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Happy Friday. It looks as if we’ll end a brutal week on a positive note. But it could still be a volatile one.
Where are investors putting their money? Let’s take a look.
Markets update
Brace yourself. Today is “quadruple witching” Friday, which comes around every quarter. What does it mean? U.S. Stock options, stock index futures and index option contracts are all due to expire today. Usually, it’s not much of a big deal. But investors are on edge as any spike in volume these days has sent shares lower. But Reuters, for one, suggests the quirk of the calendar could actually bring calm to the markets today. We need it.
So far the U.S. Futures bear out this hypothesis. The Dow and S&P look set to open up 2% higher on Friday after a modest bounce-back yesterday.
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As I type, most corners of the global markets are in the green. With the exception of Japan’s Nikkei, the major Asian indices look to close out the week in positive territory.
Europe too is looking good. The bourses in Paris and Frankfurt are up above 6% in the first half-hour of trading as investors view this as a good time to buy battered shares. Just about every industry, including travel and leisure, financials and energy, is trading higher in Europe at the moment.
Elsewhere, the dollar rally is losing steam. The British pound is up 3% against the greenback, rebounding nicely after the Bank of England announced an emergency cut yesterday. The biggest gainers are commodities. Gold is one again on the rise, and Brent Crude has once again risen above $30 a barrel, a gain of 20% in the past two days.
We have more numbers for you, as we do every Friday.
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By the numbers
10,000. The global death toll for coronavirus is now in five-figure territory, topping 10,000. Italy yesterday overtook China in the number of confirmed deaths with 3,405. Europe is the new epicenter, but it’s on the increase everywhere. If you’re still on the fence about how bad this could get, do yourself a favor—google “Bergamo + Italy +coronavirus.”
What’s so worrying to health officials is the pace of infections. As Bloomberg notes, citing the World Health Organization, “it took three months for the first 100,000 cases, but only 12 days for the next 100,000.” It’s no wonder California is joining the likes of Italy and other European countries in ordering 40 million residents to just chill at home.
9,464. The Dow has fallen that much, points-wise, since its Feb. 12 high of 29,551, a 32% drop. I’m looking for a silver lining here. So how about this? The blue-chip index is down just 3.7% since this time last week. The S&P 500 has fallen by a similar measure in the last seven days despite Monday’s historic sell-off. The Nasdaq is down by about 9.2% in that time. Here’s another look at the Dow’s mighty collapse.
7%. That’s the rise of the U.S. Dollar index since March 9. King dollar is on a tear against just about every G7 currency as investors hoard the greenback. That rush into dollar and dollar-denominated assets is more bad news for U.S. Multinationals who’ve already seen a coronavirus-driven collapse in international trade. The dollar has strengthened significantly against the euro and British pound since the COVID-19 outbreak caught the world’s attention in January. A jump of 7% is huge in FX circles, and it’s likely to eat into the bottom lines of most multinationals even after the pandemic threat passes.
Postscript
Scene: Our kitchen table. Hour: Dinner time.
My wife: Do you know what’s the most sold-out item in Italian supermarkets since the lockdown?
Me: Dunno, masks? Toilet paper?
My wife: Nope. It’s lievito.
Me: Yeast!? Italians are panic-buying yeast?
My wife: You know the Romans. They can’t live without their pizza and pane, biscotti and torte.
[Note: This is how the typical conversation goes in our house. It starts in one language, hops to another, and finishes somewhere else.]
My wife: If they can’t get it on the street, they’ll make it at home.
Me: hmm.
[Over a glass of fermented Italian grapes, I whip out my phone to fact-check her. And sure enough, Twitter and the Italian media are all over the assolto (assault) of lievito ai supermercati.]
My wife: And you know what Americans are buying? Guns.
Make pizza, not war.
Have a good weekend, and stay safe.
Bernhard Warner
@BernhardWarner
[email protected]
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Today's reads
Patience. We’re going through one of the worst market crashes in history. Stocks could fall further, but eventually will recover. And returns following a bear marke t are pretty good if you can hang on. Average returns after the worst bear markets of the past century have been 52%, 89% and 132%, respectively, over the ensuing one, three, and five years, says Ben Carlson, director of institutional asset management at Ritholtz Wealth Management. That would help your battered portfolio.
Jitters at home. 63% of Americans worry they won’t be able to pay their bills during the coronavirus crisis, a Coins2Day poll shows. 82% believe a recession is likely in the next year. 64% say the coronavirus outbreak is disrupting their household spending levels, and 69% are worried that they or a relative will be exposed to the virus, according to the poll, which shows the depth of concern over the outbreak.
Will the wifi hold up? Netflix has agreed to reduce its streaming traffic in Europe by about 25% for the next month to ease pressure on networks strained by the coronavirus pandemic. With millions in forced seclusion at home, streaming time spiked by more than 20% worldwide last weekend, leading regulators to press companies to lessen the load on the internet. Netflix will reduce traffic by reducing bit rates in Europe.
Market candy
This day in history
On March 20, 2019, Walt Disney Co closed its $71 billion acquisition of Twenty-First Century Fox’s film and TV assets. A year later, Disney finds itself in the eye of the coronavirus storm, forced to temporarily close its theme parks, suspend cruises and delay movie releases. After the market plunge, its shares are 14% below year-ago levels. But please spare a thought for this guy—his streak of 2,995 consecutive days visiting Disneyland in Anaheim is over.
