Fed Faces Threat Like Never Before While Virus Petrifies Markets; This Is Starting to Look More Like a Financial Crisis; Stopping the flow of people is stopping the flow of cash.

Mar 19, 2020

First Read

Hits & Takes
By John Lothian and JLN Staff

The NYSE yesterday sent out a notice they are closing their trading floors as of Monday, March 23. This includes their equities and options trading floors in New York and their NYSE Arca Options trading floor in San Francisco. They will move to all electronic trading as of Monday.

The backstory is that two people, an employee of NYSE and a trader, tested positive for the novel coronavirus. The market is taking this whole social distancing thing too literally as it continues to distance me from my previous balances in my IRA and portfolio.

In a note from Eurex, the exchange said, “Eurex has no plans of market closure. Quite the opposite: we will work hard to keep #Eurex open even if the circumstances will worsen further. Read more on how we handle the situation here.”

Yields of Treasury securities in the U.S. yesterday went in opposite directions as some short-term T-Bills traded at negative returns and 10-Years and 30-Years saw an uptick in yields.

The negative rates are probably in response to the “D” word coming into the discussion rather than just the “R” word. When the economic decline leaves a big mark, it is a “Depression.” And this one is leaving a mark. There is a rush to cash all around.

Below in Leads is a story from Aaron Ross Sorkin about the right way to deal with a financial panic, which is what this has turned into. He suggests “bridge loans” tied to employment guarantees for 90% of workforces at companies. The firms would have to pay back the interest free loans within 5 years. I like the idea, especially with rates here. That way the money borrowed being utilized has a chance to get paid back and continue to power the economy. There is no single right answer, there is just the best of bad ones.

The Census Bureau in the U.S. is shutting down for the next two weeks until April. Ironically, my wife was just in the process of being hired by the Census Bureau as an enumerator. I worked for them back in 1990 when I was trading at the Midam as a second job.

General Motors, which announced it was shutting down car operations along with other car makers, has offered to make ventilators in a move reminiscent of World War II mobilization. In a hint of things to come in the magazine world, Playboy magazine shut down its print edition due to the virus.

Because people are losing jobs, restaurants and bars and other businesses shutting down, we don’t need as many bank branches open, so J.P. Morgan announced it was closing 1000 branches and expects other banks to follow. Some retail workers are just afraid to go to work

If you want to see a good representation of why the U.S. is having to make such dire moves to flatten the curve, check out this animated chart shared in a Twitter post

For good news, spring will be upon us tonight with the vernal equinox earlier than normal for those in the U.S.

If you want to keep up on news faster than receiving this newsletter, I encourage you to follow me on Twitter


A few days ago the Washington Post published an article that showed simulations of various ways to deal with the coronavirus. What is even more cool is it is actually running the simulation on the web page so you can run them multiple times if you want to. Everything from doing nothing to a forced quarantine. Interestingly, social distancing seems to be the most effective means of slowing the progression of the disease. ~JB

A hearing in the Bcause bankruptcy case scheduled for today has been postponed until next Wednesday. As of today, we are still planning to cover the hearing.~SR


New York Stock Exchange to Move Temporarily to Fully Electronic Trading; Equities and Options Trading Floors Will Temporarily Close; Fully Electronic Trading Begins With Market Open on Monday, March 23; Trading and Regulatory Oversight of All NYSE-listed Securities Will Continue Without Interruption
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced today that the New York Stock Exchange will initiate its business continuity plan (“BCP”) and move, on a temporary basis, to fully electronic trading on Monday, March 23. Trading and regulatory oversight of all NYSE-listed securities will continue without interruption.

*****Temporary basis, but who knows?~JJL


FIA announces new board members
FIA today announced the election of new directors to its board at the annual board of directors meeting. The board added Paul Anderson of Deutsche Bank, Samina Anwar of Cargill, Kari Larsen of Perkins Coie, John Murphy of Mizuho Securities USA, and Jamila Piracci of Roos Innovations. The meeting took place via teleconference due to concerns over the Coronavirus (COVID-19).

*****That three women are among those elected to the FIA board is a step towards diversity.~JJL


This Is Your Brain on a Crashing Stock Market; Fear and panic over huge daily drops are compounded by dread of a global pandemic
Jason Zweig – WSJ
It isn’t just your portfolio that’s getting pounded. You are, too. Every financial asset is falling at once, and the economy itself seems to be imploding. All investors—individuals and professionals alike—need to understand the havoc this kind of stress wreaks on the human brain. To keep it from destroying your long-term investing plan, you will need to manage that stress and restore a sense of control.

*****A really good time to start working on mindfulness.~JJL


Yes, Flatten the Curve; While medicine fights the coronavirus, the response from Washington to Wall Street looks like the madness of crowds.
Daniel Henninger – WSJ
Out of every major crisis comes a saying. After the terrorist attacks of September 11, 2001—now 9/11—it was “This changes everything.” During World War II the British said, “Keep Calm and Carry On”—good advice then and now. For the coronavirus pandemic of 2020, it looks like America’s version will be “Flatten the curve.”

*****Buy your own “flatten the curve” t-shirt here via Amazon.~JJL


European brewers and distillers switch production from booze to hand sanitizer
Jack Guy – CNN
Brewers and distillers across Europe are using their production facilities to make hand sanitizer to help fight the coronavirus outbreak.
BrewDog, Leith Gin, Verdant Spirits and Pernod Ricard are all getting involved in efforts to ramp up production of hand sanitizer, which has become scarce in many countries due to a massive spike in demand. The announcements follow a raft of similar efforts from some distilleries in the United States.

*****Why do you smell like Jim Beam? Oh, it is my hand sanitizer.~JJL


Wednesday’s Top Three
Our most read story Wednesday was Chicago trading firms seek more capital, from Crain’s Chicago Business. Second was the CME Group Statement on U.S. Treasury Secretary Mnuchin Proposal to Shorten Trading Hours. Spoiler: they do not like it. Third was the link to the main page of John Lothian News.


