Dow dropped 466, decliners over advancers 5-1 & NAZ pulled back 66. The MLP index rose 3+ to the 105s & the REIT index sank 14 to the 333s. Junk bond funds were sold & Treasuries fluctuated, Oil rose to 23 aftter an agreement on production cutbacks by OPEC+ (more below) & gold was off 3 to 1749.
AMJ (Alerian MLP Index tracking fund)
The US economy could face 18 months of rolling shutdowns without an effective vaccine for the novel coronavirus, Federal Reserve Bank of Minneapolis Pres Neel Kashkari said, warning of a “long, hard” road to recovery. “Barring some health-care miracle, it seems like we’re going to have various phases of rolling flare-ups, different parts of the economy turning on, maybe turning back off again,” Kashkari said. “This could be a long, hard road we have ahead of us until we get either to an effective therapy or a vaccine. It’s hard for me to see a V-shaped recovery under that scenario.” “I think we should all be focusing on an 18-month strategy for our health care system and our economy,” he added. Kashkari is a voting member of the rate-setting FOMC this year. Unemployment has surged in the US over the past few weeks as states & cities have imposed strict stay-at-home mandates & directed nonessential businesses to close in a bid to slow the spread of COVID-19, the respiratory illness caused by the coronavirus. Last week, 6.6M Americans filed for unemployment benefits, bringing the number of applications for the last 3 weeks to more than 16M , a stunning sign of the damage inflicted by the virus. That would bring the jobless rate to at least 10%. The central bank has responded to the crisis by unleashing its full firepower to support the economy, including slashing interest rates to near-zero, purchasing an unlimited Treasuries (quantitative easing) & launching crisis-era lending facilities to ensure that credit flows to households & businesses. Economists have forecast a sharp contraction in GDP in Q2, including Fed Chair Jerome Powell, who acknowledged that it will be a "very weak" period of growth. Still, he said last week that prior to the pandemic, the economy -- which had been in the midst of a record 11-year expansion -- was healthy & therefore poised for a solid rebound once the virus is contained. “At the Fed, we are doing all we can to help shepherd the economy through this difficult time,” Powell added. “When the spread of the virus is under control, businesses will reopen, and people will come back to work. There is every reason to believe that the economic rebound, when it comes, can be robust.”`
Oil prices moved higher after OPEC & its allies (OPEC+) agreed to cut production by 9.7M barrels per day. The deal, which was finalized yesterday after marathon discussions that spanned 4 days, is the single largest output cut in history. US West Texas Intermediate crude rose 3.8% to trade at $23.63 per barrel, while intl benchmark Brent crude traded 30¢ higher at $31.78. Earlier in the session WTI rose as much as 8%, while also trading in negative territory at one point during a volatile session. The group initially proposed cutting production by 10M barrels per day — amounting to some 10% of global oil supply — on Thurs, but Mexico opposed the amount it was being asked to cut, holding up the final deal. Under the new agreement, Mexico will cut 100K barrels per day, instead of its initial allocation of 400K barrels per day. The 9.7M barrels per day cut will begin on May 1 & will extend through the end of Jun. The cuts will then taper to 7.7M barrels per day from Jul thru the end of 2020 & 5.8M barrels per day from Jan 2021 thru Apr 2022. The 23-nation group will meet again on Jun 10 to determine if further action is needed. On Thurs WTI crude dropped more than 9% as traders feared the cut wouldn't be big enough to combat the fall off in demand caused by the coronavirus pandemic. For the year WTI is down 62%, while Brent has shed 52%. The market was closed on Fri. Pres Trump, who was heavily involved in brokering a deal between Saudi Arabia & Russia after a price war broke out between the 2 countries, cheered the agreement saying in a tweet that it’s a “great deal for all.” “This will save hundreds of thousands of energy jobs in the United States,” he added. He tweeted today the energy industry “will be strong again.” OPEC+ is hoping that nations outside of the group, including the US, Canada & Norway, will also cut back on production in an effort to shore up prices. Trump has said that market forces will naturally curb output.
Oil rises after OPEC and allies agree to historic production cut
Coronavirus hospitalizations in New York City appear to have stabilized & reduced the immediate need for ventilators, showing that the city needs to “double down” on social distancing measures that are helping to curb the pandemic, Mayor Bill de Blasio said. De Blasio cautioned that the data was preliminary and there is a risk that coronavirus cases could begin to increase at a faster rate if residents do not adhere to social distancing & shelter-in-place policies. The data, the mayor said, “tells us we actually have to double down, stick to the strategies that are working.” “We know we’re not out of the woods; it’s too early,” de Blasio said, cautioning that the data should not be used to draw “bigger conclusions.” He warned that COVID-19 infections are “going to reach a huge percentage of us,” most likely more than ½ of the population. The city reported 78K total cases of coronavirus & there have been 3.6K deaths from the virus. Hospitalizations stood at 19K & coronavirus hospitalizations represented 26% of the total number of COVID-19 cases in the city.
