[BigJohn043]

Of course we are limit down and will be leading into the session.  Likely we will trip the 7% circuit breakers.  Much of this is driven by the gain of almost 9% we had on Friday driven in the last hour of trading.

There just isn't a lot of liquidity in this market.  But this is very different than 2008.  The liquidity is there but there is so much uncertainty in what is going to happen that no one wants to put that liquidity to work.  Bid-Ask spreads are wide and will remain that way until we get more information on where we are going.  My guess is we will continue to have high volatility for the forseeable future with the markets being limit up and limit down many mornings.

FWIW, my view is that the Fed did a nice job with injecting liquidity but it was a mistake to cut rates.  That being said, not sure it really matters because we were going to get here either way....

[BigJohn043]

Of course we are limit down and will be leading into the session.  Likely we will trip the 7% circuit breakers.  Much of this is driven by the gain of almost 9% we had on Friday driven in the last hour of trading.

There just isn't a lot of liquidity in this market.  But this is very different than 2008.  The liquidity is there but there is so much uncertainty in what is going to happen that no one wants to put that liquidity to work.  Bid-Ask spreads are wide and will remain that way until we get more information on where we are going.  My guess is we will continue to have high volatility for the forseeable future with the markets being limit up and limit down many mornings.

FWIW, my view is that the Fed did a nice job with injecting liquidity but it was a mistake to cut rates.  That being said, not sure it really matters because we were going to get here either way....

[OutsiderFan]

Buried in the Fed panicking news, they have said banks can reduce their reserve requirements. Can someone explain to me why this is not a terrible idea?

I remember in 2008 pulling all of my money out of Washington Mutual as it was rumored to be failing. With lower reserve requirements, if there is even a hint that a bank is in trouble and people want their money out, the bank may not have it if too many try to move their money at once. Hell, people could see 0% interest and conclude it’s better to take out their money in cash.

Dow Futures trading was halted tonight after they dropped 5%. We might set the record for biggest single drop in market history for the 3rd time in a week on Monday. Good thing most people will be at home, unable to jump out of high rise windows - LOL!

[OutsiderFan]

Buried in the Fed panicking news, they have said banks can reduce their reserve requirements. Can someone explain to me why this is not a terrible idea?

I remember in 2008 pulling all of my money out of Washington Mutual as it was rumored to be failing. With lower reserve requirements, if there is even a hint that a bank is in trouble and people want their money out, the bank may not have it if too many try to move their money at once. Hell, people could see 0% interest and conclude it’s better to take out their money in cash.

Dow Futures trading was halted tonight after they dropped 5%. We might set the record for biggest single drop in market history for the 3rd time in a week on Monday. Good thing most people will be at home, unable to jump out of high rise windows - LOL!

[2006alum]

This really falls in the category of wild speculation, but my partner used to work in the hedge fund business and it still tapped into the community, and apparently there's some speculation that Deutsche Bank may be close to failing and that the reason bond yields were going UP last week was the possibility they were cashing out their bond holdings to get liquidity now and that the Fed stepped in to buy when DB was flooding the market and not finding enough buyers. One of the Swiss Banks is also apparently on the brink and may be/have been doing the same.

(And if you're really into conspiracy theories, apparently Trump, who has a well documented history of borrowing from DB, was screaming at Mnuchin to have the Fed do something the night before the Fed intervened. If DB goes into receivership, then the German government will possess all of its records and the lawsuit currently pending before SCOTUS about DB subpoenas would be moot should its books be made public in receivership.)

[2006alum]

This really falls in the category of wild speculation, but my partner used to work in the hedge fund business and it still tapped into the community, and apparently there's some speculation that Deutsche Bank may be close to failing and that the reason bond yields were going UP last week was the possibility they were cashing out their bond holdings to get liquidity now and that the Fed stepped in to buy when DB was flooding the market and not finding enough buyers. One of the Swiss Banks is also apparently on the brink and may be/have been doing the same.

(And if you're really into conspiracy theories, apparently Trump, who has a well documented history of borrowing from DB, was screaming at Mnuchin to have the Fed do something the night before the Fed intervened. If DB goes into receivership, then the German government will possess all of its records and the lawsuit currently pending before SCOTUS about DB subpoenas would be moot should its books be made public in receivership.)

[OutsiderFan]

I was watching something last week about a rumor Deutche Bank was in trouble. 

