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March 24 – Financial Times (Neil Hume and Henry Sanderson): “Gold continued to push higher on Tuesday as a recent wave of selling dried up and Goldman Sachs told its clients the time had come to buy the ‘currency of last resort’. Like other asset classes, gold was hit hard in the recent scramble for US dollars, falling more than 12% from its early March peak… The yellow metal started to see a resurgence on Monday, rising by more than 4% after the Federal Reserve said it would buy unlimited amounts of government bonds and the US dollar fell… ‘We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policymakers act to accommodate shocks such as the one being experienced now,’ said Jeffrey Currie, head of commodities at the Wall Street bank.”
March 25 – Bloomberg (Alex Longley and Javier Blas): “As oil crashes due to the impact of the coronavirus, it’s easy to overlook an even more dismal reality for producers: the real prices they’re getting for their barrels are worse still. Having collapsed by about 60% this year, Brent and West Texas Intermediate crude have stabilized at around $25 a barrel, but the price rout is far deeper for actual cargoes, which are changing hands at large and widening discounts… The discounts mean that in the physical market, some crude streams are trading at $15, $10 and even as little as $8 a barrel. ‘The physical market is in pain, and there is more pain to come,’ said Torbjorn Tornqvist, the co-founder of Gunvor Group Ltd., a large trading house. ‘We will see the full weight of the oversupply in a couple of weeks.’”
March 23 – CNBC (William Feurer):
“Coronavirus RNA survived for up to 17 days aboard the Diamond Princess cruise ship, lasting far longer on surfaces than previous research has shown, according to… the Centers for Disease Control and Prevention.”
March 23 – CNBC (Yun Li):
“Twenty-two days. That’s all it took for the S&P 500 to fall 30% from its record high, the fastest drop of this magnitude in history. The second, third and fourth quickest 30% pullbacks all occurred during the Great Depression era in 1934, 1931 and 1929, respectively, according to data from Bank of America Securities. ‘This is not good company for 2020,’ Stephen Suttmeier, a technical research strategist at the bank, said... ‘The 2020 correction continues to make history, having already claimed the title as the third fastest end to a bull market going back to 1928.’”
March 22 – Wall Street Journal (Julia-Ambra Verlaine): “The global market rout has dealt a particular blow to a trade that intertwines Silicon Valley stock-market favorites with cautious Asian savers and European asset managers. Designed to boost returns during the 11-year bull market, Wall Street’s hunt for yield hatched a multibillion-dollar business betting on volatility itself. The idea functioned well, until the coronavirus pandemic blindsided investors and sent markets swinging at levels unseen since the financial crisis. The Cboe Volatility Index, or VIX—Wall Street’s fear gauge—surged above 80 from 13 over the past month, the S&P 500 and other major indexes plunged and even the Treasury market, usually a stalwart in market turmoil, faced disruptions so severe that the Federal Reserve intervened to prevent further chaos.”
March 25 – New York Post (Ebony Bowden):
“An emergency stimulus package to bail out the US economy amid the coronavirus pandemic will total $6 trillion — a quarter of the entire country’s GDP, the White House said Tuesday. Trump administration economist Larry Kudlow said the package would include $4 trillion in lending power for the Federal Reserve as well as a $2 trillion aid package currently being hammered out by Congress. ‘This package will be the single largest Main Street assistance program in the history of the United States,’ Kudlow said…”
March 23 – Bloomberg (Cecile Daurat, Michael Sasso, Max Reyes, and Edward Ludlow):
“First came the order to close up. Then the laying off of staff. Now small-business owners across the U.S. are bleeding cash and wading through paperwork to get financial assistance… Large swathes of the U.S. are under confinement orders that are becoming stricter by the day as authorities try to contain the coronavirus outbreak. Among the hardest hit are clothing shops and other mom-and-pop stores that are the engine of the economy. The impact is hard to overstate. The restaurant industry alone is set to lose 7.4 million jobs, consulting firm Challenger, Gray & Christmas Inc. estimates. The shutdowns across the country could send the jobless rate spiraling to 30% in the second quarter, Federal Reserve Bank of St. Louis President James Bullard told Bloomberg.”
March 25 – Financial Times (Derek Brower):
“The shale revolution that made the US the world’s biggest oil and gas producer and offered the prospect of energy self-sufficiency has run out of steam, as drillers slash spending and production in response to the price war and coronavirus-led collapse of crude demand. US oil output, now a record high of 13m barrels a day, will begin falling steeply in the second half of this year and could drop 2.5m b/d by the end of 2021… Even a modest further oil price drop could cut US production back by almost 4m b/d, fully reversing three years of increases.”
