|Bid||72.06 x 0|
|Ask||72.10 x 0|
|Day's Range||71.73 - 75.18|
|52 Week Range||55.76 - 106.51|
|Beta (5Y Monthly)||1.19|
|PE Ratio (TTM)||8.23|
|Forward Dividend & Yield||4.24 (5.89%)|
|Ex-Dividend Date||Apr 29, 2020|
|1y Target Est||N/A|
Many Canadian small businesses reeling from losses due to the coronavirus outbreak may be ineligible for federal government and bank aid designed to help them survive, industry experts say, with several already shuttered or rapidly running out of cash. The measures https://bit.ly/3e3A55Y include a number of government-backed loan options for small businesses, and a three-month 75% wage subsidy for all qualifying firms, regardless of size, as well as higher credit lines and payment deferrals from lenders. Small businesses are defined as having fewer than 100 employees, and account for 97.9% of all Canadian firms.
(Bloomberg Opinion) -- Aluminum isn’t the worst-performing base metal this year, an honor that goes to copper. Yet that’s only because it had less far to fall: Demand was ailing well before the coronavirus forced some three billion people to stay home. Add the near-total shutdown of the world’s auto and aviation industry, crunching more than a third of demand, and the lightweight metal is fast heading for levels last seen during the global financial crisis. That should translate into some of the mining industry’s deepest cuts as the pandemic forces producers such as Alcoa Corp. and Rio Tinto Group to take long-overdue decisions.Aluminum is a serial underperformer, having racked up the biggest real losses for any base metal since 1913, according to Bloomberg Intelligence. Demand has slowed for a decade, and a surplus was expected this year even before the current crisis. Prices have declined for eight consecutive weeks to below $1,500 per metric ton. That’s made most of the world’s production unprofitable.The metal has never been good at responding fast to a changing market. That’s partly because it’s inexpensive to mine the raw material bauxite. At the same time, smelters that produce aluminum metal from its oxide are slow and expensive owing to fixed costs such as power. As a result, the industry is still working through the stockpile accumulated during the last crisis. In this context, it’s less surprising that China’s aluminum production increased in the first two months of the year.The scale and speed of the demand drop caused by the coronavirus will test the industry’s elasticity. Aircraft makers are pondering production cuts, while automakers have shut down from Japan to Germany. The premium paid by Japanese buyers over the London Metal Exchange price is at its lowest in over three years. Car sales in locked-down economies have dropped by around 80%. Other sources of demand, like machinery, have been little better. While shoppers have hoarded canned food, this accounts for a small fraction of aluminum usage.Analysts at BMO LLC estimated late last month that worldwide primary aluminum demand could fall 6% in 2020 from a year earlier — similar to 2008, but larger in absolute volume terms. That’s not the steepest estimate out there, yet they suggest it already entails an unsustainable surplus of 4.2 million tons, roughly 5% of global demand. Aluminum giants cut back during the global financial crisis, and a few years later in 2015, when cheap Chinese metal flooded the market. China won’t help much to soften the blow this year, even when the full extent of Beijing’s stimulus plan is unveiled. In 2009, when consumption dropped 17% outside China, it rose 15% inside the country, according to a Boston Consulting Group report. This time, even Chinese appetite could take years to recover fully.There are some welcome signs of realism. Norsk Hydro ASA said last week it would postpone the restart of its Husnes plant. Analysts at CRU Group estimate some 365,000 tons of Chinese capacity has already been taken out. More should be on the way, even if low-cost production from the likes of China Hongqiao Group Ltd. is spared: Russian giant United Co. Rusal estimated in mid-March that at prices below 13,000 yuan ($1,830) per metric ton, more than a quarter of China’s smelters, equivalent to 10 million tons of annual capacity, were losing money. Less environmentally friendly operations will suffer disproportionately.Rio Tinto, meanwhile, had already been reviewing its Tiwai Point smelter in New Zealand and its ISAL smelter in Iceland, and now needs to think hard about the capital allocated to its least profitable division.All of those cuts and more will be needed, especially if demand weakness lingers. BMO forecasts 4.2 million tons per year of idled capacity by the third quarter, rising to 10 million tons by 2025. There are plenty of unknowns, from how long the downturn lasts to the level of demand from traders seeking to bet on stronger markets down the road. For now, absent a significant reduction to supply, it’s hard to see anything but a dim future.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- U.S. stock index futures fell, erasing part of Thursday’s rally, as global coronavirus infections continued to increase.S&P 500 Index futures expiring in June slid 0.9% as of 9:30 a.m. in London, after gaining 2.8% on Thursday. Contracts dropped 0.9% on the Nasdaq 100 Index and fell 1.1% on the Dow Jones Industrial Average. Global coronavirus infections surpassed 1 million, a milestone reached just four months after the first cases surfaced in China.In Europe, the Stoxx 600 Index was down 0.5%, weighed down by insurers and telecom shares. The euro-area economy is in a slump of unprecedented scale, with IHS Markit saying Friday its monthly measure of services and manufacturing points to an annualized economic contraction of about 10%.“Sentiment in the market is still very fearful,” said Dan Russo, chief market strategist at Chaikin Analytics. “The longer it takes to flatten the curve, the more prolonged the negative economic impact is likely to be, the longer it takes for businesses to get up and running again. Our base case remains that we are likely to retest the lows from last Monday.”The underlying S&P 500 advanced 2.3% on Thursday, climbing for the first time in three days, with Chevron Corp and Exxon Mobil Corp. among the top gainers, after President Donald Trump said Russia and Saudi Arabia would cut production. Oil prices slid back below $25 a barrel after a record surge as doubts crept in about the deal.Consumer discretionary stocks weighed on the benchmark after jobless claims doubled from last week to 6.6 million. As states shut down commerce to prevent the virus from spreading, the weekly claims data have been among the first detailed figures to show the devastating economic hit.“It’s pretty sobering in the sense of the impact it is having on so many people’s lives,” said Mike Stritch, chief investment officer for BMO Wealth Management. “Economically speaking it’s a big number. It’s an indicator of how much damage is being done in real time.(Updates with futures move, European shares.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Canada's financial system has the capacity to respond to further stresses and the regulator will continue to assess if additional changes to banks' capital buffers are needed, the Office of the Superintendent of Financial Institutions (OSFI) said on Wednesday. OSFI reduced the domestic stability buffer for banks in March to free up C$300 billion ($211.3 billion) of additional lending capacity. While banks can treat loans subject to six-month payment deferrals as performing loans, they must meet higher capital requirements if they become non-performing beyond that period, OSFI officials said on a media call.
