Business Maverick

Business Maverick

April 7: Five Things You Need to Know to Start Your Day

Boris Johnson, U.K. prime minister, speaks during a daily coronavirus briefing inside number 10 Downing Street in London, U.K., on Thursday, March 19, 2020. (Photo: Leon Neal/Getty Images/Bloomberg via Getty Images)

After contracting the coronavirus, British Prime Minister Boris Johnson has been admitted to intensive care as his condition worsens. Jamie Dimon said the pandemic will lead to a major economic downturn mirroring 2008’s global financial meltdown. And bankers in Hong Kong are scrambling to catch a wave of take-private deals. Here are some of the things people in markets are talking about today. 

Boris’s Bad News

Boris Johnson has been taken into the hospital intensive care unit for treatment for coronavirus after his condition worsened, his office said, while Foreign Secretary Dominic Raab is now deputizing for the U.K. prime minister. Johnson, 55, became more seriously ill on Monday afternoon, and though he remains conscious, he was moved to intensive care at about 7 p.m. in case he needs ventilation to help him recover, an official said. U.K. deaths from the coronavirus slowed for a second day, even as they passed the grim milestone of 5,000. Elsewhere, the number of deaths seems to be slowing in New York, the biggest epicenter for the virus, as Governor Andrew Cuomo said deaths were showing indications of hitting a plateau. There are more signs that the crisis may be easing in Europe emerged as well. Italy, France, Germany and Spain reported lower numbers of new cases and the Netherlands had the smallest increase in deaths in a week. Meanwhile, Japanese Prime Minister Shinzo Abe moved to declare a state of emergency in seven prefectures including Tokyo and Osaka and also announced a record economic stimulus package. Global cases topped 1.3 million and fatalities neared 74,000: Here’s how Bloomberg is mapping the outbreak.

Markets Rally

Asian stocks looked set to build on a U.S. rally after the reported death tolls in some of the world’s coronavirus hot spots continued to show signs of easing. The yen weakened and Treasuries fell. S&P 500 futures dipped early in Asia after the index finished up 7% and closed at its highest since March 13. Futures in Japan pointed to a strong open ahead of Prime Minister Shinzo Abe’s expected announcement of a month-long state of emergency and details of a record stimulus package to combat the spread of the virus. Australian and Hong Kong futures also rose. Elsewhere, crude oil opened up after slumping on signals that a glut is growing at America’s key oil storage hub. The pound extended a decline after the U.K. prime minister’s condition worsened.

Dimon’s Doomsday

Jamie Dimon said the coronavirus pandemic will lead to a major economic downturn and stress mirroring the meltdown that nearly brought down the U.S. financial system in 2008. “At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” the chief executive officer of JPMorgan Chase & Co. said Monday in his annual letter to shareholders. “Our bank cannot be immune to the effects of this kind of stress.”  The 23-page letter, his shortest since 2008, came less than a week after Dimon told staff he’d returned to work after undergoing emergency heart surgery. It was his first public commentary about the coronavirus since the bank’s investor day on Feb. 25 when the outbreak still seemed a distant threat. Dimon, the only current CEO who steered a major U.S. bank through the financial crisis, said JPMorgan’s earnings will be “down meaningfully” this year, though the bank is “unlikely” to cut its dividend.

Deals, Deals, Deals

The recent historic sell-off in the stock market is creating opportunities for Hong Kong-listed companies to go private, and keeping their bankers busy. Battered by the coronavirus outbreak and nine months of pro-democracy protests, the city’s benchmark Hang Seng Index plummeted 16% in the worst start of a year since 2001. The sell-off dragged the index below its book value in mid-March, a level seen only three times before in data compiled by Bloomberg going back to 1993. That means traders are pricing firms’ assets at less than their stated worth, and that, in turn is making it easier for majority owners to buy out other shareholders at bargain-basement prices. Bankers said the dynamic is driving an increase in take-private conversations.

Cutting A Deal

The world’s largest oil producers are groping their way toward a deal to mitigate the devastating impact of the coronavirus crisis on their industry. The challenge now is to nail down numbers everyone can live with. Ministers and diplomats will spend the next two days talking about who’s willing to cut production, and by how much. The most important contributions will come from oil’s trio of big powers: Saudi Arabia, Russia and the U.S. Not every barrel cut will be the same. Russia and Saudi Arabia are set to curb their production significantly, said people familiar with the negotiations. The U.S. is more likely to offer up the kind of gradual output reductions that will come as American companies respond to a market where prices are low and tanks are full. After a turbulent few days, there were signs that diplomats were making progress. Still, talks face significant obstacles. U.S. President Donald Trump has so far shown little willingness to do a deal with OPEC+, which tentatively scheduled a meeting for Thursday.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours.

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