Global markets and U.S. futures are deep in the red amid growing alarm about the profound economic hit from COVID-19. The U.S. Federal Reserve dug deep into its tool kit yesterday by slashing its main interest rate target by a full point, vowing at least US$700 billion in asset purchases, cutting the discount window rate for emergency loans to banks, and ramping up coordination with other major central banks to ensure U.S. dollars are available internationally. It’s being called “bazooka” monetary policy by some experts, but it’s failing to bolster investor confidence after a stunningly volatile week in the markets.
CANADA’S RESPONSE
Prime Minister Justin Trudeau told CTV News in an exclusive English language interview that the federal government is “not taking anything off the table” in Canada’s response to the outbreak. We’ll learn more about how far the feds are prepared to go this afternoon when the PM addresses Canadians at 1 p.m. ET, followed quickly thereafter by a media avail featuring some of his top cabinet officials. Public Health Officer Theresa Tam set the tone yesterday, warning time is running thin to flatten the outbreak’s curve and urged all Canadians to act now. And in that spirit, dozens of the country’s most powerful chief executives released an open letter late last night, calling on all leaders to embrace social distancing efforts while recognizing the short-term “significant economic impact." He’s not on the list, but Fairfax Financial’s Prem Watsa is clearing getting on board as his company announced this morning its annual meeting is being converted to online-only format.
RETAIL CLOSURES
The list of closures is growing longer by the hour. Lululemon, Nike, Apple, Aritzia, Shaw/Freedom. Meantime, food court giant MTY Food Group this morning announced it will suspend collection of royalties for the next four weeks. And while it’s not retail, GoodLife Fitness’s decision to turn off the lights in its vast network of clubs is also a telling sign. Walmart announced yesterday it’s cutting store hours in the U.S. to provide more time for staff to restock shelves. For now, the strategy is only in effect south of the border. But anyone who hit a grocery store this weekend, is well aware of the panic buying that’s underway in Canada. I’m in touch with Loblaw and Empire to check if they’re considering any adjustments. Somewhat in the same space: Cineplex is going to be on our radar today after London, U.K.-based Bluebell Capital Partners sent a letter to Canada’s heritage minister and minister of culture (plus CCing the Prime Minister) to “plead” the feds to block the company’s takeover by CineWorld on the basis of what it believes to be “significant risk to the future of Cineplex” if the transaction is green-lit. Outside the bounds of retail, this warrants specific attention: the U.S. Centers for Disease Control and Prevention yesterday issued formal guidance to cancel or postpone gatherings of 50 people or more for the next eight weeks.
AIRLINES AT RISK
The pre-market moves in major airline stocks are stunning. American, United, Delta – all down more than 10%. WestJet of course no longer is subject to public market scrutiny, but its language in an update this weekend was stark, saying it is “evaluating all available measure to secure the financial viability of our airline.” Last Thursday, the head of the International Air Transport Association warned the industry is going to “need emergency measures to get through this crisis.” In Canada, this weekend we plenty of commentary on social media about the lack of enhanced measures at major airports. In the U.S., there were scenes of astoundingly long lineups as travelers waited to get through customs. The crowds were especially remarkable at Chicago’s O’Hare airport, prompting some angry tweets from Illinois Governor JB Pritzker, who said the U.S. government “needs to get its s@#t together. NOW.”
BIG HITS IN THE ENERGY SECTOR
The firehose of information this morning includes many downward updates to capex and dividends in the energy sector. Most recently: Crescent Point said after April 1 its total annual payout to shareholders will be one cent per share instead of the existing one cent per quarter and it also slashed this year’s capital budget by 35 per cent. Vermilion is slashing its monthly dividend to two cents per share from 11.5 and will cut its capital spending budget by at least $80 million. NuVista and Enerplus also announced capex cuts today, the latter pointed out it’s ceasing all activity in North Dakota by mid-April.
PERSONAL FINANCE CONSIDERATIONS
In the aftermath of Canada’s coordinated monetary and fiscal intervention late Friday, there are some important pocketbook issues to explore and questions about what kind of relief might be granted? Will the April 30 deadline to file income taxes be delayed? How much flexibility should homeowners expect from their lenders? (CMHC indicated on Twitter help is on the way) What about renters? And how about those who are turning 71 this year and wondering about RRSP-to-RRIF conversion obligations?
NOTABLE RELEASES/EVENTS
-10:00 a.m. ET: G7 summit via conference call
-1:00 p.m. ET: Prime Minister Justin Trudeau address (followed by avail in National Press Theatre featuring deputy prime minister and ministers Hajdu, Duclos, Blair, Garneau, and Chief Public Health Officer Tam.)
-2:00 p.m. ET: City of Vancouver announces new measures against COVID-19
-3:00 p.m. ET: Ontario chief medical officer of health and associate chief medical officer of health hold briefing in Toronto
-3:30 p.m. ET: White House Coronavirus Task Force holds media briefing
-European Union finance ministers begin two-day meeting in Brussels
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.
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