Global markets are jittery after China's parliament moved forward with national security legislation for Hong Kong and with President Trump holding a press conference later today on potential sanctions on Chinese officials. A revocation of Hong Kong's favored status is considered a worst-case outcome of the press conference for investors.  (SA)

Federal Reserve Chairman Jerome Powell takes part in a moderated virtual discussion  later today with former Fed Vice Chairman Alan Blinder.  While the market sees a lower chance of negative rates, the range of Fed tools is likely to be discussed. Latest data shows its holdings of corporate debt ETFs rose to almost $3 billion, while the weekly balance sheet added a line item for muni bond purchases. It is also likely that Powell will be asked to comment on whether policy makers will engage in yield-curve control, as flagged by New York Fed President John Williams earlier this week. (Bloomberg)

Oil prices are lower after U.S. inventory data showed soft fuel demand, despite the hopes for a Memorial Day weekend rush of motorist activity. Still, there is optimism bubbling under the surface in the oil markets after strong gains in May followed the disastrous supply glut and limited storage turmoil in April. While ships full of crude are still anchored on the high seas with onshore storage sold out, the volume of crude stored on ships in Asia has come off the peaks seen earlier this month on a recovery in demand in China and India. A fresh report from the International Energy Agency projects global oil demand in May is set to decline ~25 mb/d compared to a year ago, with June demand clocking in at ~15 mb/d below last year's level. (IEA)

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

Things are escalating quickly after Twitter applied a fact-checking label to the President’s tweet about the potential for fraud with mail-in ballots. An executive order is now set to be published today that would reportedly open the door for federal officials to punish social media companies - for the way they moderate content - by allowing regulators to rethink Section 230 of the Communications Decency Act. The law largely exempts online platforms from legal liability for the material their users post, and such changes could expose tech companies to more lawsuits. The order would also address political bias on the platforms and review advertising spending on platforms like Twitter, Facebook, Google, and Snap. (SA)

Beating out rivals like Netflix, Apple has secured a deal for Hollywood veteran Martin Scorsese's next film, Killers of the Flower Moon, which will feature Leonardo DiCaprio and Robert De Niro. The project will be Apple’s biggest foray into film yet after acquiring Greyhound, starring Tom Hanks, last year. Killers of the Flower Moon will be labeled an Apple Original Film and Paramount Pictures will distribute it theatrically worldwide. Scorsese's last film, The Irishman, was released on Netflix in 2019. (CNBC)

This morning's initial jobless claims data at 8:30 a.m. Eastern Time is expected to show that 2.1 million people filed for benefits last week, with the number of continuing claims edging up to 25.7 million.  As well as claims, the second reading of first-quarter U.S. GDP is due, with the 4.8% pace of economic contraction expected to be confirmed. April durable goods orders, also at that time, are forecast to plunge almost 20%. Pending home sales for April will also show a significant drop. (Bloomberg)

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

Markets are building on yesterday’s big rally… risk appetite is higher as investors focus on huge central bank stimulus coupled with the easing of the pandemic, while turning a blind eye to rising U.S.-China tensions.  This morning the European Commission seems to have made a major step forward in fighting the downturn by proposing €500 billion in grants to member states hardest hit by the outbreak and a further €250 billion in loans.  Japan is also set to unveil a new stimulus package worth more than $1 trillion, its second such measure in a month. Additional stimulus in the US is still on hold, but New York City is seeking authority to borrow as much as $7 billion to make up for the revenue lost due to the pandemic. (Bloomberg)
 
U.S. ambitions to reclaim independence as a spacefaring nation will be on display this afternoon as astronauts - Douglas Hurley and Robert Behnken - are sent into space from American soil for the first time since 2011. SpaceX's Crew Dragon beat Boeing's Starliner to the finish line for today's afternoon liftoff in a chance to become the first private company to fly humans into orbit. Besides NASA's Commercial Crew program, the mission to the ISS could herald an upcoming era of space travel in which private businesses ferry humans to low-Earth orbit and beyond. (SA)
 
It’s not as if the coronavirus pandemic has gone away, but after a sharp pullback, homebuyers are now piling back into the housing market much faster than expected. Mortgage applications to purchase a home rose 9% last week from the previous week and from a year earlier, according to the Mortgage Bankers Association’s index.  It was the sixth straight week of gains and a 54% recovery since early April.
 

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

Stocks were lower yesterday as Wall Street digested a strong rally this week along with the latest weekly jobless claims data and rising tensions between China and the U.S.
 
