A week ago I was noting the optimism I was sensing both anecdotally and from general market sentiment. Since then, crude oil traded to negative $40/barrel and is now trading around $17 while broader market indices are almost completely unchanged. We’re seeing chop as the markets look for direction… hope that we’re coming out of this or signs we’re not.
I mentioned the Gilead Sciences remdesivir trial. It was met with great optimism a week ago, but I noted my skepticism. Turns out, we learned today that it’s likely not going to be the silver bullet folks were hoping for.
To me, it really doesn’t feel like markets can hang on much longer here. The S&P 500 looks vulnerable, hanging below resistance and continuing to be rejected by the 50-day SMA:
Meanwhile, in what seems like it would be positive news regarding antibody tests in New York, the market failed to rally and finished slightly down on the day. But to me, all it confirms is there’s a lot more pain to get through if we’re hoping for herd immunity. I think we’d be looking at a death toll 10-15x higher in the US before getting there.
We’re currently sitting just under 50,000 US fatalities:
That’s scary. But I don’t think the market is weighing that.
It seems we’re starting to recognize the reality of the economic impact. This article about the “death” of department stores caught my eye yesterday. Yes, the pandemic is accelerating an already clear inevitable. But the speed that it’s happening will be astounding.
The short of it all is stores are canceling orders for merchandise, not paying their bills, and in serious risk of bankruptcy or filing already. What’s the point? Nobody is shopping anyway.
But the bigger implications here are that factories have nothing to fulfill. So when you hear all this talk about “opening up the economy”, ask yourself what orders factories in China are fulfilling…
Meanwhile, I’ve learned that Vegas has an absolute lunatic for a Mayor and MBA students are demanding tuition refunds.
Shit is going to get ugly.