FT : Mystery surrounds ‘cured’ patients who tested positive

Mystery surrounds ‘cured’ patients who tested positive
South Korean cases highlight what scientists still do not know about coronavirus

South Korea is desperately trying to find out why scores of cured coronavirus patients tested positive for the disease days later, raising questions over scientists’ understanding of the pandemic.

The Korea Centers for Disease Control this week dispatched a team to Daegu, the country’s fourth-biggest city and the worst affected area from the outbreak, to investigate why 51 people in the city and surrounding areas tested positive again.

Interim findings from the probe are expected to be released within the next week but health officials do not believe the patients were reinfected or remained infectious.

“We say that a patient has fully recovered when he or she tests negative twice within 24 hours. But the fact that some of them tested positive again in a short period means that the virus remains longer than we thought,” Son Young-rae, a spokesman for the health and welfare ministry, told the Financial Times.

The surprise positive tests occurred between two days and two weeks after patients had been released from quarantine. Some had shown symptoms such as fevers and respiratory difficulties, while others were asymptomatic, officials said. Further details were not immediately available.

Jerome Kim, an immunology expert and director-general of the International Vaccine Institute, said experts did not yet have a definitive understanding of Covid-19 and that changes might be required in how health officials assess patient recoveries. 

“There are just some things that we don’t know,” Dr Kim said. “Often when virus infections are waning, you will have intermittent positivity and negativity, particularly at the limit of detection . . . Maybe for infected people the government is going to need to look at that data, and say ‘we need two negative tests or three negative tests in a row over a week’.”

The investigation has also underscored warnings from the KCDC over the need to remain prepared for further outbreaks despite a downward trend in new coronavirus cases in South Korea.

Over the past two months the combination of mass testing, social distancing and high-tech contact tracing in South Korea brought under control what was one of the worst outbreaks outside China.

On Friday, officials reported 27 new cases, the lowest in more than a month and down from the peak of more than 900 in late February.

Mr Son said the findings would be the latest in a series of instances where health officials and policymakers had to be ready to adapt quickly to new knowledge of Covid-19.

“We learn new things in the process of curing patients,” he said. “At first, we thought that asymptomatic people don’t transmit the virus to others but we found in mid-February that we were wrong. It is a new experience for us so we try to adjust our response as we find new facts.”

FT : Why some investors think more big falls are coming

Why some investors think more big falls are coming
‘There’s no such thing as a bear market without a bear market rally,’ says one CIO

When markets were in freefall under the pressure of coronavirus last month, Gregory Perdon was tempted to fall back on a tried-and-tested maxim that has assured investors a healthy profit for the past decade.

“Every portfolio manager is mindful of the mantra to ‘buy the dip’,” said the co-chief investment officer at London-based private bank Arbuthnot Latham. At first, that included him.

“Initially, I thought this would be a V-shaped recovery,” he said — a speedy return to health for the global economy and the capital markets after a short spell of distress triggered at the end of February by virus outbreaks and lockdowns in Europe. “What changed my view was when the Fed came in all guns blazing, and the markets still went red.”

The US central bank slashed interest rates by a full percentage point, among a series of other supportive measures, before markets opened on March 16. The grand intervention was followed by the deepest stock market declines since 1987, triggering Mr Perdon’s change of heart.

Now he focuses his efforts on what he describes as “curbing the enthusiasm” of some colleagues. “There’s no such thing as a bear market without a bear market rally,” he said.

Since their mid-March low, US stocks have gained about 25 per cent, technically lifting them back into a new bull market, albeit one tinged with extreme uncertainty over the outlook for companies and the global economy.


This presents a dilemma for investors. Is it wise to piggyback on the government and central bank support pouring into financial markets and snap up assets while their prices are still beaten up? This could, in years to come, end up being seen as the buying opportunity of a lifetime. Or is the epic shake-out in markets in March just the start of a long, slow decline in riskier assets?

Deep pullbacks are, after all, a common feature of markets in the immediate aftermath of abrupt crises, as was evident in 2001, 2008, and even back to the great US stock market crash of 1929 and the subsequent Great Depression. US stocks did not reclaim their 1929 highs until 1958. Some analysts therefore reckon that the rally since late March is what is often dubbed a “bear market trap”.

