Update: The faint trace of good news from today’s $500BN term repo carried over into the overnight repo, which just like the operation before it (see below), priced undersubscribed, with dealers submitting $129.6BN in securities for today’s $175BN operation.
In total, the Fed has injected $148BN in liquidity this morning, which however may be rather generous considering the Fed not only cut rates to zero but removed all reserve requirements. In any case, if this is indeed good news on the liquidity front it has yet to be noticed by risk markets, with the S&P now trading -11% premarket.
* * *
Heading into this morning’s market shitshow, with Emini futures frozen, the SPY trading down 10% and assuring an instant 15-minute trading halt, traders dumping gold, crude and crypto and anything else that isn’t halted, a sense of panic and foreboding has pervaded Wall Street’s trading desks, and heading into the results from today’s Fed term repo, there was angst that the panic would escalate materially if the Fed announced that today’s upsized $500 billion, 28-day repo facility was close to oversubscribed.
Luckily that did not happen, and in perhaps the first ray of hope that the S&P500 won’t just BATS IPO itself to 0 in 50 milliseconds when it reopens, dealers submitted only $18.45BN in securities to today’s massive repo operation, down from $24.1BN on Friday, suggesting that the liquidity clogs may be getting slightly smaller.
Translation: maybe, just maybe, the Fed’s massive liquidity injecting bazooka may have alleviated some dealers funding needs. Or maybe not: if on normalizes the FRA/OIS for Sunday’s rate cut, it emerges that dollar liquidity in the interbank market remains scarce and highly fragmented.
Keep an eye on today’s overnight repo facility for confirmation the funding squeeze may finally be normalizing.
Empire Fed Survey Crashes By Most Ever To 11-Year-Lows
After what appears now to be pure hope-driven rebound in February – despite all real world signals screaming otherwise – the Empire Fed’s Manufacturing Outlook survey just crashed by the most on record to its lowest since April 2009…
The Federal Reserve Bank of New York’s general business conditions index fell 34.4 points to -21.5…
Source: Bloomberg
The survey responses were collected between March 2 and March 10.
Manufacturers in New York expect a gloomier future too. The index of future business conditions also dropped to an 11-year low. A gauge of shipments fell to the weakest level since September 2016, and the index of the average employee workweek slumped to its lowest level since December 2015.
The Empire State survey is the first of several regional Fed manufacturing indexes to be released for the month. Others for areas including Philadelphia, Richmond and Dallas will be released throughout the month.
“Just Close The Whole Thing Up”: CNBC Anchors Melt Down, Beg For Market Closures On Twitter
Few are dealing with the economic and market turmoil with more chaos and less class and resolve than the expert “buy and hold” class over at CNBC, who shockingly never said one word of warning to their retail viewers when the market was doing nothing but going straight up for more than a decade, and instead were dragging mom and pop investors into massively overvalued stocks urging them to buy at all time highs, and who are now melting down before our eyes at the first sight of a substantial market pullback.
Their solution: own the shorts by shutting down the market entirely. Because if one can’t BTFD, is it even a market?
As recently as Friday, when the Dow Jones posted a 2000 point gain on the back of a short squeeze that nearly doubled the indexes gains in the last 15 minutes of the day, there was no talk about markets being defective or needing to close. That was, of course, until the Fed’s $700 billion “quarantative easing” bazooka bailout of markets fizzled spectacularly on Sunday nights and futures promptly went limit down. When it appeared that this plan was failing, some of the industry’s finest began to panic visibly.
Prior to the Fed news, Halftime Report’s Scott Wapner had already called for blanket censorship of Twitter…
Then, after the Fed bazooka failed to calm markets, it sent the popular talking heads into a typing panic, as Wapner started tweeting wildly, criticizing NFL players for signing contracts, prodding the NYSE to “close the floor” and then begging for them to “close the whole thing up” so the market could “start again later”. Perhaps because when things don’t go your way, you can always beg for a reset in some imaginary world where the Fed still runs everything.
The chorus of CNBC anchors who never mentioned that investing includes risk in addition to return during the last 11 years continued, with David Faber joining his co-worker and also suggesting that markets should go on a “two week holiday”:
Meanwhile, Wapner had already shifted stages of grief from anger to bargaining, trying to project the image of markets slowly ramping back up, despite the fact that we were still nearly 13 hours away from the next cash open and likely haven’t come anywhere near feeling the full effect of the pain of the Fed’s panicked decision making:
But then it was clear the reality of the situation was finally starting to hit Wapner for the first time in weeks:
And at one point, Wapner finally appeared to just give up and literally tweeted “Help”:
Forget the idea that closing the markets when they don’t go your way is nothing but a temporary measure to pause price discovery that will eventually happen anyway, one way or another, but the anchors obviously never seemed to consider what the idea of closing the markets could project in term of further panic upon participants.
Participants will find a way to hedge and trade in other markets. The logistical nightmare of expiring options and those needed to liquidate to deleverage as the market falls could cause serious unrest.
In other words, the thin skin of CNBC’s supposed “financial experts” is (yet again) exacerbating the problem instead of quelling it, as one Twitter user responded to Faber:
And other well known names in the Financial Twittersphere rung in, too. Short seller Marc Cohodes told Wapner to “grow up” after Wapner pressed for a market shut down:
Former CNBC anchor Jeff Macke implored regulators not to suspend the markets:
In response to Wapner’s meltdown about the nation being in “Uncharted Waters”, one Twitter user responded:
In response to Faber’s comment that “events” can change decisions, Stanphyl Capital’s Mark Spiegel cleared it up for him:
One Twitter user asked Wapner why he would want to close the markets now, with so many buying opportunities abound:
Finally, this blogger seemed to nail the overall essence of the situation:
The IMF has just fired off a trillion-dollar “bazooka” of its own Monday morning.
In a blog post published minutes ago, IMF Director Kristalina Georgieva issued three “policy prescriptions” that she said should define a “coordinated response” from the developed economies in Europe and the US. In addition to declaring that the IMF has $1 trillion in loan capacity ready to put to work to salve the economic damage caused by the outbreak, Georgieva encouraged governments to spend more, and asked the Fed to consider bulking up its dollar FX swap lines to emerging-market central banks. She also noted that the $42 billion that investors have pulled from EM markets is one of the biggest outflows in history, and will certainly ratchet up financial stressors.
Read the full post below:
* * *
Today, the IMF published a set of policy recommendations that can help guide countries in the difficult days ahead.
What more needs to be done?
