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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.
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.
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.
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.
Elsewhere, the dollar is down. Gold is soaring, and oil too is rising.
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.
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.
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@[email protected]
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