Good morning. Happy Friday.
The Asian/Pacific markets closed mostly down. China, Hong Kong, South Korea, India, Malaysia, Indonesia, Singapore, Thailand and the Philippines posted the biggest losses. Europe, Africa and the Middle East are currently mixed. Turkey, the UAE, Hungary, Israel and Saudi Arabia are up; the UK, Denmark, Germany, Norway, Spain and Sweden are down. Futures in the States point towards an up open for the cash market.
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The dollar is down a small amount. Oil and copper are up. Gold and silver are up. Bonds are mixed.
Stories/News from Seeking Alpha…
The U.S. House of Representatives passed a $484B coronavirus aid package last night that will replenish funding for PPP loans and SBA disaster assistance, as well as grants to hospitals and COVID-19 testing. Treasury Secretary Steven Mnuchin will also require public companies deemed critical to national security that seek a share of $17B in virus-related relief to offer an equity stake to the government. For private companies, Mnuchin “may, in his discretion, accept senior debt instruments” or other financial interests.
On the economy
U.S. stock index futures are ahead by 0.5%, with President Trump scheduled to pass the follow-on bill for the CARES Act and 16 states unveiling plans to lift coronavirus restrictions. Data yesterday showed 4.4M Americans filed for unemployment benefits last week, bringing the 5-week total to more than 26M and wiping out all job gains since the global financial crisis. On the earnings front, stay on the lookout this morning for corporate outlooks from Verizon (NYSE:VZ) and American Express (NYSE:AXP).
Gilead drug trial
Gilead (NASDAQ:GILD) shares were whipsawed on Thursday for the second time in a week after a summary of its remdesivir trial appeared to show that it was a failure against COVID-19. Fighting back, the drugmaker said that the results were mistakenly published and removed from the WHO’s website, and referred to the findings as “inappropriate characterizations.” Gilead’s own clinical trial of the therapeutic is slated to be released at the end of the month.
Shale bust
Continental Resources (NYSE:CLR), the company controlled by billionaire Harold Hamm, has ceased production in North Dakota and shut in most of its wells in the state’s Bakken shale field. According to Bloomberg, the producer also declared force majeure on at least one of its contracts this week after crude went negative. Betting economic growth would lift prices, Continental was more exposed to weak prices because it didn’t hedge future production with derivatives, a common strategy within the industry.
Surging meat prices coming to a store near you
The closings of the nation’s meat processors are picking up steam, with Tyson’s (NYSE:TSN) Waterloo, Iowa plant being the latest. The situation has gotten so dire in the state that the National Guard has been activated to protect supplies. It’s also led to some weird action, with prices for hogs headed sharply lower but prices for pork belly (used to make bacon) doubling in the last four days. That means soaring margins for slaughterhouses, with one outfit figuring pork margins as up 340% since the start of the month.
Not so fast
It’s “too soon and too risky” to reopen auto plants and Michigan’s economy in early May, according to UAW President Rory Gamble, who cited insufficient scientific data and coronavirus testing to assure workplaces are safe. The statement appeared to derail plans by the Detroit Three that aimed to return UAW workers to manufacturing lines on May 4. As part of a restart, GM (NYSE:GM), Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU) outlined training programs and new safety protocols designed to prevent the spread of COVID-19.
Mandating worker testing
Companies can test employees for COVID-19 before permitting them to enter the workplace as long as the tests are accurate and reliable. That’s according to the Equal Employment Opportunity Commission, the U.S. agency that enforces civil rights laws against disability discrimination. Mandatory medical testing is generally prohibited by the ADA, but is allowed if it is “job related and consistent with business necessity.”
Compelled to wear masks?
As of today, United Airlines (NASDAQ:UAL) flight attendants will be required to wear face coverings while on duty, a measure aimed at stopping the spread of COVID-19. The airline will provide flight attendants with surgical masks, but they are also permitted to don their own cloth masks. The Association of Flight Attendants wants the order to go further, asking federal authorities to require travelers to wear masks to reduce the risk of spreading disease.
