INSUBCONTINENT EXCLUSIVE:
Blame it on the algos, or a White House tweet, or maybe both
Others will talk of virus curves flattening
Some will mention short-covering
A few will cite real money re-balancing, or maybe oil producers coming to their senses or perhaps simply good old-fashioned dip
buying.
Whatever the cause, US stocks are leading a market-wide revival in the face of an unfolding global economic crisis
And it was all encapsulated in one of the longest short weeks investors have ever known
Brent drops as much as 12 per cent
contained.
The latest data suggests death rates from the coronavirus pandemic could be stabilizing in Italy, Spain, France, Germany and New
President Donald Trump sees signs the outbreak is leveling off
For investors hammered by bad news for more than a month, it is enough
Futures on the S-P 500 rise as they begin trading in Asia and stay up all day, and the underlying gauge follows suit when the cash market
opens in New York.
As well as the stabilizing rate of coronavirus spread, the stabilizing markets themselves are a contributing factor
Most investors dislike volatility, so when calm returns it makes gains more likely
The VIX Index, a market-derived gauge of expected price swings on the benchmark USequity gauge, today falls to the lowest level in a
month.
Stimulus from central banks and governments has made all this possible
The Federal Reserve has set both the pace and the standard in this regard, and seems to deliver a new support measure daily
capital markets, but it certainly reinforces the message that policy makers are alert and proactive
The Fed actions, especially its bond buying, have depressed volatility in Treasuries which has in turn calmed credit and soothed
desk strategy at NatWest Markets, writes in a Monday note
flipped a global dollar shortage to an over supply
Yet this will be another day of greenback strength as everyone continues to stock up on the one asset they can count on.
Meanwhile in
Europe, Angela Merkel warns the pandemic is the biggest challenge since the European Union was formed, yet stocks pay no attention and close
The leveling off of virus deaths probably helped, but the $34 billion euros ($37 billion) of cash pumped into the financial system in a week
riskier reaches of the credit market
Corporate debt has been a big worry, because companies are bearing the brunt of the collapse in demand caused by the lockdown needed to
contain the virus.
High-grade deals -- those which are considered lower risk -- have been flooding back in the past two weeks, and even
riskier junk debt has been sold
Today brings news of the first new leveraged loan deal in a month.
Calm has also returned to the funding markets in anticipation of the the
Fed buying commercial paper starting next week.
The markets are rediscovering some confidence, and maybe even a little hope
bickering over stimulus -- nothing can derail it today.
BloombergUS stocks rally into the close to leave a surreal state of affairs: With
74,000 people dead globally, including 10,000 Americans, and 1.3 million confirmed cases of coronavirus, a gauge of world stocks posts the
second-best day in more than a decade.
ReversalTuesday 7 April: The buying was frenzied on Monday, so much so that one of the best
performing USstocks was a cruise line, an area of business not thriving in the age of the coronavirus
thing.
The bull and bear labels are an attempt to capture the general trend or mood of a market, and are typically applied to lengthy
periods of gains or declines, respectively
reprieve.
There are rational explanations, of course
A weaker dollar tends to help equities, so the move is lending momentum to a market where no one wants to miss the bottom.
The upbeat mood
seeking hundreds of millions in an unsecured deal.
That hunger for cash is the same across vast swaths of the corporate space though, and
As companies stockpile cash banks have to get more of it, and the market for lending between them is still far from normal.
These businesses
are battening down the hatches, trying to ensure they can weather the economic storm now commerce and industry has ground to a halt
As that happened, sources of tax revenue for local administrations seized up just when the cash was needed to fight the virus
Enough anxiety is lingering in municipal bond markets that Democrats want the Fed to extend its buying to lower rated debt.
For all the talk
of slowing death rates, the numbers are still horribly high and there is no end in sight to the crisis
Fatalities in New Jersey jump
New York state reports its deadliest day yet, just a few minutes before the U.K
-- where the Prime Minister remains in intensive care -- does the same.
BloombergPeople will claim to know the reason for what happened
next, likely pointing at those virus figures
But they came hours earlier
The truth is there was no obvious trigger, except maybe a late slide in oil.
Regardless, heading into the second-half of the trading day
risk appetite is riding high and the bull market for the S-P 500 looks assured
The stars are aligned.
