Reuters - Coronavirus forces cancellation of Paris fashion weeks: statement

Coronavirus forces cancellation of Paris fashion weeks: statement

PARIS (Reuters) - Organizers have canceled the men’s and haute couture fashion weeks in Paris because of the coronavirus outbreak, organizers said.

“In light of the spread of the COVID-19 epidemic worldwide, strong decisions are required to ensure the safety and health of (fashion) houses, their employees and everyone working in our industry,” the Federation de la Haute Couture et de la Mode said in a statement.

The events were due to take place in late June and early July. The federation said it was working on possible alternatives.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Cover story says Washington’s coronavirus relief program may not be enough to bridge the gap of a near-shutdown of the economy or prevent another stock market swoon; Feature looks at a range of stocks that present opportunities amid the downturn
* Cover Story: The financial stimulus and rescue measures signed into law Friday in Washington in response to the coronavirus pandemic will bring people financial relief, but it isn’t clear that they will be enough for the economy to bridge the gap of a near-shutdown or prevent another stock market swoon—one that almost surely is coming; The big issues facing the market have been addressed, and the Cares Act provides enough funding to get even some of the hardest-hit industries through the next two months, but markets—by nature forward looking—may soon want more.
* Tech Trader: SoftBank has numerous problems—it is a large investor in struggling ride-hailing companies UBER, DiDi, and Grab, and there are concerns about Oyo Rooms—but these issues are priced into the stock, which at this point seems undervalued, based on holdings that are worth almost triple SoftBank’s share price.
* Trader: While the next few weeks or months could be bumpy, investors should begin combing through the wreckage of March’s selloff to adjust their portfolios for the market’s next phase, call it a bull or still a bear—but don’t start with defensive sectors like consumer staples or utilities, which have already done their job during the selloff.
* Features: 1) The municipal bond market—where defaults are historically rare—should weather the current storm, and a recent three-week selloff has now enticed bargain hunters looking for yield and safety—the highest-quality munis with maturities of two to 30 years now offer yields in the 1% to 2% range, topping those of comparable U.S. Treasury securities; 2) Positive on DOCU, ZM, EQIX, DLR, CONE, COR, NFLX, TWTR, AMD, LRCX, TSM, MU, AMAT, VIRT, TTWO, EA, ZNGA, NTES, Tencent Holdings, RNG, DELL, HPQ, CHTR, ATUS: Though AAPL, AMZN, GOOGL, and MSFT are set to come out of the downturn as strong as they went in, there are less obvious opportunities to be found amid the current carnage and chaos, according to top tech-focused stock pickers, who offer picks in areas such cloud computing, entertainment, and broadband companies, among others; 3) While efforts to shore up the economy and financial markets and counter the coronavirus outbreak are under way, the delay in mobilizing a policy and healthcare response probably means a far lengthier and more severe crisis for both individuals and businesses; 4) Over the past decade, biotechnology firms and pharmaceutical companies have stockpiled an armament of scientists, laboratories, and capital in the billions of dollars, and those labs could end the current global nightmare of Covid-19—but RBC Capital Markets analyst Brian Abrahams things they aren’t doing enough; 5) “As more Americans have bucked conventional wisdom in recent years and retired while still carrying a home mortgage, the market upheaval has created an opening to consider refinancing,” especially with rates for 30-year fixed-rate loans down, even if it means adding years to payoff dates; 6) Positive on CVS: Chief executive Larry Merlos talks about how the Covid-19 pandemic has put the company’s drugstores and Aetna health plans at the center of efforts to secure supplies, expand testing, and get vital medicines to communities that are locked down—Aetna recently said it would waive copays and deductibles for coronavirus hospitalizations.
* Interviews: 1) Former Reserve Bank of India chief Raghuram Rajan says there’s still time to contain the financial crisis stemming from Covid-19, and that the Fed and Congress are taking the right steps to reenergize the economy; 2) Mervyn King, who led the Bank of England during the financial crisis, sees the coronavirus as a more challenging event—in 2008, policymakers had a pretty clear idea as to the kind of measures that were necessary, while Covid-19 is “a classic example of radical uncertainty.”.
* Profile: Matthew McLennan, co-portfolio manager of the $1.2B First Eagle Gold fund, says he owns gold bullion because the future is uncertain; During times like this, he can make the case to own the precious metal strategically as a potential hedge and not as a bet for higher prices.
* European Trader: Positive on Henkel: The German-listed, family-controlled company that makes Dial Soap, Right Guard deodorant, and Loctite adhesives has the right pieces in place for a solid growth strategy as new chief Carsten Knobel “takes an axe to slow-growth brands and transforms its innovation process.”
* Emerging Markets: “Russia at a headline level is one of the most attractive places on the planet to invest now,” says Justin Leverenz, chief investment officer for developing market equities at Invesco—but Barron’s says that claim may not be valid for at least a year or two.
* Commodities: “Natural-gas prices have dropped to their lowest level in a quarter-century, but they have managed to outperform oil against a backdrop of declining demand fed by efforts to slow the spread of Covid-19.”
* Streetwise: “If you’re a long-term investor, it’s a good time to put money in stocks. Something simple like an S&P 500 index fund is fine,” says columnist Jack Hough. “It isn’t important to time the bottom perfectly—you just have to buy at prices that are reasonable compared with the alternatives, and hold for a long time.”

