Month: April 2020

Online brokerages are reporting a massive increase in new accounts and trading activity among newbie retail clients during this year’s stock market turmoil triggered by coronavirus lockdowns, reported The Wall Street Journal. 

Pajama traders have been enticed by zero commission trades offered by TD Ameritrade Holding and E*Trade Financial Corp.

Many of these first-time traders are “BTFD” as they believe a V-shaped recovery in the stock market and economy are inevitable. After all, it happened in 2016, 2019, why not in 2020?

Shown below, TD Ameritrade’s daily average client trades soared when commissions slashed to zero in 4Q19 and continue to rise through the pandemic. 

The Journal interviewed several retail traders, putting their life savings into a brokerage account because they believe with zero commission trades, now is the time to be invested. 

Eugene LeGrand,34, a construction estimator, said he was super excited about free trades and set up a TD Ameritrade account in January, putting his money into gun stocks as he thought they would erupt during the election year. LeGrand said as the market dipped, he panic bought “shares of oil giants, airlines and car-rental businesses—all,” all because he believed a massive economic rebound is ahead.

LeGrand turned to Facebook groups for investing ideas. He says his account has around $15,000 in it. However, we wonder, since he was buying gun stocks before the stock crash, how much did he initially put in his account? 

“I feel like everything that I buy, I watch pretty closely and if it’s something that’s not doing well, I’ll generally try to put [that money] into something that is doing well instead,” he said. Working from home, he added, has allowed him to watch for those movements more easily.

TD Ameritrade added 608,000 accounts in the first quarter, Charles Schwab Corp. added 609,000 accounts, and E*Trade saw a gain of about 363,000. 

Steve Quirk, executive vice president of trading and education at TD Ameritrade, said the number of new clients has increased since zero commission trades started late last year. He noted recent account increases had been seen mainly with “millennials and Generation X.” 

In past selloffs, brokerages have noted that accounts and volumes of trades tend to tick higher as retail clients look for opportunities. 

“People are absolutely more engaged here because you’ve removed the cost to trade,” said Devin Ryan, an analyst at JMP Securities.

We noted in one study that at least 97% of Brazilian day traders lost money. Other studies have shown that swing trading usually end in sad stories among pajama traders.

 “On average, when individual investors are actively buying and selling stocks, they tend to make poor decisions,” said Terrance Odean, a finance professor at the University of California, Berkeley. Odean worries that free trades could encourage risky trading by novices.

Will Nelson,27, another newbie trader that uses the Robin Hood trading app, has been dabbling in his $100 account in buying bullish options on tech stocks. He said bullish options were easy money in the last several years, but when stocks dropped because of the coronavirus pandemic, trading got hard. 

“You have to be able to handle extremes,” he said

Nelson said he panic bought the dip when stocks crashed several months ago, his account is up more than 244%. 

Thomas Peterffy, chairman of Interactive Brokers Group Inc., said virus lockdowns has led to an increase of newbie traders: 

“Many people have been promising to themselves that one day they would learn about how to invest and manage their own finances,” Peterffy said.” Now that they must stay at home, they have the time to do that.”

We noted several days ago how retail traders on the Robin Hood app, many of whom did not read the prospectus of USO, were piling into the crashing USO ETF. 

What newbie traders have trouble in understanding today is that the economy crashed, buying the dip because prices look cheap doesn’t necessarily mean things are cheap — that is an illusion. Price-earnings ratios for S&P500 and S&P500 Tech are back at nosebleed levels as earnings collapse. 

The widening gap between Nasdaq and fundamentals suggests the collapse in earnings will make prices hard to justify in the near term and likely result in the unfolding of a bear market. 

And finally, Warren Buffett’s favorite indicator has soared to a new record high, signaling that stocks are the most expensive ever. 

MoMo chasing newbie traders are about to get their clocks cleaned as they will soon realize that the rally in stocks is nothing more than a corrective wave in a bear market. 

Authored by John Solomon via JustTheNews.com,

The documents underlying his now infamous Russian dossier are long since destroyed, but Christopher Steele’s recollections of his political opposition research on President Trump nearly four years later are poised to create new heartburn for Democrats.