Three action areas for the global economy:
First, fiscal.
Additional fiscal stimulus will be necessary to prevent long-lasting economic damage.
Fiscal measures already announced are being deployed on a range of policies that immediately prioritize health spending and those in need. We know that comprehensive containment measures—combined with early monitoring—will slow the rate of infection and the spread of the virus.
Governments should continue and expand these efforts to reach the most-affected people and businesses—with policies including increased paid sick leave and targeted tax relief.
Beyond these positive individual country actions, as the virus spreads, the case for a coordinated and synchronized global fiscal stimulus is becoming stronger by the hour.
During the Global Financial Crisis (GFC), for example, fiscal stimulus by the G20 amounted to about 2 percent of GDP, or over $900 billion in today’s money, in 2009 alone. So, there is a lot more work to do.
Second, monetary policy.
In advanced economies, central banks should continue to support demand and boost confidence by easing financial conditions and ensuring the flow of credit to the real economy. For example, the U.S. Federal Reserve just announced further interest rate cuts, asset purchases, forward guidance and a drop in reserve requirements.
Policy steps that we know have worked before—including during the GFC—are on the table. Yesterday, major central banks took decisive coordinated action on monetary easing and opening of swap lines to lessen global financial market stresses.
Going forward, there may be a need for swap lines to emerging market economies.
As the Institute for International Finance said last week, investors have removed nearly $42 billion from emerging markets since the beginning of the crisis. This is the largest outflow they have ever recorded.
So central banks’ policy action in emerging-market and developing economies will need to balance the especially difficult challenge of addressing capital flow reversals and commodity shocks. In times of crisis such as at present, foreign exchange interventions and capital flow management measures can usefully complement interest rate and other monetary policy actions.
Third, the regulatory response.
Financial system supervisors should aim to maintain the balance between preserving financial stability, maintaining banking system soundness and sustaining economic activity.
This crisis will stress test whether the changes made in the wake of the financial crisis will serve their purpose.
Banks should be encouraged to use flexibility in existing regulations, for example by using their capital and liquidity buffers, and undertake renegotiation of loan terms for stressed borrowers. Risk disclosure and clear communication of supervisory expectations will also be essential for markets to function properly in the period ahead.
All this work—from monetary to fiscal to regulatory—is most effective when done cooperatively.
Indeed, IMF staff research shows that changes in spending, for example, have a multiplier effect when countries act together.
What the IMF can do
The IMF stands ready to mobilize its $1 trillion lending capacity to help our membership. As a first line of defense, the Fund can deploy its flexible and rapid-disbursing emergency response toolkit to help countries with urgent balance-of-payment needs.
These instruments could provide in the order of $50 billion to emerging and developing economies. Up to $10 billion could be made available to our low-income members through our concessional financing facilities, which carry zero interest rates.
The Fund already has 40 ongoing arrangements—both disbursing and precautionary—with combined commitments of about $200 billion. In many cases, these arrangements can provide another vehicle for the rapid disbursement of crisis financing. We also have received interest from about 20 more countries and will be following up with them in the coming days.
In addition, the Fund’s Catastrophe Containment and Relief Trust (CCRT) can help the poorest countries with immediate debt relief, which will free up vital resources for health spending, containment, and mitigation. In this regard, I commend United Kingdom’s recent pledge of $195 million, which means the CCRT now has about $400 million available for potential debt relief. Our aim, with the help of other donors, is to boost it to $1 billion.
In this way, the IMF can serve its 189 member countries and demonstrate the value of international cooperation. Because, in the end, our answers to this crisis will not come from one method, one region, or one country in isolation.
Only through sharing, coordination, and cooperation will we be able to stabilize the global economy and return it to full health.
* * *
The markets were clearly unimpressed with last night’s coordinated policy response from central banks, so how did the market react to the IMF’s call for coordinated fiscal and monetary action?
We saw a slight blip, that has already faded.
Despite throwing trillions at the market, nothing is stopping the freefall as it become clearer that what the market really wants is not a ‘loan’ to see it through but helicopter money…and once that has started, will it ever be allowed to stop?
Quarantative Easing Fails: S&P, Brent Down 10%, European Banks Hit All Time Low In Monday Massacre
The Fed’s quarantative easing has failed.
After last week’s miserable Monday moves, we are running out “black Monday” designations, so we’ll keep today’s Ides of March action simple, especially since it is likely to recur for many weeks to come: just call it the Ides Of March Mondays Massacre.
With S&P futures promptly plunging 5% limit down at the Sunday reopen of electronic trading after the Fed quite literally “blew” its largest emergency intervention ever, which instead of calming markets only exacerbated the sense of panic and dread, this morning the SPY ETF shows what to expect, and it’s a disaster, as the S&P is indicated to open about 10% lower, which will be sufficient for at least one 15 minute trading halt when markets reopen at 930am. The fact that Nike and Apple announced mass store closings, did not help, neither did Chairman Powell’s warning that US growth next quarter will be weak.
The question, however, is whether the market will be halted fully and indefinitely to prevent further selling and to “own the shorts” whether due to continued selling or by presidential decree. We will find out in a few hours, and until then here are the appropriate circuit breaker levels. If the S&P drops to 2,168 it may be all over.
2521.25 (down 7%)
2358.59 (down 13%)
2168.82 (down 20%)
Until then, we can merely list the carnage in the market which includes a near record surge in the VIX, whose front-month futures contract jumped as high as 57.9 on Monday. The actual spot VIX which tracks the 30-day implied volatility of the S&P 500 based on out-of-the-money options prices, wasn’t quoted as of 9:15 a.m. London time. A notice on Cboe’s website said the opening for S&P 500 and VIX products has been delayed, meaning we can now add a broken VIX to the list of everything else that is broken about this market.
As Bloomberg notes, Monday’s surge sent VIX futures beyond their highs of last week, which included several limit-down pauses to U.S. stocks and the S&P 500’s biggest tumble since the crash on Black Monday in 1987.
Investors have been unable to digest a ceaseless newsflow of companies shutting operations, countries sealing borders and governments devising targeted rescue plans. The Fed cut its key interest rate by a full percentage point to near zero and said it will boost its bond holdings by $700 billion. The Bank of Japan moved to accelerate asset purchases, doubling the amount of equity ETFs the central bank buys every year to 12 trillion.
“In normal circumstances, a large policy response like this would put a floor under risk assets and support a recovery,” Jason Daw, a strategist at Societe Generale SA in Singapore, wrote in a note. “However, the size of the growth shock is becoming exponential and markets are rightfully questioning what else monetary policy can do and discounting its effectiveness in mitigating coronavirus-induced downside risks.”
