One Step Forward, One Step… It’s been over a month since the S&P has managed to post back-to-back positive sessions, and after another long week a double dose of green would be a nice way to head into the weekend. Things were looking promising this morning after S&P expiry went relatively smoothly and the VIX finally showed signs of easing, but right on cue more virus headlines have darkened the mood. Word that pubs in London will close and that 100% of the non-essential NYC workforce must stay home erased those gains, and a Trump press conference announcing new border policies further dented US indices, which are just now attempting to climb off the day’s lows

Calm before another tornado…? Quad witching is coming. Tomorrow is shaping up to be one of the most volatile trading days in years during one of the most volatile months in market history. The S&P has risen or fallen at least 4% in eight straight sessions, which is actually the longest streak in history. Today is quite a bit less dramatic (S&P o +1.16% thus far, but the day is still young). Traders are bracing for this particular quad witching, especially as options contracts outstanding tied to the S&P hit a record this week. More than $1.5 trillion worth will expire – the largest motional ever– thus extending the voracious stress levels of investors globe-wide.

The new normal – Futures once again limit down overnight, but the circuit breaker did not get triggered until 12:56 today (versus just after the open the previous three times).  Looking around at all of the assets, the only one trading in the green is the Dollar, as everyone is rushing to cash (not just investors).  Oil is down 21%, a level last seen in 2002. Metal commodities are down, as well as Bonds.  One technical level our team has been watching is the 2346 on the SPX (from Dec. 2018), the index has now broken it, next level is -15% from here.

The New Normal Rolls On – From futures halting limit up last night, to US indices dipping into the red this morning, to stocks now coming off their intraday highs of almost 7% – when’s the last time we’ve had a dull moment? Trading remains volatile (to say the least) as many traders continue to adjust to working remotely and countries around the globe brace for the worst of the virus spread. San Francisco’s issuance of a “shelter in place” directive seems like a blueprint other cities will inevitably follow, yet the S&P has continued to hold above the lows made Christmas Eve 2018

Grab Yourself a Snickers… Because most of us won’t be going anywhere for a while. Talk about a marketing campaign that keeps on giving! The impossible has become the inevitable, with some companies going split teams and most sending everyone to work from home. Schools have been closed and will continue to be so for likely much longer than initially anticipated and bars/restaurants are following suit, with talk of a national curfew possibly going into effect. Get comfortable.

It started off well, and…  Things started off nicely today with markets bouncing after yesterday’s big drop.  Most sectors were trading higher (except Homebuilders, which has underperformed all session), but an announcement that Trump was going to hold a 3pm news conference to declare a National Emergency took some of the bid out.  As the US waits, equities are rallying once again, with the S&P +3% from the European close. Leading that rally, Banks (+3.3% from EU cls), Transports (+3.3%) and Biotech (IBB +3.7%).

Short and sweet (sour) today…

Nothing is in the green – Risk-off is now in every asset as investors move to cash.  With little guidance from Washington, and events/ schools/ countries (Italy) shutting down, the economic impact is not even close to being felt.  Sell first and then ask questions reigns. Investors want to see fiscal support, and they are not getting it yet.

Live to fight another day…

Pandemic Pandemonium…Policy stimulus is supportive in general, but seemingly not enough until we get the so-called Corona pandemic under control.  The House of Reps is expected to announce an economic relief package including insurance, paid sick leave, and family and medical leave in the bill today. However, The Dems don’t love President Trump’s tax cut proposal (“non-starter”). Oh well. But markets are not feeling any relief. Only a select, expected few — USD, Bonds and The Vix (and nat gas actually) are in the green.

Short-Circuiting – It’s never a good sign when everyone is brushing upon the circuit-breaker rules pre-mkt. US indices were open for ~4 minutes before the halts came into play. It was the first time they’ve been triggered since Dec, 2008. When the defensive sector are yielding losses of 4-5%, you know things have gone really sour. 4 different sectors are currently seeing DOUBLE-DIGIT losses. We did see some brief bargain-hunting in travel-related names and the oils; BRIEF. About that…