Good morning. Happy Friday.
The Asian/Pacific closed mostly up.
Hong Kong, South Korea, India, Taiwan, Malaysia, Singapore, Thailand and the Philippines posted big gains. Europe, Africa and the Middle East are currently doing very well. The UK, Poland, Denmark, France, Turkey, Germany, UAE, Russia, Greece, South Africa, Finland, Hungary, Spain, the Netherlands, Italy, Belgium, Portugal, Israel, Austria and the Czech Republic are doing great. Futures in the States point to a moderate gap up open for the cash market.
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VIDEO: Comparing Bear Markets 1980 – 2020
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Big gains were seen across every asset class overnight as policymakers pulled out all the stops and adopted a “whatever it takes” approach to mitigate economic fallout from COVID-19. The latest moves will see the Fed increase the access to dollars to global central banks grappling with liquidity shortages, while governments around the world pledged or are considering as much as $3T in fiscal support. Nasdaq futures jumped nearly 5% to hit a ‘limit up’ level on the news, while oil is ahead by 6% and gold is 2% higher. Don’t forget that it’s also quad witching day, which can lead to higher volatility and more trading volume.
Californians ordered to ‘stay at home’
California estimates that more than half of the state – 25.5M people – could get the new coronavirus over the next eight weeks as Governor Gavin Newsom issued a statewide order for people to stay at home. Non-essential businesses, including wineries and bars, will also be closed. Newsom further asked President Trump to dispatch the USNS Mercy hospital ship to the Port of Los Angeles through Sept. 1 to help with the influx of expected cases.
Next six months for consumer companies?
In what could be a harbinger of things to come in the U.S., almost half of China’s listed retailers don’t have enough cash to survive the next six months. “We expect smaller players to be more vulnerable due to tight working cash flow, and some players will exit the market, leading to a higher level of consolidation,” said Jefferies analyst Mark Yuan. Data released Monday already showed that retail sales in the world’s second largest economy plunged 20.5% in the first two months of the year, while China is also on guard for a second wave of infections.
Jobless claims surge
The number of Americans applying for first-time unemployment benefits jumped last week, increasing by 70,000 to 281,000, the fourth-biggest weekly increase on record going back to 1967. The spike is tied to the coronavirus pandemic as businesses shut down in industries from leisure to hospitality. State-level anecdotes suggest jobless claims could hit more than 2M in next Thursday’s report, according to a note from Goldman Sachs.
Oil has best day ever, but could prices go negative?
While WTI futures soared 24% on Thursday, oil traders are still struggling to navigate one of the biggest oil crashes in history, writes Bloomberg’s Catherine Ngai. Amid an oil price war between Saudi Arabia and Russia, capacity to hold barrels of U.S. oil in tanks and caverns could max out by mid-2020. In fact, in the aftermath of the last major downturn four years ago, a North Dakota sour crude was briefly priced at negative 50 cents a barrel before being revised to a mere $1.50.
Haley resigns from Boeing board
Citing her disagreement with any move to seek a federal bailout, former U.N. Ambassador Nikki Haley is leaving Boeing’s (NYSE:BA) board. “I cannot support a move to lean on the federal government for a stimulus or bailout that prioritizes our company over others and relies on taxpayers to guarantee our financial position,” said Haley, who has been in the role since Feb. 2019. “I have long held strong convictions that this is not the role of government.”
Surging data usage
In a week-over-week comparison, Verizon (NYSE:VZ) streaming demand increased 12%, web traffic climbed 20%, VPN jumped 30% and gaming skyrocketed 75%. “We’re always built for being prepared for different types of changes in the network,” CEO Hans Vestberg declared. “In less than a week, we have transformed this company dramatically.” While U.S. carriers have suspended data caps, there are fears about bandwidth usage over in Europe. Netflix (NASDAQ:NFLX) and YouTube (GOOG, GOOGL) are tapping the breaks on their download speeds there, reducing bit rates for 30 days.
