Yesterday’s advance put the S&P 500 up more than 13% for April, the index's biggest monthly increase since 1974.  Optimism was driven by positive results from Gilead's remdesivir trial, which could help speed recovery from COVID-19, as well as strong earnings from Microsoft and Facebook that put the Nasdaq Composite on track to erase losses for the year. The Fed further pledged to use "its full range of tools to support the U.S. economy in this challenging time" and the news was enough to override data showing the U.S. economy had logged its worst quarterly performance since 2009. (SA)

McDonald’s reported first-quarter earnings this morning that fell 17% as the coronavirus pandemic led to restaurant closures and plunging sales.  Net sales dropped 6% to $4.71 billion as the company observed “dramatic changes in consumer behavior”.  The company’s international developmental licensed markets business, which includes Brazil and Japan, is faring better, with 80% of locations operating. About 99% of Chinese restaurants have reopened, but the company said demand is down because consumers have not fully resumed their routines prior to the crisis. (CNBC)

Microsoft Corp. outperformed the financial expectations that it faced even before the coronavirus pandemic in an earnings report after the bell yesterday. The company reported fiscal third-quarter earnings of $10.75 billion on sales of $35 billion (FT).

Finally, US weekly jobless claims are out, this week’s claims hit 3.84 million, topping 30 million over the last 6 weeks.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

With all eyes on an advertising industry slump, Alphabet posted strong Q1 figures even as it noted a March slowdown. Many big travel booking names have been cutting their multibillion-dollar ad budgets by 50%-80%, and Alphabet revenues are still dominated by advertising (99% of Alphabet revenues from Google, and 84% of that from ads). But in Q1, the company grew revenues 13% and operating income 19%, lifted by a strong first two months before a March drop-off alongside widespread business shutdowns. YouTube ad revenue rose 33.5% year over year.  (SA)

Boeing posted a first-quarter loss of $641 million and said it burned through $4.3 billion in cash during the first quarter as the company faces both coronavirus and the more than yearlong grounding of its best-selling plane, the 737 Max.  Before the market opened on Wednesday, the company said it is planning to reduce production of some aircraft, including the 787 Dreamliner, and to cut payroll by about 10% through voluntary measures “involuntary layoffs as necessary.”  Revenue plunged 26% from a year earlier to $16.91 billion and the company.  (CNBC)

The first read on US GDP is out… US first-quarter GDP shrank 4.8%, vs 3.5% decline expected.  All eyes will be on the Fed’s monetary policy decision due at 2 p.m. ET Wednesday. Investors will look to the central bank’s statement and chairman Jerome Powell’s virtual press conference for clues about how long interest rates will stay near zero as the economy seeks to emerge from coronavirus crisis.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Detroit automakers have targeted May 18 for a restart of some production at U.S. car factories, WSJ reports. Representatives from General Motors, Ford Motor, and Fiat Chrysler agreed on the timeline following talks with Governor Gretchen Whitmer's office and the United Auto Workers union, which warned last week that it was "too soon and too risky" to reopen plants in early May. While terms haven't been finalized, the companies are working with the union on drawing up safety protocols. (WSJ)

PepsiCo on Tuesday reported its first-quarter adjusted earnings rose 10% as consumers stocked up on its drinks and snacks to prepare to spend more time at home.  The company reported organic revenue growth of 7.9% as net sales rose to just under $14bn.  Pepsi also said Tuesday that it has closed its acquisition of Rockstar Energy, freeing up the company to make distribution deals with other energy drink makers. The company said that it has signed an exclusive U.S. distribution deal with Vital Pharmaceuticals, which makes the fast-growing Bang performance energy drinks. (CNBC)

Caterpillar experienced a sales drop of 21% in the first quarter as the coronavirus pandemic disrupted demand in the construction and mining sectors.  The industrial giant on Tuesday reported revenues of $10.6 billion in the first quarter, compared with $13.5 billion in the first quarter of 2019.  The heavy equipment maker said about 75% of the company’s primary production facilities continue to operate amid the pandemic, while some facilities that were temporarily closed have reopened. (FT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

The purchasing managers index for the service sector fell to a record low in April, while the manufacturing Index weakened to the lowest level in 11 years, as business activity has slumped.  The Purchasing managers index fell to 27 from 39 in March while the manufacturing Index dropped to 36 from 48.  Any reading below 50 indicates worsening conditions.