Looks like Covid-19 may be the least of our worries, though I would love nothing more than DB being taken over by the German government and all its crimes being exposed, as I understand there are many.

[OutsiderFan]

I was watching something last week about a rumor Deutche Bank was in trouble. 

Looks like Covid-19 may be the least of our worries, though I would love nothing more than DB being taken over by the German government and all its crimes being exposed, as I understand there are many.

[BostonCard]

Reserve requirements are supposed to be countercyclical.  You force banks to increase them in the good times so that in the bad times, when they have to write off assets you can relax them and they are still solvent.  The natural inclination of banks is to overextend themselves in the good times because returns are good, but then, to paraphrase Warren Buffett, they are naked when the tide rolls out.

BC

[BostonCard]

Reserve requirements are supposed to be countercyclical.  You force banks to increase them in the good times so that in the bad times, when they have to write off assets you can relax them and they are still solvent.  The natural inclination of banks is to overextend themselves in the good times because returns are good, but then, to paraphrase Warren Buffett, they are naked when the tide rolls out.

BC

[Griffins78]

This really falls in the category of wild speculation, but my partner used to work in the hedge fund business and it still tapped into the community, and apparently there's some speculation that Deutsche Bank may be close to failing and that the reason bond yields were going UP last week was the possibility they were cashing out their bond holdings to get liquidity now and that the Fed stepped in to buy when DB was flooding the market and not finding enough buyers. One of the Swiss Banks is also apparently on the brink and may be/have been doing the same.

Thanks for sharing. Good clue to investigate.

[Griffins78]

This really falls in the category of wild speculation, but my partner used to work in the hedge fund business and it still tapped into the community, and apparently there's some speculation that Deutsche Bank may be close to failing and that the reason bond yields were going UP last week was the possibility they were cashing out their bond holdings to get liquidity now and that the Fed stepped in to buy when DB was flooding the market and not finding enough buyers. One of the Swiss Banks is also apparently on the brink and may be/have been doing the same.

Thanks for sharing. Good clue to investigate.

[BostonCard]

United is cutting flights by 50% and they expect it to last into the summer travel season.  Here’s the kicker, even after the cut in service, they expect loads to be in the 20 - 30% range in the near future.

BC

[BostonCard]

United is cutting flights by 50% and they expect it to last into the summer travel season.  Here’s the kicker, even after the cut in service, they expect loads to be in the 20 - 30% range in the near future.

BC

[chrisk]

United is cutting flights by 50% and they expect it to last into the summer travel season.  Here’s the kicker, even after the cut in service, they expect loads to be in the 20 - 30% range in the near future.

BC

American is mothballing 90% of its wide body fleet and suspending most of its long-distance flights.

[chrisk]

United is cutting flights by 50% and they expect it to last into the summer travel season.  Here’s the kicker, even after the cut in service, they expect loads to be in the 20 - 30% range in the near future.

BC

American is mothballing 90% of its wide body fleet and suspending most of its long-distance flights.

[OutsiderFan]

Well, that’s one way to reduce carbon emissions...

I read the other day Delta was cutting 40% of its schedule. That equates to parking 300 planes. They have 900. Cancellations are outpacing new bookings. They are delaying orders (obviously) and working on a 55 hour a month compensation for furloughed workers who are thankfully union-protected. The ripple effect is obviously going to hurt Boeing, as American, United, SWA and others follow.

One thing I wish they would do is allow people to sign up for some sort of “Costco” type buyer’s club that would allow you to buy an annual membership for say $500 for the promise of say a 20% discount on flights for a year, starting in maybe September, 2020. At least that would put some cash in their pockets, and think of the profit margin of getting paid with no need to fly a plane.

In a similar vein, a good idea to support your local restaurants you like by buying gift certificates. But many also deliver too. Bars don’t usually offer them, but they should follow suit. Entertainment businesses can do the same.

The CDC is now recommending all gatherings of 50 or more be prohibited across the country, and there is talk of an Italy and Spain style national shutdown if voluntary recommendations are not followed, that would include fines and jail time if violated.

It does look like the USA is finally trying to get ahead of things before we are overwhelmed and that the scientists are now in charge across the board. This is a good thing!

