>>> What to look at today - 17th of March 2020

U.S. futures advanced and the yen slid in volatile trading after the biggest plunge in Wall Street stocks since 1987. Asia-Pacific shares ranged from a further drop in South Korea to gains in Australia.
Japan’s share benchmark ended up more than 2% after swinging between gains to losses. A day after a record slump, Australia had its biggest surge since 1997. Hong Kong and China fluctuated. S&P 500 and Nasdaq futures reached their limit-up. Europe futures gained. The S&P 500 Index sank 12% Monday, erasing its gain for 2019, after President Donald Trump warned of a possible recession, with economic disruption from the coronavirus potentially extending into summer. Treasury yields rose after plummeting Monday. Australian bond yields climbed back above 1% as traders continue to rush for cash. Oil traded near $30 a barrel after plunging almost 10% in New York.
US After Hours YY +5%, COUP +2.7% up on earnings; AMZN +3.1% higher on hiring news, AIMT +13.2% (up in sympathy on negative DBVT news), PRVB +7.9% (announces temporary pause in patient randomization in Phase 3 PTOECT study; remains on track to complete rolling BLA submission in Q4), CZR +7.7% (has fully drawn on revolving credit as a precautionary measure), TMO +7% (Mad Money mention), GOL +6.5% (will reduce total flight capacity by 60-70% until mid-June),-ve : BE -23.2% (also to delay its 10-K), HQY -7.1%, ZTO -1.3%,DBVT -57.8% (announces that FDA has identified questions regarding efficacy of Viaskin Peanut),

Nikkei +0.06% Hang VSI -0.65% Seng +0.37% Shanghai -0.48% Shenzen -0.55%

Eur$ 1.1150 CNH 7,0123 CNY 7.0023 JPY 106,61 GBP 1.2223 CHF 0.9496 WTI$ 29.96 +4.46%

S&P +3.86%MIB +3.2% SMI +2.58 Nasdaq +3.60% EuroStoxx +3.15% FTSE +3.80% Dax +3.22%

Macro :
- Bridgewater Builds $14 Billion Short Bet Against European Stocks

Keep an eye on :
- AAQ GY : AAP Implantate to Cut Workforce by About 25% This Year
- AF FP : KLM Seeks Reduction of Working Hours for About 70% of Staff
- AAL LN : Anglo American Temporarily Slows Down Quellaveco Project
- AV/ LN : Aviva Says Too Early to Quantify Potential Impact From Covid-19
- BOTB LN : Best of the Best Says Performance is Ahead of Guidance
- BOCH LN : Bank of Cyprus Expects Additional Provisions of EU75M in 4Q
- BME SM : SIX Sees Spanish Approval of BME Tender Offer Until End of 1H
- CNA LN : Centrica Chairman Charles Berry Steps Down, Wheway to Succeed
- CINE LN : Regal Says All Theatres Will Remain Closed Until Further Notice
- DBV FP : DBV Technologies Says FDA Raised Questions on Peanut Drug BLA --> -52%
- EL FP : EssilorLuxottica to Buy Back Up to 3m Shares Through May 27
- GEA GY : GEA Group Full Year Oper Ebitda Meets Estimates
- HOLX US : Hologic Coronavirus Test Gets FDA Emergency Use Authorization
- ILD Fp : Iliad Names Niel Chairman, Sees Decline in FY Italy Losses
- ILD FP : Iliad’s Fiber Broadband Push Pays Off as Market Recovers
- ELG GY : Elmos Semiconductor Starts EU27m Buyback Offer at EU17.50/Share
- KBC BB : KBC Names Koenraad Debackere Chairman, Succeeding Thomas Leysen
- KOMN SW : Komax Full Year Ebit 3.9% Above Estimates
- MERY FP : Mercialys: Anti-Virus Measures Significantly Affect Activity
- NoVOB DC : Novo Drops Concizumab Trials in Phase 3 After Patient Events
- PNDORA DC : Pandora Cuts Outlook, Suspends Guidance on Virus Uncertainty
- UG FP : Opel Plans Short-Time Work at German Plants: Handelsblatt
- PAH3 GY : Porsche Eyes Deeper Overhaul as Virus Outbreak Shatters Industry
- PGHN SW : Partners Group FY Dividend Per Share CHF25.50 Vs. CHF22 Y/y
- ROG SW : Roche Starts Shipments of Covid-19 Tests to Labs Across U.S.
- ROG W : Roche Virus Test, Actemra May Have Little Effect on Sales: React
- SAN FP : Sanofi, Regeneron Virus Therapy Kevzara Faces Roche Might: React
- SHoT SS : Scandic Hotels to Cancel 2019 Dividend, Delay Financial Reports
- SIE GY : Siemens to List Energy Unit as Planned in Fall: Handelsblatt
- SGRE SM : *SIEMENS GAMESA CFO TO EXIT THE COMPANY THIS WEEK: CONFIDENCIAL
- SIX2 GY : Sixt Prelim FY Oper. Rev About EU2.95 Bln; Suspends 2019 Div.
- SQN SW : Swissquote Full Year Net Revenue CHF230.6 Mln
- TECN SW : Tecan Full Year Ebitda CHF122.8 Mln, +11% Y/y
- VET SW : Vetropack Proposes 1:50 Share Split to Both Categories
- VIFN SW : Vifor Pharma Offering by Holder Prices 2m Shares at CHF96/Share
- VIG AV : Vienna Insurance Full Year Pretax Profit Beats Highest Estimate
- VOLVB SS : Volvo Tries to Clear 2020 Decks With Wide Profit Warning: React
- VOW GY : *VW: 2020 `A VERY DIFFICULT' YEAR, CORONAVIRUS POSES CHALLENGES
- VOW GY : Volkswagen Spain to Suspend 10,500 Workers Due to Coronavirus
- VOW GY : VW Says Virus Outbreak Poses ‘Unknown’ Financial Challenges
- WCH GY : Wacker Chemie Sees Possible >EU100m Hit From Coronavirus