European stocks were not halted but the carnage was just as bad, with all sectors tumbling, while the European Stoxx 600 Banks Index plunged 7.8% Monday, falling below its low of 2009, in the aftermath of the Global Financial Crisis. Banks have underperformed the wider market as European countries are increasingly going into lock-down mode.
Predictably, debt insurance costs for European banks and sovereigns rose sharply on Monday, shrugging off massive rate-cutting moves and liquidity injections by the U.S. Federal Reserve and other global central banks over the weekend. Five-year credit default swaps for Italy’s UniCredit rose 33 basis points (bps) from Friday’s close to 243 bps, Deutsche Bank saw levels jump 18 bps to 138 bps while France’s Societe Generale saw a 10 bps rise. Sovereign debt CDS levels also gained with southern European issues suffering the sharpest increase. Italy saw CDS levels spike 18 bps to 246 bps to revisit last week’s levels while Spain gained 14 bps to 119 bps – its highest level since June 2016.
Earlier, all markets in the Asian region were also down, with Thailand’s SET falling 6.4%. The Topix declined 2%, with Kurabo and Maeda Road falling the most. The Shanghai Composite Index retreated 3.4%, with Kangni Mechanical and Sunny Loan Top posting the biggest slides. Australian equities fell almost 10%, the most since 1992, even after the Reserve Bank of Australia said it stood ready to buy bonds for the first time – an announcement that sent yields tumbling.
In rates, after the Fed cut rates to zero, 10Y US Treasury yields retreated more than 33 bps at one point overnight, but have since trimmed the move, while bonds were mixed in Europe as Italian and Greek yields blew out amid fears the ECB will not be there to bail everyone out.
There was one silver lining: the all important FRA/OIS spread suggests that liquidity may be returning to the bond market after the Fed’s Sunday bazooka, although it is just as likely that this is a misprint.
Still, until there is some confirmation that liquidity is returning to normal, investors are liquidating first and asking questions later, and nowhere is this more obvious than in the plunge in precious metals with gold crashing to $1,465, down almost $250 in just a few days.
In FX, the yen rebounded from Friday’s plunge after the Fed and five counterparts said they would deploy foreign-exchange swap lines. New Zealand’s currency slumped after an emergency rate cut by the country’s central bank.
In commodities, besides the precious metals rout, the selling shifted back to oil, which crashed to a fresh 4 year low after Goldman calculated over the weekend that the US SPR crude buying would barely make a dent on overall demand.
Economic data include Empire manufacturing survey. Tencent Music is among companies reporting earnings
Market Snapshot
S&P 500 futures down 4.8% to 2,567.50
STOXX Europe 600 down 8.4% to 274.06
MXAP down 3.8% to 131.51
MXAPJ down 5% to 434.15
Nikkei down 2.5% to 17,002.04
Topix down 2% to 1,236.34
Hang Seng Index down 4% to 23,063.57
Shanghai Composite down 3.4% to 2,789.25
Sensex down 6.3% to 31,956.62
Australia S&P/ASX 200 down 9.7% to 5,002.00
Kospi down 3.2% to 1,714.86
German 10Y yield fell 3.5 bps to -0.579%
Euro up 0.9% to $1.1211
Brent Futures down 6.7% to $31.58/bbl
Italian 10Y yield rose 2.5 bps to 1.611%
Spanish 10Y yield rose 11.3 bps to 0.735%
Brent Futures down 6.7% to $31.58/bbl
Gold spot up 0.6% to $1,539.15
U.S. Dollar Index down 1.1% to 97.65
Top Overnight News
The Federal Reserve on Sunday cut its benchmark rate by a full percentage point to near zero and will boost its bond holdings by $700 billion to cushion the U.S. economy from the coronavirus outbreak
Credit markets reeling from their worst week since the global financial crisis weren’t impressed by a dramatic rate cut by the Federal Reserve, as investors including Pacific Investment Management Co. called for governments to do more to avert a meltdown
Italy’s government will meet Monday to pass a new package of measures including increased spending for its stricken healthcare sector and moves to cover extraordinarylayoffs after deaths in the country from the coronavirus jumped by 368 Sunday
Deutsche Bank AG will operate in split teams globally from Monday as a way to curb the spread of the coronavirus
Asian equity markets weakened and US equity futures hit limit down to start the week as coronavirus fears and disruptions continued to spook investor sentiment, despite numerous policy measures to address the fallout from the outbreak including the Fed throwing the kitchen sink with a 100bps emergency cut and USD 700bln QE announcement. This followed the national emergency declaration by US President Trump last Friday which opens access to USD 50bln of emergency funds for states to tackle the coronavirus, while BoC and RBNZ also recently announced emergency cuts of 50bps and 75bps respectively. Nonetheless, ASX 200 (-9.7%) failed to benefit from the global policy measures and announcement the RBA stands ready to purchase government bonds, with heavy losses in mining names, financials and industrials resulting the index’s worst ever drop, while Nikkei 225 (-2.6%) was choppy amid the BoJ’s emergency meeting in which it kept rates and the yield target unchanged but doubled ETF and J-REIT purchases. Hang Seng (-4%) and Shanghai Comp. (-3.4%) were both negative due to widespread fears and after surprise contractions to Chinese Industrial Production (-13.5% vs. Exp. 1.5%) and Retail Sales (-20.5% vs. Exp. 0.8%), but with losses in the mainland stemmed after the PBoC’s recent targeted RRR cuts of 50bps-100bps and additional 100bps cut for joint-stock banks which will unleash CNY 550bln of funds, while the HKMA authority also announced a rate cut in lock step with the Fed albeit to a lesser extent of just 64bps. Finally, 10yr JGBs opened lower due to the after-hours slump on Friday as stock markets found some firm but brief relief, although JGB prices rebounded off their lows as fears returned to the fore of investors’ minds before retreating again after the BoJ announced to keep main policy settings unchanged but instead boosted purchases of ETFs, J-REIT, Commercial Paper and Corporate Bonds, while pressure was also seen in the Australian 10yr yield after the RBA signalled a readiness to purchase government bonds.