I just hope there isn’t a movement to take money out of banks, credit seizes and food stops being delivered. I really don’t want to bust into the Ramen and Spam reserves! Social media has the ability to spread a run on banks like nothing we have ever seen before. If that happens, it’s Lord of the Flies.

[OutsiderFan]

Well, that’s one way to reduce carbon emissions...

I read the other day Delta was cutting 40% of its schedule. That equates to parking 300 planes. They have 900. Cancellations are outpacing new bookings. They are delaying orders (obviously) and working on a 55 hour a month compensation for furloughed workers who are thankfully union-protected. The ripple effect is obviously going to hurt Boeing, as American, United, SWA and others follow.

One thing I wish they would do is allow people to sign up for some sort of “Costco” type buyer’s club that would allow you to buy an annual membership for say $500 for the promise of say a 20% discount on flights for a year, starting in maybe September, 2020. At least that would put some cash in their pockets, and think of the profit margin of getting paid with no need to fly a plane.

In a similar vein, a good idea to support your local restaurants you like by buying gift certificates. But many also deliver too. Bars don’t usually offer them, but they should follow suit. Entertainment businesses can do the same.

The CDC is now recommending all gatherings of 50 or more be prohibited across the country, and there is talk of an Italy and Spain style national shutdown if voluntary recommendations are not followed, that would include fines and jail time if violated.

It does look like the USA is finally trying to get ahead of things before we are overwhelmed and that the scientists are now in charge across the board. This is a good thing!

I just hope there isn’t a movement to take money out of banks, credit seizes and food stops being delivered. I really don’t want to bust into the Ramen and Spam reserves! Social media has the ability to spread a run on banks like nothing we have ever seen before. If that happens, it’s Lord of the Flies.

[JohnR34231]

I would assume FDIC insurance would mitigate runs on banks.
Maybe the networks should show Jimmy Stewart in "It's A Wonderful Life" for the umpteenth time.

[JohnR34231]

I would assume FDIC insurance would mitigate runs on banks.
Maybe the networks should show Jimmy Stewart in "It's A Wonderful Life" for the umpteenth time.

[OutsiderFan]

Not a good idea for the Treasury Secretary to even mention anything about the banks being fine.

Nice to see a coordinated response from the tri-state states.

[tweet]https://twitter.com/nowthisnews/status/1239570567197593600[/tweet]

[OutsiderFan]

Not a good idea for the Treasury Secretary to even mention anything about the banks being fine.

Nice to see a coordinated response from the tri-state states.

[tweet]https://twitter.com/nowthisnews/status/1239570567197593600[/tweet]

[BostonCard]

Not a good idea for the Treasury Secretary to even mention anything about the banks being fine.

Nice to see a coordinated response from the tri-state states.

[tweet]https://twitter.com/nowthisnews/status/1239570567197593600[/tweet]

I think it was Tim Geitner that said something to the effect that if you lose credibility, the markets come to believe the opposite of what you say.



BC

[BostonCard]

Not a good idea for the Treasury Secretary to even mention anything about the banks being fine.

Nice to see a coordinated response from the tri-state states.

[tweet]https://twitter.com/nowthisnews/status/1239570567197593600[/tweet]

I think it was Tim Geitner that said something to the effect that if you lose credibility, the markets come to believe the opposite of what you say.



BC

[JohnR34231]

I'll say one thing.
If you think banks are in deep doo-doo the market sure agrees with you.
Even big ones like Chase are down close to 15% today.

[JohnR34231]

I'll say one thing.
If you think banks are in deep doo-doo the market sure agrees with you.
Even big ones like Chase are down close to 15% today.

[BostonCard]

I'll say one thing.
If you think banks are in deep doo-doo the market sure agrees with you.
Even big ones like Chase are down close to 15% today.

The banks are much better capitalized than they were heading into the financial crisis, and much less likely to require a bailout (European not quite as much).  One thing that dropping interest rates to zero does is that it reduces the profitability of banks, since they can't pass all of the cuts to customers.

BC

---

UCSF has just sent a directive out to its faculty urging:

All principal investigators must communicate immediately with trainees and other lab members to institute the shutdown of all noncritical research activities before midnight on Wednesday, March 18.

BC

[BostonCard]

I'll say one thing.
If you think banks are in deep doo-doo the market sure agrees with you.
Even big ones like Chase are down close to 15% today.

