Good morning. Happy Friday. Happy Employment Numbers Day.
The Asian/Pacific markets leaned to the downside. New Zealand and Indonesia did well, but China, India, Australia and Singapore were weak. Europe, Africa and the Middle East currently lean down. Russia, Kenya and Saudi Arabia are up; the UK, France, South Africa, Hungary, the Netherlands, Italy and Belgium are weak. Futures in the States point towards a down open for the cash market.
—————
VIDEO: Play Both the Ups and Downs
—————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
If it wasn’t for the coronavirus, the news cycle would most likely be exclusively focused on the oil market, where demand has dropped by as much as 30M barrels per day (roughly equivalent to the combined output of the Saudis, Russia and the U.S.). The latest? WTI crude prices soared 25% on Thursday for its largest single-day percentage gain in history after President Trump said he expects Russia and Saudi Arabia to announce a major output cut deal. Despite swirling skepticism over how relevant that will be – due to depressed demand – crude tacked on another 5% overnight. A virtual OPEC+ meeting is also scheduled for Monday that will be open to producers even outside the group.
More on oil
Storage is a problem with the market awash in crude, while the U.S. is prohibited by antitrust law to join output cuts (those discussions are taking place at the state level in Texas). Today, President Trump meets with U.S. oil industry executives at the White House, and there’s some speculation he could ask the industry to chip in with their own cuts (at the corporate level). The agenda is also expected to include discussions on government support, tariffs on foreign oil, as well as other waivers to ease the pain.
No stability, only volatility
U.S. equity markets climbed 2.2% on Thursday as a surge in oil countered an eye-popping jobless claims report, which showed 6.6M people out of work, and some states even reporting that 10% of their workers are no longer employed. A reminder that today’s non-farm payrolls report from the Labor Department won’t reflect that data, as the numbers were pulled in mid-March, before a large section of the population was under some form of a lockdown. One day up, one day down… Stock futures are now off 1.3% as concerns mount over a V-shaped economic recovery and economists warn that the government and Fed will need to provide additional stimulus.
Lending program chaos
We’re only hours away from a federal program that’s expected to dole out at least $350B in loans to small businesses struggling with the coronavirus pandemic, but many banks are still awaiting guidance and necessary requirements. JPMorgan (NYSE:JPM) appeared to be the first lender to publicly say what others had whispered, emailing customers that it “will most likely not be able to start accepting applications on Friday.” The Paycheck Protection Program will offer up to $10M to help cover wages for employees, sick pay and eligible mortgage and other immediate debt payments. The loans are for two-year terms at a 1% fixed rate of interest, require no collateral and come with debt forgiveness options for eligible expenses.
Big Brother or necessary surveillance?
In an effort to assist in “unprecedented times,” Google (GOOG, GOOGL) is helping public health officials use its vast storage of data to track people’s movements due to the coronavirus pandemic. The “mobility reports” go down to the county level to see if locals are abiding by social distancing measures, but will use anonymized historical data, with a lag of two or three days. Google is also reportedly exploring individual location tracking with a White House task force, as well as running a handful of testing sites in Northern California in a private-public partnership with the government.
Employee furloughs
With no clear forecast of when its parks will be able to reopen, Disney (NYSE:DIS) has announced plans to furlough non-union workers and stop collecting payments for its annual park passes. “Disney employees have received full pay and benefits during this time, and we’ve committed to paying them through April 18, for a total of five additional weeks of compensation,” the company said in a statement. Employees will also be eligible for $600 per week in federal compensation through the $2T economic stimulus bill, as well as state unemployment insurance.
‘Big price to pay’
“We hit 3M (NYSE:MMM) hard today after seeing what they were doing with their Masks. “P Act” all the way… will have a big price to pay!” President Trump said in a tweet last night. He was apparently referring to a Fox News report featuring the head of Florida’s Division of Emergency Management accusing 3M of shipping N95 respirators to foreign countries who outbid U.S. buyers. Trump earlier announced he was invoking the Defense Production Act for masks and ventilator manufacturing.