Using blockchain to tackle COVID-19
Blockchain technology schemes are being developed by companies like IBM (NYSE:IBM) and Ernst & Young to help with different aspects of the coronavirus pandemic. Applications? The projects can be an efficient way of connecting healthcare providers in need of medical equipment or help validate a person’s immunity. Programs could run into challenges, however, if the data that goes on the blockchain is inaccurate and difficult to verify.
Spending limits
Credit card companies are offering customers relief in the form of waiving fees and adjusting payment schedules, but they’re also keeping a tighter rein on spending limits. Discover Financial Services (NYSE:DFS) is tightening underwriting strategies for new accounts as well as credit line management amid coronavirus uncertainty. Meanwhile, Synchrony Financial (NYSE:SYF), which handles credit card programs for J.C. Penney (NYSE:JCP), Gap (NYSE:GPS) and American Eagle (NYSE:AEO), is using “internal and credit bureau triggers to dynamically reevaluate customers’ creditworthiness.”
What else is happening…
TD Ameritrade (NASDAQ:AMTD) restricts oil futures trading.
DraftKings (DKNG) goes public with no live sports.
Ruth’s Chris (NASDAQ:RUTH) to repay $20M in small business loans.
J. C. Penney (JCP) closer to bankruptcy; Hertz (NYSE:HTZ) in debt restructuring.
ADM (NYSE:ADM) idles some ethanol output on lower gasoline demand.
New reality at Boeing (NYSE:BA) after cuts to 787 Dreamliner output.
Twitter (NYSE:TWTR) blocks 5G conspiracy tweets.
Google (GOOG, GOOGL) slashing marketing by up to half.
Thursday’s Key Earnings
Blackstone (NYSE:BX) +4.5% keeping dividend despite performance hit.
Capital One (NYSE:COF) -0.8% AH as reserve build led to quarterly loss.
Eli Lilly (NYSE:LLY) +2.1% beating expectations.
Intel (NASDAQ:INTC) -6% AH on soft EPS outlook for Q2.
Union Pacific (NYSE:UNP) +3.5% following an earnings topper.
Today’s Economic Calendar
8:30 Durable Goods
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets leaned to the upside. Japan, South Korea and India led. Europe, Africa and the Middle East are currently mostly up. Denmark, Poland, France, the UAE, Russia, Greece, Norway, South Africa, Israel, Austria, Saudi Arabia and the Czech Republic are leading; Switzerland is down. Futures in the States point towards a positive open for the cash market.
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The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
The world’s largest oil companies have been known for their dividend safety for years, but that may be changing amid a historic rout in crude prices. “In this extraordinary situation, we have decided to reduce the cash dividend for the first quarter 2020 by 67% [to $0.09],” Norway’s Equinor (NYSE:EQNR) said in a statement. While most oil majors have already slashed investments and buybacks, the latest could be a signal of what’s to come from others in the industry, including Royal Dutch Shell (RDS.A, RDS.B), BP (NYSE:BP), Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Total (NYSE:TOT) and ConocoPhillips (NYSE:COP).
Suspicious wagers?
An inquiry by the CFTC, helped by the FBI and State Department, is investigating whether Russia’s stance with OPEC+ leaked before shots were fired in an oil price war that began on March 8. The illegal wagers involving WTI futures contracts expired before Monday’s price swoon, but prior swings may have netted hundreds of millions of dollars. The CFTC has recently made an effort to prioritize insider trading, forming a specialized task force in 2018 to pursue such misconduct.
Wiping out a decade of employment gains
U.S. stock index futures were little changed overnight ahead of weekly unemployment claims that’s expected to show another 4.3M workers out of a job (PMIs and new home sales are also expected to be ugly). The jobless figure would bring the total filings since late March to more than 26.3M, though economists say this week’s data should confirm that the claims have peaked. Europe is now back in the green after eurozone business activity crashed to “shocking” lows, while the prospect of fresh U.S.-Iran tensions saw oil prices regain some ground, up 15% to $15.85/bbl.