Steele recently testified in a British court that he believed both then-Democratic presidential nominee Hillary Clinton and then-Obama National Security Adviser Susan Rice were aware of his dossier research as it was going on in summer 2016.

The testimony makes his most direct link yet between his Russia collusion research and the top of the Clinton campaign and Obama White House.

Steele told a British court he believed he had been hired by the Fusion GPS firm owned by Glenn Simpson through the Democratic National Committee-linked law firm Perkins Coie to assist the Clinton campaign during the election, according to a transcript of the testimony.

“I presumed it was the Clinton campaign, and Glenn Simpson had indicated that. But I was not aware of the technicality of it being the DNC that was actually the client of Perkins Coie,” Steele testified in March under questioning from lawyers for Russian bankers suing over his research.

“You knew it was the leadership of the Clinton presidential campaign didn’t you?” a lawyer for the businessmen asked.

“I believed it was the campaign. Yes,” he answered.

“The leadership of the Clinton campaign?” he was asked.

“Fine, the leadership of the campaign,” Steele conceded.

The lawyer persisted.

“You also understood that Hillary Clinton herself was aware of what you were doing?” the lawyer asked.

“I think Glenn had mentioned it, but I wasn’t clear,” Steele answered.

Then Steele was confronted with what lawyers said were notes he took at a meeting with the FBI in 2016 in which he purported to tell agents that Clinton was aware of his research. The lawyers read from those notes during the court proceedings.

The notes, according to the transcript, read:

“We explained that Glenn Simpson/GPS Fusion was our commissioner but the ultimate client were the leadership of the Clinton presidential campaign and that we understood the candidate herself was aware of the reporting at least, if not us.”

The lawyers prodded: “It’s your note, so we assume it’s accurate?”

“Yes,” Steele answered during the March 17 testimony.

You can read that testimony here:

Messages seeking comment that were left Tuesday at Hillary Clinton’s office and the Clinton family library were not returned.

A day later in additional testimony, Steele was asked how he came to present some of his dossier findings to the U.S. State Department during an October 2016 meeting with then-Deputy Assistant Secretary of State Kathleen Kavalec.

The former British MI6 agent turned private intelligence investigator said his meeting was set up by State officials Jonathan Winer and Victoria Nuland after longtime Clinton adviser and friend Strobe Talbott had reached out to him.

“The meeting was set up by a State Department official called John Winer,” Steele explained.

“At your request?” the lawyers asked.

“No, at his request, his suggestion. He invited us into meet, as I understood it, at her request, Assistant Secretary of State Nuland,” Steele answered.

The lawyers asked whether Talbott opened the door in October.

“I think Strobe Talbott had gotten in touch with us much earlier than that,” Steele answered.

“I remember taking a phone call from him, your lordship, earlier in the summer in which he said that he was aware that I had — he spoke in fairly cryptic terms — but he was aware that we had material of relevance to the U.S. election.

“A little bit of background, if I may, your lordship on that,” Steele added.

“Both National Security Advisor at the time Susan Rice and Åssistant Secretary of State Victoria Nuland, who were the key policymakers on Russia, had been colleagues of Mr. Talbott. And I had, although he didn’t state it explicitly, one or either or both of them had briefed him on the work we had been doing.”

You can read that part of the testimony here.

Winer has acknowledged having contact with Steele in the summer of 2016, and Nuland has also acknowledged she was aware State officials met with the British operative. Erin Pelton, a spokeswoman for Rice, told Just the News on Tuesday that Steele’s claim was “utterly and completely false.”

Steele’s testimony provides other insights key to the ongoing investigation of the investigators in the Russia collusion probe.

Steele often disputed negative or contradictory accounts offered by other Russia case figures about his work, suggesting Kavalec’s notes of his meeting contained some “fairly odd things” and that Justice Department Inspector General Michael Horowitz’s account of an interview with him was at times inaccurate.

“All I know is they got some of it wrong,” Steele said of the IG report.