New York City sees stabilization in coronavirus hospital cases, de Blasio says
The Dow had a spectacular run after the election until it fell off a cliff in late Feb (see below). The recent rebound off the lows (around the same level as it was at the time of the election) was done in a little over a couple of weeks. After the election that same advance took about one year. The Dow is vastly overbought in the current rally & there is a growing awareness that repairing damage to the economy may take more time than the optimists had estimated. Today's selling is largely related to profit taking. Longer term, it's still vulnerable to selling.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 23.45 | +0.69 | +3.0% |
| GC=F | Gold | 1,741.20 | -11.60 | -0.7% |
The US economy could face 18 months of rolling shutdowns without an effective vaccine for the novel coronavirus, Federal Reserve Bank of Minneapolis Pres Neel Kashkari said, warning of a “long, hard” road to recovery. “Barring some health-care miracle, it seems like we’re going to have various phases of rolling flare-ups, different parts of the economy turning on, maybe turning back off again,” Kashkari said. “This could be a long, hard road we have ahead of us until we get either to an effective therapy or a vaccine. It’s hard for me to see a V-shaped recovery under that scenario.” “I think we should all be focusing on an 18-month strategy for our health care system and our economy,” he added. Kashkari is a voting member of the rate-setting FOMC this year. Unemployment has surged in the US over the past few weeks as states & cities have imposed strict stay-at-home mandates & directed nonessential businesses to close in a bid to slow the spread of COVID-19, the respiratory illness caused by the coronavirus. Last week, 6.6M Americans filed for unemployment benefits, bringing the number of applications for the last 3 weeks to more than 16M , a stunning sign of the damage inflicted by the virus. That would bring the jobless rate to at least 10%. The central bank has responded to the crisis by unleashing its full firepower to support the economy, including slashing interest rates to near-zero, purchasing an unlimited Treasuries (quantitative easing) & launching crisis-era lending facilities to ensure that credit flows to households & businesses. Economists have forecast a sharp contraction in GDP in Q2, including Fed Chair Jerome Powell, who acknowledged that it will be a "very weak" period of growth. Still, he said last week that prior to the pandemic, the economy -- which had been in the midst of a record 11-year expansion -- was healthy & therefore poised for a solid rebound once the virus is contained. “At the Fed, we are doing all we can to help shepherd the economy through this difficult time,” Powell added. “When the spread of the virus is under control, businesses will reopen, and people will come back to work. There is every reason to believe that the economic rebound, when it comes, can be robust.”`
Fed president: How long painful path to economic recovery could last
Oil prices moved higher after OPEC & its allies (OPEC+) agreed to cut production by 9.7M barrels per day. The deal, which was finalized yesterday after marathon discussions that spanned 4 days, is the single largest output cut in history. US West Texas Intermediate crude rose 3.8% to trade at $23.63 per barrel, while intl benchmark Brent crude traded 30¢ higher at $31.78. Earlier in the session WTI rose as much as 8%, while also trading in negative territory at one point during a volatile session. The group initially proposed cutting production by 10M barrels per day — amounting to some 10% of global oil supply — on Thurs, but Mexico opposed the amount it was being asked to cut, holding up the final deal. Under the new agreement, Mexico will cut 100K barrels per day, instead of its initial allocation of 400K barrels per day. The 9.7M barrels per day cut will begin on May 1 & will extend through the end of Jun. The cuts will then taper to 7.7M barrels per day from Jul thru the end of 2020 & 5.8M barrels per day from Jan 2021 thru Apr 2022. The 23-nation group will meet again on Jun 10 to determine if further action is needed. On Thurs WTI crude dropped more than 9% as traders feared the cut wouldn't be big enough to combat the fall off in demand caused by the coronavirus pandemic. For the year WTI is down 62%, while Brent has shed 52%. The market was closed on Fri. Pres Trump, who was heavily involved in brokering a deal between Saudi Arabia & Russia after a price war broke out between the 2 countries, cheered the agreement saying in a tweet that it’s a “great deal for all.” “This will save hundreds of thousands of energy jobs in the United States,” he added. He tweeted today the energy industry “will be strong again.” OPEC+ is hoping that nations outside of the group, including the US, Canada & Norway, will also cut back on production in an effort to shore up prices. Trump has said that market forces will naturally curb output.
Oil rises after OPEC and allies agree to historic production cut
Coronavirus hospitalizations in New York City appear to have stabilized & reduced the immediate need for ventilators, showing that the city needs to “double down” on social distancing measures that are helping to curb the pandemic, Mayor Bill de Blasio said. De Blasio cautioned that the data was preliminary and there is a risk that coronavirus cases could begin to increase at a faster rate if residents do not adhere to social distancing & shelter-in-place policies. The data, the mayor said, “tells us we actually have to double down, stick to the strategies that are working.” “We know we’re not out of the woods; it’s too early,” de Blasio said, cautioning that the data should not be used to draw “bigger conclusions.” He warned that COVID-19 infections are “going to reach a huge percentage of us,” most likely more than ½ of the population. The city reported 78K total cases of coronavirus & there have been 3.6K deaths from the virus. Hospitalizations stood at 19K & coronavirus hospitalizations represented 26% of the total number of COVID-19 cases in the city.
New York City sees stabilization in coronavirus hospital cases, de Blasio says
The Dow had a spectacular run after the election until it fell off a cliff in late Feb (see below). The recent rebound off the lows (around the same level as it was at the time of the election) was done in a little over a couple of weeks. After the election that same advance took about one year. The Dow is vastly overbought in the current rally & there is a growing awareness that repairing damage to the economy may take more time than the optimists had estimated. Today's selling is largely related to profit taking. Longer term, it's still vulnerable to selling.
Dow Jones Industrials
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