Mid-Market Update: Central banks deliver, Pace of filings slow, BOE signals more stimulus, Oil rises after Saudi price increase, Gold and Bitcoin rally

US stocks are roaring higher as earnings season nears its end, dismal data continues, and following a few more aggressive actions from central banks.  After today, only about 15% of companies in the S&P 500 will report earnings.  Investors are not putting a lot a weight into this round of corporate updates because it is still too early to quantify the impact of COVID-19.  The big takeaway from this earnings season was that 20% of companies had withdraw their guidance, while another 20% had to cut dividends or suspend buybacks. 

Today’s rally had four key drivers: The Norges and CNB eased more than expected, while the BOE signaled they will likely be pumping in more stimulus at their next meeting.  Moderna’s vaccine, mRNA-1273 will be in late-stage studies by early summer. The US employment situation is getting very ugly as some states see a quarter of the workforce is jobless. Lastly, China and US trade chiefs will hold a phone call as soon as next week regarding the implementation of the phase-one trade deal, a possible sign we won’t see President Trump follow through with his tariff threats.

Centrals banks have provided a tentative safety net for global equities and a vaccine is what will be needed to see a complete return of global economic activity. 

Jobless Claims

33.5 million Americans have filed for unemployment benefits over the last seven weeks.  Weekly initial jobless claims came in at 3.17 million, higher than the 3 million consensus estimate, but half of what we saw during the peak. 

Financial markets had little reaction to the jobless claims data and will likely pay greater attention to tomorrow’s non-farm payroll report.  The April NFP report will likely show over 20 million jobs were lost and the big question for tomorrow is what will the unemployment rate do? Corrections to the last employment report will see more people qualify for being in the labor force, so the unemployment rate could surprise with a 20% print.  But if more people leave the labor market, not looking for work, we could see the unemployment rate come in lower than the consensus estimate of 16%. 

Oil

Oil prices are rising after the Saudis confirmed their price war tactics are over.  State-run Saudi Aramco raised their Arab light crude oil to Asia by $1.40 a barrel from May.  The price hike indicates a return to normal pricing by the Saudis and a possible sign demand is beginning is picking up.

Energy traders don’t want to be caught short oil anymore and if the headlines remain positive for both the demand and supply side, prices should continue to rise. 

Gold

Gold got a present from central banks today.  Unexpected easing, more aggressive rate cuts and the promise for stimulus in June are driving gold prices higher today.  The Norges central bank unexpectedly cut rates to zero, the Czech central bank deliver a much larger rate cut to 0.25% and the BOE saw two dissenters call for an increase with the asset purchase target. 

Gold prices are also benefiting from dismal economic data from the world’s largest economy.  Gold seems like it is ready to run higher as disastrous economic data will likely only lead to further global monetary easing. 

Bitcoin

Bitcoin is making another run for $10,000.  Further monetary easing worldwide and the upcoming halving event have provided a nice backdrop for the world’s largest cryptocurrency.  Mainstream interest is picking up and the halving event will be a make-or-break moment for the digital coins.  Bitcoin might see this halving event, which is just over four days away become a ‘buy the rumor sell the news’ event.

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