One view: Governments are unleashing trillions of dollars in spending, and such assets could soon stage a comeback.
John Normand, head of cross-asset fundamental strategy at JPMorgan, told clients on Friday that the “conditions we had set for markets to stabilize then revive” have “mostly been met.” The bank was looking at factors including infection rates, market pricing and the amount of fiscal stimulus announced by governments.
He noted that “the missing criteria is a convincing deceleration in COVID daily infection rates.”
Normand said that most risky markets, with the exception of oil and some emerging market currencies, “have probably made their lows for this recession.”
Goldman Sachs, meanwhile, is advising clients that the S&P 500 “will turn lower in coming weeks,” and that in order for the index to sustain a rally, there needs to be a slowdown in the spread of the virus, evidence that fiscal and monetary policy stimulus is working and slowing selling pressure.
“If the worst is indeed behind us, it would mark the fastest and most volatile bear market decline on record,” chief US chief equity strategist David Kostin told clients on Friday.
He pointed out that between September and December 2008, the S&P 500 experienced six bounces of 9% or more, with some gains as large as 19%. But the market didn’t reach its bottom until March 2009, “when the pace of economic contraction began to slow.”
Why it’s hard: Banks can only foresee so much, and there are plenty of mixed signals about how soon the global economy can get up and running again.
See here: US President Donald Trump announced Sunday that social distancing measures would be extended at least through April 30 after suggesting the country could reopen by Easter.
Carmakers race to make medical equipment for hospitals
As the number of coronavirus cases continues to climb worldwide, putting pressure on hospital systems that are running low on items such as ventilators, automakers are stepping up to procure crucial supplies and develop new products to ease the shortage.
The Continuous Positive Airway Pressure (CPAP) device was designed in fewer than 100 hours.
“General Motors is doing a fantastic job,” Trump said. “I don’t think we have to worry about General Motors now.”
US oil dips below $20 per barrel as pressure continues
Pressure on oil prices is only getting worse as the collapse in demand deepens and the price war between Saudi Arabia and Russia drags on.
US oil futures briefly dropped below $20 per barrel on Sunday after Trump’s announcement that social distancing guidelines would be extended through the end of April.
Brent crude futures, the global oil benchmark, were last down 7.5%, trading at $23.05 per barrel. US oil is trading at $20.43, down 5%.
Bjornar Tonhaugen, head of oil markets at Rystad Energy, a consultancy, told clients Monday that oil slipped to 17-year lows as it became clear that demand for energy would stay weak for at least another month.
US pending home sales for February arrive at 10 a.m. ET.
Coming tomorrow: How confident were US and UK consumers in March? Data arrives tomorrow — though it may not fully reflect the impact of the coronavirus and related shutdowns.