Mar 27, 2020
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It’s looking like another one of those Corona Fridays for US equities as futures are trading down around 3% piggy-backing off the declines we’re seeing in Europe. News that UK Prime Minister Boris Johnson has tested positive for the virus isn’t boosting sentiment either. Here in the US, there are also concerns that the House vote on the relief bill will be forced to an in-person vote instead of unanimous consent and that would force members to return to DC from their districts and delay the ultimate passage. On the House bill, we should know by noon whether the bill will be able to be passed today, but given it’s a Friday and the market is closed for the next two trading days, it’s hard to convince investors to hold equities into a weekend where the headlines are more likely to be bad than good.
Read today’s Bespoke Morning Lineup for a discussion of the latest trends and statistics of the outbreak, overnight moves in the market, and the plunging levels of confidence just released in Italy.
The S&P 500’s 17%+ rally in the last three trading days is the strongest rally for the index since the 1930s, and one of only a handful where the S&P 500 even rallied 10% during a three-day period. The last such occurrences of a 10%+ move were in March 2009, November 2008, October 2008, and then October 1987.
Mar 26, 2020
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
We’re looking at a 1% decline in the US equity market, which wouldn’t actually be that bad given all the volatility we have had lately. Any moves in the market that would represent a more normal trading pattern would be welcome in our view. The big events so far today came from DC where the Senate unanimously passed the $2 trillion relief package. From a market perspective, the big news wasn’t from CNBC or Bloomberg but instead the ‘Today’ show where Fed Chair Powell conveyed the message that the Fed is “not going to run out of ammunition” and that the Fed “still has policy room.”
Read today’s Bespoke Morning Lineup for a discussion of the latest trends and statistics of the outbreak and overnight moves in the market.
They say a picture is worth a thousand words, and this one doesn’t really need much in the way of explanation. Everyone was expecting a surge in claims this week, but the actual increase was more than double expectations as claims came in at 3.283 million versus estimates for 1.7 million That was basically double economist expectations and more than 10x more than the prior week. Just to put this reading in perspective, it works out to 1% of the US population. Not the working population, but the entire population!
Mar 25, 2020
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
Equity futures are indicating a modestly higher (or lower depending on when you look at the futures) open, but don’t let the numbers fool you. From midnight to around 4:30 eastern, S&P 500 futures rallied more than 4.5% in reaction to news of a deal being struck in DC over the $2 trillion coronavirus relief bill. From 4:30 through now, though, all of those gains have been erased.
Markets are still searching for equilibrium and trying to figure out when the economy will be able to re-open, and right now there is just about zero clarity on that front. Then, when the time comes where certain areas of the country look to be in the clear and can open for business a whole new set of questions will arise. First, how do you cordon off these areas that are no longer hotspots from the areas that are still hot?
Read today’s Bespoke Morning Lineup for a discussion of the details of the relief bill in DC, Asian and European markets, and the latest trends and statistics of the outbreak.
It’s been an exceptionally strong two days for gold as the yellow metal has rallied over 5% on back to back days. With all the liquidity being thrown into the system, some investors are clearly worried about the dollar’s purchasing power down the road. Going back to 1980, there have only been four prior periods where gold has seen similar moves on back to back days, with the last occurrence coming in September 2008. In other words, it has been extremely rare to see these kinds of moves.
Mar 24, 2020
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Here we go again. Equity futures were trading on a limit up basis earlier but have since given up some of their gains. As things stand now, the US equity market is still poised to open up by about 4%, but where it goes from there is anyone’s guess. Optimism this morning stems from hopes that both sides of the political divide are closer to a stimulus deal in Washington and that some of the hardest-hit hotspots from the coronavirus are showing varying levels of improvement.
Light at the end of the tunnel in the coronavirus outbreak is obviously important because the sooner we see the light, the closer the US economy will be to moving out of its coma. This has been a contentious topic over the last 24 hours. On the one side, there’s a growing camp voicing concerns over the economic damage of the US and global shutdown. They are calling for at least a plan to be made for when, how, and under what conditions Americans will be allowed to go back to work. On the other side, a number of people argue that it’s still way too early to even start thinking about starting the economy back up as there are many more pressing concerns facing the country.
