D&D Note (5.12.2020) ~ New Normal Getting Priced Into Market ~
The idea that America can just flip a switch and go back to normal is not realistic. Yet that is what the stock market has been pricing in during this Bear Market rally.
Now that is starting to shift and the New Normal is beginning to get priced into the markets.
Tech companies like Facebook and Google have said employees can work from home through the end of 2020. Today Twitter announced that their employees can work from home “forever” if they want to.
Many restaurants and retail stores are already announcing they are going out of business even before they have a chance to reopen. As even with a partial 25-50% reopen for them won’t allow them to survive.
The new round of of government stimulus is in the works and includes a second round of $1,200 checks to Americans. Democrat’s also want to extend the additional unemployment benefits of $600 a week to January. The total price tag for this new stimulus is $3 trillion.
The FED last night announced the secondary market facility will start buying ETFs today. This seems like anticipation of another collapsing Oil contract when the June contract expires May 20th. Today the biggest credit ETF jumps most in a month after the FED began buying.
Markets closed on the lows of the day.
DOW down -1.89%
S&P 500 down -2.05% (2870.12)
NASDAQ down -2.06%
The VIX spiked 18.28% back into a 30 handle of 32.68.
Oil gained 6.84% to $25.79 a barrel.
Former FDA commissioner Scott Gottlieb gives grim assessment for the USA saying we are only in the 2nd inning of the Covid-19 epidemic.
Due to the lockdowns the US reported a record $738 billion budget deficit in April.
In testimony to the Senate, Dr. Fauci warned we could face more “suffering and death” if states reopen too fast. And if criteria laid out by the White House isn’t met before reopening there could be “multiple outbreaks.”
Global cases: Over 4.2 million
Global deaths: Over 287,000
US cases: Over 1.3 million
US deaths: Over 80,000
~ Dave James / Principal Trader and Market Strategist