Source:
My short summary of the
Weekly Commentary
By Doug Noland
For the week ending May 1, 2020:
GLOBAL STOCKS:
S&P500 down 0.2% (down 12.4% y-t-d)
Dow Industrials down 0.2% (down 16.9%)
Dow Utilities down 4.2% (down 12.7%)
Down Transports up 0.6% (down 25.3%)
S&P 400 Midcaps up 2.6% (down 22.9%)
Small cap Russell 2000 up 2.2% (down 24.5%)
Nasdaq100 down 0.8% (down 0.2%)
Biotechs down 5.5% (down 0.9%).
With GOLD bullion down $29,
the HUI gold stock index
was down 1.9% (up 12.5%).
U.K.'s FTSE up 0.2% (down 23.6% y-t-d).
Japan's Nikkei up 1.9% (down 17.1%).
France's CAC40 up 4.1% (down 23.5%).
German DAX up 5.1% (down 18.0%).
Spain's IBEX 35 up 4.7% (down 27.5%).
Italy's FTSE MIB up 4.9% (down 24.7%)
Brazil's Bovespa up 6.9% (down 30.4%)
Mexico's Bolsa up 5.4% (down 16.3%)
South Korea's Kospi up 3.1% (down 11.4%).
India's Sensex up 7.6% (down 18.3%).
China's Shanghai up 1.8% (down 6.2%).
Turkey's Istanbul National 100
up 2.4% (down 11.6%).
Russia's MICEX up 3.5% (down 13.0%).
U.S. BONDS:
US Ten-year Treasury yields
added a basis point to 0.61%
(down 130bps)
US Treasury long bond yields
jumped eight bps to 1.25%
U.S. MORTGAGES:
Freddie Mac 30-year
fixed mortgage rates
dropped 10 bps to 3.23%
(down 91bps y-o-y).
Fifteen-year rates
fell nine bps to 2.77%
(down 83bps).
Five-year hybrid ARM rates
sank 14 bps to 3.14%
(down 54bps).
Jumbo mortgage
30-year fixed rates
down six bps to 3.64%
(down 58bps).
U.S. FEDERAL
RESERVE BANK:
Federal Reserve Credit
over the past year,
expanded $2.726 TN,
or 70%.
M2 (narrow) "money" supply
over the past year
surged $2.718 TN,
or 18.7%,
COMMODITIES:
Bloomberg Commodities Index
up 0.8%
(down 24.9% y-t-d).
Spot Gold down 1.7% to $1,700
(up 12.0%).
Silver down 3.3% to $14.94
(down 16.6%).
WTI crude up $2.84 to $19.78
(down 68%).
Gasoline up 15.9%
(down 55%)
Natural Gas up 8.2%
(down 14%).
Copper down 1.0%
(down 17%).
Wheat down 2.6%
(down 8%).
Corn down 1.4%
(down 18%).
NEWS FROM
LAST WEEK:
April 27 – Reuters (Cate Cadell):
“Global confirmed coronavirus cases surpassed 3 million on Monday, as the United States neared 1 million cases… It comes as many countries are taking steps to ease lockdown measures that have brought the world to a standstill over the past eight weeks.”
April 27 – Bloomberg:
“Chinese scientists say the novel coronavirus will not be eradicated, adding to a growing consensus around the world that the pathogen will likely return in waves like the flu. It’s unlikely the new virus will disappear the way its close cousin SARS did 17 years ago, as it infects some people without causing obvious symptoms like fever. This group of so-called asymptomatic carriers makes it hard to fully contain transmission as they can spread the virus undetected, a group of Chinese viral and medical researchers told reporters.
April 26 – Bloomberg (Michael Hirtzer and Tatiana Freitas):
“ Almost a third of U.S. pork capacity is down, the first big poultry plants closed on Friday and experts are warning that domestic shortages are just weeks away. Brazil, the world’s No. 1 shipper of chicken and beef, saw its first major closure… Key operations are also down in Canada, the latest being a British Columbia poultry plant. While hundreds of plants in the Americas are still running, the staggering acceleration of supply disruptions is now raising questions over global shortfalls. Taken together, the U.S., Brazil and Canada account for about 65% of world meat trade.