Corporate outlooks on the pandemic
Earnings reports are starting to paint a mixed picture on how long the coronavirus will impact business. Las Vegas Sands (NYSE:LVS) CEO Sheldon Adelson anticipates tourism spending to recover, even as the company reported a 51% drop in revenue, while Delta (NYSE:DAL) expects it could be three years before demand for flying recovers. Underlying sales at consumer giant Unilever (NYSE:UL) were flat during Q1, while Daimler’s (OTCPK:DDAIF) profits plunged and Hermes reopened all of its stores in mainland China.
Court to decide fate of Victoria’s Secret
Private-equity firm Sycamore Partners wants to scrap its plans to take control of Victoria’s Secret, a deal reached back in February. The high-profile legal test will decide whether the coronavirus allows a buyer to walk away from an agreement reached before the disease was declared a pandemic. L Brands (NYSE:LB), parent of the lingerie brand, closed its U.S. stores in March, furloughed the majority of its workers and skipped April rent payments, moves Sycamore says were in violation of the proposed transaction.
Nursing homes
A survey from the WSJ has found at least 10,700 COVID-related deaths at long-term care facilities among more than 35 states that either report data online or responded to requests for information. That’s almost a quarter of all U.S. deaths, with the virus hitting at least 4,800 facilities nationwide. Currently, the federal Centers for Medicare and Medicaid Services requires nursing homes to tightly restrict who can enter, though limited testing and asymptomatic cases means staffers could have brought infections inside.
Threat to U.S. food supply
Tyson (NYSE:TSN) is closing a factory for one of its subsidiaries in Logansport, Indiana on April 25 while its more than 2.2K employees undergo COVID-19 testing. The pork processing facility, which produces 3M pounds of pork daily and helps support more than 250 independent family farmers from across nine states, suspended production for one day on April 20 for additional deep cleaning and sanitizing. Last week, Smithfield Foods shut down a pork processing plant that accounts for up to 5% of production after more than 500 of its workers were infected and one died.
Down to Georgia
In the latest coronavirus briefing, President Trump said he disagreed with Georgia’s decision to restart its economy, telling Governor Brian Kemp that it was too early to ease stay-at-home orders and let some businesses reopen. The state was the first in the country to significantly loosen restrictions, though many are still in place and some cities such as Atlanta remain on lockdown. Asked about Georgia, Dr. Anthony Fauci said he would caution the state to move more slowly and reminded that the virus left to itself would take off and add fatalities.
Spend or hit the pause button?
“We need to spend what it takes to win the war,” Treasury Secretary Steven Mnuchin declared in an apparent rebuke to Senate Majority Leader Mitch McConnell, who feels the federal government should “push the pause button.” While he’s sensitive to concerns about the rising federal debt, Mnuchin believes low interest rates and the urgency of preventing as much long-term damage as possible cuts in the other direction. Many expect the national debt to exceed $3.8T for 2020, meaning for the first time since WWII the nation will owe more than its economy can produce in a given year.
Junk-rated debt as collateral
Already hoovering up pretty much anything in sight on The Continent for the past few years, the ECB has – in a back-doorish sort of way – added high-yield bonds to the list of allowable assets it will buy. Specifically, the central banks will accept bonds which had the lowest investment-grade rating on April 7 (many of which by now have fallen below BBB-). Presumably, this might include the paper of Italy, which is under threat of an imminent downgrade to a junk credit.
What else is happening…
Biggest 5G expansion so far for AT&T (NYSE:T).
Apple (NASDAQ:AAPL) will add $75B-$100B in buybacks – analysts.
Boeing (NYSE:BA) details lean manufacturing drive.
Marathon Petroleum (NYSE:MPC) expects to defer some planned 2020 capex.
Wednesday’s Key Earnings
Alcoa (NYSE:AA) +3.8% AH topping revenue estimates.
AT&T (T) -1.3% pulling guidance, keeping dividend.
Biogen (NASDAQ:BIIB) -9.4% extending timeline for Alzheimer’s drug.