Apple is limiting online purchases
Recent checks on Apple.com show the company is limiting iPhone model purchases to a maximum of two handsets per person, and other products, like the iPad Pro, also face restrictions. “Now that stores all over the world are closed, online scalpers see an opportunity,” according to Nicole Peng, who tracks the smartphone sector at research firm Canalys. The last time Apple (NASDAQ:AAPL) instituted selling caps was in 2007, when the iPhone was first introduced.
Box office figures suspended
Following the worst weekend in more than two decades at the North American box office, as well as the large number of theater shutdowns around the globe, Disney (NYSE:DIS) and Universal Pictures (NASDAQ:CMCSA) are suspending the release of box office data. Hollywood’s two other main movie studios, Sony Pictures (NYSE:SNE) and Warner Bros. (NYSE:T), didn’t yet make any announcements, though they may follow suit later today. In related news, the 2020 Cannes Film Festival has been postponed due to the coronavirus.
Last coronavirus roundup for the week
A decades-old drug called chloroquine – used for malaria since 1944 – may be helpful in treating COVID-19, and drugmakers from Mylan (NASDAQ:MYL) to Teva Pharmaceutical (NYSE:TEVA) are beefing up supply or donating doses. Amazon (NASDAQ:AMZN) has temporarily halted its Prime Pantry delivery service due to a surge in demand, while Walmart (NYSE:WMT) is shelling out $365M in special bonuses to its employees. Walmart additionally plans to add 150K new associates through the end of May to its stores and clubs, as well as distribution and fulfillment centers.
What else is happening…
NY Fed to buy $32B in mortgage-backed securities.
Norway cuts rates again; lowers to 0.25%.
Facebook (NASDAQ:FB) expands ad ban on COVID-19-related products.
Danaher (NYSE:DHR) wins U.S. approval to buy GE Biopharma (NYSE:GE).
NYC takes up Tesla’s (NASDAQ:TSLA) Musk on ventilator offer.
knocks on eBay’s (NASDAQ:EBAY) doors again.
Occidental (NYSE:OXY) plans to name former CEO as chairman.
Instagram (FB) tests disappearing text messages.
Thursday’s Key Earnings
Accenture (NYSE:ACN) +4.9% beating on top and bottom lines.
Today’s Economic Calendar
10:00 Existing Home Sales
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets closed mostly down. China, Hong Kong, South Korea, India, New Zealand, Taiwan, Australia, Malaysia, Indonesia, Singapore and the Philippines were all very weak. Europe, Africa and the Middle East are currently lean up. Poland, the UAE, Russia, Greece, Switzerland, Norway, Italy, Israel, Austria and the Czech Republic are doing well; the UK and South Africa are down. Futures in the States point towards a moderate gap down open for the cash market.
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VIDEO: Comparing Bear Markets 1980 – 2020
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The dollar is up. Oil is up; copper is flat. Gold is flat; silver is up. Bonds are up.
Stories/News from Seeking Alpha…
As the number of confirmed coronavirus cases and deaths in Europe surpassed China on Wednesday, the ECB launched a €750B bond-buying program to stop a pandemic-induced financial rout shredding the eurozone’s economy. The new policy brings this year’s planned purchases to €1.1T, with the new round alone worth 6% of the bloc’s GDP. Eurozone government bonds surged after the decision, with 10-year Italian bond yields dropping as much as 90 bps to 1.40%. Spanish and Portuguese 10-year bond yields slid around 30 bps each, while benchmark 10-year German Bund yields were down 12 bps at 0.35%.
It’s not just the eurozone
Australia cut rates for the second time in a month (to an all-time low of 0.25%) and made a historic foray into quantitative easing. “We are clearly living in extraordinary and challenging times,” RBA Governor Philip Lowe declared, adding the situation was “just too fluid” to provide an updated set of economic forecasts. The Bank of Japan followed up on the move by offering to buy as much as ¥1.3T ($12B) of its government bonds and supply another ¥4T of funds. “Markets are screaming for more, more and more,” said George Boubouras of K2 Asset Management. “It’s not enough. Fiscal policy needs to step up – the BOJ, ECB, RBA can’t do
everything.”
