Tuesday, 10 March 2020

What Next? Bounce Or Crash? Italy!


Baltic Dry Index. 616 -01   Brent Crude 36.99 Spot Gold 1657

Covid-19 Pandemic underway, but not according to the WHO.

Coronavirus Cases 10/3/20 China 115,622 Deaths 4,096 (Maybe.)

The Italians have had 2,000 years to fix up the Forum and just look at the place!

P. J. O'Rourke

Normally, after such devastation in stock and commodity markets, I would expect the markets to bounce, if only due to some short covering aided and abetted by the NY Fed’s plunge protection team of market riggers. But this is far from normal times.

The Fed’s, and other central banksters, “everything” bubble just blew up.

In the oil market, Saudi Arabia’s unstable de facto ruler has declared an oil war on the rest of OPEC and Russia.  The likely biggest losers, Saudi Aramco, the USA deeply indebted fracking oil industry, the oil sector in general, Russia, Canada, Nigeria, Libya and Venezuela,  among others.  A great wave of debt defaults lies directly ahead.

The winners, the oil importing countries, led by China.

Adding to all the global market chaos, the coronavirus pandemic sweeping the world. Australia and Canada yesterday joined the USA in requesting their citizens to stop using cruise lines until the pandemic is over. In the circumstances cruise line shares are more likely to sink than to bounce.

Italy, being Italy, last night put all of Italy and all Italians, into lockdown. I expect the Italian economy to sink faster than cruise line stocks.

But which Italian bank will go bust first? Will Italy finally push the rump-EU into recession?  If they do, how long before Germany’s Deutsche Bank blows up?

These are far from normal times. To this old dinosaur commodities and stock market follower since 1968, this is no time to be volunteering to catch falling swords. For now, any bounce in stocks is an exit opportunity. Time to sell out to what will probably be, the last stand of the greater fool buyers.

Yesterday’s action, probably set-off a great wave of across the board hedge fund redemptions. It will be interesting to see who gets locked-in at month-end.

By the way, how did WeWork do?

Stocks savaged, Italy on lockdown, Trump seeks to reassure as coronavirus spreads

March 9, 2020 / 11:39 AM / Updated 24 minutes ago
ROME (Reuters) - All of Italy under lockdown, reeling financial markets and rioting prisoners made clear on Monday how the global coronavirus epidemic was extending its reach into all aspects of social and economic life.

Major European stock markets dived more than 7%, Japanese indexes fell over 5% and U.S. markets sank over 7% after Saudi Arabia launched an oil price war with Russia that sent investors already spooked by the coronavirus epidemic running for the exits. 

In Italy, scene of Europe’s worst outbreak with infections and deaths still soaring, the government took its most drastic steps yet to contain the outbreak, affecting some 60 million people. It ordered everyone across the country not to move around other than for work and emergencies, banned all public gatherings and suspended sporting events, including soccer matches.

Deaths in Milan’s Lombardy region - which had already been on lockdown with cinemas, theatres and museums closed and restaurant hours restricted - jumped 25% in a day to 333, while the national death toll soared by 97 to 463, the highest in the world after China.

Over 9,000 people have become infected in Italy in little over two weeks, out of a global total of more than 113,000 in over 100 countries. Nearly 4,000 people have died across the world, the vast majority in mainland China.

“Now that the virus has a foothold in so many countries, the threat of a pandemic has become very real,” World Health Organization Director-General Tedros Adhanom Ghebreyesus told a news conference.

But he welcomed Italy’s tough measures, noting that just four countries - China, South Korea, Italy and Iran - accounted for 93% of cases worldwide. Israel ordered anyone entering the country to self-quarantine for 14 days on Monday.
More

‘Pasta started flying off supermarket shelves in Milan.’ Italians struggle to adjust to the New Normal amid nationwide coronavirus lockdown


---- A 38-year-old man had become ill with respiratory problems. Local reports said he had several contacts with doctors before he was admitted to a hospital and put under isolation in Codogna, a town just southeast of Milan. Still, we never expected to be spared the virus.

The government took swift action. Universities and schools were closed. The change in people’s behavior was almost immediate. Pasta started flying off the shelves of supermarkets in Milan. If such panic buying was any indication, people were taking it seriously. Turns out, they had good reason.

On Monday, the Italian Prime Minister Giuseppe Conte imposed quarantine restrictions on the entire country, starting this Tuesday. “There won’t be just a red zone,” he said. It’s an expansion of last weekend’s lockdown that had effectively covered 16 million people in the country’s north.

In Lombardy, we were already in lockdown mode. People may now only travel for work, health reasons or emergencies. As a teacher, I was fortunate to be able to work from home, stay in touch with my students, and plan my lessons remotely.

