Virus Models Offer No Quick Fix for Panicked Leaders and Traders

Mar 27, 2020

First Read

Hits & Takes
By John Lothian & JLN Staff

The coronavirus has claimed the life of one of the leading women from our industry, Carole Brookins. Ms. Brookins’ career ranged from being a market reporter at the Chicago Board of Trade to executive director of the World Bank. She sat on the boards of both the American Financial Exchange (home of Ameribor) and the Chicago Climate Exchange. She died Monday at the age of 76 in Palm Springs, Florida after recently returning from Paris.

She was a cum laude graduate of the University of Oklahoma who started her financial career at A.G. Becker as a trainee underwriter of municipal bonds in Chicago. She worked for E.F. Hutton when it was the second largest stock broker in the nation and rose to become their vice president of the commodity department.

I ran across Ms. Brookins in my career while I was with Knight Ridder in the 1980s when she was president of World Perspectives, a Washington, D.C.-based agricultural market analysis and consulting firm she founded after leaving Wall Street.

Richard Sandor met Brookins when she was a market reporter for the Chicago Board of Trade in 1972 and he was the CBOT’s chief economist. They formed a 50-year friendship. “She was a force of nature, kind, sensitive and a real savvy person,” Sandor told JLN in a telephone interview yesterday.

Brookins may be the first big name from our industry to die from coronavirus. I know she will not be the last.

The number of cases of coronavirus has topped 500,000 worldwide and the number of deaths attributed to it have climbed above 24,000. The United States has emerged as the country with the most cases of the disease with over 82,000 cases and 1100 deaths. in the U.K., Prime MInister Boris Johnson has tested positive for the virus and has self-quarantined. Also, Peter Tuchman, the most photographed NYSE floor trader, has tested positive.

In New York City, the number of calls to the emergency management system for 911 medical calls was the highest daily volume ever recorded by the city, surpassing the record number set on September 11, 2001.

Stay safe, be well.~JJL

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Risk.Net reported last night that ABN AMRO’s $200 million clearing loss was attributable to losses by NY hedge fund Parplus. It is the only news outlet reporting the Parplus loss so far. Many observers had speculated that the loss was tied to previously reported problems at Ronin Capital. Paywalled story here. ~Thom Thompson

The New York Stock Exchange yesterday posted the performance of its opening and closing auctions now that the exchange is operating fully electronically (temporarily). “These Exchange-facilitated auctions (EFAs) include price collars that limit the auction price to a specified distance from the final reference price,” NYSE says. Read the post here. ~SR

The Chicago Tribune published a series of photos of the streets of Chicago, which are mostly empty due to the city’s current shelter-in-place order. The photos are slightly eerie, but interesting – this may be the one chance in our lifetimes that the streets of downtown Chicago can be photographed without any people during the day. It’s also a powerful visual example of how the pandemic is impacting daily life.~MR

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CFTC Provides Temporary Relief to Market Participants During Crisis, Says Chairman
Bloomberg
Commodity Futures Trading Commission Chairman Heath Tarbert discusses the temporary relief measures provided to market participants during the coronavirus outbreak. He appears on “What’d You Miss?” (Source: Bloomberg)
/bloom.bg/33Mv0Kt

****** I need temporary relief, which is all I can get, from sciatica.~JJL

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How coronavirus is remaking democratic politics; The superficial conclusion is that it will be a gift to populists and authoritarians
Philip Stephens – FT
The state is back. Long live globalisation. Coronavirus is remaking democratic politics. The paths out of the crisis will present liberal democracies with a choice between authoritarian nationalism and an open global order founded on co-operation between states.
/on.ft.com/2UI5Bx8

*****Worth reading.~JJL

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Wall Street flees coronavirus and glimpses its mortality; Bankers hunker down in vacation homes and advisers counsel chief executives with children and dogs beside
James Fontanella-Khan, Joshua Chaffin and Laura Noonan – FT
Gregg Lemkau is having a difficult time in paradise. The co-head of investment banking at Goldman Sachs had come to Hawaii with his wife and four kids for a family vacation. Then the coronavirus spread. So the Lemkaus decided to stick around rather than return to New York.
/on.ft.com/2UT0drt

*****I am happy to be in Elmhurst, IL, just down the street from a nice hospital.~JJL

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SEC steps in after investors buy up the wrong Zoom; US regulator warns investors were mistaking Chinese company for better-known namesake
Hannah Murphy – FT
The US Securities and Exchange Commission has stepped in to clear up the worst case of mistaken identity on Wall Street, suspending the shares of Zoom Technologies, a small Chinese company that investors were confusing with Zoom, the video-calling app that has seen spectacular growth during the coronavirus pandemic.
/on.ft.com/3anTSe1

*****Get your symbols right, please!!~JJL

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Coronavirus: Mexicans demand crackdown on Americans crossing the border
BBC
Residents in Sonora, south of the US state of Arizona, have promised to block traffic into Mexico for a second day after closing a checkpoint for hours on Wednesday.
They wore face masks and held signs telling Americans to “stay at home”.
/bbc.in/2Jj9GCT

**** Mexico keeps getting more and more reasons to build a wall. ~JB

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CryptoMarketsWiki Coin of the Week: STEEM
Members of the Steemit community successfully completed a “hard fork” on the STEEM blockchain, creating a new community called “Hive.” The more STEEM tokens they have, the more influence token holders have on major decisions the entire network may make, like voting yea or nay on a system-wide upgrade. The fork was a reaction to TRON founder Justin Sun’s actions in February, when TRON, along with several major exchanges, used its combined STEEM token holdings to gain control over the network. Some of those exchanges have since “unvoted” following backlash from the crypto community.
/bit.ly/33OpGGt

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Thursday’s Top Three
Our most-read story on Thursday was ABN Amro takes $200m hit from failure of a single client from The Financial Times. Second was Foreign Policy’s The Coronavirus Is the Worst Intelligence Failure in U.S. History. The first paragraph is a doozy. Third was the alliterative headline Mortgage Mayhem Hits Broker ED&F With Mounting Margin Calls, from Bloomberg.