Top Asian News
Shell-Shocked Markets Find Little Relief in Volatile FX Trading
RBNZ Delays New Capital Rules; Sees NZ$47b Boost to Lending
India’s RBI to Hold Briefing Amid Flurry of Asia Rate Cuts
China’s Economy Set to Shrink 6% This Quarter, Macquarie Says
European equities continue to erode in early trade [Euro Stoxx 50 -8.5%] despite pre-emptive monetary easing measures from global Central Banks including a 1ppt reduction by the Fed alongside a USD 700bln QE boost. The downbeat sentiment from the APAC session reverberated into Europe as the underlying coronavirus theme further crystallises, which saw US equity futures hit the 5% limit down at the open and hover at the levels during European trade thus far (Full details available here). Meanwhile, Euronext stated that it will be doubling the ETF threshold amid “exceptional market conditions caused by recent news and events”, with the normal threshold set to return once condition return back to normal. Sector-wise, the usual suspects show underperformance – Financials (-9.6%) sink as banks bear the brunt of the lower yield environment, whilst Consumer Discretionary (-9.3%) follow closely amid a further deterioration in Travel & Leisure (-18.0%) in light of renewed fleet groundings in airline and cruise names. On that front, Air France-KLM (-16.7%) remains a laggard in the Stoxx 600 after noting that flight activity will be reduced significantly over the next few days, with the number of seats available per km seen dropping between 70-90%. easyJet (-21.0%) meanwhile stated that it has taken on further cancellations, with these actions to continue for the foreseeable future. Tui (-30.0%) plumbed the depths following after withdrawing its FY20 guidance and applying for state aid to support the business. Credit Suisse (-12.0%) shares feel extra pressure after US prosecutors are pursuing the Co. for its role in a USD 2bln Mozambieq corruption case, in which they believe that they have enough evidence against the Co. Elsewhere, Associated British Foods saw considerable downside in early European trade despite a rosier trading update (sees adj. operating profit ahead of prior guidance), with some attributing the move to a fat-finger. Finally, Bayer (-4.7%) outperforms the German index but conforms to the overall sell-off despite source reports that the Co. is a step closer in agreeing to draft settlement regarding tens of thousands Roundup weed killer claims.
Top European News
U.K.’s FCA Suspends Finablr Trading in London
H&M, Primark Brace for Downturn in Europe as Epicenter Shifts
Virus Delivers New Blow to Rio Tinto’s Flagship Copper Project
In FX, the Greenback has handed back almost all Friday’s gains and would surely be even weaker if the non-US Dollars were not underperforming on a combination of rate cuts and risk aversion. Indeed, the DXY is only just off its pre-weekend low of 97.335 within a 97.446-98.473 range after the Fed’s latest intermeeting policy action (-100 bp FF cut to 0-0.25% and Usd700 bn QE) as the US Treasury curve unwinds some of its initial bull-steepening.
CAD/NZD/AUD – As noted above, the Loonie, Kiwi and Aussie are all conceding ground to their US counterpart in wake of various forms of stimulus designed to protect respective economies from further COVID-19 contagion, including a standard 50 bp BoC rate cut (on top of the ½ point reduction at the scheduled March meeting), -75 bp from the RBNZ and the RBA introducing more repos ahead of additional ‘measures’ to come on Thursday that may involve some for of asset purchases. Usd/Cad is back up near 1.3900, Nzd/Usd is straddling 0.6000 within a wide 0.6153-0.5945 band and Aud/Usd is hovering around 0.6170 between 0.6303-0.6097 parameters, with the latter also taking on board extremely bleak Chinese data (ip and retail sales) that is keeping Usd/CNH afloat on the 7.0000 handle.
JPY/CHF/EUR – It’s abundantly evident that safe-haven appeal is considerably stronger than any negativity associated with looser monetary policy or the prospect in the case of the Yen and Franc that have both strengthened vs the Buck and generally. Usd/Jpy has retreated through 106.00 from almost 108.00, while Usd/Chf has tested 0.9400, with Eur/Jpy and Eur/Chf eyeing 118.00 and sub-1.0550 respectively even though the single currency is outpacing the Usd either side of 1.1200. To recap, the BoJ joined others in the fight against nCoV via increased QE, while the clock is ticking down to the SNB’s quarterly policy review this Thursday and latest weekly Swiss sight deposits suggest more intervention. For its part, ECB’s Holzmann has reiterated that the GC is willing to do more after last week’s targeted measures.
SCANDI/EM – As usual when oil and other commodities (Gold also) succumb to broad and severe risk-off positioning, the Nok, Rub, Mxn and Zar tend to get hit harder than most and today is no exception, albeit with crude prices not quite experiencing the near panic selling/liquidation seen this time last week. However, many regional currencies are at fresh record or multi-year lows and only being propped by intervention, like the Ils to name just one.
In commodities, WTI and Brent front-month futures continue to deteriorate amid further materialisation in coronavirus woes, and with further cancellations in the Travel and Leisure sector dampening demand growth in the complex. WTI Apr’20 dipped below USD 30/bbl at the open of electronic trade before taking multiple stabs at the level to the downside since Europe entered the market, although giving up the handle at the time of writing. Meanwhile, Brent May’20 underperforms its US counterpart with the prospect of the OPEC breakdown further weighing on the contract – Brent gapped lower to sub-40/bbl vs. Friday’s close of ~USD 45/bbl. Analysts at ING state that the underperformance doesn’t come as too much of a surprise “given the severity of the breakout across Europe, along with the action taken by governments to try to contain the virus”. The Dutch bank also suggests that the current weakness in oil prices is likely to persist through Q2 this year as the surge in supply and demand hit means that the markets will likely see a significant surplus. Elsewhere, spot gold (-1.8%) trades weaker as investors flee for cash holdings amid significant losses in riskier assets, traders also note that a decline below USD 1500/oz may induce a stop-chase, with the yellow metal’s 200DMA ~1500.25/oz and a Fib level at USD 1495.96/oz. On that front, spot silver (-10.7%) slid since the open and briefly fell south of USD 13/oz to levels last seen in 2009. Similarly, the flight to cash and a significant slump in Chinese IP figures have prompted copper prices to crash from ~USD 2.55/lb to sub USD 2.40/lb.
US Event Calendar
8:30am: Empire Manufacturing, est. 4.9, prior 12.9
4pm: Net Long- term TIC Flows, prior $85.6b
4pm: Total Net TIC Flows, prior $78.2b
DB’s Jim Reid concludes the overnight wrap
What a weekend in terms of news-flow as more and more evidence mounted that the global economy is about to go into an unprecedented hibernation. Then just as I was going to bed last night the Fed cut rates 100bps to near zero and announced that it was going to increase their bond purchases by “at least” $700billion split $500bn Treasuries and $200bn MBS. The forward guidance is that they will keep them here until “confident that the economy has weathered recent events and is on track to achieve maximum employment and price stability”. The Fed also announced it was reducing reserve requirements for banks to zero as well as letting banks borrow at the discount window for up to 90 days. In a coordinated move with other central banks, the Fed lowered the rate on USD liquidity swap arrangement by 25 bps.
