On the heels of the Dow tumbling over 500 points, this is how bad things really are in the economy.

Trouble For Restaurants
May 13 (
King World News) – 
Gerald Celente:  Restaurant Supplier’s Performance Bodes Ill for Sector:  
Sysco, which supplies food to restaurants, schools, hospitals, and other institutions, has dispensed with a third of its employees after seeing sales fall 6.5 percent in its most recent quarter, the worst performance in 11 years.

In mid-March, as economic lockdowns were being imposed, sales were down as much as 60 percent; restaurants now shuttered made up almost two-thirds of Sysco’s customers.

The company reported that sales ticked up in April, but most of the gains came from restaurants with drive-through windows, which tend to be larger chains.

Business remained virtually flat among smaller and independent restaurants, which could indicate that many will not be able to reopen when lockdowns are eased.

Even in the best of times, with profit margins thin and numerous factors such as weather, etc. affecting customer turnouts, restaurants are a risky business. 

Now, with governments across the globe making up laws on occupancy rates, seating spacing, mask wearing, etc., there will be massive restaurant closures and bankruptcies in the coming months.

As profit margins shrink, quality, even at higher end establishments, will decline as do-or-die cost cutting measures will be employed to regain financial losses and help boost profits. 

Rental Car Business Running on Empty
Already losing business to Uber and other ride-hailing services, major car rental companies saw their profits fall even faster and further in the first quarter of this year.

Avis Budget Group lost $158 billion during the period, with revenue down 9 percent to $1.8 billion and a 7-percent decline in the number of rental days.

Air travel, which has virtually ceased, accounts for about two-thirds of the car rental industry’s business.

Avis’s stock was priced at $13.97 on 4 May, compared with prices around $50 five weeks earlier.

Hertz Global Holdings negotiated a 2.5-week reprieve from creditors after the company was unable to make a lease payment earlier this month on its fleet of cars.

The company will use the delay to develop a “financing strategy and structure” that accommodates the impact of the economic lockdown on travel, it said…

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The company has laid off 10,000 North American employees in April, during which the company’s stock lost about 80 percent of its market value and stood at about $4 on 4 May.

The companies’ executives are pinning hopes on a burst of pent-up demand for travel once restrictions are lifted. Airline company executives are more subdued, expecting travelers’ comfort with being sealed in an airplane with strangers will take longer to return.

Car rental companies use cars they own as collateral for loans. The value of the unused cars sitting in rental lots depreciates by the day, increasing the companies’ financing costs.

s noted, as the travel and tourism industry continues to decline, so, too, will related industries… along with the tens of millions of workers, with incomes even in the best of times that were below middle-class standards.

Businesses Miss Mortgage Payments
Almost 24 percent of U.S. hotels failed to make their mortgage payments last month, compared with only 4.2 percent in March, according to data from JPMorgan.

The proportion of retailers late on their April mortgages rose to 11.5 percent from 3.7 percent in March.

The failures will have ripples beyond the mortgage lenders: many hotel mortgages have been bundled into securities that are used to issue bonds rated as more speculative than much corporate debt.

If late payments continue at the same rate or worse in May, “it could surpass the worst we have seen in this market going back through the Great Recession or September 11 attacks,” said Manus Clancy, research chief at Trepps, an analysis firm that tracks commercial mortgage-backed securities.

In April, about 4.1 million U.S. homeowners also failed to make their mortgage payments.

Disney Records Losses in Most Recent Quarter
Although the Disney Co.’s revenue rose 21 percent to $18 billion in the quarter ending 28 March, its operating income dropped 37 percent to $2.4 billion, net income plummeted 91 percent to $475 million, and earnings shrank by $1.4 billion.

Disney is highly diversified, but all of its commercial venues were battered by the economic freeze.

Scheduled movie releases were postponed, with an updated version of “Mulan” now slated to open in late July. Broadway shows, such as “The Lion King,” went dark.

Theme parks around the world were closed, with Disney’s Shanghai park due to reopen this week but limited to 30 percent of guest capacity. At first, the park will admit a much smaller number than that, the company has said.

Disney’s television division – including the streaming services Disney+, ESPN+, and Hulu – also reported lower revenues.

The company has laid off 100,000 workers, cut executive salaries, and canceled the summer’s semi-annual dividend, a move that will save about $1.6 billion. Analysts have downgraded their outlook for the company’s stock performance.

Disney has warned that the current quarter will show even worse numbers because economic shutdowns outside of Asia expanded after the first quarter ended.

Shanghai Disneyland reopened Monday after being closed since January, when the coronavirus struck China. 

With limitations of 30 percent capacity, no parades, no Disney characters greeting visitors or fireworks – and face masks, social distancing and restaurant seating restrictions –  the Disney COVID World, as with other once consumer friendly businesses, will continue to decline and/or go bankrupt under the “New ABnormal” mandates.

Central Planners Face Huge Problems
***Also Released: Central Planners Face Huge Problems

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