>>> US After Hours Summary: YY +5%, COUP +2.7% up on earnings; AMZ

After Hours Summary: YY +5%, COUP +2.7% up on earnings; AMZN +3.1% higher on hiring news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RPAY +11.4%, YY +5%, COUP +2.7%, HUYA +2.6%, TME +1.9%

Companies trading higher in after hours in reaction to news: AIMT +13.2% (up in sympathy on negative DBVT news), PRVB +7.9% (announces temporary pause in patient randomization in Phase 3 PTOECT study; remains on track to complete rolling BLA submission in Q4), CZR +7.7% (has fully drawn on revolving credit as a precautionary measure), TMO +7% (Mad Money mention), GOL +6.5% (will reduce total flight capacity by 60-70% until mid-June), REGI +6.2% (files mixed securities shelf offering), CCL +4% (suspends service across its fleet in North America and will resume them on April 10), NCLH +3.7% (borrowed $1.55 bln as a precautionary measure), AMZN +3.1% (announces it's opening 100,000 new full and part-time positions), TTD +2.7% (expands relationship with Samba TV), BRT +2.6% (to delay its 10-K), LUV +1.9% (withdraws previously issued FY20 financial guidance), UPS +1.8% (to support coronavirus test kit deliveries), MCD +1.4% (to close all company-owned restaurants seating areas), OXM +1.2% (announces temporary closure of all owned retail stores and restaurants in North America), INSM +1.1% (suspends guidance; announces NDA submission for ARIKAYCE in Japan; announces option exercise by AZN), HGV +0.4% (withdraws FY20 guidance; authorizes new $200 mln repurchase program)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: BE -23.2% (also to delay its 10-K), HQY -7.1%, ZTO -1.3%

Companies trading lower in after hours in reaction to news: DBVT -57.8% (announces that FDA has identified questions regarding efficacy of Viaskin Peanut), RTIX -1.9% (to delay 10-K; co is conducting internal investigation of current and prior period matters), PXD -1.1% (to reduce 2020 capital spending)

>>> US Close Dow -12.93% S&P -11.98% Nasdaq -12.32% Russell -14.27%

Closing Market Summary: Crisis of confidence fuels biggest losses since 1987

There was a crisis of confidence in the stock market today, which led to the worst day of losses since the crash of 1987. The Dow Jones Industrial Average declined 12.9%, the S&P 500 fell 12.0%; the Nasdaq Composite dropped 12.3%; and the Russell 2000 plunged 14.3%.

Confidence was lacking in the monetary policy response; it was lacking in the fiscal response; and it was lacking in the outlook for economic growth and earnings prospects.

The lack of confidence kicked in overnight when the futures market went limit down after the Federal Reserve announced a stunning series of policy measures aimed at supporting the financial markets and the flow of credit.

Specifically, the target range for the fed funds rate was cut by 100 basis points to 0.00% to 0.25%, the discount rate was cut by 150 basis points to 0.25%, a $700 billion quantitative easing program is being implemented, there was coordinated central bank action to enhance liquidity via standing U.S. dollar liquidity swap line arrangements, and bank reserve requirement ratios were reduced to 0.00%, effective March 26.

The policy effort is laudable, yet market participants quickly made it known that it isn't thought to be enough to turn the tide of deteriorating confidence on Main Street and Wall Street.

That confidence has been shaken by a multitude of announcements that made it clear the U.S. economy -- the world's largest economy -- is rapidly sliding into a shutdown mode that will severely curtail earnings prospects and will raise the specter of recession in coming months.

Those announcements included forced closures of restaurants and bars in some states; airlines further cutting their flight capacity further; more and more schools announcing extended closures; Apple (AAPL 242.21, -35.76, -12.9%), and other retailers, announcing that they will voluntarily close their stores; Wynn Resorts (WYNN 54.80, -17.82, -24.4%) and MGM Resorts (MGM 10.25, -5.19, -33.6%) noting they will temporarily suspend their casino/resort operations in Las Vegas; the president recommending to avoid gatherings of 10 or more people; and the city of San Francisco issuing an order for residents to stay inside, except for essential purposes.

In other developments, Canada announced it will be closing its borders to non-citizens, with the exception of permanent residents and Americans. The EU, meanwhile, discussed closing borders for 30 countries to foreigners.

These developments were all part of a mosaic that undermined consumer confidence and investor confidence. The latter was further impacted by a sense of angst that the government has not gone far enough with its fiscal stimulus plans to effectively mitigate the economic fallout from the growing wave of "cocooning" that is expected to lead to a major retrenchment in consumer and business spending and large job losses as a result of that retrenchment.

There was some chatter during the day that the White House is pushing an $800 billion stimulus proposal, half of which would involve a payroll tax cut, and an assistance package for the airline industry. Separately, Senate Minority Leader Schumer was reportedly floating a $750 billion stimulus proposal.

Notwithstanding those ideas, there was nothing concrete as a step-up measure on the fiscal side to alter investor confidence. The end result was wholesale selling of risk assets, which escalated further in the final hour as President Trump and his coronavirus task force conducted a press conference, which featured a suggestion that the trajectory of the virus might not peak until July or August. Importantly, though, it didn't feature any announcement of a fiscal stimulus plan.

The major indices all closed at, or near, their lows for the day, pressured by double-digit percentage losses in ten of the 11 sectors. The lone exception was the consumer staples sector (-7.0%); otherwise, losses ranged from 10.0% (health care) to 16.6% (real estate) in an historic day of trading. All 30 Dow components ended lower, with more than half suffering double-digit percentage losses. Boeing (BA 129.61, -40.59, -23.9%) was the biggest laggard.

Reviewing today's economic data:

  • The New York Fed's Empire State Manufacturing Survey fell to -21.5 in March ( consensus 4.7) from 12.9 in February. The dividing line between expansion and contraction is 0.0.

Tuesday's economic releases will include Retail Sales and Industrial Production for February, Business Inventories for January, and the NAHB Housing Market Index for March.

  • Nasdaq Composite: -23.0%
  • S&P 500: -26.1%
  • Dow Jones Industrial Average: -31.7%
  • Russell 2000: -41.8%

(ZH) VIX Closes At Record High As S&P Breaks Critical Trendline Support

VIX Closes At Record High As S&P Breaks Critical Trendline Support

Just to provide a little focused context on US markets, three major things occurred today:
1) this was the 3rd biggest down day for stocks... ever - Great Depression, 1987 and... now
Source: Bianco Research


2) VIX closed at a record high - higher than the highest close during the Great Financial Crisis...
3) The S&P 500 broke below (and closed below) the 11-year up-trendline from the March 2009 'generational low' for the first time...
And all that amid the most massive monetary intervention ever seen. As we detailed earlier, while this deserves an extended discussion, we will merely point out that each day there a distinct part of the credit and/or funding market is breaking:

  • One day it is ETF NAV discounts blowing out
  • The next day the treasury Treasury/Swap basis surges and basis funds suffer a historic VaR crash amid forced liquidations
  • Day three sees the FRA/OIS explode higher as a massive dollar funding margin call strikes
  • Then, day four sees the same repo crisis that was supposed to be fixed back in September return with a vengeance, as banks freak out about counterparty risk.
What the Fed needs is the monetary equivalent of Dr. House: someone who can diagnose what is actually wrong with the monetary plumbing, instead of using the same old shotgun approach of shoveling trillions in blunt liquidity into the market, which clearly is not working anymore.