Barrons : A German Beauty-Product Giant Tries a Makeover. That’s Likely to Boost

A German Beauty-Product Giant Tries a Makeover. That’s Likely to Boost the Stock

Henkel, the provider of beauty supplies, laundry detergent, and adhesives, may soon become unstuck.

The German-listed conglomerate and maker of Dial soap, Right Guard deodorant, Loctite adhesives, Persil detergent, Schwarzkopf hair care, and other products has suffered for years from declining revenue growth.

Shares tumbled 38% in the past five years to about 61 euros ($65), having peaked at €124.55 in 2017. Shares are down about 27% this year.

But a new chief executive is about to take an axe to slow-growth brands and transform its innovation process.

The family-controlled firm—60% is owned by descendants of the founder—has the right pieces in place for a solid growth strategy. The challenge is whether it can deliver.

Assuming Henkel (ticker: HEN.Germany) is successful, analysts at RBC Capital Markets have forecast that the price could rise 36% to its €91 target. RBC Analyst James Edwardes Jones upgraded Henkel to Outperform in a March note, writing that its “growth agenda makes a lot of sense, and while successfully executing it presents a significant challenge, this is a good start. It doesn’t need to be brilliant; it just needs to stop being inadequate.”

Deutsche Bank also estimates that shares will rise 30%, to €90, and Société Générale forecasts shares to climb to €87.

Henkel, which has a market value of €26.2 billion and employs 52,450 workers, fetches 13.5 times this year’s expected earnings and is valued at a 30% discount to its peers. In March, it posted sales of €20 billion for 2019 and €2.9 billion of earnings before interest and taxes. But like most companies, it has a coronavirus risk. It has 12 factories in China, its third-largest market, and has warned that figures for the next quarter will suffer.

CEO Carsten Knobel, who took over in January, said in a statement that “in 2019, our business performance was overall mixed. We had higher ambitions for Henkel and, consequently, will take decisive action to fully leverage our potential for growth and improving financial performance in the future.”

On March 24, Knobel announced that Henkel will donate five million units of personal and household hygiene products globally for customers and communities facing the global Covid-19 pandemic.

The business dates to 1876, when Fritz Henkel, a 28-year-old merchant interested in science, teamed up with two partners to sell detergent in handy-size packets. Within four years, Henkel established its own factory in Dusseldorf and was exporting to Switzerland.

The business floated on the German stock market in 1985 and 10 years later bought beauty firm Schwarzkopf. In 2009, Simone Bagel-Trah became the first woman to head a supervisory board—which advises management—of a DAX 30 company.

Knobel is bringing fresh leadership to the company. He had been elevated from finance director and was the No. 2 during the period of slow growth.

A recent strategic update has been well received. The company has borrowed elements from the successful turnaround at Nestlé, which has been reshaping its portfolio of brands. Henkel said it will divest or discontinue consumer businesses with sales volumes of about €500 million. It will also allow its divisions to work at their own pace on innovation.

What may help Knobel focus on delivering the strategy is that executive pay rewards have been reworked and are less reliant on the short-term goal of earnings per share.