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Lead Stories

Virus Models Offer No Quick Fix for Panicked Leaders and Traders
James Paton, Akshat Rathi, and John Lauerman – Bloomberg
Rushed findings can spread false hopes and fears on disease; Key data often lacking as public seeks solutions to crisis
Politicians, investors and worried citizens are looking to scientists for the fastest way out of the coronavirus crisis. It’s a demand that researchers can’t meet, even when they’re moving at maximum velocity.
/bloom.bg/2WNDgZi

WHO Urges World Leaders to Step Up Fight Against Coronavirus
Thomas Mulier – Bloomberg
Appeal to G-20 heads follows U.S. plan to ease lockdowns; Tedros tells nations to remove export bans on medical gear
The head of the World Health Organization appealed for a stronger attack against the coronavirus on a webcast with world leaders, trying to rally support while U.S. President Donald Trump and others question the need for the extreme steps the agency has championed.
/bloom.bg/2wytfo6

Industry calls on regulators to postpone initial margin timeline amid coronavirus pandemic; ISDA and 20 other trade associations have written to regulators to delay the execution of initial margin requirements due to the coronavirus pandemic.
Kiays Khalil – The Trade
The Internal Swaps and Derivatives Association (ISDA) and 20 other trade associations have called on regulators to suspend the timeline for the initial margin (IM) phase-in requirements due to the impacts of the coronavirus pandemic.
/bit.ly/33TMu7B

Fed Hears Pleas to Ease Rules on Banks in Options Markets
Silla Brush, Benjamin Bain, and Jesse Hamilton – Bloomberg
CBOE, Nasdaq and NYSE say bank regulations risk hurting market
Capital rules may trigger a retreat by banks, exchanges say
Amid the coronavirus outbreak, the options market has been a crucial tool for investors seeking to protect themselves from the wild swings of stock prices. Now, just as trading is surging, exchanges are warning that regulations could sideline banks that keep the market functioning.
/bloom.bg/2UKaw0C

Mnuchin Says U.S. Financial Markets to Remain Open; Treasury secretary doesn’t rule out limiting trading hours if needed due to coronavirus pandemic
By Paul Kiernan – WSJ
The nation’s top financial regulators on Thursday stressed the importance of keeping financial markets open during the coronavirus pandemic, though Treasury Secretary Steven Mnuchin didn’t rule out limiting trading hours.41bt
/on.wsj.com/2xvruI8

Fragile markets prompt providers to leave benchmarks unchanged; S&P Dow Jones Indices, FTSE Russell and ICE Data Services all delay index rebalancing
Philip Stafford and Tommy Stubbington, and Richard Henderson – FT
Global index providers have delayed updates to some of the most important stock and bond indices amid concern that forcing investors to follow suit could trigger fresh market turmoil. S&P Dow Jones Indices, FTSE Russell and ICE Data Services have all postponed updates to benchmarks, which would normally be rebalanced at the end of the month to reflect changing market prices.
/on.ft.com/2yazQoZ

Spend Generously, Take Care of Workers: Coronavirus Stimulus Takes Lessons From TARP; The 2008 bailouts helped end the financial crisis but created resentment among Americans who felt banks took most of the benefits. The current plan puts individuals and Main Street at the center, with pledges of large amounts of cash.
Greg Ip and Jacob M. Schlesinger – WSJ
It took deeply unpopular bailouts costing hundreds of billions of dollars to help end the most-recent economic crisis. Policy makers swore they’d never do it again. “There will be no more tax-funded bailouts—period,” then-President Obama declared in 2010.
/on.wsj.com/33Reo4o

‘The world is learning to work flexibly,’ says BMO fund CEO; Kristi Mitchem, head of the asset management division, on home working and staying positive
Siobhan Riding – FT
Fund management executives around the world are grappling with working at a distance from their colleagues — but Kristi Mitchem has had a head start. Since taking the reins at BMO Global Asset Management, the C$355bn ($251bn) asset management arm of Canada’s BMO, a year ago, Ms Mitchem has been based in San Francisco, a city nearly 3,000 miles away from her group’s Toronto headquarters.
/on.ft.com/2JlvduJ

European stock exchanges working well in extreme conditions
Reuters
Stock exchanges across Europe have implemented their business continuity plans due to the coronavirus epidemic and markets are working well under extreme conditions, the Federation of European Securities Exchanges said on Thursday.
/reut.rs/33L7HRe

The Week That Changed the Corporate Bond Market
Chris White – ViableMkts & BondCliQ via LinkedIn
Over the years, there have been two camps on corporate bond market structure that hold very different opinions. One group has steadfastly promoted the idea that innovative solutions have improved corporate bond market trading conditions (“we don’t believe there is a liquidity crisis whatsoever”). The other group has warned that the relative calm we’ve enjoyed in the market over the past decade, thanks to central bank intervention, has masked material structural issues that will have negative consequences on corporate bond market liquidity.
/bit.ly/33RZwCz

Bans on short selling are handouts to the ‘corporate socialists’; We short sellers see risks better than anyone else because it is our job
Carson Block – FT
There is one sure-fire feature of crises: lawyers and lobbyists from big companies descend on capital cities to try to enact their clients’ punch lists of protectionist fantasies. So it has gone with the recent imposition of short selling bans in South Korea, Italy, France, Greece, Spain and others. Not only are these bans solutions in search of problems, but worse, they harm markets.
/on.ft.com/2wwO4jN

