Given the number of new cases and deaths worldwide from COVID-19, the pain and suffering of millions around the world out of work and isolated in their homes, it's surprising that Wall Street can even muster enough capital for any kind of rally.
Conditions have not changed from the onset of COVID-19's spread, only the Federal Reserve's commitment to suspend reality and boost stocks through various band-aids and stop gap measures has. The only reason stocks managed to gain any ground last week was due to trillions of dollars pumped into the hands of primary dealers via repos, debt purchases, foreign debt purchases, and promises from various Fed presidents to keep the currency spigots wide open.
The lunacy of these efforts is astounding. Desperate to save face and completely devoid of any tools to bring the economy back to their stated mandates of full employment and no inflation, the Fed has expanded its own balance sheet to the point at which it needed funding from the US treasury, a backhanded bailout of the central bank, using some $400-500 billion from Treasury's Exchange Stabilization Fund.
Oil prices barely budged after the hurried agreement by OPEC+ and other countries will slash production by as much as 10 million barrels a day, roughly 10 percent of global supply. WTI crude closed Monday at $22.41. Efforts to raise the price of oil worldwide were seen as mostly a publicity stunt, as the problem is more a lack of demand than of oversupply. Producers would be best served to stop pumping as storage facilities are near capacity already and the lockdowns in major countries remain weeks away.
Treasury yields rose on the long end, with the 30-year bond at 1.39% and the 10-year note rising three basis points to 0.76%. The curve steepened slightly to 122 basis points.
JP Morgan Chase (JPM) announced first quarter earnings prior to the opening bell Tuesday that were the lowest since 2013, warned of a fairly severe recession ahead and set aside $8.29 billion for bad loans, the biggest provision in at least a decade and more than double what some analysts expected.
The bank reported EPS of 78 cents on revenue of $29.07 billion. Net interest income was flat at $14.5 billion.
Wells Fargo (WFC) reported EPS of 1 cent per share on revenue of $17.7 billion as a $3.1 billion reserve build accounted for 56 cents per share and a $950 million impairment of securities accounted for 17 cents a share. Net interest income fell 8% to $11.3 billion. This bank is essentially insolvent, as is the Federal Reserve, the ECB, BOJ, PBOC and hundreds of other money center banks.
Other money center banks also report this week. Wednesday Bank of America, Goldman Sachs, and Citigroup release their reports. Morgan Stanley’s announcement is scheduled for Thursday.
(Reuters) - Johnson & Johnson
Shares of the company, which raised its dividend by 6.3% to $1.01 per share, rose 3% to $144 in trading before the bell.
The company now expects 2020 adjusted earnings per share of $7.50 to $7.90, compared with its prior estimate of $8.95 to $9.10.
Gold and silver posted modest gains on the day. In case anyone was skeptical over Money Daily's call for $100 silver and a 16:1 gold:silver ratio in Sunday's Weekend Wrap (below), perhaps a gander at Mike Maloney's call for $700 silver a few years ago at goldsilver.com, may be in order:
At the Close, Monday, April 13, 2020:
Dow Jones Industrial Average: 23,390.77, -328.60 (-1.39%)
NASDAQ: 8,192.42, +38.85 (+0.48%)
S&P 500: 2,761.63, -28.19 (-1.01%)
NYSE: 10,949.53, -187.08 (-1.68%)
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