Investors will be hoping that Henkel can clean up when it comes to the value of its shares.

>>> Weekly Market Update

Weekly Market Update: More stimulus bazookas are fired off as conronavirus lockdowns expand


The coronavirus pandemic continued to intensify this week as the hotspots spread to new locations, most notably NYC. By Friday, the number of infections in both Italy and the US had surpassed that of China with only marginal signs that the stringent mitigation measures being implemented in western economies were beginning to bend infection rate curves. The US Federal reserve unleashed one of the largest weapons in its arsenal on Monday when it stated categorically that the central bank could buy “unlimited” amounts of US treasuries and mortgage backed securities. Worries of growing global financial contagion were somewhat assuaged by the audacious move and similar subsequent announcements by the ECB and central banks. Fiscal stimulus plans were also advanced by various governments, most notably the $2.2T package passed by the US Congress on Friday.

Helped by the firehouse of both fiscal and monetary policy stimulus, stock markets mounted an historic bear market rally that started on Tuesday. US indices surged some 20% in a three day rally, the likes of which had not been seen since 1929. The S&P 500 first three day rally in more than a month resulted in a litany of market followers opining that the bottom may very well be in. Treasury yields moved lower amid signs of better functioning in some lending markets which had been viewed as hotspots of dysfunction. The US dollar rolled over too, providing further comfort that dollar funding pressures were subsiding. On the other hand, oil prices remained a flashing waring signal. Anecdotal reports suggesting global storage has been maxed out, supporting a narrative that the supply and demand imbalance is on the verge of pushing crude prices even lower. Amid the historic volatility, the S&P surged 10.2% in its biggest weekly gain since 2009, while the DJIA gained 12.8% and the Nasdaq added 9%.

In corporate news this week, a further flood of companies withdrew full-year outlooks and cut dividends or stock buybacks as the coronavirus obscures any visibility for businesses around the globe. Some companies did release earnings, however. Nike revenue came in higher than anticipated while its gross margins took a hit, though it said 80% of its stores in China have reopened post-coronavirus. Micron beat on its top and bottom line, noting strong demand in its cloud data and personal computing units. Target withdrew its guidance, though said its March month to date comp sales were up over 20% y/y (likely attributable to hoarding of home staples). Yum China said its restaurant traffic is recovering slowly but is still heavily impacted as people continue to implement social distancing measures. Facebook reported seeing some weakening in its ad business due to coronavirus, though it is also posting new usage records almost every day. Chevron cut its capex outlook by 20% along with some other actions to protect its dividend. GE announced it would cut 10% of the workforce in its aviation unit. US Steel cut production, drew down its credit lines, and reduced its FY20 capex by $125M. Caterpillar also withdrew its FY20 outlook, but noted its financial position remains strong, and it plans to continue to run the majority of its U.S. domestic operations. Boeing’s stock had perhaps the most dramatic move of the week, nearly doubling off a 7-year low as the US stimulus package was confirmed to include grants to rescue airlines, though Boeing said it won’t take any direct government aid.


SUN 3/22
*(NZ) RESERVE BANK OF NEW ZEALAND (RBNZ) ANNOUNCES NZ$30B ASSET PURCHASE PROGRAM TARGETED AT GOVT BONDS, across all range of maturities

MON 3/23
(DE) German Cabinet said to have adopted package of €750B in measures to to cushion the fallout from COVID-19 outbreak in an emergency meeting - press
*(US) FED TO BUY UNLIMITED AMOUNTS OF TREASURYS AND MORTGAGE SECURITIES - Statement
AA Asset-backed 30-Day Commercial Paper rates ticked LOWER to 1.84% v 1.98% yesterday; 90-day HIGHER 2.36 v n.a yesterday (1.67% prior) - NY Fed
BA To temporarily suspend Puget Sound production operations for 14-days in response to escalating COVID-19 pandemic