CSX (NASDAQ:CSX) +2.1% AH as operating ratio hit a new record.
Delta Air Lines (DAL) -2.7% raising $3B in debt.
Discover Financial (NYSE:DFS) -6.1% AH swinging to a Q1 loss.
Kimberly-Clark (NYSE:KMB) +2.4% posting 11% organic sales growth.
Kinder Morgan (NYSE:KMI) -0.3% hurt by refined products volumes.
Las Vegas Sands (LVS) +7.2% AH after better-than-feared Q1.
Today’s Economic Calendar
8:30 Initial Jobless Claims
9:45 PMI Composite Flash
10:00 New Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly up. China, Hong Kong, South Korea, India, Indonesia and Thailand did well; China and New Zealand were weak. Europe, Africa and the Middle East are currently mostly up. The UK, Poland, the UAE, Russia, Greece, Finland, Norway, the Netherlands, Italy, Portugal, Austria and Sweden are up more than 1%. Futures in the States point towards a moderate gap up open for the cash market.
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VIDEO: How I Trade Bottoming Patterns
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
S&P 500 futures climbed 1.5% overnight, regaining some poise after two days of steep losses, as traders came to terms with the effects of this week’s spectacular collapse in oil prices. Also boosting sentiment was a fresh $484B relief package for small businesses, hospitals and testing, while several Southern leaders across Georgia, South Carolina and Tennessee moved to reopen their local economies. In earnings news, keep on the lookout for reports from Delta (NYSE:DAL) and AT&T (NYSE:T), which will provide an outlook on the airline industry and another streaming service (HBO Max) looking to cash in during the COVID-19 pandemic.
Brent takes a beating
With all the news surrounding the WTI price crash over the last two days, it’s finally Brent’s turn to take a plunge. Prices on the sweet light crude tumbled as much as 17.3% overnight to $15.98/bbl, the lowest level since mid-1999. WTI is down another 6% to $10.87/bbl. The volatility in the oil market has also prompted CME Group (NASDAQ:CME), the world’s biggest commodities exchange, to raise margins on crude futures and allow listing of negative options.
Hunt for storage
Traders are struggling to find enough ships, railcars, caverns and pipelines to store fuel as conventional storage facilities fill up. In fact, dozens of oil tankers have been booked in recent days to store at least 30M barrels, adding to the about 130M barrels of crude already in floating storage. As the crisis spirals, the Trump administration is reportedly considering offering federal stimulus to embattled oil-and-gas producers in exchange for government ownership stakes in the companies or their crude reserves.
Netflix is booming (for now?)
The streaming giant added a record 15.8M paid subscribers during the first quarter, smashing the 8.5M expected by Wall Street. While the stock rose over 3% AH on the news (it’s up 34% YTD), it quickly erased gains after the executive reaction to the numbers. While cash flow isn’t an issue (productions have shut down), Netflix (NASDAQ:NFLX) said there was heavy uncertainty surrounding the effects of COVID-19. As governments lift home confinement, it expects viewing and growth to decline.
Big push into India
Facebook (NASDAQ:FB) has revealed its largest investment ever, a $5.7B injection into Indian telecom Reliance Jio in return for a 9.99% stake. More records… It’s the biggest investment for a minority tech stake in the world and the biggest foreign direct investment into Indian technology. Jio operates various broadband, mobile services and online commerce platforms, prompting speculation of a “super” app that could handle shopping, travel and payments or other collaborations.
Public companies raided the PPP pantry
There is a bright spotlight being thrown on where the funds from the original Paycheck Protection Program designed for small business went. The first-come, first-serve U.S. government aid program saw at least $243M of the total $349B funneled to publicly traded companies, including 15 with market caps of over $100M. As has been reported over the last week, the program ran dry before many mom-and-pop operations and smaller independent businesses were able to apply. Check out the list here.
Way to shop!
