The Wall Street Journal - 03.04.2020

© 2020 Dow Jones & Company. All Rights Reserved. *** THE WALL STREET JOURNAL.** Friday, April 3, 2020 |B1

The stock market is gyrating

wildly but the Securities and Ex-

change Commission might not

have a complete picture of what

is going on.

A decade ago, a “flash crash”

in the stock market shocked in-

vestors and drove the SEC to

try to improve its ability to

monitor unexpected swings in

trading.

That effort has produced

some disappointing results.

Regulators spent millions of dol-

lars on an interim database that

has failed to provide accurate

and timely data during some pe-

riods of turmoil, according to

SEC documents obtained under

a public-records request. A

larger, more-detailed database

BYSEBASTIANHERRERA

Amazon

Adds

80,000

Workers

PERSONAL TECHNOLOGY: HOW TOVIDEOCONFERENCE LIKE A PROFESSIONAL B4

S&P 2526.90À2.28% S&PFIN À2.47% S&PIT À2.28% DJ TRANS À1.27% WSJ$IDX À0.35% LIBOR3M 1.373 NIKKEI (Midday) 17873.35À0.31% See more at WSJ.com/Markets

BUSINESS & FINANCE

Sources: Refinitiv (flows); Citigroup (separately-managed accounts); Federal Reserve (ETFs and mutual funds)

*2020 data as of March 25. Funds represented are the largest high-yield muni mutual funds of the three biggest muni high-yield managers.

High-yieldmunimutualfundflows* Assetsofmuni-bondfundsand

separatelymanagedaccounts

$1.5

0 Annualdata

0.5

1.0

trillion

2013 ’19

Mutualfunds

Separately-managedaccounts

Exchange-tradedfunds

$4

–2

0

2

billion

2010 ’10 ’20 ’10 ’20

NuveenHigh

Yield Municipal

BondFund

InvescoHighYield

MunicipalFund

GoldmanSachsHigh

YieldMunicipalFund

BYHEATHERGILLERS

ANDGUNJANBANERJI

Municipal Bonds’ Vulnerability

Is Exposed in Market Breakdown

With U.S. car factories idled
because of the new coronavi-
rus, the disruptions are falling
hard on the nation’s auto-parts
suppliers, some of which are

BYBENFOLDY

already showing signs of dis-

tress.

Unlike the bigger, well-capi-

talized car companies, the

thousands of parts firms that

feed the industry’s global sup-

ply chain operate closer to the

edge with less of a cash cush-

ion and with contract orders

that still need to be filled, say

executives, consultants and in-

dustry lawyers.

Within the past three weeks,

auto suppliers have laid off or

furloughed more than 3,000

workers in Michigan, according

to government notices. Some

suppliers are delaying pay-

ments to vendors and asking

lenders to adjust terms. Others

are trying to preserve business

by keeping some manufactur-

ing lines running, knowing

they need to be ready when

the car companies resume pro-

duction.

Many supply contracts re-

quire auto-parts firms to de-

liver on time or risk fines of up

to $50,000 for every minute

delay, industry attorneys say.

“It doesn’t take as much to

send them under because

they’re already stretched,” said

Jeremy Rice, who works with

auto suppliers at accounting

firm Mazars USA. “This is just

another giant weight on a very

thin sheet of ice.”

Clarence Martin, president

of Detroit-area auto supplier

Eypex Corp., thought he could

sidestep the temporary car fac-

tory closures in Michigan that

began in March by filling parts

orders coming from China,

which has begun restarting

manufacturing lines.

Then, Michigan ordered a

three-week lockdown of all

nonessential businesses, lead-

ing him to close one facility

completely and send workers

home. Another one is operat-

ing with minimal production.

PleaseturntopageB5

Car Makers’ Halt Hurts Suppliers

Closed assembly lines

during pandemic leave

parts producers to

weigh survival options

Confusion

Veils Loan

Plan for

Businesses

Bonds for amusement park and mall American Dream in New Jersey plunged in March amid coronavirus concerns.