Tesla tops expectations despite shutdowns
Tesla (NASDAQ:TSLA) shares soared 12% AH as the EV maker revealed the production of almost 103K vehicles and deliveries of approximately 88.4K (12.2K Model S/X vehicles and 76.2K Model 3/Ys) to mark its best Q1 ever. The consensus analyst mark was for 79.9K deliveries after a series of recent downward revisions to account for the coronavirus impact. Tesla also said that its Model Y production started in January and deliveries began in March, significantly ahead of schedule.
Mexico stops brewing Corona
Since the start of the COVID-19 crisis, Corona has been the punchline of jokes and memes. Now, Grupo Modelo (OTC:GPMCF), which is part of brewing giant AB InBev (NYSE:BUD), has stopped producing Corona beer. The move is not associated with the drink’s name, but the business was rather deemed non-essential under a Mexican government order. In the U.S., Grupo Modelo is distributed by Constellation Brands (NYSE:STZ).
What else is happening…
Jamie Dimon is back at work at JPMorgan (JPM)
American (NASDAQ:AAL) slashes flights, but no plans to stop flying.
Verizon (NYSE:VZ) network handling ‘enormous’ growth.
Apple (NASDAQ:AAPL) postpones reopening of U.S. stores.
Hiring… Facebook (NASDAQ:FB) to add 10K workers this year.
‘Virtual fest’ for canceled SXSW films.
Controversial NYSE (NYSE:ICE) high-speed data plan.
Electrification boost as GM (NYSE:GM) expands EV partnership.
Thursday’s Key Earnings
CarMax (NYSE:KMX) -4.3% posting mixed results.
Chewy (NYSE:CHWY) -3.8% AH on adjusted EBITDA loss.
Dave & Buster’s (NASDAQ:PLAY) +5.4% AH discussing a potential stake sale.
Walgreens (NASDAQ:WBA) -6.3% pulling guidance, fall in foot traffic.
Today’s Economic Calendar
8:30 Non-farm payrolls
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
1:00 PM Baker-Hughes Rig Count
————————–
Good morning. Happy Thursday.
The Asian/Pacific markets leaned to the upside. China, Hong Kong, South Korea, Indonesia and Thailand did well; Japan, Australia and the Philippines were weak. Europe, Africa and the Middle East are currently mostly up. Russia, Greece, South Africa, the Netherlands, Italy, Belgium, Austria, Saudi Arabia and the Czech Republic are leading; Denmark is weak. Futures in the States point towards a positive open for the cash market.
—————
Join our email list – get technical research reports sent directly to you.
—————
The dollar is flat. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Volatility is returning to the markets as U.S. stock futures climbed 2% overnight following Wall Street’s rocky start to the second quarter. It comes ahead of this morning’s closely-watched jobless claims report, which is likely to reinforce views that the longest employment boom in U.S. history ended in March. More than 80% of Americans are now under some form of lockdown, up from less than 50% a couple of weeks ago, leaving state employment offices overwhelmed by an avalanche of applications.
Breaking down the data
Shooting to a record high for a second week in a row, initial claims for state unemployment benefits probably rose to between 4M-5M for the week ended March 28, though some estimates are as high as 9M (last week’s data is also likely to be revised higher). Putting that in perspective: The total job loss for the financial crisis was about 8.7M, starting in February 2008 and extending through 2009. Today’s data will also be given more weight than the March jobs report (released tomorrow), since that survey was taken the week before major states issued “shelter in place” orders.
Turbulent earnings season
The SEC is giving public companies an extension on delivering their earnings, in a season that is “going to be anything but typical,” according to Chairman Jay Clayton. Even with the extra time, the reports are to likely be unclear, with many companies opting to withdraw their guidance due to coronavirus uncertainty. Analysts are expecting S&P 500 earnings growth to decline 5.2% in Q1, according to FactSet, marking the largest year-over-year decline since the first quarter of 2016.