Trouble in the retail space is spiraling, with Macy’s (NYSE:M) looking to avoid dire outcomes like bankruptcy, a trip it already took in the 1990s. According to CNBC, the retailer is seeking to use its inventory as collateral to raise $3B and real estate to raise an additional $1B-2B. Cowen analysts have estimated Macy’s had only about four months of cash available, while its shares have fallen nearly 70% YTD.
Car-distancing
General Motors (NYSE:GM) is closing down its Maven car-sharing business and has communicated the plans to the service’s more than 230,000 users. The decision was partially due to the coronavirus pandemic, as well as the business itself, which was not thought to be profitable. The automaker announced the “personal mobility brand” in January 2016, marking its first significant foray into the car-sharing and mobility space.
COVID-19 antibody tests a ‘disaster’
“Some of these companies, I tell you, this is ethically very questionable to get out with this stuff,” Roche (OTCQX:RHHBY) CEO Dr. Severin Schwan told reporters after scrutinizing some existing products. “It’s a disaster. These tests are not worth anything, or have very little use,” he added. Roche plans to offer its own blood tests by early May to identify those who had been infected with the coronavirus and plans by June to boost production to “high double-digit millions” per month.
U.S.-China relationship
“I think I should be hoping for more than just a pause in tensions, but really a serious rethinking of the very foundations of this important relationship,” said Cui Tiankai, the Chinese ambassador to the U.S. Recently thawed tensions between the countries have resumed since COVID-19, with President Trump saying last weekend that Beijing should face consequences if it was “knowingly responsible” for the outbreak. The state of Missouri has also sued the Chinese government and other top institutions for the role they played in handling the pandemic.
What else is happening…
Expedia (NASDAQ:EXPE) nears deal to sell stake to P-E players.
Chevron (NYSE:CVX) hit with de facto production ban in Venezuela.
U.S. makes move toward rare earth security.
United (NASDAQ:UAL) sells $1B of stock to weather pandemic.
JPMorgan (NYSE:JPM) to return employees to work in phases.
LendingClub (NYSE:LC) lays off a third of workforce.
ValueAct eyes Nintendo (OTCPK:NTDOY) with stake of over $1.1B.
Videogame sales log best March in 12 years.
Tuesday’s Key Earnings
Chipotle (NYSE:CMG) +5.8% AH expecting deliveries to stay strong.
Chubb (NYSE:CB) +0.1% AH faring well in Q1.
Coca-Cola (NYSE:KO) -2.5% after volumes tumbled 25%.
Emerson Electric (NYSE:EMR) -0.3% lowering 2020 outlook.
Lockheed Martin (NYSE:LMT) -2.6% on “some production impacts.”
Netflix (NFLX) +0.2% AH adding nearly 16M subscribers.
Philip Morris (NYSE:PM) -6% pulling full-year guidance.
SAP (NYSE:SAP) -5.4% missing expectations.
Snap (NYSE:SNAP) +20.5% AH as revenue soared with users at home.
Synchrony Financial (NYSE:SYF) -2.7% seeing purchase volumes drop.
Texas Instruments (NASDAQ:TXN) +3% AH on beats, expanded outlook.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
9:00 FHFA House Price Index
10:30 EIA Petroleum Inventories
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Good morning. Happy Tuesday.
Most of the Asian/Pacific markets closed down 1-3%. China, Japan, Hong Kong, New Zealand, India, Taiwan, Australia, Malaysia, Singapore and the Philippines dropped the most. Europe, Africa and the Middle East are currently very weak. The UK, Poland, France, Germany, the UAE, Russia, Greece, South Africa, Finland, Switzerland, Norway, Hungary, Spain, the Netherlands, Italy, Belgium, Israel, Austria and Sweden are down 2% or more. Futures in the States point towards a moderate gap down open for the cash market.
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VIDEO: How I Trade Bottoming Patterns
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The dollar is up. Oil and copper are getting crushed. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
May WTI crude contracts (that expire today) crashed into negative territory for the first time ever on Monday, with markets awash in so much crude that storage space is becoming harder to find. Demand is down 30% worldwide amid travel restrictions and lockdowns to contain the spread of the coronavirus, while output cuts from the world’s largest producers came too late to the show. Hopes that things would fare better today have now been dashed, with WTI contracts for June tumbling as much as 42% overnight to $11.89/bbl.