FT : European distillers turn to making sanitisers to tackle shortage

European distillers turn to making sanitisers to tackle shortage
Pernod Ricard to supply ingredients while gin makers join LVMH in switching production

Spirits makers from France’s Pernod Ricard to small craft gin distilleries in the UK are joining efforts to boost production of hand sanitisers to help fight the spread of the coronavirus.

The move comes as the UK government prepares regulatory changes to aid a switch in production, and as healthcare systems, businesses and customers in Europe struggle to secure to procure sanitisers, as well as other medical supplies, as infection rates rise. 

Stocks of isopropyl alcohol, a vital ingredient for hand gels and alcohol wipes, is also in short supply in Europe, with prices for the chemical jumping sharply.

Companies that make highly concentrated ethanol or other alcohols are well positioned to either supply ingredients or make anti-bacterial liquids or gels. The World Health Organization advises using an alcohol-based hand rub against coronavirus as an alternative to soap and water.

Pernod Ricard said it will supply alcohol to producers. Olivier Cavil, a spokesperson, said: “We have been mobilising and looking at how we can supply our 96 proof alcohol to partners to produce sanitising gel.” He said work was under way in the UK, France, Ireland and Sweden. “Several options are being considered, and the taxes and regulations in countries may complicate matters.” 

Luxury goods group LVMH announced on Sunday that it would retool production lines in its French perfume factories to produce sanitising gel to be donated to hospitals. Industrials and chemicals companies are also stepping in, with Poland’s biggest oil group Orlen switching to sanitiser production at a plant that normally makes windscreen wiper fluid and industrial oils.

Distillers use 96 proof alcohol as the base for drinks such as gin and vodka but as their factories are not equipped to make gels, some are opting to make liquid sprays, while others like Pernod Ricard are seeking to supply ingredients.

The transition to making hand sanitiser is difficult for UK distillers, for example, because those using denatured alcohol — which cannot be consumed — must be licensed, said Alan Powell, co-ordinator of the British Distillers Alliance. Those using drinkable alcohol face high taxation, at £28.74 per litre of pure alcohol.

HMRC, the UK tax authority, said it could unveil measures as soon as Wednesday to address such issues. Distillers said HMRC already appeared to be fast-tracking licences for those seeking to make hand rubs.

Some small distillers have pushed ahead. Liam Hirt, who runs Psychopomp and Circumstance in Bristol, south-west England, said he started making sanitiser out of hybrid alcohol normally used in whisky and gin, after his child’s nursery ran out.

He has been giving the sanitiser away to local people, asking them to make donations to a hospital in lieu of payment. “We are going to keep it up for as long as we possibly can but we could do with some help,” he said, adding that he had continued paying alcohol duty and hence faces losses from the initiative. 

In Ireland, Bronagh Conlon, owner of Listoke Distillery and Gin School in county Louth, has diverted production to bottled sanitisers, which it is selling at cost price to local companies, doctors’ surgeries and nursing homes, while also donating some to charities. 

“We can’t produce enough,” said Ms Conlon. “We’ve run out of bottles ourselves and other local businesses have been helping us to source bottles.” 

Listoke is producing sanitiser “in around 62-63 per cent-proof” alcohol, in line with WHO guidelines that it must be above 60 per cent proof to kill the Covid-19 virus. “My motivation was just to have something for ourselves, family and friends — and then it escalated big-time,” she said.

>>> President Trump's press conference on COVID-19: Virus could last through Jul

President Trump's press conference on COVID-19: Virus could last through July or August; He is considering quarantine for "hot spots", but not for the entire country
Mr. Trump or members of his administration made the following comments:
  • Restrictions could last through July or August.
  • Italy is having a very hard time right now.
  • He is considering quarantine for "hot spots", but not for the entire country.

>>> Tencent Music beats by $0.11, beats on revs

Tencent Music beats by $0.11, beats on revs
  • Reports Q4 (Dec) earnings of RMB 0.81 per share, RMB 0.11 better than the S&P Capital IQ Consensus of RMB 0.70; revenues rose 35.1% year/year to RMB 7.29 bln vs the RMB 7.08 bln S&P Capital IQ Consensus.
  • Online Music ARPPU increased by 8.1% year over year.
  • Paying users for online music increased 47.8% to 39.9 mln.
  • Monthly ARPPU for online music increased 8.1% yr/yr to RMB9.3.