During the ensuing press conferences, Fed Chair Powell noted that the virus was having a profound impact on the U.S economy and that financial conditions have tightened significantly. He noted that the shutdown and the “illness will have a significant effect on the economic activity in the near term.” He also expects that inflation will be held down this year given the recent events. As far as emergency rate cuts go, this is the largest on record and probably only stopped from being more by the fact that we’re at the zero bound now. The Fed chair expects the second quarter to be weak, but that “after that it’s very hard to say how big the effects will be”, and so the FOMC forecasts will return next quarter. Powell continued to reiterate that forward guidance and asset purchases will be the toolkit going forward rather than negative rates. The chair also acknowledged that the central bank does not have tools to reach individuals and smaller businesses”, but then added that “(The committee) thinks fiscal response is critical”, and is happy to see those being considered.
The 100bps cut was almost all priced in so that was to be expected. The QE was more of a an immediate surprise. The reason we’ve maintained and extended our bearish view on credit is that we think the global economy screeching to a halt is more worrying than the Fed is comforting. 0% interest rates won’t make up for much of the massive loss of activity/income for companies and consumers.
Even with the surprise move by the Fed, futures on the S&P 500 are down -4.79% after hitting the lower circuit limit while those on the Dow (-4.56%) and Nasdaq (-4.55%) are also down. Because the S&P rose c.7% in the last 30 minutes of trading on Friday for no apparent reason its hard to disentangle the Fed impact from a reversal of this. Elsewhere yields on 10yr USTs are down -30.9bps to 0.655% while those on 30yrs are down -26.8bps to 1.268%. Asia equity bourses are also trading down (but for most not aggressively) with the Nikkei (-0.21%), Hang Seng (-2.60%), Shanghai Comp (-0.55%) and Kospi (-2.10%) falling. However the ASX is down nearly -10% which is around the largest fall since October 1987. As for fx, the Japanese yen is up +0.78% while the Swiss franc is up +0.25%. In commodities, brent crude oil prices are down -3.16% while gold is up +1.03%.
In other news, as we go to print, the BoJ have just met after bringing forward Thursday’s meeting. They have said that they will continue to buy more commercial paper and corporate bonds until end-September and have also introduced low-cost lending facility for companies affected by the virus. They’ve raised their annual ETF purchase target to JPY 12tn (vs. JPY 6tn previously) while the JREIT target was revised up to JPY 180bn. The bank guideline for ETF and JREIT purchases reiterated the prior language that “in principle,” the BOJ will buy 6t yen ETFs and 90b yen JREITs, though these amounts may rise or fall depending on market conditions.
Elsewhere New Zealand issued an overnight emergency cut of 75ps and promised to keep the rate that low for a year while on the liquidity side, the PBoC injected $14.3 billion into the financial system while leaving interest rates unchanged. The RBA also boosted cash injections and said it “stands ready” to purchase government bonds. Australia is also considering further fiscal easing.
Back to our credit view, on Friday we published a short note looking at a framework for where Credit trades in a recession. We think the normal boom to recession pricing is c.100-250bps for cash IG and c.350-1000bps for HY. We also talk about what might make this cycle better or worse than a “normal” recession. Given that US HY is now in the 730bp area, we still don’t feel that enough risk is priced in yet, especially when you consider the huge illiquidity issue that the market would face in normal times if clients became forced sellers. Given that these aren’t normal times with traders, sales and PMs seeing compromised working conditions, liquidity is likely to be far worse in this current episode. We’ve previously published that the next recession would likely be the third worst for spreads in history and behind only the Great Depression and the GFC due to the massive mismatch between the likely desired liquidity and what will be on offer. It’s probably time to back up that call. In fact we are going to put out a note today increasing our already bearish HY spread forecasts in US and Europe to around +1000bps from our previous target of just under +750bps (US) in light of the more draconian measures adopted by Western governments over the weekend. See Friday’s note here which will explain most of the reasons. We will publish more later which will also extend our spread widening view for IG.
There isn’t a lot of point going through all the weekend virus developments as I’m sure you are all watching the news but for a moment let’s step back and take in how remarkable the following announcements were. For example;
* Spain is now on lockdown (joining Italy) and will only allow people to leave their homes to buy essentials, for special circumstances or to work.
* France has closed all non-essential stores/shops and done the same for all restaurants and cafes. Travel across the country is being discouraged.
* Germany has closed it’s borders with France, Switzerland and Austria outside of goods and commuter traffic.
* All main European and US Ski resorts are now closed.
* The U.K. may tell all people over 70 to stay at home and isolate soon.
* Austria has banned gatherings of more than FIVE people. Sounds like my old band could still play in Vienna then. * In Italy I saw on the telly last night long queues for supermarkets but with 2 meter gaps between people in these queues. It was quite surreal.
* In micro terms SAS is idling 90% of all its staff and will cancel most flights from today.
* NYC joins many in the world in terms of shutting down schools. The U.K. and other parts of the US remain out on a limb in keeping them open for now.
* NYC and Los Angeles also said overnight that they will close nightclubs and entertainment venues while limiting restaurants and bars to takeout and delivery.
Assuming these aggressive measures carry on then surely over the next 10-14 days the number of new cases in Europe should slow dramatically. Clearly these stats will be complicated by some countries deliberately (or from lack of resources) not testing all potential victims but we should see the direction of travel. Whether these draconian measures are the correct ones or not will be debated for months or maybe years to come. It’s irrelevant for now as it’s happening, whether you agree with it or not. What it does mean, is that most Western governments have decided to take the maximum short term economic pain route in order to stop the spread. The problem with this is that it’s not clear when you can end this once you start it. Although the case numbers should soon slow, one would think that the minimum time until we slowly re-open economies would be a month’s time at the very earliest. That’s a lot of economic and market disruption to come. The U.K. has come under criticism for not being as aggressive as many countries at closing down schools etc. However in listening to the U.K. Chief Medical Officer he made the point that if they close too early then children might be forced to spend a lot more time with their grandparents as child carers. Given this group is more likely at risk then this could be counterproductive. He also said the danger is also that we get isolation fatigue if we shut down too early as it would have to go on for a long period. So whether this is right or wrong, it certainly has been thought through. However I suspect the U.K. will soon be pressurised to move in line with everyone else.
