Written by Gary
US economy contracted in the first quarter at its sharpest pace since the Great Recession (SPY +2.6%). Fed leaves rates near zero, sees virus-related risks lingering – bigger hit still to come.
The Market in Perspective
| Here are the headlines moving the markets. | |
 | Coronavirus savages U.S. economy in first quarter; bigger hit still to comeThe U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession as stringent measures to slow the spread of the novel coronavirus almost shut down the country, ending the longest expansion in the nation’s history. |
| Wall St. surges on promising coronavirus drugU.S. stocks surged on Wednesday as expectations of an effective COVID-19 treatment prompted a broad rally and helped investors shrug off bleak GDP data and words of warning from U.S. Federal Reserve Chair Jerome Powell. |
| Fed keeps rates steady, vows to maintain coronavirus measuresFederal Reserve policymakers on Wednesday left interest rates near zero and repeated a vow to do what it takes to shore up the economy, saying the ongoing coronavirus pandemic will “weigh heavily” on the near-term outlook and poses “considerable risks” for the medium term. |
| Fed leaves rates near zero, sees virus-related risks lingeringThe Federal Reserve on Wednesday left interest rates near zero and repeated a vow to use its “full range of tools” to shore up the U.S. economy amid an ongoing coronavirus pandemic that will not only slam growth in the near term but pose “considerable risks” in the medium term as well. |
| Exclusive: Chesapeake Energy preparing bankruptcy filing – sourcesChesapeake Energy Corp , the oil and gas exploration and production company that was at the forefront of the past decade’s U.S. shale boom, is preparing a potential bankruptcy filing as it grapples with an unprecedented rout in energy prices, people familiar with the matter said on Wednesday. |
| Exclusive: Amazon turns to Chinese firm on U.S. blacklist to meet thermal camera needsAmazon.com Inc has bought cameras to take temperatures of workers during the coronavirus pandemic from a firm the United States blacklisted over allegations it helped China detain and monitor the Uighurs and other Muslim minorities, three people familiar with the matter told Reuters. |
| Amazon is Wall Street’s biggest winner from coronavirusNo company’s stock market value has benefited more from the coronavirus pandemic than Amazon.com’s. |
| Volkswagen, Toyota delay restarting U.S. productionVolkswagen AG and Toyota Motor Corp said Wednesday they will delay restarting U.S. production amid the coronavirus pandemic and concerns about the automotive supply network. |
| GE warns of more pain ahead as pandemic deals $1 billion cash hitGeneral Electric Co said on Wednesday the coronavirus pandemic dealt a $1 billion blow to cash flow at its industrial business in the first quarter, while total revenue fell almost 8% and the company warned the damage would worsen in the next three months. |
| Facebook Shares Explode Higher After Big Q1 Beat, Warns Of “Significant” Drop In Ad Spend In Last Few WeeksFacebook Shares Explode Higher After Big Q1 Beat, Warns Of “Significant” Drop In Ad Spend In Last Few Weeks Facebook shares are soaring after hours – back above $200 – after beating top and bottom lines as well as better than expected daily- and monthly-active users, and engagement improved… 1Q EPS BEAT $1.71, Est. $1.71 1Q Rev. BEAT $17.74B, Est. $17.27B 1Q Ad Rev. BEAT $17.44B, Est. $17.10B 1Q Daily Active Users BEAT 1.73B, Est. 1.68B 1Q Monthly Active Users BEAT 2.60B, Est. 2.34B All good news, but they do warn on revenues going forward (though do not offer guidance)…
But the market doesn’t care – it’s panic- … |
| Fauci & The Fed Distract Stocks From Crushing Collapse In Economy, Gold SpikesFauci & The Fed Distract Stocks From Crushing Collapse In Economy, Gold Spikes Seconds before the US GDP print, a well-timed report (and aggressively disseminated by mainstream media) on marginal success in a COVID therapy (mortality rates improved from 11.6% to 8.0%), which was then promoted by Fauci (who played down another study from The Lancet that showed no effect from the COVID therapy), distracted the stock market algos just enough from the economy’s worst collapse since 2008 (and devastation in consumption)… |