Exclusive: Capital One got CFTC waiver after oil price plunge increased swap exposure – sources
Chris Prentice, Devika Krishna Kumar – Reuters
U.S. lender Capital One Financial Corp got a waiver from the Commodity Futures Trading Commission (CFTC) after plunging oil prices increased the bank’s derivatives exposure above a key regulatory threshold, according to two sources with knowledge of the matter.
/reut.rs/2UiWuEo

Coronavirus turmoil delivers shock to the hedge fund industry; The sector’s ability to weather all conditions was called into question in 2008 and is being put to the test once more
Robin Wigglesworth, Laurence Fletcher and Ortenca Aliaj – FT
Earlier this year, hedge fund magnate Ray Dalio admitted that he and his team at Bridgewater Associates were “dumb shits” when it came to pandemics. The best they could do was to ride straight through the coronavirus-triggered market turbulence.
/on.ft.com/3dx0Gbd

Surgeon Henry Marsh: Covid-19 and the doctor’s dilemma; For medics, the virus brings agonising professional choices — and acute personal risk
Henry Marsh – FT
The realisation that Covid-19 was going to be a very serious problem came to me shortly after my 70th birthday two weeks ago. I had celebrated this in a small and happy party with my family and friends — in retrospect, some of them almost certainly were already infected with the virus. We joked about not shaking hands or embracing. I didn’t appreciate it at the time, but the party was not just celebrating my birthday but also marking my entry into a higher-risk group for dying from the virus.

Why the Fed should put the Treasuries market on a war footing; Analysts say it is time to revive the yield curve control policy after more than 70 years
Colby Smith – FT
When cracks emerged in the $18tn US government bond market this month, the Federal Reserve sprang into action to ensure volatile trading conditions did not destabilise the world’s largest and most liquid financial benchmark.
/on.ft.com/2R4Tdqn

Short-Term Yields Go Negative in Scramble for Cash; One-month and three-month Treasury bills sported negative yields for the first time in more than four years
Caitlin Ostroff and Paul J. Davies – WSJ
Yields on the safest, short-term Treasurys have settled into negative territory for the first time in more than four years, as investors continue clamoring for cash and safe dollar assets even as some markets show signs of normalization.
/on.wsj.com/3anYbpr

ECB Begins New Bond Purchases, Throwing Weight Behind Virus-Hit Nations; Eurozone’s central bank sends message to investors, saying previous limits won’t restrain its EUR750 billion push
Tom Fairless and Laurence Norman – WSJ
The European Central Bank sent a powerful signal to investors that it will aggressively support Italy and other indebted eurozone countries that are battling the coronavirus, starting purchases under a new EUR750 billion ($812 billion) bond-buying program and stating that it won’t be bound by earlier limits on its bond buys.
/on.wsj.com/2xpk2P0

Mass Job Cuts Across U.S. Threaten to Leave Millions Without Health Insurance
By Angelica LaVito – Bloomberg
About half of all Americans have health coverage through work; Revenue drop, rising expenses likely to deal blow to insurers
A record 3.28 million people filed for unemployment insurance last week as the coronavirus locked down business activity across the U.S., raising the possibility that millions could lose health coverage during a global crisis.
/bloom.bg/2Jg5Lqv

Exchanges, OTC and Clearing

The WFE launches Covid-19 information-sharing webpage
World Federation of Exchanges
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has created a new page on its website to provide a single, reliable, comprehensive source of exchange and CCP efforts to keep open, and operate, resilient markets in the midst of the coronavirus (Covid-19) crisis.
/bit.ly/2vQ4eUS

‘I feel disconnected from the world and from the market’: NYSE floor trader
Ines Ferré – Yahoo Finance
Traders accustomed to the bustling floor of the New York Stock Exchange (NYSE) are adapting to working from home after the NYSE temporarily closed the floor over coronavirus concerns and went fully electronic on Monday. “I definitely feel very disconnected from the world and disconnected from the market,” Jonathan Corpina, Senior Managing Partner at Meridian Equity Partners, told Yahoo Finance’s “The First Trade” on Monday.
/yhoo.it/2Ui9NEW

Euronext chief backs short-selling ban; Head of European exchanges group says ‘compromise’ has helped keep markets open
Philip Stafford and David Keohane – FT
The chief executive of Euronext has said he backs the French government’s decision to ban short selling in an attempt to restore calm to markets shaken by the impact of coronavirus.
/on.ft.com/3brw9d1

‘Most photographed’ Wall Street trader Peter Tuchman has coronavirus
Reuters
Peter Tuchman, dubbed the “most photographed trader on Wall Street,” took to Instagram on Thursday to tell his 10,000-odd followers that he had tested positive for coronavirus.
/bit.ly/33NQqXw

XTX Markets commits £20 million to charities fighting coronavirus; Market maker XTX Markets is the latest firm to give funding to global coronavirus relief efforts.
Hayley McDowell – The Trade
London-based market maker XTX Markets has confirmed it has committed £20 million to three charities that are battling the coronavirus pandemic.
/bit.ly/2UoNr4N

Asia CCPs forced to hike margins rapidly during equities rout; Margins for Nikkei 225 futures more than doubled at JSCC in a matter of days
Aileen Chuang – Risk.net
Asia’s largest clearing houses had to hike margins dramatically during the March coronavirus equities rout, forcing clearing members to meet large intraday margin top-up calls – and vindicating long-held concerns that bourses compete on margin on benchmark contracts, dealers say.
/bit.ly/2wwVDab

