“Won’t Back Down”… The headlines aren’t perfect, but it seems investors exhausted by selling and fed-up with bad news are ready to stand their ground. The excuses were there for US indices to have a down-day (yesterday’s +7% surge, for one) but as we enter the last 2 hours of trading the S&P is hanging tough. Recent reports that virus cases in Italy continue to drop off and that China’s Wuhan travel ban is to be lifted provided fresh bursts of hope even as New York confirmed its deadliest day yet. Good news is good news, but with so much uncertainty remaining around a subsequent economic recovery (not to mention a painful earnings season fast approaching), this mini-bull run may be “Runnin’ Down a Dream” a bit too early…

No More Sunday Scaries? – That nervous dread excitement we all get as the weekend is coming to a close took was heightened even further of late due to how Mondays were playing out. But today makes 2 in a row that equities got off to a strong start to the week. It was a case of less bad news than overt good news – Spain reported less infections/deaths and NY state, serving as the US hotspot proxy, saw similar. Hopefully we are ebbing from the peak but warnings from top officials that the coming week was to be the hardest and saddest have many from getting too ebullient.

It’s a Friday, so hit the risk-off button – The S&P has been trading in a diagonal (top left bottom right) pattern all day and is heading towards a weekly loss.  Markets are beginning to see the quantitative effects of the pandemic shutdown as March economic data is beginning to roll out.  As stocks continue their slide into the weekend (another Friday risk-off scenario), bond have benefitted with the 10-year yield now sitting at 0.574%   For those looking for a bright spot today, the VIX is below 50 for the first time since March 10th.

Back in the Green… It’s been a rocky ride but US indices are posting a positive response to yesterday’s disappointing Q2 kickoff. Oil is the star of the show (more on that later), carrying risk assets and the S&P higher after a muted morning performance. A green day feels good, but the momentum is fading into the afternoon, and putting things in perspective the index’s earlier highs were capped by the trading range established yesterday. Unfortunately it feels more likely the S&P will be testing support at 2400 / 2346 before trying to re-capture resistance at 2650.

Will April Fool Us…? Today, Q2 begins on a sour note thus far with basically more of the same. Even though everything is down, it is with the same leadership as we have seen. Cyclicals keep getting hammered and tech remains the outperformer (because of its bond-esque qualities – growth in a world of no yield).  That said, equities are still not far off the week’s highs. Thus, it might be time to ask the question – have we seen the bottom yet?!

To Survive a War, You Gotta Become a War – Jerome “Rambo” Powell? In another example of the Fed flexing their unlimited ammo muscles, they announced another repo facility and a VERY important one in our opinion. A) It lowers global US$ scarcity risk and B) alleviates upward pressure on USD (perhaps an unintended but +ve consequence). The window is open to north of 250 central banks/int’l monetary authorities and they can exchange their Treasury holdings for US$ at a rate of IOER +25bps overnight. Chairman Jer-ambo isn’t playing around…

Thickening Skin… With Trump giving up on his vision of an Easter resurrection for the American economy and scary scenes beginning to unfold in NYC hospitals over the weekend, US futures had every right to flash red overnight. The fact that US indices have fought their way back and are now holding onto gains shows investors may have built up some callouses to scary virus headlines and once unthinkable economic datapoints (see the S&P barely flinching at a -70 print on Dallas Fed manufacturing). Still the worst is yet to come on both of those fronts, and plenty of chatter around a W-shaped recovery leaves the impression many are expecting a reversal of fortune once the quarter-end pension rebalancing mojo officially peters out

FREAKY FRIDAY, PLEASE. Stocks opened on the back foot and have remained that way today, but there’s still a virtual eternity between now and the close— thus, anything could happen. There is at least one weekly certainty surrounding these volatile times though— Friday’s get sold without fail. From February 28th onward, EVERY Friday has seen the same pattern —risk-off into the weekends. In the same way that we need the $ to keep easing, we need Friday’s to become more bullet-proof. Either way, today’s close, is KEY, but looks currently to not be playing ball. S&P +17.55%, SXXP +14.6% the last three days —these strong moves mean the bar is set higher– but the sentiment remains no less important.

3283k vs 282k – That was the weekly jobless claims, and the stark reality of what the economy is facing.  While the $2trln stimulus package is on its way to the House for a vote tomorrow, today’s datapoint is the first showing the coronavirus impact.  But US equities are moving higher today as quarter end approaches, trying to get back above the 2600 level on the S&P.  Given the drastic asset movements this month, pensions will be rebalancing their portfolios (into equities from bonds), helping support US stocks into the weekend.

Don’t Jinx It… These volatile times have given new meaning to a certain saying involving counting chickens, but at the moment the S&P is on track to post its first back-to-back gains since Feb 11-12. US indices appear to have found their mojo again after it appeared earlier that yesterday’s rally had exhausted all the stimulus bill enthusiasm, and the S&P is now ticking just above last week’s highs. Still, the worst is clearly yet to come in terms of virus cases in the US, with NYC expecting to reach its peak in 2-3 weeks and hospitals there already testing capacity. Add in unemployment data coming tomorrow, and it will be interesting to see just how long the current optimism holds up