TheChek News Flow

Nikkei -2.46% Hang Seng -4.01% CSI -4.46% Shanghai -3.52% Shenzen -5.10%

Eur$ 1.1142 CNH 7.0133 CNY 7.0037 JPY 106.46 GBP 1.2330 CHF 0.9475 RUB 73.3850 TRY 6.3438 WTI$ 30.63 -3.47%

S&P -4.79% (Limit Down) NAsdaq -4.55% (LD) EuroStoxx -.96% FTSE -2.90% Dax -.418% SMI -2.60%

Macro :

- Mnuchin Says He Doesn’t Expect U.S. Recession From Virus (2)

- Traders’ Nightmare: Liquidity Vanished When They Needed It Most

- In a Week of Stock Market Horror, Friday the 13th Brings Relief

- Dalio’s Macro Fund Plunged About 20% This Year as Market Tanked

- Israel Rating May Be Cut if Deficit Hits 5% of GDP: Hapoalim

- NYC to Limit Restaurants to Take-Out, Delivery; Close Theaters

Keep an eye on :

- ADP FP : ADP May Not Meet 2020 Targets Due to Coronavirus Impact

- AI FP : Air Liquide Seeks Premium for Hand Sanitizer Unit Sale, FT Says

- AF FP : KLM Aims to Cut Up to 2,000 Full-Time Jobs Due to Virus: ANP

- AKSO NO : Aker Solutions Warns Employees of Possible Layoffs

- ALV GY : Pimco Says Policy Makers Need to Do More to Prevent Meltdown

- ALTR PL : Altri Full Year Net Income EU100.8 Mln

- AZA im : Italy Is Said to Weigh EU300M Takeover of Bankrupt Alitalia

- AAPL US : Apple Store Closures Could Crimp Quarter Sales by 2%, Loup Says

- AML LN : Aston Martin Rights Issue to Proceed, Provide Cash Relief: React

- ATIC SS : Actic Group to Temporarily Lay Off 350 Employees in Norway

- ATL IM : Atlantia Says Italy Highway Traffic Down 4.4% YTD

- BAAYN GY : Bayer Advances Toward Resolving Roundup Litigation

- BP/ LN : BP Is Cutting Spending, Pressing Ahead With Transformation

- BRK/A US : Gates to Step Down From Berkshire Board, Replaced by Chenault

- BA US : Boeing May Be Cut by Fitch Over Coronavirus Impact (2)

