Fed, seeking ways to improve Treasury market, eases capital rule for big banks

The Federal Reserve, seeking to improve the functioning of a critical market for Treasury securities, announced Wednesday it was relaxing a rule that will free up capital for the biggest banks to lend. The rule change gives banks an incentive to hold Treasurys.

The Fed announced it was relaxing the rule that required banks to set aside cash when it holds Treasury securities. The Fed staff estimated relaxing the rule should free up $76 billion in capital

The rule is aimed at the biggest banks with over $250 billion in assets. This covers 15 banks, which control $15 trillion in assets, said Mark T. Williams, a former Fed staffer and now a lecturer at Boston University’s Questrom School of Business.

“As U.S. Treasuries head to negative territory, to incentivize banks to remain buyers, the Fed has relaxed capital standards of the biggest U.S. banks,” Williams said.

The Fed said the temporary exclusion will allow them to expand their balance sheet as appropriate to serve as financial intermediaries. The banks are not allowed to use the new capital to increase capital distributions, the statement said.

Since early March, the Fed has spent nearly a trillion dollars trying to repair U.S. financial markets, damaged by a flight to safety when the extent of the coronavirus pandemic’s impact to the U.S. economic outlook became better understood.

Investors in all asset classes sought to liquidate positions and accumulate cash.

Read: Fed bond buying to inject hope in ‘fragile’ Treasury market

In an interview with the Wall Street Journal, Boston Fed President Eric Rosengren said it was “critically important” that the Treasury market can operate in a way that investors can trade large volumes.

“We’re not at 100%, but we’ve made an awful lot of progress,” Rosengren said.

U.S. Treasury prices edged up on Wednesday, sending yields lower as worries increased about the virulence of the COVID-19 pandemic. The 10-year Treasury note

TMUBMUSD10Y, -0.84%

fell 6.1 basis points to a three-week low of 0.630%. 

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16,000 New Yorkers could die from the coronavirus, according to Gates Foundation projections

The coronavirus pandemic could result in the death of 16,000 New Yorkers, Gov. Andrew Cuomo warned from Albany on Wednesday in his daily news conference.

To date, the virus has killed 1,914 across the state with 83,712 confirmed cases, according to the statistics shared Wednesday by Cuomo.

“There is a group that is funded by the Gates Foundation that projects 93,000 Americans will lose their life by the time this is over,” Cuomo said. “That model suggests 16,000 New Yorkers will pass away by the time this runs its course,” which could be through July, he added.

His U.S.-wide projection is less than what the White House gave on Tuesday, which estimated the number of deaths to be between 100,000 to 240,000 Americans.

The group referenced by the governor is the Institute for Health Metrics and Evaluation (IHME), and their specific numbers for the two rates on Wednesday afternoon are 93,765 dying in the U.S. and 16,090 in the state. The institute takes into account the effects of social distancing measures until at least the end of May 2020.

Factors affecting the forecasts, which are updated every day at 6 a.m. (PST), are based on a wide range of data sources, including state health agencies, among others, a representative for IHME told MarketWatch.

The model, which only provides statewide projections, does not provide an estimate for the death toll in New York City, the epicenter of the COVID-19 crisis in the U.S.

As of Wednesday, the city has accounted for 1,096, or 57.2%, of New York state’s 1,914 deaths.

Meanwhile, at a separate news conference Wednesday, Mayor Bill de Blasio warned that the city is expected to run out of ventilators by Sunday. He said that to handle the surge of victims, New York City will need 2,500 to 3,000 ventilators over the next week and 65,000 hospital beds by the end of April. The city will be retrofitting hotels and large venues to create 39,000 beds.

Cuomo pointed out on Wednesday that New York state will account for roughly 16% of the total deaths in the U.S. based on the modeling from the IHME. The actual figure based on IHME’s specific online numbers is a just pinch higher at 17%.

“I don’t even understand that,” he said. “Since New York is so much higher right now.”