TUES 3/24
*(EU) EURO ZONE MAR PRELIMINARY PMI MANUFACTURING: 44.8 V 39.0E (14th straight month and lowest since Jul 2012)
*(UK) MAR PRELIMINARY PMI MANUFACTURING: 48.0 V 45.0E (1st contraction in 3 months)
F To collaborate with 3M, GE, UAW to speed production of respirators for healthcare workers, ventilators for Coronavirus patients
*(JP) JAPAN PM ABE CONFIRMS THAT TOKYO OLYMPIC GAMES TO BE POSTPONED FOR ONE YEAR
(US) CNBC's Javers: agreement said to be reached on oversight of Treasury Sec fund as part of potential stimulus pact - CNBC
*(US) MAR PRELIMINARY MARKIT PMI MANUFACTURING: 49.2 V 43.5E (lowest since 2009)
AA Asset-backed 30-Day Commercial Paper rates ticked higher to 2.37% v 1.84% prior; 90-day n/a v 2.36% prior - NY Fed
(US) MAR RICHMOND FED MANUFACTURING INDEX: +2 V -15E
*(US) FEB NEW HOME SALES: 765K V 750KE
NKE Reports Q3 $0.53 v $0.55e, Rev $10.1B v $9.87Be
FB Seeing some weakening in ad business due to coronavirus; seeing new usage records almost every day
WWE CEO McMahon entered into a variable prepaid forward contract with an unaffiliated bank covering approximately 3.5 million shares of the Company’s Class B common stock - filing
(US) Federal Reserve to temporarily reduce bank exam activities, with the greatest reduction in activities occurring at the smallest banks; large banks should still submit CCAR capital plans by April 6th
CME To Launch New Gold Futures Contract with Expanded, Flexible Delivery in 100-ounce, 400-ounce or 1-kilo Bars; notes growing demand for broader range of delivery needs for clients; the new contract will provide customers with maximum flexibility in managing physical delivery

WEDS 3/25
BLK To execute bond buying for Federal Reserve - US financial press
*(US) SENATE SAID TO HAVE REACHED A BIPARTISAN AGREEMENT ON VIRUS STIMULUS PLAN - financial press
*(US) FEB PRELIMINARY DURABLE GOODS ORDERS: +1.2% V -0.9%E; DURABLES (EX-TRANSPORTATION): -0.6% V -0.4%E
AA Asset-backed 30-Day Commercial Paper rates ticked lower to 1.71% v 2.37% prior; 90-day 2.50% v n/a prior - NY Fed
MU Reports Q2 $0.45 v $0.38e, Rev $4.80B v $4.66Be
F S&P cuts rating to junk status; cuts one notch to BB+ from BBB-; outlook to Watch Negative from Stable
*(US) SENATE UNANIMOUSLY VOTES TO PASS $2.0T CORONAVIRUS STIMULUS BILL; AS EXPECTED

THURS 3/26
(EU) ECB clarifies that self-imposed issuer 33% limit used in QE will not apply to pandemic emergency purchase program
*(DE) GERMANY APR GFK CONSUMER CONFIDENCE: 2.7 V 7.5E (lowest since May 2009)
*(UK) FEB RETAIL SALES (EX-AUTO/FUEL) M/M: -0.5% V -0.2%E; Y/Y: 0.6% V 1.1%E
*(EU) ECB ECONOMIC BULLETIN: Council decided on a comprehensive package of monetary policy measures
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATE UNCHANGED AT 0.10%; AS EXPECTED; vote was unanimous (9-0)
*(US) WEEKLY INITIAL JOBLESS CLAIMS: 3.28M (record level) V 1.64ME; CONTINUING CLAIMS: 1.803M V 1.791ME
*(US) Q4 FINAL GDP PRICE INDEX: 1.3% V 1.3%E; CORE PCE Q/Q: 1.3% V 1.2%E
(US) Nevada reports Feb casino gaming Rev $1.04B, +3.1% y/y; Las Vegas strip Rev $596.2M, +0.8% y/y
AA Asset-backed 30-Day Commercial Paper rates remained at 1.71% v 1.71% prior; 90-day 1.52% v 2.50% prior - NY Fed

FRI 3/27
*(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY BY 75BPS TO 4.40%; widens rate corridor (intra-policy move)
3328.HK Reports FY19 (CNY) Net 77.28B v 73.6B y/y, NII 144.08B v 130.9B y/y
(UK) PM Johnson has tested positive for COVID-19; to isolate himself at 10 Downing Street - BBC
*(CA) BANK OF CANADA (BOC) CUTS INTEREST RATES BY 50BPS TO 0.25%; Third cut this month

>>> US Close Dow -4.06% S&P -3.37% Nasdaq -3.79% Russell -4.09%

Closing Stock Market Summary

The S&P 500 declined 3.4% on Friday after a rebound effort faded into the close, as investors took weekly profits. The benchmark index had started the session down 4.2%, then cut its losses to just 0.5% after the House passed the $2 trillion stimulus bill in the afternoon.