Wall Street advising Treasury on stimulus
The U.S. Treasury has hired outside counsel to advise on how to deploy aid from the recently passed $2T stimulus bill, known as the CARES Act. PJT Partners (NYSE:PJT) will provide guidance on negotiations with airlines, Moelis & Co (NYSE:MC) will give recommendations for the cargo sector and Perella Weinberg is being brought in for industries important to national security. Law firm Cleary Gottlieb Steen & Hamilton will also be advising the Treasury on the discussions.
Fed eases some bank leverage rules
Lenders will be able to exempt any holding in U.S. Treasury debt or deposits at the Fed from their calculations of supplementary leverage ratio, or SLR, a leverage restriction imposed on the largest U.S. banks. The move would help ease strains in the Treasury market, encourage lending and will stay in place until March 31, 2021. The SLR, which applies to institutions with more than $250B in assets, was put in place after the 2008 financial crisis that saw banks nearly collapse after a crisis in mortgage lending.
Shale turmoil
There are a lot of headlines coming out of the energy sector after Whiting Petroleum (NYSE:WLL) became the first U.S. shale producer to file for bankruptcy amid an oil price war. The coronavirus epidemic is also weighing heavily on prices, triggering President Trump to summon oil CEOs to the White House tomorrow. Under discussion is potential aid to the industry, including tariffs on oil imports from Saudi Arabia, and a waiver of the Jones Act, which requires American vessels be used to transport goods including oil between U.S. ports.
Juul investment unraveling
The FTC is suing to unwind Altria’s (NYSE:MO) stake in Juul Labs (JUUL), claiming it violated antitrust laws by using its dominant market position to get product into more stores. An administrative trial is scheduled for Jan. 5, 2021. In January, Altria already took a second big writedown on its Juul holdings and stripped down its agreement to provide services to the startup. It now values the e-cigarette maker at about $12B, down from its $38B valuation in December 2018.
Walking away from WeWork?
In a move that questions its commitment to the troubled office space company, SoftBank (OTCPK:SFTBY) has decided it will not buy $3B in WeWork (WE) stock from other shareholders, including co-founder and former CEO Adam Neumann. SoftBank has already poured billions of dollars into WeWork, and while it remains “committed” to a $5B bailout, it may eventually hold back additional financing. Since the spread of the coronavirus, WeWork’s buildings have been virtually empty, raising questions about demand.
YouTube plans answer to TikTok
YouTube (GOOG, GOOGL) is currently setting up “Shorts” inside its existing mobile app, according to The Information reports. The feature will include brief videos posted by users and take aim at a TikTok strength – music – by drawing on a hefty catalog of licensed tunes. It’s the most serious effort yet by a Silicon Valley giant to combat the rise of TikTok, a Chinese-owned social media app owned by ByteDance (BDNCE).
Early retirement and buyouts
Capitulating to the effects of the pandemic on airlines, Boeing (NYSE:BA) is expected to begin early retirement and voluntary buyout packages, WSJ reports. The company has yet to announce any layoffs of its 160K personnel as CEO David Calhoun wants to have his “workforce in place so they’re ready when the recovery comes.” Boeing has already suspended its dividend and buybacks, and temporarily halted production at its factory in Everett, Wash.
Vaccine ‘ultimate game changer’ as deaths cross 5,000
The first ‘human trial’ testing a potential coronavirus vaccine is “on track” with public distribution still projected in 12 to 18 months. That’s according to White House health advisor Dr. Anthony Fauci, who said the vaccine, being developed with Moderna (NASDAQ:MRNA), will be the “ultimate game changer” in the fight against the pandemic. Total deaths in the U.S. related to coronavirus have reached 5,138, according to data compiled by Johns Hopkins University, with 216,722 cases reported across the nation.
What else is happening…
Lawmakers, unions heap more pressure on Amazon (NASDAQ:AMZN).