Robert Buckland, chief global equity strategist at Citi, points out that a decent rule of thumb is that stock markets fall roughly as much as corporate earnings do. The depth and extent of the global recession indicates that profits should halve this year — but the FTSE All-World index is now back within 20 per cent of its peak.

Fund managers must try to balance the huge scale of central banks’ support — underlined again on Thursday when the Fed announced yet another big support package to the tune of $2.3tn — against economies in deep distress, as seen in a record-breaking acceleration in US job losses.

Not everyone is convinced the stimulus is enough. Bank of America analysts note that US equities have never taken less than six months to find their bottom, once they have tumbled 30 per cent and the economy is in a recession. They therefore predict that markets have further to fall.

“While those banking on a rapid equity market recovery are [expecting] unprecedented stimulus to erase the pain, history would also suggest they may be banking on a miracle,” they wrote in a recent report.

Signs that the coronavirus spread is slowing is not necessarily enough, either. Some analysts point out that while some countries — such as Norway, Denmark, the Czech Republic and Austria — have recently announced plans to gradually end their lockdowns, the economic damage is likely to linger.

Howard Marks, the 73-year-old billionaire founder of Oaktree Capital Management famed for his knack for scooping up bargains at times of economic distress, said in a note this week that with the course of the virus so difficult to predict, and its effects so sprawling, investors should be willing to admit that they simply do not know what happens next.

That is a tough task for a profession that prides itself on making predictions and anticipating their market impact, but “no one can tell you this is the time to buy”, he wrote. “Nobody knows.”

Nonetheless, Mr Marks said that extreme caution was now no longer warranted, given drops in asset prices and the wave of central bank support that has neutralised some systemic risks. He recalled how he and his partner Bruce Karsh snapped up $450m worth of corporate debt each week for 15 straight weeks after Lehman Brothers went bust in 2008.

“What I would do is figure out how much you’ll want to have invested by the time the bottom is reached, and spend part of it today,” he wrote. “Stocks may turn around and head north, and you’ll be glad you bought some. Or they may continue down, in which case you’ll have money left to buy more. That’s life for people who accept that they don’t know what the future holds.”

FT : US is on course for a downward spiral of mortgage failures

US is on course for a downward spiral of mortgage failures
Government policy could exacerbate an already tricky situation

For decades, most American homeowners could believe their house financing was safe. The mortgage company whose representative met them in their office in the local mall existed in a complex but predictable harmony with investors, other banks and companies called servicers, which administer mortgage payments.

Sometimes mortgage rates went down and homeowners could exchange their mortgage for a cheaper one, giving them a few extra dollars to spend with the kids on the weekend.

The system is huge. Total assets of federally supported housing finance entities Fannie Mae ($3.5tn), Freddie Mac ($2.2tn) and Ginnie Mae ($2tn) are close to the total government debt of France, Germany and Italy. If the servicers are not working properly, the paperwork on that is not being sent to the right place every month, the cash is not being routed to the holders of securitised bonds and the system would be in chaos.

Americans, as homeowners, workers and voters, were told last month that everything could go back to normal, that they could use their Covid-19 bailout money to live while locked down.

American politicians know the voter-job-house deal is the one they must continue to deliver, whatever viruses or financial shocks come along. Thanks to bureaucratic and market momentum, as much as Congressional action, US housing sales and finance are stumbling but getting through April. It looks as though significant parts of the system, worth tens or hundreds of billions of dollars, will crash in May.

There was supposed to be a deal in place, admittedly not one that was well thought through, to keep housing finance ticking over. Unfortunately there is one man — an officious regulator named Mark Calabria, the head of the Federal Housing Finance Agency — who has decided that the simple fix to the financial problem caused by the coronavirus pause should not be simple.

Despite the industry’s pleas, Calabria will not arrange for Fannie and Freddie or the Fed to make secured bridge loans to the servicers, which keep track of the documents, mail the accounts to the borrowers and the checks to the bondholders, who own the mortgages.

For its part, Ginnie Mae, directly owned by the government, has agreed to lend crisis money to servicers, which make Calabria’s inaction even harder to understand.

