Market Brief: April 6, 2020

JPMorgan Chase has $500 billion in liquid assets and an additional $300 billion in borrowing capacity from the Federal Reserve that it can use to support loans, Dimon said, adding that those figures don’t include additional capacity under some of the Fed’s newly created credit facilities.

Dimon also noted the stability of JPMorgan’s dividend—something that has been called into question at all of the major U.S. banks after their European counterparts were urged to suspend their payouts amid the pandemic.

Investors are awaiting more clarity on a global plan to cut production to reduce the current oversupply of oil. The Organization of the Petroleum Exporting Countries, or OPEC, and its allies, a group known as OPEC+, plan to talk on Thursday after delaying an expected Monday meeting. For OPEC to make a deal, however, the U.S. will likely have to agree to its own coordinated production cut—a drastic change from the competitive free market ethos that has characterized the U.S. oil industry for decades.

One potential piece of good news for Carnival: Saudi Arabia’s sovereign wealth fund recently took an 8.2% stake in the company. Meanwhile, Carnival has enough liquidity to keep the company afloat through November under a “Zero Sail” scenario outlined by analysts at Wells Fargo Securities.

Pacific Gas & Electric and its holding company PG&E have been in bankruptcy court since January 2019, when they filed to manage the potential costs of a series of historically destructive wildfires caused by the utility’s equipment. On Monday, attorneys representing victims of those wildfires in effect withdrew from a $13.5 billion settlement they reached with the utility late last year. They told the court that their mediation process with the company was “at an impasse.”

U.S. banks, for the most part, are in good shape, and central bankers injected trillions of dollars to stabilize financial markets—and stand willing to do more. But three areas—emerging markets, corporate bonds, and, of course, the banks themselves—require close monitoring to ensure today’s fragile fiscal stability doesn’t turn into a big problem.

The two biggest high-yield bond exchange-traded funds rose Monday as investors seemed incrementally more optimistic about a rebound in U.S. economic growth after signs that the spread of coronavirus could be slowing.

But buyers may want to dial down their optimism about lower-rated bonds. Unlike the investment-grade market, the market for high-yield debt won’t get Federal Reserve support. And Wall Street strategists say that risky companies are far more likely to default than they were before the coronavirus brought the economy to a standstill.

Vir and GlaxoSmithKline said they believe they could begin testing Vir’s Covid-19 drug candidates in Phase 2 clinical trials within three to five months.

The announcement came in a letter from Gilead CEO Daniel O’Day, issued on Saturday. O’Day said the company was working to boost production of remdesivir, cutting the amount of time it takes to produce the drug from a year to six months. He said the company aimed to have 500,000 treatment courses manufactured by October, and 1 million by the end of 2020.

Credit Suisse analyst Brad Zelnick on Monday cut his rating on Zoom shares to Underperform from Neutral, while lifting his price target on the shares to $105, from $95, still below Friday’s closing level of $128.20.

But officials in the Canadian province of Ontario are apparently not among those who consider cannabis essential. Cannabis stores in the province closed down on Saturday, after the government excluded recreational pot from its list of essential businesses.