The Dow Jones Industrial Average lost 4.1%, the Nasdaq Composite lost 3.8%, and the Russell 2000 lost 4.1%.

The stimulus bill will provide relief for U.S. households and businesses, as the rising number of coronavirus infections continues to keep much of America in shutdown mode. On a related note, the U.S. surpassed China and Italy for the most confirmed cases of COVID-19.

Before the close, United Airlines (UAL 32.84, -2.71, -7.6%) said it isn't going to conduct involuntary furloughs or pay cuts in the U.S. before September 30. The extended timeline provided a general sense that management isn't expecting much of a rebound in air travel, saying demand could remain suppressed possibly into next year.

In other words, it may have dampened hope for V-shape economic recovery. The market, meanwhile, had already been losing steam from its rebound effort prior to the memo. At session's end, the S&P 500 energy (-6.9%) and information technology (-4.6%) sectors led today's decline, while the utilities sector (+0.5%) closed higher. 

Within the Dow, shares of Boeing (BA 162.00, -18.55, -10.3%) fell 10% after Treasury Secretary Mnuchin said the company has no plans of using government aid at this time. Procter & Gamble (PG 110.17, +2.79, +2.6%) bucked the broader trend after the stock was upgraded to Buy from Hold at Stifel. 

In earnings news, Lululemon (LULU 32.84, -2.71, -7.6%) reported better-than-expected quarterly results, but shares fell alongside the broader market after a strong week.  

U.S. Treasuries ended the week on a higher note, driving yields lower across the curve. The 2-yr yield declined three basis points to 0.23%, and the 10-yr yield declined six basis points to 0.75%. The U.S. Dollar Index declined 1.0% to 98.36. WTI crude lost another 4.2%, or $0.95, settling lower at $21.65/bbl. 

Reviewing Friday's economic data:

  • Personal income increased 0.6% m/m in February (consensus +0.4%) while personal spending rose 0.2%, as expected. The PCE Price Index increased 0.1% while the core PCE Price Index, which excludes food and energy, rose 0.2%, both as expected.
    • The key takeaway from the report would have been that inflation remains subdued and that the income growth is a plus for consumer spending, but with the subsequent shutdown due to the coronavirus, the key takeaway now is that this February report is cold comfort in a world far different than the one that existed in February.
  • The final reading for the University of Michigan Index of Consumer Sentiment for March was revised down to 89.1 (consensus 95.7) from the preliminary reading of 95.9. The final reading for February was 101.0.
    • The key takeaway from the report is that it captures the leading wave of the change in consumer sentiment, which is deteriorating rapidly in the face of the coronavirus impact on the U.S. economy. According to the report, the 11.9-point drop from February is the fourth largest one-month decline in nearly a half century.

Looking ahead, Pending Home Sales for February on Monday.

  • Nasdaq Composite: -16.4%
  • S&P 500: -21.3%
  • Dow Jones Industrial Average: -24.2%
  • Russell 2000: -32.2%

Reuters : Italy has not reached coronavirus contagion peak: national health chie

ROME (Reuters) - Coronavirus infections in Italy have not reached their peak, the head of the country’s national health institute said on Friday, the day after more than 6,150 people tested positive and 712 died in single 24-hour period.

“We haven’t reached the peak and we haven’t passed it,” the chief of the Superior Health Institute Silvio Brusaferro told a news conference.

However, Brusaferro said there were “signs of a slowdown” in the numbers of people becoming infected, suggesting the peak may not be far away, after which new cases will show a visible downward trend.

“When the descent begins, how steep it is will depend on our behavior,” Brusaferro said, referring to how strictly Italians will continue to respect restrictions on movement imposed by a government lockdown.