According to Calabria, the payments shortfall for the servicers caused by congressionally mandated loan forbearance is all “spin”. The mortgage bankers who generate most US mortgages are extremely angry with him. For the moment, Calabria has the support of Treasury secretary Steven Mnuchin. Apparently, Calabria has decided that there has to be a “stress test” for the servicers this May, and perhaps for a few months after that.

This works only if it is possible to take live mortgages out of distressed servicers and transfer their work and liabilities to some new bank or servicers, which can perform the same function, ideally without their borrowers triggering high cost “special servicing” that goes to the financially stretched.

Few if any people in the mortgage industry believe that is possible come May or June. They believe there could be a downward spiral of mortgage failures, screwed up documentation, delayed payments and another procyclical acceleration into the hole of depression.

Before the pause driven by the coronavirus and the relief efforts, Mr Calabria and Mr Mnuchin had been vigorously pushing a plan to take Fannie Mae and Freddie Mac out of the government’s protection. They were putting in place something called “administrative recap and release” to the capital markets. Incidentally, friends of the Trump administration who controlled a bit over $33bn in junior preferred stocks would make some speculative profits.

A long list of Republican and Democratic senators, who the administration needs for the next stimulus bill, just circulated a letter that is hostile to Calabria’s plan.

Calabria makes an unlikely villain, but he has become one in the world of housing finance. At this rate, he will do well to collect a fat severance payment at the end of May. For his safety, Congress may have to throw in anonymity through the witness protection programme, and maybe a job under his new name, perhaps teaching slide deck composition at a for-profit online college.

Medium : Coronavirus Might Attack the Brain, Too

Coronavirus Might Attack the Brain, Too
Strange gets stranger as Covid-19 now appears to invade more than the respiratory and digestive systems

Early analyses of Covid-19 patients in January told of the most common symptoms: fever, cough, and difficulty breathing. More diagnosed cases and research revealed less common symptoms, such as vomiting and diarrhea, indicating that in some people, the coronavirus was disrupting the digestive system, not just the respiratory tract.
By late February, we learned of mysterious cases involving no symptoms at all — silent super-spreaders of a deadly disease who didn’t even know they had it and felt nothing. Then, last month, things got stranger, as reports emerged of diagnosed Covid-19 cases in people who had lost their sense of smell yet showed few or no other symptoms of the disease. Along the way, physicians reported some people with Covid-19 experiencing mild cold- or flu-like symptoms, ranging from sniffles to fatigue.
And yet it’s still getting stranger. SARS‐CoV‐2, the coronavirus that causes Covid-19, appears to be attacking people’s brains.

Evidence so far, however, involves only anecdotes from physicians telling of Covid-19 patients initially experiencing confusion, headaches, and other symptoms that may be caused by inflammation of the brain, along with early studies involving small numbers of patients — sometimes just one.
Meanwhile, it’s not clear whether or to what extent the coronavirus attacks the brain directly versus Covid-19’s respiratory effects robbing the brain of oxygen.
“It is very difficult to separate the two,” says Chethan Rao, MD, a practicing physician and associate professor of neurology and neurosurgery at Baylor College of Medicine Medical Center.
Rao suspects both factors are at work. And things can deteriorate quickly. He has seen otherwise healthy Covid-19 patients go from talking normally while receiving a small amount of oxygen to being put on first a ventilator and then a more serious heart-lung support system, all in the space of four hours.