| Global Economic Activity May Have ‘Bottomed’ But Don’t Expect Any ‘V-Shaped’ Recovery; FathomGlobal Economic Activity May Have ‘Bottomed’ But Don’t Expect Any ‘V-Shaped’ Recovery; Fathom A new report from Fathom’s Recession Watch indicates global economic activity may have troughed in the last several weeks, but that doesn’t guarantee a V-shaped recovery. We noted on Tuesday that Goldman Sach’s coronavirus activity tracker showed some signs of life amid an unprecedented collapse in aggregate demand. Here are the highlights from Fathom’s report: Global economic activity may have hit its trough in the past couple of weeks But output is likely to remain below pre-COVID 19 levels for an extended period It is unclear how much restrictions can be relaxed while keeping R below 1 Excess mortality data from a range of countries suggest official figures understate the COVID-19 impact on deaths Fathom points out that relaxation in strict social distancing measures has been seen in Europe and the US. It suggests that global economic activity could be finding a trough. Shown below, the bottom in air travel occurred 12 days ago. The report said, “Global GDP may have stopped declining, but is still at levels well below those from just a few months ago.” |
| Saks Fifth Avenue Is Latest Mall Anchor To Prepare For Bankruptcy FilingSaks Fifth Avenue Is Latest Mall Anchor To Prepare For Bankruptcy Filing Macy’s, JCPenney, Neiman Marcus, and now Saks Fifth Avenue: in just a few weeks, the four core pillars and anchor tennants of the US mall sector will file for bankruptcy. While we previously reported that the former two retail icons had entered their bond grace period ahead of filing a formal Chapter 11 bankruptcy petition, on Wednesday afternoon Bloomberg reported that Hudson’s Bay Co had also missed its April payments on at least two commercial mortgage-backed securities that were part of $696 million in financing for Saks Fifth Avenue and other stores. The securities, originated in 2015, were current until this month when the company missed interest-only debt payments totaling only $3.2 million, according to data compiled by Bloomberg and a person familiar with the matter. According to Bloomberg, the missed payments were on securities that financed 34 properties – 10 Saks and 24 Lord & Taylor stores. The Saks locations include Beverly Hills, California, Atlanta, Chicago and Miami. Demonstrating the shock to the retail sector over the past month, almost 11% of retail CMBS loans were as much as 30 days delinquent this month, up from 1.7% in March, according to an April 23 report by the CRE Finance Council, a commercial real estate trade group. Hudson’s Bay, which aggressively rolled up the retail sector earlier this decade, operates chains of retail stores which have been hit hard by social-distancing guidelines that have frozen much the economies in the U.S. and Canada. Of course, the coronavirus crisis only exacerbated stress faced by department stores … |
| India chalks out plan to fill in export void left by ChinaIndia chalks out plan to fill in export void left by ChinaMedical textiles, electronics, plastics are some sectors whose exports can be promoted in coming months. |
| How India can avoid Franklin-like repeatHow India can avoid Franklin-like repeatIn addition, these recent crises need to be used as a trigger for basic regulatory and banking reforms. |
| Will India lift lockdown on May 4? Read thisWill India lift lockdown on May 4? Read thisAccording to ministry’s statement, relaxations will be extended to districts that have done well so far. |
| In One Chart: These public companies are returning emergency loans meant for small businessesThe Treasury Department says Paycheck Protection Program loans are not meant for œa public company with substantial market value and access to capital markets and given big borrowers a May 7 deadline. Here’s how the returns are going. |
| The Ratings Game: Apple may not live up to ‘aggressive’ 5G expectations, analyst warnsThe COVID-19 crisis may push some 5G iPhone sales into 2021, but Wall Street could be too upbeat about the company’s growth potential. |
| Trump Today: Trump hosts call with food, agriculture executives after ordering meat plants to stay openPresident Donald Trump on Wednesday hosted a call with leaders from the food and agriculture industries, a day after ordering meat-processing plants to say open amid concerns over the coronavirus’s impact on the U.S. food supply. |
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