As for senior Justice Department official Bruce Ohr’s account of one of their meetings, Steele added:

“I think Bruce Ohr has misreported it … or misremembered it.”

He also revealed that one piece of anti-Trump information he obtained in 2016 — a since-debunked claim that Trump secretly may have communicated with Russia through a computer server at the Alfa Bank — didn’t come from a Russian intelligence source but rather was brought to his attention by one of the lawyers at Perkins Coie.

And Steele divulged he paid some of his sources of information as much as $3,000 to $5,000 a month, prompting the lawyers for the plaintiffs to ask whether that might have compromised some of the information he got.

“So they had a financial incentive to feed you stuff that was interesting, right?” a lawyer asked.

“Yes, that is true,” Steele answered. “But they were paid also to do other project work.” Steele added he didn’t think his sources would mislead him because they could be terminated if they did so.

Steele also told the court that most of his emails and other documents related to the dossier were destroyed by early January 2017 after he completed the project.

The British lawsuit is being brought under the Data Protection Act of 1998 by three international businessmen from Russia, arising out of the processing of their personal data in the Steele dossier.

The full story of President Trump’s intervening in the Russia-Saudi price war which sent oil prices plunging to historic lows has been revealed in a new explosive report. Trump’s pressure resulted in the surprise April 12 unprecedented OPEC+ production cut by 9.7 million barrels per day (bpd), which saw the Saudis and Russians begrudgingly agree to cut 2.5 bpd each.

Ourselves and others strongly suggested at the time that no doubt there were strong quid pro quo type ultimatums being delivered behind the scenes — consistent with Trump’s prior eyebrow raising boasts about Riyadh ponying up $1 billion in ‘protection money’ in return for defense against Iran — but new Reuters confirmation is out Thursday morning, and the details are more delicious than could have been expected, complete with the report actually describing of Saudi leaders that they genuinely panicked and fast began “bending the knee” when confronted by Trump’s slash output or else threat.

It began with an April 2nd phone call, Reuters details, wherein Trump pressed Saudi Crown Prince Mohammed bin Salman with the following ultimatum: OPEC must immediately begin cutting production or see all American troops withdrawn from the kingdom.

This after Trump had publicly threatened tariffs on oil imports from Saudi Arabia and Russia, which was the first suggestion at the time his intervention would run deep if the crisis would not resolved in a way satisfactory to US producers’ interests amid both the historic price meltdown and broader economic unraveling of the coronavirus pandemic.

Reuters describes it was nothing less than a “threat to upend a 75-year strategic alliance” and a gamble that ultimately resulted in a major “diplomatic victory for the White House”. And here’s where things get particularly good, given the report describes that Trump’s pressure campaign sent the 34-year old Saudi de facto ruler into nothing less than a temporary panic: 

Trump delivered the message to the crown prince 10 days before the announcement of production cuts. The kingdom’s de facto leader was so taken aback by the threat that he ordered his aides out of the room so he could continue the discussion in private, according to a U.S. source who was briefed on the discussion by senior administration officials.

A senior US official summarized Trump’s aggressive strong-arm rhetoric as essentially saying to Riyadh: “We are defending your industry while you’re destroying ours.”

 

Crucially, at that time there were bills being introduced from multiple Republican corners of the Senate that would punish Saudi Arabia over failure to cut oil production by removing all US troops from the kingdom in a month’s time, including Patriot missile and other anti-air defense systems, essential to defending the kingdom from a repeat of the Sept.14 Abqaiq–Khurais Aramco facility attack (blamed ultimately on Iran) which proved temporarily devastating to refining and export capability. Shia Houthi rebels in neighboring Yemen have also been using increasingly sophisticated missiles to attack sites inside Saudi Arabia.

In a follow-up interview Wednesday, Reuters asked the president point blank if he verbalized directly to MbS that US forces might be pulled from the kingdom, to which Trump responded, “I didn’t have to tell him.”

But the potential consequences for not coming to heel were made unmistakably clear, according to Reuters: 

On the April 2 call with Prince Mohammed, Trump told the Saudi ruler he was going to “cut them off” the next time Congress pushed a proposal to end Washington’s defense of the kingdom, according the source with knowledge of the call. Trump also publicly threatened in early April to impose tariffs on oil imports from Saudi Arabia and Russia.