April 29 – Bloomberg (Justina Lee):
“With the S&P 500 up 28% from its March trough and volatility fading, systematic trend followers are turning bullish on the U.S. benchmark, according to Nomura Holdings Inc. Typical models tracked by commodity trading advisers -- a regulatory term for the $300 billion world of futures speculators -- are flashing buy signals as U.S. stocks enjoy a rapid rebound a month after their sharpest correction in history.”
April 30 – Reuters (Humeyra Pamuk, Matt Spetalnick, Jeff Mason, David Brunnstrom, Andrea Shalal and Tim Ahmann):
“U.S. President Donald Trump said… his hard-fought trade deal with China was now of secondary importance to the coronavirus pandemic and he threatened new tariffs on Beijing, as his administration crafted retaliatory measures over the outbreak. Trump’s sharpened rhetoric against China reflected his growing frustration with Beijing over the pandemic… Two U.S. officials… said a range of options against China were under discussion, but cautioned that efforts were in the early stages.”
April 29 – Financial Times (James Politi and Colby Smith):
“Jay Powell sent an unmistakable message to investors and the public…: hopes for a quick economic rebound in the second half of the year risked being an illusion and the Federal Reserve was gearing up for a long fight against the effects of the coronavirus pandemic. ... Mr Powell piled on further during the virtual press conference ... Looking out over the ‘next year or so’, there was still huge uncertainty over whether the virus itself could be defeated, (so) there was the risk of ‘damage to the productive capacity of the economy’, there was a ‘very negative’ global dimension to the problem, and consumers would be cautious as they started spending again. ‘The chances are that it won’t go right back to where we were,’ he said.”
April 29 – New York Times (Ben Casselman):
“U.S. gross domestic product, the broadest measure of goods and services produced in the economy, fell at a 4.8% annual rate in the first quarter of the year… That is the first decline since 2014, and the worst quarterly contraction since 2008… There is much worse to come. Widespread layoffs and business closings didn’t hit until late March in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully, to show that G.D.P. contracted at an annual rate of 30% or more, a scale not seen since the Great Depression.”
April 30 – Associated Press (Christopher Rugaber):
“Roughly 30.3 million people have now filed for jobless aid in the six weeks… It adds up to more than one in six American workers. With more employers cutting payrolls to save money, economists have forecast that the unemployment rate for April could go as high as 20%. That would be the highest rate since it reached 25% during the Great Depression.”
April 30 – Financial Times (Martin Z. Braun):
“More than 30 million workers, or nearly one fifth of the labor force, relying on unemployment checks with vast segments of the economy shut down. The unprecedented scale of the payouts are depleting the state governments’ unemployment trust funds, nearly half of which had less set aside than needed to contend with a recession. In the first two weeks of April alone, New York drew $1 billion from its account, or more than 40% of the total… California’s balance has dropped by more than $2 billion since March 16… Texas, which had about $1.3 billion left to pay benefits in mid-April, has submitted a loan request to the U.S. Labor Department, as have Illinois, Connecticut and Massachusetts.”
April 30 – Bloomberg (Reade Pickert):
“U.S. personal spending plummeted in March by the most on record. Household outlays, which account for about two-thirds of the economy, plunged 7.5% from the prior month, the sharpest drop in… records back to 1959… The median estimate in a Bloomberg survey… called for a 5.1% slump. Incomes declined 2%.”
April 28 – Wall Street Journal (Paul Vigna):
“Through Tuesday, 83 U.S. companies and public investment funds, like real-estate investment trusts, have suspended or canceled their dividends, the highest number in data going back to 2001, according to S&P Global Market Intelligence. In the previous 10 years, 55 companies eliminated their dividends…”
April 26 – Reuters (Susan Heavey):
“New York City needs a $7.4 billion in federal aid to offset economic losses from the coronavirus, Mayor Bill de Blasio said…, urging President Donald Trump to push his fellow Republicans in the U.S. Senate to back more relief funding for states and cities. ‘The federal government must make us whole for us to be able to be in a position to restart,’ De Blasio, a Democrat, said…”
April 29 – CNBC (Lauren Thomas):
“More than 50% of the department stores anchoring America’s malls are going to close permanently by the end of next year, a new report by Green Street Advisors predicts. There are about 1,000 malls still open in the U.S. And roughly 60% of those have department store retailers, such as Macy’s, as anchor tenants, the commercial real estate services firm said.”
