Archives of “April 2020” month

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Coronavirus – UK PM Boris Johnson is receiving oxygen in intensive care unit

  
Analysis, Politics
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Comments from an unnamed official:

  • Johnson is receiving oxygen in intensive care unit
  • But is not on a ventilator
I said yesterday that being taken into hospital is not a sign that all is well. Same goes, but even more so, for being admitted to ICU.
The UK health system is already stretched for resources with the outbreak, and Boris Johnson would be the last person in the country to want to place more strain on the system with an unnecessary admission to intensive care. His condition is obviously very serious indeed. We all are wishing him well for a full and speedy recovery.

JP Morgan’s Dimon sees financial stress similar to the global financial crisis ahead

  
  Analysis
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Jamie Dimon is chief executive officer of JPMorgan Chase & Co.

On the coronavirus pandemic:
  • “At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008” 
  • More specifically for his firm, JPM earnings this year will be “down meaningfully”
  • 180,000, or about 70%, of the firm’s employees are working from home
  • JPM is paying around $1,000 to those whose jobs don’t allow them to work remotely
Adds:
  • people could return to work more quickly if governments made tests widely available
  • to determine who has recovered from the disease
  • “The country was not adequately prepared for this pandemic,”

Dimon is correct on the unpreparedness. Three months of denial from the very top of the US administration that there was even a problem has cause such a tragic escalation in the numbers of lives lost.

BlackRock on ‘unprecedented policy actions to limit the coronavirus shock’

  
  Analysis
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BlackRock is the world’s largest asset manager (circa $7.4 trillion in assets under management)

Given the surging equity markets (more ion this in just a moment) the comments from their latest update might appear stale (ps. these below relate to a credit view, not equities) :
  • Unprecedented policy actions to limit the coronavirus shock and sharply lower valuations have improved the outlook for credit, in our view. 
  • Major central banks are committed to keep rates low and greatly expand their balance sheets. 
More specifically on stocks (bolding mine):
  • We previously downgraded global equities to neutral. The coronavirus outbreak is disrupting economic activity and supply chains. The outbreak also poses risks to corporate earnings, in our view. Accommodative monetary policy is a support. We now favour rebalancing back toward benchmark weights as markets fall.

Major US stock indices rocket higher into the close

  
Analysis, US Market
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Indices all close with gains of over 7%

The major US stock indices rocketed higher into the close.  Reports that another $1.5 trillion of stimulus was leaked to Wall Street executives may have been a catalyst. The major indices are closing with oversized gains with the S&P bringing up the rear with a impressive 7.03% rise
The final numbers are showing:
  • S&P index up 175.03 points or 7.03% to 2663.68
  • NASDAQ index rose 540.15 points or 7.33% to 7913.23
  • Dow rose 1627.46 points or 7.73% to 2679.99

All 30 Dow stocks rose on the day led by:

  • Boeing +19.26%
  • Raytheon Technologies, +15.28%
  • American Express, +13.91%
  • Visa, +11.46%
  • DuPont, +11.0%
  • McDonald’s, +10.4%
The laggards in the Dow 30 include:
  • Procter & Gamble, +2.25%
  • Pfizer, +2.62%
  • Exxon Mobil, +3.09%
  • Verizon, +3.25%
  • Johnson & Johnson, +4.03%

German DAX leads the way higher in the European equitys today

  
Analysis, Global Indices

Major indices higher across the European continent.

The German DAX is leading the way higher in European equity’s today as they look to ease coronavirus restrictions.
The provisional closes are showing:
  • German DAX +5.71%
  • France’s CAC, +4.78%
  • UK’s FTSE 100, +3.10%
  • Spain’s Ibex, +4.13%
  • Italy’s FTSE MIB, +4.0%
Looking at the hourly chart of the German DAX below, the price today moved above its 200 hour moving average (green line in the chart below) for the 1st time since February 21. That is bullish.
Last week the price tested that moving average line, but stalled against the level and moved back lower. The low from last Thursday and Friday was able to find support buyers against its 100 hour moving average (blue line in the chart below). That too was bullish.
In trading today the market gapped above that moving average line and has moved higher through the day.
The next targets would look toward the swing high from last week at 10096 and the swing high from March 25 at 10137. Above that and the 38.2% retracement of the move down from the February high would be targeted at 10371.77.
Getting to and through the 38.2% retracement target would be the minimum retracement for the buyers. Failure to extend above that retracement level, and the move higher is simply a plain-vanilla correction for the index. I would expect the buyers to give up if that retracement level cannot be broken.

Warren Buffett isn’t betting on airlines but might be betting on the yen

  
  Analysis

Berkshire Hathaway to borrow in yen this week

Berkshire Hathaway Buffett
A story you’re probably not hearing much about right now is the surge in corporate borrowing. Lower rates, a demand for cash and the Fed’s ‘buy everything’ policy is leading to records in investment-grade borrowing.
An interesting one that’s going to market this week is Berkshire Hathaway. Warren Buffett’s company is going to borrow in yen this week in a multi-tranche sale with maturities extending to 40 years.
Borrowing in JPY is a relatively new thing for Buffett. He first tapped the yen market in September but he went big with a 430 billion sale (about $4 billion) in what was the biggest-ever issue by a non-Japanese company.
The talk on this issue is an 8-part sale from 3-40 years from +65 to +160 bps. That’s undoubtedly attractive and it may just be a follow-up to the Sept sale. I can’t find anything on the total values here but even if it’s bigger than the Sept sale, the dollar values here aren’t anything close to large by Buffett standards. Still, it’s something to think about.
In other Buffett news, filings late on Friday revealed that he was selling shares in airlines. There had been chatter that he may step up and buy and airline or invest heavily. That’s evidently not the case and airline shares are lower today despite the broad market rally.
So a bet on the yen and a sale of airlines assets? The world is dying to know what Buffett is doing right now and he’s been quiet since the market panic hit. Maybe actions speak louder than words.
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