- CCL LN : Royal Caribbean, Norwegian Halt Cruises in Response to Virus

- DAI GY : Daimler Postpones April 1 Shareholders Meeting, Dividend Payment

- DANSK DC : Danske Bank Eases Terms for Clients Hit by Coronavirus Fall

- DEMANT DC : Demant Withdraws 2020 Outlook Due to Coronavirus Uncertainty

- DBK GY : Deutsche Bank to Operate Globally in Split Teams, Reuters Says

- ELUXB SS : Electrolux Warns of Financial Impact, Supply Chain Disruption

- FB US : Chenault to Leave Facebook Board as He Joins Berkshire Board

- IAG LN : British Airways Discussed Urgent Financing Need With Banks: FT

- CFN PL : Cofina FY Net Income EU7.15 Mln, +7.5% Y/y; Shares Fall 3.7%

- CSGN SW : Swiss Banks Mull $21 Billion Loan Program for Small Businesses

- FCA IM : Automakers Send Office Workers Home, Keep Plants Running

- FIA1S FH : Finnair Cancels Denmark, Norway, Russia, Poland Flights: IS

- GYC GY : Grand City Properties Sees 2020 FFO I EU220 Mln To EU226 Mln

- HIAG SW : Hiag Immobilien Full Year Ebitda Loss CHF38.4 Mln

- IFX GY : Infineon Agreed to U.S. Security Concessions for Cypress Deal

- LH US : Coronavirus Tests From LabCorp, Quest Will Cost $50 to $100

- MMB FP : Lagardere to Postpone March 25 Investor Day

- LEO GY : Leoni Has Agreement to Boost Liquidity by at Least EU200m

- LEO GY : Leoni Fully Financed, Can Be Restructured, Experts Say

- LHA GY : Capacity Slash Gives Lufthansa Much-Needed Cash Defense: React

- LHA GY : Lufthansa May Apply for State Aid on Coronavirus

- MC FP : LVMH Will Produce Hand Sanitizer at Three Sites in France

- MT IM : Maire Tecnimont Signs EU200m EPC Contract for Turkey Urea Plant

- NTGY SM : Naturgy Calls Off Shareholder Meeting Due to Spanish Lockdown

- OERL SW : Oerlikon Gets Three China Orders Worth More Than CHF600M

- PNDORA DC : Pandora Has Now Closed 350 Stores Due to Virus, Borsen Says

- RNO FP : Renault-Nissan Halts Barcelona Plant Production Amid Virus

- ROG SW : Roche Gets Clearance for Coronavirus Test That’s 10 Times Faster

- SBRY LN : Sainsbury Raised to Buy at Jefferies

- SAS SS : SAS Temporarily Lays Off 90% of Workforce, Affecting 10,000 Jobs

- SZG GY : Salzgitter Full Year Dividend Per Share Misses Estimates

- SLIGR NA : Sligro Postpones March 18 Shareholder Meeting Due to Coronavirus

- SOON SW : Sonova Suspends Share Buyback Program on Coronavirus

- SWEDA SS : Handelsbanken’s CFO Joins Swedbank as Chief Risk Officer

- FTI FP : TechnipFMC Suspends Planned Split On Covid-19 Market Volatility

- UBSG SW : Swiss Banks Mull $21 Billion Loan Program for Small Businesses

- URW NA : Unibail Says Not Yet Possible to Estimate Coronavirus Impact

- VOW3 GY : VW’s Spain Unit to Halt Production at Martorell: La Vanguardia

- WHA NA : Wereldhave Says Cannot Measure Virus Impact on 2020 EPRA EPS

Fed cuts rates to zero as part of sweeping crisis measures

Bank ‘prepared to use its full range of tools’ to head off global downturn caused by coronavirus pandemic

The Federal Reserve cut interest rates to zero before markets opened on Sunday and joined forces with other central banks in a bid to prevent a severe economic downturn caused by the coronavirus pandemic.

After three weeks of chaotic drops in global stock markets and alarming signs of dysfunction in the US government bond market, the Fed stepped in with tools it has not used since the financial crisis.

The sweeping measures underscore the severity of the damage that the coronavirus has already caused to economic growth, and the threat the virus poses to financial stability.

The Fed dropped its policy rate by a full percentage point to zero, a level not seen since 2015. It also announced wide-ranging actions to support financial markets, including an additional $700bn in asset purchases, expanded repurchase operations, dollar swap lines with foreign banks and a credit facility for commercial banks to ease household and business lending.

“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected,” read a statement from the Fed’s Open Market Committee. “The Federal Reserve is prepared to use its full range of tools.”

The moves follow a brutal spell in global markets, which saw some of the most abrupt declines in stock prices since the financial crisis of 2008, amid mounting fears the coronavirus pandemic would lead to a global recession.

Investors were particularly alarmed by signs that the US government bond market last week was showing signs of strain, with unusual periods when haven bonds weakened despite drops in stock markets. This made it difficult for fund managers to hedge themselves against the turbulence in other markets. The mortgage-backed securities market, which is the second-most liquid market in the world after Treasuries, also seized up.

On Sunday, the Fed said it would increase its holdings of Treasury securities by at least $500bn and its holdings of agency mortgage-backed securities by at least $200bn, in order to “support the smooth functioning of markets” for “securities that are central to the flow of credit to households and businesses”.

“I think it’s a tremendous thing that took place just now, I didn’t know I’d be surprised on a Sunday,” President Donald Trump told reporters.

“I would think there are a lot of people on Wall Street that are very happy. And I can tell you that I’m very happy, I didn’t expect this. And I like being surprised.”

With three hours to go before he stepped down as governor of the Bank of England, Mark Carney and incoming governor Andrew Bailey said in a statement that the co-ordinated action would “improve global liquidity by lowering the price and extending the maximum term of US dollar lending operations,” easing strains in bank funding and aimed at avoiding a squeeze on credit.

The Fed’s announcement came just days after the New York arm of the central bank said it would pump trillions of dollars into the financial system in the form of short-term loans into the repo market — where investors borrow cash in exchange for high-quality collateral like Treasuries — to ease stress in funding markets.

