Monday – April 20, 2020

By April 20, 2020Dark and Early

Market opens lower to start the new week. Crude Oil continues to get hammered as supplies continue to overwhelm the stalled demand. Uncertainty around the virus and opening up the economy continues to be the driver. It sure seemed like the rally got way ahead of itself. A V-shaped recovery seems highly improbable. Congress appears ready to pass a deal to provide more funding for the PPP, which already dried up. Retailers continue to struggle to survive. Neiman Marcus could file bankruptcy as early as this week. The tug-of-war between the Bulls and Bears continues, though the Bulls clearly had the momentum heading into the weekend. Bullish narrative continues to revolve around peaking coronavirus cases in hotspots like New York, expectations for a near-term reopening of some parts of the US economy, unprecedented fiscal and monetary stimulus, a shift in focus to 2021 earnings, and a whole lot of FOMO. The Bear camp remains worried about systemic risks with large parts of the economy paralyzed. Also skeptical of a V-shaped recovery, particularly given behavioral changes. Valuations and lack of buyback support also seen as overhangs. Last week saw back-to-back weekly gains on the S&P for the first time since February. Asian markets were mostly lower overnight with Australia the big decliner, followed by Japan, while China managed to buck the trend. European markets are weaker too. Treasuries mostly firmer with some curve flattening. The Dollar stronger against most currencies. Gold is up slightly. Volatility remains.

Have a great morning,

Mike Frazier

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