Next steps?
Following the collapse in prices, Saudi Arabia and other OPEC members said they are considering cutting their oil production as soon as possible, rather than waiting until May 1. The Trump administration is meanwhile debating a halt to Saudi crude imports and may add 75M barrels to the Strategic Petroleum Reserve. Struggling to repay its ballooning debts, the U.S. energy industry has additionally asked the Fed to change the terms of a $600B lending facility, with storage infrastructure struggling to catch up with the shale boom.
Futures decline, earnings on tap
S&P 500 futures fell 1.4% alongside global stocks as a crash in crude prices adds to the latest bout of market turbulence sparked by the COVID-19 pandemic. More anxiety was seen in the bond market, where yields on the 10-year Treasury note fell 5 bps to under 0.60%. Traders are also keeping an eye on earnings season, with Coca-Cola (NYSE:KO) expected to beat estimates despite weaker volumes and Netflix (NASDAQ:NFLX) forecast to post a jump in revenue due to stay-at-home streaming.
Planemakers lose fuel efficiency selling point
The oil plunge is adding to the woes of Boeing (NYSE:BA) and Airbus (OTCPK:EADSY), which spent more than a decade racking up record orders for new planes – 737 MAX and A320neo – they boasted could save millions in fuel costs. “One thing that kept the industry aloft during the great financial meltdown [in 2008] is fuel prices actually rose,” said aviation analyst Richard Aboulafia. Globally, jet-fuel demand is set to drop 47% Y/Y in Q2, nearly twice the rate of the forecast decline in gasoline consumption and more than 3x the rate of the drop in diesel, according to S&P Global Platts.
Health of Kim Jong-un
The South Korean government has refuted a CNN report that stated Kim Jong-un was in “grave danger” after undergoing a surgical procedure, saying there were “no unusual signs” regarding the leader’s health. The Korean won weakened following the rumor, falling 1.08% to trade at 1,233.83 per dollar, while South Korean markets saw sizable declines, with the KOSPI and KOSDAQ indexes sinking as much as 1.9% and 2.3%, respectively. Some even linked a drop in U.S. stock futures to the unconfirmed report.
Lord & Taylor explores bankruptcy
The latest retail casualty from the coronavirus pandemic may be Lord & Taylor, which is exploring bankruptcy protection after temporarily shutting all of its 38 U.S. department stores, Reuters reports. Neiman Marcus also plans to file for bankruptcy as soon as this week, while J.C. Penney (NYSE:JCP) is considering a similar move. Fashion startup Le Tote acquired Lord & Taylor last year from Saks Fifth Avenue owner Hudson’s Bay (OTCPK:HBAYF), in a C$100M deal that also included real estate, ownership stakes and board seats.
Biggest services expansion in a decade
Apple (NASDAQ:AAPL) is launching its App Store, iCloud, Apple Podcasts, Apple Arcade and Apple Music – watch out Spotify (NYSE:SPOT) – to dozens of new markets in Africa, the Middle East and beyond. It’s an important expansion for Apple, which is seeking to grow more revenue from selling services as customers have slowed in upgrading their phones. In fact, Apple’s services segment set an all-time revenue record last quarter and totaled 17.8% of $260.1B in sales during the most recent fiscal year.
Protest limits
Facebook (NASDAQ:FB) is banning posts and groups that promote anti-lockdown protests (or any in-person gatherings) that don’t comply with government health directives like social distancing. While the events have been relatively small, many have grabbed attention on social media as the debate about when and how to reopen the economy becomes political. In other protest news, more than 300 Amazon (NASDAQ:AMZN) workers from across 50 facilities are planning to stage a “mass call out” this week over greater COVID-19 safety protections.