The Labor Department reported another 2.4 million people filed for unemployment benefits last week.  This report brings the total number of filings during the pandemic to more than 38 million. The number of continuing claims was at 25.07 million, its highest level on record.
 
Sales of previously-owned homes slid nearly 18% in April as the pandemic upended the U.S. real estate market.  Existing-home sales occurred at a seasonally-adjusted annual pace of 4.33 million, according to the National Association of Realtors.  It was the lowest level for sales since July 2010.  Compared with last year, sales were down 17% in April.
Maybe we are seeing some green shoots.  U.S. private sector firms reported a slightly slower rate of contraction in activity in May.  The manufacturing purchasing index rose to 39.8 in May from 36.1 in April. Meanwhile the services managers index rose in May to 36.9 from 26.7.  Any reading below 50 indicates worsening conditions.  At least the numbers are headed in the right direction.
 
With Northwest Quadrant Wealth Management, I?m Tyler Simones.

Stocks were solidly higher yesterday adding to gains for the week with Facebook and Amazon leading the gains hitting fresh all-time-highs.
 
Shares of Lowes and Target both traded higher after both retailers reported better-than-expected profit and sales, with Target reporting digital sales rising 141%.
 
The Senate passed legislation that could ban many Chinese companies from listing shares on U.S. exchanges or raising money from American investors without adhering to Washington’s regulatory and audit standards.  The bill, would require companies to certify that “they are not owned or controlled by a foreign government.” Alibaba, an e-commerce giant based in China, saw its U.S.-listed shares fall more than 2% on the news.
 
State economists are predicting Oregon’s economy is heading into its steepest downturn since the Great Depression. They expect it will take several years for Oregon to return to the health it enjoyed before the outbreak hit.  Economists estimate the state will lose $10.5 billion in lost revenue over the next five years, a massive budget hit that will trigger sharp cuts in Oregon’s spending on schools, health care, law enforcement and other social services.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.
 
 
 

Two large Dow Jones components reported fiscal first-quarter results with Walmart the big gainer, while Home Depot was the biggest drag. Walmart's stock surged 4.1% to pace the Dow's gainers after the discount retail giant reported better than expected profit, revenue, and same store sales. Home Depot shares fell 1.3% to pace the Dow's losers after missing on profit but beating on revenue and same store sales. 

 
Housing starts occurred at an 891,000 seasonally adjusted annual rate in April, representing a 30% drop from March. It was the slowest pace of new home construction since February 2015. Permitting activity for newly-built homes fell 20.8% between March and April to a seasonally adjusted annual rate of 1.07 million.
 
For the first time in weeks, Americans are booking more flights than they're canceling, and US airlines are adding flights to their schedules.  Southwest, Delta and United Airlines all said they are pulling back on the deep cuts in their current schedules because of improved bookings.  It's only a modest improvement, but any good news is welcome in the airline industry, which needed a $25 billion bailout to keep operating. After weeks of essentially zero demand for US air travel, even a small improvement in passenger demand, bookings, and trip cancellations is a step in the right direction.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.

Stocks rebounded yesterday from losses last week as news from a Moderna vaccine trial sparked optimism about a potential virus vaccine.

 Confidence among home builders has recovered somewhat after last month’s record-breaking decline even as much of the country remains under stay-at-home orders because of the coronavirus.  The National Association of Home Builders’ monthly confidence index rose seven points to 37 in May. April’s figure had represented the lowest index reading since June 2012.

Fewer Americans are calling their mortgage servicers to ask for relief from mortgage payments, but the housing industry isn’t out of the woods yet.  More than 4.1 million homeowners are in forbearance plans now, which means 8.16% of all mortgages were in forbearance as of May 10, allowing borrowers to either skip or make reduced payments.  While mortgage servicers are still facing stress because of the record deluge of requests for payment relief, signs suggest that homeowners’ prospects have improved as parts of the country have begun to emerge.

San Francisco-based Square said they would let people work remotely, even after regional shelter-in-place orders end. The news came a week after Twitter announced their employees could permanently work from home.

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

This week Investors will be focused on a slew off retail companies reporting earnings and what the Fed has to say in front of Congress.    

U.S. retail sales tumbled by a record 16.4% from March to April as business shutdowns have kept shoppers away and threatened the viability of stores across the country.  The Commerce Department’s report showed a sector that has collapsed so fast that sales over the past 12 months are down a crippling 21.6%. The severity of the decline is unrivaled for retail figures. The monthly decline in April nearly doubled the previous record drop of 8.3% — set just one month earlier.                                                                                                              

JCPenney filed for bankruptcy on Friday, the latest retail giant to see its downfall hastened by the crisis. The pandemic was the final blow to a 118-year-old company struggling to overcome a decade of bad decisions, executive instability and damaging market trends.  The company said it has an agreement with most of its lenders on the turnaround plan that will allow it to stay in business as a more financially healthy company, but will include closing an as yet unannounced number of its 846 stores. As part of the turnaround process JCPenney arranged to borrow an additional $450 million from those lenders to pay for operations during the reorganization.

