But while economic indicators in the labor market, manufacturing, and retail, were all deep in the red, the stock market flashed green
The market has made a historic rally as the Federal Reserve continues to inject liquidity into key, previously unabetted pockets of the market. Its expanded remit includes corporate bonds of so-called “fallen angels,” or issues that have been downgraded into “junk” bonds by ratings agencies.
Meanwhile, banks braced for loan losses, as the quarantine is putting insurmountable funding pressures on some companies. Last week Neiman Marcus missed key coupon payments on several of its loans, and now the luxury retailer is on the brink of bankruptcy. Meanwhile, other corporate borrowers are struggling to meet their obligations. Live Nation Entertainment and Marriott International asked their lenders to waive key covenants so that they could make good on the loan. Yields on bonds in the restaurant sector continue to spike.
The dominoes continue to line up. Just yesterday, oil made history, with Western Texas Intermediate pushing into negative territory, dipping below -$40 at its lows. And this week is just beginning…