WarnerMedia (NYSE:T) names ex-Hulu chief Kilar as CEO.
Apple (NASDAQ:AAPL) won’t take cut of Prime Video (AMZN) purchases.
U.S. light vehicle sales fall 27% in March.
Carnival (NYSE:CCL) pays high price to get credit investors.
Booking Holdings (NASDAQ:BKNG) CEO positive for coronavirus.
Shopify (NYSE:SHOP) expects solid results as businesses pivot online.
T-Mobile (NASDAQ:TMUS) finally closes merger with Sprint (NYSE:S).
Today’s Economic Calendar
Auto Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 International Trade
10:00 Factory Orders
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
——————————
Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly down with big losses. New Zealand and Australia did well, but Japan, Hong Kong, South Korea, India, Malaysia, Indonesia, Singapore and Thailand were very weak. Europe, Africa and the Middle East are currently suffering relatively big losses. Virtually every market is down 1-4%. Futures in the States point towards a big gap down open for the cash market.
—————
Join our email list – get technical research reports sent directly to you.
—————
The dollar is up. Oil and copper are down. Gold is flat; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
A new study by Morgan Stanley estimates the U.S. deficit will total at least $3.7T in calendar year 2020 and an additional $3T in 2021, financed by the sale of Treasurys, largely to the Federal Reserve. If the economy shrinks this year, the fiscal deficit relative to the size of the economy could even approach 15% to 20% (those numbers haven’t been seen since WWII). On top of all those deficits, President Trump on Tuesday called for a new infrastructure spending bill worth $2T, while the Fed launched a temporary lending facility allowing foreign central banks to convert their Treasury holdings to dollars.
Recession ahead
In a sign of things to come, Italy’s Economy Minister Roberto Gualtieri confirmed a business lobby’s forecast of a 6% fall in gross domestic product in 2020. “Unfortunately the estimates are realistic… at the same time we can say that (the Italian economy) can aim at a vigorous rebound,” he told daily Il Fatto Quotidiano. Italy has been in lockdown since March 9 and non-essential activities are shut down until April 3, although the regulation is likely to be extended until April 15.
Where do we go from here?
Risk-off sentiment is seeping into the markets once again, with traders deciding their next moves as the second quarter kicks off. S&P 500 futures are down 3% and Dow futures are off more than 600 points, following a warning from President Trump that the coming weeks would be “very painful” and White House projections of 100K-240K U.S. deaths from COVID-19. The Dow already recorded its worst quarter since 1987 in Q1, while the S&P 500 logged its worst quarter on record, as the coronavirus pandemic caused a nationwide shutdown of the economy.
Microsoft bucks the plunge
Only one stock in the Dow Jones Industrial Average rose during the first quarter and it was only up by a penny. While Microsoft (NASDAQ:MSFT) said it didn’t expect to reach its quarterly revenue target for the business segment that includes Windows – due to coronavirus interruptions – it also said demand was solid and benefited from high usage of cloud services. Hardest hit on the DJIA was Boeing (NYSE:BA), which saw losses of 54%, as well as energy plays Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), and financial names JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS).
Oil glut decisions
With U.S. crude experiencing its worst month and quarter in history, President Trump called Vladimir Putin for a “constructive” and lengthy conversation, agreeing that their energy ministers should begin consultations. The U.S. Department of Energy also appears ready to lease space to oil companies in the Strategic Petroleum Reserve. That would help drillers running out of space to stash their product as demand evaporates due to the coronavirus and Saudi-Russia price war.
Rollback of fuel efficiency standards
The Safer Affordable Fuel-Efficient Vehicles Rule will toughen carbon dioxide emissions standards by 1.5% a year through model year 2026 vs. the 5% reduction set under the Obama Administration. By 2026, new cars are required to average about 40 miles per gallon, instead of the prior requirement that was close to 50 miles per gallon. The issue isn’t considered a real gamechanger with California still fighting in court to have its own standards. Ford (NYSE:F), Honda (NYSE:HMC), BMW (OTCPK:BMWYY) and Volkswagen (OTCPK:VWAGY) have already agreed to the tighter standards set by Obama and seem to be planning accordingly.
$20B payday
General Electric (NYSE:GE) has finalized the sale of its BioPharma unit to Danaher (NYSE:DHR), giving it $20B, after accounting for taxes, fees and factored receivable balances. The anticipated proceeds have been central to CEO Larry Culp’s efforts to chip away at GE’s debilitating debt load and help it recover from a deep slump in recent years. The companies won approval from the Federal Trade Commission last month for the deal, which was announced in early 2019.
Macy’s booted from S&P 500
Macy’s (NYSE:M) shares have sunk more than 70% this year, leaving the struggling company with a market value of $1.52B, as coronavirus-induced store closures compound its struggles with a shift to online shopping. As a result, the once-iconic retailer, which has furloughed most of its staff, is being removed from the S&P 500. It will be replaced by AC maker Carrier Global, which was spun out of United Technologies (NYSE:UTX) in a bid to complete its merger with Raytheon (NYSE:RTN).
Zoom overtakes Microsoft Teams
Zoom Video’s (NASDAQ:ZM) daily U.S. user volumes hit a record 4.84M yesterday, according to Apptopia data, and the company’s active users were up 151% Y/Y in March. On the same day, Microsoft (MSFT) Teams had 1.56M users and Slack (NYSE:WORK) had less than 500K. Shares of Zoom, which debuted last year at $36 apiece, closed at $146 on Tuesday, while its market value has more than doubled since the end of January.
First state to adopt facial recognition rules
Microsoft (MSFT) is hailing new legislation signed by Washington Governor Jay Inslee, calling it the “first time a state or nation has passed a new law devoted exclusively to putting guardrails in place for the use of facial recognition.” It requires public agencies to regularly report on their use of the technology, establishes a task force to study its effects and test the software for fairness and accuracy. Law enforcement agencies must also obtain a warrant to run facial recognition scans, except in case of emergency.
What else is happening…
3M (NYSE:MMM) ramping up N95 masks to reach 50M per month.
Macau casino operators are bleeding up to $4M/day.
Internet, mobile providers check in with Trump.
Plans for New York legal pot go up in smoke.
Amazon’s (NASDAQ:AMZN) firing of strike leader under investigation.
Marriott (NASDAQ:MAR) suffers another data breach.
Xerox (NYSE:XRX) abandons $35B hostile bid for HP (NYSE:HPQ).
Caterpillar (NYSE:CAT) latest company to nix pay hikes.
Tuesday’s Key Earnings
BlackBerry (NYSE:BB) -9% AH as sales came in light.
Conagra Brands (NYSE:CAG) +3.9% on heightened food demand.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
——————
Good morning. Happy Tuesday.
The Asian/Pacific markets closed mostly up. Hong Kong, South Korea, India, New Zealand, Malaysia, Indonesia, Singapore, Thailand and the Philippines did well; Japan and Australia were weak. Europe, Africa and the Middle East are currently mostly up. Denmark, Poland, Turkey, Russia, Greece, Finland, Norway, Hungary, Belgium, Israel, Saudi Arabia and the Czech Republic are leading. Futures in the States point towards a down open for the cash market.
—————
Join our email list – get technical research reports sent directly to you.
—————
The dollar is up. Oil and copper are up. Gold is down; silver is up. Bonds are down.
Stories/News from Seeking Alpha…
Looking to extend the recent rally in equities and close Q1 on a more positive note, futures climbed another 0.7% overnight, building on yesterday’s gains that saw the S&P 500 soar 3.4% and Dow jump nearly 700 points. Lifting stocks were medical industry breakthroughs, including progress on Johnson & Johnson’s (NYSE:JNJ) coronavirus vaccine and Abbott’s (NYSE:ABT) five-minute detection kit. Investors also appeared to embrace the latest government approach of social distancing until April 30, which many believe will reduce economic damage in the long run. What’s next? Consumer confidence data will be published at 10 a.m. ET, while Conagra (NYSE:CAG) and BlackBerry (NYSE:BB) are scheduled to release quarterly results.
Energy crisis intensifies
In response to the collapsing crude market, shale drillers Pioneer Natural Resources (NYSE:PXD) and Parsley Energy (NYSE:PE) have asked Texas oil regulators to convene an emergency meeting to consider production curbs. The request comes even as the American Petroleum Institute criticized such actions as a “shortsighted” and “anti-competitive” effort that will “harm U.S. consumers and American businesses.” Parsley CEO Matt Gallagher thinks Texas production should be cut by 20%, telling Bloomberg such action from a state level would “help enable discussions at an international level from our federal government.”
Corporate debt
Moody’s Investors Service has lowered its outlook on U.S. corporate debt from stable to negative, saying that a coronavirus recession will result in rising default rates. “Government support will cushion the blow for some companies, but it is unlikely to prevent distress at businesses with less certain long-term viability,” wrote Senior Credit Officer Edmond DeForest. The situation is especially troubling as non-financial corporate debt totaled $6.6T at the end of 2019, a 78% increase since the Great Recession ended in mid-2009.
Decline in consumer spending
Transaction volumes at Visa (NYSE:V) have been hit due to the coronavirus pandemic, leading it to forecast mid-single digit percentage revenue growth for Q2. “As countries have imposed social distancing, shelter-in-place or total lock-down orders, domestic spending, most notably in travel, restaurants, entertainment and fuel, has sharply declined week on week,” according to a regulatory filing. For March: U.S. payments volume fell 4% Y/Y, cross-border volumes on a constant-dollar basis sank 19% Y/Y and processed transactions slipped 2% MTD.
Retail disaster
Furloughs at Macy’s (NYSE:M) will affect the “majority” of its 125,000 workers, while Gap (NYSE:GPS), which owns Old Navy and Banana Republic, said it would furlough nearly 80,000 store employees in the U.S. and Canada. L Brands (NYSE:LB) is suspending most store staff, Nordstrom (NYSE:JWN) is putting “a portion of corporate employees” on temporary leave and furloughs total 85,000 at Kohl’s (NYSE:KSS). It’s a stark sign of how devastating the coronavirus will be on many apparel and accessories retailers which were already under pressure before COVID-19.
Amazon sees more industrial action
Some Whole Foods employees are planning to call in sick today to protest what they say is a lack of protections offered to workers during the coronavirus pandemic, Vice reports. The latest protest is happening even after Amazon (NASDAQ:AMZN) increased hourly pay for its staff, offered to provide two weeks of paid sick leave to workers who test positive for COVID-19 and said it would not penalize anyone for calling in sick. Amazon’s stock price has largely weathered the coronavirus crisis, closing back at $1,963 on Monday, or roughly where it was trading before the market selloff.
50,000 ventilators in 100 days
Ford (NYSE:F) and GE Healthcare (NYSE:GE) are partnering up to begin production on third-party ventilators. The companies have a goal to produce 50K units within 100 days and create the capability to have production quickly scaled to help meet growing demand in the U.S. amid the pandemic. The simplified ventilator design can meet the needs of most COVID-19 patients and relies on air pressure without the need for electricity.
Gun stores ruled ‘essential businesses’
Firearm sales have picked up during the coronavirus outbreak, with long lines seen at stores nationwide. Though advisory in nature, the federal government has now classified the industry as an “essential business” that shouldn’t be closed during shutdowns. New Jersey reversed course because of the new guidance, while Pennsylvania’s governor is allowing gun stores to operate with new social-distancing rules even after the state Supreme Court backed his initial decision to close them down.