Intel reported earnings and revenue that spiked well above expectations in the first quarter but predicted that profit would come in lower than projections in the second quarter, sending shares lower.  Intel reported first-quarter net income of $5.7 billion, or $1.31 a share, compared with $3.97 billion, or 87 cents a share, in the year-ago period.

Another 37,000 Oregonians filed new jobless claims last week, bringing total job losses over the five weeks of the coronavirus outbreak to 334,000. That’s 17% of the state’s workforce, one in six Oregon jobs altogether.

And one of the mis intended consequences of the unemployment benefit in the CARES ACT is that it is encouraging people to stay unemployed because they are making more on unemployment than they are at their jobs.  The enhanced unemployment benefits run through the end of July.

With Northwest Quadrant Wealth Management, I’m Tyler Simones
 

Stocks rose for the first time in three days yesterday as crude prices stabilized after a record plunge while better-than-expected earnings also lifted market sentiment. 

In an April survey of the National Association of Realtors, 90% of their members said buyer interest has declined since the pandemic.  Also, 59% said buyers are delaying home purchases for a couple of months and 57% said sellers are delaying home sales for a couple of months.  Homes that are on the market are often just sitting there. According to Zillow the inventory of listed homes is up about 2.5% overall since March 1.

Chipotle Mexican Grill said their sales rose 8% in the first quarter, thanks in large part to a surge in online sales that accounted for more than a quarter of the three-month revenue. Shares jumped 12%

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The pandemic has already pushed demand for some more costly consumer products off a cliff. AT&T posted its lowest-ever postpaid smartphone upgrade rate in the first quarter in what could be a distressing sign for smartphone manufacturers.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones

Stocks fell sharply for a second day yesterday, taking a cue from a further slide in oil futures.

Shares of Netflix are higher after the streaming pioneer revealed that it added more than double the new subscribers it expected amid the spread of COVID-19.  The company reported the addition of 15.77 million paid subscribers globally in the first quarter. Netflix’s biggest quarter for paid net additions to its subscriber total previously was 9.6 million in the year-ago quarter.  Netflix reported first-quarter earnings of $709 million, or $1.57 a share, compared with $344 million, or 76 cents a share, in the year-ago period.

Sales of previously owned U.S. homes sank 8.5% in March just as large parts of the economy shut down which threw the real estate market into disarray.  Existing home sales dropped to an annual pace of 5.27 million and the decline is likely to be a lot sharper in April.

Senate Republicans and Democrats reached a deal on another $484 billion coronavirus relief package for small businesses, hospitals and testing.  The deal would allocate $320 billion more for the Paycheck Protection Program, which provides small business loans, and the rest would go towards hospitals and testing.

With Northwest Quadrant Wealth Management, I’m Tyler Simones

U.S. stocks sold off yesterday as investors watched oil prices crash, overshadowing optimism about plans for a staggered easing of global lockdowns.

The May contract for U.S. West Texas intermediate crude oil, which expires today, erased all value and dropped below zero for the first time in history, settling at -$37.63 per barrel. The June contract for the commodity also sank sharply but held above $20 per barrel.

The Senate did not reach a deal on the next relief bill in time for a brief Monday session, but set up a vote as soon as this afternoon to replenish a key small business aid program.  On Sunday, negotiators signaled they had come closer to a deal that could include $370 billion in loan programs for small businesses, designed to keep employees on the payroll as businesses across the country shutter. It may also include $75 billion for hospitals and $25 billion for testing — but not money for state and local governments that Democrats sought, as of now.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones
 

The American government has committed more than $6T to arrest the economic downturn from the COVID-19 pandemic, with $2.35T in fiscal spending and $4T from the Federal Reserve. The figure represents more than a quarter of U.S. economic output, and will mean for the first time since WWII, the nation will owe more than its economy produces in a year. Despite the huge congressional stimulus, proportionate to GDP, it is the world's 10th largest, behind Japan, Singapore and the Netherlands. (FT)

Protection measures against the coronavirus continued to tear through the employment ranks, with 5.245 million more Americans filing first-time claims for unemployment insurance last week, the Labor Department reported this morning.  The new filings bring the crisis total to just over 22 million, nearly wiping out all the job gains since the Great Recession. Though the most recent total, for the week ended April 11, represented a drop from the previous two weeks, it still showed that the damage to the U.S. labor market remains profound. The numbers of late have been bolstered by measures taken to allow more workers to file claims. They now include independent contractors and others who previously were not eligible for benefits. (CNBC)