ITALY:
April 30 – Bloomberg (Alessandro Speciale and Alessandra Migliaccio):
“Italy’s economy fell into a deep recession even before suffering the full effect of a drastic economic lockdown. The euro area’s third-largest economy shrank 4.7% in the first quarter, the biggest drop since the series started in 1995. The contraction, bigger than the 3.8% slump in the currency union as a whole, compares with a 5.4% forecast by economists.”
GERMANY:
April 29 – Bloomberg (Birgit Jennen):
“Germany expects the impact of the coronavirus to plunge the economy into its worst recession since the nation began its recovery in the aftermath of World War II… Gross domestic product is forecast to shrink by 6.3% in 2020, more than even during the financial crisis a decade ago, according to Economy Ministry projections… The low point of the recession -- the worst since at least 1950 -- is expected in the second quarter, before a gradual recovery and growth of 5.2% next year.”
BRAZIL:
April 27 – Reuters (Jamie McGeever):
“The outlook for Brazil’s economy continues to deteriorate…, as economists at global bank Citi slashed its 2020 forecast and predicted ‘the worst annual contraction ever’ this year. Citing more widespread and lasting damage from the COVID-19 crisis than previously thought, Citi’s economists said gross domestic product in Latin America’s largest economy will shrink 4.5% this year, versus an earlier forecast of a 1.7% decline. That would be deeper than the 4.25% contraction in 1981, the biggest annual fall in output going back to at least 1962…”
BRAZIL:
April 27 – Reuters (Jamie McGeever):
“Consumer and business confidence in Brazil fell to the lowest on record in April as the coronavirus crisis gripped Latin America’s largest economy…, with the outlook suggesting no sign of improvement in the coming months. The monthly surveys, carried out by the Getulio Vargas Foundation (FGV), showed record low confidence and optimism across the board, including intentions to buy consumer durable goods and the outlook for household finances.”
INDIA:
April 26 – Bloomberg (Divya Patil, Bijou George, and Anurag Joshi):
“India’s credit markets were jolted late last week when a major money manager halted withdrawals from mutual funds, adding to a worrying string of superlatives that have been piling up since well before the coronavirus pandemic. Franklin Templeton’s decision to wind up $4.1 billion of Indian debt funds was the biggest-ever forced closure of funds in the country. It immediately sent corporate borrowing costs soaring, with the spread on one benchmark index rising to a seven-year high. Fresh on its heels, the local venture of France’s AXA SA said it had marked down the value of some of its bond holdings.”
CHINA:
April 29 – Bloomberg (Josh Wingrove):
“China poses a threat to the world by hiding information about the origin of the coronavirus that it allowed to spread to other countries, U.S. Secretary of State Mike Pompeo said. President Donald Trump’s top diplomat… ratcheted up the accusations between the U.S. and China over the virus. White House adviser Jared Kushner… also said… the president has ordered an investigation into the origins of the virus and will hold those responsible accountable for its spread. ‘The Chinese Communist Party now has a responsibility to tell the world how this pandemic got out of China and all across the world, causing such global economic devastation,’ Pompeo told Fox News…, where he repeatedly criticized China’s government. ‘America needs to hold them accountable.’”
SAUDI ARABIA:
April 30 – Reuters (Timothy Gardner, Steve Holland, Dmitry Zhdannikov and Rania El Gamal):
“In an April 2 phone call, Trump told Saudi Crown Prince Mohammed bin Salman that unless the Organization of the Petroleum Exporting Countries (OPEC) started cutting oil production, he would be powerless to stop lawmakers from passing legislation to withdraw U.S. troops from the kingdom… The threat to upend a 75-year strategic alliance… was central to the U.S. pressure campaign that led to a landmark global deal to slash oil supply as demand collapsed in the coronavirus pandemic - scoring a diplomatic victory for the White House.”
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