Multiple cases reported
The possibility that Covid-19 is invading the brain directly emerged back in February in a study out of Wuhan, China, the epicenter of the initial outbreak. Then, in March, researchers raised the possibility in the Journal of Medical Virology, stating that this coronavirus, SARS‐CoV‐2, is similar to others that “are not always confined to the respiratory tract and… may also invade the central nervous system inducing neurological diseases.”
Recently, a woman in her late fifties who had experienced three days of cough, fever, and “altered mental status” was tested for flu, which she did not have. Turns out she had Covid-19. Brain scans showed unusual swelling, and physicians diagnosed it as acute necrotizing hemorrhagic encephalopathy, which is “a rare central nervous system complication secondary to influenza or other viral infections which is characterized by altered mental status and seizures, and often this further leads to profound disability or death.”
Other tests were done on the woman to eliminate some other viruses that might cause the diagnosed condition. (Influenza is known to cause, in some cases, encephalitis and its neurological consequences, such as strokes and seizures, Rao says.)
“This is the first reported case of Covid-19-associated acute necrotizing hemorrhagic encephalopathy,” the physicians, from the Henry Ford Health System in Detroit, concluded on March 31 in the journal Radiology. “As the number of patients with Covid-19 increases worldwide, clinicians and radiologists should be watching for this presentation among patients presenting with Covid-19 and altered mental status.”
In another case, a 74-year-old man with preexisting neurological conditions had suddenly lost his ability to speak. He was ultimately diagnosed with Covid-19. “Since Covid-19 affects the elderly more and those with preexisting conditions, patients with prior neurological conditions and acute respiratory symptoms are at an increased risk of encephalopathy on initial presentation,” his physicians wrote.
Getting into the brain
It’s not yet clear how SARS-CoV-2 might be affecting the brain, but experience with other viruses, including the flu, suggests it certainly could make its way there, Rao and others say.
SARS-CoV-2 is rather sneaky, a new study in the journal Nature suggests. The virus enters human cells through a certain type of cell receptor. It appears to often hold initially in the upper respiratory system, mainly in the throat, without typically causing many symptoms there.
Then, in cases destined to become more severe, the virus migrates into the lungs and/or the stomach.
The cells with the right receptors for SARS-CoV-2 are found extensively in the lungs, Rao tells Elemental, explaining why breathing problems are common in severe Covid-19 cases. But those receptors are also found in blood vessels in the blood-brain barrier and in nerve endings, he explains.
“It is definitely possible that the nervous system is being invaded through these means,” Rao says.
Until more definitive research can be done, Covid-19’s mysterious ways are an ever-moving target, says Peter Gulick, DO, an oncologist and infectious disease specialist at Michigan State University’s College of Osteopathic Medicine. And he’s not ready to accept the case studies as proof of what might be happening.
“Acute encephalitis is not a known presentation of Covid-19, even though it has presented with other coronaviruses,” Gulick says by email. “But we will have to continue to follow cases to see if any neurological conditions do occur as a result of Covid-19.”

Medium : Neuroscience Says Listening to This Song Reduces Anxiety by Up to 65%

Neuroscience Says Listening to This Song Reduces Anxiety by Up to 65 Percent
Sure to both stir your soul and calm your nervous system.

Everyone knows they need to manage their stress. When things get difficult at work, school, or in your personal life, you can use as many tips, tricks, and techniques as you can get to calm your nerves.
So here’s a science-backed one: make a playlist of the 10 songs found to be the most relaxing on earth.
Sound therapies have long been popular as a way of relaxing and restoring one’s health. For centuries, indigenous cultures have used music to enhance well-being and improve health conditions.
Now, neuroscientists out of the UK have specified which tunes give you the most bang for your musical buck.
The study was conducted on participants who attempted to solve difficult puzzles as quickly as possible while connected to sensors. The puzzles induced a certain level of stress, and participants listened to different songs while researchers measured brain activity as well as physiological states that included heart rate, blood pressure, and rate of breathing.
According to Dr. David Lewis-Hodgson of Mindlab International, which conducted the research, the top song produced a greater state of relaxation than any other music tested to date.
In fact, listening to that one song — “Weightless” — resulted in a striking 65 percent reduction in participants’ overall anxiety, and a 35 percent reduction in their usual physiological resting rates.