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Lead Stories

Fed Faces Threat Like Never Before While Virus Petrifies Markets
Craig Torres and Liz McCormick – Bloomberg
More moves seen coming from U.S. central bank to counter virus; Fiscal policy an imperative as nation hunkers down in alarm
Financial markets are sending central banks a stark message: tackling the economic impact of the coronavirus isn’t just about easing financial conditions. It’s about getting ready for a sudden stop. Plunging equity markets reflect the fear that economic activity is going to slump in the second quarter, before hopefully rebounding in following months. A catastrophic collapse in corporate revenue and household income from a global pandemic is something the Federal Reserve has no history of facing in the postwar period, and one it can’t solve alone.

This Is Starting to Look More Like a Financial Crisis; Stopping the flow of people is stopping the flow of cash.
Mark Gongloff – Bloomberg
A couple of weeks ago, before the Working From Home Era, we compared the coronavirus’s economic effect to the credit crisis, saying that stopping the flow of people would devastate economies as badly as, if not worse than, stopping the flow of credit. Now that this thesis has proved alarmingly true, it seems also to be causing one of those original credit crises, involving, you know, credit.

This Is the Only Way to End the Coronavirus Financial Panic; Bailouts of companies or industries just cause division. The answer: a government “bridge loan” to everyone.
Andrew Ross Sorkin – WSJ
The Covid-19 crisis will take time to be solved by science. The economic crisis can be solved right now. With President Trump proposing to send $1,000 checks to every American and industries, like the airlines, lining up for bailouts, there is a better way to arrest the panic.

NYSE to shift fully to e-trading from Monday after two coronavirus cases
The New York Stock Exchange (NYSE) will temporarily close its trading floors and move fully to electronic trading from Monday, its owner Intercontinental Exchange Inc (ICE.N) said after an employee and a trader were tested positive for the coronavirus.

FESE urges European exchanges remain open in coronavirus crisis; Despite the rapid spread of coronavirus, European exchanges must continue to operate, according to exchange association FESE.
Kiays Khalil – The Trade
European exchanges will be impacted by the ongoing spread of coronavirus but must continue to operate as normal, the Federation of European Security Exchanges (FESE) has asserted.

Financial crunch looms as economies reel from coronavirus shock; With echoes of 2008 getting louder, time is not on the side of central banks or governments
Michael Mackenzie – FT
Supermarket shelves are being cleared and in financial markets, cash is the only precious commodity. The hoarding of cash by banks, investors and companies illustrates the vast wave of deleveraging that is taking place across financial markets with the echoes of 2008 getting louder and louder.

Global Traders Create Ultimate Work From Home ‘Rona Rigs’
Tom Maloney – Bloomberg
Instagram posts document Wall Street adapting to new reality; Banks still struggling to implement remote-work arrangements
One finance professional’s makeshift work-from-home station is set up in a beachside hut in Mexico, according to the Instagram post.

Wall Street Says a Volatility Doom Loop Is Gripping Markets
Yakob Peterseil – Bloomberg
Wall Street Says a Volatility Doom Loop Is Gripping MarketsView photos
(Bloomberg) — There have been plenty of scares in the market horror show of recent weeks, but one idea in particular is increasingly sending shivers around Wall Street: that extreme stock turbulence may now be feeding itself.

Senate Passes Virus Relief Bill, Plans for Even Bigger Stimulus
Steven T. Dennis, Laura Litvan, and Billy House – Bloomberg
The Senate cleared the second major bill responding to the coronavirus pandemic, with lawmakers rushing to follow up with an additional economic rescue package that President Donald Trump’s administration estimates will cost $1.3 trillion.

Treasury bill yields turn negative in sign of investor fear; Analysts say ‘massive’ flight to safety increases demand for cash-like products
Colby Smith – FT
US Treasury bill yields dipped below zero while longer-dated government debt yields rose on Wednesday in a sign of frightened investors flocking to more easily traded securities during the global market tumult.

Could Coronavirus Lead to a Depression? Economists Are Worried.
Evie Liu – Barron’s
Many economists and analysts are worried that the coronavirus outbreak could disrupt life in the U.S. for an extended period and in turn drag the economy into a recession. Monday’s severe stock selloff and worse-than-expected economic data from China and the U.S. have further intensified that fear. In a possibly worse scenario, could the economy slow even further—beyond a recession and into a depression?

The Great Coronavirus Crash of 2020 Is Different; People have to live with social distancing to save lives. But what if the economy shuts down, too?
Peter Coy
The Great Coronavirus Crash has been frightening in its speed and breadth. Stocks have lurched lower worldwide, with brief rallies between the falls, like wounded bulls in a corrida. Through 1 p.m. on March 18 the S&P 500 index was off 27% for the year to date, Germany’s DAX was down 38%, and Japan’s Nikkei was off 29%. In the credit market, investors have fled junk bonds. Even U.S. Treasury bonds—traditionally a safe harbor in crisis times—have come under pressure, possibly because investors are selling them to cover losses elsewhere.

Schwab Faces ‘Unpredictable Issues’ in Work From Home Rush
Annie Massa and John Gittelsohn – Bloomberg
Closing branches to public being considered beyond Bay Area; Brokerage faced record levels of client trades as markets drop
Charles Schwab Corp. said it’s rushing to get more employees working from home, conceding its systems weren’t built to withstand the stresses on the business that the coronavirus outbreak has caused.

There Aren’t Enough Ventilators to Cope With the Coronavirus; The United States and other countries face a critical shortage of the lifesaving machines — and no easy way to lift production.
Sarah Kliff, Adam Satariano, Jessica Silver-Greenberg and Nicholas Kulish – NY Times
As the United States braces for an onslaught of coronavirus cases, hospitals and governments are confronting a grim reality: There are not nearly enough lifesaving ventilator machines to go around, and there is no way to solve the problem before the disease reaches full throttle.

Bank of England offers unlimited QE for large company financing; New governor Andrew Bailey seeks to limit impact of coronavirus on economy
Chris Giles – FT
Andrew Bailey, the new Bank of England governor, said on Wednesday that the UK central bank was willing to pump unlimited quantities of money into the economy via its new commercial paper facility to help fight the effects of the coronavirus — and would go further if requested to by the government.

