Dow sruged 558 closing near the highs, advancers over decliners 3-1 & NAZ advanced 323. The MLP index added 3+ to the 108s & the REIT index rose 10 to the 342s. Junk bond funds were bid higher & Treasuries edged lower. Oil fell 1+ to under 21 & gold closed down 4 to 1756 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The first people to lose their jobs, worked at restaurants, malls, hotels & other places that closed to contain the coronavirus pandemic. Higher skilled work, which often didn't require personal contact, seemed more secure. That's not how it's turning out. A 2nd wave of job loss is hitting those who thought they were safe. Businesses that set up employees to work from home are laying them off as sales plummet. Corp lawyers are seeing jobs dry up. Gov workers are being furloughed as state & city budgets are squeezed. And health-care workers not involved in fighting the pandemic are suffering. The longer shutdowns continue, the bigger this 2nd wave could become, risking a repeat of the deep & prolonged labor downturn that accompanied the 2007-09 recession. The consensus of economists is that 14.4M jobs will be lost in the coming months, & the unemployment rate will rise to a record 13% in Jun, from a 50-year low of 3.5% in Feb. Already nearly 17M Americans have sought unemployment benefits in the past 3 weeks, dwarfing any period of mass layoffs recorded since World War II.
The economic shutdown due to the coronavirus pandemic is costing the US perhaps $25B a day in lost output and cannot be sustained indefinitely, St Louis Federal Reserve Pres James Bullard said in saying the country needs widespread testing & risk management strategies so the economy can reopen. Restarting the economy would not be done by a “pronouncement” of any politician but as households & firms find ways to resume daily life “knowing this disease is out there,” Bullard added. Widespread testing or other ways to mitigate risk, even business by business or school by school, would be key, he said.
Wells Fargo (WFC) reported a plunge in Q1 profit as the bank set aside Bs of $s to cover potential loan-losses from the coronavirus pandemic. The gov has poured Ts of $s into financial markets & launched stimulus programs to support individuals & small businesses whose income has stalled due to the virus. But the money has not gotten into people's hands immediately, leading WFC & other banks to offer forbearance for home, auto & credit-card borrowers who meet certain criteria. With or without those programs, the unpaid bills are stacking up. Under a new accounting rule, banks must predict losses over the life of a loan & reserve that cash now, which led WFC to set aside $3.83B in credit loss provisions, up from $845M a year earlier. "Our results were impacted by a $3.1 billion reserve build, which reflected the expected impact these unprecedented times could have on our customers,'' CFO John Shrewsberry said. The 4th-largest US lender's quarterly profit fell to $42M (1 penny per share) from $5.51B ($1.20 per share last year). The bank also reported an impairment of securities of $950M due to the economic & market conditions. Analysts had expected EPS of 33¢. It was not immediately clear whether the estimates were comparable. Revenue tumbled 18% to $17.7B in Q1, as the US banking sector grapples with what is expected to be the worst recession in generations. The stock dropped 1.27.
club.ino.com/trend/analysis/stock/WFC?a_aid=CD3289&a_bid=6ae5b6f7
Johnson & Johnson (JNJ), a Dow stock & Dividend Aristicrat, reported Q1 profit & sales that rose above expectations and boosted its div, offsetting a downbeat full-year outlook. EPS rose to $2.17 $1.39 a year ago. Excluding non-recurring items, adjusted EPS rose to $2.30 from $2.10, beating the consensus of $2.01. Revenue grew 3.3% to $20.7B, above the consensus of $19.7B, with all 3 business segments topping expectations. Pharmaceutical sales rose 8.7% to $11.1B, medical device sales declined 8.2% to $5.93B & consumer health sales increased 9.2% to $3.63B For 2020, JNJ lowered its adjusted EPS guidance range, citing the impact of the COVID-19 pandemic, to $7.50-7.90 from $8.95-9.10, which is below the consensus of $8.27, & cut its sales forecast to $77.5-80.5B from $85.4-86.2B, below the consensus of $81.1B. Separately, JNJ raised its quarterly div by 6.3% to $1.01. The stock rose 6.26.
