Archives of “March 2020” month

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Here are the US companies who are hiring

  
  Analysis
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This via Bloomberg, some hiring to offset the job losses elsewhere

Instacart 300,000
Walmart 150,000
Amazon 100,000
Dollar General 50,000
CVS 50,000
Albertsons 30,000
Pizza Hut 30,000
Dollar Tree 25,000
Papa John’s 20,000
7-Eleven 20,000
Dominos 10,000
Kroger 10,000
Walgreens 9,500

Pepsi 6,000
Service, delivery workers. There will be similar developments on other economies (scaled to the size of those economies of course).
These will not entirely offset the job losses ahead. Initial claims this week are seeing estimates, some of 3 million (BoA)

US FDA grants orphan drug designation for potential Covid-19 treatment Remdesivir

  
  Analysis
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This will hasten use of the drug to combat coronavirus

  • OOPD provides incentives for sponsors to develop products for rare diseases
  • program enables the development and marketing of drugs, biologics, and medical devices for rare diseases
  • Orphan Drug Designation Program provides orphan status to drugs and biologics which are defined as those intended for the safe and effective treatment, diagnosis or prevention of rare diseases/disorders that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 persons but are not expected to recover the costs of developing and marketing a treatment drug.
Remdesivir is a nucleotide prodrug that blocks a key enzyme needed for viral replication

UK PM Johnson announces lock down effort in response to coronavirus threat

  
  Analysis
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A pre-recorded speech from UK Prime Minister Johnson being broadcast now

  • coronavirus is the biggest threat UK has faced for decades
  •  “Without huge national effort to halt the growth of this virus, there’ll come a moment when no health service in the world could possibly cope; because there won’t be enough ventilators, enough intensive care beds, enough doctors, enough nurses”
Says people should remain at home, only go out for essentials, medical reasons
  • critical thing is to stop the disease spreading between households
  • people will only be allowed to shop for basic necessities
  • people only allowed one form of exercise a day alone or with members of your household
  • people allowed out for any medical need, or to provide care or to help a vulnerable person
  • people can travel to and from work, but only where this is absolutely necessary and cannot be done from home
  • people should not be meeting friends or family who live outside their home
  • police will have the powers to enforce rules, including through fines and dispersing gatherings

Without a huge national effort, will come a moment when no health service in the world could possibly cope

  • says if too many people become seriously unwell at one time, the health service will be unable to handle it

More:

  • closing immediately all shops selling non-essential goods,​including clothing and electronic stores and other premises including libraries, playgrounds and outdoor gyms, and places of worship
  • will stop all gathering of more than two people, except people you live with
  • we’ll stop all social events​, including weddings, baptisms and other ceremonies, but excluding funerals
  •  restrictions will be kept under constant review
  • we will look again at restrictions in three weeks
  • we will relax restrictions if the evidence shows we are able to
  •  says the way ahead is hard, and it is still true that many lives will sadly be lost

(more…)

US Stocks end the day lower in volatile trading

  
Analysis, US Market

Dow was down -960 at the lows

The major indices close lower on the day. The Dow is on pace for the worst month since 1931.  The major indices to close off session lows. The Dow was down -960 points and is closing down -597.94 points.  Other indices had similar rebounds.

The NASDAQ index tried to close higher, but gave up small gains in the last few minutes of trading to end down -0.27%.
The final numbers are showing:
  • S&P index fell -67.52 points or -2.93% to 2237.40.  The low for the day was down -4.91%. The high was down -0.18% on the day.
  • Nasdaq fell -18.846 points or -0.27% at 6860.67. The low for the day fell -3.61%. The high for the day extended up to +1.53% on the day.
  • The Dow close down -558.05 points or -3.04% to 18591.93. The low for the day was down -5.01%. The high reached up to -0.28% on the day.
Price action is getting increasingly volatile. Each of the indices jumps up and down at large increments suggesting liquidity conditions are not right. Today, the New York Stock Exchange traded all shares electronically as their floor was closed to specialists and traders.
Dow was down -960 at the lows

Schumer: We’re very close to reaching a deal

  
  Analysis

House minority leader

Both parties need to agree on a deal and the holdup now is that Democrats want more money for states and want oversight on a huge slush fund for corporate bailouts.
Signs have been mixed and you can’t trust anything until the vote but Chuck Schumer says their goal is to reach a deal today and that they’re ‘very close’.
The headlines have helped to reverse some market pressure. There is a vote coming up at the top of the hour. He called it ‘irrelevant’ and said a deal will pass once it’s made.

Full text: Federal Reserve announces extensive new measures to support the economy

  
  Analysis
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Full text of the Federal Reserve announcement

The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time. The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation’s first priority is to care for those afflicted and to limit the further spread of the virus. While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.

The Federal Reserve’s role is guided by its mandate from Congress to promote maximum employment and stable prices, along with its responsibilities to promote the stability of the financial system. In support of these goals, the Federal Reserve is using its full range of authorities to provide powerful support for the flow of credit to American families and businesses. These actions include:

  • Support for critical market functioning. The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy. The FOMC had previously announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. In addition, theFOMC will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases.
  • Supporting the flow of credit to employers, consumers, and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing. The Department of the Treasury, using the Exchange Stabilization Fund (ESF), will provide $30 billion in equity to these facilities.
  • Establishment of two facilities to support credit to large employers – the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.
  • Establishment of a third facility, the Term Asset-Backed Securities Loan Facility (TALF), to support the flow of credit to consumers and businesses. The TALF will enable the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration (SBA), and certain other assets.
  • Facilitating the flow of credit to municipalities by expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities, including municipal variable rate demand notes (VRDNs) and bank certificates of deposit.
  • Facilitating the flow of credit to municipalities by expanding the Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities. In addition, the pricing of the facility has been reduced.

In addition to the steps above, the Federal Reserve expects to announce soon the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the SBA.

The PMCCF will allow companies access to credit so that they are better able to maintain business operations and capacity during the period of dislocations related to the pandemic. This facility is open to investment grade companies and will provide bridge financing of four years. Borrowers may elect to defer interest and principal payments during the first six months of the loan, extendable at the Federal Reserve’s discretion, in order to have additional cash on hand that can be used to pay employees and suppliers. The Federal Reserve will finance a special purpose vehicle (SPV) to make loans from the PMCCF to companies. The Treasury, using the ESF, will make an equity investment in the SPV.

The SMCCF will purchase in the secondary market corporate bonds issued by investment grade U.S. companies and U.S.-listed exchange-traded funds whose investment objective is to provide broad exposure to the market for U.S. investment grade corporate bonds. Treasury, using the ESF, will make an equity investment in the SPV established by the Federal Reserve for this facility.

Under the TALF, the Federal Reserve will lend on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. The Federal Reserve will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. Treasury, using the ESF, will also make an equity investment in the SPV established by the Federal Reserve for this facility. The TALF, PMCCF and SMCCF are established by the Federal Reserve under the authority of Section 13(3) of the Federal Reserve Act, with approval of the Treasury Secretary.

These actions augment the measures taken by the Federal Reserve over the past week to support the flow of credit to households and businesses. These include:

  • The establishment of the CPFF, the MMLF, and the Primary Dealer Credit Facility;
  • The expansion of central bank liquidity swap lines;
  • Steps to enhance the availability and ease terms for borrowing at the discount window;
  • The elimination of reserve requirements;
  • Guidance encouraging banks to be flexible with customers experiencing financial challenges related to the coronavirus and to utilize their liquidity and capital buffers in doing so;
  • Statements encouraging the use of daylight credit at the Federal Reserve.

Taken together, these actions will provide support to a wide range of markets and institutions, thereby supporting the flow of credit in the economy.

The Federal Reserve will continue to use it full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals.

Read it here.

Dollar heading lower after the Fed increases the QE pipeline

  
  Analysis

Stocks rocket higher

The Fed came in and threw “all but the kitchen sink in” (they did not say they were buying ETFs or stocks).  The Dow was down about 900 points over night. It is implying a gain of 417 currently (and changing rapidly).  That is the good news. The not so good news is the uncertainty from the virus and the economic impact and implications going forward.  However, the Fed, through the banks, continue to open up the spigots to provide liquidity.
The dollar has moved lower on the news:
EURUSD:
The EURUSD has shot to new session highs at 1.0790. The next upside target is the swing low from March 18. The price moved above that level on Friday to a high of 1.0830. The falling 100 hour MA is currently at 1.08276, near that high from Friday. Get above each and the price will target the 38.2% at 1.0866 (from the March 16 high).  That was the last time the price seriously tested the 100 hour MA.  The 50% of the same move comes in at 1.09366.

Stocks rocket higher

USDPY

The USDJPY has moved down to test a lower trend line at 109.71. The 38.2% of the move up from the March 18 low comes in 109.683.  The low reached 109.80 but has bounced back higher as traders rethink, the move in this currency. The current price is currently at 110.279.
Stocks are higher and that tends to support the USDJPY but the price action of late has been into the USD despite the falling stocks.   It is tricky currency, but what we know technically is the trend line at 109.71 and the 38.2% nearby at 109.683 need to be broken to hurt the technical bias.
USDJPY
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