Wall Street Breakfast

Author: bmotrader   |   Latest post: Wed, 1 Apr 2020, 8:58 AM


Wall Street Breakfast: Fears Of A Ballooning Deficit

Author: bmotrader   |  Publish date: Wed, 1 Apr 2020, 8:58 AM

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.

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 Markets

In Asia, Japan -4.5%. Hong Kong -2.2%. China -0.6%. India -4.1%.
In Europe, at midday, London -3.6%. Paris -3.6%. Frankfurt -3.2%.
Futures at 6:20, Dow -3%. S&P -3%. Nasdaq -2.6%. Crude -1.2% to $20.23. Gold +0.7% to $1608.40. Bitcoin -2.2% to $6315.
Ten-year Treasury Yield -9 bps to 0.61%

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


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Wall Street Breakfast: Investors Prepare For More Market Swings

Author: bmotrader   |  Publish date: Mon, 30 Mar 2020, 10:03 AM

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.

Today's Markets

In Asia, Japan -1.6%. Hong Kong -1.3%. China -0.9%. India -4.6%.
In Europe, at midday, London -0.7%. Paris -0.9%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.4%. S&P -0.2%. Nasdaq flat. Crude -5.2% to $20.40. Gold +1.3% to $1645.90. Bitcoin +3.1% to $6298.
Ten-year Treasury Yield -8 bps to 0.7%

Today's Economic Calendar

10:00 Pending Home Sales
10:30 Dallas Fed Manufacturing Survey


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Wall Street Breakfast: Largest Outbreak In The World

Author: bmotrader   |  Publish date: Fri, 27 Mar 2020, 9:11 AM

At the beginning of the month, there were roughly 100 confirmed COVID-19 cases in the U.S., but now there are more confirmed cases than both China and Italy, making it the country with the largest outbreak in the world. As testing ramps up, there are also efforts to reopen the economy, with President Trump hearing recommendations from the White House coronavirus task force this weekend. Plans include classifying counties by low, medium and high "risk" levels, though state governors will have the ultimate say on whether to relax stay-at-home orders and business closures.

Near-term bottom?

A sharp rally on Thursday saw the Dow climb for a third straight session, recording a 21% surge that put the index back in bull territory. Others argue that the term "bull" can only be applied after notching a new high or can only be identified long after the event. Market participants appeared hopeful about the House's expected approval of a $2T coronavirus relief bill and brushed off (along with Steve Mnuchin) weekly unemployment claims that soared to a record 3.28M.

Economic fallout

A pullback was seen overnight as Dow futures slid 575 points, while S&P 500 and Nasdaq futures fell 2.5%. Investors may have been reminded that the world economy isn't in great shape as China reported a huge tumble in factory profits for the first two months of the year - down 38.3% Y/Y to 410.7B yuan ($57B). That's the steepest decline on record. Consumer confidence figures are due out later this morning in the U.S., gauging how hard households have been hit by the coronavirus crisis despite efforts to get back to work.

Fed balance sheet tops $5T

The Fed's balance sheet exploded by more than half a trillion dollars over the past week, roughly twice the pace of the next-largest weekly expansion during the global financial crisis. Total assets held by the central bank topped $5T for the first time as it attempts to keep credit flowing to all corners of the market, including Treasurys, commercial paper and municipal bonds. In an interview aired yesterday on the The Today Show, Jerome Powell said there was essentially no limit to the Fed's emergency lending ability and doesn't see inflation resulting from current policies.

...and $5T for the global economy

"The virus respects no borders," leaders from G20 nations said after an emergency meeting on Thursday, declaring a commitment to inject over $5T into the global economy and do "whatever it takes" to overcome the coronavirus pandemic. "We will continue to conduct bold and large-scale fiscal support. The magnitude and scope of this response will get the global economy back on its feet and set a strong basis for the protection of jobs and the recovery of growth."

