To Survive a War, You Gotta Become a War – Jerome “Rambo” Powell? In another example of the Fed flexing their unlimited ammo muscles, they announced another repo facility and a VERY important one in our opinion. A) It lowers global US$ scarcity risk and B) alleviates upward pressure on USD (perhaps an unintended but +ve consequence). The window is open to north of 250 central banks/int’l monetary authorities and they can exchange their Treasury holdings for US$ at a rate of IOER +25bps overnight. Chairman Jer-ambo isn’t playing around…

Thickening Skin… With Trump giving up on his vision of an Easter resurrection for the American economy and scary scenes beginning to unfold in NYC hospitals over the weekend, US futures had every right to flash red overnight. The fact that US indices have fought their way back and are now holding onto gains shows investors may have built up some callouses to scary virus headlines and once unthinkable economic datapoints (see the S&P barely flinching at a -70 print on Dallas Fed manufacturing). Still the worst is yet to come on both of those fronts, and plenty of chatter around a W-shaped recovery leaves the impression many are expecting a reversal of fortune once the quarter-end pension rebalancing mojo officially peters out

FREAKY FRIDAY, PLEASE. Stocks opened on the back foot and have remained that way today, but there’s still a virtual eternity between now and the close— thus, anything could happen. There is at least one weekly certainty surrounding these volatile times though— Friday’s get sold without fail. From February 28th onward, EVERY Friday has seen the same pattern —risk-off into the weekends. In the same way that we need the $ to keep easing, we need Friday’s to become more bullet-proof. Either way, today’s close, is KEY, but looks currently to not be playing ball. S&P +17.55%, SXXP +14.6% the last three days —these strong moves mean the bar is set higher– but the sentiment remains no less important.

3283k vs 282k – That was the weekly jobless claims, and the stark reality of what the economy is facing.  While the $2trln stimulus package is on its way to the House for a vote tomorrow, today’s datapoint is the first showing the coronavirus impact.  But US equities are moving higher today as quarter end approaches, trying to get back above the 2600 level on the S&P.  Given the drastic asset movements this month, pensions will be rebalancing their portfolios (into equities from bonds), helping support US stocks into the weekend.

Don’t Jinx It… These volatile times have given new meaning to a certain saying involving counting chickens, but at the moment the S&P is on track to post its first back-to-back gains since Feb 11-12. US indices appear to have found their mojo again after it appeared earlier that yesterday’s rally had exhausted all the stimulus bill enthusiasm, and the S&P is now ticking just above last week’s highs. Still, the worst is clearly yet to come in terms of virus cases in the US, with NYC expecting to reach its peak in 2-3 weeks and hospitals there already testing capacity. Add in unemployment data coming tomorrow, and it will be interesting to see just how long the current optimism holds up

Days Lock Horns – Its Monday vs Tuesday once again, for the 3rd week in a row a rough/brutal Monday has led to a turnaround the next day. And while rounds 1 and 2 have easily favored the first day of the week, round 3 goes to TT by a big margin; although to be fair Tuesday has a lot more ground to make up. The worst of the distressed unwinding could be over a truly relenting USD would not only loosen market logistics but sentiment as well. On the bright side, at least relative to yesterday’s move lower, volumes are elevated on this ‘snapback’, but there’s been so much chatter about it happening it almost became self-fulfilling.

Monday Gridlock… Leave it to Congress to find a way to not rise to the occasion. The Senate’s failure to keep reach an agreement over the weekend on a fiscals stimulus package appeared to derail any hopes of starting the week on a positive note (despite the Fed’s best efforts). Now word coming out moments ago the two sides have again failed to strike a deal have US indices heading lower once more after attempting to rally. US virus cases continue to grow rapidly (with NYC as the epicenter), but even as more states prepare to issue stay-at-home directives, President Trump is reported to be having reconsidering the federal govt’s guidance on social distancing. The Dow earlier erasing all of its gains since the 2016 election night surely has something to do with the case of cold feet…..

One Step Forward, One Step… It’s been over a month since the S&P has managed to post back-to-back positive sessions, and after another long week a double dose of green would be a nice way to head into the weekend. Things were looking promising this morning after S&P expiry went relatively smoothly and the VIX finally showed signs of easing, but right on cue more virus headlines have darkened the mood. Word that pubs in London will close and that 100% of the non-essential NYC workforce must stay home erased those gains, and a Trump press conference announcing new border policies further dented US indices, which are just now attempting to climb off the day’s lows

Calm before another tornado…? Quad witching is coming. Tomorrow is shaping up to be one of the most volatile trading days in years during one of the most volatile months in market history. The S&P has risen or fallen at least 4% in eight straight sessions, which is actually the longest streak in history. Today is quite a bit less dramatic (S&P o +1.16% thus far, but the day is still young). Traders are bracing for this particular quad witching, especially as options contracts outstanding tied to the S&P hit a record this week. More than $1.5 trillion worth will expire – the largest motional ever– thus extending the voracious stress levels of investors globe-wide.

The new normal – Futures once again limit down overnight, but the circuit breaker did not get triggered until 12:56 today (versus just after the open the previous three times).  Looking around at all of the assets, the only one trading in the green is the Dollar, as everyone is rushing to cash (not just investors).  Oil is down 21%, a level last seen in 2002. Metal commodities are down, as well as Bonds.  One technical level our team has been watching is the 2346 on the SPX (from Dec. 2018), the index has now broken it, next level is -15% from here.