By Nell Sloane of Capital Trading Group
Stocks continue on the roller coaster ride! Coronavirus headlines have the entire world nervous.
I felt it became even more real after hearing the Pentagon was going to provide over +100,000 military body-bags for civilian use here on U.S. soil.
At the same time, the trade is being forced to digest headlines out of New York that doctors are asking for discretion to withhold care from patients unlikely to recover.
Stock bulls want to believe that more government stimulus and a couple of positive days means the worst might be behind us. Bears believe this might only be the calm before the storm, pointing to at least several more weeks of upcoming economic data that is going to be very hard to digest.
New jobless claims released yesterday provided a preview, with claims soaring to a new all-time record 6.648 million for the week ended March 28. That brings the number of Americans who filed for unemployment over the past two weeks to nearly 10 million and highlights the unprecedented impact the virus outbreak is having on the U.S. economy.
And unlike a typical labor market downturn, which tends to come in waves, this has come down like a sledgehammer all at one time. How long the waves of layoffs last will be a key factor in determining how quickly the turnaround will happen.
If shutdowns last into the late summer or beyond, a lot of businesses - especially small businesses - are going to go under.
The March jobs report is due today but the survey is based on data from around the middle of the month. That means it probably won't fully reflect the 10 million coronavirus-related new unemployment claims filed in the last two weeks. Today could bring some interesting news on the oil front. Saudi Arabia late yesterday called for an "urgent meeting" of the OPEC+ alliance and other producers to negotiate a deal on output cuts that could stem the coronavirus-induced free fall in oil prices. According to insiders, the kingdom said it was "seeking a fair agreement that will restore the desired balance to the oil markets" and indicated that it wanted other countries outside the OPEC+ alliance to join the talks. Trump had earlier tweeted that he had spoken by phone with Saudi Crown Prince Mohammed bin Salman, who in turn called Russian President Vladimir Putin to heal their oil market rift. A production cut agreement would be a step in the right direction but it could take a long time to re balance supply and demand amid the fallout from the coronavirus pandemic. Looking to next week, it's likely to be another rocky one as most outlooks see the virus still raging for an extended period. That means continued lock downs and the near standstill of economic activity. The U.S. Congress is out for at least the next three weeks so there's not likely to be any new legislation to help boost investor sentiment on that front. Meaning poor economic data and what is expected to be a tragic number of coronavirus deaths could dominate the headlines.
Keep in mind next week will be short with markets closed for Good Friday on April 10. Staying extremely conservative!