BlackRock, the world's largest asset manager, said assets under management dropped in the first quarter by the most on record as its clients' portfolios were slammed by the turmoil in global markets caused by coronavirus. The group's assets tumbled to $6.5tn from a record high of $7.4tn at the end of 2019. The company still garnered $35bn in inflows over the period, although a significant portion came from an influx of cash as investors moved to the safest types of assets. (WSJ)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Goldman Sachs on Wednesday said first quarter profit dropped 46% as the coronavirus pandemic wiped out results in its asset management division.  While results were dragged down by losses in debt and equity holdings housed in the asset management business, the firm’s trading division exceeded expectations, helping companywide revenue of $8.74 billion top the $7.92 billion estimate.  

Bank of America said Wednesday that first quarter profit slumped 45% as the company set aside $3.6 billion for loan loss reserves because of the coronavirus pandemic. The bank posted profit of $4.01 billion for the quarter.  (CNBC)

Trouble in Unicorn land… WeWork’s chief executive told employees that plans for new lay-offs, first reported by the FT in March, would be finalized by the end of May. The cuts could affect more than 1,000 of WeWork’s roughly 10,000 employees. Airbnb is raising a further $1bn of debt, just one week after announcing an equal-sized funding round carrying an interest rate of 10%.  (FT)

The International Energy Agency said in its latest report on the oil market this morning that the world risks running out of places to store crude as it predicts global demand to fall by 9% this year. The report warned that the logistics of the industry could be overwhelmed “in the coming weeks.” Despite the agreement from OPEC and its allies to reduce production by almost 10 million barrels per day, the outlook from the IEA was enough to put further pressure on oil with a barrel of West Texas Intermediate. (EIA)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

JP Morgan Chase kicked off earnings season this morning posting a first-quarter profit that was well below analysts’ expectations, although the bank’s revenue held up amid the coronavirus pandemic.  The earnings drop was caused by a massive $6.8 billion addition to the bank’s credit reserves. The move signals that management expects a surge in defaults across the company’s lending businesses, from credit cards in its consumer division to energy, real estate and retail sector loans in its commercial operations.  Wells Fargo also reported this morning, and set aside a smaller $3.1bn in reserves to cover anticipated defaults. (CNBC)

Airline industry officials expect all major airlines to accept the terms for the airline relief deal, with some announcements expected as early as today. The government has set identical terms for industry players and says it won't negotiate individually with airline managements. Those terms include a requirement that 30% of the funds allotted to each airline be repaid and the issuance of warrants with prices already locked in. The Treasury Department is not demanding compensation from small carriers receiving $100M or less in payroll support. If the $25B in grants is allotted as expected, the government could end up owning about 3.0% of American Airlines, 2.3% of United Airlines, 1.3% of JetBlue, 1% of Delta Air Lines, and 0.6% of Southwest Airlines. (SA)

Markets are putting yesterday’s drop in U.S. stocks behind them as optimism again rises that there is an end in sight to the lockdown in some of the world’s largest economies. Overnight the MSCI Asia Pacific Index rallied 1.7% while Japan’s Topix index closed 2.0% higher. Europe’s Stoxx 600 Index is on the cusp of a technical bull market. (FT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Earnings season kicks off this week, and it is shaping up to be one like no other. Stock analysts are at an almost complete loss as to how to forecast company performance during the pandemic, with one measure showing the difference between the high and low estimates for company earnings at a near record spread. The fundamental obstacle to coming up with a damage assessment for corporate balance sheets is that nobody knows how long the crisis will continue, leaving any prediction based on much guesswork. (FT)

There is a standoff developing between the White House and airlines over Treasury Secretary Steven Mnuchin’s insistence that the companies partially repay the tax-payer funded bailout they are due to receive under the stimulus plan. Airlines are seeking to negotiate the terms with the Treasury Department. Also in trouble is the U.S. Postal Service which did not get the $25 billion in additional funding some members of Congress had called for in the stimulus plan, meaning its financial future remains precarious just as Americans are relying on it more than they have in years. (WSJ)

The world’s top oil producers agreed to cut output by 9.7 million barrels a day after a week-long marathon of negotiations led to a pact on how to tackle the pandemic’s impact on global demand. The market seems to have been positioned for a successful outcome to the talks, which Goldman Sachs Group Inc. described as “historic, yet insufficient.” One of the biggest losers from the deal is Russia, with the country agreeing to cut production by 2.5 million barrels, more than Saudi Arabia. Market reaction has been less positive than may have been expected, with crude trading little changed. (Bloomberg)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

