Morning 4-17

Hope for a treatment Has Stocks Running higher.

   -Gilead Sciences: a report that C-19 trials of Remdesivir had shown encouraging early results; the University of Chicago’s phase 3 drug trial found that most of its patients had “rapid recoveries in fever and respiratory symptoms” and were discharged in less than a week

“The best news is that most of our patients have already been discharged, which is great. We’ve only had two patients perish,” University of Chicago infectious disease specialist Kathleen Mullane said, according to STAT News, which obtained a video of her remarks. (CNBC)

  • Dow +3%, Spoos +2.7 Nasdaq Only +1.9% (Market leader turned follower?) Stoxx 50 +3.45 France’s Cac +4.17% Dax +3.6% Travel and leisure sector +7%

There has been comments regarding the efficacy of the study so be on Guard as any Tape bombs regarding its shortcomings could eliminate gains  in a hurry

White House steps to reopen Economy

  The guidelines suggest that before reopening, states should first see a decrease in confirmed cases of COVID-19 for two weeks. Hospitals should be able to “treat all patients without crisis care,” the guidelines say, and have a “robust testing system in place for at-risk health care workers” before proceeding to a phased reopening. (White House Patch)

China Econ Data released overnight:

  • GDP Q/Q -9.8 vs. Forecast -12.8   Y/Y -6.8 % vs Forecast -6%
  • Industrial Production Y/Y -1.1 VS Forecast-6.2%    YTD -8.4 vs Forecast -10%
  • Retail sales Y/Y -15.8% vs Forecast -10%

Markets didn’t care too much about data even with the GDP data being the worst since 1992.The pattern is Ugly now, Much better later this year(Hopefully). Also, Most of the Drop in Economic output has been priced into markets to some extent. If recovery starts to lag, maybe then markets will react to data points

 Bunds little changed, Bonds down a handle gone are the volatile Day of March as Bond complex settles into more of a range trade then a panic trade. Dollar steady, Spot gold -1.4% Futures -1.15% negative correlation between Spoos and Gold today. May Crude oil -7%   almost broke below $18 handle ugly June crude little changed. Nothing on Economic calendar to be excited about a Bit of Fed speak today but that’s shown to have little impact on the trade these days. Past fed speakers do not try and sugar coat the upcoming Slowdown/recession they also pledge to do more if need be. Stocks can run higher all they want   Bonds still pricing in  A recession,and likely a bit less optimistic of a peak in Virus cases anytime soon

Color from Mizuho, Always informative:

• They hate the small caps. The big pairs trade is now at levels last seen in 2000. Yesterday the Russell 2000 (RTY) fell 0.50% while the Nasdaq 100 (QQQ) rose 1.82%. For the week the Nasdaq 100 is up 6.17%, while the Russell 2000 has plunged 5.51%. Year-to-date, the QQQ is UP 0.30%, the RTY is down a whopping 29.39%.

• They hate the financials. The Bank index (BKX) relative to the S&P 500 (SPX) is now lower than during the GFC.

• Flows part I. Lipper said they had a data error last week. That record -$62b outflow now corrected to a +$8b inflow, followed by another +$5b this week. After revisions from Lipper, the 4-week total of equity fund flows (through last week) went from -$100B to -$30B… negative but less dramatic. After six weeks of outflows from munis, we are back to inflows. Lipper reported $833.388 million this week.

• Flows part II. Front running the Fed. EPFR Global data for the week ending April 15th. Inflows to corporate bond funds hit a record high while sovereign debt saw outflows. Equities ($ billions): U.S. +7.7 Europe -0.64 Asia -0.8 Japan +2.8 Emerging markets -0.65. Bonds ($ billions) Government-related bonds -2.8 Investment grade corporate bonds +10.5 High-yield corporate bonds +10.3 Emerging markets +1.1

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