- WTI Crude Oil traded at a low just above $6 per barrel yesterday due to a strong lack of demand for crude oil globally due to the coronavirus pandemic triggering economic shutdowns. It has recovered a little to just over $10. These multi-decade low prices are indicative of how the strong the decline in global economic activity has become.
- Most stock markets fell yesterday, most notably the U.S. stock market. Stock markets have been surprisingly strong for several days but may now finally be readying to make another strong downwards move due to collapsing global demand. If yesterday’s lows break down today, that will be a bearish sign. U.S. indices had regained more than half of their losses, which is technically significant as an inflection point. Many market analysts think the bottom of this bear market has already been reached, but other analysts see further strong falls likely in stocks over the coming weeks and months. There is a strong divergence of opinion.
- The rate of increase globally in new confirmed infections from the coronavirus pandemic is showing signs of beginning to plateau, although this may be at least partially due to the pandemic moving towards less developed nations, with total confirmed cases of almost 2.6 million and a case fatality rate of 6.92%. The number of daily reported deaths globally has declined over recent days. The pandemic’s epicenter is still located in New York, but even there it seems likely that the peak of this wave has already been reached, as it probably has in every European nation, but not in the U.S.A. yet as a whole. A world recession or possibly even depression from the pandemic appears to be inevitable, with Goldman Sachs forecasting a 34% drop in U.S. Q2 annualized GDP and other analysts seeing a 30% unemployment rate in the near future. If correct, these will be the worst such numbers seen since the 1930s, but it should be noted many analysts continue to see a much better outlook for U.S. unemployment. The WTO has forecasted that global trade is set to fall by one third.
- Data from New York City suggests that 0.18% of the entire population of the city has recently died while infected with the coronavirus, which is one of the strongest pieces of hard evidence that the disease has a significantly higher mortality rate than any common flu. Similar data from Bergamo, Italy suggests an estimate from between 0.20% to 0.50%, indicating that claims of coronavirus having a significantly lower IFR are unlikely to be accurate. If the case fatality rate is 0.8%, this suggests that almost one-quarter of all New Yorkers have been infected with the disease so far.
- There is increasing discussion of the economic cost of the pandemic in hard hit countries and talk of reopening economies, especially in the United States where the unemployment rate is currently estimated to have hit 15%. Some nations (mostly in Europe) have begun to relax restrictions, notably Germany, Poland, Norway, the Czech Republic, Albania, Italy, and Israel. It is becoming clear that the nations which have suffered least from this first wave are New Zealand, Australia, Norway, Austria, and Israel. The situation appears to be worsening in Brazil, Turkey, Russia, India, and Japan, although the Indian lockdown has been surprisingly efficient.
- While the vast majority of confirmed cases are still in Europe and the U.S.A., with the U.S.A. accounting for approximately one third of all cases, infections are beginning to increase notably in Latin America, especially in Brazil which is confirming more than 2,000 new cases daily. The President of Brazil Jair Bolsonaro has been seen in public recently suffering from a dry cough, leading to speculation he is infected, as he continues to play down the disease as no worse than the flu.
- The price of Gold looks like it has ended its recent bullish run and will probably consolidate for a while.
- Currency markets are currently dominated by relative strength in the Japanese Yen, while the British Pound looks likely to be the weakest currency today.
- Markets have been affected recently by high relative volatility, but this has decreased back to more normal levels, although stocks are still showing relatively high volatility.