Coronavirus support

Retailers are attempting to fill a void as hospitals and healthcare facilities throughout the U.S. experience shortages of personal protective equipment. Gap (NYSE:GPS), HanesBrands (NYSE:HBI), Ralph Lauren (NYSE:RL) and Canada Goose (NYSE:GOOS) are all shifting production lines from making apparel to manufacturing face masks, scrubs and gowns, as well as utilizing connections in their supply chains. Other companies like Target (NYSE:TGT), Lowe's (NYSE:LOW) and Home Depot (NYSE:HD) are redirecting supply to frontline healthcare workers.

Coronavirus testing

Verily now has more than 1,000 volunteers from across Alphabet (GOOG, GOOGL) working on COVID-19 as it readies a ramp-up across additional regions. The life sciences unit launched a coronavirus screening website last week, which directs people to local testing centers, and has opened "drive-thru" locations itself, manned by employees. Next step? Verily co-founder Jessica Mega said the company is considering integrating the screening process through wearables.

No help for big cruise lines

The major cruise ship lines are shut out of the $2T coronavirus stimulus package headed for a vote today in the U.S. House, despite President Trump's desire to help them. The package limits aid to U.S.-incorporated companies with a majority of workers based in the U.S., two criteria that effectively exclude Carnival (NYSE:CCL), Norwegian (NYSE:NCLH) and Royal Caribbean (NYSE:RCL). "There's a risk that cruise ships are laid up for an extended period of time," said Wedbush analyst James Hardiman. "They'll continue to burn cash without any revenue coming in the door."

Who's zoomin' who?

The SEC suspended trading in the largely defunct Zoom Technologies (OTC:ZOOM) - once a distributor of wireless products - after widespread confusion with popular videoconferencing company Zoom Video Communications (NASDAQ:ZM), which has seen a sharp rise in usage and stock price amid the COVID-19 pandemic. That suspension lasts until April 8 - hopefully giving everyone enough time to learn who's who. Over the past three months, Zoom Video Communications has risen 109%, while Zoom Technologies went from $1.26 to an intraday high of $60 last Friday.

Don't forget the oil price war

A new OPEC+ deal to balance oil markets might be possible if other countries join in, according to Kirill Dmitriev, head of Russia’s sovereign wealth fund. Dmitriev and Energy Minister Alexander Novak were Russia's top negotiators in the production cut deal with OPEC (the existing pact expires on March 31). Who would be the new members? President Trump said last week he would get involved in the Saudi-Russia oil price war at the appropriate time amid Moscow's longstanding frustration with rapidly growing U.S. shale.

Thursday's Key Earnings

GameStop (NYSE:GME) +10% turning a profit despite revenue dip.
Lululemon (NASDAQ:LULU) -2.4% pulling outlook after strong sales.

Today's Markets

In Asia, Japan +3.9%. Hong Kong +0.6%. China +0.3%. India -0.4%.
In Europe, at midday, London -3.8%. Paris -3.2%. Frankfurt -2.%.
Futures at 6:20, Dow -2.6%. S&P -2.5%. Nasdaq -2.5%. Crude +0.3% to $22.67. Gold -1.5% to $1626.90. Bitcoin +0.8% to $6677.
Ten-year Treasury Yield -4 to 0.77%

Today's Economic Calendar

8:30 Personal Income and Outlays
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count


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Wall Street Breakfast: Jobless Claims Set To Soar

Author: bmotrader   |  Publish date: Thu, 26 Mar 2020, 9:03 AM

Today's weekly jobless claims report is set to grab the attention of both Wall Street and Main Street, offering proof that the economy is already in recession. The number, which could surge to at least one million, is especially in focus after the U.S. Labor Department asked individual state governments to postpone publishing unemployment data (dusting off the 2008 playbook). That would shatter a previous record of nearly 700,000 back in 1982, when the U.S. hiked interest rates to quash inflation. S&P 500 futures are off by 1.5% ahead of the big release.

Grimmer picture

Others are expecting a drastically larger jobless figure, with Barclays predicting that 2M Americans were laid off last week and Citigroup forecasting the number at 4M. "It's the tip of the iceberg, and they're going to be ugly. It depends on the speed at which the claims were filed, and the next week will probably be worse," said Diane Swonk, chief economist at Grant Thornton. "You have 15.8M people working in leisure and hospitality, and you just shut down the industry," added Jon Hill, fixed income strategist at BMO.

