2 Min Market Update : 29th April 2020


As of New York Close 28 Apr 2020,


U.S. Dollar Index, -0.22%, 99.87
USDJPY, -0.45%, $106.75

EURUSD, +0.02%, $1.0833
GBPUSD, +0.04%, $1.2435
USDCAD, -0.36%, $1.3980
AUDUSD,  +0.57%, $0.6502
NZDUSD,  +0.48%, $0.6076


S&P500, -0.52%, 2,863.39
Dow Jones, -0.13%, 24,101.55
Nasdaq, -1.40%, 8,607.73

Nikkei Futures, +1.08%, 19,933.0


Gold Spot, -0.61%, 1,705.03
Brent Oil Spot, +2.58%, 20.24


Dollar was on the back foot as the slowing spread of the Covid-19 and moves to re-open economies supported the investor mood, ahead of major central bank meetings. AUD and NZD continued to creep relentlessly higher as trade data from both countries show that exports continue to remain robust. With food security being a key issue in the months ahead, both these currencies could continue to trade strong on that back of that. 

Investors will be watching to see if the Fed gives any clues on its future policy path after it responded to the economic devastation of the Covid-19 pandemic by slashing rates, buying bonds and backstopping credit markets. The US Conference Board’s Consumer Confidence Index for April plunged to 86.9 (consensus 86.5) from a downwardly revised 118.8 (from 120.0) for March. The April reading is the lowest since June 2014. The key takeaway from the report is that consumers while thinking positively about things reopening again, are still less optimistic about their financial prospects, which could be a headwind for spending activity during the recovery phase.

S&P 500 declined 0.52% on Tuesday in a mixed session. Large-cap technology and health care stocks lagged while reopening enthusiasm continued to flow into the small-cap Russell 2000 (+1.3%). The Dow Jones Industrial Average shed 0.13%, while the Nasdaq Composite fell 1.40%. U.S. 2yr yield fell 4bp to 0.20% and U.S. 10yr yield fell 5bp to 0.62%.

In other earnings news, shares of Caterpillar (CAT 115.46, +0.26, +0.2%), 3M (MMM 157.61, +3.96, +2.6%), and PepsiCo (PEP 136.32, +1.4%) finished higher, even after the companies withdrew full-year guidance, while shares of UPS (UPS 96.43, -6.12, -6.0%) faltered after the company missed profit estimates.

Alphabet rose more than 7% on earnings after hours, as ad revenue slowdown turns out to be less than feared. Though $33.8 billion of Google’s total quarterly revenue of $41.16 billion came from advertising, a reflection of its continued reliance on a battered market, there is a silver lining. Sales from Google Cloud and YouTube continued to surge, underscoring versatility in the company’s overall product line — YouTube ad revenue increased 33.4%, to $4.04 billion from $3.03 billion a year ago, while Google Cloud sales grew 52%, to $2.78 billion from $1.83 billion.


With concerns about food shortages and supply chain disruptions, Trump is expected to sign an executive order using the Defense Production Act to mandate that the plants continue to function, a senior administration official said.

U.S. meat companies slaughtered an estimated 283,000 hogs on Tuesday, down about 43% from before plants began shutting because of the pandemic, according to U.S. Department of Agriculture data. Processors slaughtered about 76,000 cattle, down about 38%.

IMPACT: The world’s biggest meat companies, including Smithfield Foods Inc, Cargill Inc, JBS USA and Tyson Foods, have halted operations at about 20 slaughterhouses and processing plants in North America as workers fall ill, stoking global fears of a meat shortage. UFCW, the largest U.S. meatpacking union, demanded that the administration compel meat companies to provide “the highest level of protective equipment” to slaughterhouse workers and ensure daily Covid-19 testing. 

Any shortage in poultry due to supply chain destruction will put pressure on prices when demand returns. Meat exporting countries like New Zealand might get some positive tailwind for its currency.


The endorsement, at an online town hall on the effects of the Covid-19 crisis on women, came at a critical moment as Biden aims to raise his profile with female voters and other key demographic groups even as the pandemic ravages the U.S. economy.

Women favored Clinton over Trump in 2016, exit polls showed, and are expected to play a critical role in swaying the most competitive swing states in the Nov. 3 election between Biden and Trump.

IMPACT: The battle lines for the U.S. presidential election are not Dollar friendly. Biden’s main proposal is likely to be Nationalizing Healthcare and using wealth tax to fund the deficit. This is a Dollar bearish scenario as the U.S. will be running a much larger budget deficit due to the Covid-19 crisis.


U.S. Covid-19 death toll reached (56,567 Covid Deaths, 58,220 Vietnam War Deaths) a grim milestone on Tuesday, surpassing the number of American lives lost in the Vietnam War, as Florida’s governor met with Trump to discuss easing shutdowns aimed at curbing the pandemic.

About a dozen states were forging ahead to restart shuttered commerce without being ready to put in place the large-scale virus testing or means to trace close contacts of newly infected individuals, as outlined in White House guidelines on April 16.

IMPACT: The number of known U.S. Covid-19 infections has doubled over the past 18 days to more than 1 million. The actual count is believed to be higher, with state public health officials cautioning that shortages of trained workers and materials have limited testing capacity, leaving many infections unrecorded. Any spike in Covid-19 mortality in the U.S. will morbidly cause the Dollar to strengthen on risk-aversion. 



The Fed meets later today and, having thrown everything including the kitchen sink to protect the US economy in the battle against the economic damage of this crisis, no action is expected this time. As such, the market reaction may depend mainly on Powell’s remarks. From a risk-management perspective, Powell has more incentive to soothe investors’ nerves and hint that more stimulus is possible, which could briefly hurt the Dollar.

Investors will be hanging from Powell’s every word, eager to find out whether the central bank is willing to do even more if the crisis worsens, or whether policymakers feel they have done enough. For example, would the Fed consider going down the Bank of Japan’s path and introduce yield-curve control? How about buying stocks (though Treasury Secretary Mnuchin was quoted yesterday that this was an unlikely option for the Fed)?

Overall, he is likely to maintain a very cautious tone, and probably keep even these extreme options on the table. Ruling out more stimulus now would risk increasing market volatility, which is the last thing the Fed wants as that could reduce the effectiveness of all its previous actions. Better be safe than sorry, especially in the middle of a recession.




Yet another day of wild swings in the WTI crude oil June future falling almost 30% at one stage before retracing the losses to close slightly positive on the day. The volatility was likely exacerbated by the USO ETF announcing that they would be selling the June future to switch their long positions to contracts further out the calendar. S&P500 slowly crept to test the highs of the day before the open of the US session, and promptly sold off when the US trading hours got fully underway. There seems to be a puzzling trend of risk assets being bought during Asian hours before retracing during NY hours. Seems inexplicable why that is the case, but it’s something to keep an eye on.




Get out of the way!

The relentless rally in the stock markets in recent days is a good reminder that to succeed in trading, we need a healthy dose of humility along with a generous helping of prudence. Regardless of what you believe the fundamentals to be, when the price action is constantly going against your trade, it is imperative to have risk management measures which will ensure that your risk gets smaller as your performance deteriorates. 

If the bear market should resume, there will be ample opportunities to get short in a meaningful way again. There is no need to be fighting the market on a trade that is not working when there are many other trade opportunities that can be exploited every day! Constantly be on the look out for trades that work, rather than stick to the ones that are a constant torture. That will help preserve your sanity and help grow your capital in the long run.


2 Min Market Update : 28th April 2020


As of New York Close 27 Apr 2020,


U.S. Dollar Index, -0.20%, 100.09
USDJPY, -0.20%, $107.29

EURUSD, +0.04%, $1.0825
GBPUSD, +0.42%, $1.2421
USDCAD, -0.48%, $1.4037
AUDUSD,  +0.97%, $0.6449
NZDUSD,  +0.07%, $0.6024


S&P500, +1.47%, 2,878.48
Dow Jones, +1.51%, 24,133.78
Nasdaq, +1.11%, 8,730.16
Nikkei Futures, +3.01%, 19,768.0


Gold Spot, -1.13%, 1,709.84
Brent Oil Spot, -7.37%, 19.73


Dollar fell across the board on Monday as several countries laid out plans to ease restrictions on businesses that have been closed due to the Covid-19 outbreak, boosting risk appetite and reducing demand for the safe-haven U.S. currency. Italy, which has the world’s second-highest Covid-19 mortality rate due to a large elderly population, is among the countries that have laid out plans to allow businesses to reopen. 

The Yen gained after the Bank of Japan expanded its stimulus to help companies hit by the Covid-19 crisis, pledging to buy an unlimited amount of bonds to keep borrowing costs low as the government tries to spend its way out of the deepening economic pain. Typically, the currency should weaken if the Central Bank embarks on an unlimited Quantitative Easing program but Japan has essentially been on such a program for years. As such, it was more of a sell the fact as word that this was on the table was already leaked last week. 