We also got China’s monthly economic data dump overnight and it highlighted an even deeper slump in economic activity than expected. YTD Feb industrial production recorded the largest decline since the series began in January 1997 at -13.5% yoy (vs. -3.0% yoy expected) while retail sales printed at -20.5% yoy (vs. -4.0% yoy est.), the largest decline since January 1998, and fixed asset investment dropped to -24.5% (vs. -2.0% yoy est.), the largest decline since January 1997. February unemployment rate also rose to a record 6.2% as the outbreak worsened in China.
In term of this week’s planned events (I suspect they’ll be a lot of unplanned ones) the Fed meeting on Wednesday was going to be the highlight but they have upstaged themselves by last night’s actions.
Elsewhere, the Eurogroup (euro area finance ministers) meets today with the EU counterpart —ECOFIN — meeting tomorrow. So these are crucial meetings to learn what the phrase “whatever is necessary” that has been used by Merkel, Scholz and European Commission President von der Leyen over the last few days means. For more on the German government interventions last week see our economists piece from Friday night here. Mark Wall’s team have previewed the two days of very important meetings in this note here. It is well worth a read as it outlines what they might do and what the size of the potential package might be relative to the GFC.
For all data in the week ahead best to see our day by day calendar at the end. It’s still too early for the three week market crisis to feed into much of the data but you’ll start to get the first signs, especially in some of the sentiment indicators.
This past week saw an even more volatile week than the last, with European and US Equity markets seeing truly once-in-a-generation sized moves. The S&P 500 saw its 5th worst daily loss since 1927 on Thursday when it was down -9.51% before rallying +9.29% on Friday – which was the 10th largest daily gain in the history of the index – as there seemed to be a clear response to the US government’s initial fiscal actions. Considering that with only 27 minutes before the close the index was only up +2.4% shows what a remarkable end to the week we saw.
In total, the index was still down -8.79% on the week though. Although this was less than 2 weeks ago, it was still the 24th worst week in the history of the index, with all of the other weeks taking place during the Great Depression, October 1987, the Dot Com Bubble, or the Financial Crisis. On Friday, The S&P 500 posted only its 5th daily gain in 19 sessions. Since its record high on Feb. 19, the index is now down just under 20% at -19.94% and entered “bear market” territory on Thursday for the first time since 2009. The large cap index has lost $5.7 trillion of market capitalization since those all-time highs.
10-year U.S. Treasury yield were up even as equities continued lower on the week as correlations started to breakdown. Yields rose just under +20bps over the week to finish at 0.960% (+15.6bps Friday, +19.8bps last week). 30y US treasuries were +24.2bps on the week (+8.9bps Friday). At one point last week, the entire US Yield curve fell under 1.0% for the first time in history. Oil had its worst week since 2008 – down -25.23% on week, up +1.90% Friday – with the commodity being hit from a demand shock as the global economy slows due to Covid-19, while simultaneously being hit by a supply shock as Saudi Arabia and Russia continue their price war on crude.
If anything it was more volatile in Europe, where many indices saw their worst day on record this past week on Thursday as the STOXX 600 fell -18.44% on the week (+1.43% on Friday) Much of the underperformance relative to the US last week was due to the very late mammoth US rally on Friday. Italy lagged with the FTSE MIB down -23.30% on the week (+7.12% Friday on the hope of fiscal stimulus and bouncing off the worst ever recorded day on Thursday), while BTP yield saw their worst day on record on Thursday (+58.5bps on week, 2.5bps Friday). 10yr bund yields finished the week at -0.544%, rising +19.7bps on Friday and +16.6bps over the week. Credit spreads were wider as well on both HY and IG – US HY was +167bps wider on the week (-11bps Friday), while IG was +80bps wider on the week (+7bps Friday). In Europe, HY was +189bps wider on the week (+5bps Friday), while IG was +46bps wider on the week (+1bps Friday). The VIX closed the week at 57.8, which is the highest closing level since the Financial Crisis. It spiked over 75 at the close on Thursday in the worst of the selloff. Gold sold off -8.60% on the week (down -2.9% Friday), as the risk off hedge did not seem to work with dollar rallying +2.9% around the same time (+1.3% Friday).
VIX, Wall Street’s fear index, which has been nearing record highs in recent days, has failed to open this morning.
A notice on Cboe’s website said the opening for S&P 500 and VIX products has been delayed.
As indicated in a previous notice, due to a limit down state on the E-mini S&P 500 future the Cboe Options Exchange Global Trading Hours (“GTH”) session opening for SPX and VIX products has been delayed under Cboe Rule 5.20.
Cboe will send an update when the limit down state has been resolved and a resumption time has been determined.
VIX futures signal an open around 56 for spot VIX…
But the VIX futures term structure (m8-m2) is the most inverted ever…
Market functions are starting to breakdown under the pressure. Talk of closing markets grows louder.
“Assume Everyone Is Infected”: US & Europe Wake Up To World In Lockdown As Death Toll Rises: Live Updates
Those who spent their weekend on one last bar crawl may not have noticed that millions of people are waking up to a fundamentally different situation on Monday than they saw on Friday. In the US, more than one million students in NYC schools – including ~100,000 homeless students with no regular access to shelter or hot meals – are waking up to the first of many school-free days. Some of their parents are scrambling to find childcare, others, left at home because of the mass closures of restaurants, gyms (just in LA), concert venues, nightclubs, cafes, plus myriad other closures, are desperately hoping that government check lands soon.
In Italy, Italians are heading into a second week of nationwide lockdown, while citizens in Spain and France are facing these measures for the first time.
In Washington’s King County, Executive Director Dow Constantine said late Sunday night that “it’s time, right now, for people to assume that they and everyone they meet is infected.”
“It is time, right now, for people to assume that they and everyone they meet is infected.” King County, WA, as confirmed cases reach 420, bans gatherings of 50+, orders restaurants, bars, theaters, gyms, and similar venues to cease operations until March 31 #COVID19pic.twitter.com/9VGJyURgQf
In the Philippines, which acted early to bar visitors from China, infections have repeatedly doubled over the past week, leading the government on Sunday to prepare to lock down the entire island of Luzon, according to the Rappler.
President Duterte said earlier that his ultimate goal with the country’s virus-containment measures is to “save ourselves from ourselves”.