The virus is an economic emergency too; As borrowers and spenders of last resort, governments must act now to avert a depression
Martin Wolf – FT
The pandemic was not unexpected. But reality always differs from expectations. This is not just a threat to health. It may also be a bigger economic threat than the financial crisis of 2008-09. Dealing with it will require strong and intelligent leadership. Central banks have made a good start. The onus now falls on governments. No event better demonstrates why a quality administrative state, led by people able to differentiate experts from charlatans, is so vital to the public.

Treasury Proposes to Guarantee Money Funds in Stimulus
Saleha Mohsin, Josh Wingrove, Jennifer Jacobs, and Christopher Condon – Bloomberg
Mnuchin seeks authority stripped by Congress after 2008 crisis; Unclear if 2016 fund reforms are fully protecting industry
The U.S. Treasury Department proposed to temporarily guarantee money market mutual funds with taxpayer dollars as part of its coronavirus stimulus plan, according to a document obtained by Bloomberg News.

Credit Is the Scariest Market to Watch, Not the Dow or S&P; Markets for newly issued company debt and commercial paper have already prompted the Fed to step in.
Claire Boston – Bloomberg
While drops in the Dow and S&P dominate the headlines, the market that has many traders and policymakers most on edge right now is debt—that is, bonds and loans. The free-flowing credit conditions that defined the last decade are no more.

London Faces Lockdown as Troops Mobilized to Halt Virus
Thomas Penny and Kitty Donaldson – Bloomberg
PM Johnson to meet London Mayor Khan to discuss travel limits; Government is preparing to publish emergency virus legislation
Boris Johnson’s government is mobilizing military personnel and preparing to put London in lockdown as it battles to slow the spread of the coronavirus.

ECB to launch EUR750bn bond-buying programme; Pandemic Emergency Purchase Programme will cover sovereign and corporate debt
Martin Arnold – FT
The European Central Bank has unveiled plans to buy an extra EUR750bn of bonds and issued a “no limits” commitment to defend the eurozone on Wednesday night in response to the worsening economic and financial turmoil caused by the coronavirus pandemic.

Markets Enter New Phase—Where Cash Is All That Matters; Investors sold nearly everything they could Wednesday
Paul J. Davies – WSJ
A rush for cash shook the financial system Wednesday, as companies and investors hunkered down for a prolonged economic stall, taking the recent market turmoil into a new, more troubling liquidation phase.

Rich world pumps aid to fight virus, Britain latest to face lockdown
Guy Faulconbridge, Ryan Woo – Reuters
The world’s wealthiest nations poured unprecedented aid into the reeling global economy on Thursday as coronavirus cases ballooned in the current epicentre Europe and London became the latest major center bracing for lockdown.

99% of Those Who Died From Virus Had Other Illness, Italy Says
Tommaso Ebhardt, Chiara Remondini, and Marco Bertacche – Bloomberg
More than 99% of Italy’s coronavirus fatalities were people who suffered from previous medical conditions, according to a study by the country’s national health authority.

Exchanges, OTC and Clearing

NYSE to Close Trading Floor After Two Positive Coronavirus Tests; Investors will likely see little impact to markets as exchange will shift to all-electronic trading
Alexander Osipovich – WSJ
The New York Stock Exchange will close its famed trading floor in lower Manhattan effective Monday after two people who work at the exchange tested positive for coronavirus. The NYSE’s parent company, Intercontinental Exchange Inc., or ICE, said it was temporarily closing the floor and shifting to all-electronic trading in a press release Wednesday.

NYSE comes under fire for not closing its trading floor as coronavirus spreads
Frank Chaparro – The Block
UPDATE 4:46 p.m. ET: ICE has announced that the NYSE will temporarily close its trading floors and move to fully electronic trading starting on March 23.
“All-electronic trading will begin with Monday’s market open. The facilities to be closed comprise the NYSE equities trading floor in New York, NYSE American Options trading floor in New York, and NYSE Arca Options trading floor in San Francisco,” the firm said in a statement. “The decision to temporarily close the trading floors represents a precautionary step to protect the health and well-being of employees and the floor community in response to COVID-19.”

CME CEO protests prospect of shorter trading hours; Terry Duffy took on Treasury Secretary Steven Mnuchin in arguing against shortening trading hours for stock markets.
Lynne Marek – Crain’s Chicago Business
CME Group CEO Terry Duffy pushed back against Treasury Secretary Steven Mnuchin’s suggestion that financial markets’ trading hours may be shortened in the face of coronavirus-inspired trading turmoil, saying “shorter hours make no sense.”

Buy Side Supports IEX D Limit Order Type
There’s more going on in the stock market than either 100 or thousand point swoons. On a deeper market structure issue, IEX has received some much-needed and appreciated support for its D Limit order type from twenty-seven institutional investors including Brandes Investment Partners, Northern Trust, Eaton Vance, Janus Henderson and the Ohio Public Employees Retirement System, the seventh largest pension fund in the US. The buyside consortium has submitted a joint comment letter to the Securities and Exchange Commission endorsing the IEX plan.

Vienna Stock Exchange CEO Boschan Supports National Short Selling Regulation
Today, the Austrian Financial Market Authority FMA issued an extended short selling ban on Austrian shares after no Europe-wide agreement was possible. Christoph Boschan, CEO of the Vienna Stock Exchange, supports this: “The national supervisory authority, like us, has urgently sought the extended ban at EU level. Both the impact of COVID-19 (Corona) and the interests of the individual sub-markets of the Union still differ greatly. This is extremely regrettable for us as Europeans. However, as a uniform solution was not enforceable, a national solution is now the right and important step to take.”

Clarification of the scope of short selling bans imposed by European national authorities
Please note that with a view to index products traded on Eurex, the German Federal Financial Supervisory Authority (BaFin) has clarified on its webpage the scope of the short selling bans introduced in March 2020 by several European national authorities.