Rush for cash
Investors in the U.S. sold nearly everything they could on Wednesday despite President Trump signing a $100B coronavirus relief bill and Congress turning its focus to broader economic stimulus. Stock index futures wavered between gains and losses overnight, while crude posted a big rebound as WTI futures soared 13% to $23.53/bbl. Weekly jobless claims will also be on investors’ radars this morning (figures will be released at 8:30 a.m. ET), as well as the weeks ahead to gauge the depth of nationwide layoffs.
Need for liquidity
Another Fed bullet yesterday promised a liquidity facility for money market mutual funds, marking the second program in two days to use a $10B backstop from the Treasury Department’s Exchange Stabilization Fund. It’s a repeat from the 2008-era playbook, offering loans to financial institutions for use in buying assets from prime money market funds, which themselves purchase non-Treasury debt. According to the Fed, the “MMLF will assist money market funds in meeting demands for redemptions by households and other investors, enhancing overall market functioning and credit provision to the broader economy.”
First case at U.S. Amazon warehouse
An employee working at one of Amazon’s (NASDAQ:AMZN) shipping facilities in New York has contracted COVID-19, the first infection reported in a U.S. delivery network that’s become a lifeline for consumers sheltering at home. “In addition to our enhanced daily deep cleaning, we’ve temporarily closed the Queens delivery station for additional sanitation and have sent associates home with full pay,” said spokeswoman Rena Lunak. In related news, Amazon-owned Whole Foods Market is joining a growing rank of grocers in setting aside a special time for seniors to shop to minimize exposure to the virus.
ZOOM tops the charts
“ZOOM Cloud Meetings” topped the free charts yesterday across the Apple (NASDAQ:AAPL) and Google (GOOG, GOOGL) mobile app stores in the U.S., ahead of Facebook’s (NASDAQ:FB) Messenger, Netflix (NASDAQ:NFLX) and TikTok. In fact, Zoom (NASDAQ:ZM) is one of the few technology stocks that investors have supported in the past few months, with shares climbing another 7% on Wednesday to $118.71 (up 73% YTD). In addition to beefing up its data centers, the company has also been raising its capacity with its two cloud infrastructure providers, AWS (AMZN) and Microsoft Azure (NASDAQ:MSFT).
‘Arsenal of democracy’
Less than a day after the Detroit Three and the UAW union agreed to keep plants running with reduced shifts and staffing, the automakers said they would close their U.S. facilities to stop the spread of coronavirus. Despite shuttered production lines, GM (NYSE:GM) and Ford (NYSE:F) are in talks with the White House about how they could make ventilators and other medical gear to help fight the current pandemic. During WWII, automakers retooled their factories to build tanks, planes and other military equipment supporting the war effort, earning Detroit the nickname “arsenal of democracy.”
E-trading
The New York Stock Exchange (NYSE:ICE) will temporarily close its trading floors and move fully to electronic trading from Monday after an employee and a trader were tested positive for COVID-19. “While we are taking the precautionary step of closing the trading floors, we continue to firmly believe the markets should remain open and accessible to investors,” said NYSE President Stacey Cunningham. “All NYSE markets will continue to operate under normal trading hours despite the closure of the trading floors.”
Bank closures begin
JPMorgan (NYSE:JPM) is the first of the U.S. megabanks to announce broad closures of branches because of the coronavirus. It’s temporarily shuttering about 20%, or 1,000 branches, to protect employees, as well as deal with the escalating health crisis. Wells Fargo (NYSE:WFC) is meanwhile keeping the “vast majority” of branches open and operating normally, but is “implementing an enhanced cleaning program in all properties.”