The governor was referring to the disproportionate number of both coronavirus cases and deaths in the state. New York currently accounts for 42.7% of the U.S.’s total 195,929 confirmed cases and for 45% of the country’s 4,310 coronavirus deaths.

“If you believe these numbers, 16,000 deaths in New York, that means you’re going to have tens of thousands of deaths outside of New York,” Cuomo said. “So to the extent people watch their nightly news in Kansas and say ‘well this is a New York problem’, that’s not what these numbers say. It says it’s a New York problem today, tomorrow it’s a Kansas problem and a Texas problem and a New Mexico problem.”

Along with the projections, Cuomo said Wednesday that 7,917 new cases of coronavirus have been confirmed across New York compared to the figures he announced Tuesday, 1,297 new hospitalizations and 391 more deaths.

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Zoom Video lurches from boom to backlash amid privacy issues

For weeks, Zoom Video Communications Inc. basked in the glow of surging shares, enthusiastic research reports and insatiable demand among consumers and enterprises.

But in recent days, the one-time darling of Wall Street and Main Street has faced a backlash from regulators and politicians. Hackers have targeted the video-conferencing service because of its popularity, leading to a warning to consumers from the FBI about so-called “Zoom-Bombing” incidents. And a lawsuit filed Monday in California claims Zoom

ZM, -6.24%

 allegedly gave users’ personal data to Facebook Inc.

FB, -4.32%

 and other outside companies without fully informing customers.

What a difference a week makes.

Shares of Zoom toppled 6% on Wednesday, its third straight day of declines — and the longest such streak since late January. Since March 27, Zoom’s stock has tumbled 10%.

See also: Zoom, Microsoft cloud usage are rocketing during coronavirus pandemic, new data show

Zoom’s rash of problems in some ways parallels those of Facebook: High-flying companies whose popular services have access to mountains of personal information that have made them both high-valued stocks as well as targets of lawmakers and scammers.

Ironically, the COVID-19 pandemic has both helped and now hurt Zoom, brand experts say.

“People who found the ease of Zoom as a new toy may change their opinion in 10 days when all this bad news sinks in,” John Durham, chief executive of Catalyst, a brand-strategy firm that works with tech companies, told MarketWatch in a phone interview. “And today, in this social-media climate, it’s harder to regain trust. Some Zoom customers might shift to known and trusted brands like Microsoft

MSFT, -3.55%

 or Cisco Systems”

CSCO, -2.49%

 for video-conferencing tools, he said.

Indeed, Zoom may find itself in the same position as Facebook, following the 2016 presidential election in particular. A slew of privacy- and data-related problems prompted the company to spend billions of dollars shoring up its security and regaining the trust of customers.

“Two thoughts on the developments we have seen with #Zoom over the past couple of days,” Carolina Milanesi, an analyst at Creative Strategies, tweeted. “It’s clear that changing perception takes much longer is much harder than making your tools Enterprise class. Just look at Google. Security & Privacy are not the same — Zoom must address both.”

“Zoom was caught out in not thinking about some of the exploits people might be using,” Milanesi told MarketWatch in a message.

Case in point: “Zoom Bombing,” in which a hacker essentially hijacks a video conference to post pornographic or hate images. There have been reports of trolls breaking into AA meetings and taunting recovering alcoholics, and of a virtual meeting of black students at the University of Texas being interrupted with racist slurs. The FBI’s Boston office on Monday advised users not to make Zoom meetings public or share links to the video conference on social media.

“The millions of Americans now unexpectedly attending school, celebrating birthdays, seeking medical help, and sharing evening drinks with friends over Zoom during the coronavirus pandemic should not have to add privacy and cybersecurity fears to their ever-growing list of worries,” Sen. Richard Blumenthal, D-Conn., wrote in a letter to Zoom CEO Eric Yuan on Tuesday. “Zoom has a troubling history of software design practices and security lapses that have posed significant risks to the privacy and safety of its users.”