Largest spending bill in history

Last night, the U.S. Senate approved a $2T relief package, that includes checks of up to $1,200 per taxpayer with income of up to $75,000, $500B in funds to help stricken sectors of the economy, $367B in loans to small businesses and $100B for the healthcare system. The package now moves to the House of Representatives for their approval, although there’s already speculation that further stimulus measures will be needed. The House will vote on the bill Friday.

Negative rates in the U.S.

Yields on both the 1-month and 3-month Treasury bills fell below zero yesterday, marking the first time that happened since 2015, when both bills briefly flashed red and yields fell to minus 0.002%. However, the readings on Wednesday were well below those, with the one-month traded at minus 0.053% and the three-month at minus 0.033%. Japan and large swaths of Europe have had negative-yielding debt for some time now (in Germany all government fixed income instruments except the 30-year bond carry rates below zero).

ECB divisions are simmering

The central bank said it will not apply its self-imposed purchase limits (capped at 33% of each country's debt) on a €750B bond-buying scheme aimed at combating the coronavirus outbreak. Tensions already erupted into the open in September following Mario Draghi's last easing package, while German critics have repeatedly taken the ECB to court over the purchases. Hawks on the council argue that if the ECB owns more than a third of a country’s debt it would have a blocking minority in any future debt restructuring negotiations, forcing a vote that could be attacked as monetary financing.

Healthcare crisis deepens

Spain overtook China's coronavirus death toll yesterday with 3,434 fatalities (second only to Italy), highlighting a dire picture as older patients miss out on treatment to younger people with a better chance of surviving. Similar wrenching decisions are taking place in the U.S., with Northwestern Memorial Hospital in Chicago and George Washington University Hospital in Washington exploring a universal do-not-resuscitate policy for infected patients. Atrium Health in the Carolinas, Geisinger in Pennsylvania and regional Kaiser Permanente networks are also looking at guidelines that would permit overriding the wishes of a COVID-19 patient on a case-by-case basis (such as risk to doctors and nurses, or a shortage of protective equipment) but would stop short of imposing DNR orders.

Analyzing potential COVID-19 drugs

Are chloroquine and hydroxychloroquine effective against COVID-19? It's not yet known, but Oracle (NYSE:ORCL) is beginning a collaboration with the White House on creating a data repository for clinical trials. Two senior administration officials familiar with the matter say the online platform could gather data from physicians who prescribe the malaria drugs and track patient symptoms. Planners have also discussed using it to mail the treatments to patients involved in the trial.

Other small business relief

Major retailers are looking to ease the impact of the coronavirus pandemic, offering help and easing financing to their small business partners. Walmart (NYSE:WMT) is waiving April rent fees for its more than 10,000 businesses that operate within Walmart Supercenters and Sam's Clubs, including hair and nail salons, optometrists, restaurant franchises, veterinary clinics and banks. Amazon (NASDAQ:AMZN) is meanwhile pausing loan repayments until April 30 for sellers enrolled in its Amazon Lending program, while interest will not accrue during that time.

'Virtual' G20 emergency meeting

The G20 is usually a once-a-year event, but as the world confronts the coronavirus pandemic, 2020 host Saudi Arabia is chairing an emergency virtual summit today. Two meetings were additionally held in 2009 and 2010, at the height of the global financial crisis, and many are expecting similar coordinated fiscal measures. Also on watch is the U.S.-China relationship. Fears are running high that the coronavirus could undo the goodwill demonstrated between President Trump and Xi Jinping in January when the "Phase One" trade deal concluded.

Unprecedented oil glut

The collapse in oil demand will lead to a massive oil glut that not even a supply production freeze or cut from OPEC can rectify, according to Goldman Sachs, which predicts a 14M b/d surplus in Q2. "Any potential agreement between the U.S., Saudi and Russia to freeze or reduce output is too little too late. It would take months to impact inventories globally and would be dwarfed by the current demand losses." The firm sees Brent crude remaining near $20 a barrel next quarter, while West Texas Intermediate oil will likely fall well below that level as storage swells.