We’re not quite sure where the disagreement is here. In the words of NY Governor Cuomo, “you have to walk and chew gum in life.” In other words, can’t we address both the pressing Health Care needs facing the country and also start coming up with a plan for how Americans will be able to go back to work when the peak of the outbreak passes? Governments at all levels have come under enormous criticism for being caught flatfooted heading into this outbreak. Now that both Federal and state governments are thinking ahead, though, do they deserve the same criticism now? There are no easy answers in any of this, and no one is looking to get things back up and running if it is only going to make things worse, but that doesn’t mean we shouldn’t be asking the questions and coming up with plans and strategies as new data and treatments come to light.
Read today’s Bespoke Morning Lineup for a discussion of the latest figures in terms of Fed purchases in the last several days, the latest on the competing fiscal stimulus plans, and the latest coronavirus figures.
Mar 23, 2020
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While they are far from going all in, the Federal Reserve just raised a couple of stacks this morning by introducing a slew of new measures to help stem the pressure of the medically induced coma that the US economy has been put into. Among the measures taken, the Fed announced unlimited QE and would purchase $375 billion in Treasuries and $250 billion in mortgage securities this week. Other measures being taken include purchases of MBS securities, corporates, and the launch of three new lending facilities. We’ll have more details later today.
Futures have surged on the news and what was looking like a 3% decline at the open is now looking like a 3% gain. Obviously, that’s encouraging, and while the Fed’s actions are an enormous help, the only way the markets are going to find sustainable improvement is when the economy is allowed to come back to life, or at least there is a real path in place for how that is going to happen. Also, as we have seen repeatedly over the last month, where the market is one minute can be wildly different from where it was a few minutes before.
Read today’s Bespoke Morning Lineup for a discussion of the latest moves in Asian and European markets and the latest coronavirus case counts, including a discussion of some encouraging trends in the state of Washington.
We’ve been showing a number of crazy charts over the last several weeks, and it seems as though with each day that passes they only get more extreme. The chart below showing the 20-day rolling dollar value traded in the S&P 500 ETF (SPY) is another example. Through Friday, this total reached $1.5 trillion, which was up more than five-fold from where it was earlier this year and much higher than any other reading seen throughout the history of the ETF.
Mar 20, 2020
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Futures started out the overnight session weak, rallied throughout the night, but have been giving up ground ever since. We have no idea where they’ll be by the time the market opens (or closes for that matter). At the recent pace, though, they won’t be positive by the time equities open for trading. We would note that if the S&P 500 does manage to finish the day higher, it would be the first back to back gains for the S&P 500 since February 12th!
Along with US equities, just about every financial asset except for volatility products and the US dollar are higher. The moves higher look pretty reasonable and restrained, and that would be a huge improvement for the function and orderliness of US financial markets even if we have not yet seen a major bottom for equities start to carve out yet. The best thing for everyone is that markets will close for the weekend shortly and give investors, central bankers, lawmakers, and most importantly, health care professionals an opportunity to assess their actions over the last few weeks to see what has worked and what hasn’t. They can also take into account new developments and alter their actions accordingly. Conditions have been very fluid, but a lot still needs to be done. The bottom line is that the status quo of an indefinite economic lockdown is unsustainable for everybody.
Read today’s Bespoke Morning Lineup for a discussion of the latest uptake in Fed liquidity programs, European markets, credit market dislocations, and coronavirus case counts.
Charts like the one of crude oil’s daily changes can be found across just about every different asset class these days. Yesterday, WTI crude oil had its largest one-day daily gain on record, rising by 23.8%. That move followed the second and third largest one-day declines for crude oil on record from 3/9/20 (-24.6%) and 3/18/20 (-24.4%), respectively. Not sure what you want to call it, but it’s far from rational market behavior.