club.ino.com/trend/analysis/stock/JNJ?a_aid=CD3289&a_bid=6ae5b6f7
Boeing (BA),a Dow stock, reported another 75 cancellations for its 737 MAX jetliner in Mar, as the coronavirus crisis worsens disruptions from the grounding of its best-selling jet. The planemaker posted a total of 150 MAX cancellations in Mar, including 75 previously reported from Irish leasing company Avolon. New cancellations came from buyers including 34 of 135 aircraft ordered by Brazil's GOL. The cancellations come as BA seeks to untangle delivery commitments after halting output of the MAX in Jan, following delays in returning it to service. The company, facing a 13-month-old freeze on deliveries of the MAX & now disruption to deliveries of larger planes due to the coronavirus epidemic, said it had delivered 50 planes in Q1, nearly a 3rd of the 149 a year earlier. BA posted orders in Mar for 12 787 Dreamliners, one 767 freighter & 18 pre-MAX versions of the 737 for the P-8 maritime patrol program. For Q1, it posted 49 new orders, or a negative total of 147 after cancellations. After further accounting adjustments representing jets ordered in previous years but now unlikely to be delivered, BA's adjusted net orders sank to a negative 307 airplanes. The stock sank 6.14.
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
There is a “hopeful possibility” that the sharp recession facing the country can be a “temporary downturn,” but this optimistic view comes with several cautionary notes, said Chicago Federal Reserve Pres Charles Evans. “There are many caveats in the hopeful story line, and many, many things must go right in order to minimize the economic pain,” Evans added. Evans said a candid assessment of the economy is that a deep downturn cannot be avoided. The Ts of $s the federal gov & the central bank are providing to cushion the blow from the pandemic has created a chance that the economy could begin to recover in H2, under the condition that the public health situation allows it, Evans said. The Chicago Fed pres said a spike in inflation was not one of the things he was worried about. In fact, he said he was more concerned that inflation would be too low. Evans also downplayed risks of “moral hazard,” where the Fed's help to financial markets could lead investors to take more risks in the future in the belief that the Fed would bail them out if the market turned against them. In a widespread national shock, the role of gov is to socialize more of the losses, Evans said. “There’s no way you could have insured against this,” he said. “A lot of this right now is, ‘Let’s get everybody to the second half of this year and then think about what the future looks like from there,’ ” Evans said.
Oil futures ended at a roughly 2-week low, weighed down by a global glut of crude as demand slumped due to the disruptions to travel and trade resulting from the COVID-19 pandemic. Price pressure from that weak demand & oversupply outweighed support from an agreement over the weekend by major producers to cut output, which ended a month-long price war between Saudi Arabia & Russia. West Texas Intermediate crude for May fell $2.30 (10.3%) to settle at $20.11 a barrel after a brief drop to as low as $19.95. Prices for the front-month contract marked the lowest finish since Mar 30. Jun Brent crude lost $2.14 (6.7%) at $29.60 a barrel, ending at the lowest since Apr 1. Oil saw a mixed finish on Mon, with US benchmark prices down, but global benchmark prices posting a gain. After several days of intense negotiations, members of OPEC & allies, collectively known as OPEC+, agreed Sun to cut overall crude-oil production by 9.7M barrels a day starting on May 1 through Jun 30 of this year.
Gold futures tallied a 4th straight session climb, gaining support from concerns about weakness in the global economy, as well as in corp quarterly results, due to the cessation of business activity intended to stem the spread of COVID-19. Some weakness in the $ also provided a lift to bullion, even as stocks, which tend to move in the opposite direction to haven metals, rose. Gold for Jun climbed by $7 (0.4%) to settle at $1769 an ounce after hitting an intraday peak at $1788. The settlement & peak were the highest values for a most-active contract since Oct 2012. Commodity investors also may be focusing on a dim outlook for the economy from the IMF, which released its most recent update. The new forecast sees the global economy contracting at a 3% annual rate this year followed by a 5.8% rebound in 2021, representing a deeper recession than during the 2007-09 recession.
