I continue to read where the United States doesn’t have to reach 240,000 coronavirus deaths. The Chris Murray model sees 93,765 deaths by August 4^th with an apex of 2,604 on April 16. That day is also expected to be the day of peak resources:

• Hospital beds: 260,342
• ICU beds: 38,849
• Ventilators: 32,082

Shutting down America like China’s shutdown in Wuhan was never a possibility. If that had been the case, the peak would have occurred on Monday. There is still a chance of reaching the apex in mid-April.

Bailout Party Train

Get ready for the Phase 4 coronavirus funding package as soon as Congress gets back, and it’s going to be a doozy.

Meanwhile, the next 48 hours will hear a lot of chatter on bailing out two hard-hit industries.

• Airline Industry

Yesterday, analysts at Stifel gave up on the airlines, downgrading several of them with lowered share price targets:

• American Airlines (AAL): $13.00
• JetBlue Airways (JBLU): $11.00
• Mesa Air Group (MESA): $5.00

Boeing (BA) shares tumbled hard as the company’s CEO David Calhoun continues to draw a line in the sand over forking over an equity stake in return for government financial assistance. He continues to talk about funding from other sources, but it’s evident that a best-case scenario only keeps the company solvent for half a year at best.

Calhoun is standing strong like a knight facing a fire-breathing dragon, but the true white knight in this scenario could be Nancy Pelosi.

The Speaker of the House is insisting the Treasury drop its demands for an equity stake in return for grants, suggesting airlines will balk and people will lose their jobs. She joined three unions, including the Association of Flight Attendants-CWA, and other lawmakers calling the request a “poison pill,” and demanding it to be dropped.

Aerospace Grants on Table:

• $25.0 billion for passenger carriers
• $4.0 billion for air cargo
• $3.0 billion for contractors (meal providers, etc.)

Also, there is $29.0 billion on the table (separately) in the form of potential loans.

Pelosi has manhandled the Republican Party, so I bet the so-called “poison pill” provision is dropped.

• Oil Industry

The industry is marching to the White House tomorrow, as everyone has been beaten down to a position of “big hat, no cattle.” The American fracking miracle has meant hundreds of thousands of great paying jobs, monster construction projects, big-time tax receipts, and improved national security.

There is no doubt that aid will be forthcoming, but not without embarrassment for these formerly wealthy companies. Yesterday, Whiting Petroleum (WLL) filed for bankruptcy protection just a few days after awarding its executives a $14.6 million bonus. That’s BS. I would hope a judge orders the money returned.

Just think: WLL shares hit $370.00 on August 25, 2014. We’ve taken huge losses in the stock.

Bracing for Initial Unemployment Claims

I shared these numbers yesterday. I wanted to put them out there again, so when the official release happens this morning, you aren’t knocked off your feet.

Estimates: 

• 6,500,000: Banque Pictet & Cie SA
• 5,298,000: SouthBay Research
• 5,250,000: Goldman Sachs
• 5,000,000: Capital Economics
• 5,000,000: NatWest Markets
• 5,000,000: Wrightson ICAP
• 4,500,000: Fact & Opinion Economics
• 4,500,000 Moody’s Analytics

3,500,000 Consensus

Portfolio Approach

 

Today’s Session

Equity futures were higher all morning, and then lost hope after the initial jobless claims release.  At 6.648 million, the tally surpassed even the most negative assumption coming into the session.

Although the market was bracing for an ugly number, and even 6.6 million wasn’t out of the question, the fact it’s happening is difficult to phantom.

Comments

Disgusting to see the Whiting Petroleum executive bonuses. It's also wrong to see the talk of government seeking equity shares in companies. Wrong. But there should be some way to prevent the cozy executive over-payment, especially on companies that deal with national resources. Since what is extracted from our land is really a national asset, can there not be a structure of payment for that raw material and some regulation that can be imposed on minimum and maximum compensation? - Just askin'. Marty Anderson on 4/2/2020 11:16:24 AM

Interesting Anne Holmes on 4/2/2020 11:26:51 AM

Charles, When is the SEC going to finally bridle the high frequency traders? The activity is now to the point that it is essentially price manipulation of both stocks and options, not just trading. By artificially using large purchases and sales to control the prices, they are making it almost impossible for retail investors to trade on a daily or near term basis. Ed on 4/2/2020 2:56:38 PM

Now that the vast majority of people locked down, we should plateau soon and finally descend bell shaped curve. Everything is a bell shaped curve. I few months (at most) everything should be under control. Main problem is the trillions of dollars used, and it will lead to a quicker burst of the debt bubble. Neil Rosen on 4/2/2020 6:20:36 PM

With the advent of 15 min testing times, I think it might be possible to start getting at least some of the country back to business. Start with small rural towns and test everyone in town. setup testing sites along the access routes to them and "ASK" everyone entering the town to get tested. give out "Tested Clear" ID to virus free people. to show if asked, good for 3? 5? days. Once a town has tested clear they could go back to work, with some precautions about close contact. What do you think Charles? would this work? Patrick Coffey on 4/3/2020 12:06:06 AM

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