Wednesday's Key Earnings

Micron (NASDAQ:MU) +5.5% AH after Q2 beats, in-line outlook.

Today's Markets

In Asia, Japan -4.5%. Hong Kong -0.7%. China -0.6%. India +4.9%.
In Europe, at midday, London -1.6%. Paris -1.4%. Frankfurt -1.7%.
Futures at 6:20, Dow -1.1%. S&P -1.5%. Nasdaq -1.4%. Crude -2.5% to $23.87. Gold -0.7% to $1622.70. Bitcoin -3.9% to $6655.
Ten-year Treasury Yield -5 bps to 0.81%

Today's Economic Calendar

8:30 GDP Q4
8:30 Initial Jobless Claims
8:30 International trade in goods
8:30 Corporate profits
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $32B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet


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Wall Street Breakfast: What's Next After Epic Comeback?

Author: bmotrader   |  Publish date: Wed, 25 Mar 2020, 10:07 AM

Up by nearly 3% for most of the night, stock index futures turned negative moments ago following Tuesday’s historic rally. The DJIA climbed more than 2,000 points, or 11.4%, marking its biggest percentage gain since 1933, while the S&P 500 soared 9.4% for its best day since October 2008. Triggering the movement was news that a $2T coronavirus stimulus deal was reached and comments from President Trump saying he wants the nation "opened up and just raring to go by Easter. Next market catalyst? After a series of actions on the monetary and fiscal front, traders need to "see the infections pass an inflection point," said Vincent Reinhart, chief economist at BNY Asset Management.

What's in the stimulus package?

People making up to $75,000 a year are expected to receive checks of $1,200. Couples making $150,000 will receive $2,400 with an additional $500 per child. The payments would decrease for those making more than $75,000, with an income cap of $99,000 per individual or $198,000 for couples. The bill is also expected to include roughly $100B in assistance for hospitals, $350B in assistance to small businesses to help them meet payroll, and $500B in aid for corporations, such as airline companies and cruise lines.

BlackRock to manage Fed's bond buying

The Federal Reserve has hired the world's largest money manager to shepherd several debt-buying programs on its behalf as the central bank works to shore up an economy reeling from the spread of coronavirus. BlackRock (NYSE:BLK) will serve as an investment adviser and manage assets for three separate programs, including two new facilities to provide liquidity to corporate borrowers, as well as purchases of agency commercial mortgage-backed securities.

Return to work statistics

In a poll of 119 U.S. companies conducted in mid-March by the American Chamber of Commerce in China, only 22% of the companies surveyed said they've resumed normal business operations, while a quarter expect to be there by the end of April. 50% are experiencing "significant revenue declines," and more than half say they expect 2020 revenues to fall this year if they can't return to usual levels by the end of April. While the sample size is small, the resumption rate is well below official claims that over 90% of manufacturing companies and more than 60% for services firms are back at work.

Confident on recovery plan

Amid a boost from its digital business and growth in North America, Nike (NYSE:NKE) reported quarterly earnings and sales that topped analysts' expectations after the bell on Tuesday, sending shares up 10% AH. The company also noted that it will follow a playbook established by the company in China as it looks to recover its business in other parts of the world. Nearly 80% of its stores in Greater China are now open, and digital sales in the country are approaching triple-digit growth.

COVID-19 at Amazon warehouses

The U.S. coronavirus outbreak has spread to at least six Amazon (NASDAQ:AMZN) warehouses, according to the Jeff Bezos-owned Washington Post. In some cases, Amazon shut down facilities for cleaning, and co-workers who were in close contact with their infected colleagues have been quarantined, though some warehouse workers are still sounding the alarm about sanitary practices. "We are supporting the individuals, following guidelines from local officials, and are taking extreme measures to ensure the safety of all the employees at our sites," Amazon spokeswoman Lisa Levandowski said in an emailed statement.