The banks are much better capitalized than they were heading into the financial crisis, and much less likely to require a bailout (European not quite as much).  One thing that dropping interest rates to zero does is that it reduces the profitability of banks, since they can't pass all of the cuts to customers.

BC

---

UCSF has just sent a directive out to its faculty urging:

All principal investigators must communicate immediately with trainees and other lab members to institute the shutdown of all noncritical research activities before midnight on Wednesday, March 18.

BC

[cardcrimson]

Probably been mentioned before, but I missed it. The first case of coronavirus was identified in Italy more than a week later than the first identified US case. The Italians id'd two Chinese tourists with the disease on January 31st, ironically the same day Trump announced travel restrictions from China. Amazing how swiftly the disease decimated Italy.

[cardcrimson]

Probably been mentioned before, but I missed it. The first case of coronavirus was identified in Italy more than a week later than the first identified US case. The Italians id'd two Chinese tourists with the disease on January 31st, ironically the same day Trump announced travel restrictions from China. Amazing how swiftly the disease decimated Italy.

[2006alum]

Probably been mentioned before, but I missed it. The first case of coronavirus was identified in Italy more than a week later than the first identified US case. The Italians id'd two Chinese tourists with the disease on January 31st, ironically the same day Trump announced travel restrictions from China. Amazing how swiftly the disease decimated Italy.

I don't think that's right - the strain that is decimating Italy came from German who came back from China in mid-January, exposed his colleagues, and one of those colleagues then went to Italy. I will find the source and follow up, but I am almost certain the major strain was not directly from China.

ETA: Here you go:

“The sequence closest to the base of the branch, which is the one that probably precedes the others, came from a person infected in Munich in all likelihood between Jan. 19-22,” said Massimo Galli, head of the university research group and of the infectious-diseases department at Milan’s Sacco hospital.
Galli added that the German patient had caught the virus after contacting someone who came from Shanghai.

He said their analysis showed that the Italian outbreak must have started between Jan. 25-26, well before the first patient was officially diagnosed in the northern town of Codogno.

Here's another source:

He says it looks unlikely that Italy could have done anything to completely prevent the virus from entering. “The only thing we could have done is introducing the current lockdown on 30 January, a decision that was impossible and unthinkable at the time,” he says. Even stopping flights from China might have had no influence at all, he says – new, provisional research suggests that the coronavirus reached Italy from Germany.

And it bears repeating - viruses don't care about borders or ethnicities. Sealing off borders helps insofar as it reduces transmission by reducing population movement, but a travel ban from China was never going to stop a virus that had long since hopped to other shores.

[2006alum]

Probably been mentioned before, but I missed it. The first case of coronavirus was identified in Italy more than a week later than the first identified US case. The Italians id'd two Chinese tourists with the disease on January 31st, ironically the same day Trump announced travel restrictions from China. Amazing how swiftly the disease decimated Italy.

I don't think that's right - the strain that is decimating Italy came from German who came back from China in mid-January, exposed his colleagues, and one of those colleagues then went to Italy. I will find the source and follow up, but I am almost certain the major strain was not directly from China.

ETA: Here you go:

“The sequence closest to the base of the branch, which is the one that probably precedes the others, came from a person infected in Munich in all likelihood between Jan. 19-22,” said Massimo Galli, head of the university research group and of the infectious-diseases department at Milan’s Sacco hospital.
Galli added that the German patient had caught the virus after contacting someone who came from Shanghai.

He said their analysis showed that the Italian outbreak must have started between Jan. 25-26, well before the first patient was officially diagnosed in the northern town of Codogno.

Here's another source:

He says it looks unlikely that Italy could have done anything to completely prevent the virus from entering. “The only thing we could have done is introducing the current lockdown on 30 January, a decision that was impossible and unthinkable at the time,” he says. Even stopping flights from China might have had no influence at all, he says – new, provisional research suggests that the coronavirus reached Italy from Germany.

And it bears repeating - viruses don't care about borders or ethnicities. Sealing off borders helps insofar as it reduces transmission by reducing population movement, but a travel ban from China was never going to stop a virus that had long since hopped to other shores.

[cardcrimson]

Lots of info out there, most of it not completely accurate. 

https://www.pharmaceutical-technology.co...s-tourism/

Regardless, the US seems to have had the virus just as long and we are much more fortunate, for whatever reason, than our friends in Italy.

