Just when you thought there was a semblance of calm returning to the markets, the VIX turned up to 57 and US market indices lost 4.4% overnight with the Dow plunging close to a thousand pts again (974). FAAANG stocks started to show vulnerability with Apple and Alphabet both losing 5%.
CNBC attributed the plunge to Wall St fearing COVID-19 will shut down the economy longer than expected probably in response to POTUS declaration of a painful two weeks ahead. If the markets were still seeing the situation with rose tinted glasses, they have been given a jolt of reality - the much hope of a short V shaped recovery is increasingly been considered misguided and the US markets rallied on that premise are now imputing the increasing likelihood of protracted pain. Economists are now projecting wider unemployment claims of 4-5m (watch for the data out tonight 8.30am NY time) which is still likely not to be the worst yet.
As if things can't get worse, NZ Central bank ordered NZ banks to stop or freeze paying dividends and redeem capital notes with immediate effect given the widespread economic uncertainty caused by COVID-19, following the actions of the Europeans yesterday. Will Australia follow suit? Why is such action necessary if this is just a health crisis , is there something we have not been told? Yes more speculation but you judge by actions not words, and actions tell you things could start to look serious. Then perhaps it is just a safeguard measure and not to read too much into it. This thread has been consistently cautioning about the folly of chasing yield in particular bank stocks for dividend yield, and I clearly stated that the potential capital loss stemming from ownership of bank stocks was likely to outweigh the dividends received (pretty much like it has been for legacy Telstra shareholders).
April Fool'd - Stocks Suffer Worst Start To A Quarter Since Great Depression
by Zero Hedge
Wed, 04/01/2020 - 16:00
With month-/quarter-end rebalancing flows now a thing of the past... Virus-fear is back...
Source: Bloomberg
But the day started off ugly with a huge sell program... Source: Bloomberg
...the biggest negative TICK since Aug 13th 2018...
Source: Bloomberg Small Caps led the bloodbathery with a near 7% collapse today (limit-down) but all the major US indices were ugly (note the weak open, bounce into EU close, then selling fir the rest of the day...
Today was the worst start to a quarter since 1932... as The Great Depression was hotting up... Source: @Not_Jim_Cramer The Dow lost 21k; S&P dropped below 2,500; and Russell 2000 broke back below 1,100... erasing over 50% of the dead-cat-bounce from last week...
Both Defensive and Cyclicals were equally hit today... Source: Bloomberg
It appears the short-squeeze ammo has run out again... Source: Bloomberg
FANG stocks were slammed, as the opening and closing bid ramps from last week have disappeared... Source: Bloomberg
Bank stocks continued yesterday's losses... Source: Bloomberg
Directly-Virus-Affected sectors were monkey-hammered today with Airlines collapsing... Source: Bloomberg
Most worrisome today was the crash in Mortgage REITs - despite weak markets and tumbling yields... systemic issues? Source: Bloomberg
Credit was weaker today (HY worse) Source: Bloomberg
Will stocks catch-down to bond yields now that the rebalance flows are done? Source: Bloomberg
Treasury yields were all lower today as the rate-locks from record issuance lift (led by the long-end: 30Y -6bps, 2Y -1.5bps)... Source: Bloomberg
10Y Yield tumbled back below 60bps today (57.7bps lows)... Source: Bloomberg
The Dollar rebounded from yesterday's weakness... Source: Bloomberg
The Dollar shortage is back, with FRA-OIS widening notably today
Source: Bloomberg
Cryptos faded today... Source: Bloomberg
Commodities were noisy today with oil and gold up, copper down... Source: Bloomberg
Oil prices turmoiled around today but ended higher after plunging back below $20 again
Gold futures bounced back above $1600...
Finally, we note that Republicans have retaken the lead (albeit very marginally) in the prediction markets for the November election... Source: Bloomberg
And amid all the ongoing calls for more and more rounds of fiscal stimulus and helicopter money, USA sovereign/deval risk is starting to rise rapidly... Source: Bloomberg