The Fed has been buying Treasury bills at a pace of $60bn per month since October in order to increase the supply of cash reserves available to banks, and amid the market turmoil last week, it sped up the pace of its purchases.

In a separate statement, the New York Fed said it would buy Treasuries of all maturities “at a pace appropriate to support the smooth functioning of markets”. It will begin on Monday by purchasing $40bn of coupon securities and Treasury inflation-protected securities, or Tips. Through April 13, the Fed said it aims to purchase around $80bn in agency mortgage-backed securities.

The Fed also opened its discount window to commercial banks, and urged them to dip into their own capital buffers to extend lending to households and businesses, as the personal-contact service sectors of the economy grinds to a halt as social-distancing becomes the norm.

“These capital and liquidity buffers are designed to support the economy in adverse situations and allow banks to continue to serve households and businesses,” the Fed said in its statement. “The Federal Reserve supports firms that choose to use their capital and liquidity buffers to lend and undertake other supportive actions in a safe and sound manner.”

The US central bank also announced co-ordinated action with peers from Canada, the UK, Japan and Europe, including the Swiss National Bank, to lower the cost of borrowing dollars internationally via existing swap lines.

These swap lines effectively allow global central banks to get access to dollars in exchange for their own currency. The central banks announced that the cost of borrowing dollars would be lowered to 0.25 per cent above the fed funds rate. In addition to existing one week operations, the Fed announced a new 84-day liquidity line would begin from Monday.

“The swap lines . . . serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad,” the Fed said in a statement.

Mohamed El-Erian, chief economic adviser at Allianz, said: “This a massive, co-ordinated and multi-faceted central bank intervention that involves measures from the Federal Reserve that only two months ago would have been deemed unlikely, if not unthinkable. Their immediate aim is to forestall what many correctly feared would be an extremely volatile market open that could also cause damaging market malfunction.”

Gregory Peters, a senior portfolio manager at PGIM Fixed Income, said: “Tonight was an important first step needed to fix the Commercial Paper market, and credit next. The question is, will Fed officials ever get off of zero? It will be hard.”

Prime minister will ask manufacturers to address shortage of vital kit

Boris Johnson will urge business leaders on Monday to lead a national effort to tackle the spread of coronavirus by ramping up efforts to fill a ventilator shortage in the UK.

The prime minister will host a call with companies including Dyson, Unipart Group and JCB, after the government admitted there were just 5,000 machines available in the National Health Service.

The government has already approached manufacturers, including Honda, about the possibility of opening up new production lines at their plants.

The move comes as the Department for Health confirmed on Sunday that 35 people with coronavirus had died while 1,372 people in the UK had now tested positive for the disease.

“Preparing for the spread of the coronavirus outbreak is a national priority and we’re calling on the manufacturing industry and all those with relevant expertise who might be able to help to come together to help the country tackle this national crisis,” a Downing Street spokesperson said.

“We need to step up production of vital equipment such as ventilators so that we can all help the most vulnerable, and we need businesses to come to us and help in this national effort.”

Honda told the FT the government had approached it about using its Swindon factory to manufacture ventilators.

The Japanese carmaker said discussions were at an early stage, and were expected to continue on Monday.

It is understood the discussions are around whether Honda could find space in its factory for impromptu lines to make ventilators, rather than about repurposing its car line, which would involve tearing out expensive and complicated machinery.

Other industry executives said companies could help existing ventilator manufacturers to ramp up production by lending resources, including engineers and technical staff.

“With the right level of resource — with people and funding — you could do this very quickly,” said one executive who had been contacted.

“Industry leaders will be very supportive. This is a critical piece of equipment that could save lives. Industry will pull together. But this has to be driven by Downing Street. The leadership has to make it happen. ”

Another industrial executive added: “If a company already has facilities in the UK that make these products and they want to run them 24 hours a day, seven days a week, we will happily lend them people to run the factories, work in the factories, whatever. If they need to move to 24/7 that is perfectly do-able. We are all willing to help but we need to know what they want to do.”

Chancellor Rishi Sunak used last week’s Budget to pledge a £12bn coronavirus stimulus package including support for businesses and workers who will be hit by the crisis.