The data-sharing lawsuit, on the heels of New York Attorney General Letitia James’ look into Zoom’s security practices, underscores the myriad issues facing Zoom. And, like Facebook, it is attempting to respond quickly and minimize the damage to its brand. (Zoom did not respond to an email seeking comment on Wednesday.)

Shortly after details over its data-sharing practices surfaced in a Vice Media report, Zoom officials acknowledged its data sharing in blog posts and said they had changed those practices. “Our customers’ privacy is incredibly important to us, and therefore we decided to remove the Facebook SDK [Software Development Kit] in our [Apple-based] client and have reconfigured the feature so that users will still be able to log in with Facebook via their browser,” Yuan said in a March 27 blog post.

Separately, a Zoom spokesperson said company officials would fully comply with James’ request for specifics on how the company will safeguard users’ data. The AG’s inquiry came after a Consumer Reports investigation that found Zoom — while outlining in its privacy policy that it collects personal information about its users — failed to disclose details about how that information is used for advertising, marketing or other business purposes.

“There is a huge shift in how we are using these tools,” Bill Fitzgerald, a Consumer Reports privacy researcher, told MarketWatch in a phone interview. “A month ago, most people had never heard of Zoom. They may have heard of Skype or Google Hangouts. But shelter-in-place policies changed that.”

Zoom has been among the biggest beneficiaries of the novel coronavirus outbreak, which has forced millions of Americans to work remotely. The company’s daily active users have catapulted 378% year-over-year, as of March 22, according to market researcher Apptopia.

Gains had been most pronounced on Wall Street. While the S&P 500 index

SPX, -4.41%

 has plunged 27% since its record high Feb. 19, Zoom stock has improved 32% since then because investors are betting Zoom will become a corporate and consumer staple after COVID-19 dissipates.

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‘Would you risk your life for a jar of marmalade?’ My coronavirus survival guide to navigating grocery stores safely

NEW YORK — It’s not always easy to ask for help.

One of my best friends in New York is self-quarantining. She is smart, extremely well-read and makes me laugh. We read long-form articles together and, afterwards, we discuss them over tea. We don’t always agree, which we like, but we do agree most of the time, and we’re OK with that, too.

My friend remembers the AIDS crisis of the 1980s and 1990s, and witnessed people get up from a park bench if they thought a sick person sat next to them. She did not even get around to telling me about the many polio epidemics. Perspective is good: THIS IS NOT THE FIRST PANDEMIC. (That’s Point No. 1).

We take tap-dancing classes together (her idea). At least, we did until the social-distancing policies prescribed by public health officials came into effect. On Monday, we each vowed to practice 15 dance steps. That’s more “dig, brush, toe, heel, paddle and roll, paradiddle!” for me.

It’s good to be cautious, but it makes sense to be careful and take your time.

She listens carefully, tells me exactly how she feels, and remains open to changing her mind. I learn from her. Before tap-dancing class, she asks me, “So, Quentin, what color is your tutu today?” I usually describe the most ridiculous-sounding tutu. “Pink,” I say, “with yellow ruffles.”

My friend is 95, and she is now blind. Mostly, I feel grateful that we are both here at the same time, and that our paths crossed. She is one of my favorite people on the planet. She grew up in an Irish community in Massachusetts. I grew up in Dublin. She calls me “lace-curtain Irish.”

She needed a couple of weeks’ worth of groceries. That is how I found myself with another Irishman — who moved to the U.S. 30 years before I did — at the Fairway Market on Broadway and 74th Street on Monday afternoon, with a shopping list in one hand and a grocery cart in the other.

We’d been asked to help buy our friend groceries, so we joined forces. I didn’t like him usurping my place as Sir Edmund Hillary on this potentially hazardous expedition. (Nor did I want to be Francis Crozier to his Sir John Franklin.) But it’s a lot for one person to carry the load. We made a good team.

