Monday, March 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were lower in overnight trading. U.S. stock index futures are presently pointed toward solidly lower openings when the New York electronic day session begins. The New York Stock Exchange, itself, is now closed. When the markets opened electronically Sunday, U.S. stock indexes were locked limit down. The U.S. Congress over the weekend failed to agree on a financial aid package for U.S. businesses and citizens, which is being blamed for the even more dour marketplace mood to start the trading week.
The Covid-19 outbreak continues to spread worldwide, with the U.S. economy shutting down even further as many states, including New York and California, have been locked down by their governors. Focus in the U.S. is on a shortage of medical supplies. Local health officials are now asking for the public to donate any supplies such as masks and gloves that they have at home. U.S. Senator Rand Paul has been diagnosed with Covid-19. Over the weekend much of the American public came to the stark realization the U.S. is not going to remain on lockdown for just a couple weeks, but instead for a period likely at least twice that long and probably even longer. China-U.S. relations are becoming more strained as President Trump now refers to Covid-19 as the “China virus,” which has angered the Chinese people.
Following is an edited email dispatch from a market analyst Monday morning: “U.S. economic growth estimates from the biggest investment banks are becoming increasingly dire. Last week, J.P. Morgan expected GDP to shrink 14% in the second quarter of this year, Goldman Sachs sees a 24% fall, while the latest forecast by Morgan Stanley is even gloomier, anticipating a 30% drop. However, the worst projections are coming from a well-respected Fed official, James Bullard, who said unemployment may hit 30% and GDP decline 50% in the second quarter. Within the next couple of weeks, we will get to know how severe the upcoming economic crisis will be. The scariest scenario is that it turns into a credit crisis which will break the financial system.”
The important outside markets today see Nymex crude oil prices weaker and trading around $22.25 a barrel. The U.S. dollar index is near steady after hitting a three-year high last week. Gold prices are higher and trading just below $1,500.00 an ounce. The 10-year U.S. Treasury note yield has dropped to 0.813% Monday after trading above 1.0% last week.
U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.