BRYAN ANSELM FOR THE WALL STREET JOURNAL

Amazon .com Inc. has filled

80,000 jobs in the span of a

few weeks, part of a hiring

spree to add 100,000 workers

to meet soaring demand amid

the coronavirus pandemic.

The technology giant also

unveiled a raft of worker pro-

tections, including plans to

check employees’ tempera-

tures at its facilities in the U.S.

and Europe and at Whole

Foods Market locations by

early next week. The company

is checking the temperatures

of 100,000 employees daily

and plans to provide masks to

all facilities by next week, ac-

cording to Dave Clark, Ama-

zon’s senior vice president of

world-wide operations. Any

employee found to have a tem-

perature above 100.4 degrees

Fahrenheit will be asked to go

home and not return until af-

ter having gone three days

without a fever, Mr. Clark said.

Amazon warehouse workers

and other hourly employees

have called on the company to

do more to protect them as

the coronavirus has spread.

Employees in at least 15 ware-

houses in the U.S. have tested

positive for Covid-19 or en-

tered quarantine because of

symptoms, Amazon said this

week. That list has grown al-

most daily in recent weeks.

Amazon employs more than

500,000 people in the U.S.,

making it the country’s sec-

ond-largest private employer.

Walmart Inc.—the nation’s

largest private employer, with

about 1.5 million workers—re-

cently announced similar

plans to provide masks to em-

ployees and take temperatures

at the start of each shift. The

company has hired 65,000

workers since March 19 and

said it would add 150,000 to

manage the shopping surge

sparked by the pandemic.

About 15 employees at a

warehouse in Staten Island,

N.Y., walked out of work Mon-

day, according to Amazon. The

walkout was followed by simi-

lar actions at facilities in Chi-

cago and the Detroit area, as

well as a “sick out” on Tues-

day by workers at Whole

Foods, which is owned by Am-

azon.

As the virus spread across

the U.S., Amazon has faced

overwhelming demand and

mass employee absences at its

warehouses, The Wall Street

Journal reported this week.

Some workers have said Ama-

zon hasn’t provided enough

cleaning supplies at facilities

or properly enforced social-

distancing measures. Orga-

nized employees have called

on Amazon to shut down any

warehouse where at least one

confirmed case of Covid-19 is

identified.

Amazon has taken several

steps to keep employees safe

at warehouses, including sepa-

rating tables and chairs in

break rooms and eliminating

meetings between workers

PleaseturntopageB2

Hours before small busi-
nesses can apply for forgivable
loans from the $2 trillion fi-
nancial relief package, some of
the biggest U.S. banks aren’t

ready to handle an expected
flood of applications from po-
tential borrowers.
JPMorgan Ch ase & Co. told
its small-business customers
Thursday that it doesn’t expect
to start accepting loan applica-
tions on Friday. Bank of Amer-
ica Corp. plans to limit the
loans to customers with exist-
ing deposit accounts and loans
at the bank as of mid-February,
according to people familiar
with the matter.
Under the Small Business
Administration’s Paycheck Pro-
tection Program, part of the
stimulus package signed into
law last week in response to
the Covid-19 pandemic, lenders
would make available as much
as $350 billion in government-
guaranteed loans to cover eight
weeks of payroll and other ex-
penses. Business owners can
begin applying on Friday for
the loans, which are forgivable
if businesses keep their work-
force largely intact and use the
loans for eligible expenses such
as rent and utilities.
Many details of the program
remain unclear, which is com-
plicating efforts by lenders to
gear up for what is expected to
be an onslaught of prospective
borrowers at the end of this
week. Among what lenders say
are the unanswered questions
are how much due diligence of
borrowers is required and
whether they will be able to
sell these loans to create li-
quidity.
JPMorgan said in a state-
ment that it is still awaiting
guidance from the SBA and
Treasury Department before
making loans. A Bank of Amer-
ica spokeswoman said the bank
could move fastest with its
nearly one million small-busi-
ness borrowing clients.
“We know for these busi-
nesses speed is of the essence,”
the spokeswoman said in a
statement, adding that existing
customers are Bank of Amer-
ica’s “near-term priority.”
PleaseturntopageB2

By Ruth Simon ,

Peter Rudegeair

and Amara Omeokwe

that was originally supposed to

be completed in November 2019

has been delayed until 2022.