March 22 – Bloomberg (Erik Schatzker):
“Real estate investor Tom Barrack said the U.S. commercial-mortgage market is on the brink of collapse and predicted a ‘domino effect’ of catastrophic economic consequences if banks and government don’t take prompt action to keep borrowers from defaulting. Barrack… warned in a white paper and in a subsequent interview… of a chain reaction of margin calls, mass foreclosures, evictions and, potentially, bank failures due to the coronavirus pandemic and consequent shutdown of much of the U.S. economy. ‘To keep people employed, you have to support the employers,’ he said… ‘The biggest part of employer expense is rent. When commerce stops and they can’t pay rent and they can’t pay interest on the debt, and then the banks and the intermediaries can’t pay their investors, it all collapses.’”
March 26 – New York Times (Jesse Drucker):
“The federal government’s planned $2 trillion economic rescue package includes financial aid for individuals and industries that are struggling to survive the coronavirus pandemic. It also includes a potential bonanza for America’s richest real estate investors. Senate Republicans inserted an easy-to-overlook provision on page 203 of the 880-page bill that would permit wealthy investors to use losses generated by real estate to minimize their taxes on profits from things like investments in the stock market. The estimated cost of the change over 10 years is $170 billion.”
March 24 – Reuters (Lucia Mutikani):
“Sales of new U.S. single-family homes fell in February after surging in the prior month, and could decline further… New home sales dropped 4.4% to a seasonally adjusted annual rate of 765,000 units last month. January’s sales pace was revised sharply higher to 800,000 units, which was the highest level since May 2007…”
March 24 – Financial Times (Eric Platt, Robert Armstrong, Robert Smith and Joe Rennison):
“Upheaval in the US mortgage market ricocheted through the investment world on Tuesday, with two more real estate investment trusts warning that they could not meet margin calls from their lenders. Shares of some of the largest funds invested in the residential mortgage-backed securities market tumbled after two companies — Invesco Mortgage Capital and MFA Financial — said that they had been unable to meet cash calls…”
March 25 – Bloomberg (Katherine Doherty):
“The amount of distressed debt in the U.S. has quadrupled in less than a week to nearly $1 trillion, reaching levels not seen since 2008 as the collapse of oil prices and fallout from the coronavirus shutters entire industries across the globe. In total, the tally has ballooned to $934 billion of U.S. corporate bonds that yield at least 10 percentage points above Treasuries and loans that trade for less than 80 cents on the dollar… That’s nearly double the amount from less than a week ago.”
March 25 – Financial Times (Claire Bushey, Joe Rennison and Peter Campbell):
“Downgrades by Moody’s and S&P Global stripped Ford of its investment-grade credit rating…, a week after the carmaker shuttered most global plants, sending $36bn of its debt tumbling into the junk bond market. The move comes after regulators and investors warned about the risks of large amounts of debt falling down the ratings ladder, potentially causing turmoil as investors bound by strict requirements to only hold higher-rated debt are forced to sell.”
March 24 – Bloomberg:
“China’s government is facing the worst fiscal situation since the global financial crisis more than a decade ago, with revenue falling after the government shut down economic activity in February to curb the spread of the coronavirus. The income of central and local governments contracted 9.9% in the first two months of the year compared to a year ago. That was the deepest fall since February 2009. Tax revenue declined more than 11%, with drops in value-added taxes, corporate income taxes and car purchase taxes undercutting the government’s coffers just as it needs to find extra money to stimulate the economy.”
March 24 – Bloomberg (Paul Gordon):
“The euro zone is sinking into the biggest economic crisis in its history as measures to contain the coronavirus pandemic bring much of the business world to a standstill. IHS Markit’s measure of private-sector activity plunged to the lowest since the index was started -- and the currency bloc was formed -- more than two decades ago.”
March 26 – Wall Street Journal (Bob Davis and Lingling Wei): “Chinese President Xi Jinping has been on a telephone spree this month, dialing the leaders of coronavirus-battered France, Italy, Spain and Germany with offers of support, including masks and other medical equipment. One phone number he hasn’t tried is Donald Trump’s. The last time the leaders of the world’s two largest economies talked was in early February when the virus was ravaging China but not the U.S. The two talked about whether China would still buy as many farm goods as it promised in a trade deal. Since then, both governments have traded barbs over the coronavirus, generating distrust that now stands in the way of rescuing the global economy. ‘How do you cooperate when you hear the president of the United States referring to the epidemic as the ‘Chinese virus’ all day long,’ said a Beijing government adviser. A senior U.S. administration official countered that China’s attempts to cast suspicion that the virus originated in the U.S. ‘are dangerous, counterproductive to relief efforts and something we’re watching closely.’”
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