Bank of Montreal doesn't believe divesting from the fossil fuel industry is a productive solution to climate concerns and collapsing energy prices, and is working with oil and gas clients on a case-by-case basis, its chief executive said on Tuesday. "We have the particular, almost idiosyncratic, confluence of supply shock and demand shock at the same time, which has impacted the commodity price," BMO CEO Darryl White said during the bank's annual shareholder meeting, which was held with a virtual format due to the coronavirus outbreak.
Fund management executives around the world are grappling with working at a distance from their colleagues — but Kristi Mitchem has had a head start. Since taking the reins at BMO Global Asset Management, the C$355bn ($251bn) asset management arm of Canada’s BMO, a year ago, Ms Mitchem has been based in San Francisco, a city nearly 3,000 miles away from her group’s Toronto headquarters.
(Bloomberg Opinion) -- If there were ever a time for bond traders to be fearful of out-of-control U.S. deficits, it would have been Wednesday.After all, the Trump administration and congressional leaders agreed overnight to an unprecedented $2 trillion stimulus package to help mitigate some of the economic damage caused by the coronavirus outbreak. No one is asking “how will we pay for it?” The answer is obvious: piling on to the $23.5 trillion national debt. Barclays Plc strategists Anshul Pradhan and Andres Mok were among the first to put hard estimates to the expected surge in sales of U.S. Treasuries, and the figures are as staggering as expected. The Treasury Department will have a $2.6 trillion financing need in 2020, they wrote, and about half of that will likely be covered by short-term T-bills. The net issuance of longer-term notes and bonds will rise to $1.35 trillion this year, up from about $1 trillion in 2019, and it’ll grow to $1.8 trillion in 2021. As a reminder, the largest U.S. deficit in modern history was $1.4 trillion in fiscal 2009, which shrank for five of the next six years to as little as $442 billion by 2015. It’s hard to see this gap winnowing anytime soon.And yet, the world’s biggest bond market rallied. Benchmark 10-year and 30-year yields fell by about four basis points, settling into what appear to be their new comfort zones of 0.8% and 1.35%, respectively. A month ago, those levels would have easily represented new record lows. Even five-year notes gained, despite Barclays forecasting that “the bulk of the increase” in new debt would be around that point. A $41 billion auction of the maturity on Wednesday was strong, with the yield lower than the market indicated before the sale. The S&P 500 Index is up, so the Treasury market’s advance could hardly be chalked up to a pure bid for haven assets.So, what’s going on? Exactly what you’d expect when a price-insensitive buyer like the Federal Reserve pledges to buy as much as necessary for the Treasury market to function normally.It’s starting to look as if that “whatever it takes” number is going to be almost as huge as the fiscal stimulus package. “Despite unprecedented U.S. Treasury purchases as part of the Fed’s new QE program, there is little to no risk that the central bank will run out of securities to purchase,” BMO Capital Markets’s Jon Hill wrote Wednesday.BMO agrees with Barclays that much of the deficit spike will be financed with short-term debt. That’s important because the Fed’s policy bars it from owning more than 70% of any single Treasury — soon it will need new ones to buy. “These borrowing needs will eliminate any skepticism that the Fed will be able to source securities to complete their QE purchases as the federal government will always make more USTs,” Hill said.For now, the Fed is adding about $25 billion a day in debt due within 27 months, according to Hill. At its current pace of buying $75 billon or more a day across maturities, the central bank would add a whopping $1.6 trillion to its balance sheet in a month. The previous record for a month was March 2011, at $120 billion.Let those last two lines sink in for a moment. The Fed is on pace to buy Treasuries in an order of magnitude 13 times greater than any other time in its history.I wrote earlier this week about the Fed’s “infinite cash” and how it will be put to the test like never before given the huge increase in debt over the past decade. This is precisely what I meant. The U.S. Treasury market has grown to $17 trillion from less than $5 trillion around this time in 2008. Yes, foreign investors bought bonds, as did Americans in search of safe income. But in times of distress, the central bank has shown it will gobble up much of what the Treasury sells to keep the world’s borrowing benchmarks in line. It’s going back to that tried and true method in a big way to offset any incoming pressure from the federal government’s stimulus bill.“People don’t realize: the Fed will win. The Fed has unlimited bullets,” Rick Rieder, BlackRock Inc.’s global chief investment officer of fixed income, said Wednesday. Bond traders, at least, are getting the picture.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- U.S. stocks led the way on Tuesday in the biggest rally for global equities since the depths of the financial crisis in October 2008, with the MSCI All-Country World Index surging 8.39% in late trading. No one is ready to say the rebound is the start a sustained rally; history shows that in times of crisis, markets experience multiple false starts. So rather than the beginning of the end, it may be more like the end of the beginning.And yet, although stocks have experienced unprecedented volatility in recent weeks, plummeting into the fastest bear market in history, one thing is becoming clear: Investors are optimistic that the earnings power of U.S. companies has only been temporarily impaired. At Monday’s close of 2,237, the S&P 500 Index was trading at 19 times the benchmark’s average earnings per share of $122 over the past decade, according to DataTrek Research. It’s a safe bet that earnings won’t meet that average in 2020 given the steep contractions in the economy being projected, “but markets think we’ll get there in the next year or the year after,” DataTrek co-founder Nicholas Colas wrote in a research note. That’s a tremendous vote of confidence in America, but is it realistic? After the financial crisis, Colas notes that it took just 12 months, or until the first quarter of 2010, for