S&P 500 gained 1.47% on Monday, as investors showed optimism in reopening efforts indicated by more states and countries. The Dow Jones Industrial Average (+1.51%) and Nasdaq Composite (+1.11%) also advanced more than 1.0%, while the Russell 2000 outperformed with a 4.0% gain. U.S. 2yr yield rose 2bp to 0.24% and U.S. 10yr yield rose 7bp to 0.67%.

At least nine U.S. states had their economies partially reopened as of Monday, according to The New York Times, while other states like New York, Texas, and Ohio announced plans to gradually reopen in the coming weeks. The prospective increase in economic activity, even without a confirmed Covid-19 treatment, had investors piling into previously-neglected cyclical sectors.

Italy, France and Spain initiated steps to reopen their economies as well. Some attribute the risk-on sentiment partially to the Bank of Japan lifting the cap on its JGB bond purchases, and announcing plans to increase its purchases of corporate bonds and commercial paper.


Georgia, at the vanguard of states testing the safety of reopening the U.S. economy in the midst of the Covic-19 outbreak, permitted restaurant dining for the first time in a month on Monday while governors in regions with fewer cases also eased restrictions.

Eager to revive battered commerce despite warnings from public health experts about the lack of testing, a handful of states from Montana to Mississippi were also set to reopen some workplaces deemed to be non-essential.

Alaska, Oklahoma, and South Carolina, along with Georgia, previously took such steps, after weeks of mandatory lockdowns that have thrown millions of Americans out of work and led to forecasts that an economic shock of historic proportions is at hand.

IMPACT: Trump and some local officials have criticized Georgia Governor Brian Kemp for forging ahead to add restaurants and movie theaters to the list of businesses – hair and nail salons, barbershops, and tattoo parlors – that he allowed reopening last week, albeit with social-distancing restrictions still in force. As states start to reopen, keep an eye out for the rise in a second wave of infection within 14-28 days later, any spike will cause the Dollar to strengthen as risk-aversion due to policy error will take hold. This might be a case of taking one step forward and two steps back.


At the meeting on Monday, cut short by a day as a precaution against the spread of the pandemic, the BOJ kept its interest rate targets unchanged, as had been widely expected. Kuroda said the central bank was ready to act further to fight the impact of the novel coronavirus, which he said could do more harm to the global economy than the 2008 collapse of Lehman Brothers.

Under a policy dubbed yield curve control, the BOJ targets short-term interest rates at -0.1% and 10-year bond yields around 0%. It also buys government bonds and risky assets to pump money aggressively into the economy.

To ease corporate funding strains, the BOJ said, it will boost three-fold the maximum amount of corporate bonds and commercial paper it buys to 20 trillion yen ($186 billion). The central bank also clarified its commitment to buy unlimited amounts of government bonds by scraping loose guidance to buy them at an annual pace of 80 trillion yen.

IMPACT: The BOJ also sharply cut its economic forecast and projected inflation would fall well short of its 2% target for three more years, suggesting its near-term focus will be to battle the crisis. Their determination to do what they have done for years for no results remains strong. JPY was unimpressed and in fact, strengthened mildly as a result. Part of the BoJ plan is to weaken the JPY to boost inflation but it has not been the case thus far. Further strengthening in the JPY will likely be met with more comments on their resolve to ease more aggressively.


The Australian government will give an update next month on the economic impact of the coronavirus before providing further outlook in June, it said on Tuesday, bowing to calls for more fiscal transparency in relation to the crisis.

Treasurer Josh Frydenberg will outline the impact of the outbreak and the federal government’s response in a statement to parliament on May 12, the day the government was originally scheduled to deliver its full annual budget.

IMPACT: A prelude into the impact on the Australian economy will be Westpac Banking Corp earnings. The bank on Tuesday said it expects to record pre-tax impairment provisions of A$2.24 billion ($1.4 billion) for the first half, largely due to the economic deterioration expected from the Covid-19 outbreak. Westpac is set to announce results for the six months ending March 31 and its decision on interim dividend payment on May 4. A huge miss in earnings and revision lower in revenues might cause Aussie to lose some steam.


The Fed has thrown everything including the kitchen sink at the US economy in a desperate bid to avoid total catastrophe as the deadly Covid-19 has forced most businesses to go into hibernation. That has left the Fed with very few new options and policymakers are expected to sit tight when they meet on Wednesday for their first regular meeting since January.



WTI June futures fell more than 25% but did not cause much of a panic as the market seems to have become used to the wild moves. Gold weakened more than 1% against the USD but the USD was weak against most of the other currencies, especially the AUD (+0.97%). Stocks started weak in early Asia with S&P down 0.5% but steadily recovered throughout the day to close more than 1% higher. Everything seems mixed and confused but eventually the fundamentals will reassert themselves.




Watch Out For The Second Wave

Countries and States that are re-opening their economies do not seem to realise that bulldozing your way into economic recovery whether be it via monetary policy or reopening commerce without proper measures set in place may be a fool’s errand in the long run. Singapore and many other established governments are good reference cases for how things can go awry in a short span of time if they rest on their laurels. The city-state was the poster boy for the containment of Covid-19 earlier on in the pandemic, but that proved to be an illusion. Mistaking a victory in an early battle means that the war is won, imported cases started to infect the community and with uncurtailed community spread, it quickly became one of the countries with the highest % rate of infections (adjusted for population size) and eventually had to implement draconian social distancing measures.

Watch out for the increase in rate of infections for the re-opened countries and states and that will be a good barometer for how much more protracted this crisis will be. The next 3-4 weeks will be a crucial period.


2 Min Market Update : 27th April 2020


As of New York Close 24 Apr 2020,


U.S. Dollar Index, -0.23%, 100.29
USDJPY, -0.07%, $107.51

EURUSD, +0.40%, $1.0821
GBPUSD, +0.20%, $1.2369
USDCAD, +0.22%, $1.4104
AUDUSD,  +0.27%, $0.6387
NZDUSD,  +0.20%, $0.6020


S&P500, +1.39%, 2,836.74
Dow Jones, +1.11%, 23,775.27
Nasdaq, +1.65%, 8,634.52

Nikkei Futures, -1.29%, 19,190.0


Gold Spot, -0.12%, 1,729.43
Brent Oil Spot, +1.87%, 21.30


Dollar eased against the Euro on Friday, snapping a four-day winning streak as investors covered some bearish bets against the common currency. Despite an agreement by EU leaders to fund a recovery from the Covid-19 pandemic, delays to an agreement on divisive details of the European Union’s stimulus package has kept a lid on the Euro. French President Emmanuel Macron said differences continued among EU governments over whether the fund should be transferring grant money, or simply making loans.

U.S. Durable goods orders declined 14.4% m/m in March (consensus -10.0%). Excluding transportation, durable goods orders declined 0.2% (consensus -4.0%). Given the unprecedented set of circumstances, the projection being way off ironically isn’t that unexpected. Market sentiment continues to be driven by Covid-19 developments, oil production, and brewing geopolitical tension between China and U.S. For now, bad numbers will be the norm. Real economic data will start to matter at a later point in the cycle. The final reading for the University of Michigan Index of Consumer Sentiment for March was revised up to 71.8 (consensus 66.5) from the preliminary reading of 71.0. The final reading for March was 89.1.

S&P 500 increased 1.39% on Friday, wrapping up a negative week on a positive note amid a resurgence in buyers during the afternoon. The Dow Jones Industrial Average rose 1.11%, the Nasdaq Composite rose 1.65%, and the Russell 2000 rose 1.6%. U.S. 2yr yield remained unchanged at 0.22% and U.S. 10yr yield decreased 1bp to 0.60%.

Investors started the day parsing a mixed batch of earnings reports, including those from a trio of Dow components. Intel (INTC 59.26, +0.22, +0.4%), Verizon (VZ 57.93, +0.34, +0.6%), and American Express (AXP 83.17, +0.71, +0.9%) reported mixed earnings results, but shares were able to close higher despite early losses. Price action was muted from an index level, though, as the market appeared disinterested, even as oil prices ($17.03, +0.23, +1.4%) continued to rebound and the $484 billion Covid-19 relief bill was signed by Trump.


With the U.S. Covid-19 death toll topping 51,000 and nearly one in six workers out of a job, Georgia, Oklahoma, and several other states took tentative steps at reopening businesses on Friday, despite disapproval from Trump and medical experts. Georgia, one of several states in the Deep South that waited until early April to mandate restrictions imposed weeks before across much of the rest of the country to curb the outbreak, has become a flashpoint in the debate over how and when the nation should return to work.

Georgia was not alone in reopening. Oklahoma was permitting some retailers to resume business on Friday, Florida began reopening its beaches a week ago, South Carolina started easing restrictions on Monday, and other states will follow suit next week.

Trump, who had staked his November re-election on the nation’s booming economy before the pandemic, has given mixed signals about when and how the country should begin to get back to work.

IMPACT: In the latest protest against the shutdowns, hundreds of people gathered on Friday outside the Wisconsin State Capitol building in Madison calling for Democratic Governor Tony Evers to reopen the state, even as it reported its largest single-day jump of new Covid-19 cases. Based on the asian infection curve, the risk of a second wave of infection seems inevitable for the U.S. and any spike in Covid-19 related deaths will be bad for global risk assets as the U.S. remains a barometer for economic recovery. A resurgence of new infection will cause a bout of risk aversion which perversely will lead to USD strength.


A key U.S. government trial of Gilead Sciences Inc’s experimental Covid-19 treatment may yield results as early as mid-May, according to the study’s lead investigator, after doctors clamored to enroll their patients in the study.

Those hopes were dampened somewhat on Thursday when details from a Chinese remdesivir trial involving patients with severe Covid-19 inadvertently released by the World Health Organization suggested it provided no benefit. Gilead pushed back on that interpretation saying the study, which was stopped early due to low patient enrollment, cannot provide meaningful conclusions.

IMPACT: Gilead on Thursday said it expected results from the NIAID trial in late May. The company’s shares, up more than 20% so far this year due largely to remdesivir prospects, were 1.7% higher at $79.10 on Friday. The Infectious Disease Society of America (IDSA), which represents more than 12,000 U.S. specialists, said it will make a formal recommendation once the entire body of evidence for remdesivir is available. Gilead has the potential to produce a positive wing outcome in this virus situation, any conclusive drug effectiveness on the virus will send optimism across the globe. If that should happen, growth currencies such as AUD and NZD will benefit from the positive risk sentiment.


Italy will allow factories and building sites to reopen from May 4 and permit limited family visits as it prepares a staged end to Europe’s longest Covdi-19 lockdown, Prime Minister Giuseppe Conte said on Sunday. “We expect a very complex challenge,” Conte said as he outlined the road map to restarting activities put into hibernation since early March. “We will live with the virus and we will have to adopt every precaution possible.”

IMPACT: Manufacturers, construction companies and some wholesalers will be allowed to reopen from May 4, followed by retailers two weeks later. Restaurants and bars will be allowed to reopen fully from the beginning of June, although takeaway business will be possible earlier. Italy has been hardest hit by the virus pandemic, the lockdown has put a strain on the euro zone’s third-largest economy, which is headed for its worst recession since World War Two. Italian business leaders have called for the restrictions to be eased to head off economic catastrophe.


Bank of Japan’s policy meeting will kick off on Monday, but it will not be a usual two-day gathering this time as policymakers are expected to reach their decision the same day. While under other circumstances, such an adjustment would signal an eventful meeting, the current virus situation may pressure the central bank for additional corporate aid and likely some flexibility on government bond purchases, whereas there is no doubt that interest rates will remain steady.




Risk assets rallied into the close without any clear reason but that seems to be the case these days. The relentless money printing has pretty much taken away the fear of the economic damage that is about to come. Economic damage, though inevitable, will slowly manifest itself in various ways. For now, focus on the trades that do not go against the tide of money.




Time to Shine

Though the economic prospects of the world seem extremely bleak, risk assets such as stocks have relentlessly crept higher due primarily to the incessant money printing from various policymakers around the world. Until the folly of such policies manifests itself in the form of inflation, the printing presses will continue to work overtime. 

To sell risk assets will be to fight against this tide of money. It could work, but it sure takes a lot of struggling. The easier thing to do would be find trades that go along with the tide. Gold is one such beneficiary. With infinite amounts of fiat money being printed, hard assets in finite supply will be repriced. Gold, although volatile, will inevitably and inexorably creep higher as time passes.


2 Min Market Update : 23rd April 2020


As of New York Close 22 Apr 2020,


U.S. Dollar Index, +0.28%, 100.48
USDJPY, +0.05%, $107.82
EURUSD, -0.47%, $1.0806
GBPUSD, +0.22%, $1.2322
USDCAD, -0.18%, $1.4186
AUDUSD,  +0.25%, $0.6297
NZDUSD,  -0.60%, $0.5922


S&P500, +2.29%, 2,799.31
Dow Jones, +1.99%, 23,475.82
Nasdaq, +2.81%, 8,495.38
Nikkei Futures, +0.98%, 19,260.0


Gold Spot, +1.65%, 1,714.82
Brent Oil Spot, +7.60%, 20.11


Dollar edged higher on Wednesday, adding to the previous session’s gains, as safe-haven currencies remained largely well supported even as markets began to stabilize and oil prices recovered from another slump. The U.S. House of Representatives will pass Congress’ latest Covid-19 aid bill on Thursday, House Speaker Nancy Pelosi said, paving the way for nearly $500 billion more in economic relief amid the pandemic.S&P 500 advanced 2.29% on Wednesday, recouping some of its decline this week,, as sentiment benefited from a reprieve in the oil futures market and expectation of more stimulus from the government. The Nasdaq Composite outperformed with a 2.81% gain, followed by the Dow Jones Industrial Average (+1.99%) and Russell 2000 (+1.3%). U.S. 2yr yield rose 2bp to 0.22% and U.S. 10yr yield rose 5bp to 0.63%.WTI crude futures gained 19.3%, or $2.23, to $13.80/bbl after a two-day collapse. Facebook (FB 182.28, +11.48, +6.7%) and Alphabet (GOOG 1263.21, +46.87, +3.9%) also did some heavy lifting, partially due to the overwhelmingly positive response to Snap’s (SNAP 16.95, +4.51, +36.3%) revenue results. Daily active users (DAU) on Snapchat rose 20% to 229 million in the first quarter ended March 31, compared with a year earlier. The figure stood at 218 million in the fourth quarter. The average revenue per user in the first quarter was $2.02, up from $1.68 in the prior year.


More states in the U.S. South and Midwest signaled readiness on Wednesday to reopen their economies in hopes the worst of the Covid-19 pandemic had passed, but California’s governor held firm to sweeping stay-at-home orders and business closures. Nationwide, U.S. deaths totaled 47,050 on Wednesday, up about 1,800, with some states yet to report. The United States has the world’s largest number of cases at over 830,000.

IMPACT: The patchwork of still-evolving orders across the 50 states meant some Americans were still confined indefinitely to their homes, unable to work, while others began to venture out for the first time in weeks. Reopening prematurely before it is safe to do so will have tragic consequences in the longer run.


Trump said on Wednesday he had instructed the U.S. Navy to fire on any Iranian ships that harass it at sea, a week after 11 vessels from Iran’s Islamic Revolutionary Guard Corps Navy (IRGCN) came dangerously close to American ships in the Gulf. “I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea,” Trump wrote in a tweet, hours after Iran’s Revolutionary Guards Corps said it had launched the country’s first military satellite into orbit.

IMPACT: Senior Pentagon officials said that Trump’s comments on Iran were meant as a warning to Tehran, but suggested that the U.S. military would continue to abide by their existing right to self-defense instead of any changes to their rules. Tensions between Iran and the United States increased earlier this year after the United States killed Qassem Soleimani, the head of Iran’s elite Quds Force, in a drone strike in Iraq.

TRUMP SIGNS IMMIGRATION ORDER CURBING GREEN CARDSTrump on Wednesday signed an order to temporarily block some foreigners from permanent residence in the United States, saying he was doing so in order to protect American workers during the Covid-19 pandemic. White House lawyers worked all day to craft the language for the order, prompting some officials to say the signing might have to wait for Thursday. But aides described Trump as eager to sign the document.One U.S. Department of Homeland Security official who requested anonymity said the order would only apply to people applying for permanent residence from outside the United States, not those already in the country seeking to adjust their status.

IMPACT: The order is to last for 60 days and then will be reviewed and possibly extended. Some critics saw Republican Trump’s announcement as a move to take advantage of the Covid-19 crisis to implement a long-sought policy goal of barring more immigrants ahead of the Nov. 3 election.


Another slowdown in U.S. Initial Jobless Claims data, which upset investors three weeks ago after revealing a 6.8 million increase in demand for unemployment benefits amid the global lockdown, could help strengthen the Dollar. If forecasts are true, the gauge will have retreated for the second consecutive week to 4.35 million in the week ending April 18, hinting that measures by the Trump administration may have brought some stabilization in the labour market.



Another day of wild swings in the oil market but this time, prices went higher. That soothed the market and both stocks and Gold rallied on the day. Expect swings in sentiment to be the norm for now. Focus on the inevitable, i.e. the unlimited amount of fiat money in the system will drive prices of hard assets ever higher!




