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Situational awareness: JPMorgan CEO Jamie Dimon released his annual shareholder letter warning of “a bad recession ... combined with some kind of financial stress similar to the global financial crisis of 2008." (Letter)
🎙"The world must be made safe for democracy. Its peace must be planted upon the tested foundations of political liberty. We have no selfish ends to serve. We desire no conquest, no dominion." - See who said it and why it matters at the bottom.
Illustration: Sarah Grillo/Axios
The Fed's massive injections of liquidity have reopened much of the bond market, and after back-to-back weeks in which more than $100 billion flowed out of bond funds, investors have regained their bearings and now see opportunity.
What's happening: Junk bond funds took in more than $7 billion for the week ended April 1, according to Refinitiv Lipper, setting a new weekly record.
Why it's happening: "The Fed came in with its massive bazooka, addressed the liquidity concerns and it’s gone from a buyer’s market to seller’s market," Mike Collins, senior portfolio manager at Prudential's PGIM Fixed Income, tells Axios.
Yes, but: "While the Fed can have a very direct impact on liquidity… the ability of the Fed to have a major impact on the real economy is very much in question," Mike Swell, co-head of fixed income global portfolio management at Goldman Sachs Asset Management, tells Axios.
Flashback: Investors pulled out of bond funds at a record pace during March, data from the Investment Company Institute show.
The bottom line: While the Fed has taken unprecedented action, there are significant portions of the bond market where the central bank may not be willing or able to provide funding.
In just the last three weeks, the Fed’s balance sheet has mushroomed by roughly $1.5 trillion and is now close to $1.3 trillion above its previous record high.
Watch this space: Credit ratings agencies are beginning to take action and sound the alarm. Moody’s cut its outlook for corporate debt to negative last week, warning of "defaults rising in the coming quarters" and saying there was "no clear turning point yet."
Wells Fargo announced it had exhausted its $10 billion capacity for lending under the SBA’s Paycheck Protection Program (PPP) after only two days of operation. (Twitter)
Many businesses reported they were unable to access funding from the $350 billion PPP. (Axios)
Nearly 1 million retail workers were furloughed last week. (The Washington Post)
The shock from COVID-19 could push the global economy into deflation territory for the first time in decades. (Bloomberg)
Oil prices have seesawed over the last few days after President Trump inserted himself into a spat between Saudi Arabia and Russia that, in concert with the demand shock from COVID-19, helped torpedo the price of crude in early March.
Driving the news: "Some progress was made toward an agreement on Sunday, according to diplomats, but the lack of participation from the U.S. — the world’s largest producer — could prove to be a stumbling block," Bloomberg reported Sunday.
The big picture: Trump's assertion that he could broker an agreement for a production cut of 10 million barrels of oil per day, which would be about 10% of global production, sent prices soaring by as much as 40%.
Illustration: Eniola Odetunde/Axios
Top CEOs, in private conversations and pleas to Trump, are warning of economic catastrophe if America doesn't begin planning for a phased return to work as soon as May, corporate leaders tell Axios co-founders Jim VandeHei and Mike Allen.
Why it matters: The CEOs said that a massive numbers of companies, big and small, could go under if business and government don't start urgent talks about ways groups of workers can return.
A return to work might start by geography, demography or type of work.
Reality check: Large parts of the South and central U.S. may not hit their peak until May.
Gary Cohn, the first White House economic adviser under Trump, told Axios that startup founders and CEOs are pleading privately: "We just need a realistic timeframe, and we need to talk honestly about it so we can tell our employees."
Mark Cuban, owner of the Dallas Mavericks, agreed it's a hot topic of private chats.
Cohn, former president and COO of Goldman Sachs, said entrepreneurs and business titans also worry about depression and addiction issues that have accompanied past economic downturns.
What's next: Look for business groups to begin to broach these topics publicly in the next few weeks.
Quote: "The world must be made safe for democracy. Its peace must be planted upon the tested foundations of political liberty. We have no selfish ends to serve. We desire no conquest, no dominion."
Why it matters: Spurred by the words above from President Woodrow Wilson, the U.S. officially entered World War I on April 6, 1917.