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

As the U.S. tries to wrestle global supply chains back from China, Taiwan Semiconductor, a major supplier to Apple and Qualcomm, has confirmed plans to build a $12B chip factory in Arizona. The plant, which would create over 1,600 jobs, will produce the most sophisticated 5-nanometer chips that can be used in high-end defense and communications devices. The administration is also in talks with Intel about new foundries. While the company has major domestic manufacturing operations, it supplies only its own chips rather than making them for outside customers. (SA)

While final negotiations with lenders could still spill into the weekend, J.C. Penney is planning to file for bankruptcy within the next 24 hours.. The retailer has been in discussions with its first-lien lenders for a $450M loan to finance the bankruptcy and would require the achievement of certain goals to receive the second half of it. Restructuring plans include closing 180-200 out of the 846 J.C. Penney department stores that were active as of February. (CNBC)

Consumer spending tumbled a record 16.4% in April as the backbone of the U.S. economy retrenched amid the coronavirus pandemic, according to data released this morning.  Economists surveyed by Dow Jones expected the advanced retail sales number to fall 12.3% after March's reported 8.3% dive already had set a record for data going back to 1992. The March numbers were revised to be not as bad as the 8.7% initially reported.  Some 68% of the nation's $21.5 trillion economy comes from personal consumption expenditures, which tumbled 7.6% in the first quarter just as social distancing measures aimed at containing the coronavirus began to take effect. (WSJ)

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

In normal times, weekly initial jobless claims falling to the lowest level in almost two months. Time -- would sound like a good thing. But with almost another 3 million claims, we remain far away from normal times. We’ve now eclipsed 36m unemployment claims. Goldman Sachs Group Inc. now sees unemployment in the U.S. peaking at 25%, with a slow reversal meaning the rate will hold near 10% by the end of the year. The overhang of unemployed workers seems set to be one of the main risks to an economic rebound, with signs it is already slowing the recovery in China. (Bloomberg)
 
The Freddie Mac COVID-19 Payment Deferral solution returns a homeowner's monthly mortgage payments to their pre-COVID amount by adding up to 12 months of missed payments, including escrow advances, to the end of the mortgage terms without accruing any additional interest or late fees. This will help borrowers keep their mortgage payment current following their hardship when other options - such as reinstatement, or a repayment plan - are not viable. Fannie Mae also unveiled a COVID-19 payment deferral option that allows homeowners in forbearance due to the pandemic to shift their missed payments to the end of the loan term. (SA)
 
There was a little good news for the oil market in this morning's International Energy Agency report which said that the outlook had "improved somewhat." Supplies are falling faster than previously expected, with OPEC and its partners slashing output while others like the U.S are forced to scale back drilling. A barrel of Brent for Julu delivery is trading over $30 this morning.  (FT)
 
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

The President opened a new front in his diplomatic war with China, ordering the main pension plan for US federal government employees not to invest its portfolio in Chinese companies.  The intervention comes as the Federal Retirement Thrift Investment Board, which manages almost $600bn for some 5.5m federal employees, prepares to shift the international component of the fund into an index that includes Chinese stocks.  The Trump administration argues that the MSCI All Country World ex-US Investable Market index includes companies that pose a serious national security risk.  (FT)

Big advertisers like General Motors, PepsiCo, and General Mills are seeking to take advantage of options that became available May 1 to cancel up to 50% of third-quarter TV spending.  That doesn't bode well for owners of broadcast and cable networks, from Comcast and NBCUniversal to ViacomCBS and Walt Disney. Where's the money going? Much of it will likely be aimed at shoring up the firm's balance sheets, while some is shifting to areas like digital video and e-commerce. (SA)

Shares of Grubhub and Uber are both higher following reports of a merger. A deal would give Uber Eats' money-losing restaurant delivery service a leg up on market leader DoorDash at a time when the coronavirus pandemic has upended Uber's core business of ride-hailing. The two companies are still haggling over the deal's stock exchange ratio, though some say the tie-up could be finalized this month. (CNBC)

In economic data, the US Producer Price Index fell 1.3%, significantly below expectations.