That is remarkable.
Equally remarkable is the fact the song was actually constructed to do so. The group that created “Weightless”, Marconi Union, did so in collaboration with sound therapists. Its carefully arranged harmonies, rhythms, and bass lines help slow a listener’s heart rate, reduce blood pressure and lower levels of the stress hormone cortisol.
When it comes to lowering anxiety, the stakes couldn’t be higher. Stress either exacerbates or increases the risk of health issues like heart disease, obesity, depression, gastrointestinal problems, asthma, and more. More troubling still, a recent paper out of Harvard and Stanford found health issues from job stress alone cause more deaths than diabetes, Alzheimer’s, or influenza.
In this age of constant bombardment, the science is clear: if you want your mind and body to last, you’ve got to prioritize giving them a rest. Music is an easy way to take some of the pressure off of all the pings, dings, apps, tags, texts, emails, appointments, meetings, and deadlines that can easily spike your stress level and leave you feeling drained and anxious.
Of the top track, Dr. David Lewis-Hodgson said, “‘Weightless’ was so effective, many women became drowsy and I would advise against driving while listening to the song because it could be dangerous.”
So don’t drive while listening to these, but do take advantage of them:
10. “We Can Fly,” by Rue du Soleil (Café Del Mar)
9. “Canzonetta Sull’aria,” by Mozart
8. “Someone Like You,” by Adele
7. “Pure Shores,” by All Saints
6. “Please Don’t Go,” by Barcelona
5. “Strawberry Swing,” by Coldplay
4. “Watermark,” by Enya
3. “Mellomaniac (Chill Out Mix),” by DJ Shah
2. “Electra,” by Airstream
1. “Weightless,” by Marconi Union
I made a public playlist of all of them on Spotify that runs about 50 minutes (it’s also downloadable).

There’s also a free 10-hour version of “Weightless” available if you want a longer listening experience.

FT : Inside Bill Ackman’s $2.6bn big short

Inside Bill Ackman’s $2.6bn big short
Hedge fund chief bets on stockmarket recovery after profiting from coronavirus sell-off

In late February, Bill Ackman began worrying about the approaching coronavirus pandemic. The silver-haired billionaire was so concerned about the economic fallout that he even contemplated selling all of the holdings at the investment group he founded almost two decades ago. 

Instead, working from his study at home, Mr Ackman made a series of trades designed to “hedge” Pershing Square’s portfolio, that is, to protect it in the event of a market sell-off. Within a month, the trade had reaped $2.6bn of profits, captivating the hedge fund world and thrusting one of its most controversial stars back into the limelight.

New information, published in Mr Ackman’s letter to investors this week, shows the impact it had on Pershing Square’s portfolio. While its assets are worth just 3 per cent more than they were at the start of the year, it used profits from the trade to vastly increase its stakes in some of America’s most famous companies at knockdown prices. This has set Mr Ackman up to win a second time if he is right and the economy rebounds quickly once the coronavirus shutdown is lifted.

Mr Ackman declined to comment for this article.

The coronavirus hedge marked the first time that Pershing Square had wagered in credit default swaps since the financial crisis. 

At first glance, it was an unusual move for an activist investor who made his fortune by taking big bets on equities, then loudly and publicly defending his point of view. But the mere scale of the latest trade bore the hallmark of an investor whose career has turned on a small number of large bets.

Mr Ackman quietly scooped up a set of huge insurance policies linked to $71bn of corporate debt — ten times Pershing Square’s assets under management. By the time he exited the position, he had paid only $27m in premiums.

The hedge fund industry is no stranger to big bets. Whereas hedge fund manager John Paulson’s financial crisis era “big short” was a highly-complex wager that the US housing market would collapse, Pershing Square’s trade was an opportunistic attempt to protect itself using standard derivative contracts.

Big US banks — primarily Citi, Goldman Sachs and Bank of America — helped Mr Ackman quietly amass the positions. The institutions on the other side of the trade were told their new counterparty was investing outside its normal area of expertise and was willing to pay slightly over the odds for protection against a deterioration in the economic outlook. The three banks declined to comment.

The firepower and flexibility to take this view at scale was enabled by Pershing Square's unusual structure. Unlike most hedge funds, which can face calls from investors to retrieve their money, it raised $2.8bn in a Netherlands stock market listing in 2014. This gave it permanent capital to invest.

The sort of insurance policies Pershing Square purchased are linked to indices of corporate bonds and are widely traded, in many cases easier to buy and sell than the individual bonds on which they are based. 

Conditions for borrowers had been so good for so long that the price to insure against them defaulting was close to the lowest it has ever been: around 50 basis points of the insured amount for investment grade debt, per year. 


According to a person familiar with the trades, Pershing Square built up CDS on $50bn of US investment grade debt, a $18.5bn position in the equivalent European index, and a $2.5bn notional exposure to Europe’s high-yield debt.

Such policies typically last for five years, but Pershing Square paid less than the first month’s $40m premium. By early March, investors were waking up to the implication that stopping the spread of Covid 19 meant entire industries, including airlines, travel and hospitality, would essentially shut down for an unknown period. 