This was a very confusing day in the stock market. News on balance was dreay, yet buyers were buying aggressively. They must be hoping that states will start opening up very soon. Meanwhile economic news & the start of earnings season are not going well. The bulls will be challenged to extend this rally. At the same time, demand for gold from negative thinking ivestors continues strong. Go figgah!!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The first people to lose their jobs, worked at restaurants, malls, hotels & other places that closed to contain the coronavirus pandemic. Higher skilled work, which often didn't require personal contact, seemed more secure. That's not how it's turning out. A 2nd wave of job loss is hitting those who thought they were safe. Businesses that set up employees to work from home are laying them off as sales plummet. Corp lawyers are seeing jobs dry up. Gov workers are being furloughed as state & city budgets are squeezed. And health-care workers not involved in fighting the pandemic are suffering. The longer shutdowns continue, the bigger this 2nd wave could become, risking a repeat of the deep & prolonged labor downturn that accompanied the 2007-09 recession. The consensus of economists is that 14.4M jobs will be lost in the coming months, & the unemployment rate will rise to a record 13% in Jun, from a 50-year low of 3.5% in Feb. Already nearly 17M Americans have sought unemployment benefits in the past 3 weeks, dwarfing any period of mass layoffs recorded since World War II.
Next wave of layoffs hits staffers working from home as sales plunge
The economic shutdown due to the coronavirus pandemic is costing the US perhaps $25B a day in lost output and cannot be sustained indefinitely, St Louis Federal Reserve Pres James Bullard said in saying the country needs widespread testing & risk management strategies so the economy can reopen. Restarting the economy would not be done by a “pronouncement” of any politician but as households & firms find ways to resume daily life “knowing this disease is out there,” Bullard added. Widespread testing or other ways to mitigate risk, even business by business or school by school, would be key, he said.
Fed prez estimates how much virus is costing US every day in lost output
Wells Fargo (WFC) reported a plunge in Q1 profit as the bank set aside Bs of $s to cover potential loan-losses from the coronavirus pandemic. The gov has poured Ts of $s into financial markets & launched stimulus programs to support individuals & small businesses whose income has stalled due to the virus. But the money has not gotten into people's hands immediately, leading WFC & other banks to offer forbearance for home, auto & credit-card borrowers who meet certain criteria. With or without those programs, the unpaid bills are stacking up. Under a new accounting rule, banks must predict losses over the life of a loan & reserve that cash now, which led WFC to set aside $3.83B in credit loss provisions, up from $845M a year earlier. "Our results were impacted by a $3.1 billion reserve build, which reflected the expected impact these unprecedented times could have on our customers,'' CFO John Shrewsberry said. The 4th-largest US lender's quarterly profit fell to $42M (1 penny per share) from $5.51B ($1.20 per share last year). The bank also reported an impairment of securities of $950M due to the economic & market conditions. Analysts had expected EPS of 33¢. It was not immediately clear whether the estimates were comparable. Revenue tumbled 18% to $17.7B in Q1, as the US banking sector grapples with what is expected to be the worst recession in generations. The stock dropped 1.27.
club.ino.com/trend/analysis/stock/WFC?a_aid=CD3289&a_bid=6ae5b6f7
Wells Fargo profit decimated as coronavirus boosts loan-loss provisions
Johnson & Johnson (JNJ), a Dow stock & Dividend Aristicrat, reported Q1 profit & sales that rose above expectations and boosted its div, offsetting a downbeat full-year outlook. EPS rose to $2.17 $1.39 a year ago. Excluding non-recurring items, adjusted EPS rose to $2.30 from $2.10, beating the consensus of $2.01. Revenue grew 3.3% to $20.7B, above the consensus of $19.7B, with all 3 business segments topping expectations. Pharmaceutical sales rose 8.7% to $11.1B, medical device sales declined 8.2% to $5.93B & consumer health sales increased 9.2% to $3.63B For 2020, JNJ lowered its adjusted EPS guidance range, citing the impact of the COVID-19 pandemic, to $7.50-7.90 from $8.95-9.10, which is below the consensus of $8.27, & cut its sales forecast to $77.5-80.5B from $85.4-86.2B, below the consensus of $81.1B. Separately, JNJ raised its quarterly div by 6.3% to $1.01. The stock rose 6.26.