Fintech

Barchart Releases Daily Price Assessment Report for International Grain Markets
Barchart
Barchart, a leading provider of data and analytics to the commodities industry, announces the release of a free daily report that provides benchmark price assessments for international cash grain markets. Alongside additional commodity price reports available from cmdty by Barchart, the Daily International Grain Price Report is delivered to users’ inboxes every morning and presents global pricing insights across grains, oilseeds, vegetable oils, and feed markets.
/bit.ly/33NMDcJ

Cryptocurrencies

Bankruptcy Trustee to Hand Quadriga Users’ Information to Canadian Taxman
Nikhilesh De – Coindesk
Ernst & Young (EY), the court-appointed bankruptcy trustee overseeing the winding up of crypto exchange QuadrigaCX, will be turning all user information over to the Canada Revenue Agency (CRA). EY reported Tuesday that the CRA had asked it to turn over a trove of information about QuadrigaCX, whose customers have been waiting for more than a year to get back $190 million deposited on the exchange.
/bit.ly/2WNr1M0

CME Group board of directors nominee says the firm should start mining bitcoin
Yilun Cheng – The Block
Dante Federighi, a nominee for CME Group’s upcoming board of directors election, has proposed that the company start mining bitcoin and other cryptocurrencies to create new revenue streams for shareholders. Federighi is the co-founder of Fortezza Forza RMC Fund LLC, an investment management firm focused on short-term interest rates and energy products like crude oil. He has been named a nominee for CME Group’s Class B-2 director along with three other nominees. Ultimately, two nominees from the Class B-2 group will be elected during CME’s next board member election in May.
/bit.ly/3bzb7cf

Miners Are Selling More Bitcoin Than They Are Mining
Omkar Godbole – Coindesk
While bitcoin (BTC) looks set to prolong its recent bullish moves, those responsible for making new bitcoin have increased their selling. The world’s largest cryptocurrency by market value rose from $3,867 to $7,000 in the 13 days to March 25, according to CoinDesk’s Bitcoin Price Index. Yet, throughout the 81 percent recovery rally, miners sold more coins than what they generated, according to the miner’s rolling inventory (MRI) figure, a measure created by crypto data company ByteTree to track the changes in inventory levels held by miners.
/bit.ly/3dAdZaI

HSBC Puts $10B of Private Placements on R3’s Corda Blockchain
Nathan DiCamillo – Coindesk
HSBC has put $10 billion of paper-based private placement records on R3’s Corda blockchain and plans to ramp up the project through this year and next. “We’re confident that we’ll be able to put significant additional volume and value of private placements from new and existing clients [on the platform] over the next 12 to 18 months,” said Ciaran Roddy, head of custody innovation and strategy initiatives at HSBC.
/bit.ly/2QQ3l5V

Block.one invests $150M in its social media app Voice to fund independent operations
Celia Wan – The Block
Block.one, the publisher of the EOS blockchain protocol, has invested $150 million in Voice, a social media platform launched in June last year. Announced on Thursday, the investment is said to kickstart Voice’s independent operation separate from Block.one, per a company statement. The $150 million consists of $100 million in cash and $50 million in IP assets, a Block.one spokesperson told The Block.
/bit.ly/2Um15p7

Block.one Absorbs Team Behind Now-Defunct Block Producer EOS New York
Paddy Baker – Coindesk
EOS creator Block.one has acquired the team behind once-prominent block producer EOS New York, which has now entirely ceased operations. Block.one, which raised more than $4 billion in a yearlong initial coin offering (ICO) in 2018, said Wednesday it had hired EOS New York founders Rick Schlesinger and Kevin Rose, as well as their team. Block.one says the former EOS New York staffers will work on community outreach initiatives. “In our new role, we plan to listen to and work with communities to leverage Block.one’s digital asset positions to maximize the health and security of various public networks,” Schlesinger and Rose said in a statement.
/bit.ly/2wJDLIW

US Says Venezuelan President Maduro Hid Massive Drug Ring Proceeds in Crypto
Danny Nelson – Coindesk
Venezuelan President Nicolas Maduro tapped crypto to conceal transactions related to illicit drug-running, the U.S. Department of Justice alleged in an indictment Thursday. The sweeping charges against Maduro and 14 other Venezuelan officials are primarily targeted at stopping an alleged multibillion-dollar cocaine trafficking ring the DOJ claimed wreaked havoc on American communities for over 20 years. It allegedly involved drug runners, Colombian revolutionaries and narco-terrorism. Venezuela’s crypto superintendent, Joselit Ramirez Camacho, 33, was also indicted in a separate action in the Southern District of New York.
/bit.ly/3ar9f5e

Malta Denies COINMALEX, Crypto Foxtrades Have License to Operate
Aziz Abdel-Qader – Finance Magnates
Two crypto exchanges called “COINMALEX” and “Crypto Foxtrades” are neither licensed to operate nor regulated in Malta, the country’s chief financial watchdog said. Both exchanges claim on their websites that they are licensed or operating in the island nation’s fledgling cryptocurrency industry. One of the flagged entities, Crypto Foxtrades, went a step further claiming that it holds a Category 3 Investment Services provider from the Malta Financial Services Authority. The MFSA, however, issued a statement denying that it has ever regulated any of the two platforms or that they ever had permission to operate in the country.
/bit.ly/2UloAi8

A Binance crypto debit card is in the works
Celia Wan – The Block
Binance has officially announced the Binance Card, stating that “The Binance Card is issued by Visa and accepted by more than 46 million merchants in 200 regions and territories, which makes shopping with crypto easier than ever before.” “The Binance Card does everything a regular payment card does, plus much more. It works like a regular debit card issued by your bank – which, in this case, is your Binance.com account. You simply top-up your card with funds through the Binance Card App in the form of Bitcoin or BNB, and you’re ready to go. It’s as simple as transferring BNB from one wallet to another,” the blog post explained.
/bit.ly/3amKKGl