In short order the cost of insuring debt quadrupled. “In the first couple of weeks of March there were a lot of buyers and very few sellers”, said David Riley, a partner at BlueBay Asset Management. 

Mr Ackman had to stomach huge swings in the value of the firm's CDS position as US markets leapt and plunged as well as an enormous $485m yearly premium if he was forced to hold on to it for longer than anticipated. 

On March 13, for example, the S&P 500 rose 10 per cent in a day and the value of Pershing Square’s contracts dropped by $800m, a person familiar with the firm said. This was a hair-raising amount of volatility for a position that had come to represent about 40 per cent of the firm’s assets at its peak. 

Mr Ackman began to sell as fast as he could without alarming the market and after offloading the insurance policies, he had booked a $2.6bn profit.

By the time Mr Ackman made an emotional appearance on CNBC on March 18, he had sold about half the position. His voice cracked as he called on governments “to shut the world for 30 days” to avoid human and economic disaster. Commentators suggested he was trying to send the markets lower, but Mr Ackman told CNBC he was “aggressively buying stocks”. He later added on Twitter that he saw “bargains of a lifetime”. The newly-bullish stance was prompted by what he perceived to be encouraging signs that the Trump administration was dealing with the economic fallout of coronavirus. 

The hedge fund manager doubled down on existing positions in his portfolio — companies that had been hurt by the market sell-off but had business models he believed would thrive in the long term. This included hotel group Hilton Worldwide Holdings, Warren Buffett’s Berkshire Hathaway, and property group Howard Hughes Corporation. Pershing Square also bought back into Starbucks, the coffee chain that it had sold out of at almost twice the price earlier this year. 

These concentrated positions are characteristic of Mr Ackman, whose reputation was made on spectacular bets, such as a $60m investment in General Growth Properties, a bankrupt mall operator that Pershing helped rescue in 2009, which would eventually be worth $3.6bn. 


Despite Mr Ackman’s strong long-term record — Pershing Square has recorded annual investment gains of 14.5 per cent — there have been bumps along the way. Mr Ackman and his co-investors lost almost all of $2bn spent on financial derivatives related to Target, after an activist campaign seeking changes at the US retailer fizzled out.

Then after Pershing Square gained a whopping 40 per cent in 2014, it subsequently suffered a string of bad years, wrong-footed by big bets on pharmaceutical company Valeant, and Herbalife, the multilevel marketing group. Mr Ackman spent enormous amounts of time and money in a high-profile campaign to persuade the US government to investigate what he alleged was a pyramid scheme. The stock market merely shrugged at the consequences of the multiyear probe which resulted.

These setbacks prompted Mr Ackman to take a step back from the public eye. Now Pershing Square’s biggest and best-ever trade has left him in a familiar position: centre stage and resolutely bullish about the stocks he thinks you should own too.

FT : Travel companies face billions in refund payouts

Travel companies face billions in refund payouts
On The Beach chief says operators must reconsider using customer deposits to fund operations

Travel companies must radically rethink their business models after the coronavirus crisis as they face paying out billions in refunds to customers due to the near total shutdown in global travel, the chief executive of On The Beach has said.

Simon Cooper, head of the online travel agent, warned that tour operators and airlines would have to stop using cash deposits for future bookings to support their current operations after the pandemic prompted mass refund claims.

“It’s painful enough being in an environment of zero revenue without being in an environment of zero revenue and having to pay money out,” he told the FT. 

Instead he said that customer money should be put in a ringfenced account that would not be used to meet day-to-day running costs. On The Beach does not pre-book inventory such as hotels and keeps customer money in a trust account until they travel, so does not face the same challenge.

Most airlines and tour operators, including cruise companies, have been refunding customers for cancelled holidays using vouchers and credit notes in order to preserve cash — something that is not strictly permitted under EU law, which says that if a service cannot be provided a cash refund should be given within seven days. The US government has also ruled that carriers must fully refund tickets to passengers.

Iata, the global trade body for airlines, said this week that allowing them to issue vouchers is a matter of “survival” for the industry. It warned that carriers have about $35bn of ticket refunds that are due in the second quarter alone because of cancelled flights. The UK travel trade body ABTA estimates that travel companies owe £4.5bn in refunds.