BREAKING NEWS. The Philippine government is set to place the entire island of Luzon on total lockdown in a bid to contain the spread of the coronavirus disease. #COVID19Quarantinehttps://t.co/DrBA0rFW3N
In China, the government is expanding its crack down on foreign arrivals by threatening to “probe and punish” anyone who violates rules on mandatory 14-day quarantines for foreign travelers arriving in the country, especially “those who plan to lie about whether or not thy are infected,” according to a Bloomberg report.
The global outbreak reached a grim milestone on Sunday: the number of coronavirus cases confirmed outside China has now surpassed the mainland total. Last night, China’s NHC reported 16 new confirmed cases, extending their streak of near-zero infection figures into its second week. Though few ever trusted the Chinese data, there’s now little doubt that the outbreak that originated in the city of Wuhan is now mostly under control.
Nearby in Australia, the conservative government led by PM Scott Morrison is considering a second round of economic stimulus, Reuters reports, as Canberra accelerats efforts to contain the spread of the coronavirus that has now killed five people in the country.
The situation in Australia is especially concerning, because, as Harvard epidemiologist Dr. Eric Feigl-Ding reports:
Why should we all care & deeply worry about New South Wales, Australia 🇦🇺 ‘s 171 #COVID19 cases? Because it is the MIDDLE OF SUMMER THERE!!! This virus will not be die out when summer comes to Northern Hemisphere. Forget that fantasy. We are stuck with it until vaccine arrives! https://t.co/dGbQqGkvfJpic.twitter.com/avDV5TUpkK
Back in the US, after several governors on the east coast joined in the national emergency, closing schools etc., VP Pence and the rest of the White House coronavirus response team again promised to have testing on-line and paid for by the end of the week, with millions of tests and up to 2,000 labs across the country expected to come online this week, now that the CDC has revised its strict standards that allegedly surrounded the testing process with red tape. After Trump tested negative on Sunday, the media was quick to lash out at him again after he said that the virus is “something we have tremendous control of” during last night’s press conference.
Five governors have now closed bars and restaurants, including California, and mayors in Nashville and New Orleans announced restrictions in those cities, too, with more cities expected to join in the coming days. In Las Vegas, Wynn Resorts and MGM closed their casinos. Casinos in Massachusetts also closed over the weekend. At this point, more than 30 US states have closed schools, with many not set to reopen for at least two weeks, with schools in NYC closed until April 20.
Before we go, here are a few quick updates on the state of the epidemic around the world.
Canada:
Coronavirus update, Canada:
– 89 new cases today
– 341 cases in total
– 13% hospitalized
– 51% women
– 74% are travelers
– 31% above age 60
– USA: 823 new cases
– Canada: 89 new cases
– Brazil: 79 new cases
– Peru: 28 new cases
– Mexico: 17 new cases
– Venezuela: 15 new cases
– Chile: 14 new cases
– Argentina: 11 new cases
– Colombia: 11 new cases
– Ecuador: 9 new cases
– Netherlands: 176 new cases
– Czechia: 104 new cases
– Greece: 103 new cases
– Sweden: 79 new cases
– Portugal: 76 new cases
– Estonia: 56 new cases
– Ireland: 41 new cases
– Slovenia: 38 new cases
– Denmark: 28 new cases
– Luxembourg: 26 new cases
– Italy: 3,590 new cases
– Spain: 1,801 new cases
– Germany: 1,228 new cases
– France: 924 new cases
– Switzerland: 842 new cases
– UK: 251 new cases
– Austria: 205 new cases
– Belgium: 197 new cases
– Norway: 177 new cases
In Africa, more cases are beginning to crop up as South Africa, which reported its first case last week, begins the process of closing its borders with several neighboring states.
Brazil reports 79 new cases of coronavirus, 200 cases in total, with 136 cases in Sao Paulo alone. Offering another jarring stat, one twitter user pointed out that 50% of coronavirus patients in intensive care in the Netherlands, which has like many other European countries seen cases spike last week, are younger than 50. In Bavaria, the hardest-hit German state, the governor has also closed schools and bars. The government of Ireland has shut pubs across the country (just in time for St. Paddy’s Day).
On Monday, Iran reported 1,053 new cases of coronavirus and 129 new deaths, bringing its total case load to 14,991, and the ‘official’ death toll to 853.
And finally, we’d like to leave off with a bit of levity.
im annoyed that this isn’t some new ongoing series someone came up with 4 days ago https://t.co/TCo2vVXmlE
US Equity ETFs Signal Massive Opening Loss, WTI Crashes Below $30
While futures markets have been limit-down since shortly after their open, despite massive Fed intervention efforts, US Equity ETFS are signaling a near 10% down open (which will immediately trigger a 15 min halt circuit breaker).
Dow ETFs also imply around a 2,100 point opening drop to 20,500…
Bonds are bid (but off the overnight yield lows when 30Y was down 27bps)…
Additionally, oil prices have collapsed to their lowest since February 2016, with WTI back below $30…after OPEC canceled their technical meeting this week and IHS Markit warned the most extreme oil surplus on record is possible.
And wholesale gasoline prices are down a stunning 20%…
And gold is being dumped again (though less aggressively)
Many countries have decided to lock down entire cities and shutdown airspace to contain the spread of coronavirus. This decision may create a massive crisis drowned in liquidity.
Governments and central banks are committed to do whatever it takes in terms of demand-side policies, spending and increasing liquidity as much as needed to avoid a 2008-style crisis. However, these measures, which were already ineffective for years, will be even less successful this time.
To start with, global policymakers made the mistake of implementing aggressive easing policies in a period of growth, which left them without effective tools to address the financial turmoil. When central banks cut rates and inject billions of liquidity in a period of growth and risk appetite, an urgent reaction due to a black swan scenario like coronavirus finds them with no tool that makes a significant impact. What impact will the ECB have with a 120 billion euro per month asset purchase when it has already bought almost 20% of eurozone governments’ debt in its misguided monthly 20 billion euro purchase and deposit rates are negative? None. Sovereign debt in the eurozone already trades with a negative yield, and buying corporate bonds of zombie multinationals did not help the eurozone economy nor will it help now.
Adding a monetary facility for SMEs only helps those who are indebted now, it does nothing for those small and medium companies that were prudent all throughout these years and now face a collapse in sales and accumulating fixed costs.