Ex-CFTC chief’s digital dollar initiative adds 22 new advisors, will release white paper in the next two months
Yilun Cheng – The Block
“Crypto dad” Christopher Giancarlo’s digital dollar initiative has named 22 new advisory members and is set to release a white paper in the next two months. Giancarlo, the former chairman of the Commodity Futures Exchange Commission (CFTC), first created the Digital Dollar Foundation in Jan. 2010. The goal, according to a previous announcement, is to advocate for the creation of a “portable” digital dollar that can be sent “as easily as a text.”
/bit.ly/2UoTPJj

Coinbase’s Retail Payments Wing Crosses $200M in Transactions
Danny Nelson – Coindesk
Virus or not, people are still paying for goods in bitcoin. That’s the verdict from new numbers out of Coinbase’s retailer payment portal Coinbase Commerce, which on Thursday passed a milestone in its two-year history: $200 million in total transactions processed. That comes from a massive network: 8,000 integrated retailers now accept cryptocurrencies alongside their other payment streams. It’s a bright spot for adoption in an otherwise topsy-turvy time for bitcoin and cryptocurrency at large, which, like so much of the world, has been struggling to price in COVID-19.
/bit.ly/39nWgAf

South Korea’s biggest bank is set to launch crypto custody service
Yogita Khatri – The Block
KB Kookmin, the largest bank in South Korea, is set to launch crypto custody service for assets such as bitcoin (BTC) and ether (ETH). The bank has filed a trademark application for “KBDAC” – KB Digital Asset Custody – with the Korean Intellectual Property Office, local news outlet Digital Today reported on Friday.
/bit.ly/2QMeMeP

Politics

Pence Aide Says No Evidence for Worst-Case Virus Projections
Jordan Fabian, Josh Wingrove, and Mario Parker – Bloomberg
Models in U.K. report don’t match actual outbreaks, Birx says; She cites evidence from China, South Korea and Italy
Worst-case projections for the spread of coronavirus aren’t supported by evidence emerging from outbreaks in China, South Korea, and Italy, said Deborah Birx, the immunologist advising Vice President Mike Pence.
/bloom.bg/2WLwyml

Robert Reich Says ‘There Is No Reason to Bail Out Big Companies’; The former labor secretary on bad bailouts.
Robert B. Reich
We’re trying to stimulate the economy in the traditional way, but this is not your typical recession, not like after 2008. This economic crisis is entirely because we have an unprecedented public-health crisis. We need to shut the economy down so people can be home and safe, rather than spreading the virus if they’re not.
/bloom.bg/2wHpsVh

Glenn Hubbard on How to Avoid the Demand Doom Loop; The former chair of the Council of Economic Advisers says the government needs to cover businesses’ lost revenue.
Glenn Hubbard
If you shut down an economy in a pandemic, you need to replace private business demand. Think about all the small and midsize firms who have to turn off a switch and just not operate for eight weeks, 12 weeks, whatever it is, and lay off all their employees. That’s a cataclysmic event. The health part is unavoidable. What’s avoidable is the demand doom loop, and to do that you’d have to fill in private demand.
/bloom.bg/2QN487C

U.S. Indicts Venezuela’s Maduro on Drugs With $15 Million Reward
Chris Strohm, Patricia Laya, and Ben Bartenstein – Bloomberg
Money goes to anyone with information to help arrest Maduro; Barr says Venezuelan regime protects Colombian drug cartels
The U.S. indicted Venezuelan President Nicolas Maduro for drug trafficking on Thursday, offering a $15 million reward for information leading to his arrest, as the Trump administration ramps up pressure on an adversary it has sought to push aside.
/bloom.bg/2WTDMVk

U.S., China Trade Blame for Coronavirus, Hampering Global Economy Rescue; Frayed relationship contrasts with cooperation between Washington and Beijing during financial crisis
Bob Davis and Lingling Wei – WSJ
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. For weeks, the one phone number he hadn’t tried was Donald Trump’s.
/on.wsj.com/2JhGoV0

Local Leaders Are Showing the Way Forward; The crisis will renew respect for competence and expertise
Jeb Bush – WSJ
As governor of Florida, I dealt with the aftermath of 9/11, major floods and fires, and an anthrax attack, as well as eight hurricanes and four tropical storms over just 16 months. Each crisis, however difficult, was a learning opportunity. Each made our state and local emergency responders better at their jobs and improved Florida’s capacity to deal with future problems.
/on.wsj.com/3amCtSN

Trump questions if New York will actually need 30K ventilators
Tamar Lapin – NY Post
President Trump on Thursday downplayed the number of ventilators he thinks New York will need in the battle against the coronavirus. “I have a feeling that a lot of the numbers that are being said in some areas are just bigger than they’re going to be,” Trump said in a call to Fox News’ “Hannity.”
/bit.ly/33PW6QG

The White House has fumbled its response to the virus; World’s most advanced economy is poised to become centre of pandemic
The editorial board – FT
Donald Trump wants the US back open for business by Easter — April 12. Never mind that experts including Anthony Fauci, one of the key members of the White House coronavirus task force, believe that cases of Covid-19 might not even peak before May. The president did not say what calculation underpinned his target: “I just thought it was a beautiful day.” Yet it is easy to imagine that in the run-up to an election — one that might hinge on how his administration is perceived to have dealt not just with the health crisis but with the recession that will result — Mr Trump wants to get the markets and US growth back up again, and fast.
/on.ft.com/2xoLoEN

