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Good morning, Bull Sheeters. This rally appears to have legs, with a second straight day of gains in the cards.
Let’s see where there’s green on the screens.
Markets update
Across Asia, all major indices gained ground on Tuesday as investor enthusiasm returns to global markets. China reported no new coronavirus infections in the past 24 hours, a first since the pandemic started roiling markets at the start of the year. We even have that oddity of oddities: a profit-beat, delivered by Samsung this morning.
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Now to Europe, where the benchmark STOXX Europe 600 was trading nearly 3% higher within the first half-hour of trade. Germany’s Dax closed above 10,000 yesterday, and padded that further this morning.
Meanwhile, the British pound sterling sunk overnight on news Prime Minister Boris Johnson was transferred to intensive care as his coronavirus-related symptoms worsened. His condition has since stabilized, and, with that, sterling swung positive again.
Looking ahead, all ears will be tuned to an EU finance ministers video-conference meeting today in which member nations are set to discuss how best to fund a recovery plan. There’s more agreement on bailout funds than there is for so-called corona bonds. The latter would mutualize the coronavirus debt load across every country, a non-starter for the Germans.
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As I type, The U.S. futures are set to add to yesterday’s gains. The Dow and S&P 500 are poised to tick up 2.5%. That’s after all three major indices closed up more than 7% yesterday.
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Elsewhere, the dollar is down. Gold is soaring, and oil too is rising.
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Yesterday’s rally was driven by data showing some improvement in the growth rate of infections in recent days. Make no mistake: nobody is calling a peak in the United States, or in Europe.
The coronavirus death toll will almost certainly top 75,000 confirmed cases worldwide in a matter of hours, with infections well over 1.3 million. But there are signs the severe shelter-in-place rules and the shutdown of restaurants, factories and public gatherings are beginning to slow the rate of infection.
Both health officials and Wall Street analysts are watching closely the three-day trailing indicator for coronavirus infections. And they’re seeing some improvement, as today’s chart shows.
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Searching for a cure
The progressively dwindling bars is what we want to see. A week ago in Europe, the recorded growth rate was 29%, falling to 16% over the past 72 hours.
There are big caveats, however, to the official numbers. Testing rates across countries are wildly inconsistent, and so we don’t know what the true numbers are, or if the situation is truly improving. In fact, health officials in the U.S. continue to warn the worst is yet to come.
So, is this rally premature? The bullish among you would probably note: even after yesterday’s gains, the S&P 500 still has ground to make up; it’s down 21.5% from its all-time high, set in February.
Postscript
The crack team at Politico compiled a great piece of research on what Europeans are buying after a month or more of lockdowns. The Italian breakdown, in particular, intrigued me.
Gloves and soap do not top the list. Rather, fresh fruit— apricots—does. (Never mind for the moment that the apricot season isn’t set to commence for another two- to three-months around here; maybe Italians are looking ahead.)
You might be able to just make out what’s in decline, at the very bottom of the list, starting with foreign wine. No surprise there. Imports tend to be more expensive, and grocery shopping in general has gotten pricier in recent weeks. What’s not shown here on the Politico list (see the full list here) are two protein staples—veal and horse meat—that are both in decline. Meanwhile, purchases of rabbit and chicken are on the up.
I’m an omnivore, but I’ve never been much of a fan of horse meat. If you serve it to me, I’ll do the polite thing. I’ll eat your horse. But I’m not the guy at the butcher asking, Ciao, Mario, how’s the horse today?
I have Italian friends who swear by its nutritional value. It’s high in iron, they’re quick to point out.
You know what else is high in iron? Horse shoes. I’ll go with the rabbit.
Have a good day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
Worse than the Great Recession? The fallout from the coronavirus pandemic could be worse than the 2008 financial crisis, JPMorgan Chase CEO Jamie Dimon has warned. The worst-case scenario that the bank is bracing for “assumes an even deeper contraction” than back then, with the economy shrinking 35% in the second quarter and remaining down through 2020, while unemployment peaks at 14% by year-end. “This scenario is quite severe and, we hope, unlikely,” Dimon wrote in his annual letter, reports Fortune’s Jen Wieczner.
Another trillion dollars. House Democrats plan a new aid package for the coronavirus-hit U.S. economy worth at least another $1 trillion, Speaker Nancy Pelosi said on a conference call. The next stimulus package will focus on replenishing funds for programs established in Congress’s $2.2 trillion virus relief bill signed into law last month, Bloomberg quoted people on Pelosi’s call with Democrats as saying.
Advertising plunge. The COVID-19 pandemic is having a chilling effect on advertising. Some 81% of large advertisers are deferring ads, according to the World Federation of Advertisers, whose members include household names such as AB InBev, Airbnb, Diageo, L’Oreal, Coca-Cola, Unilever and Visa. More than half the companies surveyed have cut budgets due to the outbreak, CNBC reports.
Market candy
Quiz time
Which high-flying tech stock, regarded as a stay-at-home darling during so far during the coronavirus lockdown, crashed yesterday amid a larger market rally?
- Zoom
- Netflix
- Amazon
- Microsoft
Answer: A … Zoom has had a spectacular run, up 80% since the start of the year while the Nasdaq has plunged. But its shares slid more than 4% yesterday as reports of “Zoom bombings”—uninvited guests crashing Zoom meetings—led several major organizations to discourage its use.