Rolling in the Dip

Unlike stocks or spot markets where the instrument can trade in perpetuity, futures contracts have a set rollover or expiration date. “Rollover” refers to the process of closing out all positions in soon-to-expire futures contracts and opening contracts in newly formed contracts. Understanding products like the USO Exchange Traded Fund (Oil ETF) whose underlying is made up of Oil futures is crucial to profitability.

Futures have various expiration months out the curve and each month’s futures are priced differently, relative to the cost of funding and the cost of storing the commodity in this case, oil. For example, the June Oil contract may be at $20, while the July contract may be at $24. Each time the fund rolls, you get fewer contracts of Futures as you are selling at the cheaper price ($20) to buy at the higher price ($24), this is a drag on your portfolio if this phenomenon persists as the number of fund holdings erodes over time. Even if the market prices do not fluctuate, as long as the futures curve remains upward sloping and time passes, the investor long these contracts will be losing money as time passes.

ETFs that deal in the futures market is a double-edged sword, understanding when the macro environment works for you or against you and understanding the products that you trade are crucial to successful investing. To illustrate the point, as WTI Oil June Futures rose 19.3% yesterday, the USO ETF was down by -10.68%.


2 Min Market Update : 24th April 2020


As of New York Close 23 Apr 2020,


U.S. Dollar Index, +0.04%, 100.52
USDJPY, -0.08%, $107.65
EURUSD, -0.45%, $1.0775

GBPUSD, +0.15%, $1.2352
USDCAD, -0.68%, $1.4066
AUDUSD,  +0.83%, $0.6377
NZDUSD,  +0.92%, $0.6005

S&P500, -0.05%, 2,797.80
Dow Jones, +0.17%, 23,515.26
Nasdaq, -0.01%, 8,494.75
Nikkei Futures, +1.54%, 19,313.0

Gold Spot, +0.81%, 1,728.78
Brent Oil Spot, +3.98%, 20.91


Gains in Euro unwound (high of +0.22%) when it became clear that eurozone leaders weren’t going to come up with any solid fresh stimulus and it fell further on talk that they won’t have anything ready until 2021. Commodity currencies enjoyed a good day, with the Canadian Dollar, CAD, strengthening amidst the rally in oil but note that only the front-month Crude climbed while the rest of the curve was more-or-less flat.

U.S. Initial claims for the week ending April 18 decreased by 810,000 to 4.427 million (consensus 4.0 million). Continuing claims for the week ending April 11 increased by 4,064,000 to 15.976 million (a record high). The key takeaway from this report, which covers the period in which the survey for the April Employment Situation Report was conducted, is that it presents some hope that the peak of the layoffs following the Covid-19 shutdowns has passed. Nonetheless, it is also a reminder of how bad things are on the labor front. This did not impact the market much as bad numbers are all within expectations now. 

The S&P 500 advanced as much as 1.6% on Thursday after the number of weekly initial claims declined to about 4.4 million, but stocks gave up gains following a negative report regarding potential Covid-19 treatment. The benchmark index finished just below its flat line with a 0.05% decline. The Dow Jones Industrial Average (+0.17%) and Nasdaq Composite (-0.01%) also closed little changed, while the Russell 2000 (+1.0%) outperformed. U.S. 2yr yield remained unchanged at 0.22% and U.S. 10yr yield fell 2bp to 0.61%.

The Financial Times reported that Gilead’s (GILD 77.78, -3.53, -4.3%) remdesivir drug flopped in its first randomized clinical trial in China, according to draft documents published accidentally by the World Health Organization (WHO). The news unnerved the market, and wiped out gains, as Stat News reported last Friday that the drug showed promising signs in one Chicago trial.

Gilead defended the results, saying WHO had an inappropriate characterization of the study, and the data still suggested the drug had a “potential benefit,” according to Stat News. Shares of Gilead still declined (-4.3%), and the broader market struggled the rest of the session, as the report reminded investors that the medical breakthroughs still needed to restore consumer confidence are not easily achieved.


U.S. House of Representatives overwhelmingly approved (vote of 388-5) a $484 billion Covid-19 relief bill on Thursday, funding small businesses and hospitals and pushing the total spending response to the crisis to an unprecedented near $3 trillion. The House action sent the latest of four relief bills to the White House, where Republican President Donald Trump has promised to sign it quickly into law.

The House also approved a select committee, with subpoena power, to probe the U.S. response to the Covid-19. It will have broad powers to investigate how federal dollars are being spent, U.S. preparedness, and Trump administration deliberations. 

IMPACT: The $484 billion aid bill is the fourth passed to address the Covid-19 crisis. It provides funds to small businesses and hospitals struggling with the economic toll of a pandemic that has killed more than 47,000 Americans and thrown a record 26 million out of work, wiping out all the jobs created during the longest employment boom in U.S. history. These stimulus packages are an overcompensation for actual economic destruction that will not disappear because more money has been thrown at it, the chickens will eventually come home to roost and the weakening bids in the S&P500 is a sign of things to come.


An array of U.S. merchants in Georgia and several other states prepared on Thursday to reopen for the first time in a month under newly relaxed Covid-19 restrictions, as another week of massive unemployment claims highlighted the grim economic toll of the pandemic. From Tennessee and Texas to Ohio and Montana, a handful of governors around the country have announced plans to swiftly allow the reopening of some workplaces that had been ordered closed as a way of curbing the spread of the Covid-19.

IMPACT: Those plans have drawn fire from public health experts and other governors who warn that a premature easing of stay-at-home orders and business closures imposed over the past five weeks could trigger a renewed surge in Covid-19 cases. If China’s and Singapore’s experience has shown us anything, it is that  there is evident risk of massive reinfections if measures are dropped prematurely. A second spike in Covid-19 cases in the U.S. will dampen risk sentiment once more and cause the stock market to crater like how it did when infections were rampant in New York city. This will lead to extreme risk aversion which will lead to USD strength.


A U.S. warship has again sailed through the sensitive Taiwan Straits, Taiwan’s Defence Ministry said on Friday, the second time in a month amid heightening tension between Taiwan and China. This coincides with a Chinese aircraft carrier passing near the island which China considers its own. China has been angered by the Trump administration’s stepped-up support, , such as more arms sales, U.S. patrols near it, and a visit to Washington by Vice President-elect William Lai in February, for Taiwan

IMPACT: China has carried out frequent drills near Taiwan in recent months, including flying fighter jets and nuclear-capable bombers close to the island, in moves denounced by Taipei’s government as attempts at intimidation. The tension between the U.S. and China is ramping up, this adds to the elevated volatility in markets. Extreme risk aversion will lead to a sell off in Asian currencies and USD strength. 



Covid-19, reopening of states in the U.S. and Oil developments will continue to grab headlines and drive risk appetite across the board. US durable goods orders later today will give us a sense of how quickly business spending is falling.




Market sentiment turned strongly risk seeking as oil rallied aggressively off the lows. The rally got serious when the Bank of Japan was reported to be considering unlimited bond buying in their next policy meeting. The party stalled when news that Gilead’s drug trial was not going so well. How fast things turned on a dime as the US stock indices backed off from the highs and oil, gold and risk currencies followed suit. 

Volatility remains high as the short-term investor sentiment can change from headline to headline. However, focus on the inevitable. All policymakers around the world are determined to print as much as they can. Hard assets like Gold will eventually power higher and every dip will be met with buyers.




Begin at the Beginning

This seems like an obvious thing to do but somehow many people start at the end. What I mean is that quite often conclusions are arrived at even before facts are determined and analysis is done. A good example of this is that many believe that this will be a V-shaped recovery. 

This belief is strongly held to without any concrete evidence to back it. Why should there be a V-shaped recovery? Oh, because that’s always been so for the market corrections we have seen in recent memory. 

That might well be true, but the economic damage, demand destruction and supply disruption that the world is experiencing is unprecedented. To be successful in trading, it is critical to form conclusions after examining the facts. The facts so far do not suggest that the recovery will be V-shaped. False bravado from politicians counts for nothing. According to them, Covid-19 was just a flu, until it became patently obvious that it wasn’t.


2 Min Market Update : 22nd April 2020


As of New York Close 21 Apr 2020,


U.S. Dollar Index, +0.26%, 100.20
USDJPY, +0.09%, $107.72

EURUSD, -0.06%, $1.0856
GBPUSD, -1.09%, $1.2301
USDCAD, +0.30%, $1.4191
AUDUSD,  -0.71%, $0.6291
NZDUSD,  -1.23%, $0.5963


S&P500, -3.07%, 2,736.56
Dow Jones, -2.67%, 23,018.88
Nasdaq, -3.48%, 8,263.23
Nikkei Futures, -2.89%, 19,073.0


Gold Futures, -0.32%, 1,705.70
Brent Oil Spot, -24.88%, 18.69


The Dollar rose to a two-week high against a basket of currencies as investors fled riskier assets for the world’s most liquid currency while putting pressure on oil-linked currencies such as the Mexican Peso (USDMXN, +1.40%) and the Canadian Dollar (USDCAD, +0.30%). 