After the conversation with the Saudi crown prince, and another the same day with Putin, Trump tweeted that he expected Saudi Arabia and Russia to cut output by about 10 million barrels, which “will be GREAT for the oil & gas industry!” 

Add to this the intense pressure coming simultaneously from Republican senators led by Kevin Cramer and Dan Sullivan and other Congressional leaders, who had introduced legislation threatening to cut defense ties. 

A “brutal” pressure campaign waged on the kingdom’s energy decision-makers laid the groundwork for Trump’s ultimatum subsequently relayed directly to MbS:

On March 16, Cramer was among 13 Republican senators who sent a letter to Crown Prince Mohammed reminding him of Saudi Arabia’s strategic reliance on Washington. The group also urged Commerce Secretary Wilbur Ross to investigate whether Saudi Arabia and Russia were breaking international trade laws by flooding the U.S. market with oil.

On March 18, the senators – a group that included Sullivan of Alaska and Ted Cruz of Texas – held a rare call with Princess Reema bint Bandar bin Sultan, the Saudi ambassador to the United States. Cramer called the conversations “brutal” as each senator detailed the damage to their states’ oil industries.

“She heard it from every senator; there was nobody that held back,” Cramer told Reuters.

And in a parallel mid-March initiative, North Dakota Republican Senator Kevin Cramer wrote a letter to Trump declaring “We will not be bullied” while urging a position of strength against “Foreign nations… now using the environment of the worldwide spread of COVID-19 to flood the market and cripple our domestic energy producers.”

Indeed it looks like the Trump presidency has given us a rare if not completely unprecedented instance wherein Washington finally reminded the Saudis who’s boss after the better part of a century of ‘blank check’ protection, not just through empty posturing, but actually getting them to “bend the knee” at a crucial moment.

After a US District Court Judge unsealed four pages of FBI emails and handwritten notes which provided the strongest evidence of a perjury trap, attorney and journalist @Techno_Fog has just connected two more damning dots.

According to a new filing in Flynn’s case, the FBI investigation into Trump’s former National Security Adviser was called “Crossfire Razor.”

Notably, on January 1, 2017, the FBI’s Washington DC field office recommended closing the case against Flynn after finding “no derogatory information” against him.

“The goal of the investigation was to determine whether [Flynn], associated with the Trump campaign, was directed and controlled by and/or coordinated activities with the Russian Federation in a manner which is a threat to the national security and/or possibly a violation of the Foreign Agents Registration Act,” reads an FBI memorandum.

“Following the initiation of captioned case, the [Crossfire Hurricane] team conducted a check of logical databases for any derogatory information on [Flynn],” it continues, concluding: “No derogatory information was identified in FBI holdings.”

Text messages sent by former FBI official Peter Strzok the same day reveal his intent to continue his pursuit of Flynn.

🚨🚨BREAKING

The operation that targeted Flynn: CROSSFIRE RAZOR

1/4/17: FBI field office found “No derogatory information” on Flynn and decided to close RAZOR.

1/4/17: FBI leadership (STRZOK) went off the rails and targeted Flynn: “Don’t close RAZOR” pic.twitter.com/0MAKqzhxas

— Techno Fog (@Techno_Fog) April 30, 2020

Peter Strzok texts to the FBI Case Manager handling the Crossfire Razor (Flynn) case.

Strzok: “If you haven’t closed RAZOR, don’t do so yet”

Strzok: “7th floor involved” (FBI Leadership)

(Possible use of Logan Act “violations” to keep investigation open) pic.twitter.com/nnGqMnHNue

— Techno Fog (@Techno_Fog) April 30, 2020

To review, as Sara Carter detailed last night, the FBI emails and handwritten notes revealed that the retired three-star general was being targeted for prosecution according to Flynn’s attorney, Sidney Powell.