earnings to return to their pre-crisis normalized levels. It took another 18 months for earnings to reach a new highs.The economic data that will trickle out in coming months will surely show a lot of pain and questions of how quickly corporate America can rebound. Some Wall Street firms are predicting the economy will likely contract by 30% or more in the second quarter. But the recent sell-off in markets has happened at double the speed of what we saw during the financial crisis. Given that, is it crazy to think the recovery could come faster? Investors don’t seem to think so. SURVIVAL OF THE FITTEST CORPORATE BONDSA key part of the Federal Reserve’s latest efforts to keep the financial system afloat is to buy corporate bonds. More specifically, the central bank will only buy investment-grade bonds maturing in five years or less, as well as exchange-traded funds that buy such securities. Bonds rated below investment grade, or junk, are out of luck. This has naturally resulted in a clear bifurcation in the corporate bond market between the “haves” and the “have-nots.” The cost to insure investment-grade corporate bonds against default has fallen to about its lowest level in more than two weeks. The cost to do the same with junk bonds is only back to where it was late last week, which is to say at levels that predict an elevated level of defaults on the order of about 10% or so that we saw in the aftermath of the 2008 financial crisis. In some ways, this isn’t a bad thing, as it should finally prod borrowers to clean up their balance sheets and cut their debt, which has hardly been an incentive in recent years. But the gap in yields between investment-grade and junk bonds has blown out to almost 7 percentage points in recent weeks from less than 3 percentage points. THE DOLLAR TAKES A NEEDED BREATHEROf all the moves by the Fed over the last week, perhaps the most underappreciated has been efforts to ease a run on the dollar, stemming a rally that further threatened to upend the global financial system. What the Fed did was provide foreign-exchange swap lines with central banks in both developed and emerging markets, offering dollars in exchange for their currencies. Issuers in developing countries have borrowed trillions of dollar-denominated debt, and the greenback’s rise means it’s much more expensive for them to make interest payments or refinance. The Institute of International Finance estimates that emerging-market borrowers have $8.3 trillion of foreign-currency debt, the bulk of it in dollars, up by more than $4 trillion from a decade ago. The Bloomberg Dollar Spot Index surged 8.44% between March 9 and March 19, but has been little changed since, including dropping as much as 1.51% on Tuesday in what was its biggest intraday decline since February 2016. “Markets are going to start feeling the full tsunami of liquidity the Fed is providing now,” Nathan Sheets, head of macroeconomic research at PGIM Fixed Income, told Bloomberg News.GOLD IS ACTING ODD AGAINFor the most part, markets have behaved as one would expect in times of crisis. Investors fled riskier assets such as equities, commodities and credit, and loaded up on cash, U.S. Treasuries, the dollar, Swiss franc and Japanese yen. The one exception has been gold. The precious metal sold off hard as the coronavirus pandemic spread around the world earlier this month, and in recent days has rebounded even though there have been signs of optimism. This isn’t how gold, known as a haven, is supposed to act. But there are sensible explanations. Gold’s decline from about $1,680 an ounce on March 9 to $1,471 on March 19 was likely the result of selling by finance authorities and central banks, which had loaded up on the precious metal throughout 2019 to raise cash. The rebound over the past three days to $1,623 on Tuesday is harder to explain, but is likely tied to physical trading routes being choked off. At issue is whether there will be enough gold available to deliver against futures contracts, with metals refiners shutting and efforts to contain the virus halting planes, according to Bloomberg News’s Jack Farchy and Justina Vasquez. “This isn’t anything that we’ve seen in a generation because refiners never had to shut down – not in war, not in the great financial crisis, not in natural disasters,” said Tai Wong, the head of metals derivatives trading at BMO Capital Markets. TEA LEAVESThe Mortgage Bankers Association of America releases data on the volume of loans for home purchases and refinancings every Wednesday. And although it would be logical to think that the collapse in Treasury yields, which help determine mortgage rates, would be a boon for homeowners looking to refinance, that hasn’t exactly been the case. Yes, refinancings are up, but so are mortgage rates. The average rate on a 30-year mortgage has jumped to 3.65%, the highest since January, from 3.29% earlier this month, according to Freddie Mac. One reason for this is the disruptions that we have seen in the market for mortgage bonds, which also help set home-loan rates. Yields on those securities have jumped as investors both sell the most-liquid mortgage bonds in an attempt to raise cash and as those bonds backed by riskier borrowers drop on concern for the potential of a spike in consumer defaults. The government is taking steps to alleviate pressures on consumers, but until that happens, mortgage rates are likely to remain elevated relative to what they would normally be.DON’T MISS $25 Trillion of Derivatives Exposure We Can't Cover: Shuli Ren Matt Levine's Money Stuff: Now There’s a Mortgage Crisis Too Fallen Angels Are Coming. Fed Can't Save Them: Brian Chappatta Trump Would Hurt Economy With Restart Effort: Michael R. Strain How a Risk Manager Thinks About Personal Finance: Aaron BrownThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Canadian banks on Tuesday followed U.S. heavyweights in offering one-time bonuses and extra paid days off to customer-service employees who are required to work in branches and call centres amid the coronavirus crisis. Banks have largely been excluded from government-mandated shutdowns in many countries because they are considered an essential industry, meaning most bank branches, call centers, and trading floors have stayed open even as many firms send their employees home. Canadian Imperial Bank of Commerce (CIBC) and Bank of Montreal (BMO) said they would pay C$50 per day to employees.
