Somebody find Donald Trump a Sharpie so he can autograph a chart and send it over to Lou Dobbs at Fox.
Stimulus hopes, unlimited Fed backstops and a short squeeze managed to boost the Dow by the most in nearly 90 years on Tuesday. Amusingly, that’s not an exaggeration.
The Dow’s 11.3% gain marked the best session since 1933, a wild statistic befitting of the current environment, characterized as it’s been by eye-popping moves across all assets.
The massive move higher came on the heels of a similarly spectacular rally on Germany’s DAX.
The gains on the S&P were almost as impressive. The benchmark closed more than 9% higher – it was the fourth time in less than two weeks that the S&P has moved 9% or more in either direction. This is a truly ridiculous state of affairs:
The greenback held onto most of its losses, a sign that the global dollar shortage is abating, albeit slowly. Japanese banks have tapped the Fed’s swap lines for more USD funding than they did during the crisis. Specifically, Japan’s lenders have accessed in excess of $150 billion since March 17, including Tuesday’s operations. So it’s far too early to sound the all-clear.
Treasurys were whipsawed, still torn between “parachutes and helicopters” as the Fed pledges unlimited buying, while Congress is set to pass a stimulus bill totaling as much as $2 trillion. Ultimately, 10-year yields were cheaper by around 5bps at 0.85%.
Gold, meanwhile, staged a remarkable rally, rising nearly 5%, while crude jumped too.
Essentially, we’re now seeing a reversal of the “sell everything and go to dollar cash” dynamic which defined some of the more harrowing sessions last week.
Goldman is bullish on bullion, and if risk assets can stabilize (thereby removing some of the margin call pressure and attendant forced liquidations), gold should be able to benefit from expectations of monetary and fiscal largesse. “We believe this will likely lead to debasement concerns”, the bank said. “We are likely at an inflection point where ‘fear’-driven purchases will begin to dominate liquidity-driven selling pressure, as it did in November 2008”.
There’s also talk of a squeeze. “At issue is whether there will be enough gold available in New York to deliver against futures contracts traded on the Comex in New York with metals refiners shutting and efforts to contain the virus halting planes”, Bloomberg explains. That, in turn, has driven the premium in futures to the highest in four decades.
Meanwhile, Donald Trump made it as explicit as possible that he fully intends to flout the advice of some in the medical community in order to avert the economic fallout from containment measures aimed at stopping the spread of the coronavirus.
At a town hall on Fox Tuesday, the president said he wants to get the economy back up and running by Easter, which he called “a very special day for me”. (I know, I know.)
“I think Easter Sunday, you’ll have packed churches all over our country”, Trump declared. “This cure is worse than the problem”, he went on to insist, parroting his own line about the economic damage outweighing the danger of the virus spreading unchecked. “In my opinion, more people are going to die if we allow this to continue”.
March PMIs out Tuesday showed the US economy crashing amid lockdowns and the curtailment of economic activity.
State and local officials don’t necessarily agree with Trump about the relative wisdom of lifting protocols aimed at ensuring public safety. Neither does the World Health Organization, which warned Tuesday that the US may soon be the new virus epicenter.
“We are now seeing a very large acceleration in cases in the US. So it does have that potential. We cannot say that is the case yet but it does have that potential”, WHO spokeswoman Margaret Harris cautioned. “The US has a very large outbreak and an outbreak that is increasing in intensity”.
But don’t worry, Paul Tudor Jones and Dan Loeb are all over it.
On Tuesday afternoon, CNBC reported that Trump and Mike Pence held a call to discuss the virus’s impact on the economy with Loeb, Jones and Blackstone’s Stephen Schwarzman, all noted immunologists.
The discussion was described by sources as “constructive”.
Jesus, what is he thinking?
No pun intended?
Hahaha! Great, that’s one bouncy cat.
Gonna have a dead cat bounce on that flattened curve…
Mind-boggling short squeeze. Here’s an idea: Unplug the computers.
I want 10,000 copies of a photo of trump, suitable for wall hanging, penned with the quote from Bill Gates today: “It’s very tough to say to people, ‘Hey keep going to restaurants, go buy new houses, ignore that pile of bodies over in the corner, we want you to keep spending because there’s some politician that thinks GDP growth is what counts,’”
I think New York doctors should give those copies out, starting around, oh, Easter, to the families of patients who don’t get access to a ventilator.
Lining up the hedge funds to buy. Not so stupid.
For how long?
“Why Easter?”
“It would be a very beautiful day, a beautiful timeline.”
We’ll see how that works out. He’s been able to go off his hunches, opinions, and gut feelings without any backlash for 3 years, maybe another 30% off the Dow and people will start to react accordingly.
The telling point will be when large, dense conservative cities enter uncontrollable crisis mode. Watch New Orleans. Trump is a natural when he has resistance or opposition. Right now, liberal governors are leading, and Trump gets to sit back passively and project calm. Most Trump supporters still consider this largely a Democratic hoax–why panic when Trump is so calm? Conservative governors aren’t being proactive. When New Orleans et al start melting down, Trump might have to actually step in and lead where the conservative governors are still channeling “it’ll wash over us, like a miracle.”
What happens to his plan to get America back to work–and save his precious Dow–when he’s reinitiating national emergency powers down the line?
Maybe he’ll have “a hunch” that they should cram ’em into the Superdome. Worked for Dubya.
H-Man, Rome is burning while Nero is playing the fiddle.
Why Easter? My guess is the mega MAGA churches are taking a social distancing donation hit and the churches are all over Trump to make sure butts are in the pews by Easter so they don’t miss out on those smooth milk chocolate and the sweet fondant center Cash-bury Egg donations.
Why Easter? I’m guessing the mega MAGA churches are taking a social distancing donation hit and are putting pressure on Trump to get butts in pews by Easter so they can collect those smooth milk chocolate and the sweet fondant center Cash-bury egg donations.
I’m sorry but someone has to say it: Morons.
Does the Gee in GOP stand for genocide?
Trump is in the hospitality trade. His properties must be bleeding red. Trump cares infinitely more for his business interests that for the health and safety of Americans. A few million deaths are not a yuge concern in comparison.
Like the tobacco companies, he may be killing his own customers. Let’s say his supporters take Hannity’s lead and significantly reduce their numbers. How will that work for him in November? Is it just me, or does this seem like the calculus of a very stable genius?
Many hedge fund bigwigs are touting a big bounce to the 2700+ level before the carnage continues. I’m not so sure we’ll even make that mark before retesting the lows.
The international EM situation (Brazil, India, Turkey) has yet to really get started. So on top of the pandemic and the oil wars, we could very well have a whole ‘nother crisis to add to the mix in the next two months (sovereign defaults or currency collapse). Not every country out there has the exorbitant privilege of being the world’s reserve currency.
I’ve just done my mkt shopping and feel the market is way overvalued. If you believe the next business cycles will totally ignore growth, valuations, earnings and reality, this is a time to buy and also a time to shop for an Easter hat and gloves and scootch next to your favorite community members, and hoot it up about the fake virus. Me, I’m believing cash is King and I’ll wait for real bargains. People have been shooting fish in barrels for a decade and none of us have ever seen this type of bat urine in our lifetimes!!!!! Amen
It feels like the marketing department is running the company. The Easter date gets picked for the obvious metaphor and now the virus curves must bend to fit in the date. This marketing department is never afraid to over-promise either….
Unfortunately I think this is win-win for him, if the disease magically abates he gets to claim victory. If it doesn’t he can suspend the election due to virus concerns. What are people going to do… go out and protest?
Love the reference to largest gain since 1933. Isn’t that when the Great Depression started?