Eurex Exchange Readiness Newsflash | Procedures for equity derivatives in the event of deferrals of ordinary dividends
As a response to questions raised during these extraordinary market conditions, this Newsflash is to inform market participants about the procedures for equity derivatives in the event an ordinary dividend would be deferred.

Deutsche Börse Photography Foundation and Deutsche Gesellschaft für Photographie (DGPh) honor publications on photography
Deutsche Börse
Partners redesign “DGPh – Research Prize in Photography History”; In the future, two new prizes for research and journalism in photography
The Deutsche Börse Photography Foundation and the Deutsche Gesellschaft für Photographie (DGPh) will jointly promote the scientific dialogue on photography in the future. As part of their cooperation, the “DGPh – Research Prize in Photography History”, which was launched in 1978, will be redesigned and awarded in the form of two awards for research and journalism.

TMX Group pledges support to Food Banks Canada in response to COVID-19
TMX Group has donated $50,000 to Food Banks Canada, a national charitable organization dedicated to helping Canadians living with food insecurity, in support of Novel Coronavirus (COVID-19) response efforts across Canada.

SGX RegCo provides guidance on holding of general meetings amid COVID-19
Singapore Exchange Regulation (SGX RegCo) in consultation with the Accounting and Corporate Regulatory Authority and the Monetary Authority of Singapore is providing guidance on the holding of general meetings amid the COVID-19 situation.


U.S. bank regulator approves banking charters for Square Inc and Nelnet Inc
The U.S. Federal Deposit Insurance Corporation on Wednesday approved separate applications by payment company Square Inc and student loan servicer Nelnet Inc to become banks under a special charter, the first time the agency has granted such licenses in over a decade.


CME Bitcoin Options Volume Hits Record Low, While Bakkt Goes Weeks With No Trades
Omkar Godbole – Coindesk
Demand for bitcoin options on regulated U.S. derivatives exchanges has dried up even as price volatility reaches record highs. The Chicago Mercantile Exchange (CME) traded just three bitcoin options contracts on Tuesday, with a notional amount of 15 bitcoin (approximately $80,000), the exchange told CoinDesk. That is CME’s lowest daily volume for bitcoin options on record, according to crypto derivatives firm Skew Markets. The previous record low of $125,000 was registered Jan. 24.

Bakkt Crypto Exchange Boosted By $300M From Microsoft, ICE During Crisis
Darryn Pollock – Forbes
Amid the massive global market crisis, and the rippling effect it has had on the Bitcoin market, one business that has a focus on institutional cryptocurrency investors — Bakkt — has raked in $300 million in a Series B round. Bakkt has been bolstered by Microsoft’s M12, PayU, Boston Consulting Group, Goldfinch Partners, CMT Digital, Pantera Capital and Intercontinental Exchange, the latter being its parent company.

Binance, Huobi to support Steem’s hard fork into Hive; the steem token is up by 180%
Yogita Khatri – The Block
Two major crypto exchanges – Binance and Huobi – have said that they will support Steem blockchain’s hard fork into the new Hive network. The steem token appears to have reacted positively to the news, and is currently up by 180% at around $0.35, according to CoinGecko. Binance said it will support the hard fork, which is scheduled to take place tomorrow, and will distribute the new hive tokens to steem holders in 1:1 ratio. As a result, the exchange is suspending steem deposits and withdrawals from tomorrow and will reopen after the hard fork is complete. Huobi has also announced similar measures.

Swiss Blockchain Exchange SDX Hires ConsenSys Startup Boss to Head Business
Ian Allison – Coindesk
Tim Grant, formerly the CEO of ConsenSys-backed startup DrumG Technologies, is to become head of business at Swiss blockchain-based stock exchange SDX. SDX, the digital asset trading venue being built from the ground up by Swiss stock exchange operator SIX Group, had been searching for a new leader to take over from interim CEO Thomas Kindler. As the new head of business, Grant fills that role, a spokesman for SDX confirmed.

Huobi’s derivative platform now includes a circuit breaker function
Yogita Khatri – The Block
Crypto exchange Huobi’s futures trading platform, Huobi DM, has introduced a new “partial” liquidation mechanism. It gradually reduces a trader’s positions rather than liquidating them in full in a single event. It also includes a circuit breaker function, which halts liquidation when large or unusual price movements are detected. “We believe our new liquidation feature will have far-reaching benefits for the wider crypto community by helping minimize sudden price movements caused by abnormal liquidation events,” said Ciara Sun, VP of global business at Huobi Group.

Coronavirus Financial Crash Is Bitcoin’s Biggest Test, BitMEX Says
Helen Partz – Cointelegraph
BitMEX, the world’s second largest crypto exchange by daily trading volume as of press time, believes that amid the ongoing global coronavirus crash, Bitcoin faces its biggest challenge and the opportunity to prove its potential during the global financial crisis.

Crypto-market infrastructure creaks amid volatility test
Tom Wilson – Reuters
As worries over the economic hit from the coronavirus outbreak spread from stocks, oil and bonds to cryptocurrencies late last week, bitcoin crashed to its worst day in seven years. But plummeting prices weren’t the only problem for investors.

Bitcoin’s Crash Seen Driven by Long-Sought Institutional Buyers
Olga Kharif – Bloomberg
Large owners likely accounted for 70% of exchange activity; Trading during March rout reviewed by researcher Chainalysis
Wait until institutional investors show up had been a mantra for Bitcoin advocates since the debut of the cryptocurrency just over a decade ago. They should have been careful about what they wished. Large professional and institutional traders were among the biggest sellers during the rout that saw Bitcoin tumble about 40% this month, according to analysis from researcher Chainalysis.

Square’s new industrial loan company receives approvals ahead of planned 2021 launch
Yilun Cheng – The Block
The Federal Deposit Insurance Corporation (FDIC) has conditionally approved the deposit insurance application of Square Financial Services, the de novo industrial bank created by payment services provider Square. The move clears the path for Square’s banking effort to go live next year. According to a press statement by the FDIC, the new bank will issue commercial loans to merchants who use Square’s payment system to handle card transactions. Applicants will be evaluated based on their financial history and conditions, their management system, their risk level, the needs of their customers, and their level of alignment with the purposes of the Federal Deposit Insurance Act.

