In this latest issue of my weekly podcast, I discuss my three crisis signals: the US dollar, commodities, and gold. The USD continues to ride high despite Fed success in sinking our sinking yield curve. On the commodities side, oil has spiraled downward, going as low as $-36. And gold remain elevated but slightly down over the last week. The equity rebound momentum is slowing, and IVol has been flat at just over 40.
What's the plan? The US, along with other nations, still doesn't have an exit strategy when it comes to COVID-19. With new "confirmed" US cases per day still hovering around 30,000 (and with total new cases per day up around 300,000+), reopening the economy will surely create a second wave. Equity investors have recently been framing the narrative as a one-and-done natural disaster, so they have been filtering out all the nightmarish economic prints as they arrive.
In economic news, US indicators saw record lows. The CB Leading Index MoM was -6.7% for March. That is the largest decline in its 60-year history. The Chicago Fed National Activity Index, usually slow to register, dropped to -4.19 for March. It has only been lower two other months since 1967. The Empire State Manf Index registered at -78.2 for April, which is its lowest reading on record. And the Philadelphia Fed Manf Index came in at -56.6 for April, its lowest number since July of 1980. Stay tuned next week for flash Markit PMIs for April.
No bump for Trump. The president has yet to see the large rise in approval ratings that usually accompanies a crisis. On the other hand, governors across the nation are seeing large popularity (and visibility) surges as they battle the virus head on.
Big Brother strikes. Over half the world is on government-enforced shutdown. Surveillance is rising. A large share of businesses and ordinary people are becoming wards of the state. Authoritarians are using using this pandemic to consolidate power as they implement suppression-test-and-trace. Liberal western democracies, on the other hand, are struggling to come up with any viable battle plan. Is Big Brother needed to battle COVD-19?
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