As we noted earlier Thursday:

***

In one of the emails dated Jan. 23, 2017, FBI lawyer Lisa Page, who at the time was having an affair with Strzok and who worked closely with him on the case discussed the charges the bureau would bring on Flynn before the actual interview at the White House took place. Those email exchanges were prepared for former FBI Deputy Director Andrew McCabe, who was fired by the DOJ for lying multiple times to investigators with DOJ Inspector General Michael Horowitz’s office.

Former FBI Director James Comey, who was fired by President Trump for his conduct, revealed during an interview with Nicolle Wallace last year that he sent the FBI agents to interview Flynn at the White House under circumstances he would have never done to another administration.

“I probably wouldn’t have done or maybe gotten away with in a more organized investigation, a more organized administration,” Comey said. “In the George W. Bush administration … or the Obama administration, two men that all of us, perhaps, have increased appreciation for over the last two years.”

In the Jan 23, email Page asks Strzok the day before he interviews Flynn at the White House:

“I have a question for you. Could the admonition re 1001 be given at the beginning at the interview? Or does it have to come following a statement which agents believe to be false? Does the policy speak to that? (I feel bad that I don’t know this but I don’t remember ever having to do this! Plus I’ve only charged it once in the context of lying to a federal probation officer). It seems to be if the former, then it would be an easy way to just casually slip that in.

“Of course as you know sir, federal law makes it a crime to…”

Strzok’s response:

I haven’t read the policy lately, but if I recall correctly, you can say it at any time. I’m 90 percent sure about that, but I can check in the am.

In the motion filed earlier this week, Powell stated “since August 2016 at the latest, partisan FBI and DOJ leaders conspired to destroy Mr. Flynn. These documents show in their own handwriting and emails that they intended either to create an offense they could prosecute or at least get him fired. Then came the incredible malfeasance of Mr. Van Grack’s and the SCO’s prosecution despite their knowledge there was no crime by Mr. Flynn.”

Attached to the email is handwritten notes regarding Flynn that are stunning on their face. It is lists of how the agents will guide him in an effort to get him to trip up on his answers during their questioning and what charges they could bring against him.

“If we get him to admit to breaking the Logan Act, give facts to DOJ & have them decide,” state the handwritten notes.

“Or if he initially lies, then we present him (not legible) & he admits it, document for DOJ, & let them decide how to address it.”

The next two points reveal that the agents were concerned about how their interview with Flynn would be perceived saying “if we’re seen as playing games, WH (White House) will be furious.”

“Protect our institution by not playing games,” the last point on the first half of the hand written notes state.

From the handwritten note:

Afterwards:

• interview

• I agreed yesterday that we shouldn’t show Flynn (redacted) if he didn’t admit

• I thought @ it last night, I believe we should rethink this

• What is (not legible) ? Truth/admission or to get him to lie, so we can prosecute him or get him fired?

• we regularly show subjects evidence, with the goal of getting them to admit their wrongdoing

• I don’t see how getting someone to admit their wrongdoing is going easy on him

• If we get him to admit to breaking the Logan Act, give facts to DOJ & have them decide

• Or if he initially lies, then we present him (not legible) & he admits it, document for DOJ, & let them decide how to address it

• If we’re seen as playing games, WH will be furious

• Protect our institution by not playing games

(Left column)

• we have case on Flynn & Russians

• Our goal is to (not legible)

• Our goal is to determine if Mike Flynn is going to tell the truth or if he lies @ relationship w/ Russians

• can quote (redacted)

• Shouldn’t (redacted

Review (not legible) stand alone

It appears evident from an email from former FBI agent Strzok, who interviewed Flynn at the White House to then FBI General Counsel James Baker, who is no longer with the FBI and was himself under investigation for leaking alleged national security information to the media.

Who could have known that instead of asking for taxpayer bailouts, all Boeing – whose market cap is now far below that of Tesla – had to do to replenish much needed liquidity, was to come to the Fed-backstopped bond market.

One day after S&P downgraded Boeing to just one notch above junk, or BBB-, as a result of the company’s massive debt load which was a record $38.9 billion as of the end of Q1…

… the Baa2/BBB- company added another $25 billion in debt to its balance sheet, effectively assuring that it will be downgraded to junk in the coming months. But what is fascinating is how easy it was for the soon-to-be fallen angel to issue the debt.

