Archives of “March 19, 2020” day

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This is the biggest jobless claims report in a long time

  
  Analysis
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Initial jobless claims top the economic calendar

Initial jobless claims top the economic calendar
The weekly initial jobless claims report at the bottom of the hour is for the week ending March 14 so it’s before the real coronavirus crunch, which is a week or two away.
Last week was 211K and the ‘consensus’ this week is 220K but that’s far lower than what the market is expecting. State unemployment claims in some places are up 5x to 10x.
Last week I was warning about this and when I wrote that ‘The coming wave of unemployment claims is going to be unprecedented‘ there were comments like this:
Where are you guys coming up with this stuff… I was out last night eating and food places are full stores are full… you are acting like this is the end of the world…this is being blow up to be way way more that what it is… which is nothing more than a cold with a twist on it that has not even gone above last year flu session. This is completely stupid what the news media is doing.
Now it’s conventional wisdom.
What we haven’t figured out is if the bureaucracy can handle and process the level of claims to actually get people the money. That’s more important right now than a $1 trillion piece of legislation the White House is proposing to get people money at the end of April.

Japan visitors plunge by 58% in February, the most since the 2011 earthquake, tsunami

  
  Analysis

Total foreign visitors to Japan fell by 58.3% y/y in February

Japan
The 58% drop brings the total amount of foreign visitors to just over 1 million.

That is the biggest drop since April 2011 with visitors from China experiencing a 88% y/y plunge as the coronavirus outbreak keeps travelers at home. Meanwhile, visitors from South Korea also fell by a whopping 80% y/y.

I can only imagine the situation being worse at the present time as the virus outbreak in Japan itself has been a deterrent to global travelers – not to mention travel restrictions from all over the world over the last few weeks as well.

Dollar flexes its muscles to start the session

  
Analysis, Forex

EUR/USD falls to a session low of 1.0845

EUR/USD D1 19-03

The dollar is pushing forward with gains once again as it creeps higher against the euro and franc to begin the European morning. EUR/USD is brought down to a session low of 1.0845 after having traded around 1.0920 a few hours ago.
The greenback is also maintaining solid gains against the aussie and kiwi, while USD/JPY is looking to keep above 109.00 to start the session.
For EUR/USD, the pair looks to be making its way back to test the 1.0800 level but the key support level to watch out for will be the February low @ 1.0778.
Once that gives way, it opens up yet another slippery slope for the greenback to build further momentum to the downside.
As things stand, it looks like the dollar funding pressure is continuing to run its course.

European equities in a mixed mood to start the day

  
Analysis, Global Indices

Investors scratching their heads on what to make do of the ECB stimulus

  • Stoxx 600 -0.6%
  • Germany DAX -0.6%
  • France CAC 40 +0.4%
  • UK FTSE +0.1%
  • Italy FTSE MIB +3.0%
On the one hand, Italy seems to be responding well but that is mainly because of BTPs surging and bank stocks are heavily weighted in the FTSE MIB. But elsewhere, the mood is more mixed as we are seeing stocks fluctuate between flat levels and losses and gains.
Update: The DAX has already seen a swing from 0.7% gains at the open to 0.6% losses and is now back up by 0.5%.

ECB announces a new coronavirus pandemic response, EUR750bn purchase program

  
  Analysis
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European Central Bank announcement

  • €750 billion pandemic emergency purchase programme (PEPP)
  • a new temporary asset purchase programme of private and public sector securities to counter the serious risks to the monetary policy transmission mechanism
  • purchases will be conducted until the end of 2020 and will include all the asset categories eligible under the existing asset purchase programme
  • says for the purchases of public sector securities, the benchmark allocation across jurisdictions will continue to be the capital key of the national central banks.
  • says to the extent that some self-imposed limits might hamper action that the ECB is required to take in order to fulfil its mandate, the governing council will consider revising them to the extent necessary
  • says at the same time, purchases under the new PEPPwill be conducted in a flexible manner. this allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions.
  • says a waiver of the eligibility requirements for securities issued by the Greek government will be granted for purchases under PEPP.
  • says the governing council is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as longas needed
  • the governing council will terminate net asset purchases under PEPP once it judges that the coronavirus covid-19 crisis phase is over, but in any case not before the end of the year
  • says to expand the range of eligible assets under the corporate sector purchase programme (CSPP) to non-financial commercial paper, making all commercial papers of sufficient credit quality eligible for purchase under CSPP
  • says the governing council of the ECB is committed to playing its role in supporting all citizens of the euro area through this extremely challenging time

Summary Headlines via Reuters

ES futures have flipped around to positive on this supportive announcement after losing ground earlier on the reopening for evening trade.
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There are plenty of responses to these sorts of actions along the lines that they will not ‘cure’ the coronavirus. Correct. Central banks are applying band-aids to mitigate (hopefully) the impacts upon econiomies, doing what they can do. Don’t expect Lagarde, Powell, et al find a miracle medical cure, K?
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