U.S. Existing home sales declined 8.5% m/m in March to a seasonally adjusted annual rate of 5.27 million (consensus 5.35 million). Total sales were up 0.8% year-over-year, marking the ninth straight month that they have increased on a year-over-year basis. The key takeaway from the report is that it showed existing home sales activity was relatively soft before the Covid-19 impact, with low inventory and high prices crimping sales. Existing home sales are counted when the deals are closed, so the sales activity for March is predicated mostly on contracts signed in January and February.

In New Zealand, the central bank (RBNZ) said it is open to direct monetization of government debt. A central bank buying debt directly from the government issue is not something that will inspire confidence in markets, this will be viewed as a Kiwi negative event (NZDUSD, -1.23%). Central banks get around this by buying sovereign debt from the market, not directly from the government press, with the stated reason being helping to stabilize markets or guide interest rates to a desired level. 

S&P 500 fell 3.07% on Tuesday, closing near session lows for its second straight decline, as risk sentiment remained suppressed by the ongoing turmoil in the oil futures market. The Dow Jones Industrial Average declined 2.67%, the Nasdaq Composite declined 3.48%, and the Russell 2000 declined 2.3%. U.S. 2yr yield remained unchanged at 0.20% and U.S. 10r yield fell 5bp to 0.58%.

The May WTI contract officially expired at $10.01/bbl after falling negative yesterday, but the fundamental problems that drove the contract into negative territory continued to plague the rest of the WTI futures curve. Specifically, WTI crude futures for May delivery collapsed 306% to -$37.63/bbl ahead of expiration, as no one presumably wanted to take physical delivery given the well-documented storage constraints and lack of demand. The June WTI contract plunged 43.0%, or $8.70, to $11.57/bbl, after trading to an intraday low of touch $6.50/bbl at its low (a whopping 69% fall). Intraday price swings of 10-20% were occurring within minutes as extreme volatility was the order of the day.

Separately, news that Congressional leaders and the Trump administration reached a stimulus bill agreement, which reportedly includes $310 billion in small business funding, was encouraging but not market moving. The Senate and House will still need to vote on the bill.


In Singapore, the circuit breaker measure to choke off the spread of the Covid-19 will be extended by another month to June 1, and existing measures will be tightened until May 4, said Prime Minister Lee Hsien Loong. While he noted that the circuit breaker measures have been working, he stressed that Singapore cannot be complacent. He said the number of unlinked cases has not come down, which suggests a “hidden reservoir” of cases in the community. 

IMPACT: The Singapore Dollar (USDSGD, +0.76%) weakened on the back of the measures as businesses will suffer for an extended period. This is an important and bearish development as it shows that even a well organised city state like Singapore needs extended social distancing measures to keep the virus spread at bay. Anything else will likely lead to disastrous outcomes.


The U.S. Senate on Tuesday unanimously approved $484 billion in fresh relief for the U.S. economy and hospitals hammered by the Covid-19 pandemic, sending the measure to the House of Representatives for final passage later this week.

Previously, Washington provided nearly $350 billion in loans to small businesses impacted by the economic fallout from the Covid-19 that can turn into grants if certain requirements are met. That funding was quickly exhausted. Critics of the program said too much of the money had gone to larger, better-connected businesses. Indeed, burger chain Shake Shack Inc (SHAK.N) said on Monday it would return a $10 million loan it received after coming under public criticism.

To reduce the risk of large companies getting the bulk of the loans, Senate Democratic leader Chuck Schumer said, $125 billion of small business funds in the latest package would go to “mom and pop” and minority-owned stores.

IMPACT: The House is expected to vote on Thursday on what would be the fourth Covid-19-related measures. Taken together, the four measures amount to about $3 trillion in aid since last month to confront a crisis that has killed more than 43,000 Americans.


A handful of mostly southern U.S. states will begin loosening economic restrictions this week in the midst of a still virulent pandemic, providing a live-fire test of whether America’s communities can start to reopen without triggering a surge that may force them to close again.

The Republican governors of Georgia, South Carolina, Tennessee and Ohio all announced on Monday they would begin peeling back the curbs on commerce and social activity aimed at stopping the Covid-19 outbreak over the next two weeks. Colorado’s Democratic governor said on Tuesday he would open retail stores on May 1.

Georgia has been hardest-hit of these states, with 19,000 cases and nearly 800 deaths, including a dense cluster in the state’s southwest. Amid a national debate over how to fight the virus while mitigating the deep economic toll, these moves are the first to test the borders of resuming “normal” life.

IMPACT: None of the states have met basic White House guidelines unveiled last week of two weeks of declining cases before a state should reopen. Most are weeks away from the timing suggested in modeling by the influential Institute for Health Metrics and Evaluation (IHME), based on the virus’s spread and social distancing. As the case with Singapore and Japan show, premature complacency will lead to even more pain in the longer run.


The U.S. energy secretary said on Tuesday he would talk with leaders in the U.S. House of Representatives and urge them to fund the purchase of crude to fill the emergency oil reserve.

In March, Trump ordered Energy Secretary Dan Brouillette to fill the Strategic Petroleum Reserve, or SPR, to the top as the price of oil plunged while the Covid-19 crushed global demand. So far, Congress has declined to fund the purchase, with some Democrats opposed to bailing out the oil industry.

As the Energy Department works with Congress on a purchase, it also is moving forward with a plan to lease an initial 23 million barrels of storage space in the reserve to oil companies.

IMPACT: Oil prices are falling for many reasons, with the primary one being an unprecedented level of demand destruction as social distancing measures and travel restrictions are imposed in various countries worldwide. Trying to stem the tide of overwhelming amounts of supply is futile. 



The Eurozone’s preliminary PMIs for April will be released tomorrow, and the numbers could be abysmal. The preliminary PMIs for April will reveal just how much economic damage the pandemic has inflicted, with forecasts pointing to another drop deeper into contraction territory for both the manufacturing and services indexes.

Admittedly though, economic data don’t mean much right now. While investors could pay some attention to the PMIs since they also contain a forward-looking component, most of the price action in the euro might be driven by the meeting of EU leaders.

They will be discussing more stimulus measures, including the prospect of some risk-sharing mechanism like Eurobonds. If agreed, this could be a game-changer for the euro. It would imply a quicker recovery in the most virus-ravaged economies such as Italy and Spain, and remove some of the political risk premia.

However, despite some recent signs of flexibility, such an agreement remains very unlikely given the scale of opposition from Germany and the Netherlands. Therefore, the risks surrounding the euro’s reaction seem asymmetric. With nobody really expecting a deal, a surprise Eurobond agreement would likely push the euro much higher, whereas another disappointment might only generate minor losses.




The wild swings and the continued sell off in WTI crude oil futures dominated the news headlines and caused risk aversion in various asset classes including Gold which was down almost 3% at one point. This will continue to weigh on sentiment as victims of the crisis in various shapes and forms will relentlessly pop out of the woodwork as time passes.




Beware the Assumed Boundaries

Many people trade with the assumption that prices are somehow bound by some limits without fully understanding why they hold these assumptions. 

Interest rates can never be less than zero else there would be queues at the banks to borrow money and get paid for doing so. That was assumed true until it wasn’t. Oil prices cannot be at zero because then it would be free. That was true until the price of oil futures went deeply negative.

Always review what are the assumptions that are inherent in your thinking if you want to succeed at trading. Many have lost the shirts in the process of buying blue chip investment bank stocks such as Lehman Brothers all the way down to zero!


2 Min Market Update : 21st April 2020


As of New York Close 20 Apr 2020,


U.S. Dollar Index, +0.23%, 99.95
USDJPY, +0.14%, $107.68

EURUSD, -0.14%, $1.0863
GBPUSD, -0.48%, $1.2438
USDCAD, +0.94%, $1.4131
AUDUSD,  -0.36%, $0.6342
NZDUSD,  +0.28%, $0.6043


S&P500, -1.79%, 2,823.16
Dow Jones, -2.44%, 23,650.44
Nasdaq, -1.03%, 8,560.73
Nikkei Futures, -1.37%, 19,430.0


Gold Futures, +0.44%, 1,706.35
Brent Oil Spot, -6.54%, 24.88


Dollar Index edged 0.23% higher, 99.95, on Monday. Oil-linked currencies were weaker with the U.S. dollar 0.94% higher against its Canadian counterpart.