Officials are now keeping close tabs on businesses in the UK, with daily calls to many of the major trade bodies from civil servants and ministers.

On Thursday last week, business secretary Alok Sharma held a conference call with trade groups to discuss issues facing companies — it was made clear to those on the call that this would be a more regular event as the government sought to keep businesses in operation.

Separately the government has held discussions with train bosses over the need for emergency measures in the face of falling passenger numbers on the rail network, according to people familiar with the matter.

Industry rail sources suggested the drop off in demand could push train operators to collapse if the government failed to do anything.

One industry source told the FT: “The risk is that the nationalisation of the entire rail system is very likely as nobody will be able to pay the franchise fees with the significant drop of passengers.”

On Monday, Britain’s defence secretary Ben Wallace will update MPs on military involvement in the government’s virus contingency measures with personnel expected to assist with transport logistics and planning.

Military officials said there were no plans to have troops guarding shops or hospitals.

However, if large numbers of police officers fall ill, then Ministry of Defence police could be redeployed to more standard civilian policing roles within forces, including guarding hospitals if that becomes necessary.

Police forces regard it as unlikely, based on the experience of other countries, that there will be social disorder as the outbreak progresses.

Deputy Chief Constable Paul Netherton, the lead on civil contingencies planning for the National Police Chiefs’ Council, said that, while forces planned for the “worst-case scenario”, that did not mean they expected it.

Global sell-off signals end of boom years for asset managers

The world’s three biggest fund managers have seen their assets shrink by an estimated $2.5tn this year as a global sell-off in financial markets heralds a decisive end to the industry’s golden era of growth.

BlackRock, Vanguard and State Street Global Advisors have all seen their assets under management fall sharply as a result of the recent market chaos, during which US stocks fell into bear market territory after more than a decade of gains and the FTSE 100 suffered its worst one-day drop since 1987.

BlackRock’s assets hit a record of more than $7.4tn earlier this year, spurred by its iShares exchange traded fund arm. But that figure has now fallen bynearly $1.4tn to $6tn, according to FT calculations, as global equities crashed, including the S&P 500’s 20 per cent drop since its February peak.

Shares in BlackRock have dropped 28 per cent since their February high, cutting the New York based group’s market value to $64bn. The company declined to comment.

Vanguard’s assets reached $6.2tn in January, fell to $5.9tn by the end of February, and are now tracking at about $5.4tn based on recent market falls. Vanguard said assets had dipped in March but it was “still seeing positive cash flow”, including net investor inflows of more than $77bn in the first two months of the year.

Tim Buckley, Vanguard chief executive, advised investors this month to “stay the course”. He added: “In my 30 years in the business, I’ve seen many market storms. Repricings are inevitable, sometimes violent, but never predictable. Panic and rash action aren’t your ally.”

State Street Global Advisors, a unit of the US custodian bank of the same name, had assets of more than $3.1tn earlier this year. Assuming a fall in line with US equity markets, its assets will have fallen by about $600bn to $2.5tn in the past four weeks. The US group declined to comment.

Jim McCaughan, former chief executive of Principal Global Investors, a US asset manager, said the sector’s resplendant era was probably coming to an end, even before the recent market rout. “But February 2020 will be the point when many people come to realise that it was happening,” he said.

Although all three houses are renowned for their vast passive and exchange traded fund operations, they also have large high-fee-paying active portfolios.

“For active managers in liquid markets, the outlook is very difficult, and declining fees will no longer be countered by market buoyancy,” Mr McCaughan said.

Greggory Warren, senior stock analyst at Morningstar, the data provider, said fund managers had been hit hard by a “one-two punch” of market losses and outflows, which would cut management fees.

He said BlackRock would likely perform better than most listed peers because of its large institutional client base and “fairly diverse” product mix. Just over half of BlackRock’s assets are in equity strategies, 31 per cent in fixed income, 8 per cent in multi-asset classes, 7 per cent in money market funds, and 2 per cent in alternatives.

“February 2020 may well be the golden peak for those Goliaths who thrived from the relentless rise of passive investments,” said Amin Rajan, chief executive of consultancy Create Research. But he added central bank stimulus could see a return to the good times. “Having artificially inflated asset prices for so long, central banks’ credibility will be shot to pieces if markets go into prolonged free fall.”