I wore a balaclava I’d bought for a New Year’s Eve midnight run in Central Park.

“If we get coronavirus, a grocery store is where we’ll get it!” I said, surveying the food aisles. He looked at me like I was about to rob a store, not shop in one. “What’s wrong?” I said. I was wearing a balaclava I’d bought for a New Year’s Eve midnight run in Central Park. He tried to muffle a laugh.

“Would you risk your life for a jar of marmalade?” I asked. He turned his head, as if to roll his eyes up to heaven, but then appeared to think better of it midroll. I presumed he was about to say, “You’re completely overreacting.” But he’s a gem, so he did a diplomatic 360-degree head roll, instead.

As for wearing a D.I.Y. mask, I could be wrong, I could be right, as the former Johnny Rotten sang. There are conflicting messages on whether a face mask other than the scarcely available medical-grade N95 helps. With so many people milling about, I decided to err on the side of caution.

Research has concluded that masks have helped reduce contagion by reducing droplets being sprayed into the air during flu season; and infectious-disease specialist Anthony Fauci has said the White House’s coronavirus task force is considering giving the public the green light to wear them.

N95 medical-grade masks help filter viruses larger than 0.1 micrometers.

N95 masks filter viruses larger than 0.1 micrometers (a micrometer, um, is one millionth of a meter). The coronavirus is 0.125 micrometer. Still, I would not wear an N95. They’re needed elsewhere. And if I am asymptomatic? If I can avoid passing on one droplet while reaching for the chicken giblets, I will.

Proponents of face masks also point to countries in East and Southeast Asia, including South Korea and Taiwan, which appear to have slowed the spread of the coronavirus more effectively than the U.S., Spain and Italy have. But they also have other safety measures, including early testing, in place.

I wore gloves because studies have found that shopping carts are traditionally covered in all kinds of germs, just like subway poles and turnstiles, or anything else that lots of people touch on a regular basis. I constantly lose my gloves, alas. But I have adopted a wartime thrift: I wear odd pairs with pride.

I did not bring alcohol wipes. Next time, I will at least bring Clorox

CLX, +2.05%

wipes in a Ziploc bag. I tell myself every 15 minutes to wash my hands as soon as I get home both before and after I put the groceries away. “When you get home, Quentin, WASH YOUR HANDS.” (Point No. 2.)

Shopping carts are covered in all kinds of germs, just like subway poles.

Here’s the other reason I wore a ridiculous balaclava: It’s not comfortable, it reminds me that we’re dealing with a serious health emergency, it covers almost my entire head, and — here’s the science bit — I am constantly reminded: DO NOT TOUCH YOUR FACE. (That’s No. 3.)

If you take anything away from this, rather than becoming embroiled in a heated debate on face masks, take that. Coronavirus can survive longer on a solid surface than on a pair of gloves, but it can live for a time on different surfaces, so I try to be aware that it could be on my gloves, too.

Growing up in Ireland in the 1980s during the Troubles, and living in London during the 1990s, swanning around in a balaclava would have been a risky proposition, especially with an Irish accent. But during the 2020 coronavirus pandemic with my now transoceanic twang, I think I’ll be OK.

As an editor, I play devil’s advocate with my writers, push back and ask questions. It helps to be a little paranoid. I’m putting a life skill to good use. The coronavirus pandemic is a time when germaphobes (check), quirky paranoid types (check) and workaholics (check) come into their own.

I took my time, and I stayed 6 feet away from others whenever possible.

But here’s the other thing I learned during My Day at the Supermarket: Shopping can be stressful under these conditions. It’s good to be a cautious — and a smart — shopper. I usually want to get in and out in double-quick time, but I decided to be careful and take my time.

What’s more, I enjoyed it. Everything I could have done to minimize my chances of picking up COVID-19, I did. I stayed 6 feet away from others, whenever possible, including my shopping partner. We did not go at rush hour. I talked to staff and other customers.

