Weekly Market Update: Pandemic numbers climb, hitting March data hard
US equity markets resumed moving lower this week amid the ongoing coronavirus pandemic. Confirmed cases globally topped 1M, with a quarter of the numbers in the US alone. The situation remained extremely dire, particularly in NYC and parts of Europe as deaths continued to climb and health care systems cracked under the intense strain. US March payrolls shrunk by a staggering 701K jobs and that number likely didn’t incorporate the full impact of state government lockdowns that have been enforced since the survey week. Initial jobless claims jumped above 6.5M nearly doubling consensus estimates, marking the second straight week of record highs.
Crude futures surged some 45% off the lows late in the week after President Trump indicated the Saudis and Russians assured him that they would be willing to resume talks on further coordinated output cuts if the US was willing to participate in production cuts. Friday the President met with US oil executives at the White House and expectations were running high that early next week OPEC+ producers will be able to reach an agreement to cut roughly 10M bpd of output going forward. Friday also saw the US government launch the Paycheck Protection Program (PPP) under the recently passed Cares Act. Treasury Secretary Mnuchin indicated that over $1.8B of relief loans for small businesses had been processed by the SBA by the afternoon of the first day. For the week, the S&P fell 2.1%, the DJIA lost 2.7%, and the Nasdaq declined 1.7%.
In corporate news this week, Xerox ended its hostile takeover bid for HP, blaming the coronavirus turmoil. Carnival Corp launched $6B in debt and stock sales in an effort to weather the virus storm over the next 12 months. Gap, Guess, and Urban Outfitters joined other retailers in extending store closures and furloughing employees. Automakers reported predictably terrible sales results for March, with GM Q1 sales down 7% and Ford down double digits. On Friday, it was reported that Walmart has seen a 20% jump in same store sales as American’s stocked their pantries to ride out the coronavirus pandemic. On the medical front, J&J announced it expects to initiate a Phase 1 study of its COVID-19 candidate by September, while Abbott said it has launched a point-of-care test that can detect novel coronavirus in as little as five minutes.
SUN 3/29
386.HK Reports FY19 (CNY) Net 57.5B v 61.6B y/y; Op 86.2B v 82.3B y/y; Rev 2.97T v 2.89T y/y
MON 3/30
*(DE) GERMANY MAR CPI SAXONY M/M: 0.1% V 0.5% PRIOR; Y/Y: 1.6% V 2.0% PRIOR
*(EU) EURO ZONE MAR ECONOMIC CONFIDENCE: 94.5 V 91.6E
JNJ Announces lead vaccine candidate for Covid-19; Expects to Initiate Phase 1 Human Clinical Studies of Vaccine Candidate at Latest by September 2020 and could be available for emergency use authorization in early 2021
*(DE) GERMANY MAR PRELIMINARY CPI M/M: 0.1% V 0.0%E; Y/Y: 1.4% V 1.3%E
AA Asset-backed 30-Day Commercial Paper rates at 2.05% v 1.95% prior; 90-day 1.81% v 1.61% prior - NY Fed
*(US) MAR DALLAS FED MANUFACTURING ACTIVITY INDEX: -70 V -10.0E
(US) White House reportedly plans to announce tomorrow a rollback from Obama-era auto fuel efficiency standards, allowing a billion tons more CO2 over lifetime of cars than under prior standards - NYT
*(CN) CHINA MAR MANUFACTURING PMI (GOVT OFFICIAL): 52.0 V 44.8E (returns to expansion after record low)
TUES 3/31
SNG.UK Confirms commencement of dosing in trial of SNG001 in COVID-19
*(DE) GERMANY MAR NET UNEMPLOYMENT CHANGE: +1.0K V +25.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.1%E (**Note: data only up to Mar 12 was included)
*(EU) EURO ZONE MAR ADVANCE CPI ESTIMATE Y/Y: 0.7% V 0.8%E; CPI CORE Y/Y: 1.0% V 1.1%E
*(US) MAR CONSUMER CONFIDENCE: 120.0 V 110.0E; Expectations index: 88.2 v 108.1 prior
(US) Dallas Fed March Texas Service Sector Outlook Survey: General Business Activity: -78.8 v 7.0 prior
(US) Pres Trump in tweet calls for $2T infrastructure bill
WEDS 4/1
*(US) MAR MARKIT FINAL MANUFACTURING PMI: 48.5 V 48.0E (lowest final reading since Aug 2009)
GM Reports Q1 deliveries 618.3K v 735.9K q/q; -7% y/y
(CN) Jia County (located in central China's Henan Province) institutes a partial lockdown after finding new coronavirus cases, article notes concerns in China about a second wave related to coronavirus cases - press
(US) Fed announces temporary change to supplementary leverage ratio rule to ease strains in the Treasury market resulting from the coronavirus and increase banking organizations’ ability to provide credit to households and businesses
THURS 4/2
WBA Reports Q2 $1.52 v $1.45e, Rev $35.8B v $35.3Be;
(ES) Spain Mar Net Unemployment Change: +302.3K v +30.0Ke (record increase)
*(US) WEEKLY INITIAL JOBLESS CLAIMS: 6.648M V 3.700ME (record high for 2nd week in a row); CONTINUING CLAIMS: 3.029M V 4.941ME
(RU) Russia Energy Min Novak: coronavirus is having an unprecedented effect on oil markets; an OPEC+ deal would not have any positive effects in current environment
(US) March ISM New York: 12.9 v 51.9 prior (all time low)
(US) Pres Trump: "Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!"
(SA) Saudi Arabia statement: calls for urgent OPEC+ meeting; wants to restore balance to oil market; OPEC+ should seek a fair deal - Saudi press
(US) Virus-related restrictions from China said to be disrupting US air cargo operations, affecting crews and flight scheduling; FedEx and UPS call on US govt to help protect the supply chain – press
(US) Virus-related restrictions from China said to be disrupting US air cargo operations, affecting crews and flight scheduling; FedEx and UPS call on US govt to help protect the supply chain – press
FRI
(US) MAR UNEMPLOYMENT RATE: 4.4% V 3.8%E
(US) MAR AVERAGE HOURLY EARNINGS M/M: 0.4% V 0.2%E; Y/Y: 3.1% V 3.0%E; AVERAGE WEEKLY HOURS: 34.2 V 34.2E
(RU) Russia Pres Putin: Want joint action in the Oil market; situation in the global energy market remains difficult, this undermines investment and threatens the workforce
(US) CDC reports total coronavirus cases in the US to 239,279 , +12.3% d/d (prior from 213,144, +14.5%); Total deaths 5,443 v 4,513 prior, 20.6% d/d v +25% prior
(US) Texas Railroad Commissioner Ryan Sitton (oil regulator): reiterates spoke with Russia energy minister, Texas would be willing to participate in a global coordinated effort to help energy market – CNBC
WMT US SSS +20% in past 4 weeks, up 30% in past 8 weeks - press