Unemployment rate may top 32%
The coronavirus economic freeze could cost 47M jobs and send the unemployment rate past 32%, according to the latest projections from the St. Louis Fed. They reflect the high nature of at-risk jobs that ultimately could be lost to a government-induced economic freeze aimed at halting the spread of COVID-19. A record 3.3M Americans filed initial jobless claims for the week ended March 21 and economists expect another 2.65M or more to join them this week.
Signs of life for China’s factories
China’s official manufacturing PMI bounced to 52.0 in March, up from a record-low 35.7 in February, signaling a revival in activity even as much of the rest of the world is shut down. “This does not mean that output is now back to its pre-virus trend. Instead, it simply suggests that economic activity improved modestly relative to February’s dismal showing, but remains well below pre-virus levels,” said Julian Evans-Pritchard, senior China economist at Capital Economics. Economists are already forecasting a steep contraction in China’s Q1 GDP, with some expecting a Y/Y slump of 9% or more, marking the first such contraction in three decades.
What else is happening…
Inspector General of the $2T stimulus package.
American Airlines (NASDAQ:AAL) will apply for up to $12B in aid.
Worries over the news industry’s survival.
WPP (NYSE:WPP) suspends dividend, buyback and outlook.
Hiring freeze, but no layoffs at AmEx (NYSE:AXP).
Domino’s Pizza (NYSE:DPZ) withdraws fiscal 2020 guidance.
Easing cancellation pain, Airbnb (AIRB) pays $250M to hosts.
Disney’s (NYSE:DIS) Iger, Chapek cutting salaries amid pandemic.
Today’s Economic Calendar
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:45 Chicago PMI
10:00 Consumer Confidence
3:00 PM Farm Prices
————————
Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets closed mostly down. New Zealand and Australia did well, but Japan, China, Hong Kong, India, Malaysia, Indonesia, Singapore, Thailand and the Philippines were weak. Europe, Africa and the Middle East currently lean down. Denmark, South Africa, Kenya and Israel are up; Poland, France, the UAE, Spain, Italy, Belgium, Austria and the Czech Republic are down. Futures in the States point towards a positive open for the cash market.
—————
VIDEO: State of the Market
—————
The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
It’s the first Monday in nearly a month that S&P 500 futures haven’t gone limit-down in reaction to alarming weekend news, though traders are still starting the week with caution. Losses were seen at the start of the session as President Trump did away with the idea of the economy opening back up by Easter and extended social distancing guidelines until April 30. Futures then wavered between gains and losses throughout the night, suggesting another rocky ride for the week ahead. A severe recession is starting to get priced in, yet this will be set against unprecedented stimulus.
Latest estimates
National Institute of Allergy and Infectious Diseases Director Anthony Fauci has warned that the coronavirus pandemic could cause 100-200K deaths in the U.S., but doesn’t want to be “held to the projection, when it’s such a moving target.” For comparison, the flu has killed 12K-61K Americans a year since 2010, according to CDC data. The U.S. now has the largest number of COVID-19 cases worldwide at 143K, according to data compiled by Johns Hopkins, while the U.S. death toll stands at over 2,500.
Bills come due
Mortgage firms are bracing for a wave of missed payments starting April 1, with an estimated $20B in monthly retail real estate loans due as early as this week. Many retailers and restaurants have already said they are not going to pay their April rents, which in turn poses a threat to the $3T commercial mortgage market. The Mortgage Bankers Association also warned Sunday that the U.S. housing market is “in danger of large-scale disruption” as lenders face margin calls due to the Fed’s recent actions.
Talk of a fourth stimulus package
The next phase would likely pivot from stabilization to stimulus and might be larger than the $2T bill completed on Friday. “There’s a general recognition that we need something big to get some juice into the economy,” said Stephen Moore, an outside economic consultant to the Trump administration and some congressional Republicans. “There’s talk of a multi-trillion-dollar program, given the size of the shutdown.” Ideas being floated include extending last week’s package to make the benefits last longer, as well as plugging holes in the hastily assembled bill.