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

The central bank's Secondary Market Corporate Credit Facility will begin purchases today of eligible exchange-traded funds invested in corporate debt, seeing the method as a fast way to direct money into the credit markets. It's a historic milestone for the Fed, which hasn't yet bought any ETFs. The program, managed by BlackRock centers around investment grade corporate bonds, though some purchases will be in high-yield. Another Fed facility designed to buy debt directly from issuers is set to launch "in the near future." (SA)
 
The Department of the Interior has given final approval for Berkshire Hathaway's $1B solar project in Nevada that could power 260K households, enough to cover the entire residential population of Las Vegas. When finished, the 690 MW Gemini Solar Project would become the world's eighth largest solar power facility in the world, spanning some 7,100 acres of federal land. The developers aim to build the project in two phases over 28 months, with the first portion coming online in early 2021 and final facility completion as early as 2022. (CNBC)
 
Demand is slowing for the US government’s $660bn small-business rescue program, reflecting fears among some enterprises that they cannot meet its requirements for loan forgiveness.  Businesses rushed to apply for money when the second round of the loan scheme opened last month, with $90bn being allocated in the first three days. Demand was so high the scheme’s website crashed on the first day.  But, demand has slowed since then, with only just over $100bn having been claimed in the subsequent 11 days, leaving over $122bn in the pot. (FT)
 
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Thousands of visitors streamed into Shanghai Disneyland on Monday for the first time in three months as the Chinese park became the first reopened by Walt Disney after the coronavirus pandemic brought the Magic Kingdom to a standstill.  While Mickey Mouse joined familiar Disney characters welcoming the crowds, the Shanghai experience will not be as it was: Instead of parades and fireworks, there are mandatory masks, temperature screenings, and social distancing for visitors and employees.  Disney’s $5.5 billion China flagship is the first of its six resorts around the world to reopen after the pandemic (CNBC)

As concerns grow about reliance on Asia as a source of critical technology, the administration is meeting with semiconductor companies looking to develop chip factories in the U.S., WSJ reports. Officials are discussing new foundries with Intel and Taiwan Semiconductor, and are interested in helping Samsung Electronics expand operations. "This is more important than ever, given the uncertainty created by the current geopolitical environment," Intel CEO Bob Swan wrote in a letter to the U.S. Department of Defense. (SA)

Under Armour this morning reported a sales decline of 23% during its first quarter as its business took a blow from the coronavirus pandemic and its stores were forced shut, freezing its turnaround plans. The athletic apparel company said it plans to cut about operating costs in 2020 to help it weather the crisis, including by temporarily laying off some retail employees.  For the quarter, Under Armour reported a net loss of $589.7 million.

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

US stocks were higher yesterday with the NASDAQ higher for the fourth straight day.  The NASDAQ is now positive on the year after suffering steep losses in March.

The US Economy Lost 20.5 million in April and the unemployment rate rose to 14.7%, both post-World War II records.  Economists had been expecting a loss of 21.5 million jobs and the unemployment rate to surge to 16%.  The “real” unemployment rate, which includes workers not looking for jobs and the underemployed, surged to 22.8%.

Shares of Uber are sharply lower after the company announced a quarterly loss of nearly $3 billion, including a write-down of more than $2 billion related to its investments in Asian partners.  The only bright spot in the company’s earnings report was the growth they saw in their Uber eats division.

The 112-year-old storied luxury department store chain Neiman Marcus has filed for Chapter 11 bankruptcy protection, the first department store chain to do so and the second major retailer to be toppled by the coronavirus pandemic.  This follows the bankruptcy filing by J Crew on Monday. Experts believe there will be more to come even as there are moves to reopen businesses in parts of the country like Texas and Florida.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones

US Stocks fell for the first time in three days yesterday as investors weighed the prospects of reopening the economy along with a dismal report on U.S. payrolls.

Shares of Peloton shot higher after the company reported revenue surged 66% during the third quarter, as more people purchased its fitness equipment and tuned into its live classes, to try to break a sweat while stuck at home.

Nordstrom plans to permanently close 16 of its 116 full-line stores while moving toward a phased reopening of others, as they tailor their immediate future to the realities of retail in a pandemic.  The Seattle-based company also said it will make changes to how their stores function in a “market-by-market” approach and will move its big Anniversary Sale from July to August.
 
The Oregon Department of Revenue said that emergency stimulus loans going to small businesses throughout the state will not be taxable as commercial activity under Oregon’s controversial new business tax that supports education.  Originally the OR dept of Revenue said the forgiven loans would be subject to the commercial activity tax.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones

Stocks rose yesterday as investors bet the U.S. economy could start to reopen soon, while oil prices jumped for a fifth straight day.