[cardcrimson]

Lots of info out there, most of it not completely accurate. 

https://www.pharmaceutical-technology.co...s-tourism/

Regardless, the US seems to have had the virus just as long and we are much more fortunate, for whatever reason, than our friends in Italy.

[2006alum]

Lots of info out there, most of it not completely accurate. 

https://www.pharmaceutical-technology.co...s-tourism/

Sure. But at least the sources attributing it to Germany directly quote medical experts in Italy who have been analyzing the virus. That link has no direct attribution at all. I get that you want to push a particular narrative, but I don't think that game is worth the candle given how many ways this virus has criss-crossed the planet for the past few months. 

Regardless, the US seems to have had the virus just as long and we are much more fortunate, for whatever reason, than our friends in Italy.

Well for one thing, our population is 5 times the size of Italy's but spread over 30 times the geography, so we are much more disparate, which means transmission takes longer. We are also less reliant on public transportation and other high-density forms of transport. Finally, Italian culture is to kiss on the cheeks, even strangers, which of course is a very effective way to transmit SARS-COV-2. I suspect absent massive coordinated intervention at the federal, state, and local level, some of our urban areas like NYC will unfortunately be as affected as the worst affected areas of Italy when all is said and done.

[2006alum]

Lots of info out there, most of it not completely accurate. 

https://www.pharmaceutical-technology.co...s-tourism/

Sure. But at least the sources attributing it to Germany directly quote medical experts in Italy who have been analyzing the virus. That link has no direct attribution at all. I get that you want to push a particular narrative, but I don't think that game is worth the candle given how many ways this virus has criss-crossed the planet for the past few months. 

Regardless, the US seems to have had the virus just as long and we are much more fortunate, for whatever reason, than our friends in Italy.

Well for one thing, our population is 5 times the size of Italy's but spread over 30 times the geography, so we are much more disparate, which means transmission takes longer. We are also less reliant on public transportation and other high-density forms of transport. Finally, Italian culture is to kiss on the cheeks, even strangers, which of course is a very effective way to transmit SARS-COV-2. I suspect absent massive coordinated intervention at the federal, state, and local level, some of our urban areas like NYC will unfortunately be as affected as the worst affected areas of Italy when all is said and done.

[burger]

Lots of info out there, most of it not completely accurate. 

https://www.pharmaceutical-technology.co...rts-touris

Regardless, the US seems to have had the virus just as long and we are much more fortunate, for whatever reason, than our friends in Italy.

This is wrong and highly misleading.  As 2006alum noted, community spread has probably been going on longer in Italy.  While it's possible that there are intrinsic factors that make Italy more susceptible, the data does not bear that out.  We are almost exactly on Italy's trajectory so far--they just had a head start.

Check out the US graph below.  The dashed line is Italy.  The dots are the US.

[burger]

Lots of info out there, most of it not completely accurate. 

https://www.pharmaceutical-technology.co...rts-touris

Regardless, the US seems to have had the virus just as long and we are much more fortunate, for whatever reason, than our friends in Italy.

This is wrong and highly misleading.  As 2006alum noted, community spread has probably been going on longer in Italy.  While it's possible that there are intrinsic factors that make Italy more susceptible, the data does not bear that out.  We are almost exactly on Italy's trajectory so far--they just had a head start.

Check out the US graph below.  The dashed line is Italy.  The dots are the US.

[cardcrimson]

Sure. But at least the sources attributing it to Germany directly quote medical experts in Italy who have been analyzing the virus. That link has no direct attribution at all. I get that you want to push a particular narrative, but I don't think that game is worth the candle given how many ways this virus has criss-crossed the planet for the past few months. 

I'm puzzled. What narrative am I pushing? 

Simply, I heard on the news this morning that the US's first case predated Italy's first case and I was surprised by that. The link I posted matched the timeline I heard from a talking head this am. Sorry sharing my surprise.

[cardcrimson]

Sure. But at least the sources attributing it to Germany directly quote medical experts in Italy who have been analyzing the virus. That link has no direct attribution at all. I get that you want to push a particular narrative, but I don't think that game is worth the candle given how many ways this virus has criss-crossed the planet for the past few months. 

I'm puzzled. What narrative am I pushing? 

Simply, I heard on the news this morning that the US's first case predated Italy's first case and I was surprised by that. The link I posted matched the timeline I heard from a talking head this am. Sorry sharing my surprise.