Eye Of The Tiger.

“Given the pain that we see near-term in the US and Europe, this is unprecedented since the Great Depression, in terms of magnitudes”, Deutsche Bank’s Peter Hooper told Bloomberg TV last week.

That captures the mood. March payrolls underscored the notion that the largest economy on the planet was rapidly shedding jobs even before some of the stricter stay-at-home orders were put in place during the last two weeks of the month. Jobless claims for those two weeks reflect an unprecedented shock.

And yet, even as the worst of the economic pain still lies ahead, the news flow wasn’t overtly dour on Sunday. In New York, for example, fatalities declined for the first time, and Italy reported the least deaths in weeks. Similarly, daily fatalities in France and Spain fell. Washington State is set to give hundreds of ventilators back to the national stockpile in a sign the state’s crisis may not be as acute as feared. New Jersey reported “just” 71 deaths versus 200 the previous day.

Taken together, all of that suggests things are improving in the “hot spots” – at least for now. For once, Asia didn’t wake up to a deluge of news that suggests the epidemic is rapidly worsening.

Of course, it’s still bad out there. The overall case count continues to climb, as does the death toll, which means even “good” days are actually “bad” days in an absolute sense. It’s all relative.

“Financial markets spent last week grappling with the fact that the US and most economies around the world will be partially shut down for at least another month”, JonesTrading’s Mike O’Rourke said, in a Sunday evening note. “Markets and investors can only hope that today’s progress versus the virus continues”, he went on to say, adding that “in the meantime, investors must manage market developments as they unfold”.

“One day at a time” is the mantra for now. But, as alluded to here at the outset, there is no escaping our fate when it comes to the near-term economic hit, something Deutsche’s Hooper underscored in his latest note.

“We estimate that the increasingly stringent containment measures being taken currently and prospectively to combat COVID-19 in Europe and the US are depressing the levels of consumer and business spending by more than anything we have seen since the Great Depression”, he wrote last week. “The peak-to-trough decline in EA and US GDP in this crisis is likely to be more than double that during the more prolonged Global Financial Crisis”.

(Deutsche Bank)

To say that makes for an uncertain environment would be to grossly understate the case. It still feels as though most market participants haven’t quite come around to the idea that when it comes to corporate profits in the second quarter, we’re flying almost completely blind.

I suppose it’s possible to simply “look through” the next quarter or two – to write off (figuratively and in some sense literally) what are sure to be God-awful numbers as a kind of “sunk cost”. After all, that’s how we’re supposed to look at the GDP numbers, I’m told. It’s an “engineered” shutdown, and therefore maybe doesn’t count as a “classic” recession or depression.

And, look, I get that. It does make sense if you’re looking at it from a dispassionate perspective, either safe in your employment or otherwise comfortable in your financial position. But for the millions of people who are set to lose their jobs, it will seem very real indeed.

“At its peak impact, we will likely see 15 million US jobs lost despite massive government efforts to stem these losses”, Deutsche’s Hooper says, noting that “the rise might only be half as large in the euro area thanks for ‘shortshift’ work schemes, although the benefits will differ by country”.

Read more: As Economic Confidence Collapses In Europe, Germany Pays Workers To Stay Home

He goes on to say that “as bad as these expected numbers are, they could be much worse were it not for phenomenally timely and aggressive monetary and fiscal policy responses.”

Those policy responses will be in focus in the days ahead. “The week is likely to bring additional policy stimulus but more important will be news on how swiftly and effectively already-adopted policy measures are implemented”, SocGen’s Klaus Baader wrote in a Sunday evening piece. “Policy implementation is bound to run into difficulties in places, and fine-tuning will be necessary”.

Recall that last week ended with US lenders struggling to implement the $349 billion emergency small business loan program. Expect much more in the way of headlines around that going forward.

“Retail investors were not the ones responsible for the first phase of the correction i.e., the first two weeks, but they did amplify the down move in risky markets during the last two weeks of the corrections, in particular in corporate bonds”, JPMorgan’s Nikolaos Panigirtzoglou reminds you, before delivering a somewhat upbeat assessment. “The good news is that this previous panicky phase in retail investors’ behavior appears to be behind us”.

It’s not all good news as the new week dawns, though. Boris Johnson was hospitalized due to persistent COVID-19 symptoms and a tiger in New York’s Bronx Zoo became infected after coming into contact with a keeper who was positive but asymptomatic.

According to the US Department of Agriculture, it’s the first known case of a tiger contracting the virus. The cat (and her compatriots) are expected to make full recoveries.

4 year old female Malayan Tiger at the Bronx Zoo tests positive for #covid19 … 3 other tigers and 3 African lions also have dry coughs. All cats expected to recover. @BronxZoo says asymptomatic employee infected the cats. #nbc4ny (?: WCS) pic.twitter.com/7KhIJpcCjv

— Steven Bognar (@Bogs4NY) April 5, 2020