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Equity option markets provide investors with valuable information about expectations for volatility and the time value embedded. The VIX Index closed at 82.69 which was a new record close surpassing closing VIX prices during the Great Financial Crisis in 2008. However, the absolute intraday peak of 89.53 in 2008 has not been surpassed yet. Historical analysis of the VIX Index suggest that VIX at these levels puts the market into a state with significant negative return expectations and realized volatility more than four times the normal level combined with extreme large kurtosis. In other words, equities are biased towards more declines from current levels.

However, hidden in the VIX futures term structure clues for when the equity market bottoms are visible. The term structure of VIX (how the price of future contracts relates to the spot) is normally in contango (upward sloping) meaning that VIX futures have a higher price than the spot. This means that the futures market is pricing on average than volatility will rise from current levels. Historically this premium to spot has been too high relative to the subsequent realized volatility and thus traders have made money by shorting the different VIX futures contracts which then rolls down creating a positive roll yield for being short volatility.

The current spread in percentage between the second futures contract (expires in May) and spot is -84.5% which is lower than during the Great Financial Crisis in 2008. This means that the expecting VIX to fall over the coming months but only to levels around 44 which would still be very high levels. The steep backwardation (downward sloping) creates a tailwind for being long volatility. The Lyxor ETF S&P 500 VIX Futures Enhanced Roll (vool:xetr) is one way to express this. When the VIX futures term structure (2nd VIX contract / VIX Index) has been higher than -10% we typically see positive equity markets. For clients that want to track this spread the VIX Index and the current 2nd month VIX futures contract have the Saxo ticker codes VIX.I and VXK0 respectively.

Another way to gauge when the market has exhausted itself is be looking at the speculative positions in VIX options and futures. We have come from the largest short volatility position ever with 40% of open interest being short, that’s yield chasers dominating volatility hedgers. The data is one week delayed but still shows that the short volatility positions have been cut massively but not to zero yet. If speculative positions move into positive then it would be another sign of equity market bottoming.

With that stress in mind, hardly surprising that the company is apparently moving to pull back some $3 billion that it agreed to handover to WeWork insiders as a payoff to allow SoftBank to seize control of the office-leasing company and save it from spiraling into bankruptcy following the collapse of the IPO and JPM-led credit line tied to the offering.

According to WSJ, SoftBank has found a loophole allowing it to reneg on its agreement to purchase shares from WeWork insiders as part of the rescue package, including its agreement to buy shares from founder and former CEO Adam Neumann. Neumann had the right to sell up to $970 million in stock as part of the October deal that led to his ouster from the company’s board and from his CEO spot. The package ultimately allowed him to walk away from the company with more than $1 billion.

However, it looks like he might soon be giving back the bulk of that money in exchange for WeWork shares that probably aren't worth the paper they're printed on (it's an expression).

As WSJ adds, the move doesn't necessarily mean SoftBank is walking away - the decision could be intended to exert leverage over WeWork's new management team, which was hand-picked by SoftBank. The deal notably doesn't affect the $5 billion SoftBank pledged as part of the turnaround effort, some $1.5 billion of which has already been "invested" (i.e. squandered) by the company.

But regardless of SoftBank's motives, it looks like CEO Adam Neumann, who committed every financial sin imaginable, including badly overextending himself financially by borrowing against his WeWork shares to buy illiquid assets like commercial real estate, might finally be getting his comeuppance for leading the company into the ground.

These are the eight conditions she demands for any federal bailout cash to be released...

1. Companies must maintain their payrolls and use funds to keep people working or on payroll.

2. Companies must provide a $15 minimum wage as quickly as practicable but no later than one year of the national emergency declaration ending.

3. Companies are permanently prohibited from engaging in share repurchases.

4. Companies are prohibited from paying out dividends or executive bonuses while they are receiving any relief and for three years thereafter.

5. Companies must set aside at least one seat -- but potentially two or more, as the amount of relief increases -- on the board of directors for representatives elected by workers.

6. Collective bargaining agreements should remain in place and should not be reopened or renegotiated pursuant to this relief program.

7. Corporations must obtain shareholder and board approval for all political expenditures.

8. CEOs must be required to personally certify a company is compliance and face criminal penalties for violating these certifications.

So... no layoffs, no buybacks, no bonuses, high minimum wage, and union representation on board?

If these rules are to be take effect (which they won't):

1) no cash is going out anytime soon... and

2) if they do, their business viability would be in question.

But hey, what does that matter - she has signaled the tiny percentage of Americans that voted for her during the Primaries that she is right there beside them fighting the good fight - except she isn't because they are all getting laid off due to the virus and she is a millionaire.

"We are seeing a significant increase in demand, which means our labor needs are unprecedented for this time of year," said semior VP of operations, Dave Clark, in a memo reviewed by the Journal.

With the coronavirus spreading throughout the U.S. and states implementing restrictions on large gatherings, more customers are turning to online shopping for everything from grocery delivery to paper towels, cleaning supplies and daily needs. Amazon, which also owns grocery store chain Whole Foods, was one of the companies President Trump mentioned during his update on the coronavirus on Sunday. Amazon accounts for 39% of all online orders in the U.S., according to eMarketer, and is shouldering a lot of those needs. -Wall Street Journal

Amazon also expanded its sick-leave policy last Wednesday to include part-time warehouse workers. They company has also set up a relief fund with an initial $25 million for drivers and other delivery partners affected by the outbreak.

