The World
U.S. stocks closed out their worst quarter since the depths of the financial crisis, a stunning blow for the market that few investors could have anticipated at the start of the year. The longest-ever bull market in U.S. history ended abruptly, with declines so sharp that rarely used mechanisms to halt trading across the entire market were activated by exchanges on multiple occasions. The S&P 500 finished Tuesday down 42.06 points, or 1.6%, to 2584.59, posting a 20% loss for the quarter—its biggest quarterly decline since 2008. The Dow Jones Industrial Average fell 410.32 points, or 1.8%, to 21917.16 and lost 23% for the quarter, its worst showing since 1987. The Nasdaq Composite slid 74.05 points, or 1%, to 7700.10 and finished the quarter down 14%. Money managers and strategists are reluctant to call when the worst of the selling might pass. “We’re really in unprecedented territory,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management. (Wall Street Journal)
China has rolled out new measures to support its economy from the coronavirus pandemic, including an additional central bank credit line of 1 trillion yuan (US$140 billion) to small lenders. The initiatives announced at a cabinet meeting on Tuesday ranged from new bond quotas for local authorities to income support for poor Chinese. The government also announced new monetary policies, including the prospect of lower deposit reserve requirements for small banks in the future and an additional 1 trillion yuan for small banks to spur lending to small businesses. (South China Morning Post)
Factories fell quiet across most of Europe and Asia in March as the coronavirus pandemic paralyzed economic activity, with evidence mounting that the world is sliding into deep recession. Manufacturing activity has tumbled, purchasing managers’ index (PMI) surveys showed on Wednesday, with sharp slowdowns in export powerhouses like Germany and Japan overshadowing a modest improvement in China. In the euro zone, IHS Markit’s final March manufacturing PMI sank to lowest since mid-2012, when the currency union’s debt crisis was raging, and was well below the mark separating growth from contraction. Output from Britain’s factories shrank at the fastest pace since the debt crisis as the spread of coronavirus led to a spiraling of delays and hammered business confidence. (Reuters)
Goldman Says Shale Might End Up Being a Winner of the Oil War: The bruised and battered U.S. shale industry is poised to emerge from the oil crash a winner, according to Goldman Sachs Group Inc. Shale’s high-pressured wells and short drilling time mean the industry is well positioned to benefit if the current plunge in oil causes long-term damage to production capacity, resulting in a price jump when demand returns, Goldman analyst Damien Courvalin said in a note dated March 31. (Bloomberg)
The renewable energy sector is pressing for the "phase 4" coronavirus response bill to provide the aid that was omitted from the recent $2 trillion rescue package — and they might have a wider opening this time around. Wind and solar developers are warning of project cancelations and layoffs as activity is frozen, supply chains are disrupted, and companies risk missing deadlines to use tax credits. (Axios)
Beef costs are up at stores, but futures are down: Republican Charles E. Grassley, a senior Judiciary Committee member will ask the Justice Department and the U.S. Department of Agriculture to look into live cattle future prices that declined in March as meat packers saw prices rise for the boxed beef they sold to grocery stores and other retailers. (Roll Call)
Europe's farmers are staring at their fields and worrying that with people confined to their homes, and their home countries, crops may wither on the vine this year. Farms across Western Europe are deeply dependent on Eastern Europeans who travel for work during the growing season. Yet with lockdowns in place as agriculture wakes up from its winter slumber, German asparagus may start rotting in the field and French strawberries may suffer from a lack of tending. European countries say they have enough food, for now. (Washington Post)
Home Depot executed a "Stop-Sale" on all N95 masks in stores and HomeDepot.com and redirected all shipments to be donated to hospitals, healthcare providers and first responders around the country. (Home Depot)
Whole Foods workers organized a national “sick-out” protest on Tuesday, demanding that the grocery store give employees double their normal wages as “hazard pay” for working on the frontlines during a pandemic. The Whole Foods protest follows worker-organized strikes for better coronavirus protections at Instacart, the grocery delivery service, and at an Amazon warehouse in New York. (The Guardian)
Hobby Lobby is defying state-mandated lockdowns by quietly reopening stores, including nearly all of its stores in Wisconsin and Ohio. A March 28 memo obtained by Business Insider equipped managers with talking points for "how to respond and communicate if visited by a local authority that asks why we are open." (Business Insider)
For weeks, former president Barack Obama has chosen not to respond to the taunts as President Trump seeks to deflect responsibility for the widespread coronavirus outbreak in the United States by shifting some blame to his predecessor. But on Tuesday, Obama appeared to fight back. “We’ve seen all too terribly the consequences of those who denied warnings of a pandemic,” he wrote on Twitter to his nearly 115 million followers, in what could be read as a critique of Trump’s initial efforts to minimize the threat of the pathogen. (Washington Post)
Finance