Everyone is freaked out. Friendly banter puts me and, I hope, others at ease. A nice woman recommended the London broil. I read peer-reviewed studies — not Facebook

FB, -4.14%

 posts. I choose caremongering over scaremongering because FEAR IS NOT YOUR FRIEND. (Point No. 4.)

There is no evidence linking coronavirus transmission with food or food packaging. Juan Dumois, a pediatric infectious-diseases physician at Johns Hopkins All Children’s Hospital in St. Petersburg, Fla., suggests that viruses would survive better on “artificial fibers” such as plastic or polyester.

Viruses survive better on artificial fibers such as plastic, vinyl and polyester.

This, too, might help: Sarah Fortune, a professor who chairs the department of immunology and infectious diseases at the Harvard T.H. Chan School of Public Health, said that while health-care workers might have to worry about their clothes, we should not.

But here’s the deal: If you want to change clothes or wear a mask, do it. TRUST YOUR GUT. (Point No. 5.)

As my self-quarantining friend told me the other day on the phone, “Quentin, I’m 95! Do you think I’m scared of coronavirus?” But that doesn’t mean she’s standing in line at the supermarket, either.

If you are concerned about going to the grocery store, imagine what it’s like for those who work there. I told every staff member I spoke to at Fairway, “Thank you for working today.” They need to hear that. Customers must be frazzled, and a frazzled customer is often not a gentle or happy customer.

I also got something I couldn’t buy at any store or pharmacy. Getting out of the house for a couple of hours was a great tonic. I didn’t see Yoko Ono rummaging through the vegetables at Fairway — I did see her there once, and I left her to it — but I did meet another friend outside, from 6 feet away.

If you’re nervous about shopping, imagine what it’s like for the staff.

We had two weeks’ worth, maybe more, of groceries — including bottles, cans, six-packs of kitchen roll, liters of milk, jars of this, that and the other — and they were heavy. I walked one block, and we had a few more to go. I spotted an abandoned cart on the street corner. “We’ll return it,” I said. “Later!”

I quickly piled the groceries into the cart and pushed it across four traffic lanes on Broadway. We’re in the middle of a national emergency, after all; if the cops stopped me, I’d simply tell them the truth. Thank you, NYPD, first responders and health professionals, and thank you, Fairway Market.

As I headed down Amsterdam with the speed of a clanking, yet nutritious, bullet, a man ran out of a jewelry store in pursuit of another man. “People are dying, and you try to steal something from my store? You motherf—!” Ah, yes. There are always folks with bigger problems than mine.

It was a good day in Manhattan. To quote that opening line from the postwar film noir, “The Naked City”: “There are 8 million stories in the naked city. This has been one of them.” My 95-year-old friend would have been 23 when that film was released. She, too, has more stories to tell.

This essay is part of a MarketWatch series, ‘Dispatches from a pandemic.’

MarketWatch photo illustration/iStockphoto

Voices from around the world.

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Dow slides more than 600 points as Trump’s warning on coronavirus puts investors on edge

Stocks fell early Wednesday after President Donald Trump warned that a “very, very painful” two weeks lies ahead for the country in face of a rapidly spreading COVID-19 pandemic.

The pandemic has raised fears the world’s largest economy is experiencing an unprecedented disruption to industries, small businesses and households, after leaving U.S. equities with their worst quarterly performance since 2008 in the first quarter.

What are major indexes doing?

The Dow Jones Industrial Average

DJIA, -3.14%

  fell 674 points, or 3.1%, to 21,243. The S&P

SPX, -3.29%

 slipped 84 points, or 3.2%, to 2,501. The Nasdaq Composite

COMP, -2.82%

  shed 199 points, or 2.6%, to 7,501.

