Both Governors of Florida and Pennsylvania have issued some type of Stay at home mandate.Florida has been dragging her feet do to for political and Financial reasons but it appears that the growing number of cases have forced Governor to take these measures. Reports are saying that another wave of virus cases are showing up in a different province in China ,obviously if true this is not good.Gov Cuomo press conference again filled with Dread ,honesty and possibly disaster so Spoos naturally turned lower.
Livestock,Cattle and Hogs limit down as the Run up in supply these last few weeks is finding less and less takers.Talk of Slaughter plants running with less staff and now with States issuing lock down orders slaughterhouse might be processing less meat and thus backing up supply in feed yards. Boxed Beef prices collapsing these last 5 days as is Spot values for hogs
Trump says he will be meeting with oil Execs. to find solution for low oil prices
Below is the Traditional CRB commodity index made up of Futures priced Commodities.This is a weekly Chart and it is not pretty Dis- Inflation or deflation on the horizon being priced.Multi year lows
Now the next chart is the RIND CRB index made up of Spot prices of of raw Industrials it is better reflective of true supply and demand as actual users of Commodity dictate price action. Trend is down but no where near multi year lows as the Futures driven CRB. So industrial metals used more on production side of Economy whereas CRB is made up of all Consumer and producer commodities I will monitor as Futures driven CRB maybe more to do with negative Sentiment then actual Supply and Demand worries, we shall see.
Headline ISM 49.1 vs F/C of 44.5 a shocker for sure. Talk that one of the Components,Supplier delivery time, may have had an Out sized positive impact on Overall Index , regardless hard to believe in validity of Headline number. Commentary from ISM regarding Employment
— Orders and employment at U.S. factories contracted in March at the quickest pace in 11 years as producers grappled with pandemic-related demand destruction, Institute for Supply Management data showed Wednesday. The purchasing managers group’s gauge of bookings tumbled 7.6 points to 42.2, the lowest since March 2009, while its employment index slid to 43.8, the weakest since May of that year. Readings less than 50 indicate shrinking activity
price paid or Inflation dipped to lowest level since 2016 .I will say that the Services sector has been hit a bit harder and we can see how hard in tomorrows non Manufacturing ISM. The problem with Economic releases is that if they are better then expected hard to believe and if Worse then Expected no suprise, thus very little reaction in markets when Numbers are released.
According to bespoke Investments March, The Most Volatile Month ever for SPX
UK Banks measured by the FTSE350 Bank index down for 5th day in row off 7.5% today as UK joins the EU in demanding banks stop the payment and stock Buybacks.
Reserve bank of India Announced another Stimulus Package, they cut rates 75bps last week
Dollar, Not good For Risk, Higher today by .6% Both CAD and AUD down over 1% Surprisingly JPY Unchanged vs Dollar but JPY stronger vs. Most G-10 Currencies
Italy Extended Lockdown till April 13th
In U.S. Corona virus task Force Dr Brix and Dr Fauci both said that 100-200 k Deaths from Virus might be near the lower side of expectations. America bracing for a “painful” next couple of weeks (IFR)
No takers for the Feds Overnight Repo operation this are expected as Quarter end Month end passes. The Repo Operation are not where the problems lie as of Late Use of this facility has been decreasing daily.
Risk OFF as Quarter end Activity pension re balancing completed the true Sentiment of market shows through. Spoos -100 handles, NKY closed down 4.1% Cac -4% Dax -3.8% Bonds +3 handles, Bunds only +43 .Gold little changed. Some top tier Economic Data today and Markey is waiting to see how ugly it is.ADP report was less then Bad then feared but markets believe worse is yet to come so little reaction from release. China PMI data overnight better than expected, but Focus Has moved away from China to the US and Europe.
As vix Touches 50 long way from the 110 & 120 calls being in the money markets are taking the small steps back towards normal functionality.I like the volatility and chaos I like when markets are inefficient,oh well.Some metrics that indicate steps back towards normal markets:
First Cross currency basis swaps between JPY and USD the more negative the swap moves the more expensive it is to acquire dollars.This is is a smaller graph but you get the idea the swap spread is almost positive !indicating ample dollars available, whereas at the apex of Crisis the index was greater then -150 intra day.
Once the daily press briefing From New York Gov Cuomo started Stocks started to give back Daily gains some of his comments:
Virus is more dangerous then expected Cases jump 14% OVERNIGHT
This ends when we get a face track test -kit
Unemployment hotline has 1.2 million calls in a week usually have 50K
Also UK Minister Gove with some sobering comments regarding virus right around same time Cuomo was speaking so a double dose of bad news.On the good news front, Italy reported a small uptick in Cases today they are at a 2 week low.
Today’s Economic data surprised to the upside but I don’t think we should believe it.Both Chicago PMI and Consumer Confidence was less bad then feared ,probably best to ignore it then read too much into it.San Francisco president Daly says that “U.S. likely already in recession,She expects things to get worse before they get better” uplifting
Below find the Morgan Stanley,G7 currency “vix” dormant for months but not for long