According to the report, the 100,000 new jobs come at a time when retail is collapsing and retailers are considering widespread closure of physical stores. Nike, Apple and Lululemon have all announced temporary store closures, while people working in the entertainment, restaurant and hospitality industries are facing furloughs as cities and states restrict gatherings in public places.

Industries that are calibrated to supply consumers with just enough of what they need on a given day cannot keep up with a nationwide surge of relentless shopping fueled in large part by fear. -NYT

As distributors and retailers struggle to restock shelves with a sudden demand for canned soup and oat milk, industry officials insist that these are temporary problems.

"There is food being produced. There is food in warehouses," said North American Meat Institute CEO, Julie Anna Potts. "There is plenty of food in the country."

Costco COO Ron Vachris said in a Saturday interview "Our stores are getting stocked every day," adding "Transportation is functioning, our suppliers are working around the clock and the flow of goods is strong."

Notably, hot dog orders at Costco and Walmart have increased by as much as 300% according to meat suppliers - with some hot dog plants adding Saturday and Sunday shifts, and are shipping Memorial Day stockpiles to meet the surge in demand. Hot dog makers say they have a year's supply of ingredients such as garlic, according to the report.

Meanwhile, the National Chicken Council says they aren't seeing any disruptions in production - and that "ample surplus supplies of chicken" are currently in cold storage - 950 million pounds worth, according to government data.

None of this matters to shoppers facing empty shelves right now, however.

The panicky buying is testing the food system’s capacity in the near term. Over the past few weeks, sales of rice have increased more than 50 percent, according to data from the research firm Nielsen. Canned meat is up more than 40 percent. And sales of other essentials like beans, pasta, peanut butter and bottled water have also risen substantially, with a sharp spike this month. Kroger told its suppliers that demand had surged 30 percent across all categories in recent days. (For comparison, the company’s sales for all of last year rose about 2 percent.) -NYT

Another factor in helping to restock store shelves is shifting the food supply from closed restaurants, school cafeterias and college campuses.

"The food is there. It’s just going into different spots," according to FreshDirect CEO David McInerney. "Cruise ships are not using up all of the avocados. We have a giant surge of avocados."

The hoarding began around two weeks ago. According to the Times, shortages in hand sanitizers and wipes "set off a wave of panic buying that spread in recent days to include bread, canned goods, milk and frozen food." Perhaps a more plausible explanation is that the reality of a potentially protracted home-quarantine combined with people who don't want to shop at a store with aerosolized, three-hour hang-time coronavirus in the aisles has driven Americans to stock up before it hits en masse.

Ramping up

Despite there being 'enough food' - there are logistical issues to increasing production, such as the 50-days or longer it takes for chickens to go from egg to mature bird to store shelves.

For some chicken suppliers, the process takes even longer, depending on the type of bird.

Across the industry, “you’re talking about 50 days to get to a customer,” said Matthew Wadiak, who runs Cooks Venture, a chicken supplier based in Arkansas and Oklahoma. “Fifty days ago, we didn’t know this was even on the horizon. There was essentially no way to plan for it.”

...

"It’s clear that the modern supply chain, for all its efficiency and speed, is not equipped to deal with this kind of surge." -NYT

Amazon's algorithms, for example, have been designed to provide near-perfect estimations of exactly how much inventory warehouses or particular stores must keep on hand during a typical week - but they're unable to cope with this type of exogenous event leading to bare shelves in such a short period of time.

"When the shelf is emptied in the course of 24 hours and the safety stock was built intent upon protecting a week or two of demand, you get this tremendous dislocation," said Columbia Business School director of retail studies Mark Cohen.

"The trouble is that the hoarding hasn’t abated. We’re just seeing the very beginning of this kind of behavior," he added. "The question is: How long will it take for industry to catch up?"

Payments should be looked as “business interruption payments” for Americans, Mnuchin said.

"We want to make sure Americans get money in their pockets quickly,” he added.

The plan will also include money for small businesses, as well as loan guarantees to airlines and tourism companies.

“We don’t want airlines going out of business," Mnuchin said, adding that this crisis was "worse than 9/11" for the airlines.

Speaking of 9/11, Mnuchin insisted he wanted to set one thing straight before running off to Capitol Hill: The Treasury Secretary insisted that the market would not close because of the coronavirus.

"The only reason the market closed after 9/11 was because the technology was disrupted...but Americans should know, we are going to do everything to make sure that Americans will have access to the money in their stocks, in their 401(k)s and their portfolios," Mnuchin said.

Stocks climbed to their session highs on the news, as the White House continues to move closer to where traders want it to be regarding fiscal stimulus.

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With US stocks back in the green, White House is holding yet another press conference to discuss the latest progress in the response. Will Trump announce the massive $850 billion stimulus package that has been kicking around all morning?

Watch live: