A big turnaround on Wall Street was seen Monday as the S&P 500 erased a 2.5% drop on word that the Fed would begin buying individual corporate bonds, on top of the ETFs it's already snapping up (see more below). Futures are adding to the gains this morning amid reports that the Trump administration is preparing a $1T infrastructure proposal, as well as an executive order on police reform. What else is happening? Jay Powell heads to Capitol Hill for his semi-annual economic testimony before Congress and the latest retail sales figures will provide a key look at U.S. consumer spending activity.

Fed does it again

The big signal from the central bank yesterday was that it will take a broader approach to corporate bond buying, expanding its operations into the secondary market. Details were also given on how it plans to implement its buying strategy - a diversified market index of U.S. corporate bonds specifically created for the facility. It marks the latest step by the Fed to reassure investors that it will continue to support financial markets during the coronavirus.

Big drop, big bounce

"In sporting terms, the 2020 oil market is now close to the half time mark," the IEA said in its closely-watched monthly report. Demand is expected to drop by 8.1M barrels per day in 2020 - slightly less than forecast in May - before rebounding by a record 5.7M bpd in 2021. "So far, initiatives in the form of the OPEC+ agreement and the meeting of G20 energy ministers have made a major contribution to restoring stability to the market. However, we should not underestimate the enormous uncertainties."

Latest bankruptcy

Chesapeake Energy (NYSE:CHK) is in the final stages of negotiating a roughly $900M debtor-in-possession loan, as well as "rolling up" some of its existing debt to bring its total DIP financing near $2B, Reuters reports. It's also attempting to negotiate an equity infusion, and if the company manages to emerge from bankruptcy, creditors that include Franklin Resources (NYSE:BEN) would take over Chesapeake in exchange for eliminating more than $7B of its debt. A Chapter 11 filing could come as soon as Thursday, but the timing could slip to next week depending on how the negotiations play out. CHK +6.8% premarket.

Hydroxychloroquine

The FDA has issued a warning to healthcare providers that it does not recommend co-administering malaria meds chloroquine or hydroxychloroquine with Gilead Sciences' (NASDAQ:GILD) remdesivir for COVID-19 patients. The combination may compromise the antiviral effect of the latter, though it is not aware of any instances in the field of this reduced activity. The FDA has also rescinded emergency use authorization of malaria drugs for COVID-19, saying there is no longer a reason to believe that they "may be effective."

Biggest U.S. listing of 2020

Trading kicks off today for Royalty Pharma (RPRX). The company sold $2.18B in stock after pricing shares at $28 a piece, which was at the top of its intended price range. According to data provider Dealogic, Royalty Pharma has surpassed Warner Music's (NASDAQ:WMG) $1.93B IPO earlier this month as the largest U.S. listing so far this year, and is behind only Zoetis (NYSE:ZTS) as the largest pharma IPO of all time.

Standards are critical to technologies

Washington is amending prohibitions on American companies doing business with China's Huawei to permit them to work together on setting standards for 5G networks. "The United States will not cede leadership in global innovation,” said Commerce Secretary Wilbur Ross, outlining that participation will influence the "future of 5G, autonomous vehicles, artificial intelligence and other cutting-edge technologies." The blacklisting of Huawei in May 2019 had previously created confusion as to whether U.S. firms could be involved in standards setting discussions and organizations where Huawei was also a participant.

Fresh EU antitrust probes

EU regulators have opened fresh investigations into Apple (NASDAQ:AAPL), saying restrictions imposed by the iPhone maker may have breached competition rules. The first case centers around the Apple Store and the mandatory use of proprietary in-app purchase systems, as well as limits on developers for outside their apps. The second case focuses on the terms and conditions for integrating Apple Pay into merchant apps and websites across Apple devices.
 

Self-checkout only

Walmart (NYSE:WMT) is doubling down on self-checkout in the age of the coronavirus. The retailer is removing all cashiers and conveyor belt lanes at one of its popular superstores in Fayetteville, Arkansas, and if successful, the program could be expanded to more outlets. The initiative comes a month after the company deployed a touch-free payment system called Walmart Pay aimed at mitigating the spread of COVID-19.
 

Cyberstalking

Six former employees of eBay (NASDAQ:EBAY) have been charged in Massachusetts with leading a cyberstalking campaign targeting the editor and publisher of a newsletter that eBay execs viewed as critical of the company. The alleged harassment included sending the couple threatening messages, as well as disturbing deliveries like live cockroaches, a funeral wreath and a bloody pig mask (covert surveillance of the victims is also alleged). eBay's statement on the matter: "Neither the company nor any current eBay employee was indicted. In order to preserve the integrity of the government's investigation, eBay did not previously communicate about this matter."

Monday's Key Earnings

Lennar (NYSE:LEN) +2.7% AH as beats triggered homebuilder gains.

Today's Markets

In Asia, Japan +4.9%. Hong Kong +2.4%. China +1.4%. India +1.1%.
In Europe, at midday, London +2.6%. Paris +2.6%. Frankfurt +3.2%.
Futures at 6:20, Dow +1.7%. S&P +1.2%. Nasdaq +1.2%. Crude +1.3% to $37.61. Gold +0.6% to $1737.20. Bitcoin +3.9% to $9506.
Ten-year Treasury Yield +4 bps to 0.74%

Today's Economic Calendar

8:30 Retail Sales
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 NAHB Housing Market Index
10:00 Business Inventories
10:00 Powell Testifies on Semi-Annual Monetary Policy