Social distancing at 30,000 feet

Air travel has already slowed to a trickle with the number of passengers dropping more than 85% from a year ago, according to the TSA. American Airlines (NASDAQ:AAL) is now blocking 50% of all middle seats on every flight, spacing passengers in accordance with public health recommendations. The airline also announced several other changes aimed at reducing contact between flight attendants and passengers, including scaling back food and beverage service and shuttering most airport lounges.

Questionable decision?

The management at WeWork (WE) is offering members of its community teams in the U.S. and Canada an extra $100 per day or $500 per week to work out of WeWork offices during the coronavirus pandemic. Community team employees handle a range of member services, including signing for packages and taking care of on-site programming. According to WeWork's website, only two of its co-working spaces are shuttered in North America and none are closed in Europe.

Facebook ads taking a hit

In hardest hit countries, total messaging across platforms has risen more than 50% over the past month, and in Italy "up to 70%" since the COVID-19 crisis arrived in the country. However, Facebook (NASDAQ:FB) doesn't "monetize many of the services where we're seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19." Facebook also owns Instagram, as well as the popular messaging service WhatsApp.

Shielding U.S. credit reports

Equifax (NYSE:EFX) is actively working with creditors and lenders to minimize the effects the novel coronavirus may have on consumers' credit standing. "These are uncharted waters for everyone," said CEO Mark Begor. "The company is working with policy makers including the U.S. Congress, the Consumer Financial Protection Bureau and the Consumer Data Industry Association to mitigate the negative impact of the pandemic on consumers' credit files."

Tuesday's Key Earnings

Nike (NKE) +9.9% AH beating estimates, touting recovery plan.

Today's Markets

In Asia, Japan +8.1%. Hong Kong +3.8%. China +2.2%. India +7%.
In Europe, at midday, London -0.7%. Paris +2.3%. Frankfurt -0.1%.
Futures at 6:20, Dow -0.8%. S&P -1.1%. Nasdaq -1.1%. Crude -1.4% to $23.67. Gold -0.3% to $1656.60. Bitcoin -1.3% to $6634.
Ten-year Treasury Yield flat at 0.82%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Durable Goods
9:00 FHFA House Price Index
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $18B, 2-Year FRN Auction
1:00 PM Results of $41B, 5-Year Note Auction


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Wall Street Breakfast: Volatility At Record Highs

Author: bmotrader   |  Publish date: Tue, 24 Mar 2020, 8:57 PM

The rollercoaster on Wall Street continued overnight as U.S. stock index futures climbed 5% to hit 'limit up' levels. A day late? Equities plunged Monday despite unprecedented efforts by the Fed to expand purchases of U.S. Treasurys and MBSs "as needed," and implement measures to backstop credit for households, small businesses and major employers. While the U.S. Senate is still at odds over a coronavirus stimulus package, there is some hopeful news as both new cases and deaths dropped for two days running in Italy. "43 days was exactly the same amount of time as it took South Korea to reach its apex. And if such is the case, the U.S. would be 14 days behind Italy," said Thomas Lee, head of research at Fundstrat Global Advisors.

Fed surprises again

The "whatever it takes" attitude was also seen by the Fed's willingness to buy corporate bonds and corporate bond exchange traded funds. The buying spree is not unlimited - the Fed cannot own more than 20% of any one ETF, or 10% of individual corporate bonds - and purchases will only be made in investment grade corporate bonds, not high yield. While this is new for the U.S., Japan has been buying ETFs (even equity funds) for several years.

American business may reopen soon

The White House is discussing easing social distancing guidelines as early as next week as advisers and business leaders push President Trump to boost an economy beset by deepening job losses nationwide, WSJ reports. "We're not going to let the cure be worse than the problem," Trump said at a press briefing late Monday, echoing an earlier tweet. "America will again and soon be open for business. It won't be that long."

Easing the coronavirus lockdown

Chinese authorities are planning to lift the mass quarantine on the central province of Hubei, where the coronavirus first emerged last December. The news comes days after Hubei reported that new infections dropped to zero (if you can believe the statistics). Only locals deemed free from contagion risk will be allowed to leave, while restrictions on the capital city of Wuhan will last two more weeks.