The Federal Reserve announced a bevy of new moves aimed at getting another $2.3 trillion of financing into businesses and revenue-pinched governments.  Among the Fed’s measures were details regarding its Main Street business lending program and several other initiatives it is undertaking to backstop the reeling U.S. economy. The central bank also provided more detail on its market interventions, including plans to buy corporate bonds both at an investment-grade level as well as junk, bonds.  Under provisions outlined for the first time, the loans would be geared toward businesses with up to 10,000 employees and less than $2.5 billion in revenues for 2019. Principal and interest payments will be deferred for a year.  This $2.3 Trillion on top of the already approved $2.2 Trillion Cares Act.

Oil prices jumped on reports that Saudi Arabia and Russia had reached a deal on a deep output cut, and that the cuts could reportedly be as high as 20 million barrels per day.  OPEC and its allies, known as OPEC+, would reportedly cut output by 12 million barrels per day, with an additional 5 million barrels per day cut by producers outside of the group.
Millions of coronavirus-related job losses and the shutdown of large parts of the U.S. economy have battered consumers and dragged confidence down to a nine-year low.  US consumer sentiment sank to 71 in early April from 89.1, marking the biggest-ever one-month decline and putting the index at lowest level since 2011.

US Capital Markets are closed today in observance of the Good Friday holiday.

With Northwest Quadrant Wealth Management, I’m Tyler Simones.
 

Today marks the beginning of the Paycheck Protection Program, a federal program that's expected to dole out at least $350B in loans to small businesses struggling with the coronavirus pandemic, but many banks are still awaiting guidance and necessary requirements. JPMorgan appeared to be the first lender to publicly say what others had whispered, emailing customers that it "will most likely not be able to start accepting applications on Friday." The Paycheck Protection Program will offer up to $10M to help cover wages for employees, sick pay and eligible mortgage and other immediate debt payments. The loans are for two-year terms at a 1% fixed rate of interest, require no collateral and come with debt forgiveness options for eligible expenses. (SA)

Tesla shares are soaring as the EV maker revealed the production of almost 103K vehicles and deliveries of approximately 88.4K to mark its best Q1 ever. The consensus analyst mark was for 79.9K deliveries after a series of recent downward revisions to account for the coronavirus impact. Tesla also said that its Model Y production started in January and deliveries began in March, significantly ahead of schedule. (Bloomberg)

Since the start of the COVID-19 crisis, Corona has been the punchline of jokes and memes. Now, Grupo Modelo, which is part of brewing giant AB InBev, has stopped producing Corona beer. The move is not associated with the drink's name, but the business was rather deemed non-essential under a Mexican government order. In the U.S., Grupo Modelo is distributed by Constellation Brands. (FT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

New estimates say the U.S. deficit will total at least $3.7T in calendar year 2020 and an additional $3T in 2021, financed by the sale of Treasuries, largely to the Federal Reserve. If the economy shrinks this year, the fiscal deficit relative to the size of the economy could even approach 15% to 20% (those numbers haven't been seen since WWII). On top of all those deficits, President Trump on Tuesday called for a new infrastructure spending bill worth $2T, while the Fed launched a temporary lending facility allowing foreign central banks to convert their Treasury holdings to dollars. (SA)

Only one stock in the Dow Jones Industrial Average rose during the first quarter and it was only up by a penny. While Microsoft said it didn't expect to reach its quarterly revenue target for the business segment that includes Windows - due to coronavirus interruptions - it also said demand was solid and benefited from high usage of cloud services. Hardest hit on the DJIA was Boeing which saw losses of 54%, as well as energy plays Exxon Mobil and Chevron, and financial names JPMorgan and Goldman Sachs. (Refinitiv)

Today marks the end of the agreed production limits by OPEC and its allies. Saudi Arabia has boosted output to more than 12 million barrels a day, while other major producers such as Iraq also plan increases. Russia, however does not intend to ramp up production, according to a government official. The moves come as the oil market faces something close to a wipeout in demand, meaning the next month could be a game-changer for the industry. In trading this morning, a barrel of West Texas Intermediate for May delivery held close to $20 a barrel. (Bloomberg)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.