How much debt can the U.S. bear?
“We have to deal with debt and deficits at some point down the road, but during crises or wars, you have got to sort of not worry about borrowing,” White House economic adviser Lawrence Kudlow told Fox News. What is unusual about this moment is that the debt was already so high before the current crisis, standing at $23.5T. Most analysts now see this fiscal year’s deficit soaring well past the record $1.5T hit in 2009, with estimates ranging from $1.7T-$2.1T.
What else is happening…
Investors pull $6.5B from SPDR S&P 500 ETF Trust (NYSEARCA:SPY).
Jeff Gundlach covers his equity shorts.
Harley-Davidson (NYSE:HOG) suspends U.S. production.
House Democrats unveil proposals to tackle COVID-19 crisis.
Mortgage REITs back from the brink.
Coronavirus updates – ‘Tens of thousands in NY’
Wednesday’s Key Earnings
General Mills (NYSE:GIS) -3.2% on mixed Q3 results.
NIO (NYSE:NIO) -16.2% posting weak guidance.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Current Account
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets closed with mostly big losses. Thailand did well, but China, Hong Kong, South Korea, India, Taiwan, Austria, Malaysia, Indonesia, Singapore and the Philippines posted big losses. Europe, Africa and the Middle East are currently getting hit hard. The UAE is up, but otherwise numerous markets are down 4% or more, including the UK, France, Germany, Russia, South Africa, Hungary, the Netherlands, Israel, Austria and the Czech Republic. Futures in the States point towards another big gap down open for the cash market.
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VIDEO: Comparing Bear Markets 1980 – 2020
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Wall Street is continuing its unprecedented roller-coaster ride amid the coronavirus turmoil, with stock index futures plunging about 4% overnight to enter “limit down” territory once again. In fact, the S&P 500 has swung 4% or more in either direction for the last seven consecutive sessions, topping the previous record of six days from November 1929. The latest? Traders are having a hard time seeing the light at the end of the tunnel with the government response to COVID-19 fallout still unfolding, while crude just dropped another 5% to $25/bbl amid an oil price war.
Emergency stimulus
Markets rebounded from their deepest rout since 1987 on Tuesday as the White House weighed a fiscal package of more than $1T that includes helicopter cash for Americans and financial relief to small businesses and the airline industry. Treasury Secretary Steven Mnuchin also said corporations will be able to defer tax payments of up to $10M, while individuals could defer up to $1M in payments to the IRS. Adding to the sentiment, the Fed announced it would reopen the so-called Commercial Paper Funding Facility, a key market backstop first set up during the last financial crisis.
Global recession is here
Economists at Morgan Stanley and Goldman Sachs have joined the chorus of other Wall Street prognosticators to declare that COVID-19 has pushed the global economy into recession. It won’t be as steep as the 0.8% contraction of 2009, according to the IMF’s measure, but would be worse than the 2001 and early 1990s recessions. In related news, Mnuchin warned of 20% American unemployment without federal action, while today’s Fed meeting was canceled following the central bank’s emergency actions.
Inflating the life jacket
Boeing (NYSE:BA) is calling for a $60B lifeline for the U.S. aerospace industry, which faces enormous losses from the coronavirus crisis. “Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain,” according to the company. Earlier on Tuesday, President Trump signaled his support for the planemaker, saying at a press conference: “We have to protect Boeing.”
Hotel industry next to make bailout case
Executives from companies such as Marriott (NASDAQ:MAR) and Hilton (NYSE:HLT) convened at the White House on Tuesday to discuss a bailout, consisting of $150B in direct aid for the hotel sector and $100B for related travel companies. They warned that half of the hotels in the country could close this year and the sudden cratering of demand would cause the loss of 4.6M jobs. Chip Rogers, CEO of the American Hotels and Lodging Association, said the economic impact of the pandemic on the hotel industry was already bigger than “September 11th and the 2008 recession combined.”