Last week Germany’s governing coalition sent a letter to the European Commission formally requesting a “short-term, practical voucher solution” and calling for a temporary suspension of rules requiring cash reimbursements.

Other countries, such as Brazil, Canada, Columbia and the Netherlands have also agreed to relax refund rules which airlines have called a “vital time buffer” to help the sector deal with its cash problems.

Tui, the world’s largest tour operator had €2.9bn of customer deposits on its balance sheet at the end of September according to its annual report, but said the majority of that had already been paid out to hoteliers and other suppliers as prepayments. 

Like most travel companies and airlines it has been forced to halt virtually all operations as airspace and international borders have shut.

Tui has secured a €1.8bn bridging loan with German state bank KfW but one industry executive warned that given the potential scale of refund payouts, this would only provide a starting point to support the company through the crisis.

“That loan gets German business through next three months,” they said. “This is not a bailout, this is a first instalment.”

Tui said that it supported the proposal of a voucher scheme but said that discussions were “ongoing”. 

German carrier Lufthansa, which is in talks with the government about its rapidly diminishing liquidity after grounding almost all of its planes, has called for a voucher system to be approved.

Mr Cooper added that the result of giving customers credit notes was that the companies were being bailed out “at the expense of the consumer” and that regulators were “sitting on their hands”.

>>> Weekly Update

Weekly Market Update: Optimism and more stimulus plans drives markets higher


Animal spirits were reanimated this week leading to the largest weekly percentage gains for US stocks since the 1970s. Underlying sentiment was buoyed by the fact that coronavirus infection curves continued to signal that stringent government lockdown measures have started to gain traction in slowing the spread. Investors were further heartened by a resurgence in corporate bond markets. A series of high yield corporate bond offerings for some of the firms hardest hit by the Covid-19 crisis were successfully tapped by investors, albeit at significantly elevated rates. Crude prices attempted to stabilize off the recent lows on hopes OPEC+ producers could reach an agreement to cut production, paving the way for broader coordinated production cuts at Friday’s G20 energy meeting.

Thursday saw the Fed’s latest ‘shock and awe’ announcement overshadow another historically dismal weekly initial jobless claims reading of more than 6M. The US Federal Reserve and Treasury announced details of a new Main Street lending facility that could unlock more than $2T in loans. The new program includes an extraordinarily broadened range of assets that are now eligible as collateral, including CMBSs, CLOs, ETFs, and corporate debt, including high-yield. Chairman Powell emphasized yet again that there's really no limit to the Fed’s ability to lend and that the Fed will not be in a hurry to withdraw the new relief programs as the economy rebounds. Coming into the session, US stock markets were already higher by nearly 10% on the week and continued to move higher as the Fed announced the long-anticipated Main Street measure. The S&P tested the 50% retracement of the decline off February’s all-time high to the March 23rd low. The HYG high yield ETF surged 7% while sectors like mortgage servicers, retailers, and travel saw another influx of buying. Gold prices broke out to a fresh 7-year high. For the week, the S&P surged 12.1%, the DJIA rose 12.7%, and the Nasdaq climbed 10.6%.

In corporate news this week, ExxonMobil announced it would reduce its capex by 30% to $23B in order to address low oil prices and weaker demand. McDonald’s saw its SSS drop 22% in March amid the COVID-19 pandemic and also announced a cut to its capex. The return of Boeing’s 737 MAX ran into new hurdles as regulator test flights were postponed to May and two new software issues were discovered, though unrelated to its anti-stall MCAS system. The Saudi Arabia Public Investment Fund disclosed a stake in Carnival Corp., boosting shares of the cruise line. Gilead announced it is ramping up production of its experimental coronavirus drug Remdesivir, while Novavax accelerated the initiation of its first-in-human coronavirus vaccine trial to mid-May. Despite Zoom Video’s booming popularity during the global lockdown, shares came under pressure recently amid privacy concerns and potential congressional scrutiny. Disney+ global paid subscriber count passed 50M members, nearly doubling since early February. Nintendo suspended its shipments of the Switch game console in Japan amid supply chain disruptions and demand surge caused by COVID-19.