Goldman Sachs has revised its view on how the coronavirus will impact the U.S. economy, seeing a sharper downturn than originally thought followed by an even bigger upturn. Among its expectations are that the unemployment rate will peak at around 15% later this year, well above original expectations for 9%. Gross domestic product is forecast to fall 9% in the first quarter followed by a stunning 34% plunge in the second quarter that would be by far the worst period in post-World War II history. Goldman previously had forecast respective GDP drops of 6% and 24% and a top unemployment rate of 9%. (CNBC)
Millions of homeowners are set to miss their monthly mortgage payments today. But the move shifts the squeeze onto mortgage lenders, who owe payments on home loans they resold to bond investors as debt instruments. Now, the industry — backed by an array of other players in housing finance — is urging the Federal Reserve to step in and help bridge the gap by lending to it. Most expect the central bank to do so. Lenders have their backs against the wall after failing to secure direct help in the $2.2 trillion stimulus package President Trump signed Friday. Yet the Fed has not announced it will ride to the rescue. (The Finance 202)
Financing costs in the commercial paper market — typically seen as one of the safest lending markets, where companies borrow cash for periods up to one year — have soared since the coronavirus pandemic reached US shores. For some companies, the rate now sits at the highest level since the global financial crisis. Costs rose in part because money market funds that are typically big buyers of the debt have had to sell to meet a wave of redemptions. Some multinationals have since sought alternative financing through bank credit lines and the bond market to see them through the deepening economic downturn. (Financial Times)
The market’s decline has already damaged retirement account balances. Now, more companies are cutting the contributions they make to employees’ 401(k) plans to save cash in the economic crisis sparked by the coronavirus. (Wall Street Journal)
Private equity funds hunting for deals during and after the coronavirus pandemic will likely turn to the public markets, according to PitchBook. In a new research note, PitchBook analysts predicted that the health and economic crisis would cause an upswing in PIPE deals, or private investments in public equities. These deals — which involve publicly traded companies selling shares or convertible securities to private investors, typically at a discount price — are more likely to occur when “cyclical businesses look for cash when credit is hard to come by,” the analysts said. (Institutional Investor)
Private equity groups seek US small business rescue loans: Groups on Wall Street are pressing the Trump administration to allow private equity-owned companies to access hundreds of billions of dollars in loan funds earmarked for US small businesses hit by the coronavirus pandemic. The Wall Street groups are taking aim at the so-called affiliation rule, under which small businesses can be barred from accessing the rescue funds if they are backed by a private equity firm whose portfolio companies collectively have a workforce that exceeds the 500-person limit. (Financial Times)
Junk bonds show signs of life: Investors are showing more appetite for speculative-grade corporate bonds and loans, the latest sign of easing credit-market conditions after markets seized up earlier in March. (Wall Street Journal)
Technology
The new coronavirus pandemic is deepening a national digital divide, amplifying gains for businesses that cater to customers online, while businesses reliant on more traditional models fight for survival. The process is accelerating shifts already underway in parts of the U.S. economy in ways that could last long after the health crisis has passed, some analysts say. Many bricks-and-mortar retailers, which had seen falling foot traffic for years due to online competition, have now shuttered their stores while online merchants watch sales boom. And sectors that had long resisted the move online are now joining in: Doctors and therapists offer telemedicine appointments while their offices sit nearly empty; yoga studios and other fitness providers are offering remote sessions; schools and universities have moved classes online. (Wall Street Journal)
Shanghai judicial courts start to replace clerks with AI assistants. The courts in Shanghai will use AI assistants to transcribe case notes, pull out files and present digitised evidence. The city’s pilot programme is part of a broader effort to modernise China’s judicial system through the use of technology. (South China Morning Post)
Weather forecasts are at risk from coronavirus lockdowns. (Bloomberg)
Apple has acquired popular weather app Dark Sky and will be shutting down the Dark Sky Android and Wear OS apps in July. (The Verge)
Netflix and YouTube streaming has grown so much that they have to limit bandwidth. Video game live-streaming is way up. Spotify music streaming, on the other hand, has gone down. For podcasts, downloads are down; listening is down more. Meanwhile, gaming services are booming. It’s not just Zoom. Social chat and streaming apps are seeing a surge in new users. (Chartable & Bloomberg)
Scientists have developed an artificial intelligence system that can translate a person’s thoughts into text by analysing their brain activity. Researchers at the University of California, San Francisco, developed the AI to decipher up to 250 words in real time from a set of between 30 and 50 sentences. The algorithm was trained using the neural signals of four women with electrodes implanted in their brains, which were already in place to monitor epileptic seizures. (The Independent)
Smart Links
Governments around the world – including Thailand, India, and Germany – urge citizens to refrain from making coronavirus April Fools’ Day jokes. (Washington Post)
Bill Gates explains how to make up for lost time on covid-19. (Washington Post)
Harvard delays elections. (Harvard Gazette)
Here's what made Michael Jordan great, via Duke star who played against MJ. (ESPN)