Keeping plants running
Following hours of talks that extended well into the night, GM (NYSE:GM), Ford (NYSE:F), and Fiat Chrysler (NYSE:FCAU) negotiated “extensive plans” with the United Auto Workers union to prevent America’s auto industry from coming to a standstill. “They will be working on shift rotation to minimize risk,” according to a statement. The ‘Big Three’ “agreed to review and implement the rotating partial shutdown of facilities, extensive deep cleaning of facility and equipment between shifts, extended periods between shifts, and extensive plans to avoid member contact.”
Harnessing location data
The U.S. government is in active talks with Facebook (NASDAQ:FB), Google (GOOG, GOOGL) and a wide array of tech companies and health experts about how they can use location data gleaned from Americans’ phones to combat the novel coronavirus. The data could help officials predict the next hotspot or decide where to allocate overstretched health resources, The Washington Post reports. Privacy concerns? Recent news about Israel’s plans to use location data to help track COVID-19 already sparked intense discussions about legal and ethical implications.
China moves to expel American journalists
Echoing the NBA-China controversy that blew up last October, Beijing said it would expel American journalists working in the country for The New York Times (NYSE:NYT), The Wall Street Journal (NASDAQ:NWS) and The Washington Post. It continues a tit-for-tat fight that began in February after the Journal ran an opinion article entitled, China Is the Real Sick Man of Asia. In response, Secretary of State Mike Pompeo imposed a cap on the number of employees permitted to work for Chinese government-controlled media organizations in the U.S. (down to 100, from 160).
Everyone-must-eat rally
Grocery store stocks raced higher on Tuesday as traffic accelerated with the number of coronavirus cases growing and dining out no longer an option in some parts of the country. Kroger (NYSE:KR), the largest supermarket chain in the U.S., has even hired more than 2,000 people in the last week to keep up with increased demand. “We’re hiring every day,” CEO Rodney McMullen told CNBC, adding that the company, which also owns Harris Teeter and Fred Meyer, has more than 10,000 openings.
Prioritizing essentials, medical supplies
Independent sellers, as well as vendors who supply items for Amazon (NASDAQ:AMZN) to resell, will be unable to ship products other than such high-demand items to company warehouses until April 5. “As COVID-19 has spread, we’ve recently seen an increase in people shopping online,” reads a memo. “So in the short term, we are temporarily prioritizing household staples, medical supplies, and other important products coming into Amazon fulfillment centers so we can more quickly receive, restock, and deliver these products to customers.”
What else is happening…
Coronavirus updates – ‘wristbands on arriving passengers’
King Dollar spells trouble for emerging markets.
Facebook (FB) giving $1,000 bonus to all employees.
Uber (NYSE:UBER) suspends pooled rides in U.S., Canada.
Latest to pull FY20 guidance: FedEx (NYSE:FDX).
United (NASDAQ:UAL) reduces schedule; Macy’s (NYSE:M) closes stores.
The U.S. economic response is encouraging – El-Erian.
Tuesday’s Key Earnings
FedEx (FDX) -2.1% AH citing headwinds ahead.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts
10:30 EIA Petroleum Inventories
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Good morning. Happy Tuesday.
The Asian/Pacific markets closed mostly down. Japan did well, but South Korea, India, Malaysia, Indonesia, Singapore and Thailand were weak. Europe, Africa and the Middle East are currently mostly down. Poland, Spain and Saudi Arabia are doing well, but the UK, France, Turkey, Germany, the UAE, Russia, Greece, Finland, Switzerland, Hungary, the Netherlands, Belgium, Austria and the Czech Republic are weak. Futures in the States were up big overnight but are now only suggestion a moderate gap up open for the cash market.
