Monday Morning Reads

Monday Morning Reads



Open Interest Changes:



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.
Go deeper: Is the Fed's cure worse than the disease?

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.
Go deeper: Mall owner Taubman: Tenants must pay rent.

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.
Go deeper: China jumps on the easing bandwagon.

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.
Go deeper: Sanofi, Regeneron expand testing of Kevzara.

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:ESYJYgrounds its entire fleet.

Microsoft (NASDAQ:MSFT) sees 775% surge in cloud demand.

Verisign (NASDAQ:VRSNfreezes prices for domain names.

SoftBank's (OTCPK:SFTBY) satellite startup OneWeb files for bankruptcy.

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

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)