Tuesday Morning Reads
- Futures +2% after wild overnight session
- Pfizer teams up with BioNTech to develop COVID-19 vaccine
- Big Tech unites on coronavirus response
- Banks begin drawing from Fed's discount window
- Southwest Airlines pulls out all the stops as cancellations soar
- Airlines seek $50B bailout to avoid collapse
- FDA to allow states to authorize coronavirus test
- Firms get creative to tackle sanitizer shortag
- Automakers offer attractive vehicle financing
- Tesla delivers its first Model Y
- RBC expects 20% decline in US vehicle sales amid coronavirus outbreak
Open Interest Changes
The volatility ain't over yet following Wall Street's worst day since the 1987 crash. U.S. stock futures soared overnight and even hit a 4% "limit up" halt at one point, before plunging into the red, only to resurface moments later (S&P 500 futures are up 1% at the time of writing). At least 4,281 coronavirus cases have been confirmed in the U.S. - along with more than 70 deaths - as President Trump warned the current situation could stretch into August and tweeted his support for U.S. industry. "Although the contemporary crisis is loaded with bad news, this has not been its primary problem. It's the 'unknown,'" said Jim Paulsen of The Leuthold Group. "Give me bad news any day over complete uncertainty."
Go deeper: 'Stop! This Is A Falling Machete' by Regarded Solutions.
History will look back on the successes and failures of coronavirus responses, as nations take varying measures to combat COVID-19. Britain, which had stood apart from European nations in its response to the virus, hardened some measures on Monday, though schools will stay open for the time being. The Netherlands, meanwhile, adopted a controversial "herd immunity" strategy, allowing large numbers to contract the illness at a controlled pace. Guidelines released in the U.S. yesterday called for people to avoid gathering in groups of more than 10 people, steer clear of restaurants and food courts, and work or attend school from home whenever possible.
U.S. airlines are seeking over $50B in financial assistance from Washington, in a potential aid package that could include government-backed loans, cash grants and other measures like tax relief. Putting it in perspective: The figure would be more than three times the size of the industry's bailout after the Sept. 11 attacks. "We're going to back the airlines 100% - it's not their fault," President Trump said at a media briefing on Monday. Industry trade group Airlines for America, or A4A, also proposed $8B in grants and guarantees for cargo carriers, while U.S. airports are separately seeking $10B in assistance.
The calls to keep Wall Street open are growing louder despite circuit breakers being activated three times in the last six trading sessions. "Closing the markets would not change the underlying causes of the market decline, would remove transparency into investor sentiment, and reduce investors’ access to their money. This would only further compound the current market anxiety," tweeted Stacey Cunningham, President of the New York Stock Exchange (NYSE:ICE). CME Group (NASDAQ:CME) CEO Terry Duffy also chimed in, saying, "You should at least leave the markets open, so people can transact."
Following a brutal day for America's largest banks, when several of them lost more than 15% of their market value, the industry began reactivating a lending facility largely dormant since the financial crisis. "While Forum member institutions individually have substantial liquidity and multiple sources of funding, they believe it is important to lead by demonstrating the value of the Federal Reserve's discount window facility and to encourage its use by other financial institutions," according to a statement from the Financial Services Forum. Members include: BofA (NYSE:BAC), BNY Mellon (NYSE:BK), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), State Street (NYSE:STT), and Wells Fargo (NYSE:WFC).
Go deeper: Max Greve discusses benefits of new JPMorgan partnerships.
Top U.S. tech giants have put out a first-of-its-kind joint statement saying that they are working together to fight fraud and misinformation related to the coronavirus. "We're helping millions of people stay connected... elevating authoritative content on our platforms, and sharing critical updates in coordination with government healthcare agencies around the world." Facebook (NASDAQ:FB), Google (GOOG, GOOGL), Microsoft (NASDAQ:MSFT) Reddit and Twitter (NYSE:TWTR) are part of the group, which invited others to join its efforts. In recent weeks, fake cures and false information about the origin of the virus began proliferating on public platforms as well as through private messaging.
A potential COVID-19 vaccine from Moderna (NASDAQ:MRNA) has moved into human testing, with the first participant receiving treatment on Monday. A total of 45 healthy adults will receive one of three dose levels (25, 100, 250 µg) of the candidate, called mRNA-1273, and will be followed for 12 months after receiving the second vaccination. The primary endpoint is safety, including reactogenicity (the expected adverse events such as excessive immunological responses and injection site reactions). The secondary endpoint is immunogenicity (the robustness of the immune response).
As the virus outbreak spreads across Europe, many companies are retooling production to combat a shortage of hand sanitizers. Spirits maker Pernod Ricard (OTCPK:PDRDF) said it will supply alcohol to producers, luxury goods group LVMH (OTCPK:LVMHF) is altering perfume lines to produce sanitizing gel, while Poland's biggest oil group Orlen is making the ingredient at a plant that normally manufactures windshield wiper fluid. Britain has also asked Ford (NYSE:F), Honda (NYSE:HMC) and Rolls-Royce (OTCPK:RYCEF) to help make health equipment including ventilators to cope with COVID-19.
"Model Y deliveries begin!" Tesla (NASDAQ:TSLA) announced on Twitter, despite the coronavirus pandemic which has raised concerns about economic growth. The news is a big win for the company, which has previously fallen short of self-imposed, start of delivery deadlines (Model Y's launch timeline was summer 2020). Tesla has never disclosed deposits, or order book numbers, for the crossover SUV - unlike its Cybertruck and Model 3 - and is also reportedly keeping its Fremont factory open despite a Bay Area shutdown.
Universal Pictures (NASDAQ:CMCSA) is taking a major step in response to the COVID-19 pandemic and the capacity restrictions in theaters: The studio is making its movies available for home entertainment on the same day as theatrical release. While the move breaks longstanding practice, the films won't be that cheap. They'll be available for a 48-hour rental period at a suggested retail price of $19.99 in the U.S., and roughly the same price internationally.
What else is happening...
Check out the latest coronavirus updates here.
In Asia, Japan +0.1%. Hong Kong +0.9%. China -0.3%. India -2.6%.
In Europe, at midday, London -0.9%. Paris -0.7%. Frankfurt -1%.
Futures at 6:20, Dow +1%. S&P +1%. Nasdaq +2.2%. Crude +1.6% to $29.16. Gold -1% to $1472.30. Bitcoin +16.4% to $5295.
Ten-year Treasury Yield +9 bps to 0.82%
Today's Economic Calendar
8:30 Retail Sales
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 NAHB Housing Market Index
10:00 Business Inventories
10:00 Job Openings and Labor Turnover Survey