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VIDEO: Comparing Bear Markets 1980 – 2020
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
The volatility ain’t over yet following Wall Street’s worst day since the 1987 crash. U.S. stock futures soared overnight and even hit a 4% “limit up” halt at one point, before plunging into the red, only to resurface moments later (S&P 500 futures are up 1% at the time of writing). At least 4,281 coronavirus cases have been confirmed in the U.S. – along with more than 70 deaths – as President Trump warned the current situation could stretch into August and tweeted his support for U.S. industry. “Although the contemporary crisis is loaded with bad news, this has not been its primary problem. It’s the ‘unknown,'” said Jim Paulsen of The Leuthold Group. “Give me bad news any day over complete uncertainty.”
Go your own way
History will look back on the successes and failures of coronavirus responses, as nations take varying measures to combat COVID-19. Britain, which had stood apart from European nations in its response to the virus, hardened some measures on Monday, though schools will stay open for the time being. The Netherlands, meanwhile, adopted a controversial “herd immunity” strategy, allowing large numbers to contract the illness at a controlled pace. Guidelines released in the U.S. yesterday called for people to avoid gathering in groups of more than 10 people, steer clear of restaurants and food courts, and work or attend school from home whenever possible.
$50B bailout to avoid collapse
U.S. airlines are seeking over $50B in financial assistance from Washington, in a potential aid package that could include government-backed loans, cash grants and other measures like tax relief. Putting it in perspective: The figure would be more than three times the size of the industry’s bailout after the Sept. 11 attacks. “We’re going to back the airlines 100% – it’s not their fault,” President Trump said at a media briefing on Monday. Industry trade group Airlines for America, or A4A, also proposed $8B in grants and guarantees for cargo carriers, while U.S. airports are separately seeking $10B in assistance.
Could markets close?
The calls to keep Wall Street open are growing louder despite circuit breakers being activated three times in the last six trading sessions. “Closing the markets would not change the underlying causes of the market decline, would remove transparency into investor sentiment, and reduce investors’ access to their money. This would only further compound the current market anxiety,” tweeted Stacey Cunningham, President of the New York Stock Exchange (NYSE:ICE). CME Group (NASDAQ:CME) CEO Terry Duffy also chimed in, saying, “You should at least leave the markets open, so people can transact.”
Drawing from Fed’s discount window
Following a brutal day for America’s largest banks, when several of them lost more than 15% of their market value, the industry began reactivating a lending facility largely dormant since the financial crisis. “While Forum member institutions individually have substantial liquidity and multiple sources of funding, they believe it is important to lead by demonstrating the value of the Federal Reserve’s discount window facility and to encourage its use by other financial institutions,” according to a statement from the Financial Services Forum. Members include: BofA (NYSE:BAC), BNY Mellon (NYSE:BK), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), State Street (NYSE:STT), and Wells Fargo (NYSE:WFC).
Big Tech presents united response
Top U.S. tech giants have put out a first-of-its-kind joint statement saying that they are working together to fight fraud and misinformation related to the coronavirus. “We’re helping millions of people stay connected… elevating authoritative content on our platforms, and sharing critical updates in coordination with government healthcare agencies around the world.” Facebook (NASDAQ:FB), Google (GOOG, GOOGL), Microsoft (NASDAQ:MSFT) Reddit and Twitter (NYSE:TWTR) are part of the group, which invited others to join its efforts. In recent weeks, fake cures and false information about the origin of the virus began proliferating on public platforms as well as through private messaging.
Record pace for a vaccine
A potential COVID-19 vaccine from Moderna (NASDAQ:MRNA) has moved into human testing, with the first participant receiving treatment on Monday. A total of 45 healthy adults will receive one of three dose levels (25, 100, 250 µg) of the candidate, called mRNA-1273, and will be followed for 12 months after receiving the second vaccination. The primary endpoint is safety, including reactogenicity (the expected adverse events such as excessive immunological responses and injection site reactions). The secondary endpoint is immunogenicity (the robustness of the immune response).
