promises substantial economic data, with reports on jobs and inflation due. A Texas manufacturing survey revealed significant weakness, with executives describing the tariff situation as chaotic.

Experts predict an eventful week, with potential for market volatility driven by various trade and economic headlines. Investors are particularly attuned to trade relations with China, with outlooks hinging on government actions.

Despite some executives remaining uncertain about tariff impacts, analysts are calculating potential effects on corporate earnings. Bloomberg Economics projects net income for the S&P 500 could drop around 7% by 2025 due to elevated tariff rates, compared to previous growth expectations.

Morgan Stanley suggests that a weak dollar may help US earnings, keeping the S&P 500 within a 5,000 to 5,500 range unless trade agreements with China are made, alongside a rebound in earnings and potential easing of monetary policy.

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Busy week: big tech earnings, U.S. jobs data

Busy week for markets with major tech earnings and U.S. jobs data shaping investor sentiment amid trade uncertainties.

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Busy week for markets with major tech earnings and U.S. jobs data shaping investor sentiment amid trade uncertainties.

In Short

Next week, major tech companies, including Apple and Microsoft, will report earnings alongside key economic data, amid ongoing global trade concerns.

The S&P 500 has seen some recovery but remains down 10% since February, with investors anxiously awaiting the U.S. jobs report and economic growth indicators.

Next week, U.S. markets anticipate significant activity as big tech companies release earnings and crucial economic data is reported.

Investors will focus on corporate results from major firms like Apple and Microsoft, alongside the U.S. jobs report and first-quarter economic growth data. This comes amidst ongoing concerns related to global trade that could affect market stability.

The S&P 500 index has seen modest recovery recently, cutting its previous losses but still down roughly 10% from February’s peak. Optimism has been partially driven by indications of a softer trade approach from the Trump administration.

Market sensitivity

Michael Mullaney of Boston Partners noted that stock market sensitivity remains high, responding rapidly to any shifts in tariff news. Recent easing of trade tensions, including a pause in major tariffs announced by Trump, has contributed to market gains, but uncertainty continues.

In the forthcoming week, about 180 S&P 500 companies, accounting for over 40% of the index’s value, will announce their quarterly performance. Early reports indicate strong earnings growth, though some firms have lowered profit forecasts, highlighting potential challenges ahead.

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