Token Economics: In The Long Run, Decentralization Will Survive
Neeraj Khandelwal – Traders Magazine
Money exists to serve a fundamental purpose as a medium of exchange for goods and services. A central authority designates a certain currency as ‘legal tender’ and people can proceed to trade with it, trusting in its function as a unit of account and a store of value. Simply put, the traditional system of money thus far has revolved around four main participants: governments, central banks, intermediary banks, and users of money. It’s a system that has been built over centuries—one not easily dismantled or replaced, as significant cost and physical infrastructure has been put into supporting its integrity and performance.

Hawaii is establishing a regulatory sandbox for digital currency issuers
Aislinn Keely – The Block
The government of Hawaii unveiled a regulatory sandbox for digital currency firms on Tuesday. The state announced the establishment of its “Digital Currency Innovation Lab” a two-year initiative that allows digital currency issuers to do business in Hawaii without a state money transmitter license. The governor’s statement said it hopes to gain more perspective on digital currency and its activities through the two-year period, with an eye towards crafting legislation.

Gemini Continues European Expansion With New Institutional Sales Role
Paddy Baker – Coindesk
The New York-regulated exchange Gemini is looking to expand its foothold in Europe, advertising for a new director-level role to head institutional sales. The new director for European sales will promote and grow Gemini’s business across Europe and the U.K. as well as “generate new business” by creating relationships with institutional clients, the exchange said in a LinkedIn post on Tuesday.

JPMorgan Chase to close around 1,000 branches amid coronavirus pandemic
Yilun Cheng – The Block
JPMorgan Chase is set to close about 1,000 bank branches to prevent the further spread of COVID-19. The bank currently has over 5,100 branches across 38 U.S. states. On Wednesday, it informed employees that around 1,000 of them will be closed in light of the escalating epidemic, as the Financial Times reported. Meanwhile, employees working at the rest of the branches can choose to work from home.

SIX Digital Exchange appoints former R3 Labs chief to head business; Experienced leader in enterprise blockchain and institutional capital markets joins SIX’s digital trading venue as it gears up for launch.
Jonathan Watkins – The Trade
The SIX Digital Exchange (SDX) has hired new technologies pioneer, Tim Grant, as the group readies to launch its trading, settlement, and custody infrastructure for digital assets.


Trump says he will invoke wartime act to fight ‘enemy’ coronavirus
Jeff Mason, Steve Holland – Reuters
U.S. President Donald Trump moved on Wednesday to accelerate production of desperately needed medical equipment to battle the coronavirus pandemic and said an estimate that U.S. unemployment could conceivably reach 20 percent was a worst case scenario.

A Recession Is Coming. Government Needs to Keep It From Becoming Something Worse.
Ben Levisohn – Barron’s
The world is facing a health crisis unlike any it’s experienced during the past century. And without new and creative ways to tackle it, the economic downturn that comes with it could be the deepest experienced in generations. It’s up to lawmakers to ensure it doesn’t get worse than that—and that the notion of an actual depression remains a barely mentioned, far-fetched idea.

America’s Cities Call for Federal Rescue from Economic Collapse
Mallika Mitra – Bloomberg
Cities seek $250 billion, New York’s MTA asks for $4 billion; Westchester County chief says it’s in ‘budgetary free fall’
America’s local governments are asking the federal government for massive amounts of aid as the fallout from the coronavirus pandemic threatens to leave them contending with significant budget shortfalls.

Kudlow Says Government May Take Equity Stakes for Company Aid
Justin Sink – Bloomberg
The White House’s top economic adviser, Larry Kudlow, said the administration may consider asking for an equity stake in corporations who want coronavirus aid from taxpayers. “One of the ideas is, if we provide assistance, we might take an equity position,” Kudlow said Wednesday at the White House, adding that the 2008 bailout of General Motors Co. had been a good deal for the federal government.

Taxpayers Can Delay Payments for 90 Days, Must File by April 15
Laura Davison – Bloomberg
Treasury guidance clarifies that tax forms still due April 15; Individuals, businesses can defer some payments until July 15
The Treasury Department issued guidance saying that taxpayers can delay paying some federal income taxes for 90 days but still must submit their forms to the Internal Revenue Service — or officially request an extension — by April 15.

Virus Pandemic Exercise Got One Thing Wrong: the U.S. Response
Nick Wadhams and Iain Marlow – Bloomberg
2019 drill forecast a coronavirus killing 3% of those infected; Trump pressed back on notion he didn’t take virus seriously
Last October, about 50 national security experts gathered in Washington to role-play a global response to a frightening scenario: a pandemic sparked by a mysterious new coronavirus ravages the world, hitting North Asia, Europe and the U.S. especially hard. The exercise got a lot right about the pandemic now sweeping the globe. It concerned a virus that’s “highly transmissible via direct person-to-person contact,” overwhelms available resources and kills more than 3% of those infected, roughly equivalent to the current rate, with a workable vaccine trial many months away.

How a Coronavirus Test Shortage Threatens Paid Sick Leave Promises
Katia Dmitrieva – Bloomberg
Lack of diagnosis means some can’t file for paid sick leave; White House, Congress consider $1.3 trillion stimulus package
President Donald Trump and Democrats in Congress are promising Americans won’t miss a paycheck if they’re home with coronavirus. But a lack of testing means many can’t get a diagnosis, leaving them in limbo.

U.S. Chamber CEO Writes President Trump On Essential Infrastructure And Business
Thought you would like to see this letter from Chamber CEO Thomas J. Donohue to the President putting forward guidance on how governments should structure quarantine orders and business closures during the coronavirus outbreak, and designate “essential infrastructure” and “essential businesses and services.”

Universal Basic Income is an affordable and feasible response to coronavirus; A cash payment made to everyone, with no strings attached, can support workers through the crisis
Daniel Susskind – FT
The coronavirus crisis is a disaster for many workers. In the UK, for instance, we often forget that prosperity does not rest on a handful of well-regarded business titans and big-named companies — many of whom are now visibly lobbying the government for financial support.