But for all the immediate government measures that were taken, they don’t seem to have had much of an impact on the spread of the coronavirus. I’ve been following the number of confirmed cases in real time in the area of Lombardy. Last week, in one 24-hour period, they literally doubled.

As of Monday evening, there were 9,172 cases in Italy, and at least 463 deaths. That’s the highest number of infections for one country outside of mainland China, where there are now more than 80,754 confirmed cases of COVID-19, the illness caused by the novel coronavirus.

Of course, many are following protocol and taking positive action, but there does seem to be a lack of awareness of how serious the situation actually is; serious in the sense that the coronavirus — which now has more than 114,219 confirmed cases worldwide — is spreading fast.

Hospital staff are under enormous pressure as they don’t have the facilities to deal with the number of critical cases. There’s even talk of the possibility of having to select which patients take precedence, if the worst comes to the worst and they can’t admit all of those people infected.

I heard that retired doctors have been asked to go back to work, despite being in the high-risk category because of their age. It’s the medical staff that are literally pleading with the general public to wake up, and start acting responsibly. Not everyone is having an easy time doing that.
Some people are in denial, while others are defiant
Take the 71-year old man who was hospitalized in Como. He was in isolation for the virus, but felt fine so he packed his bags, called a taxi and headed home to Bergamo. The staff discovered that he’d “escaped” when they were doing their rounds, and so the authorities were called in.

Even the unfortunate taxi driver was quarantined! It’s that lack of a sense of social responsibility or, perhaps in this case, simply an unfortunate lack of awareness about the seriousness of the coronavirus outbreak in Italy that hasn’t helped. And these are not isolated cases.

Others appear to be in denial. On Sunday, the beaches on the Ligurian Riviera were crowded with people — despite the government’s drastic measures — as was the town of a former fisherman’s village in Boccadasse, Genoa. The region’s governor appealed to people to use common sense.
More
https://www.marketwatch.com/story/pasta-started-flying-off-supermarket-shelves-in-milan-as-italy-imposes-nationwide-coronavirus-lockdown-italians-struggle-to-adjust-to-the-new-normal-2020-03-09?mod=mw_latestnews

Opinion: These energy companies have the highest debt and the most at risk as the oil market collapses

Published: March 10, 2020 at 1:17 a.m. ET
Investors shocked at Saudi Arabia’s decision to lower oil prices and increase production sent financial markets reeling. A concern now for the oil and gas industry is which players can survive a prolonged market imbalance.

West Texas crude oil for April delivery CLJ20, 7.420% fell as much as 34% to $27.34 a barrel Monday. That action followed Saudi Arabia’s announcement Saturday that after failed negotiations between OPEC and Russia to cut production in an attempt balance supply with reduced demand as the coronavirus spread, it would actually lower its own prices while increasing production

“Now the question is, what is the Russian response?” said Philip Orlando, chief equity market strategist for Federated Hermes, in an interview. “Do they hold their breath until they turn blue? Or do they say, ‘You have the market weight here, why don’t we sit down to cut and stabilize the market?’ That may be too obvious and rational, so I have no idea how this is going to end up.”

Read:Why an oil price war is wreaking havoc on stocks and global financial markets right now
Highly leveraged energy companies
Banks with heavy exposure to the energy industry may be facing defaults, loan losses and other fallout. Here’s a list of banks with the most exposure as a share of tangible common equity.

But how about the energy borrowers? Starting with the S&P Composite 1500 (made up of the S&P 500 SPX, -7.59%, the S&P 400 Mid Cap Index MID, -9.13% and the S&P Small Cap 600 Index SML, -9.64% ), here are the 20 U.S.-listed oil companies with the highest percentages of long-term debt to equity, according to FactSet, based on their most recent regulatory filings as of March 6:
More
https://www.marketwatch.com/story/these-energy-companies-have-the-highest-debt-and-the-most-at-risk-as-the-oil-market-collapses-2020-03-10?mod=mw_latestnews

Canada reports first COVID-19 death as number of infected climbs

10 Mar 2020 03:21AM
OTTAWA: Canada on Monday (Mar 9) reported its first death from a new coronavirus as the number of people in the nation who have contracted the disease jumped to above 70, officials said.

The dead man had been living in a nursing home, the Lynn Valley Care Centre in North Vancouver, British Columbia's chief health officer Bonnie Henry told a news conference.

---- Canada now has at least 72 presumptive and confirmed cases of the virus that causes the respiratory illness COVID-19, up from 51 on Friday.

READ: COVID-19: All of Italy to be placed under lockdown, says PM

READ: Threat of coronavirus pandemic now 'very real': WHO




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