Trump defiles Christianity’s holiest day; Trump says he hopes to ease coronavirus guidelines by Easter
Michael Gerson – Washington Post
For the symbolic reopening of the U.S. economy, President Trump has picked the first Sunday after the Paschal Full Moon, which lands on or just after the spring equinox. This is the way Easter has been determined in most of the Christian world since the Council of Nicaea in 325 A.D., and Trump’s target date for the resumption of normal life in America seems just as arbitrary.
/wapo.st/3byhBIH

The U.S. is still exceptional — but now for its incompetence
Fareed Zakaria – The Washington Post
When a crisis hits the United States, the country’s general instinct is to rally around the flag and wish the best for its leaders. That’s probably why President Trump has seen his approval ratings rise, even though he has had a delayed and fitful approach to this pandemic. But at some point, we Americans must look at the facts and recognize an uncomfortable reality. The United States is on track to have the worst outbreak of coronavirus among wealthy countries, largely because of the ineffectiveness of its government. This is the new face of American exceptionalism.
/wapo.st/3dCla2q

Trump Campaign’s Threat on TV Licenses May Be Mostly Bluster
Todd Shields, Jennifer Epstein, and Mario Parker – Bloomberg
Broadcasters in battleground states told to stop using ad; Trump appoints members at FCC which controls TV licenses
The Trump re-election campaign told TV stations they could lose their operating licenses for airing an ad criticizing the president’s actions in the coronavirus crisis — a challenge that may be more bluster than actual threat.
/bloom.bg/2WMNicR

The Coronavirus Isn’t Trump’s Katrina. It’s His Vietnam; An unfit president will cost American lives.
By Francis Wilkinson – Bloomberg
Mistakes were made. Lies were told. The body count kept rising. President Lyndon Johnson knew the war in Vietnam was a fiasco. But he believed American prestige was on the line. And he didn’t want to be the first president to lose a war. “I know we oughtn’t to be there,” he told Senator Eugene McCarthy in a February 1966 phone call. “But I can’t get out.”
/bloom.bg/33O0RdE

Regulation

Coronavirus (COVID-19) Update—Regulatory Relief for IBs
NFA
NFA Financial Requirements Section 5 and CFTC Regulation 1.10 require each independent introducing broker (IB) Member to file a certified financial report as of the close of its fiscal year end within 90 days after the close of its fiscal year, or within 60 days for IB Members that are also registered with the SEC as securities brokers or dealers. IB Members are also required to file financial reports either semi-annually, quarterly or monthly, within 17 business days of the date for which the report is prepared. Independent IB Members generally meet their CFTC requirements by complying with NFA’s requirements.
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Regulators tackle concerns over companies’ coronavirus reporting; Initiatives include giving listed and private groups more time to publish accounts
Matthew Vincent – FT
Britain’s three main financial regulators have told companies and auditors to adopt new approaches to providing information to investors during the coronavirus outbreak as concerns mount over the quality of corporate reporting — and market reactions to it.
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ESMA issues guidance on financial reporting deadlines in light of COVID-19
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has issued a Public Statement on the implications of the COVID-19 pandemic on the deadlines for publishing financial reports which apply to listed issuers under the Transparency Directive.
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Cybersecurity Alert: Measures to Consider as Firms Respond to the Coronavirus Pandemic (COVID-19)
ESMA
As work processes adjust in response to COVID-19, firms and their associated persons should take appropriate measures to address increased vulnerability to cybersecurity attacks and to protect customer and firm data on firm and home networks, as well as devices.
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SEC Provides Additional Temporary Regulatory Relief and Assistance to Market Participants Affected by COVID-19; SEC continues to closely monitor the impact of COVID-19 on investors and capital markets
SEC
Today, the Securities and Exchange Commission announced that it is providing additional temporary regulatory relief to market participants in response to the effects of the Coronavirus Disease 2019 (COVID-19). The actions announced today involve (1) parties needing to gain access to make filings on the EDGAR system, (2) certain company filing obligations under Regulation A and Regulation Crowdfunding, and (3) a filing requirement for municipal advisors.
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Statement of CFTC Chairman Heath P. Tarbert Regarding COVID-19 Before the FSOC Principals Meeting
CFTC
Thank you, Secretary Mnuchin. I want to commend you for your outstanding leadership in working with the President and Congress to develop a comprehensive response to the impact of the COVID-19 (coronavirus) pandemic on our nation’s economy. I also very much appreciate your convening this public meeting on the measures FSOC members are taking to safeguard the U.S. financial system during this unprecedented period of market volatility.
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ICYMI: Chairman Tarbert Discusses CFTC’s Response to COVID-19 on Bloomberg TV; Chairman Tarbert on the CFTC’s Response to COVID-19:
CFTC
“[T]he last couple of weeks we have pivoted our resources to take this challenge head on. And, we are really focusing on two things. First, is really understanding what’s going on in our markets. So, the issue that you’ve raised—are people able to continue to talk to their brokers—that’s something we’ve approached with a series of targeted, temporary no-action relief to allow all of those interactions … We have asked them to make sure they have notes and make sure they are documenting it, but anything we can do to continue the markets to be orderly and liquid to keep that trading going that’s what we’ve done. So, if you visit our website which is cftc.gov/coronavirus, all of the no-action letters that we’ve done are listed there and explains to whom they apply, and what are the basic rules that we have lifted during this temporary where there is social distancing taking place.”
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FCA and PSR respond to the CMA’s guidance on business cooperation under competition law
Uk FCA
Both the FCA and PSR are supportive of the CMA’s guidance(link is external) on its approach to business cooperation under competition law, which was published on 25 March 2020. Both regulators will take a consistent approach to their competition law enforcement activity in the financial services sector (under the Competition Act 1998 and/or the Treaty on the Functioning of the European Union).
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Investing and Trading