America Needed Coronavirus Tests. The Government Failed; Decisions that limited testing for the pathogen blinded the U.S. to the outbreak’s scale. Here’s how it happened.
Christopher Weaver, Betsy McKay and Brianna Abbott – WSJ
When cases of the new coronavirus began emerging several weeks ago in California, Washington state and other pockets of the country, U.S. public-health officials worried this might be The Big One, emails and interviews show. The testing program they rolled out to combat it, though, was a small one.

Trump Considers Letting Homeowners Delay Mortgage Payments
The Trump administration is considering a plan to allow homeowners whose income was cut by the coronavirus to delay mortgage payments. Still to be decided is a mechanism for borrowers to catch up.

The Economic Response We Need to the Coronavirus; A strong recovery requires immediate relief to be coupled with long-term investment.
Michael R. Bloomberg – Bloomberg
Never before has a public-health emergency created such widespread economic paralysis. As government officials work to slow the spread of the coronavirus, treat the afflicted, and save lives, it is essential that Congress and the president take immediate actions to stabilize a dangerously teetering economy and lay the groundwork for long-term recovery.


Against the short-selling ban
Jamie Powell
During the extreme stock market volatility of the past month, financial regulators have largely kept mum when it’s come to taking actions to stem the selling.

ICYMI: Chairman Tarbert Highlights CFTC’s COVID-19 Response
Commodity Futures Trading Commission Chairman and Chief Executive Heath P. Tarbert highlighted the agency’s response to the COVID-19 (coronavirus) pandemic today in an interview on Fox Business’ Cavuto: Coast to Coast, as well as in an op-ed for FoxBusiness.com. The CFTC also unveiled today a new coronavirus-focused webpage, cftc.gov/coronavirus, featuring a video message from Chairman Tarbert, a catalogue of the agency’s coronavirus-related regulatory relief, a new CFTC Customer Advisory, and public health resources

Report from FINRA Board of Governors Meeting – March 2020; Board Approves Allocations of 2019 Fines and Proposed Trade-Reporting Fees Related to Treasury Securities
FINRA’s Board of Governors met on March 11 for the first time in 2020. During the meeting, held remotely in light of the coronavirus outbreak, the Board discussed a variety of topics, including FINRA’s long-term planning and financial sustainability. As is now customary for the first meeting of the year, the Board also approved the allocation of prior-year fine monies to various capital initiatives in accordance with FINRA’s Financial Guiding Principles, which the Board reaffirmed in December. FINRA plans to release details about the allocations in a forthcoming Report on the Use of 2019 Fine Monies.

Temporary ban on net short positions by AMF
The FCA would like to draw the industry’s attention to the announcement by the AUTORITE DES MARCHES FINANCIERS (AMF) which restricts transactions under Article 20 (2) (b) of Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012.

Austrian Financial Market Authority Issues A Regulation Prohibiting Short Selling In Certain Financial Instruments That Are Listed On The Vienna Stock Exchange
Due to the prevailing and severe level of uncertainty on the market in conjunction with the COVID-19-Virus the Austrian Financial Market Authority (FMA) has today, by means of a Regulation, temporarily prohibited the short selling of certain financial instruments. All shares that are admitted to trading on the Regulated Market of the Vienna Stock Exchange (Wiener Börse) and that fall under the competence of the FMA as supervisory authority are affected by this ban.

Statement of Commissioner Rostin Behnam on Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants

Concurring Statement of Commissioner Dan M. Berkovitz on Final Rule Extending Uncleared Swap Margin Deadline for Financial Entities with Small Swap Portfolios

Statement of CFTC Commissioner Brian Quintenz on Current Market Dynamics and Commission Actions Related to COVID-19

Statement of CFTC Chairman Heath P. Tarbert in Support of Extending Relief for Initial Margin Requirements for Uncleared Swaps
Last night, the Commission voted unanimously to finalize a one-year extension of the initial margin compliance deadline for market participants with the smallest uncleared swaps portfolios.

U.K. FCA Requests Coronavirus Contingency Plans From Insurers
Franz Wild – Bloomberg
The U.K. Financial Conduct Authority said insurance companies must make contingency plans to ensure they can continue to operate during the coronavirus pandemic and warned they should be fair with customers.

ESMA sets out approach to SFTR implementation
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is issuing a Public Statement to ensure coordinated supervisory actions on the application of Securities Finance Transactions Regulation (SFTR), in particular, on the requirements regarding the reporting start date, as well as the registration of Trade Repositories (TRs). This approach is needed in response to the effect of current adverse developments events as a result of the COVID-19 pandemic.

Frequently Asked Questions Related to Regulatory Relief Due to the Coronavirus Pandemic
Due to the coronavirus pandemic (COVID-19), FINRA is providing temporary relief for member firms from rules and requirements in the Frequently Asked Questions below. The relief provided does not extend beyond the identified rules and requirements. As coronavirus-related risks decrease, member firms should expect to return to meeting any regulatory obligations for which relief has been provided. When appropriate, FINRA will publish a Regulatory Notice announcing a termination date for the regulatory relief that will provide member firms with time to make necessary operational adjustments.

March 2020 Board Update
Updates from the March 2020 FINRA Board of Governors meeting.

Investing and Trading

Wall Street slumps again as fears continue to spiral, Dow all but erases ‘Trump-bump’
Caroline Valetkevitch – Reuters
U.S. stocks deepened their selloff on Wednesday and the Dow erased virtually the last of its gains since President Donald Trump’s 2017 inauguration, as the widening repercussions of the coronavirus pandemic threatened to cripple economic activity.

Coronavirus Pandemic to Test Limits of How Much Debt U.S. Can Bear; Federal Reserve has capacity to buy massive amount of bonds if investors balk
Jon Hilsenrath – WSJ
The coronavirus pandemic is about to test the bounds of how much debt the U.S. government can bear. Even before the crisis hit, the U.S. was on track to increase its budget deficit to nearly $1 trillion in the fiscal year that ends Sept. 30. It was already up to $625 billion in the five months since the current fiscal year began Oct. 1.