 The Institute for Supply Management’s survey of non-manufacturing companies plummeted to 41 in April from 52% in March, breaking a string of 112 straight months of positive readings.  Any number over 50% is considered a sign of growth; readings below 50% signal contraction or even recession.  The massive losses suffered by retailers, restaurants, hotels, airlines and other service-oriented companies caused the key economic bellwether to plunge to the lowest level since the 2007-2009 Great Recession.

Walt Disney’s profit dove more than 90% in the second quarter, an example of the drastic effects on the company from the pandemic, which executives said cost the media giant more than $1 billion in sales just in its theme-parks division.

Shares of Norwegian Cruise Line took a dive, after the cruise operator issued a “going concern” warning.  Norwegian’s warning also weighed heavily on the stocks of rivals Carnival and Royal Caribbean Cruises.  The stocks’ selloffs come despite Norwegian also announcing a series of financial transactions that if completed would provide enough liquidity to fund operations even if its cruises remain suspended for over 12 months.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones

US Stocks rose slightly yesterday as an advance in the biggest U.S. technology stocks lifted the market into the green from losses earlier in the session.

Massive stimulus to support the U.S. economy through the coronavirus crisis will cause the Treasury to borrow a record $3 trillion this quarter.  On top of that borrowing, Treasury also said it anticipates another $677 billion in the third quarter. 

J. Crew and Golds Gym filed for bankruptcy protection yesterday with plans to hand over control to their lenders, adding to a list of companies being pushed to the brink by widespread store closures.

The Federal Reserve said it would start buying corporate bond exchange-traded funds starting this week, as it offered up further details on its planned purchases of debt from U.S. businesses. Soon after, the central bank will start purchasing debt issued by companies directly, and from the market. The Fed also said it could buy an entire sale of corporate bonds by itself.
 
The restaurant purge is already upon us. Over the past two months 5% of Oregon restaurants have permanently closed, according to a survey from the National Restaurant Association. That number could climb to 10% by the end of May.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones

US Stocks were lower last week after Wall Street analysts realized first-quarter corporate earnings would be bad this year because of the pandemic, but they’ve been even worse than expected as companies are beating forecasts by the lowest rate in at least 10 years.

Mortgage rates have dipped to a record low for the second time in as many months.   The 30-year fixed-rate mortgage dropped to an average of 3.23% during the week ending April 30, a decrease of 10 basis points from the previous week. This represents the lowest level since Freddie Mac began tracking this data starting in 1971. A year ago, the 30-year fixed-rate mortgage averaged 4.14%.

So far, 3.5 million mortgage borrowers have requested forbearance, representing nearly 7% of all mortgages nationwide.  That means millions of homeowners can now skip or make reduced monthly payments on the home loan for up to one year.  Eventually, borrowers will need to work out a repayment plan with their lender.  And borrowers need to be careful that they don’t agree to a repayment plan they cannot afford.

Billionaire investor Warren Buffett made a lot of news at Berkshire Hathaway’s first virtual annual meeting on Saturday, including revealing that he sold all his airline stocks and didn’t see any value in any major acquisitions amid the coronavirus pullback in stocks.

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

Amazon reported its first-quarter earnings after the bell yesterday, revealing the pandemic’s impact on the business that has been a rare bright spot on the stock market. The stock fell about 5% after hours after missing estimates on earnings while generating just over $75bn in revenue during the quarter.  “If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Amazon said in the press release. “Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances.” (CNBC)

Boeing has said it doesn’t plan to seek federal aid after raising a whopping $25 billion in a bond offering, the company’s biggest debt sale ever, as it faces what it expects to be a multi-year slump in air travel.  Boeing has scrambled to shore up liquidity and recently drew down a nearly $14 billion loan.  The seven-part offering, which includes bonds that won’t be redeemed until 2060, was oversubscribed and attracted better pricing than might have been expected for a company with Boeing’s credit rating and challenges.  (WSJ)

Apple Inc. AAPL 2.11% reported a slight uptick in revenue for its latest quarter even as the coronavirus shut down factories and dented sales in China, as the tech giant’s growing services business offset declining iPhone sales.  The company said revenue rose 1% in its fiscal second quarter to $58.3 billion, with iPhone sales momentum stalling after Apple closed stores, first in China and then world-wide. Profit fell about 3% to $11.25 billion.  In the face of historic economic uncertainty, Apple declined to project sales for its current quarter for the first time since it began providing concrete revenue guidance in late 2003. (FT)

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