Over in Europe

"Once the crisis is over - and we hope this will be the case in several months - we will return to austerity policy," German Economy Minister Peter Altmaier declared after unveiling a €750B stimulus package. Meanwhile, Italy is reportedly in favor of giving the bloc's countries access to the eurozone's ESM bailout fund with "no conditionality." GDP in France is already "collapsing at an annualized rate approaching double digits," according to IHS economist Eliot Kerr, as Markit's composite PMI came in at 30.2 for March, the lowest figure since the series began in 1998.

Nike reports after the bell

While essentials retailers have seen an uptick in deliveries, it remains to be seen what kind of demand there is for expensive sneakers. Nike's (NYSE:NKE) results may not entirely reflect the effect of the coronavirus (coming in the May quarter), but they will provide some picture of what's going on with the company and how the crisis will impact consumers and the economy. On March 16, Nike shuttered all of its stores in the U.S., Canada, Western Europe, Australia and New Zealand and the closures will be in effect until Friday (unless extended).

U.S. airlines could ground themselves

Major U.S. carriers are prepping plans for a potential voluntary shutdown of passenger flights across the U.S. if air traffic controller staffing emergencies continue to crop up or demand falls much further, Dow Jones reports. Also on the table... the federal government could at some point halt all U.S. flights in an effort to deal with the pandemic. Air traffic is already at a minimal level, with the TSA reporting a drop of 80% on Sunday compared to the same day a year ago. Related stocks: American (NASDAQ:AAL), Delta (NYSE:DAL), United (NASDAQ:UAL), Southwest (NYSE:LUV), JetBlue (NASDAQ:JBLU), Spirit (NYSE:SAVE), Hawaiian (NASDAQ:HA), Alaska Air (NYSE:ALK).

Insider trading vigilance

The SEC has issued a sharp warning against trading on nonpublic information related to COVID-19 following stock sales that have sparked calls for investigations. NYSE (NYSE:ICE) Chairman Jeff Sprecher and his wife Sen. Kelly Loeffler sold up to $3M worth of securities in the weeks before market indexes plunged, and on the heels of a private, all-senators briefing about the virus outbreak on Jan. 24. Sales by senators Richard Burr, James Inhoffe and Diane Feinstein have also come under scrutiny.

Postponing the Olympics

More countries are coming out in support of postponing the Olympics, like the U.S. and New Zealand. "The parameters going forward have not been determined, but the Games are not going to start on July 24, that much I know," said longtime International Olympic Committee member Dick Pound. Any postponement would be a blow for host country Japan, which has pumped in more than $12B of investment, and huge sums are also at stake for sponsors and broadcasters, including Comcast (NASDAQ:CMCSA) and Discovery (NASDAQ:DISCA).

A community effort

As General Motors (NYSE:GM) accelerates 'Project V' to build ventilators in Indiana, another Big Three automaker is looking to do its part to combat the coronavirus pandemic. Fiat Chrysler (NYSE:FCAU) is beginning to manufacture more than 1M protective face masks per month, which will be donated to police, EMTs, firefighters and healthcare workers. The company, which is also giving support to increase ventilator production, will disclose "further actions related to the fight against the coronavirus in the coming days."

Today's Markets

In Asia, Japan +7%. Hong Kong +4.5%. China +2.3%. India +2.7%.
In Europe, at midday, London +4.2%. Paris +5.7%. Frankfurt +6.7%.
Futures at 6:20, Dow +5%. S&P +5.1%. Nasdaq +5.4%. Crude +7.2% to $25.03. Gold +4.5% to $1638. Bitcoin +16.4% to $6802.
Ten-year Treasury Yield +6 bps to 0.83%

Today's Economic Calendar
8:55 Redbook Chain Store Sales
9:45 PMI Composite Flash
10:00 New Home Sales
10:00 Richmond Fed Mfg.
1:00 PM Results of $40B, 2-Year Note Auction

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