According to Reuters, Boeing approached the market targeting a $10BN in new debt. However, after a brief but successful roadshow, Bloomberg reported that the company had received $70BN in orders for its offering. The massive, 5x oversubscribtion meant that the company could upsize the offering at will, and what was originally a $10BN bond sale ended up being $25BN – the largest offering this year – across seven tranches, with initial price talk as follows:

• 3yr T+425bp
• 5yr T+450bp
• 7yr T+450bp
• 10yr T+450bp
• 20yr T+440bp
• 30yr T+450bp
• 40yr T+462.5bp

Those initial risk premiums are more in line with junk-rated companies, and will “get the greed juices flowing,” said David Knutson, head of credit research for the Americas at Schroder Investment Management.

According to Bloomberg, Boeing is betting its balance sheet strength and access to capital will see it through the current crisis. Chief Financial Officer Greg Smith told investors in reporting earnings Wednesday the company is committed to maintaining investment-grade ratings, but ultimately that’s up to the market to decide.

Ironically, as we reported last night, S&P cut the company to one level above junk with a stable outlook precisely because of its massive debt load. Fitch rates the new bonds BBB, though the rater doesn’t expect global aviation markets to return to 2019 levels until 2022, and in some cases 2023, analysts Craig Fraser and Nicholas Varone said in a report Thursday. Boeing should be able to rebuild its credit metrics to levels consistent with the BBB rating within the next two years, they said. Then again, one wonders just how an exponential debt increase is “consistent with a BBB rating.”

Boeing had already fully drawn on a nearly $14 billion term loan which it needed to fund its operations at a time when the entire ec0onomy had virtually shut down, and Thursday’s bond sale will add even more cash as the company received $70 billion of orders at the peak, according to a Bloomberg source.

Boeing burned through a record $4.7 billion of cash in Q1, which could quadruple by year-end and continue into 2021 as the pandemic and global recession sap demand for plane sales, Barclays analyst David Strauss said in a note to clients Thursday, not to mention the ongoing 737 MAX fiasco. Strauss estimates the company will need to raise $15 billion from the capital markets and U.S. government to navigate the severe market correction. Well, it has done all that and more just a few hours later.

Assuming roughly $24 BN in net proceeds, Boeing’s new cash balance will be $40BN. It will, however, also have a record $63BN in debt as shown below.

The extra liquidity will provide “solid upside” to Boeing’s stock, Bernstein analysts led by Douglas Harned said in a report Thursday. Creditors however were less amused at the surge in leverage, and its existing bonds traded lower, with debt maturing in 2050 and 2059 quoted at less than 80 cents on the dollar.

None of this mattered to new bond investors however, who assumed that the Fed will backstop Boeing’s debt – after all it was IG at time of issuance, and nothing else matters.

“It is almost paradoxical that companies with little to no income or a very hazy outlook would have substantial access to capital markets,” Knutson said. “Despite the worst economic contraction in history, the debt markets are wide open.”

No David, it’s not paradoxical: now that the Fed has backstopped all investment grade debt, fundamentals no longer matter as we showed this weekend, when we showed just how much debt has been sold this month during an economic depression.

And yes, this time the Fed owns the bubble from top to bottom. In other words, if it was the Fed’s intention to make the current bond bubble much, much bigger, it has succeeded.

The good news is that creditors have made Boeing’s taxpayer bailout moot: after all, they can fund all the company’s needs, right, so no need for taxpayer money to be put on the line. When asked if Boeing no longer needed federal aid given the strong response to its bond offering, a Boeing spokesman declined to comment and referred to the earnings call commentary.

“We believe that government support will be critical to ensuring our industry’s access to liquidity,” Chief Executive Officer Dave Calhoun said, even as he knew his bond offering just one day later would be massively oversubscribed . “We continue to evaluate options in the capital markets as well as funding options from the U.S. Government via the U.S. Treasury and various Federal Reserve programs.”