S&P 500 declined 1.79% on Monday, although that was relatively modest given the implosion in the oil market where the expiring May contract for WTI crude closed negative for the first time ever. The Dow Jones Industrial Average declined 2.44%, the Nasdaq Composite declined 1.03%, and the Russell 2000 declined 1.3%. U.S. 2yr yield remained unchanged at 0.20% and U.S. 10yr yield fell 2bp to 0.63%.

Specifically, WTI crude futures for May delivery collapsed 306% to -$37.63/bbl ahead of expiration, as no one presumably wanted to take physical delivery given the well-documented storage constraints and lack of demand. The negative price also indicated that producers are paying someone to take their oil. According to Bloomberg, USO owned 25% of the outstanding volume of May WTI oil futures contracts as of last week. With that contract set to expire today, the buyers of that “paper oil” have to sell or take physical delivery at the end of May. ETFs like USO are not created to take physical delivery of the oil contracts and were forced to unwind at any price.

The historic, and mind-boggling, occurrence appeared to spoil an intraday rebound in stocks, which started to accelerate losses heading into the futures settlement time at 2:30 p.m. ET. Around that same time, it was also reported that a vote to replenish the small business loan program was delayed in the Senate due to ongoing negotiations.

It should be noted, though, that the WTI futures curve did show rising prices amid expectations that prices should rebound with production cuts and hopefully increased demand. For instance, the June WTI crude futures contract settled at $20.43/bbl, although that was still an 18.9% decline.

In equities, Walt Disney (DIS 102.26, -4.37, -4.1%) and Boeing (BA 143.61, -10.39, -6.8%) underperformed the broader market following a pair of analyst downgrades and negative-sounding reports. Disney is reportedly suspending pay for 100,000 employees, while a GE leasing subsidiary canceled 69 orders of Boeing’s 737 MAX.


U.S. crude oil futures collapsed below $0 on Monday for the first time in history, amid a Covid-19-induced supply glut, ending the day at a stunning minus $37.63 a barrel as desperate traders paid to avoid having to take delivery of physical oil.  Brent crude, the international benchmark, also slumped, but that contract was nowhere near as weak because more storage is available worldwide.

IMPACT: Traders fled from the expiring May U.S. oil futures contract in a frenzy on Monday with no place to put the crude, but the June WTI contract settled at a much higher level of $20.43 a barrel. The May U.S. WTI contract fell 306%, to settle at a discount of $37.63 a barrel after touching an all-time low of -$40.32 a barrel. Brent was down 6.54%, to settle at $24.88 a barrel.

Refiners are processing much less crude than normal, so hundreds of millions of barrels have gushed into storage facilities worldwide. Traders have hired vessels just to anchor them and fill them with the excess oil. A record 160 million barrels are sitting in tankers around the world.


Trump said on Monday that his administration was looking at the possibility of stopping incoming Saudi Arabian crude oil shipments as a measure to support the battered domestic drilling industry.

“The problem is no one is driving a car anywhere in the world, essentially…Factories are closed, businesses are closed,” Trump said. “We had really a lot of energy to start off with, oil in particular, and then all of a sudden they lost 40%, 50% of their market.”

IMPACT: Trump reiterated that his administration plans to top up the nation’s emergency crude oil stockpile as prices plunge. The Department of Energy is in the process of leasing some of the roughly 77 million barrels of available space in the Strategic Petroleum Reserve to U.S. oil companies to help them deal with the dearth of commercial storage as the Covid-19 outbreak crushes domestic energy demand. The administration initially wanted to purchase the crude oil directly, but Congress has yet to approve the funding.


Students in Australia’s most populous state, New South Wales, will start returning to school next month in much larger numbers amid a rapid decline in new infections, Premier Gladys Berejiklian said on Tuesday. Australian states and territories have largely shuttered schools for more than a month as part of efforts to slow the spread of Covid-19, despite sometimes conflicting advice from the federal government, which had wanted schools to remain open. Children of emergency workers are among the few who have continued to go to school.

IMPACT: Berejiklian said students will begin to return to school on May 11 on a staggered basis in preparation for full-time schooling to re-start in July. Australia is one of the few nations around the world to detail plans to reopen schools after infection rates plummeted from more than 25% in mid-March to its current level of less than 1% a day.

The reopening of schools has been a key demand of Prime Minister Scott Morrison, who hopes it will stimulate Australia’s economy and allow parents to better juggle work commitments.



Caution returned to world markets as a drubbing for U.S. WTI crude oil kicked off a busy week of data and earnings that will drive home the damage being inflicted by global Covid-19 lockdowns. Investors will be watching for signs of progress as heads of European Union governments are scheduled to hold a video summit over how to tackle the economic fallout from the crisis on Thursday, where differing views on coronabonds, mostly demanded by the southern EU member states, are expected to be voiced.



The world woke up to the rude fact that the price for oil is not actually bound by zero. Though many will dismiss the panic selling in the May futures of WTI crude oil and say it is primarily due to the maturity contract today, the demand destruction is what has led to persistently weak prices despite the OPEC+ deal with US support. Market disruptions like these will inevitably lead to stories of massive losses in various firms having exposure to the product thinking that 0 is the lowest it can go. Credit losses at banks due to loans made to various firms that have oil trading activities will soon be revealed. Expect unexpected ripple effects…




Free energy? No, we pay you!!

How did you end up with negative oil prices today?  This happens when a physical futures contract finds no buyers close to or at expiry, here is a brief explanation in point form.

  1. A physical contract such as the WTI Crude has a delivery point at Cushing, in this occurrence May 2020. So people who hold the contract at the end of the trading window have to take physical delivery of the oil they bought on the futures market. – this is very rare.
  2. It means that in the last few days of the futures trading cycle, (which is today for this one) speculative or paper futures positions start rolling over to the next contract. – this is normally a pretty undramatic affair.
  3. What happened yesterday is trades or speculators who had bought the contract are finding themselves unable to resell it, and have no storage booked to get delivered the crude in Cushing, where the delivery is specified in the contract.
  4. This means that all the storage in Cushing is booked, and there is no price they can pay to store it, or they are totally inexperienced in this game and are caught holding a contract they did not understand the full physical aspect of as the time clock expires.
  5. The June contract is not out of the woods either: yesterday’s action indicates that physical oil markets at Cushing are not in good shape and that storage is getting very full.

Oil costs money to store and due to the Covid-19 induced economic halt, oil isn’t being used much. All the land storage facilities are filled up and nobody who can store it will buy it from you. Hence if you want to get rid of the oil, you have to pay someone.


2 Min Market Update : 20th April 2020


As of New York Close 17 Apr 2020,


U.S. Dollar Index, -0.25%, 99.72
USDJPY, -0.40%, $107.53

EURUSD, +0.38%, $1.0878
GBPUSD, +0.35%, $1.2501
USDCAD, -0.58%, $1.4000
AUDUSD,  +0.57%, $0.6365
NZDUSD,  +0.92%, $0.6026


S&P500, +2.68%, 2,874.56
Dow Jones, +2.99%, 24,242.49
Nasdaq, +1.38%, 8,650.14
Nikkei Futures, +2.39%, 19,700.0


Gold Futures, -1.90%, 1,698.80
Brent Oil Spot, +0.23%, 26.62


Dollar ticked lower on Friday as investors, cautiously optimistic about the results of a drug trial and Trump’s plan to reopen the economy, regained some appetite for risk. Dollar, which has closely tracked risk sentiment through the Covid-19 crisis, fell -0.19%, 99.72. 

S&P 500 advanced 2.68% on Friday amid hopes for a Covid-19 treatment and optimism about reopening the economy. The Dow Jones Industrial Average (+2.99%) and Russell 2000 (+4.3%) outpaced the benchmark index, while the Nasdaq Composite (+1.38%) had a more modest performance. U.S. 2yr Yield was unchanged at 0.20%. U.S. 10yr Yield rose 4bp to 0.65%.

A report published by Stat News indicated that most Covid-19 patients treated with Gilead Sciences’ (GILD 83.99, +7.45, +9.7%) remdesivir showed a rapid recovery in a trial at the University of Chicago Medicine. Note, Gilead did not issue an official statement regarding the trial, which lacked a placebo group for comparison. The University of Chicago itself warned that drawing any conclusions was “premature and scientifically unsound”.

The possibility that there might be an effective Covid-19 treatment, though, added to the positive sentiment in the market as it could restore some confidence for consumers when the economy starts to reopen. Trump said on Thursday that some states already satisfied the administration’s new guidelines to reopen before May.

The information technology sector (+1.4%) underperformed today amid relative weakness in Apple (AAPL 282.80, -3.89, -1.4%), which was downgraded to Sell from Neutral at Goldman Sachs on a view that iPhone sales will take more time to recover than expected. Boeing (BA 154.00, +19.76, +14.7%) shares rose nearly 15% after the company said it plans to restart production at its Puget Sound facility next week. Procter & Gamble (PG 124.69, +3.19, +2.6%) advanced with the broader market after it beat earnings estimates. 