(Bloomberg) -- South Africa’s iconic mines, from the ever-deepening gold shafts on which the economy was founded to massive iron ore pits and rich platinum seams, are about to go silent.From midnight Thursday, all but a few coal operations needed to fuel the country’s power stations are expected to be included in a nationwide lockdown aimed at containing the coronavirus. The sweeping shutdown is unprecedented in the 150-year history of South Africa’s mining industry, which today employs more than 450,000 people.President Cyril Ramaphosa is moving quickly to curb the virus spread as infections threaten to spiral out of control in a country with an already strained health system and rampant unemployment. The army will help police to enforce the lockdown, with grocers, pharmacies, banks, filling stations and other essential services allowed to remain open.Producers from Harmony Gold Mining Co., the nation’s biggest producer of the precious metal, to top platinum miner Sibanye Stillwater Ltd. said they’re bracing for earnings hits as mines move to care and maintenance, an industry term for when production stops but essential services like underground water pumping continue. Anglo American Plc said it will review the detailed regulations on the lockdown when they’re published, including for potential exemptions.“This would be unprecedented in the history of mining in South Africa,” said Roger Baxter, the chief executive officer of the Minerals Council South Africa, the main industry group. “There were certain times when components of the industry were closed, for example during the second world war, but this is unprecedented.”Labor IntensiveSouth Africa’s mining industry is labor intensive, and digging underground means workers regularly enter narrow elevators together to travel beneath the surface. Many of the thousands of workers who will be affected by the shutdown live in close proximity to one another in mining communities around the operations.“Companies whose operations require continuous processes such as furnaces, underground mine operations will be required to make arrangements for care and maintenance to avoid damage to their continuous operations,” Ramaphosa said Monday.For global metal markets, the biggest impact may be in platinum and palladium -- South Africa accounts for 75% and 38% respectively of global supply. Prices for both metals, which are used in autocatalysts, extended gains Tuesday, with spot palladium rising more than 15%, the biggest intraday gain since 1998. Shares in MMC Norilsk Nickel PJSC, the world’s top producer of palladium, jumped as much as 23%.Palladium was in a persistent and widening global deficit before the health crisis took hold around the world. Still, sweeping factory closures by carmakers are likely to limit the effect of South Africa’s shut down on global metal supplies as demand tumbles.South African operations are also crucial for some of the world’s biggest miners. Anglo American was projected to get about 50% of its profits from the country this year, according to BMO Capital Markets. Glencore Plc and South32 Ltd. are also active in the country, while smaller miners such as Petra Diamonds Ltd. and Bushveld Minerals Ltd. have the majority of their operations there.The two biggest industry labor groups, the Association of Mineworkers and Construction Union and National Union of Mineworkers, both welcomed the measures announced by Ramaphosa.The Minerals Council is also exploring what will be required to prevent the lockdown leading to permanent damage of the industry, it said in a statement.“There are marginal and lossmaking mines that would likely be unable to reopen should they be required to close fully, without remedial measures,” the group said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Lockdowns imposed to control the coronavirus have battered China’s appetite for everything from coal to copper, pushing stockpiles of raw materials higher and global prices lower. The next crunch could come from supply. The risk of an outbreak is growing in ill-prepared producer countries, with mandatory quarantines and border shutdowns threatening to choke off production.Prices of bulk commodities are already seeing some support from such disruptions, as ports and mines close. Coking coal in particular has outperformed owing in part to Mongolia’s decision in late January to seal its border with China, which cut off a key source of supply. The impact may be only short term. With factory shutdowns spreading through the U.S. and Europe, the reduction in wider metals supply would need to be dramatic to offset crumbling global demand. Upheaval could provide some price support regardless.Appetite for virtually all commodities has slumped since January, when the extent of damage from the novel coronavirus became clear. Even where mills, smelters and factories stayed open, that largely translated into crammed warehouses. China’s industrial production, investment and retail sales for the first two months of the year plunged across the board, with construction particularly weak. China’s economy is now all but certain to contract in the first quarter from a year earlier.With European automakers and other manufacturers shuttering operations, the drop in commodity demand in the first three months is likely to be even worse than during the global financial crisis. Steel demand will fall more than a fifth, copper will slide 14% and aluminum almost a third, analysts at BMO Capital Markets estimate.It hasn’t helped futures prices that the latest wave of closures is coming as we head into the second quarter, usually a peak period for demand. China, by contrast, was worse hit during the quieter Lunar New Year. Copper, a bellwether of confidence in global manufacturing, has tumbled to four-year lows of around $4,800 per metric ton on the London Metal Exchange.Travel and quarantine restrictions have already damaged supply, making it harder for miners to fly employees in and out and impeding projects under construction. Peru’s quarantine has already prompted Anglo American Plc to stop all nonessential work at its $5 billion Quellaveco project and withdraw most of the site’s 10,000 staff and contractors. Canada’s Teck Resources Ltd. has suspended work at its Quebrada Blanca Phase 2 in Chile, while Rio Tinto Group says work has slowed on its underground mine at Oyu Tolgoi in Mongolia.Lockdowns may be even more severe. Copper mines are among the worst affected as Chile and Peru, the world’s top two producers, scramble to contain the virus, prompting Anglo American, Antofagasta and others to send staff home. Chilean state behemoth Codelco will work at reduced capacity for two weeks, while workers at BHP Group’s Escondida, the world’s largest copper mine, threatened action to compel the company to take more preventative steps. The miner said Saturday it would reduce the number of contractors onsite. Analysts at Bank of Nova Scotia estimate a two-week halt in operations in those two countries would amount to 325,000 tons of lost production — roughly 4% of their combined annual output. This serves to underline the geographical concentration of a handful of key materials. Lithium is produced mainly in Chile and Australia, while iron-ore exports are dominated by Australia and Brazil. The price surge after last year’s Vale SA dam disaster shows what a port closure could do to the iron-ore market, though such a move appears unlikely given the huge budget contribution that the material makes to Brazil and Australia.Many producer countries are developing economies and ill-equipped to handle an epidemic that has floored even the world’s richest nations. In Brazil, the response has been patchy at best, with some states taking measures that are increasingly at odds with the federal government. Poorly implemented lockdowns, as seen in the Philippines, could push thousands of casual workers out of cities in search of work in more remote areas — potentially extending the spread.If more drawbridges are raised, expect supplies from explosives and tires to heavy equipment to get blocked, hampering even mining operations that could otherwise keep going. In the meantime, low prices will hurt some higher-cost projects, though rock-bottom prices for oil, a significant input, will cushion the blow. This will affect smaller producers first, given the healthy balance sheets of big miners. Still, operations like Rio’s Pacific Aluminium, or pricey U.S. copper mines, look vulnerable.Demand was the first part of an unprecedented crunch for the global commodities industry. The second act is only beginning. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- China will see the slowest growth this year in more than 40 years according to economists, who have drastically slashed their forecasts for the economy after an across-the-board slump in activity in the first two months of the year.The economy will grow 2.9% this year, according to the median of 17 forecasts over the last week. That is the lowest since a contraction in 1976 - the final year of the Cultural Revolution which wrecked the economy and society, and the year Mao Zedong died.Data out last Monday showed an across-the-board slump in manufacturing, retail sales and investment in January and February, with all the numbers hitting historic lows. The coronavirus and the measures taken to contain it shut down economic activity for much of February, and now the outlook is worsening as other countries follow China with quarantines and lockdowns.At least 17 banks or analysts have revised down their forecasts since the data were released. The median of those new forecasts is for the economy to shrink 6% in the first quarter from the same period a year ago. There’s never been such a contraction since comparable data began in 1990.Read more: China’s Economy Suffers Historic Slump Due to Virus ShutdownA possible recovery later this year will largely depend on the pace of work resumption and policy makers’ efforts to stimulate the economy, economists say. That process might be hindered by the spread of the coronavirus worldwide, as global supply chains will likely be disrupted and external demand may shrink.Economist Forecasts(Updates median estimates, and adds CICC, Barclays and Credit Suisse forecasts.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The way the global government bond market is acting, it looks as if the highly controversial Modern Monetary Theory is about to be put to the test. In essence, the theory suggests that countries with their own central banks need not worry about budget deficits and spending to spur economic growth because those central banks could just buy whatever debt the government issues. What makes MMT relevant now is that despite continuing jitters over the global financial system and another plunge in equities on Wednesday, government bonds from the U.S. to Germany, and from Italy to Australia, tumbled, sending their long-term yields soaring and causing yield curves to widen. This is hardly the reaction that would be expected in a “risk off” environment when the safest assets such as government debt should be in demand. Some might argue that the bond market is just discounting the possibility of runway inflation once the economy recovers because of all the fiscal stimulus programs — including ones that may total close to $2 trillion in the U.S. alone — that will need to be financed with debt. But so-called breakeven rates on bonds have held steady, or even declined, suggesting traders see no inflation on the horizon. That leaves worries about who will buy all the debt that will be issued. It’s hard to know how much is coming, but “Bond King” Jeffrey Gundlach said Tuesday in a webcast that the U.S. budget deficit may triple to $3 trillion. That’s a scary thought for bond traders in a country whose debt has already ballooned to $23.4 trillion from less than $10 trillion before the 2008-2009 financial crisis.This is not just a U.S. problem. Globally, debt surged to a record $253 trillion at the end of the third quarter, or 322% of worldwide gross domestic product, which is also an all-time high, according to the latest data from the Institute of International Finance. “The combination of ballooning Treasury issuance needs and the eventual return of inflationary ambitions bode well for the longevity of the move” higher in yields, the top-ranked rates strategists at BMO Capital Markets wrote in a research note Wednesday. Yes, yields are still low on an absolute basis, but history shows that can change quickly. Anyone remember the late 1970s?GET ME OUTTA HERE!There is another plausible theory for what is happening in the markets, with the historic volatility and even haven assets such as government bonds selling off along with riskier assets such as stocks. That theory says we are now in the phase of the crisis where investors are selling anything they own that is liquid to meet margin calls. “Risk assets are simply being liquidated globally as overvaluation and leverage do what they always do: force participants to generate cash,” the strategists at Cantor Fitzgerald wrote in a research note. “If you are levered long in an equity position and that equity position loses value, you must liquidate other assets in order to generate cash to satisfy your margin call.” Pretty simple, but it’s one of those things that nobody in markets can accurately predict will end given the lack of data. The synchronized drop across major assets is not something that’s supposed to happen, and is a threat to classic diversification strategies, as Bloomberg News’s Sam Potter notes.DOLLAR DANGEROne thing that’s not falling is the dollar, which is concerning. The Bloomberg Dollar Spot Index reached a record high Wednesday, having risen about 7.5% since March 9. The last time the gauge experienced such a swift move higher was during the height of the financial crisis in late 2008, showing the extent of the dash for dollars globally. Of course, the rising dollar does U.S. exporters no favors, but the real problem is in emerging markets. Issuers in developing countries have borrowed trillions of dollar-denominated debt, and the greenback’s rise means it’s much more expensive for them to make interest payments or refinance. The Institute of International Finance estimates that emerging-market borrowers have $8.3 trillion of foreign-currency debt, most of it in dollars, up by more than $4 trillion from a decade ago. Cumulative investment outflows from emerging markets since January “have surpassed the levels observed at the peak of the global financial crisis and are an order of magnitude larger relative to the size of the global economy” than prior periods of stress, the IIF says. “Based on these past global shocks, we can expect reserve losses and substantial current account adjustment across EM as financing dries up.” It’s no wonder the Bloomberg Barclays Emerging Markets Hard Currency Aggregate Index is down about 10% this month, compared with 2.89% for the global bond market overall.OIL’S VIRTUAL STIMULUSThe price of oil cratered again on Wednesday, with West Texas Intermediate falling as much as $6.89, or 25.6%, to $20.06 a barrel. It’s now down 66.5% since early January. The latest leg lower came as Saudi Arabia vowed to keep producing at a record “over the coming months,” doubling down on its price war with Russia. On the downside, these low oil prices are putting tremendous pressure on frackers and other drillers, whose business models depend on much higher prices. This is one reason the junk bond market is so weak, as many of these companies have issued tens of billions of dollars in debt to fund their operations. On the upside, the low oil prices are a boon to energy users. But like so much in markets these days, even the upside has a downside. Airlines should benefit but can’t as they ground planes while travelers cancel their plans. JetBlue Airways Corp.’s average daily sales have plummeted 82% this month. Also, regular-grade gasoline prices as measured by the Automobile Association of America have fallen to $2.217 a gallon from this year’s high of $2.600 in early January. Citigroup’s economists estimated in a research note that lower gasoline prices may add as much as $125 billion in extra disposable income to consumer wallets. But with the spreading coronavirus keeping Americans close to home, such a potential boon looks more like a lost opportunity.TEA LEAVESIn normal times, the weekly report on jobless claims put out by the U.S. Labor Departments merits little more than a footnote. But these are clearly not normal times, and the next report due Thursday is likely to get much more attention than usual as it will provide the first real-time reading on how the spreading coronavirus is impacting the economy. Economists have no idea what to expect, which is why the median estimate in a Bloomberg News survey is for a reading of 220,000 for the period ended March 14, up only slightly from 211,000 last week. Anecdotal evidence suggests the number could be much higher. In Connecticut, about 30,000 claims have been filed since Friday, about 10 times the average weekly total, according to Bloomberg News’s Reade Pickert, citing the Hartford Courant. Ohio received more than 48,000 applications the past two days, compared with just less than 2,000 for the same period the week before, Columbus television station WBNS reported Tuesday. New York had an “unprecedented” increase in phone calls and web traffic for unemployment insurance claims and advertised on Twitter more than 50 job positions for immediate hire in the last 24 hours to help process the huge inflow of claims, Pickert reports.DON’T MISS Stocks Are Not Yet a Bargain, Even With the Rout: Nir Kaissar Why Are Real U.S. Yields Suddenly So High?: Brian Chappatta Dollar Funding Is Freezing Up, and the Fed Knows It: Shuli Ren Cheap Sterling Has Reasons to Be Cheaper: Marcus Ashworth Worries Ease About Economic Response to Virus: Mohamed El-ErianThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Realtors across Canada are kicking off the busy spring selling season with the unprecedented step of cancelling open houses, moves that could contribute to slower-than-forecast sales in the country's biggest housing markets this year. The coronavirus outbreak, combined with a collapse in oil prices, is fueling recession fears and slowly eroding housing demand in key markets despite the central bank's 100 basis points of rate cuts this month. "Open houses are quickly becoming extinct," said Phil Soper, chief executive of brokerage Royal LePage, although agents are still showing homes to individuals and small groups.
Canada's six largest banks will take new coordinated measures to support social distancing to control the coronavirus pandemic, including temporarily limiting operating hours and cutting the number of branches, the Canadian Bankers Association said. The association said https://cba.ca/banks-in-canada-coordinate-health-response-for-covid-19 on Tuesday many banking services will continue to be available through automated banking machines, mobile apps, bank websites and telephone banking, as businesses rush to shelter employees and customers from the fast-spreading virus. The move comes on a day when Ontario, Canada's most populous province, banned gatherings of more than 50 people and ordered the closure of bars and restaurants in a bid to slow the spread of the coronavirus.
(Bloomberg) -- Canadian policy makers are escalating their efforts to backstop the nation’s financial system and ensure banks have plenty of room to continue lending through the coronavirus crisis.In separate statements on Monday, the federal government and Bank of Canada said they planned to purchase billions of mortgages and mortgage-backed securities to inject liquidity into the financial system.The moves are the latest in a series of measures by financial authorities, the government and the Bank of Canada to ensure global market turmoil doesn’t result in a seizing up of the flow of credit to companies and households.“Policy makers are pulling out all the stops,” Benjamin Reitzes, Canadian rates strategist at Bank of Montreal, said in a note to investors.In a series of notices on Monday, the Ottawa-based central bank said it will start purchasing about C$500 million ($357 million) a week in mortgage bonds and accept a wider set of securities in its term repo operations. The bank will also allow more non-mortgage loans to be used as collateral in a separate overnight facility.Separately, the housing agency of Canada’s government said it will acquire up to C$50 billion of mortgages to provide stable funding to banks.These add to a series of liquidity boosting measures announced last week, including a pledge Friday by the Bank of Canada to acquire securities directly linked to corporate credit lines. The central bank also announced it would be increasing the frequency with which it purchases securities to every week, from every two weeks, and widening the terms to include six-month and 12-month operations.In what may be the most significant change, the country’s banking regulator also said last week it would loosen capital requirements to free up C$300 billion of lending capacity.Here is a list of recent changes:Insured Mortgage Purchase Program -- This is a return of a program the government used during the 2008-2009 financial crisis, with plans now to acquire up to C$50 billion in government insured mortgages through the nation’s housing agencyCanada Mortgage Bonds -- The country’s mortgage fund program lets approved financial institutions pool eligible insured mortgages into marketable securities, guaranteed by the country’s housing agency. The Bank announced today it will target purchases of up to C$500 million per week “as market conditions warrant”Capital Buffers -- The Office of the Superintendent of Financial Institutions lowered the domestic stability buffer for Canada’s key banks to 1% of risk-weighted assets from the 2.25% level set for the end of April. The buffer -- one of four capital requirements for the biggest banks -- will not increase for at least 18 months, the regulator said.Term Repo Operations -- The central bank will accept in its term repo operations the full range of collateral eligible under Standing Liquidity Facility, with the exception of non-mortgage loan portfolios. Last week, the Bank of Canada announced it would extend term repo operations to weekly, instead of every second week, and broaden the maturity of operationsStanding Liquidity Facility -- This is the Bank of Canada’s overnight credit facility for the country’s payment system. Bank of Canada said Monday it will allow a greater percentage of collateral to be in the form of non-mortgage loansBankers Acceptance Purchase Facility -- This facility was announced on Friday for the purchase of securities linked to credit lines of small and medium-sized businesses. The first operation is planned for March 23Bond buyback program -- The bank will expand the scope of a bond buyback program in which it sells newer, more liquid bonds for older issues. These buybacks will now take place at least weekly and go beyond the typical 30-year maturity(Updates with economist quote in fifth paragraph)To contact the reporter on this story: Theophilos Argitis in Ottawa at email@example.comTo contact the editors responsible for this story: Theophilos Argitis at firstname.lastname@example.org, ;Derek Decloet at email@example.com, Stephen Wicary, Erik HertzbergFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- As investors try to make sense of one of the swiftest downward spirals in market history, some of Canada’s biggest money managers are advising clients to hold their nerve.After a wild week, the S&P/TSX Composite index staged a late comeback on Friday after U.S. President Donald Trump and other leaders said they would boost their efforts to help the economy. Trump instructed Energy Secretary Dan Brouillette to buy “large quantities of crude oil” for the U.S. strategic reserves, boosting crude prices.The Bank of Canada cut interest rates by half a percentage point to buffer the nation’s economy, while Finance Minister Bill Morneau also announced moves to help small- and medium-sized businesses get credit.Still, the Canadian benchmark closed a whopping 15% lower at the end of the week -- its biggest weekly drop since 2008 with investors assessing the likelihood of a global recession as the coronavirus pandemic and oil price war pummeled markets. Earlier in the week, it plunged 10% and on Thursday it nosedived 12%. The loonie has weakened about 3% this week against the greenback and government bond yields have flirted with record low levels.Read more: Historic Stock Market Drop Exposes Canada’s Economic Fault LinesSince its Feb. 20 peak, Canada’s stock index has tumbled 24% in three weeks. That’s about twice the 15% slump in the three weeks after Lehman Brothers Holdings Inc. collapsed during the 2008 financial crisis.On Thursday, Bloomberg gathered with three top investors to discuss where we go from here. Around the table were Lesley Marks, chief investment strategist at BMO Private Wealth, which has C$210 billion ($152 billion) of assets; Rob Vanderhooft, chief investment officer of TD Asset Management, which manages C$394 billion; and Kevin McCreadie, CEO and CIO of AGF Management Ltd., who sets the direction for about C$37.4 