President Trump on Thursday downplayed the meat shortage crisis that is expected to unfold across America in the first and second week in May. He said he’s “not at all” worried about the food supply chain. Despite Tyson Foods on Sunday, in a full-page ad in the New York Times, warned that the nation’s “food supply chain is breaking.” 

Perhaps President Trump feels confident because he signed an executive order invoking the Defense Production Act to force meatpacking plants to stay open. The president said he expects the food supply chain to be stronger than ever. 

Bloomberg quoted USDA Secretary Sonny Perdue as saying shuttered meatpacking plants will be operational in “days not weeks” thanks to the president’s executive order. 

Perdue said workers at meatpacking facilities would receive a new attire that includes the protective gear that will better shield them from COVID-19.

So far, at least 12 meatpacking plants have closed in April because of virus-related shutdowns among employees. This has resulted in at least 25% of pork and 10% of beef processing capacity to shift offline in the last several weeks, which is expected to trigger a meat shortage.

Already, the shutdowns have led to unprecedented food inflation for beef prices. 

While the president downplays the incoming shortage of meat, Perdue said the national shortfall in meat production is between 20% to 30%, to be narrowed to “10% to 15% within a week to 10 days.” He added as plants come back online, operating capacity will be reduced through the ramp-up period. 

“There will be some less production, some inefficiency based on line speeds, some employees that will not be able to come back to work,” Perdue said.

Under the executive order, the USDA can force meat processing plants to reopen, Perdue said. Still, as we noted over the weekend, labor shortages could develop as line workers don’t feel comfortable knowing the virus continues to spread at facilities. 

“Worker health and safety is the first priority here,” Perdue said. “We want to assure the workers and the community of their safety.”

The United Food and Commercial Workers Union said at least 20 meatpacking workers have died from the virus, with at least 6,500 infected in the last two months. 

Authored by Ian Lyngen, Jon Hill and Benjamin Harvey of BMO Capital Markets

In a word: Gilead. It’s the optimism associated with the company’s experimental Covid-19 therapy which has supported risk assets as this week nears the final stretch. Overnight, equity futures hit new post-crash highs (2965 for the S&P) as investors take solace in the progress being made to combat the outbreak. While Remdesivir (we’re never going to correctly pronounce that) isn’t a vaccine nor a silver-bullet to end the pandemic, the development of such a drug has shifted investor sentiment and points toward a potential path back toward a version of normality. While risk assets have benefited on the margin from this news, Gilead cannot be credited for the rally in domestic equities which has trimmed the year-to-date losses in the S&P 500 to just 9%. It’s well within the realm of conceivable outcomes that May is the month stocks breakeven for 2020; leaving behind the volatility of March and April. For context, the Nasdaq is already effectively flat on the year.

The recovery of equity markets doesn’t imply the economic damage from the coronavirus has been mitigated or that we’ve even seen the full extent of the downside; recall the current quarter is anticipated to reveal a contraction that will shatter records and models. For the time being however, the macro narrative has transitioned toward reopening, recovering, and rebuilding. The US rates market hasn’t been overcome by the same optimism seen in other assets and with 10-year yields once again at 61 bp we’re impressed by the sustainability of the range. If a -4.8% Q1 real GDP print and the Fed affirming limitless QE isn’t enough to budge Treasuries, we struggle to see anything on the immediate horizon which will.

This isn’t to suggest that in 2021 10s will be holding on to the 54 bp to 78 bp zone; even if it currently appears that might be the most likely outcome. We’re retaining our call to see the eventual reemergence of inflationary pressure in the wake of the pandemic, which will serve to push longer-dated Treasury yields higher and bring into focus the 1.25-1.50% range as the new year approaches. This is, as they say, a lifetime away given the current market conditions. In the very near-term, the present range will remain the defining characteristic in US rate space. As such, 54-78bp 10s will be in place well through month end and with recent experience as a guide, a sustainable breakout won’t be on the table until mid-May or later. The logic underlying this call is that the incoming economic data will continue to be ignored in favor of headlines regarding the treatment of Covid-19 and the success of the reopening efforts – which will commence in earnest during the second half of the month.