club.ino.com/trend/analysis/stock/JNJ?a_aid=CD3289&a_bid=6ae5b6f7
Johnson & Johnson raises quarterly dividend
Boeing (BA),a Dow stock, reported another 75 cancellations for its 737 MAX jetliner in Mar, as the coronavirus crisis worsens disruptions from the grounding of its best-selling jet. The planemaker posted a total of 150 MAX cancellations in Mar, including 75 previously reported from Irish leasing company Avolon. New cancellations came from buyers including 34 of 135 aircraft ordered by Brazil's GOL. The cancellations come as BA seeks to untangle delivery commitments after halting output of the MAX in Jan, following delays in returning it to service. The company, facing a 13-month-old freeze on deliveries of the MAX & now disruption to deliveries of larger planes due to the coronavirus epidemic, said it had delivered 50 planes in Q1, nearly a 3rd of the 149 a year earlier. BA posted orders in Mar for 12 787 Dreamliners, one 767 freighter & 18 pre-MAX versions of the 737 for the P-8 maritime patrol program. For Q1, it posted 49 new orders, or a negative total of 147 after cancellations. After further accounting adjustments representing jets ordered in previous years but now unlikely to be delivered, BA's adjusted net orders sank to a negative 307 airplanes. The stock sank 6.14.
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
Boeing crisis deepens with cancellations
There is a “hopeful possibility” that the sharp recession facing the country can be a “temporary downturn,” but this optimistic view comes with several cautionary notes, said Chicago Federal Reserve Pres Charles Evans. “There are many caveats in the hopeful story line, and many, many things must go right in order to minimize the economic pain,” Evans added. Evans said a candid assessment of the economy is that a deep downturn cannot be avoided. The Ts of $s the federal gov & the central bank are providing to cushion the blow from the pandemic has created a chance that the economy could begin to recover in H2, under the condition that the public health situation allows it, Evans said. The Chicago Fed pres said a spike in inflation was not one of the things he was worried about. In fact, he said he was more concerned that inflation would be too low. Evans also downplayed risks of “moral hazard,” where the Fed's help to financial markets could lead investors to take more risks in the future in the belief that the Fed would bail them out if the market turned against them. In a widespread national shock, the role of gov is to socialize more of the losses, Evans said. “There’s no way you could have insured against this,” he said. “A lot of this right now is, ‘Let’s get everybody to the second half of this year and then think about what the future looks like from there,’ ” Evans said.
Fed’s Evans: ‘Many, many things must go right’ for U.S. economy to recover quickly from coronavirus
Oil futures ended at a roughly 2-week low, weighed down by a global glut of crude as demand slumped due to the disruptions to travel and trade resulting from the COVID-19 pandemic. Price pressure from that weak demand & oversupply outweighed support from an agreement over the weekend by major producers to cut output, which ended a month-long price war between Saudi Arabia & Russia. West Texas Intermediate crude for May fell $2.30 (10.3%) to settle at $20.11 a barrel after a brief drop to as low as $19.95. Prices for the front-month contract marked the lowest finish since Mar 30. Jun Brent crude lost $2.14 (6.7%) at $29.60 a barrel, ending at the lowest since Apr 1. Oil saw a mixed finish on Mon, with US benchmark prices down, but global benchmark prices posting a gain. After several days of intense negotiations, members of OPEC & allies, collectively known as OPEC+, agreed Sun to cut overall crude-oil production by 9.7M barrels a day starting on May 1 through Jun 30 of this year.
Oil ends around 2-week lows as focus shifts from output cuts back to demand hit
Gold futures tallied a 4th straight session climb, gaining support from concerns about weakness in the global economy, as well as in corp quarterly results, due to the cessation of business activity intended to stem the spread of COVID-19. Some weakness in the $ also provided a lift to bullion, even as stocks, which tend to move in the opposite direction to haven metals, rose. Gold for Jun climbed by $7 (0.4%) to settle at $1769 an ounce after hitting an intraday peak at $1788. The settlement & peak were the highest values for a most-active contract since Oct 2012. Commodity investors also may be focusing on a dim outlook for the economy from the IMF, which released its most recent update. The new forecast sees the global economy contracting at a 3% annual rate this year followed by a 5.8% rebound in 2021, representing a deeper recession than during the 2007-09 recession.
Oil ends around 2-week lows as focus shifts from output cuts back to demand hit
This was a very confusing day in the stock market. News on balance was dreay, yet buyers were buying aggressively. They must be hoping that states will start opening up very soon. Meanwhile economic news & the start of earnings season are not going well. The bulls will be challenged to extend this rally. At the same time, demand for gold from negative thinking ivestors continues strong. Go figgah!!
Dow Jones Industrials
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