April 3, 2020

$1.5 Trillion Helicopter Money for Wall Street in 3 Weeks of Fed Bailouts

by Wolf Richter • Apr 2, 2020 •

Loading up on Treasury securities, mortgage-backed securities, repos, “central bank liquidity swaps,” and “loans” to keep the Everything Bubble from imploding further.

By Wolf Richter for WOLF STREET:

Total assets on the Fed’s weekly balance sheet – mostly composed of Treasury securities, mortgage-backed securities (MBS), repurchase agreements (repos), “foreign central bank liquidity swaps,” and “loans” – spiked by $557 billion in just one week, to $5.81 trillion, according to the Fed’s release Thursday afternoon.

This doesn’t yet include about $200 billion in MBS that the Fed bought over the past three weeks but whose trades have not yet settled (the Fed will book them later when they settle). With those MBS included, the Fed now holds over $6 trillion in assets.

....(snip)....

Loans”: The newly hot bailout

“Loans” is a group of asset accounts on the Fed’s balance sheet that had been essentially asleep since Financial Crisis 1. But over the past three weeks, they jumped from near-zero to $129 billion. This is what the Fed has lent out as part of its new bailout liquidity programs and direct lending programs, by category:

- Primary credit: $44 billion
- Primary Dealer Credit Facility: $33 billion
-Money Market Mutual Fund Liquidity Facility: $53 billion

The chart is on the same scale as the charts for swaps and repos above, giving these loans room to grow into as Wall Street gets more of its helicopter money: .......(more)

https://wolfstreet.com/2020/04/02/helicopter-money-for-wall-street-1-5-trillion-in-3-weeks-of-fed-bailouts/

April 2, 2020

Hang on, this is gonna be bad......

https://m.


Mortgage Defaults Could Pile Up at Pace That Dwarfs 2008

Mortgage lenders are preparing for the biggest wave of delinquencies in history. If the plan to buy time works, they may avert an even worse crisis: Mass foreclosures and mortgage market mayhem.

Borrowers who lost income from the coronavirus -- already a skyrocketing number, with a record 10 million new jobless claims -- can ask to skip payments for as many as 180 days at a time on federally backed mortgages, and avoid penalties and a hit to their credit scores. But it’s not a payment holiday. Eventually, they’ll have to make it all up.

As many as 30% of Americans with home loans – about 15 million households –- could stop paying if the U.S. economy remains closed through the summer or beyond, according to an estimate by Mark Zandi, chief economist for Moody’s Analytics. .........(more)

https://news.bloomberglaw.com/banking-law/home-lenders-brace-for-up-to-15-million-u-s-mortgage-defaults

April 2, 2020

States, Cities Already Cutting Jobs With Financial Toll Mounting

(Bloomberg) State and local governments are eliminating jobs as they brace for the financial impacts of the coronavirus, offering a potential early glimpse of the steps they may have to take as the unprecedented shutdown of local economies devastates tax collections.

The swift action stands in contrast to the approach during the last recession, showing the severity of the revenue losses that some governments expect as businesses are shuttered, millions of workers are idled and tourism grinds to a halt. The shift from a record-setting expansion to a deep contraction in a matter of weeks has caused surpluses to turn into deficits and left mayors and governors racing to gauge the impact, even with Congress discussing a fresh round of stimulus spending that may pump at least $760 billion into local infrastructure projects.

....(snip)....

This week, Cincinnati, Ohio, decided to furlough as many as 1,700 workers after revised budget estimates projected a $27.5 million deficit, a stark reversal from the previous estimate of a $24 million surplus. Mayor John Cranley fought back tears as he announced the decision.

Pennsylvania laid off 2,500 seasonal, temporary and part-time employees, along with interns, due to the “unprecedented impact” of the virus. Wichita, Kansas, has implemented a hiring freeze and a furlough that will affect roughly 300 employees, according to the city. ........(more)

https://www.bloomberg.com/news/articles/2020-04-02/states-cities-already-cutting-jobs-with-financial-toll-mounting?srnd=premium

April 2, 2020

U.S. Jobless Claims Doubled to Record 6.65 Million Last Week

(Bloomberg) The number of Americans applying for unemployment benefits more than doubled to a second straight record, highlighting the devastating economic impact of the coronavirus as shutdowns widened across the country. ......(more)

https://www.bloomberg.com/news/articles/2020-04-02/u-s-jobless-claims-doubled-to-record-6-65-million-last-week?srnd=premium

April 1, 2020

Foretaste of the Lockdown-Driven Collapse in the Services & Retail Sectors: Holy Moly, What a Catast

(WolfStreet) The Texas Service Sector Outlook Survey, released by the Dallas Fed on March 31, is one of the first indicators as to what services more broadly – they account for about 70% of the US economy – will look like under lockdown. The data also includes the retail sector that’s an even bigger mess.

This is based on surveys of executives of 248 companies in the Texas service sector and of 56 companies in the retail sector. The companies are unnamed. The data was collected from March 17 through 25. It was on March 19 that Texas Governor Greg Abbott issued a comparatively mild lockdown. A few days later, major cities and counties issued tighter “stay at home” orders. All this happened within the survey collection period. Some of the announcements might have come too late to be fully reflected in the survey data. Nevertheless, the results were stunningly ugly.

The Texas Service Sector Outlook Survey’s General Business Conditions Index, which reflects service sector executives’ perceptions of broader business conditions, collapsed by over 85 points to an epic all-time low of -78.8: .........(more)

https://wolfstreet.com/2020/03/31/heres-a-foretaste-of-the-lockdown-driven-collapse-in-the-services-retail-sectors/

April 1, 2020

8 figures reveal how the coronavirus pandemic is devastating restaurants across America

(Business Insider) The coronavirus outbreak is already devastating the restaurant industry.

Roger Lipton, a restaurant industry analyst, investor, and advisor who recently penned a blog post about the upcoming "restaurant apocalypse," told Business Insider that the restaurant industry is facing an unexpected and unprecedented challenge.

"Any pundit who thinks that they're going to use a recent history — and by recent history, I mean the last 100 years, including the Depression — as a template for what is going to go on here? They're kidding themselves," Lipton told Business Insider on Monday. .....(more)

https://www.businessinsider.com/how-coronavirus-devastating-restaurants-across-us-2020-3