The 10-year Treasury yield hit an all-time low of 0.694% overnight as the coronavirus continued to push investors into the safety of government bonds. "Better to stay in cash," responded bond guru Jeffrey Gundlach. "I don't think calling the direction of interest rates is all that meaningful. Even if you are absolutely right and you get lower 10-year rates, you don't make any money." Investors are meanwhile increasing bets that the Fed will follow this week's surprise 50-basis point rate cut with further easing - at or before its scheduled March 18 meeting.
More pain will come at the open, with Dow futures sinking 652 points and the S&P 500 and Nasdaq down 2.7% and 2.9%, respectively. The spread of coronavirus has accelerated in the U.S., and investors who once downplayed down the virus are now re-assessing risks. Infections surfaced in at least four new states and San Francisco on Thursday, while the death toll from the respiratory illness rose to 12 nationwide. Concerns about the outbreak are also likely to overshadow any signs of a strong labor market today as investors digest the most recent non-farm payrolls report.
Go deeper: Largest two-week withdrawal from stock funds since 2018.
Estimates suggest employers added 175K new jobs to the economy last month, a step down from than the 225K created in January but a number that would match the average monthly jobs growth in 2019. The headline unemployment rate will likely remain at a low of 3.5%, while hourly wages are expected to rise by 0.3% from the previous month. Impacts of the coronavirus will not fully be captured in the figures, as the disease spread in the U.S. beginning in late February.
Crude futures tumbled 4.6% to $43.78/bbl after a high-level Russian source told Reuters that the country would not back an OPEC call for extra reductions in oil output, saying the "position won't change." OPEC ministers told Moscow on Thursday that if it doesn't join them in slashing crude output by another 1.5M barrels a day, then the cartel could abandon its reductions altogether. It's a high-stakes move in a market already slammed by the coronavirus and which triggered Saudi Aramco (ARMCO) to delay announcing its monthly crude pricing.
Go deeper: 'Oil & Gas MLPs: Why Such A Sell-Off' by The Dividend Guy.
Defending the business of fossil fuels and resisting targets on carbon emissions, Exxon Mobil (XOM) CEO Darren Woods called pledges by some of its Big Oil rivals to cut carbon dioxide emissions a "beauty competition" that would do little to halt climate change. "Individual companies setting targets and then selling assets to another company so that their portfolio has a different carbon intensity has not solved the problem for the world," he declared. The company is focused on "taking steps to solve the problem for society as a whole."
The 63-year-old CEO, at the helm of JPMorgan (JPM) for over a decade, was rushed into emergency surgery yesterday after suffering a tear in his aorta. He's now "awake, alert and recovering well." The bank was quick to disclose his condition and be upfront about who's in charge. Daniel Pinto and Gordon Smith, the co-presidents and co-chief operating officers, will take the reins as Dimon recovers (possibly giving a glimpse into a future succession plan).
Go deeper: 'JPMorgan Chase - I'm Out At $150' by Regents Research.
FAA adminstrator Stephen Dickson thinks a certification test flight for the 737 MAX could happen "in a matter of a few weeks" (prior reports pointed to April). "We're working though the last few software review and documentation issues," he announced at a Washington aviation conference. Boeing's (BA) 737 MAX has been grounded for almost a year after two fatal crashes which killed 346 people in five months.
Jack Dorsey appeared to back off plans to spend part of this year in Africa as he tries to fend off a push by activist fund Elliott Management to replace him. Speaking to Morgan Stanley's TMT conference, the CEO of Twitter (TWTR) and Square (SQ) said he "made a mistake and should have provided more context about why." The continent will be one of the most populated in the next 20-30 years, and room for tech innovation there is incredible, but "in light of COVID-19 and everything else going on I need to reevaluate."
"[Coronavirus] certainly might have an impact. At the same time, I have to say people are now staying in the United States spending their money in the U.S., and I like that," President Trump said in his first town hall of the 2020 election season. "We have plans for every single possibility and I think that's what we have to do. We hope it doesn't last too long." "I still believe we can get through this year without a recession," added Dallas Fed President Rob Kaplan, in an interview on Bloomberg Television.
Facebook (FB) told employees in the Bay Area to stay home and cancel any trips, while Gap (NYSE:GPS) shuttered its New York City headquarters after a worker tested positive for the coronavirus. Microsoft (MSFT) also confirmed that two employees have been diagnosed in Washington's Puget Sound region, the area that includes its Redmond headquarters. More bad news for the travel sector... Southwest Airlines (LUV) is expecting a hit of up to $300M for first-quarter operating revenue, prompting the carrier to cut its outlook.
What else is happening...
U.S. coal consumption plunges most since 1954.
In Asia, Japan -2.7%. Hong Kong -2.3%. China -1.2%. India -2.3%.
In Europe, at midday, London -3.2%. Paris -3.8%. Frankfurt -3.5%.
Futures at 6:20, Dow -2.5%. S&P -2.7%. Nasdaq -2.9%. Crude -4.6% to $43.78. Gold +1% to $1684.10. Bitcoin +0.7% to $9168.
Ten-year Treasury Yield -2 bps to 0.75%
8:30 Non-farm payrolls
8:30 International Trade
9:20 Fed's Evans: “Transparency and Communications"
9:20 Fed's Mester: “Transparency and Communications"
10:00 Wholesale Trade
10:00 Fed's Kashkari Speech
11:20 Fed's Bullard: “Inflation Targeting and Rules-Based Policy"
1:00 PM Baker-Hughes Rig Count
2:00 PM Fed's Williams: “Monetary Policy and the Zero Lower Bound"
2:00 PM Fed's Rosengren: “Monetary Policy and the Zero Lower Bound"
3:00 PM Consumer Credit
3:30 PM Fed's George: “The Fed’s Balance Sheet and Credit Policy"
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