Good morning! Was this email forwarded to you? (Today's Smart Brevity count: 1,216 words, < 5 minutes.)
🎙 "It’s not fair to feel proud of lineage. You are all about your karma." See who said it and why it matters at the bottom.
Illustration: Aïda Amer/Axios
Microsoft delivered the goods in its earnings report Wednesday, announcing increased profit and sales that not only beat analysts' expectations but showed the company could continue its impressive growth trajectory in the face of the coronavirus pandemic.
Why it matters: The impact of Microsoft's strong earnings is magnified by the fact that it is one of the five Big Tech companies that account for around 20% of the entire S&P 500's market cap — along with Apple, Amazon, Alphabet and Facebook — the index's highest level of concentration since the 2000 tech bubble.
What they're saying: “In the third quarter of fiscal year 2020, COVID-19 had minimal net impact on the total company revenue,” Microsoft said in its earnings release.
Between the lines: Stock traders have largely ignored poor earnings reports this year, preferring to look to a company's likely rebound once national quarantine orders are rescinded, and are expecting tech companies to weather the storm.
On the other side: Earnings season has not been nearly as kind to the rest of the market. First quarter earnings are on pace to fall by 15.8%, a number that has decreased each week of earnings season and would mark the largest year-over-year decline for the S&P since the second quarter of 2009, according to FactSet.
Be smart: The combination of crumbling earnings and rising investor optimism already has brought the broader market's overall valuations to historically high levels, with FactSet clocking the S&P's 12-month forward price to earnings ratio at 19.1 and the Nasdaq's at 27.1.
The bottom line: Most companies are struggling to tread water, but Microsoft's earnings and the respectable showings from Facebook and Alphabet this week could provide a shot in the arm to an already bullish market racing back from its March 23 nadir.
Oil and gas giant Chesapeake Energy has held discussions with creditors about a possible $1 billion loan while it prepares a potential bankruptcy filing. (Reuters)
Gilead's remdesivir, an antiviral drug, appears to help coronavirus patients recover more quickly than no treatment at all, but does not significantly reduce death, preliminary data showed Wednesday. (Axios)
A former CFPB economist alleged Trump administration officials now heading the agency manipulated its research process in an effort to dismantle regulations on payday lending. (N.Y. Times)
Photo illustration: Sarah Grillo/Axios. Photo: Scott Olson/Getty Images
Fed chair Jerome Powell made clear the U.S. central bank had no plans to raise interest rates anytime soon and expects the economy to need monetary assistance for some time.
Why it matters: Powell and the Fed have been out in front of the global policy response to the coronavirus pandemic from day one, taking an abundance of precautionary action long before the impact of the virus was clear to most others.
Between the lines: The Fed's statement opened by saying the central bank "is committed to using its full range of tools," one of few notable changes from its policy statement last month, but one that set a clear tone.
What it means: "The message appears to be that officials are planning on making the forward guidance more dovish, and with more specificity, before too long," analysts at TD Securities said in a note to clients.
The bottom line: "The Fed is committed to doing 'whatever it takes,' and more, just to make sure," BlackRock CIO of global fixed income Rick Rieder said in a note to clients, quoting former ECB president Mario Draghi's famous pledge during the eurozone debt crisis.
Initially hailed as a savior of Brazil's economy as stock prices climbed to record highs after his election, President Jair Bolsonaro now has the country's markets on a crash course.
What's happening: Brazil's benchmark stock index has been one of the world's worst performers, down by nearly 30% in its local currency so far this year, and lower by 46% in U.S. dollar terms.
One level deeper: Brazil's economy is falling apart as it has become the Latin American epicenter of the COVID-19 outbreak and Bolsonaro dismisses the pandemic as a “fantasy” or “a little flu.”
Keep it 💯: Citing more widespread and lasting damage from the coronavirus outbreak, economists at Citi now expect “the worst annual contraction ever” this year for Brazil's economy, predicting a decline of 4.5%, versus an earlier forecast of a 1.7% decline.
Online brokerages have seen a record number of new accounts opened this year as so-called mom and pop retail investors look to buy the dips and cash in on the market's late February selloff.
By the numbers: "TD Ameritrade said last week that retail clients opened a record 608,000 new funded accounts in the quarter ended March 31, with more than two-thirds of those opened in March," WSJ reports.
Watch this space: Retail traders, especially those using the stock trading app Robinhood, have shown unusual buying patterns, pursuing cheap and particularly volatile stocks, DataTrek Research co-founder Jessica Rabe points out in a note to clients.
My thought bubble: Rabe and DataTrek co-founder Nicholas Colas also "glibly" dismissed the importance of the record growth of M2 money supply highlighted by Axios Markets in their note yesterday. Shots fired? (Kidding.)
Quote: "It’s not fair to feel proud of lineage. You are all about your karma.”
Why it matters: Irrfan Khan, one of Indian cinema's top stars and one of the world's most well-known Muslim actors, died on Wednesday at the age of 53. He was among Bollywood's most successful exports to Hollywood, starring in films including "Slumdog Millionaire," "Life of Pi" and "Jurassic World."