The interim system, known

as Midas, short for Market In-

formation Data Analytics Sys-

tem, was designed to give the

agency “the same speed, ease,

and reliability of data collection

and analysis that is available to

sophisticated market partici-

pants,” the SEC stated in a 2012

contract procuring Midas from

an outside vendor. The service

gives regulators access to about

a billion records Midas collects

each day via proprietary data

feeds from each of the 13 na-

tional stock exchanges, as well

as consolidated feeds of best

bids and offers across markets.

Internal SEC emails from the

system’s administrator show

that Midas has broken down at

times when trading volumes

surged or unusual trading roiled

markets.

On Aug. 24, 2015, anomalous

trading caused huge price

swings in markets. As SEC staff

tried to understand what had

happened, Midas’s data collec-

tion slowed to a trickle. Two

days later, the SEC’s Midas ad-

ministrator said of the system’s

vendors: “They have yet to pro-

vide confirmation the data is

100% accurate. I continue to

press them on this important is-

sue.”

On Feb. 27, 2018, Midas be-

gan to “intermittently drop”

trading data from one of the

major stock exchanges because

of an issue “somewhere within

PleaseturntopageB5

BYCEZARYPODKUL

SEC’s Trade-Analysis Tools Still Lag

The coronavirus triggered a

liquidity crisis in municipal

bonds, but the volatility that

resulted has been brewing for a

decade.

Desperate sellers across

most markets sold assets at

deep discounts last month as

the spreading coronavirus left

investors fearful and hungry for

cash. Perhaps no investment

flipped from coveted haven to

spurned hot potato as quickly

as municipal bonds.

Prices have started to re-

cover as U.S. lawmakers autho-

rized the Federal Reserve to

prop up a wide swath of state

and local government debt. But

the marketwide breakdown ex-

posed a new vulnerability in

the nearly $4 trillion municipal

market: a concentration of

power and risk resulting from a

fundamental shift in how muni

bonds are bought and sold on

Wall Street and on Main Street.

More money than ever is

managed by a few financial be-

hemoths that can swallow large

chunks of debt at premium

prices and don’t shy away from

risk. Meanwhile, the banks and

brokers that trade munis have

become less inclined to ware-

house debt.

That shift left the market

susceptible to extreme volatil-

ity when worried investors fled

bond funds, triggering waves of

forced selling with few other

buyers willing to pay top dollar.

Yields on 10-year bonds dou-

bled in three days, a price drop

never seen before, according to

Refinitiv, and the S&P Munici-

pal Bond Index gave up more

than a year’s worth of gains.

State and local governments

were locked out of the debt

market for days and investors

who cashed out likely suffered

tens of millions of dollars in

losses. Yields rise as bond

prices fall.

Powerful participants in mu-

nicipal funds such as Nuveen

LLC, BlackRock Inc., Goldman

Sachs Group Inc. and Invesco

helped the sector’s record run

last year. Now, outflows from

those same funds helped fuel a

record selloff in the historically

PleaseturntopageB2

$1.0

0

0.2

0.4

0.6

0.8

million

2014 ’15 ’16 ’17 ’18 ’19

SEC'smonthlycostfor
accessinggranularmarket
dataviaMidas

Source: Monthly Midas invoices from SEC

Notes: Invoices consolidated by month;
Data as of August 2019

February 2019

spike reflects

purchase of new

services and

capabilities.

INSIDE

BUSINESS NEWS

Disney is furloughing employees

across all divisions in its domestic operations

as it struggles with fallout from

the coronavirus pandemic. B3