SUN 4/5
(RU) Russia and Saudi Arabia with other large producers said to be in talks for a deal that will stop the price of oil from declining, despite remaining negative in the press - financial press

MON 4/6
(US) US agencies announce changes to the community bank leverage ratio; community bank leverage ratio requirement won't be re-established at greater than 9 percent until 2022
(US) New York state reports 130,689 confirmed coronavirus cases, +7% (prior 122,031, +7.3% d/d); deaths rise to 4,758, +14.4% d/d (up from 4,159, +14.4% prior)
(UK) UK PM Boris Johnson taken to intensive care as COVID-19 condition worsens; asks Foreign Sec Dominic Raab to be deputized for him where necessary - press
005930.KR Reports prelim Q1 (KRW) Op 6.4T v 6.2Te (+2.7% y/y); Rev 55.0T v 55.4Te (+5% y/y)

TUES 4/7
066570.KR Reports Q1 prelim (KRW) Op 1.09T v 876Be, Rev 14.7T v 15.3Te
NIO Reports Mar deliveries 1.5K units, +116.8% m/m
XOM Cuts FY20 Capex by 30% to $23B, cash Opex by 15%; Maintains long-term outlook and dividend
*(US) FEB JOLTS JOB OPENINGS: 6.882M V 6.500ME
(US) Sen Maj Leader McConnell: calls for immediate funding increase for PPP for small business loans, wants it as soon as Thurs
*(US) FEB CONSUMER CREDIT: $22.3B V $14.0BE

WEDS 4/8
HEIA.NL Withdraws all guidance for FY20 due to Covid-19; Guides Q1 total consolidated volume -4% organically with beer volume around -2%; Impact to worsen in Q2
NVAX Identifies Coronavirus Vaccine Candidate; Accelerates initiation of first-in-Human Trial to Mid-May
MCD COVID-19 update: Q1 SSS -3.4%, SSS declined significantly in March; withdraws FY20 outlook, reducing capex
(US) NIH's Fauci: beyond this week, should see beginning of a turnaround; expected coronavirus deaths now look less than thought earlier, no doubt due to social distancing
*(US) DOE CRUDE: +15.2M V +9.5ME; GASOLINE: +10.5M V +5ME; DISTILLATE: +0.5M V +1ME
(US) Bernie Sanders reportedly dropping out of presidential race - press

THURS 4/9
UBSG.CH Guides Q1 Net ~$1.5B v $1.14B y/y; To pay 2019 dividend in 2 installments following request from Switzerland regulator FINMA; to pay dividend of $0.365/share and special dividend of $0.365/share [the total equals the previously announced 2019 dividend of $0.73/share]
(UK) Treasury and BOE temporarily extend a Ways and Means Facility to provide a short-term source of additional liquidity
(US) NIH's Fauci: fatalities looking more like 60K than 100-200K; think we are at beginning of NY turning virus corner and flattening of virus curve
*(US) MAR PPI FINAL DEMAND M/M: -0.2% V -0.4%E; Y/Y: 1.3% V 0.5%E
*(US) INITIAL JOBLESS CLAIMS: 6.61M V 5.50ME; CONTINUING CLAIMS: 7.46M V 8.24ME
*(US) FED TAKES ADDITIONAL STEPS TO PROVIDE $2.3T IN LOANS TO SUPPORT ECONOMY; TO OFFER $600B IN LOANS THROUGH 'MAIN STREET LENDING PROGRAM'; TO INCREASE PRIMARY AND SECONDARY MARKET CORPORATE CREDIT FACILITIES; TO SUPPORT STATE AND CITY FINANCES WITH $500B FACILITY
(US) Fed Chair Powell: Fed will act forcefully, proactively, and aggressively until recovery is at hand - prepared remarks
(US) Fed Chair Powell: economy's performance will be dictated by how virus evolves; there's really no limit to Fed lending as long as it's agreed upon with Treasury and supported by the law - Q&A
OPEC+delegate: members agreed to cut production by 23% during May and June; Saudi and Russia will apply the 23% cut from an 11M bpd base (implies cutting to about 8.5M bpd)
(EU) Reportedly EU Fin Mins agree to a €500B economic support package - press