Market participants will be glad to see the quarter end on Tuesday, that’s for sure.
Almost all major equity gauges posted outsized losses in Q1, although a smattering of rallies over the past several sessions helped cushion the blow, as did wave after wave of central bank action in March.
European stocks were tracking for one of their worst quarters in history.
The rub is: Next quarter will surely be worse economically, if not for risk assets, although maybe that too.
“Today is the end of the first quarter of 2020. And no one could be faulted for saying ‘good riddance'”, former trader Richard Breslow wrote. “It’s been miserable on so many levels. In fact, it’s probably safe to say, most people are already looking forward to bidding goodbye to the second quarter”.
The dollar gained for a second day, as currencies tracked month- and quarter-end flows.
The economic outlook seems to get darker by the day – at least if you go by the evolution of forecasts. Goldman – which shocked earlier this month with what, by now, seems like a somewhat “pedestrian” call for a 24% contraction in the US economy in Q2 – has revised their forecast.
“We are making further significant adjustments to our GDP and employment estimates”, Jan Hatzius says. “We now forecast real GDP growth of -9% in Q1 and -34% in Q2 in QoQ annualized terms’. That’s down sharply from -6% and -24% previously.
The bank sees the unemployment rate spiking to 15% by midyear.
The good news is, Hatzius sees a stronger rebound in Q3 – 19% versus the previously expected 12%. “Our estimates imply that a bit more than half of the near-term output decline is made up by yearend”.
Still, 2020 is going to be abysmal. Real GDP will fall 6.2% this year on an annual-average basis, Goldman now projects. The bank previously said that figure would be 3.7%.
This of course comes as Donald Trump extended social distancing guidelines to the end of April and said (on Sunday) that the economy likely won’t start to heat back up in earnest until June 1.
“The better you do, the faster this whole nightmare will end”, Trump said. “We can expect that by June 1, we will be well on our way to recovery, we think by June 1. A lot of great things will be happening”.
Even that may prove optimistic. And he apparently knows it. The White House and Congress are already pondering a fourth set of stimulus measures.
Meanwhile, in Russia, efforts to contain a coronavirus outbreak in Moscow took a turn for the dystopian. Residents of the city will now need to apply for a QR code from city hall every time they intend to leave their homes. That’s according to Kommersant citing a government presentation on the proposal and a pair of unnamed officials.
That QR code will be necessary to go to the store, walk pets and even to take out the garbage. Those caught outside without a code are subject to being escorted home by the police.
“It’s enough to make you go crazy”, a 48-year-old woman named Nadezhda told The Guardian while sitting by the front door to her apartment building.”I’d barely heard of coronavirus [until this month], and now we’re going to spend the next month climbing the walls at home. Nobody was prepared for this”.