billion in assets.Here’s a synopsis of the discussion.Market Structure TestFinancial markets are experiencing extreme movements not seen since the 2008 financial crisis. But the structure of the market has changed since then and that’s a factor in the volatility, said Marks.Exchange-traded funds are now an easier way for investors to move money quickly. “Historically, it may have taken a longer period of time to move money in and out of asset classes versus using an ETF,” she said.ETF assets had grown to more than $5 trillion globally this year compared with about $700 billion when the financial crisis first started, according to Bloomberg Intelligence.Program trading may be another reason that activity is frantic in the first and last 30 minutes of any trading day and quieter in between.Vanderhooft at TD said a dramatic drop in liquidity is also contributing to the downturn. “Liquidity is a coward and it disappears at times of market disruptions and that’s certainly what we’re seeing right now.”Either way the market is a different beast, the strategists said.“They are not traditional market makers any longer,” said McCreadie. “I think in this period of volatility, we will see how the market structure has evolved and will it hold up.”Oil And TroubleThe hit to oil prices is compounding the damage from the virus pandemic in Canada, where 15% of the TSX index is made up of energy stocks. The breakup of the OPEC+ alliance led to swift price war on crude, with catastrophic consequence for the oil patch. The country’s benchmark crude, Western Canadian Select, is at $18.74 a barrel.“If you look at the impact on the oil market, it’s very, very negative for Western Canada,” Vanderhooft said. “As bad as $31 WTI is, $20 WCS is a lot worse. A lot of companies that were already teetering will go under.”Smaller producers may have a harder time surviving the current crash in prices than during the 2014 crisis because banks are less inclined to prop them up, added McCreadie.“This time around a lot of these smaller players aren’t going to make it,” he said. “I think you’re going to be dealing with bankruptcies.”Read more: Recession Calls Mount in Canada on Double Hit from Virus and OilThe increased focus on climate change and sustainability may be factoring into banks’ thinking more now, said Marks. “You already had that major headwind without the latest crisis, without a price war, without the situation between the Saudis and the Russians. We think this will just fuel the fire.”Vanderhooft said that his firm has moved to a “more negative position” on the Canadian dollar as a result of the oil-price hit. The loonie hit fresh four-year lows at one point on Thursday.Read more: No Respite Seen for Loonie With Oil War, Pandemic Raging OnCarry OnAll three strategists say the markets will come back. McCreadie and Vanderhooft see the current turmoil as different than 2008.“2008 was a true credit crunch, people didn’t trust each other, banks stopped lending, there was no repo. The world stopped,” McCreadie said, adding there’s unlikely to be “system failure” now.As coronavirus cases start to ebb, as they have in China, that will likely be when the market begins to turn back up, especially if governments get their act together with fiscal stimulus to aid the economy.“We’re not playing this as a multi-year bear market,” he said, though odds of a recession in North America have clearly risen. “I think it could be the pause that resets the cycle.”Marks said BMO hasn’t seen any substantial fear when it comes to asset outflows, with much of the money shifting to bonds from equities. “In conversations with clients, we haven’t seen that sense, that pervasive sense of panicking, that ‘Get me out of the market’ across the board.’”“We will get through this event,” McCreadie said. “We always do.”Next Steps“You talk about fully balanced portfolios, that’s where clients need to be,” said Vanderhooft. “At times of stress like this, you kind of figure out why that’s the case.”McCreadie’s team at AGF will be looking at paring back investments that have generated double-digit returns and add some of its cash back into markets over the next few weeks.Marks said she is standing pat after BMO Private Wealth’s Investment Counsel Business reduced its equity exposure in November. While stocks have become cheaper, the lack of visibility makes it “hard to have conviction to step in,” she said.\--With assistance from Danielle Bochove.To contact the reporters on this story: Jacqueline Thorpe in Toronto at firstname.lastname@example.org;Divya Balji in Toronto at email@example.comTo contact the editors responsible for this story: Derek Decloet at firstname.lastname@example.org;Kyung Bok Cho at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- A rousing rally swept Wall Street in the final hour of a tumultuous week, unwinding almost 90% of the previous day’s historic rout, as President Donald Trump’s plans to buttress America’s medical capacity to combat the coronavirus soothed Wall Street’s frayed nerves.Traders who dreaded a repeat of his Wednesday address and the subsequent 10% sell-off came storming back into stocks, extending a 5% rally when he began to more than 9% by the close. In addition to declaring a national emergency, Trump waived interest on federal student loans, vowed virus tests would be “quickly and conveniently” ready, and directed purchases oil for the strategic reserve.Here’s what investors are saying:Jennifer Ellison, principal at San Francisco-based BOS:“I do think that his tone is a little bit different today, he sounds slightly more presidential and we have word that Mnuchin and Pelosi are talking as well. It’s a combination of the tone changing somewhat. The state of emergency goes to show the government is taking this seriously.”Charlie Smith, founding partner and chief investment officer at Fort Pitt Capital Group in Pittsburgh:“There was concern that the wooden performance he gave Wednesday night would be repeated and there would be a certain amount of consternation as a result. This event has been much better coordinated, better produced, there was a whole lot more firepower and planning going into this speech than the one that happened the other night and I think the markets are recognizing that. Between Google, Walmart and Walgreens up there on the dais with him, he’s obviously lining up some folks, some companies, some capital and some expertise that’s going to be needed to make this thing work. And it sounds like he’s really finally rallied the troops.”Mike Stritch, chief investment officer for BMO Wealth Management:“We had a monster sell-off, so there is probably some exhaustion on the downside so you’re primed for turnaround. It’s another step in the U.S. from a fiscal standpoint, to