Somebody find Donald Trump a Sharpie so he can autograph a chart and send it over to Lou Dobbs at Fox.
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”.