Gold Heads for Biggest Weekly Advance Since 2008 After Squeeze
Ranjeetha Pakiam and Swansy Afonso – Bloomberg
Disruptions in the physical bullion market have roiled trading; Gold-positive conditions aren’t over, RBC Capital Markets says
Gold headed for the biggest weekly advance since 2008, rallying along with risk assets including equities, as investors weighed up the impact of massive monetary and fiscal stimulus for virus-hit economies and disruptions in the physical bullion market that have roiled trading.
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How the Pandemic Crash Compares With Slumps of the Last Century
Tara Patel and Ellen Proper – Bloomberg
The economic destruction wrought by the coronavirus has been swift, broad and deep, with manufacturing seizing up across the globe and consumers increasingly stuck at home in government-imposed isolation.
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Investors Are Exiting Some Risky Asia ETFs With Over 40% Returns
Ishika Mookerjee- Bloomberg
Inverse ETFs in Japan, South Korea, Taiwan lost $2.9 billion; Vehicles use derivatives, leverage and are viewed as risky
Investors are fleeing exchange-traded funds betting against stock index performance in some Asian markets, even as some vehicles generate returns of more than 40% amid the global coronavirus pandemic.
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Oil Industry Braces for Biggest Idling of Wells in 35 Years
Javier Blas – Bloomberg
As virus hits demand, the global glut is too big to store; Producers are already reducing output and more cuts are coming
Only the old hands at the Coffeyville oil refinery could remember anything like the prices posted this month. The small Kansas plant in the heart of rural America was offering just $1.75 a barrel for Wyoming sweet crude.
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Billionaire Mike Ashley Apologizes After Questioning Shutdown Order
Niveditha Ravi – Bloomberg
Billionaire Mike Ashley apologized in an open letter for questioning a government-mandated lock-down and attempting to keep his retail stores open. Ashley, the founder of the Sports Direct brand, sought to keep his stores open in defiance of government guidance, provoking criticism from politicians and the public. The U.K. government had ordered non-essential services to close down to tackle the spread of the coronavirus.
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OJ pips all other commodities as consumers seek vitamin boost; Coronavirus outbreak has driven demand for the restorative properties of orange juice
Emiko Terazono – FT
Consumers fearful of contracting coronavirus have been seeking to boost their immune systems the old-fashioned way: by loading up on orange juice.
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Investors spooked by outbreak seek safety in money market funds; Largest recorded inflows led by move to short-term government debt due to coronavirus
Colby Smith in New York and Richard Henderson – FT
Investors put a record amount of cash into money market funds in the week ending on Wednesday, underlining the caution from the coronavirus outbreak that prompted a global markets sell-off.
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I Became a Disciplined Investor Over 40 Years. The Virus Broke Me In 40 Days; I’ve survived — and even prospered through — four stock-market crashes. But nothing prepared me for this.
James B. Stewart – NY Times
It’s Thursday morning, March 19 — four weeks into the coronavirus crash of 2020. The Dow Jones industrial average has opened down another 700 points, after plunging below 20,000 a day before. It’s down 30 percent in a month, the steepest drop ever, even worse than during the Great Depression.
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ETFs Have Passed Their Covid-19 Stress Test; Exchange-traded bond funds are proving an integral part of today’s financial architecture
Jon Sindreu – WSJ
What doesn’t kill a useful financial instrument will probably make it stronger. During both the coronavirus selloff and this week’s bounce, big gaps have opened up between the value of exchange-traded bond funds and that of their holdings. Over the past two weeks, the iShares iBoxx $ Investment Grade Corporate Bond ETF—the largest of its type—has traded at both its largest discount and its largest premium to net asset value in 11 years.
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Federal Reserve’s Balance Sheet Tops $5 Trillion for First Time
Matthew Boesler – Bloomberg
The Federal Reserve’s balance sheet topped $5 trillion for the first time amid the U.S. central bank’s aggressive efforts to cushion debt markets against the coronavirus outbreak through large-scale bond-buying programs.
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Stock Analysts Now Need to Be Credit Analysts; Modeling growth and market size is out; understanding debt covenants and refinancing schedules is in
Jacky Wong – WSJ
In the coronavirus pandemic, stock analysts have a new job: credit analysis. As the global economy grinds to a standstill amid mandatory shutdowns, the survival of many businesses is suddenly in doubt, especially those in vulnerable sectors such as airlines, hotels and restaurants.
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Zero-Coupon Bond Index Nears Zero Bonds; Pillar of 1980s LBO boom stands on verge of extinction as index loses its last member
Sebastian Pellejero – WSJ
A pillar of the 1980s leveraged-buyout boom is on the verge of extinction. At the start of the year, just three companies remained in the ICE BofA U.S. High Yield Deferred Interest Bonds index, which tracks so-called zero-coupon corporate bonds from low-rated companies. Those are bonds that don’t make regular interest payments. Instead, investors buy them at a deep discount, receiving their full face value all at once when the bonds mature.
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Investors, Fearing Defaults, Rush Out of Junk Bonds; Money managers say junk bonds have plunged at their fastest pace ever since early March
Serena Ng and Xie Yu – WSJ
The specter of widespread corporate defaults in the coming months has caused a massive selloff in junk bonds around the world, as many debt-laden companies face the prospect of going weeks or months with virtually no revenue.
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Institutions

