Wednesday Morning Reads
- Next Big Headache for World Economy
- ‘Irrevocably Changed’ Markets
- U.S. Crude Hits 17-Year Low as Lockdowns, Restrictions Spread
- Fallout From Turmoil in Global Credit Markets Is Spreading
- Trump Told Mnuchin to Go Big, and a $1 Trillion Stimulus Emerged
- Fed Unveils Emergency Lending Programs
- All-Out Crisis
- Glued to TV for Now
- The Historic Sell-Off & a Game of Expectations
- How To Fight Hindsight Bias
- Coronavirus Crash is Different From 2008
- Ackman calls for a 30-day spring break for U.S.
- Futures hit 'limit down' range; oil drops 5%
- Cash-hungry companies could pull out $700B from banks
- Dividend in question as Boeing slumps another 17%
- Oil freefall accelerates; WTI sinks to 17-year low
- All Nevada casinos to go dark for 30 days
- Apple's biggest bull trims target
- Tesla -10% as Fremont production in question
- Not time to buy yet, Barclays says
- Cowen sizes up alcohol and tobacco trends amid coronavirus outbreak
- Goldman likes McKesson in premarket analyst action
- Realty Income declares $0.233 dividend
Open Interest Changes
Wall Street is continuing its unprecedented roller-coaster ride amid the coronavirus turmoil, with stock index futures plunging about 4% overnight to enter "limit down" territory once again. In fact, the S&P 500 has swung 4% or more in either direction for the last seven consecutive sessions, topping the previous record of six days from November 1929. The latest? Traders are having a hard time seeing the light at the end of the tunnel with the government response to COVID-19 fallout still unfolding, while crude justdropped another 5% to $25/bbl amid an oil price war.
Go deeper: Barclays says it's not time to buy equities yet.
Markets rebounded from their deepest rout since 1987 on Tuesday as the White House weighed a fiscal package of more than $1T that includes helicopter cash for Americans and financial relief to small businesses and the airline industry. Treasury Secretary Steven Mnuchin also said corporations will be able to defer tax payments of up to $10M, while individuals could defer up to $1M in payments to the IRS. Adding to the sentiment, the Fed announced it would reopen the so-called Commercial Paper Funding Facility, a key market backstop first set up during the last financial crisis.
Go deeper: Philip Davis lists 10 more 'buying the dip' ideas.
Economists at Morgan Stanley and Goldman Sachs have joined the chorus of other Wall Street prognosticators to declare that COVID-19 has pushed the global economy into recession. It won't be as steep as the 0.8% contraction of 2009, according to the IMF's measure, but would be worse than the 2001 and early 1990s recessions. In related news, Mnuchin warned of 20% American unemployment without federal action, while today's Fed meeting was canceled following the central bank's emergency actions.
Go deeper: 'Beware False Prophets Who Never See Bear Markets Coming' by Danielle Park.
Boeing (NYSE:BA) is calling for a $60B lifeline for the U.S. aerospace industry, which faces enormous losses from the coronavirus crisis. "Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain," according to the company. Earlier on Tuesday, President Trump signaled his support for the planemaker, saying at a press conference: "We have to protect Boeing."
Go deeper: Airlines feel pressure as U.S. raises tariffs on Airbus.
Executives from companies such as Marriott (NASDAQ:MAR) and Hilton (NYSE:HLT) convened at the White House on Tuesday to discuss a bailout, consisting of $150B in direct aid for the hotel sector and $100B for related travel companies. They warned that half of the hotels in the country could close this year and the sudden cratering of demand would cause the loss of 4.6M jobs. Chip Rogers, CEO of the American Hotels and Lodging Association, said the economic impact of the pandemic on the hotel industry was already bigger than "September 11th and the 2008 recession combined."
Following hours of talks that extended well into the night, GM (NYSE:GM), Ford (NYSE:F), and Fiat Chrysler (NYSE:FCAU) negotiated "extensive plans" with the United Auto Workers union to prevent America's auto industry from coming to a standstill. "They will be working on shift rotation to minimize risk," according to a statement. The 'Big Three' "agreed to review and implement the rotating partial shutdown of facilities, extensive deep cleaning of facility and equipment between shifts, extended periods between shifts, and extensive plans to avoid member contact."
Go deeper: Plan to keep Tesla production humming quashed by sheriff.
The U.S. government is in active talks with Facebook (NASDAQ:FB), Google (GOOG, GOOGL) and a wide array of tech companies and health experts about how they can use location data gleaned from Americans' phones to combat the novel coronavirus. The data could help officials predict the next hotspot or decide where to allocate overstretched health resources, The Washington Post reports. Privacy concerns? Recent news about Israel's plans to use location data to help track COVID-19 already sparked intense discussions about legal and ethical implications.
Echoing the NBA-China controversy that blew up last October, Beijing said it would expel American journalists working in the country for The New York Times (NYSE:NYT), The Wall Street Journal (NASDAQ:NWS) and The Washington Post. It continues a tit-for-tat fight that began in February after the Journal ran an opinion article entitled, China Is the Real Sick Man of Asia. In response, Secretary of State Mike Pompeo imposed a cap on the number of employees permitted to work for Chinese government-controlled media organizations in the U.S. (down to 100, from 160).
Grocery store stocks raced higher on Tuesday as traffic accelerated with the number of coronavirus cases growing and dining out no longer an option in some parts of the country. Kroger (NYSE:KR), the largest supermarket chain in the U.S., has even hired more than 2,000 people in the last week to keep up with increased demand. "We're hiring every day," CEO Rodney McMullen told CNBC, adding that the company, which also owns Harris Teeter and Fred Meyer, has more than 10,000 openings.
Independent sellers, as well as vendors who supply items for Amazon (NASDAQ:AMZN) to resell, will be unable to ship products other than such high-demand items to company warehouses until April 5. "As COVID-19 has spread, we've recently seen an increase in people shopping online," reads a memo. "So in the short term, we are temporarily prioritizing household staples, medical supplies, and other important products coming into Amazon fulfillment centers so we can more quickly receive, restock, and deliver these products to customers."
What else is happening...
Coronavirus updates - 'wristbands on arriving passengers'
King Dollar spells trouble for emerging markets.
The U.S. economic response is encouraging - El-Erian.
In Asia, Japan -1.7%. Hong Kong -4.2%. China -1.8%. India -6.1%.
In Europe, at midday, London -4.9%. Paris -4.7%. Frankfurt -4.8%.
Futures at 6:20, Dow -3.9%. S&P -3.7%. Nasdaq -4.4%. Crude -5% to $25.61. Gold -1.5% to $1503.30. Bitcoin flat at $5234.
Ten-year Treasury Yield +1 bps to 1.12%