Far East & Beyond
Beyond Meat (NASDAQ:BYND) is teaming up with Starbucks (NASDAQ:SBUX) for its China debut as the latter launches a new menu that will feature the company’s plant-based beef in pastas and lasagna. It will go a long way for Beyond’s expansion into Asia, where meat alternative products still have not experienced the popularity boom seen in the U.S. and parts of Europe. As part of the launch, Beyond will establish a Chinese-language website, as well as make use of popular social media channels Weibo and WeChat.
vVirgin Australia goes bust
Australia’s second largest airline is entering voluntary administration, after failing to secure the required financial assistance from state and federal governments. It’s one of the first big carriers to seek bankruptcy protection, with more than 10,000 employees and a roughly 31% market share on domestic routes. “If Virgin Australia (OTC:VBHLY) disappears, Qantas (OTCPK:QABSY) would effectively have a monopoly of the Australian skies,” wrote British billionaire Richard Branson, whose Virgin Group owns a 10% stake in the airline. “We all know what that would lead to.”
What else is happening…
Senate may vote on SBA loan program today.
General Electric (NYSE:GE) enters into $15B loan agreement.
Auto sector looks for safe way to restart.
Fandango (NASDAQ:CMCSA) to buy Walmart’s (NYSE:WMT) Vudu streaming service.
WeWork (WE) committee pushes back against SoftBank (OTCPK:SFTBY).
$30M in costs as Hertz (NYSE:HTZ) lays off 10,000 staff.
SAP scraps dual-CEO structure to simplify leadership.
Trump to temporarily suspend immigration into U.S.
Monday’s Key Earnings
Equifax (NYSE:EFX) +7.3% AH topping expectations.
Halliburton (NYSE:HAL) +0.6% posting Q1 earnings beat.
IBM (NYSE:IBM) -3.1% AH returning to pattern of revenue misses.
Today’s Economic Calendar
8:55 Redbook Chain Store Sales
10:00 Existing Home Sales
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets closed mostly down. China and Thailand did well, but Japan, South Korea, Australia, Indonesia and the Philippines were weak. Europe, Africa and the Middle East are currently almost entirely down. The UK, Poland, France, Germany, the UAE, Russia, South Africa, Finland, Norway, Hungary, Spain, Italy, Portugal, Israel and Saudi Arabia are all down significantly. Futures in the States point towards a moderate gap down open for the cash market.
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VIDEO: How I Trade Bottoming Patterns
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The dollar is up. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
The front-month May WTI contract plunged as much as 23% overnight to under $15/bbl, the lowest level since March 1999, after losing almost a fifth of its value last week. Production cuts agreed by top producers are barely making a dent in the demand destruction wrought by COVID-19 as the world rapidly runs out of places to store crude. While the May contract expires tomorrow, adding to reasons for prices to crater, the June WTI contract also fell more than 7% to $23/bbl (the spread is usually around $0.50 – it’s now around $8-10). Besides the crude slump, U.S. stock index futures are off by 1% as investors look ahead to a busy week for earnings (nearly a fifth of S&P 500 companies report) and gauge the early financial effects of the coronavirus pandemic.
Some) tariffs postponed
American importers that “demonstrate a significant financial hardship” from the coronavirus epidemic will be allowed to delay tariff payments for 90 days, though the measure fell short of an across-the-board deferral. It won’t apply to anti-dumping and countervailing duties, or importers of goods caught up in trade conflicts – including solar panels, steel, aluminum and a range of Chinese products – as well as enforcement actions against Airbus (OTCPK:EADSY). “This will protect American jobs and help these businesses get through this time,” Treasury Secretary Steven Mnuchin said in a statement.
Paycheck Protection Program
A deal to replenish funding for the PPP may be reached as soon as today, adding about $300B in funding for small business loans and $50B for disaster lending. It would also provide $75B for hospitals and $25B for a federal testing program, items that Democrats had wanted. “The next 45 days may just become the most critical period in U.S. financial history,” said money manager Alan B. Lancz. “Even if we execute properly, the recovery will take time and a best-case scenario is a ‘U’ shaped recovery.”