Deutsche Bank Delays Historic Job Cuts Program as Virus Spreads
Steven Arons and Nicholas Comfort – Bloomberg
Bank seeks to avoid further emotional distress amid crisis; HSBC, Lloyds, Citigroup, Morgan Stanley recently paused cuts
Deutsche Bank AG became the latest bank to halt plans for widescale layoffs, joining lenders including HSBC Holdings Plc and Lloyds Banking Group Plc in putting thousands of job cuts on hold because of the coronavirus outbreak.
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China’s Big Banks Post Record Profits Ahead of Virus Crisis
Bloomberg News
ICBC, world’s biggest bank, posted 5% rise in profit in 2019; Banks have been asked to step up and cushion virus fallout
China’s big banks posted record earnings last year, beefing up their capacity to cope with the virus outbreak that’s threatening to throw the nation into the worst economic slump in four decades.
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Morgan Stanley Pursuing Fixes for Wealthy Clients Hurt in Outage
Sonali Basak – Bloomberg
Morgan Stanley says it’s working on providing remedies for any clients stung by a technology problem in its wealth-management business, which lasted about four hours Wednesday. The issue wasn’t related to trading-volume issues or the fact that about 90% of the bank’s staff is working from home amid the coronavirus outbreak, according to a Morgan Stanley spokesperson. Rather, the problem was from a bug related to an external software provider.
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Citigroup chief says navigating virus fallout is ‘fine line’; Mike Corbat says US banks need to guard against an increase in consumer indebtedness
Laura Noonan – FT
Citigroup’s chief executive says America’s banks need to walk a “fine line” between supporting customers through the coronavirus crisis and burdening them with loans they cannot pay.
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ABN Amro confirms $200 million hit from client’s failed margin call; A client could not meet margin calls on US options and futures trades, forcing ABN Amro to close-out the position and take a $200 million loss.
Hayley McDowell – The Trade
Dutch bank ABN Amro has confirmed that it will incur a significant $200 million loss after a single client failed to meet margin calls to keep trading.
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ABN AMRO Takes $200 Million Loss on U.S. Client; Loss offers latest evidence of how the fallout of the coronavirus pandemic is spreading through the financial system
Ben Dummett – WSJ
ABN AMRO Bank NV said Thursday it will take a $200 million net loss after a U.S. client of the Dutch lender’s clearing division couldn’t meet a margin call on a loan. The bank’s loss offers the latest evidence of how the fallout of the coronavirus pandemic is spreading through the financial system as banks, hedge funds, and other market participants try to minimize their exposure to potential losses from wild swings across markets.
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BGC Partners Provides Operational and Outlook Update
BGC Partners
Howard W. Lutnick, Chairman and Chief Executive Officer of BGC said: “In these unprecedented and difficult times, all of us at BGC Partners wish to express sympathy for all who have been experiencing the pain and stress of this global health and financial crisis.
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Coronavirus Fallout Could Cut Wall Street Bonuses as Much as 40%, Expert Says; Compensation adviser sees efforts to fight the pandemic leading to recession, curbing payouts
Ted Bunker – WSJ
Private-equity firms and the rest of Wall Street could see a 30% to 40% drop in bonuses as the coronavirus bites into everything from asset values to deal flow, a compensation consultant predicted Wednesday.
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Regions

Farmers warn over harvests amid shortage of workers; Cross-border flows of agricultural labour slow, forcing growers to recruit at home
Judith Evans and Emiko Terazono in London and Leila Abboud – FT
At this time of year, Matt Stanton would normally be preparing to welcome 70 to 80 Romanian seasonal workers to harvest asparagus on his family farm in Kent, south-east England. This year, he is expecting seven.
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Swiss keep calm and rest on their months of stockpiles; Switzerland has one of the largest strategic reserves of food and medicine in the world
Sam Jones – FT
Over the past week, customers across Europe have cleared supermarket shelves of pasta, tinned foods and toilet rolls as the coronavirus pandemic has plunged countries into lockdown, seized up supply chains and triggered bouts of panic buying. But in the Swiss city of Zurich, the only shortages in supermarkets have been of customers.
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Goldman, Morgan Stanley receive approvals for majority stakes in China ventures
Zhang Yan, Julie Zhu – Reuters
REuGoldman Sachs (GS.N) and Morgan Stanley (MS.N) said on Friday they had received the final regulatory approvals to take majority stakes in their China securities joint ventures, as Beijing continues to open its financial sector to foreigners.
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Vietnam Will Stockpile 190,000 Tons of Rice for Food Safety
Mai Ngoc Chau – Bloomberg
Vietnam’s General Department of State Reserves plans to have 190,000 tons of rice in storage by June 15 to ensure the country has enough food amid the novel coronavirus outbreak, the finance ministry said on its website.
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Singapore’s PM Warns Nation Is Facing ‘Very Grave Situation’
Philip Heijmans – Bloomberg
Timing of elections has not yet been decided, says Lee; Tapping reserves again a possiblity if situation worsens
Singapore is facing a grave economic challenge posed by the coronavirus pandemic that may affect the timing of the nation’s election, said Prime Minister Lee Hsien Loong.
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Migrant Farmworkers Whose Harvests Feed Europe Are Blocked at Borders; Legions of seasonal workers from Eastern Europe who harvest crops from Spain to Sweden can’t get in, forcing a rapid rethink of how to secure food at Europe’s farms.
Liz Alderman, Melissa Eddy and Amie Tsang – MY Times
When Europe tightened its borders to prevent the spread of the coronavirus, France’s biggest farmers sounded an alarm: The workers they rely on from other countries to harvest much of the nation’s food could no longer make the trip.
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Miscellaneous

Nonprofits Built Themselves on a Dream. Their New Mission: Survival; Upended by the coronavirus outbreak, nonprofits are laying off workers, seeking help from stretched donors and trying to stay alive.
David Streitfeld – WSJ
It took Stephanie Cartier nearly three years to open No Limits, a central New Jersey cafe operated by people with intellectual disabilities. That was early February. It took only a few days in March to close the 65-seat restaurant indefinitely.
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