Then around lunchtime on Wall Street, the gauge turns
Having opened with a jump of 3.5 per cent, the S-P 500 meets the closing bell in the red
The bull must wait another day.
Beckoning BullWednesday 8 April: The start to the day is inauspicious
euro lower and when bonds start trading, Italian yields spike
The great risk of this outbreak, aside from the death toll, remains the economic halt triggering financial collapse which feeds back into
the economy to become a self-sustaining crisis
The Fed, ECB and others have spent trillions of dollars in an attempt to avert such a scenario, and they have been successful
which were closed when their USpeers erased gains on Tuesday, slump at the open
Data showing the French economy shrank the most since World War II in the first quarter hardly helps the mood.
That gloomy economic tone
contrasts with the one emanating from the U.S., where the White House is developing plans to get the economy back in action
Similar suggestions by Trump in recent weeks have been met with fear, but with evidence of a slowing virus count it gets a warmer reception
from investors.
The S-P 500 opens up and stays that way
A record day for deaths for in both New York and the U.K
Data showing the USis already in recession is a technicality
The bull is back on.
BloombergThe good mood extends to the credit markets, even though investment-grade issuance is finally slowing down
after back-to-back record weeks
reckons spreads for in the high-grade space peaked in March, and the Fed actions mean the worst is behind
Sentiment in Europe is hit by the failed EU talks, but investors are keen to put cash to work, and order books for new deals are
large.
Corporate demands for cash extend beyond the debt markets, however
Not enough to cause panic, and central bank actions are helping, but this could be a key area to watch if the stress does not ease.
Later in
the trading day, a couple of things help cement the risk-on mood
gathering of major producers scheduled for Thursday will discuss output cuts of 10 million barrels a day.
Even shares in Europe, facing yet
another existential crisis, end little changed
The S-P 500 finishes 23 per cent above its March 23 low
According to one of the more popular definitions, it is back in a bull market.
Everything In PlayThursday 9 April: The long weekend beckons
For the duration of the coronavirus crisis, the last trading day of of the week has almost always seen stocks decline
The markets stop but the pandemic does not, so many investors prefer to trim their exposures before a two-day break
Easter means three or even four days off for many participants.
Play it safe or keep riding the rally that has the S-P 500 up more than 10
per cent this week? It would be a puzzle at the best of times, but Thursday has evolved into a day packed with potentially market moving
EU finance chiefs are back on the phone together
Jerome Powell will give a big speech
Plus the small matter of the weekly jobless claims.
Asian stocks had a good session, thanks to the upbeat finish seen on Wall Street a few
But S-P 500 futures are rudderless, swinging from gain to loss as the markets weigh it all up
European shares start on the front foot before paring amid a general confidence vacuum
end-of-week pattern is showing signs of returning
It feels technical in nature, rather than headline driven
the blow.
In a twist worthy of the unprecedented market turmoil unfolding this year, the defining event of the day turns out to be none of
those listed above.
At the same moment the unemployment data hits the wire -- another 6.6 million Americans claiming benefits in a week --
the Fed makes its move, announcing a series of sweeping steps to provide as much as $2.3 trillion in additional aid
These will include programs targeting small and mid-sized businesses as well as state and local governments.
For a few minutes, equity
futures swing wildly as the market absorbs both this and the claims
The claims were expected, another Fed bazooka was not.
BloombergWhat a contrast to Europe, where the minutes of the latest ECB meeting show
In a stunning move, it will now take positions in some debt recently downgraded to below investment grade as well as certain collateralized
loan obligations and commercial mortgage-backed securities
The credit markets rejoice
The bonds of Ford Motor Co., recently cut to junk, lead the surge.
It all means that stocks will end the week in the green
Despite a record number of deaths in New York city, an underwhelming deal to cut oil production and billions in aid getting snarled up in
Washington, appetite for risk holds
Investors heading into the long weekend can toast double digit gains in the S-P 500 for the second time in three weeks.
At some point, there
may be questions about printing trillions of dollars -- undermining the currency and risking inflation -- to plow it into financial markets
when tens of millions no longer have a job
There may be worries about what it means when one institution is effectively backstopping the global financial system with an increasingly
stretched balance sheet.
But it seems that will have to wait
At the time of the closing bell in New York, with the S-P 500 about 21 per cent from its all-time high, there are 1.5 million confirmed
infections worldwide, and 93,000 dead.