Stocks ended lower on Tuesday, capping a quarter that saw stocks tumble from February records into a bear market at record speed. The Dow logged a 23.2% quarterly fall, its biggest first-quarter drop on record and biggest quarterly decline since 1987. The S&P 500 fell 20% for its biggest quarterly selloff since the final three months of 2008. The Nasdaq Composite fell 14.2% for the quarter.

Read: Here’s how the stock market tends to perform after brutal quarters

What’s driving the market?

A continued rise in COVID-19 cases in the U.S. and around the world weighed on equities, with Trump warning late Tuesday that a “very, very painful” two weeks lies ahead for the country. The White House released new projections for 100,000 to 240,000 deaths in the U.S. from the coronavirus pandemic even if current social distancing guidelines are maintained.

See: Dow faces crucial April test as coronavirus pandemic brings ‘blizzard of bad news’

The number of COVID-19 cases world-wide rose to 862,234 on Wednesday, while the number of deaths rose to 42,404 according to data from Johns Hopkins Unviversity. The U.S. has the most number of cases world-wide, at 189,633, and 4,081 deaths.

“The grim situation world-wide makes it inevitable that major economies will suffer a severe downturn and the prospect of a prolonged period of business shutdowns is likely to weigh on equity markets for at least the next few weeks, if not months,” said Raffi Boyadjian, senior investment analyst at XM, in a note.

The U.S. labor market saw growing cracks as businesses curtailed hiring and shed workers. Automatic Data Processing reported the U.S. economy lost 27,000 private-sector jobs in March, though the data is expected to be of little use in predicting the official unemployment numbers due on Friday due to distortions created by the pandemic.

In other U.S. data published Wedneday, the IHS Markit final U.S. March manufacturing PMI fell to 48.5 from initial 49.2. A reading of the index below 50 indicates contraction in activity.

The Institute for Supply Management’s March U.S. manufacturing index is due at 10 a.m. Eastern is expected to fall to 44% from 50.1% in February. A reading below 50 indicates a contraction in activity.

Meanwhile, expectations are growing for another round of fiscal stimulus following the passage last week of a $2 trillion relief package.

As Washington considers other steps for responding to the coronavirus pandemic and the resulting economic damage, Trump and House Speaker Nancy Pelosi both have suggested a “Phase 4” package could include spending on infrastructure.

Which companies were in focus?


XRX, -4.22%

  dropped its $35 billion hostile bid for HP Inc.

HPQ, -8.09%

 , saying it was prioritizing its response to the outbreak over all other considerations. The company’s shares were down more than 2%.

Shares of T-Mobile US Inc.

TMUS, -0.04%

  were up slightly after the network provider officially closed its merger with Sprint.

Whiting Petroleum

WLL, -43.32%

filed for bankruptcy and said it had agreed with some of its debtholders to pursue a financial restructuring. Under the proposed terms, it would hand 97% of any new equity to its bondholders. Low crude prices have put oil companies under pressure, raising the likelihood that the U.S. energy sector will see a spate of defaults.

How did other markets trade?

Government bond yields extended their drop, with the yield on the 10-year U.S. Treasury

TMUBMUSD10Y, -10.33%

 tumbling 10 basis points to 0.602%.

Oil prices traded near depressed levels, with the price of a barrel of West Texas Intermediate crude oil

CLK20, -0.88%

  for May delivery was virtually flat at $20.47 a barrel on the New York Mercantile Exchange. In precious metals, gold

GCJ20, -0.42%

  for June delivery fell $6.80, or 0.4%, to trade at $1,576.60 an ounce on Comex.

The U.S. dollar

DXY, +0.54%

  rose 0.6% against a basket of its major trading partners, according to the ICE U.S. Dollar index.

European stocks traded sharply lower, with the STOXX Europe 600 index

SXXP, -2.77%

  down more than 3.2%. In Asia overnight, stocks reported similar losses. The China CSI 300

000300, -0.30%

 was down 0.3%, and Japan’s Nikkei 225

NIK, -4.50%

  booked a 4.5% decline on Wednesday.

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