Getting creative to tackle sanitizer shortage
As the virus outbreak spreads across Europe, many companies are retooling production to combat a shortage of hand sanitizers. Spirits maker Pernod Ricard (OTCPK:PDRDF) said it will supply alcohol to producers, luxury goods group LVMH (OTCPK:LVMHF) is altering perfume lines to produce sanitizing gel, while Poland’s biggest oil group Orlen is making the ingredient at a plant that normally manufactures windshield wiper fluid. Britain has also asked Ford (NYSE:F), Honda (NYSE:HMC) and Rolls-Royce (OTCPK:RYCEF) to help make health equipment including ventilators to cope with COVID-19.
Tesla surprises with Model Y
“Model Y deliveries begin!” Tesla (NASDAQ:TSLA) announced on Twitter, despite the coronavirus pandemic which has raised concerns about economic growth. The news is a big win for the company, which has previously fallen short of self-imposed, start of delivery deadlines (Model Y’s launch timeline was summer 2020). Tesla has never disclosed deposits, or order book numbers, for the crossover SUV – unlike its Cybertruck and Model 3 – and is also reportedly keeping its Fremont factory open despite a Bay Area shutdown.
Home theaters
Universal Pictures (NASDAQ:CMCSA) is taking a major step in response to the COVID-19 pandemic and the capacity restrictions in theaters: The studio is making its movies available for home entertainment on the same day as theatrical release. While the move breaks longstanding practice, the films won’t be that cheap. They’ll be available for a 48-hour rental period at a suggested retail price of $19.99 in the U.S., and roughly the same price internationally.
What else is happening…
Coronavirus effects to overshadow FedEx (NYSE:FDX) earnings.
Amazon (NASDAQ:AMZN) hiring 100K workers to deal with demand rush.
Expecting sales downturn, automakers offer attractive financing.
PG&E (NYSE:PCG) wins approval of $23B bankruptcy package.
Goldman (GS) allows deferring of Apple Card (NASDAQ:AAPL), Marcus payments.
Check out the latest coronavirus updates here.
Today’s Economic Calendar
8:30 Retail Sales
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 NAHB Housing Market Index
10:00 Business Inventories
10:00 Job Openings and Labor Turnover Survey
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets suffered big, across-the-board losses. Japan, China, Hong Kong, South Korea, India, New Zealand, Taiwan, Australia, Malaysia, Indonesia, Singapore, Thailand, the Philippines – all down big. Europe, Africa and the Middle East are currently getting crushed. The UK, Germany, France, Italy, Spain – all down huge, and so is everything else. Futures in the States point towards a massive gap down that will lead to the market be halted as soon as it’s open.
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VIDEO: Comparing Bear Markets 1980 – 2020
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The dollar is down. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
S&P 500 futures triggered another ‘limit down’ trading halt overnight after tumbling 5%, even after the Fed embarked on a massive monetary stimulus campaign to cushion the U.S. economy from the coronavirus pandemic. Interest rates were slashed to near zero, while the central bank said it would buy $700B in Treasury and mortgage-backed securities. It’s also letting banks borrow from the discount window for as long as 90 days and reducing reserve requirement ratios to zero percent.
Why the selloff?
“It’s basically using up all [the Fed’s] ammunition within a three-week span. And there’s nothing left,” said Terence Wong, CEO of Azure Capital. “The policy response is so strong, it’s likely to spook investors,” added Michael O’Rourke, chief market strategist at JonesTrading. Many investors also want to see coronavirus cases peaking and falling in the U.S. before it is safe to take on risk and buy equities again, while there’s concern about earnings for 2020 and a potential recession.
Don’t forget the oil-price war
Crude futures popped nearly 6% after the Fed’s emergency action, but the gain quickly evaporated, with futures now tumbling about 5% to under $30/bbl. The action demonstrates the inability of policy support moves to save oil markets mired in a price war on top of the severely contracting global oil consumption. Meanwhile, gold climbed alongside Treasuries, as investors once again turned to safe haven assets.