Trump lashed out at four Democratic governors over their handling of the pandemic after having conceded that states bear ultimate control of restrictions to contain the outbreak. The Republican president targeted three swing states critical to his re-election bid – Michigan, Minnesota and Virginia – where his conservative loyalists have mounted pressure campaigns challenging those governors’ stay-at-home orders.

Amplifying a theme that his supporters have trumpeted this week in street protests at the state capitals of Lansing, St. Paul, and Richmond, Trump issued a series of matching Twitter posts touting the slogans: “LIBERATE MICHIGAN!” “LIBERATE MINNESOTA!” and “LIBERATE VIRGINIA!”

IMPACT: Michigan has become a particular focus of agitation to relax social-distancing rules that rank among the strictest in the nation after Governor Gretchen Whitmer, widely seen as a potential running mate for presumed Democratic presidential candidate Joe Biden, extended them through the end of April. Trump, who played down the Covid-19 threat in its early stages, had been pressing to restart idled businesses as soon as May 1, at first declaring “total” authority to do so and branding governors who resisted his approach, many of them Democrats, as “mutineers.”


Trump said on Saturday that Texas and Vermont will allow certain businesses to reopen later today while still observing Covid-19-related precautions and Montana will begin lifting restrictions on Friday. He said both Republican and Democratic governors “have announced concrete steps to begin a safe and gradual phased opening.” Texas and Vermont “will allow certain businesses to open on Monday while still requiring appropriate social distancing precautions,” he said.

IMPACT: On Saturday morning, Governor Andrew Cuomo of New York, the epicenter of the U.S. epidemic, said his Covid-19-battered state may finally be past the worst of the health crisis there. Again, Trump is determined to ignore the lessons that have been learnt by other countries (Singapore, Japan, China) regarding the measures required to stop a 2nd wave of infections.


China, the world’s second-largest economy shrank 6.8% (expected -6.2%) in the first quarter of 2020 compared to a year earlier. While a contraction was expected, it’s still a historic moment for China. The plunge is the worst for a single quarter that China has recorded since it started publishing those figures. 

China’s three major engines for growth — consumer spending, exports and fixed asset investment — all sputtered as large swaths of the country were placed on lockdown in late January and early February to contain the spread of the virus. Retail spending dropped 19% last quarter, while exports plunged more than 13%. Fixed asset investment declined 16%.

IMPACT: China cut its benchmark lending rate as expected on Monday to reduce borrowing costs for companies and prop up the Covid-19-hit economy, after it contracted for the first time in decades. The one-year loan prime rate (LPR) was lowered by 20 bps to 3.85% from 4.05% previously, while the five-year LPR  was cut by 10 bps to 4.65% from 4.75%.



While the stimulus is significant to be sure – as it will help prevent this crisis from evolving into a depression – investors might be underappreciating how deep this downturn will be and how long it will take for economies to recover. The speed of job losses in the US is simply terrifying. The unemployment rate will easily surpass 10% next month – the peak of the previous recession – and who knows how much higher it will climb as the pandemic cascades through the economy. Those losses could take years to recover, especially when considering the scars this crisis might leave on consumer behavior. Would you go to a restaurant or cinema on the same day the end of the lockdown, or play it safe and wait? Not to mention the risk of second waves of infections once the lockdowns are lifted, and the possibility of future shutdowns.

All this argues for a slow and protracted recovery as consumption remains soft, something that stock prices don’t seem to fully reflect. Indeed, the latest gains in gold and the yen suggest traders don’t have much faith in the recent stock rally either. The fact that oil prices can’t get off the floor either, despite huge supply cuts, argues the same point. It implies a real pickup in demand isn’t expected anytime soon.




Rumour of a promising drug trial got the bulls going but the denial from the company did not tamper the enthusiasm and the bears could not regain lost territory. The waves of money from policymakers continue to rule the sentiment for now. Reality will bite eventually, but it takes time.




The Dollar Smile

The theory states that the Dollar tends to outperform when the US economy is very strong (on the left side of the smile) or very weak (right side). And it does poorly when the US economy is just muddling through (middle of the smile). 

Why is this? Well, the logic is straightforward. The US trades at a “safety premium” relative to other countries. 

Most international funding is done in USD dollars. So, when the US economy is extremely weak, volatility increases, and markets are perceived as riskier. The risk aversion will lead to these Dollar loans being called back and Brazilian Reals or whichever currency will get converted into USD to cover the dollar debt thus putting upward pressure on the Dollar.

When the US economy is extremely strong and outperforming the rest of the world, investments will flow into USD and the US economy, thus leading to USD strength.


2 Min Market Update : 17th April 2020


As of New York Close 16 Apr 2020,


U.S. Dollar Index, +0.26%, 99.90
USDJPY, +0.42%, $107.93

EURUSD, -0.46%, $1.0859
GBPUSD, -0.22%, $1.2488
USDCAD, -0.53%, $1.4039
AUDUSD,  +0.65%, $0.6360
NZDUSD,  +0.14%, $0.6000


S&P500, +0.58%, 2,799.55
Dow Jones, +0.14%, 23,537.68
Nasdaq, +1.66%, 8,532.36
Nikkei Futures, +0.38%, 19,655.0


Gold Futures, -0.53%, 1,731.00
Brent Oil Spot, +2.11%, 26.56



The Dollar Index hit a one-week high on Thursday as investors fled to safe-haven assets following the release of weekly U.S. jobless data which showed a record 22 million Americans have sought unemployment benefits in the last month, erasing nearly all job gains since the Great Recession. Weekly jobless claims totaled 5.245 million (consensus 5.000 million), down 1.37 million from the prior week. Housing starts for March declined 22.3% m/m while building permits fell 6.8% m/m. The Philadelphia Fed Index for April plunged 43.9 points to -56.6 (consensus -25.0) for its lowest reading since July 1980.

Stock market closed mixed on Thursday, as investors responded to another round of weak economic data by continuing to buy shares of technology companies while avoiding distressed sectors like financials and energy. The Nasdaq Composite rose 1.66%, while the S&P 500 (+0.58%) and Dow Jones Industrial Average (+0.14%) posted smaller gains. The Russell 2000 declined 0.5%. U.S 2yr yield remained unchanged at 0.20%. U.S. 10yr yield fell 2bp to 0.61%.



Trump proposed guidelines on Thursday under which U.S. state governors could act to revive the U.S. economy from its Covid-19 shutdown in a staggered, three-stage process.

“We are not opening all at once, but one careful step at a time,” Trump told reporters, without himself providing details on his guidelines. The new federal guidelines recommend that states record a 14-day “downward trajectory” in Covid-19 cases before beginning a three-phase process of re-opening. Before states re-open, hospitals should have a “robust testing program” that includes antibody testing in place for healthcare workers, the guidelines say.

The document lays out Trump’s plan for opening businesses in states across the country that have been ravaged by the pandemic and its economic impact even though the responsibility for such decisions lies with the state, not federal authorities.

IMPACT: A White House official described the guidelines as conservative and noted that they had been agreed to by the top doctors on the president’s coronavirus task force.

Trump is pushing to get the U.S. economy going again after the Covid-19 shutdown left millions of Americans jobless. More than 20 million people have filed for unemployment in the U.S. in the past month and over 90% of the country has been under stay-at-home orders.



A Chicago hospital treating severe Covid-19 patients with Gilead Sciences’ antiviral medicine remdesivir in a closely watched clinical trial is seeing rapid recoveries in fever and respiratory symptoms, with nearly all patients discharged in less than a week.

Remdesivir was one of the first medicines identified as having the potential to impact SARS-CoV-2, the novel coronavirus that causes Covid-19, in lab tests. The entire world has been waiting for results from Gilead’s clinical trials, and positive results would likely lead to fast approvals by the Food and Drug Administration and other regulatory agencies. If safe and effective, it could become the first approved treatment against the disease.

IMPACT: Gilead Sciences shares popped by more than 16% in after-hours trading Thursday after details leaked of a closely watched clinical trial of the company’s antiviral drug Remdesivir, showing what appears to be promising results in treating Covid-19. As a result, S&P500 Futures are up approx. 2.73% in early Asian Trading.  

The University of Chicago Medicine recruited 125 people with Covid-19 into Gilead’s two Phase 3 clinical trials. Of those people, 113 had severe disease. All the patients have been treated with daily infusions of remdesivir.




US intelligence is reviewing sensitive intelligence collection aimed at the Chinese government, according to the intelligence source, as they pursue the theory. But some intelligence officials say it is possible the actual cause may never be known.


According to a US State Dept report China may be secretly conducting nuclear tests with very low explosive power; there is no proof, but there is a series of activities that “raise concerns”.


