Archives of “March 2020” month

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There is no plan for a ‘dramatic’ US economic plan

  
  Analysis
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The promise is going to be tough to deliver

President Trump helped to reverse market sentiment late yesterday when he promised to unveil “dramatic” and “major” economic policies today.
CNBC’s Eamonn Javers reports:
I’m told that there is no finalized economic plan inside the White House now. As of last night, I was told: “it’s not there right now.” A lot of details to work out.
Trump mentioned a payroll tax cut and that’s a bit of a trap for Democrats. They’re pushing for paid sick leave but Trump and Republicans will try to bundle in more. If/when Democrats reject it, Trump will frame it as Democrats being against a tax cut.
There’s also this from Politico’s Jake Sherman:
The promise is going to be tough to deliver

What’s urgently needed is something on paid sick leave to slow this down, rather than planning for economic impacts. Putting in a tax cut and politiking is going to drag it out and eventually cost more.

China president Xi says that Hubei province should resume production step by step

  
  Analysis
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Comments by China president Xi Jinping via state media

China
  • Coronavirus control tasks in Hubei, Wuhan remain arduous
  • Will speed up application of effective medicines for coronavirus
  • Hubei’s economy is only hit in the short-term, long-term momentum not affected
Xi was in Wuhan for a visit today and when you see such a symbolic move – sort of like an army general taking his victory lap over a conquered land – then there is little chance that the current lockdown in Hubei will last for too long.
As such, Hubei will slowly go back to normality soon enough and we are already seeing early signs of that as seen here with the city of Qianjiang.

Oil ignores the Saudi-Russia war drums so far today

  
  Analysis
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Oil sneaks back above $34, bounce of over 9% for today

WTI H1 10-03

Oil moved a little lower on the headline that Saudi Arabia would step up production to 12.3 mil bpd next month but buyers leaned on the near-term trendline support to keep a move towards the $34 level seen currently.
Since the headline, there have been a couple of Russia and Saudi Arabia remarks as well but so far oil is not faltering just yet. So far, the market mood has been relatively positive with US futures also seeing gains of over 4% today.
But with coronavirus fears still persistent and Saudi Arabia and Russia heading for a prolonged duel, it is going to be hard to see how oil can sustain any meaningful gains.
For today, look out for the overnight high @ $34.88 as that may provide a technical reprieve on a move higher in oil prices. But in the big picture, there’s only so long that oil can ignore the war drums before falling lower once again.

Saudi Arabia says that doesn’t see wisdom in a OPEC+ meeting in May or June

  
  Analysis

The battle has just begun

As mentioned earlier, until either of them shows some willingness to compromise, there is no point for any more OPEC+ meetings moving forward.

Meanwhile, Russian energy minister Novak has just called a meeting with Russian oil companies for tomorrow to discuss more on the matter. I just don’t see how either side will be backing off so early in the battle. So, expect many more months of this to come.

South Korean news organisation reports nearly 200 North Korean soldiers have died from coronavirus

  
Analysis, Politics
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Daily NK say the Covid-19 virus killed 180 North Korean soldiers in January and February

  • And that another 3,700 military personnel are in quarantine
Yonhap say almost 10,000 people in total in NK have been quarantined (nearly 4,000 have been released since they did not present symptoms).
The South China Morning Post convey the news, which is just awful if true.
  • Daily NK attributed its information to a medical corp report from within the North Korean military
  • Officials are looking into increasing the soldiers’ supply of food so their bodies are better equipped to resist Covid-19
Daily NK say the Covid-19 virus killed 180 North Korean soldiers in January and February 

Japan finance minister Aso was asked about the potential for intervention in yen

  
  Analysis
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In response, Aso said that while he had no comment on volatility in the FX market he will respond appropriately depending on market conditions

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In Japan intervention in the currency market is directed by the Ministry of Finance. The bojj Bank of Japan will take the necessary steps in the market, but the directive comes from the Ministry. This is not the case in most other DM central banks, where intervention decisions are taken by the central bank itself (there is often consolation with the relevant government department of course).
In response, Aso said that while he had no comment on volatility in the FX market he will respond appropriately depending on market conditions

White House says US President Trump has not been tested for coronavirus

  
  Analysis

The question was asked at the COVID-19 briefing earlier

Answered now.
There has been speculation that given the number of Republicans self-quarantining after being diagnosed with the infection that Trump himself may have been infected. After all, Trump spends a lot of time meeting and greeting supporters, handshakes of course, so the risk is real. Let’s hope he remains free of the virus and get the bests care possible if necessary, and the same for all in the US.

US stocks suffer worst day since 2008

  
Analysis, Global Indices
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Closing levels for the main US indexes

Closing levels for the main US indexes
US stocks fell to fresh session lows of 8% late in the day but staged a small bounce late in the day to finish at slightly better levels.
Nonetheless, it was the worst day for US stock markets since 2008 and possibly the worst day ever for oil stocks.
Here is the damage:
  • S&P 500 -7.6% — a 226 point decline to 2746
  • DJIA a 7.8% decline or -2015 points to 23,849
  • Nasdaq -625 points to 7950 — a 7.3% decline
  • Toronto TSX -9.3%
These headlines all sound terrible and this was the worst day for US stocks since December 2008 but when you consider that we’re only back to the June lows, it doesn’t seem that bad. A fall to the 2018 lows would be a decline of 31%.
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