The Spanish government launched an urgent economic program of tax relief that, when you read the text, only applies to companies with sales below 6 million euros and maximum relief of 30,000 euro. Nothing. The vast majority of self-employed workers and small companies that face a lockdown that can last for months are not going to receive the slightest respite. In Italy, only the already indebted will see some relief. This is exactly the same all over Europe. Governments are implementing aggressive demand measures when the problem is not a demand issue and ignoring the real risks.
For most small companies and self-employed workers globally, a month of closure is a ruin. Two months is a catastrophe that leads to a domino of bankruptcies and layoffs.
The key factor is that the lockdown and economic crisis ahead comes on top of a very weak 2019 and 2018 for small companies, which are almost 90% of the corporate fabric in most developed nations.
Working capital kills more companies than the Government, but when the two factors come together, the risks of falling into a severe crisis are enormous.
What is death by working capital? Revenues plummet, rising unpaid or delayed payment invoices, while at the same time fixed costs accumulate and taxes continue to drown businesses. Most companies have very little liquidity. According to Moody’s the large quoted companies have increased cash, but even at large multinationals -excluding tech giants and a few exceptions-, net cash balance sheet does not cover one year of working capital requirements, particularly in the eurozone. However, an average small company usually has enough cash to survive a maximum of two months of difficulties. Hardly enough to survive a complete shutdown and a pandemic crisis.
In 2019 there were already worrying signals. In the US, small businesses were struggling despite economic growth and low unemployment. Thousands of stores closed in 2019, and the statistics of Business Formation suggested a significant weakness ahead. In most countries, the average cash maintained by an SME does not reach to cover three months of costs, and that is being very optimistic.
In the eurozone, the other problem is the high cost of hiring. Labor tax costs have increased 20% in the past two years in Spain, with 13% unemployment already, many taxes have to be paid in advance for invoices that, in the best case, will be paid months later, and fixed costs choke some companies that were mostly loss-making.
Delaying the payment of some taxes for six months does not mitigate the effect of a sales collapse or the already challenging situation that existed before any epidemic, in 2019.
The result of death by working capital is that the business fabric is rapidly destroyed and, with it, employment. Meanwhile, governments and already heavily indebted companies will receive ample liquidity and endless refinancing.
One of the reasons why Europe destroys so much employment is because it destroys companies faster than anyone else by resorting to large headline measures that do not solve the problems of job creators and ignore the problem of working capital and the size of its business fabric.
Governments will launch massive headline expense programs that strengthen neither the small nor the big companies. The small ones do not receive any real relief, and the large ones are only kept alive with a lifeline, zombified.
An epidemic crisis is not solved by increasing deficits and increasing spending in white elephants, with useless rate cuts that have no effect on SMEs with no debt suffering a sudden cash wipe-out, but even less by purchasing bonds from states that are already financing themselves at negative real rates.
GDP will be artificially lifted, but that does not work. It is easy to lift GDP with debt spending, it is very difficult to maintain the business fabric of a country in the face of a supply problem.
When governments and central banks deny supply-side measures to a supply problem and put in place large demand-side policies they benefit only those who were already privileged – the government and already-indebted sectors.
Small companies that behaved prudently throughout the so-called recovery face a double virus. The health pandemic and the interventionist epidemic.
It is almost impossible t to maintain the business fabric of a nation in the face of a supply crisis by rejecting supply measures yet adding even more demand policies.
An epidemic shock is not solved with deficit increases, current spending, and low rates. Demand for credit was already weak despite negative real rates.
The massive demand measures that will be announced in the coming days will generate a double negative:
On the one hand, excess capacity in the zombie sectors and deficit spending will increase, credit is absorbed by governments and those companies that already had large debts.
On the other hand, the lockdown and epidemic measures force a general closure of the economy that is not solved by building roads and infrastructure or forming congress committees.
The sectors that are already indebted and the Government benefit from the measures, the rest of us are hurt by the fall of the economy and the subsequent increase in taxes.
The reader might say that more government spending will also help SMEs and citizens. However, reality and history show that any relief measure does not even start to cover the loss of employment and productive parts of the economy. Think about this, if increasing government spending and deficits were the solution to a crisis, Europe would have recovered faster and stronger than any other economy in 2009 when it launched its enormous Jobs and Growth stimulus plan.
An epidemic shock is solved with supply measures, not demand policies:
Cutting taxes during the crisis period, eliminating social contributions in labor taxes to avoid the bleeding of employment. Lower the corporate tax in all sectors by 50% in exchange for employment strengthening plans.
Governments are already financing themselves at negative real rates. Enable, as banks are already doing, lines for working capital at zero rates. Banks do it with their clients, the government can do it with SMEs that do not have debt or financial contracts.
Eliminating all the obstacles to job creation and burdens for the little investment that arrives. A project cannot be delayed for months and even years under normal conditions and even less in a period of crisis.
The reader will tell me that all of this must be done in normal conditions and not just because of an epidemic, and we agree. However, we are surrounded by some politicians who think this is a fantastic opportunity to destroy the small business fabric, advance in the nationalization of the economy and make employers and employees even more dependent on state aid.
The proof that these enormous “whatever it takes” measures will fail has been evident for years. These measures only help those who are already in debt. The ones who suffer the most are the ones who have been cautious in recent years but now face tax bills, zero support, and collapsing sales.
We will see, again, the bailout of the reckless and the burden to the prudent.
These folks are also ordering $5,000 emergency go-bags that come with virus-fighting related products that will increase their survival probabilities.
Bloomberg notes that purchasers of the emergency go-bag can expect to find a “virus-eliminating” personal air purifier, Garmin satellite messenger, night vision goggles, portable solar panel kit, Datrex food rationings, and N-95 masks.
Ryan Kuhlman, the co-founder of Preppi, maker of high-end disaster kits, said as the virus spreads, the emergency go-bags are flying off the shelves:
“Our warehouse shelves are almost wiped out,” said Kuhlman. “Having the right tools and supplies can provide incredible relief to anxieties.”
He said sales jumped 5,000% in February, indicating that demand is coming in so suddenly that he’s having difficulty replenishing inventory.
Ann Marie Resnick, Hammacher Schlemmer & Co.’s vice president, said sales of personal-care products are up 500% since the virus crisis developed earlier this year.
“It just went boom,” she said. “Everyone needs an air purifier for the home. You’ll need more than one.”
While the rich are buying emergency go-bags to survive the pandemic, they’re also hopping on private jets to fully stocked disaster bunkers – here are a couple of setups of how they will live:
Interior bedroom of bunker
Bunker swimming pool and garden using artificial lighting