Bad bank idea
The ECB has held high-level talks with counterparts in Brussels about opening a bad bank as a potential way to deal with a surge in non-performing loans. It would remove billions of euros from balance sheets of eurozone lenders caused by the toxic debts left over from the Global Financial Crisis. However, some in the European Commission still don’t want to waive EU rules that say banks only get state aid after a resolution process imposes losses on their shareholders and bondholders.
Will the turnaround at IBM continue?
The company reports its first earnings after Ginni Rometty stepped down as CEO on April 6, to be replaced by Arvind Krishna, who had already played a large role in shifting IBM’s (NYSE:IBM) core to cloud, AI, and quantum computing. Investors will be focused on two main things: How the coronavirus pandemic is affecting business and how new management will sharpen Big Blue’s focus on the fast-expanding cloud market. Last quarter, IBM surprised Wall Street with Q4 revenue growth, after five straight periods of declining sales. Revenue from recently acquired Red Hat jumped 24% and total cloud revenue rose 21%.
Retail misery
Things were already on shaky ground in the brick-and-mortar retail sector, though the coronavirus crisis is pushing the industry into an even weaker position. Neiman Marcus is preparing to seek bankruptcy protection as soon as this week, becoming the first major U.S. department store operator to succumb to the economic fallout from COVID-19. Combined, $12.3B has been wiped from the market caps of J.C. Penney (NYSE:JCP), Macy’s (NYSE:M), Nordstrom (NYSE:JWN) and Kohl’s (NYSE:KSS) since the start of 2020 as the companies scramble to shore up their balance sheets.
Reopening the Vegas Strip
Wynn Resorts (NASDAQ:WYNN) CEO Matt Maddox is urging Nevada’s governor to start reopening the Las Vegas Strip in mid- to late May – with extensive safety measures. “Begin with reduced occupancy, physical distancing measures in place, temperature checks and no large gatherings,” Maddox said in a Nevada Independent column. “We all need to wear a mask.” Wynn’s Macau casinos reopened Feb. 20 after a mandatory two-week shutdown, with safety measures in place including temperature checks, fewer open tables and rules against guests standing or congregating.
Massive furloughs at Disney
The financial toll of COVID-19 is building up at the Mouse House as Disney (NYSE:DIS) stops paying more than 100,000 employees this week, or nearly half of its workforce. That will leave staff reliant on state benefits (though healthcare benefits will still be given in full), even as the company protects executive bonuses and a $1.5B dividend payment due in July. The decision will save Disney up to $500M a month across its theme parks and hotels, which have been shut in Europe and the U.S. for almost five weeks.
Stand for something good
Following an outcry, Shake Shack (NYSE:SHAK) is returning all $10M of its loan from the Paycheck Protection Program, the small business rescue fund that ran out of cash less than two weeks after launch. Founder Danny Meyer and CEO Randy Garutti said they’ve secured separate funding and decided to return the entire $10M so others that “need it most can get it now.” The burger chain took part because the law permitted assistance for any restaurant business with no more than 500 employees at a location (it also explains why others such as Potbelly tapped the fund.)
Hydroxychloroquine?
“We recognize the importance of answering the scientific question of whether hydroxychloroquine will be beneficial for patients with COVID-19 disease,” said John Tsai, Novartis’s (NYSE:NVS) top drug developer. As a result, the company will conduct a randomized Phase III, or late-stage, trial on 440 hospitalized patients after getting the green light from the FDA. Emergency use authorization was granted earlier this month, though so far there is no scientific proof the drug works against coronavirus.
What else is happening…
Gym chain 24 Hour Fitness weighs bankruptcy.
It’s time to mask up at Walmart (NYSE:WMT).
Dispute sees Amazon (NASDAQ:AMZN) extend French warehouse closures.
Beverage industry worries about CO2 supply.
United Airlines (NASDAQ:UAL) sells back planes to conserve cash.
Alibaba (NYSE:BABA) doubles down on cloud investment.
Tech giants must pay for news content Down Under.
Facebook (NASDAQ:FB) launching Gaming app early – NYT.
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index