Will COVID-19 hurt more than the financial crisis?
Data from China overnight provided a first glimpse of what the coronavirus can do to an economy amid a prolonged quarantine of millions of people. Industrial output tumbled by 13.5% and total retail sales plunged by 20.5% Y/Y in January and February, according to the National Bureau of Statistics. The urban unemployment rate surged to 6.2% in February, the highest level ever reported, and fixed asset investment slumped by 24.5% (down from 5.4% in the prior period).
Liquidity is the top priority
In a joint statement, the Federal Reserve, Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank pledged to use their swap line arrangements to ensure that dollars keep flowing across the globe. They added a weekly offering of the world’s reserve currency over a longer maturity, and reduced the cost of the facility. Objective: Meeting the needs of companies and financial institutions rushing for dollars as the global payments system undergoes severe strain due to the coronavirus.
Big banks suspend buybacks
The largest eight U.S. banks, including BofA (NYSE:BAC), JPMorgan (NYSE:JPM) and Citigroup (NYSE:C), are putting share buybacks on hold through the end of Q1 and all of Q2 as they put capital to use by helping consumers and businesses. The move sounds smart politically, particularly as the Fed has re-launched QE with a vengeance, but it might dash the hopes of some bank investors. After all, what’s the point of over-capitalization if a bank can’t buy back stock when shares are cheap?
Global coronavirus cases overtake those inside China
The center of the coronavirus pandemic is shifting decisively toward the U.S. and Europe, as Italy reported 368 coronavirus deaths in just 24 hours. In fact, coronavirus deaths outside China (3,300+) have surpassed those inside (3,200) for the first time, according to figures compiled by Johns Hopkins University. Similarly, the 81,000 total cases in China have now exceeded the 88,000 outside the country, where cases of the disease were first reported in the Hubei province in December.
Over in Europe…
vThe Euro Stoxx 50 (NYSEARCA:FEZ) fell as much as 10% this morning as traders sized up recent developments hitting all sectors of the economy. Spain imposed a 15-day nationwide lockdown, banning its 46M citizens from all-non essential movement, while France and Germany closed large parts of their fortified borders. The U.K. government is also facing growing calls to take more drastic measures after the Trump administration expanded its travel ban to include the U.K. and Ireland.
Back in the U.S…
MGM (NYSE:MGM) joined Wynn Resorts (NASDAQ:WYNN) in temporarily closing Las Vegas casinos, while Colorado ski resorts suspended operations. NYC Mayor Bill de Blasio announced the shutdown of all city schools until April 20, adding that it’s possible they may not re-open this year, and city restaurants were restricted to takeaway only. The CDC further recommended that organizers of events that are expected to draw more than 50 people should cancel them for the next two months.
Domestic air travel ban is on the table
The Trump administration is weighing “all options” to curb the coronavirus outbreak in the U.S., including an outright halt to domestic air travel. That’s according to acting DHS secretary Chad Wolf, who added that the administration is following guidance from the CDC. Such a step hasn’t been taken since 9/11, and it would raise questions about U.S. airlines’ chances for survival without government support. Premarket: AAL -17.5%, UAL -13.5%, DAL -13.2%, LUV -10.4%, JBLU -9.3%.
What else is happening…
Google (GOOG, GOOGL) launches coronavirus testing website.
Amazon (NASDAQ:AMZN) running out of some household items.
COVID-19 – Will there be enough hospital beds?
France slaps €1.1B anti-competitive fine on Apple (NASDAQ:AAPL).
Starbucks (NASDAQ:SBUX) temporarily adopts ‘to go’ model.
Worst box office weekend in two decades.
Under Armour (NYSE:UAA) joins Nike (NYSE:NKE) in shuttering N.America stores.
Ford (NYSE:F) makes move to lock in CEO successor.
Today’s Economic Calendar
8:30 Empire State Mfg Survey
4:00 PM Treasury International Capital