Market drowns in crude
Traders are now betting on production shutdowns to cope with the collapse in demand, triggering WTI crude prices to drop under $20/bbl overnight to levels not seen since 2002. A price war between Saudi Arabia and Russia has only compounded price problems with growing lockdown measures from the coronavirus pandemic. “Since the 1930s, U.S. states have had the authority to limit oil and gas production in order to support oil prices,” said Morgan Stanley analyst Devin McDermott. “Though this practice is not widely used today, both federal and state regulators still have the ability to place restrictions on production levels.”
Waiving charges for COVID-19
Following in the footsteps of CVS’s (NYSE:CVS) Aetna, more insurers are promising to forgo cost-sharing charges for people who need coronavirus treatment. Cigna (NYSE:CI) and Humana (NYSE:HUM) are waiving out-of-pocket fees for insured members and employer plans, including hospitalizations and ambulance transfers. The waiver applies to all medical costs related to the treatment of COVID-19, including FDA-approved medications and vaccines when they become available.
Ventilator production
Britain has ordered more than 10,000 ventilators from a consortium of manufacturing giants that includes Formula One (NASDAQ:FWONA), Airbus (OTCPK:EADSY), BAE Systems (OTCPK:BAESY), Ford (NYSE:F) and Unilever (NYSE:UL). Work is set to start this week amid a jump in demand from the spread of the new coronavirus outbreak. Vacuum cleaner maker Dyson said last week it had received an order from the U.K. for a newly-made ventilator which will need to be approved by the country’s health regulator.
Temperature checks
Amazon (NASDAQ:AMZN) will begin screening employees for elevated temperatures each day, starting at sites in Seattle and New York City, as coronavirus cases were reported across 17 of its U.S. warehouses. In fact, Amazon workers at a fulfillment center in Staten Island, known as JFK8, are planning to strike from Monday to call attention to the lack of protections. “We are following all guidelines from local health officials and are taking extreme measures to ensure the safety of employees at our sites,” according to an Amazon spokesperson.
Serious challenges for the sports empire
The consequences across the sports industry are beginning to come into focus as the idea of hosting games without fans doesn’t fly with many athletes. “I just don’t know how we can imagine a sporting event without fans,” LeBron James said on a podcast last week. “There’s no excitement. There’s no crying. There’s no joy.” Media analyst Michael Nathanson forecasts that if the NBA were to shut down the season and cancel the playoffs, it would cost Disney’s (NYSE:DIS) ESPN and ABC $481M and WarnerMedia’s (NYSE:T) TNT $211M in lost ad revenue. The NBA itself was already bracing for a $400M hit from a standoff with China over a tweet from a Houston Rockets manager that supported protesters in Hong Kong.
Jefferies CFO dies of coronavirus
The 56-year-old CFO of investment bank Jefferies (NYSE:JEF) has died from the coronavirus, marking the first senior Wall Street executive known to have succumbed to the disease. Peg Broadbent had been in the position since 2007, making him one of Wall Street’s longest-serving finance chiefs and one of only a few still in the job to have weathered the 2008 recession. The New York-based firm named Teri Gendron, currently CFO of Jefferies’ financial-services arm, as his interim successor.
What else is happening…
China reopens province where it all began.
Abbott (NYSE:ABT) soars on launch of 5-minute coronavirus test.
New York reportedly weighs cigarette sales ban.
Airlines are considering passenger consolidation.
EasyJet (OTCQX:ESYJY) grounds its entire fleet.
Microsoft (NASDAQ:MSFT) sees 775% surge in cloud demand.
Verisign (NASDAQ:VRSN) freezes prices for domain names.
SoftBank’s (OTCPK:SFTBY) satellite startup OneWeb files for bankruptcy.
Today’s Economic Calendar
10:00 Pending Home Sales
10:30 Dallas Fed Manufacturing Survey