Activist Investors Throw in the Towel as Market Turmoil Rages
Ben Scent – Bloomberg
Elliott tenders Altran shares into $4 billion Capgemini offer; U.K. investor Tchenguiz ‘sorry’ to sell out of Greyhound owner
Activist shareholders are giving up on some of their campaigns amid historic market volatility. Elliott Management Corp. dropped its opposition Wednesday to Altran Technologies SA’s $4 billion takeover by Capgemini SE, citing “current market conditions.” The investment firm led by Paul Singer said it will sell its stake in Altran to Capgemini, after arguing for months that the the deal undervalued the French technology consulting firm.

Target, Clorox Among Giants Lobbying to Keep Shelves Stocked
Megan Wilson – Bloomberg
Consumer goods groups seek exemption from local bans, curfews; Industry groups press for uniform federal, state measures
Lobbying groups that represent companies including Target Corp., The Clorox Co., and Anheuser-Busch InBev NV, are pushing for an exemption from local gathering bans and curfews in the U.S. so that stores can replenish products that are rapidly disappearing from store shelves.

What the Dow’s 28% Crash Tells Us About the Economy
Dave Merrill and Esha Dey – Bloomberg
It is hard to follow the stomach – turning plunge across financial markets without hearing a reference to the Dow. Professional money managers, as well as casual investors, often look at the Dow—or the Dow Jones Industrial Average—to get a 30-thousand feet view of the markets. Referred to as simply the Dow, it is a price – weighted average of 30 blue – chip U.S. stocks that are generally the leaders in their industry.

How Financial Advisers are Helping Clients Through the Virus Crisis
Michael McDonald and Annie Massa – Bloomberg
Advisers say they’re fielding plenty of questions from clients; Among them: ‘Is it time to buy?’ and ‘Are we close to bottom?’
Even for financial advisers who have lived through Black Monday in 1987, the dot-com bust and the global financial crisis of 2008, the coronavirus-induced market meltdown is uncharted territory.

Emerging Markets Are in the Fastest Collapse in a Generation; Emergency rate cuts have done little to stop the free fall.
Julia Leite, Aline Oyamada – Bloomberg
Emerging markets are having the worst start to a year since the asset class came into being in 1988. The brutal losses have erased almost $5 trillion from equity values since mid-January, with stocks in Colombia, Greece, and elsewhere down more than 40%. Emergency rate cuts from South Korea to Turkey did little to calm investors, who pulled a record $4 billion from emerging markets exchange-traded funds over the five days ended March 13. Latin American currencies keep hitting lows against the dollar. Mexico and Colombia, countries that rely on oil revenue, saw their currencies fall more than 20%.

How A Macro Manager Is Trading On One Of The Wildest Markets In History
Tracy Alloway and Joe Weisenthal – Bloomberg
Markets around the world are so extremely volatile that nobody can think of any perfect precedent. There are shades of the Great Recession, 1987, the period in the wake of 9/11, and other moments of extreme turbulence. This week’s special episode was recorded on Monday, March 16 with Naufal Sanaullah, a macro strategist at EIA All Weather Alpha Partners. He walked us through his thinking on the market, and even discussed how he was trading things, right then, during the market open.

To Save Restaurants, Chefs and Former Financiers Ask for Tax Relief, New Rules; The consensus is that for the food service industry, Covid-19 will be worse than the 2007 financial crisis.
Kate Krader and Lananh Nguyen – Bloomberg
Former hedge fund manager and Goldman Sachs Group Inc. trader Sean Feeney knows it’s important to have skin in the game during a crisis. That’s why he is offering a share of profits to employees at Misi and Lilia, the restaurants he co-owns with chef Missy Robbins. While staff members are being temporarily let go so they can seek unemployment benefits, those who return when the restaurants are allowed to reopen are eligible for a percentage of the profits, he said on Instagram. Feeney also made a plea that government support businesses hurt by the Covid-19 coronavirus pandemic, just as banks were helped during the financial crisis.

This radically different market is no paradise for short sellers; Rapid moves can trip up fund managers trying to place bets on falling prices
Laurence Fletcher – FT
Hedge funds have been longing for a big shift in market conditions for years. The current chaotic environment is not quite what they had in mind.

Wealth managers field onslaught of calls from investors spooked by virus;
Clients want reassurance yet remain alive to investment opportunities as markets roil
Madison Darbyshire – FT
Shaken investors are flooding wealth managers with phone calls, seeking guidance on how to deal with the financial market crisis triggered by the coronavirus pandemic.

The Fed must act to keep markets functioning; US and other central banks need to ease the intensifying squeeze on dollar funding
The editorial board – FT
A decade after the global financial crisis that they helped to combat, Ben Bernanke, Tim Geithner and Henry Paulson published a book in which they warned that new limits on how the Federal Reserve could intervene in financial markets might tie its hands in tackling a future crisis. They surely did not expect their warning to become relevant so soon.

Airlines are begging for a bailout, but they’ve used 96% of their cash on buybacks over the past 10 years. It highlights an ongoing controversy over how companies have been spending their money.
Joseph Zeballos-Roig – Markets Insider
The Trump administration has responded to the airline industry’s request and proposed a $50 billion bailout as part of its massive $1 trillion stimulus package. The ultimate goal is to jolt the American economy by flooding it with cash.
Major airlines are reeling from massive wave of cancellations as Americans stay home and governments around the world implement travel bans to curb the spread of the coronavirus.

**** Remember, share buybacks were illegal in the US until 1982. They were deemed a form of stock manipulation. ~JB


Coronavirus, Ray Dalio and forecasting in an age of uncertainty; Predictive models only get you so far. We also need to maintain our peripheral vision
Gillian Tett – FT
It is never easy to admit that you are wrong; especially when you have previously earned fame (and billions of dollars) by calling the future right.

H2O apologises to investors for ‘particularly significant’ losses; Asset manager one of highest-profile victims of market rout due to coronavirus outbreak
Laurence Fletcher and Robert Smith – FT
H2O Asset Management has sent a letter to clients offering “sincere apologies” for its recent string of heavy losses, which have made the subsidiary of French bank Natixis one of the highest-profile victims of the recent market rout.