throw some money behind stabilizing the economy, helping those who need help, that is exactly what the market is looking for some help from the government. They needed some sort of leadership to emerge and an acknowledgment that people were going to react timely and aggressively and we’re starting to see more of that. This looks like a step in the right direction.”Willie Delwiche, an investment strategist at Baird:“Bringing in outside experts, whether it’s medical professionals or business leaders helps convey a sense of seriousness and helps instill confidence on the part of investors. And that’s what’s been missing. The Oval Office comments didn’t leave anybody with confidence. The message is one of moving beyond the politics of it and to the wrapping our arms around the problem and working to solve it.”David Yepez, portfolio manager Exencial Wealth Advisors:“It gives investors a little bit more assurance that the government is taking this problem seriously, that there was a collaboration between the government and other countries. We aren’t there yet, we don’t know what the consequences for companies will be this year, but a little bit of assurance from the government is good.”Max Gokhman, the head of asset allocation for Pacific Life Fund Advisors:“Well remember at first we dropped down 2.3% and then back up to the +9.3% close... I’m a little surprised that the market reaction was so strong. Virtually nothing material that was said was breaking news -- we knew about the drive-through tests, public/private testing partnerships, and the national emergency. One aside, is the student loan interest tax holiday was a smart move ahead of November.”Michael Antonelli, market strategist at Baird:“I’d just amplify that the market has been thirsty for action from policy makers. Serious action. You see major CEOs and a president saying ‘we stand ready.’ Americans know how to mobilize for a war and we’re doing that now.”Nathan Thooft, Manulife Investment Management’s head of global asset allocation: “We need more but I think people expect more is coming. The tone of this conference is definitely more serious which I think is well received. My initial impression as I listen here is there is some detail, which is good news. Expanding testing availability is a positive. The designation of a national emergency was widely expected. Given Pelosi spoke separately early, I think it was pretty obvious that the Trump administration had not yet reached a compromised package on stimulus. So we will still be waiting for that unfortunately.”\--With assistance from Sarah Ponczek.To contact the reporters on this story: Vildana Hajric in New York at firstname.lastname@example.org;Claire Ballentine in New York at email@example.comTo contact the editor responsible for this story: Jeremy Herron at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to […]
In 2013, Jim Cramer and Bob Lang observed that four tech stocks outperformed the overall market (when compared to the S&P 500 Index) that year.Those four stocks-- Facebook, Inc. (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMZN), Netflix Inc. (NASDAQ: NFLX) and Google, now Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL)--made for a tidy acronym: FANG. Throw Apple Inc. (NASDAQ: AAPL) into that group, and you've got FAANG.FANG has gained notoriety in the years since, with the group standing out as one of the key drivers of equity markets. And the popularity of the FANG trade has not stopped, even seven years after the term was coined.An increase in demand for the MicroSectors FANG+ Index -3X Inverse Leveraged ETN (NYSE: FNGD), an inverse exchange-traded note that attempts to deliver three times the inverse daily return of the NYSE FANG+ Index, resulted in the Bank of Montreal increasing the note's aggregate principal amount from $225 million to $325 million in February 2020. It's the sixth such time the note has had to be upsized since inception."Despite a strong tech-led rally to start 2020, we've seen a considerable pullback in the equity markets," said Scott Acheychek, president of REX Shares. "With FNGD, investors now have the opportunity to trade the FANG stocks in bearish market."Alternatively, for bullish traders, the MicroSectors FANG+ Index 3X Leveraged ETN (NYSE: FNGU), is a leveraged exchange-traded note that attempts to deliver three times the daily return of the NYSE FANG+ Index.The NYSE FANG+ Index--an equal-weighted index that includes the FAANG stocks plus Alibaba (NYSE: BABA), Baidu (NASDAQ: BIDU), NVIDIA Corporation (NASDAQ: NVDA), Tesla Motors (NASDAQ: TSLA) and Twitter Inc. (NYSE: TWTR)--has outperformed both the S&P 500® Index (SPX) and Nasdaq-100 (NDX) since September 19, 2014 on a total return basis."Unlike the traditional benchmark technology indices, the NYSE FANG+ Index offers an investment solution focused on direct FAANG exposure," said Acheychek. Source: Bloomberg LPTo learn about how to invest in the NYSE FANG+ Index, please visit www.microsectors.comPlease note that leveraged, inverse and inverse leveraged ETNs seek a return on the underlying index for a single day. Those investments are not "buy and hold" investments, and should not be expected to provide the respective return of the underlying index's cumulative return for periods greater than a day. The investments are intended to be daily trading tools for sophisticated investors to manage daily trading risks as part of an overall diversified portfolio. They are designed to achieve their stated investment objectives only on a daily basis. Leveraged investments include risk and are not suitable for all investors. Please read the disclosure documents, including the relevant pricing supplements and product supplements for information.Bank of Montreal, the issuer of the ETNs, has filed a registration statement (including pricing supplements, a prospectus supplement and a prospectus) with the Securities and Exchange Commission (the "SEC") about the ETNs that are being offered by this free writing prospectus. Please read those documents and the other documents relating to these offerings that Bank of Montreal has filed with the SEC for more complete information about Bank of Montreal and these offerings. These documents may be obtained without cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, Bank of Montreal, any agent or any dealer participating in these offerings will arrange to send the applicable documents if so requested by calling toll-free at 1-877-369-5412.See more from Benzinga * The Financial Wellness Industry Is Showing No Signs Of Slowing Down * In Volatile Markets, It Works To Fade The Move: PreMarket Prep Recap For March 10, 2020 * How Will The Market Volatility Impact Community Banks?(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.