Sen. Graham suggested that China needs to be held accountable for spreading the virus and advocated for the closing of some markets in China where food is sold. He also said the United States needs to take aggressive action against China or risk another pandemic.

IMPACT: U.S. seems to be orchestrating a narrative warfare on China, leveraging the virus situation to soften the ground for the U.S. administration to sow seeds of discord in time to come. Keep a keen eye on this development as it will shape foreign policies in the near future. Increasing tension in a world where cooperation is needed more than ever should be bad for risk assets when things come to the fore.



With the worst of the pandemic now behind Europe and the US also approaching a peak, markets have turned their sights to when economies will reopen. Stocks have recovered on hopes for a ‘return to normal’, but importantly, safe havens like the yen and gold are also gaining. The combination suggests that traders are still playing defense and that the recent stock rally may be built on shaky foundations. Indeed, investors might be downplaying the scale of this crisis, and how long it will take for economies to recover. As such, the upcoming PMIs could provide a reality check.




It’s hot and it’s cold, it’s up and it’s down. As the tug of war continues between unlimited money from policy makers and deteriorating economic fundamentals, the market is behaving like a yoyo. It is easy to forget that the world is about to experience the worst depression of our time. However, it is critical to focus on the facts and the relentless flow of money will push prices of hard assets higher over time. Focus on that and ignore the noise. 




Do what works, Avoid what doesn’t

Fighting the market trends can be exhausting. It is both devastating to your financial and mental capital. When market movements do not behave as you expect them to according to your world view, and your trades are not working well, it is best to reduce the size of your risk positions or even just exit everything and take a step back.

Without risk positions to colour your view, you will be in a better frame of mind to objectively take stock of the situation at hand. Even in the midst of a very noisy market, there will be some trades that are working out. Focus on what is working out well and do more of that. If you can’t find anything that works, then you have the answer. Don’t do any trades, take a breather and enjoy the bliss of having no financial capital at risk. 

The weekend is upon us, enjoy it!


2 Min Market Update : 16th April 2020


As of New York Close 15 Apr 2020,


U.S. Dollar Index, +0.81%, 99.65
USDJPY, +0.38%, $107.63

EURUSD, -0.69%, $1.0905
GBPUSD, -0.84%, $1.2519
USDCAD, +1.68%, $1.4116
AUDUSD,  -2.07%, $0.6309
NZDUSD,  -1.81%, $0.5996


S&P500, -2.20%, 2,783.36
Dow Jones, -1.86%, 23,504.35
Nasdaq, -1.44%, 8,393.18
Nikkei Futures, -1.86%, 19,245.0


Gold Futures, -1.49%, 1,742.50
Brent Oil Spot, -6.47%, 26.01


On a day of equity weakness, investors fled from riskier assets for safe-havens such as the Dollar and US Treasury bonds. The U.S. dollar index, which had fallen in the four previous trading days, rose as high as 99.98, but returned some of those gains, last trading up 0.81%. IMF’s overnight report, which downgraded global growth more than expected, along with the record downturn in U.S. retail sales, and the huge drop in U.S. industrial production, all combined to see a rush into safe havens.

S&P 500 declined 2.20% on Wednesday, as the release of historically weak economic data undercut risk sentiment. The Dow Jones Industrial Average lost 1.86%, the Nasdaq Composite lost 1.44% to snap a four-session winning streak, and the Russell 2000 underperformed with a 4.3% decline. U.S. 2yr yield fell 3bp to 0.20% and U.S. 10yr yield fell 13bp to 0.63%.

U.S. Retail sales declined 8.7% m/m in March (consensus -8.0%). The key takeaway from the report is that it captured the impact of the Covid-19 shutdown situation, as spending in discretionary categories cratered while spending for essential items accelerated. Industrial production declined 5.4% m/m in March (consensus -4.1%).

In addition, more banks bolstered their loan-loss reserves to prepare for tougher times ahead, the Fed’s Beige Book for April noted a sharp contraction in economic activity with business contacts expecting conditions to worsen, and The Wall Street Journal reported that the Paycheck Protection Program for small businesses was on pace to run out of money today.

The energy sector (-4.7%) declined the most, though, as the group remained pressured by lower oil prices after the EIA projected a 9.2 mb/d decline in oil demand in 2020. Brent Oil settled 6.47% lower, to $26.01/bbl.

Separately, airline stocks finished mixed after the companies reached individual agreements with the government for payroll relief. Shares of American Airlines (AAL 12.29, +0.35, +2.9%) closed higher, while Delta Air Lines (DAL 24.35, -0.19, -0.8%) closed lower.


Canada’s central bank held interest rates steady at 0.25% as expected, added provincial and corporate bonds to its quantitative easing program, and suspended its economic forecasts given the highly uncertain outlook. “The next challenge for markets will be managing increased demand for near-term financing by federal and provincial governments, and businesses and households,” the Bank of Canada said in a new policy statement April 15. “The situation calls for special actions by the central bank.”

In its quarterly monetary policy report, the bank outlined two scenarios under which real gross domestic product (GDP) would shrink. It estimated real GDP would fall by 1% to 3% in the first quarter and would contract by 15% to 30% in the second quarter, both compared with the fourth quarter of 2019.

IMPACT: Policy-makers already have set up a half-dozen emergency programs aimed at pushing cash into financial markets, including the weekly purchase of at least $5 billion of federal government bonds. In the “coming weeks,” the central bank announced it also will start buying up to $50 billion in provincial debt, and up to $10 billion of investment-grade corporate bonds. Both will be firsts for the Bank of Canada.


U.S. retail sales suffered a record drop in March and output at factories declined by the most since 1946, buttressing analysts’ views that the economy contracted in the first quarter at its sharpest pace in decades as extraordinary measures to control the spread of Covid-19 shut down the country.

The drag on sales from social restrictions far outweighed a 3.1% surge in receipts at online retailers like Amazon (AMZN), and grocery stores and pharmacies as consumers stocked up on household essentials such as food, toilet paper, cleaning supplies and medication. Grocery store sales soared 26.9% and receipts at healthcare outlets jumped 4.3%. Sales at building material stores rose 1.3%.

IMPACT: Economists see no respite for consumer spending in the second quarter, with estimates as deep as a 41% rate of decline, despite a historic $2.3 trillion fiscal package, which made provisions for cash payments to some families and boosted unemployment benefit checks. As a reminder, about 16.8 million people have filed claims for unemployment benefits since March 21.


Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the Covid-19 crisis takes an “unprecedented” toll on the region’s service sector and major export destinations, the International Monetary Fund said on Thursday.

Asian policymakers must offer targeted support to households and firms hit hardest by the pandemic, the IMF said, calling also for efforts to provide ample liquidity to markets and ease financial stress faced by small and midsize firms. Emerging economies in the region should tap bilateral and multilateral swap lines, seek financial support from multilateral institutions, and use capital controls as needed to battle any disruptive capital outflows caused by the pandemic, the IMF said.

IMPACT: While Asia is set to fare better than other regions suffering economic contractions, the projection is worse than the 4.7% average growth rates throughout the global financial crisis, and the 1.3% increase during the Asian financial crisis in the late 1990s. The IMF expects a 7.6% expansion in Asian economic growth next year on the assumption that containment policies succeed, but added the outlook was highly uncertain.



China’s economy contracted in Q1, but by how much?

All this is expected to be revealed tomorrow when China publishes its Q1 GDP growth estimate as well as industrial output and retail sales numbers for March. A dire set of figures could spark some panic selling on fears that the economic slump in Europe and America will be even greater. Forecasts are for GDP to have declined by 10% over the quarter and 6% annually. If the contraction proves to be milder than anticipated, however, this may not necessarily be met with a positive response in the markets as many traders would question the validity of the official data.



US bonds had a strong rally and US stocks fell, with the S&P500 index dropping around 3% from the strong close of the day before. All on a day with nothing surprising on the news front. It seems likely that the 2840-50 level will be strong resistance on the S&P500 index for now. 

No matter how positively Trump wants to spin the situation and want to send people back to work to get the economy started again, doing so preemptively will be a mistake. The price for making mistakes when it comes to dealing with the virus, as we have seen repeatedly, is eventually going to be costly.




The Glass is Half Full

That’s the mode that investors are in right now in seeing the positive spin to every piece of news. Aided by the wave of cheap money from the Fed and fiscal subsidies from the government, sentiment has improved considerably, and fears have subsided. 

No matter how positive of a spin you make to give it, the glass is still, in fact, half empty and as time passes, as the deteriorating fundamentals take whole, we are going to have to wake up to the fact that there’s going to be a lot of thirsty people around. 

Earnings season has just started and eventually, all the repeated wake-up calls from disappointing earnings will take a toll.