London Hedge Fund Gains 94% as Pandemic Batters Credit Markets
Katie Linsell and Nishant Kumar – Bloomberg
Chenavari made long-term bets that spreads would widen; Returns have jumped from 70% on March 12 as bonds plummet
Hedge fund Chenavari Investment Managers has extended its gains this year to as much as 94% thanks to bets on credit-market volatility during the coronavirus pandemic.

Banks plead for rethink over post-crisis rules; Executives argue regulations are hampering their abilities to respond to coronavirus pandemic
David Crow, Stephen Morris and Laura Noonan- FT
The global banking industry is demanding regulators relax or delay a raft of post-crisis rules on everything from capital and liquidity to accounting and climate change, which they argue are hampering their ability to respond to the coronavirus crisis.

Federal Reserve sets up facility to make loans to banks; Latest move to limit market fallout from coronavirus will be secured by mutual fund assets
James Politi – FT
The US Federal Reserve increased its efforts to shore up financial markets late on Wednesday by setting up a facility that would make loans to banks secured by assets from money market mutual funds.


New Yorkers Flock to Grocery Delivery Services Amid Food Crunch
Bailey Lipschultz – Bloomberg
Amazon Fresh delivery windows hard to come by across New York; Many deliveries have products missing as demand exceeds supply
New Yorkers are flocking to grocery delivery services like Amazon Fresh and closely-held Instacart as store shelves go bare amid the coronavirus outbreak.

London lockdown imminent to slow coronavirus outbreak; Capital set to face tougher measures because it is ahead of the ‘curve’ on outbreak
George Parker and Jim Pickard – FT
London is facing a lockdown, possibly before the weekend, as Boris Johnson prepares sweeping new measures, including school closures, to tackle the rapid spread of coronavirus.

City of London Exodus Leaves Crippled Businesses in Its Wake
Neil Callanan, Greg Ritchie, and Anooja Debnath – Bloomberg
At lunch hour, James Leahy’s Burrito Joe stall in the City of London’s financial district is usually buzzing as people line up from around the corner for their fajitas, tacos, quesadillas and rice-and-meat bowls.

France Likely to Remain in Confinement for at Least a Month
Ania Nussbaum and Angeline Benoit – Bloomberg
Authorities need to assess measures aimed containing pandemic; French health agency head warns of extension beyond 15 days
Parisians are unlikely to have picnics by the Seine anytime soon. France’s measures to contain the coronavirus pandemic by largely confining citizens to their homes could be extended beyond the planned 15 days, according to French health agency Sante Publique France.

Norway Warns It May Intervene to Stop Historic Krone Slump
Love Liman and Mikael Holter – Bloomberg
Norway’s central bank said it’s ready to intervene in currency markets for the first time in more than two decades, after the krone became the victim of the worst sell-off in its history.

Crashing Ruble Puts Russia’s Central Bank in Bind
Anna Andrianova – Bloomberg
Ruble rebounds after central bank announces extra FX sales; Options markets show rate rise possible within three months
The Bank of Russia stepped in to slow the ruble’s plunge, highlighting the challenge it faces as it tries to cushion a double blow from coronavirus and the plunge in oil prices.

Mexico Slow to Implement Strong Measures Against Coronavirus; President cites impact on economy; other Latin American nations, with fewer cases, have taken tougher actions
Robbie Whelan and Juan Montes – WSJ
Mexico’s government is resisting implementing strong measures to slow the spread of the novel coronavirus, even as President Trump said Wednesday that he would block the entry of asylum seekers and ban nonessential travel across the U.S.-Mexico border.

An Adventure in Economic Wonderland Comes to an End; Australia’s central bank is deploying its monetary firepower in ways that once seemed unfathomable. A 28-year expansion is at risk.
Daniel Moss – Bloomberg
One of the biggest repercussions from the Covid-19 outbreak in Australia ought to be the end of its island mentality. A near three-decade expansion fed a myth of invincibility that now seems to be coming to an end. Luckily, central bank chief Philip Lowe never fully bought into this hype, and has rightly accelerated plans that he’d been considering for some time to restore the economy. Let’s hope he’s not too late.


Brexit transition deadline in doubt as talks called off; UK and EU negotiators believe delay beyond December 31 is likely
Sebastian Payne and George Parker and Jim Brunsden – FT
The next round of Brexit negotiations has been cancelled as expectation grows in Brussels and London that the standstill transition period will be extended beyond its December 2020 deadline owing to coronavirus disruption.

Letter: UK’s Brexit plans must be put on hold
Jan Harrington – Financial Times
With the need to concentrate on solutions to Covid-19, neither the UK government nor EU can achieve a workable long-term deal by December 31, 2020 (Opinion, March 13). Therefore, they should quickly seek one of two alternatives: the simplest would be to formally extend the deadline to at least December 31, 2022, with everything continuing as at present until then. A braver solution would be for the UK to rejoin the EU. That would allow the UK to participate fully in the handling of the crisis throughout Europe. The terms of rejoining could include an immediate Brexit on negotiating (from the inside) a mutually satisfactory post-Brexit situation.

Boris Johnson Dismisses Calls to Delay Brexit as Virus Roils Politics
Joe Mayes – Bloomberg
U.K. Prime Minister Boris Johnson dismissed calls to postpone Britain’s final break with the European Union at the end of this year, even as the coronavirus puts politics as normal on hold. “There’s legislation in place that I have no intention of changing,” Johnson said at a press conference on Wednesday, referring to a law he enacted prohibiting any delay. “It’s not a subject that’s being regularly discussed in Downing Street.”


Coronavirus Forces $600 Billion Higher Education Industry Online; As the pandemic shutters campuses, schools scramble to provide distance education.
John Hechinger, Janet Lorin – Bloomberg
Analisa Packham, an economist who studies health and education, would seem ideally suited for teaching in the age of Covid-19. Yet last weekend the 30-year-old assistant professor at Vanderbilt University in Nashville realized she had a lot to learn—about technology.

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