“Only when the tide goes out do you discover who’s been swimming naked.” — Buffett

1. Airlines, Treasury Reach Tentative Accord to Tap Billions in Aid — U.S. airlines reached preliminary agreements with the Treasury Department to access billions of dollars in aid as the government attempts to shore up one of the industries hardest hit by the coronavirus pandemic. The aid represents a temporary lifeline for airlines after the outbreak and government travel restrictions erased all but 5% of daily passenger demand in the U.S. Forced in some cases to pay more in refunds than they were taking in from new ticket sales and fees, carriers have cut capacity as much as 80% and parked thousands of planes in the industry’s worst-ever disruption.
2. U.S. Economic Data Show Deep Hit in March, Collapse in April — the value of overall retail sales fell 8.7% from the prior month, the biggest decline in records dating back to 1992, according to Commerce Department data released Wednesday. Federal Reserve figures showed U.S. factory output dropped in March by the most since 1946, just after World War II ended. But surveys in April looked even worse, with manufacturing in New York state and sentiment among U.S. homebuilders plummeting by previously unthinkable amounts. Coronavirus containment measures escalated quickly in the month as states began closing restaurants and bars to dine-in customers and urging residents to stay home. Now, almost every state has issued a stay-at-home order and many businesses have temporarily shuttered in the wake. The month was also defined by millions of layoffs, which have continued into April, and sharply reduced spending power.
3. U.S. Jobless Claims Top 5.2 Million, Erasing a Decade of Gains — more than 5 million Americans filed for unemployment benefits last week, bringing the total in the month since the coronavirus pandemic throttled the U.S. economy to 22 million and effectively erasing a decade worth of job creation. The latest figures suggest an unemployment rate currently around at least 17% — far above the 10% reached in the wake of the recession that ended in 2009 — in a sign that the effects of shutdowns have spread well beyond an initial wave of restaurants, hotels and other businesses.
4. China Suffers Historic Economic Slump — Gross domestic product shrank 6.8% from a year ago, the worst performance since at least 1992 when official releases of quarterly GDP started and missing the median forecast of a 6% drop. The economy hasn’t contracted on a full-year basis since the end of the Mao era in the 1970s. Both retailing and factory output showed improvement from the nadir in the first two months, suggesting a stabilization in economic activity. But the data overall indicated an uphill struggle awaits the world’s second largest economy and its experience will be monitored elsewhere for clues as to how fast other economies will emerge from lockdowns.
5. Big Banks’ Profits Sink as They Brace for Loan Defaults — US banks are setting aside billions of dollars to cover bad loans after the coronavirus outbreak. JP Morgan boosted its reserves for potentially bad loans by nearly $7 billion. The bank warned it could boost those reserves even further in the April-June period. Meanwhile, Bank of America ’s allowance for loan losses is now almost $7 billion higher than it was in December. The reserve for credit-card losses is double what it was at the end of 2019.
6. Market Completes A 50% ‘Bear Market’ Retracement — Over the last couple of weeks, we have indeed had an extremely strong “oversold,” reflexive rally, that has now reversed the conditions that “fueled” the advance. The next level of resistance for the SPY is around 292 which shows a retrace of 61.8;

The week ahead — Economic data from Econoday.com: