(no February data was included)
Positives
1)Congress passes the $2T bill that will provide short term relief for many households and businesses.
2)The Fed takes further steps to re-liquefy parts of the credit markets and also announces that they will outright be buying IG corporate bonds (in a roundabout way). The ECB takes off issuer limits in its new 750b QE program.
3)The patient count increases in Asia continue to be modest and are mostly imported. China continues to reopen but is getting no help from closed export markets.
4)More test kits, ventilators, masks, gowns and hospital beds are delivered.
5)Some US companies paying the cost of the tariffs on imported goods get some relief in that they can delay payments. Get rid of them all I say.
6)Singapore, India, Germany and the UK announced also new fiscal plans to cushion their economies.
7)The Reserve Bank of India to the growing list of central bank actions as they cut its reverse repo rate to 4.4% from 5.15% and they added a $50b plan to help the banks and ease the financial market freeze up.
8)The March Richmond manufacturing index actually rose 4 pts to +2 surprisingly but the Richmond Fed said “Manufacturers reported weakening local business conditions and a decrease in backlog of orders. Survey respondents were pessimistic, expecting weaker business conditions and a drop in shipments and new orders in the coming months.” Pointing to a weaker headline number next month are the declines in all the key components in the 6 month outlook questions, particularly in capital spending.
9)The March UK retail sales survey from CBI fell to -3 from +1 and better than the estimate of -15. The internals though were very mixed as “Grocers reported exceptionally strong growth in sales volumes in the year to March, as did specialist food and drink firms. However, most other sectors reported sharp falls in sales volumes, including clothing, furniture and ‘other normal goods’ (such as flowers, jewelery, cards, etc…).”
10)Consumer confidence in France in March hung in real well, falling 1 pt only m/o/m.
11)As a Jet fan, Tom Brady is finally out of the AFC east.
Negatives
1)The patient counts in Europe and the US continue to rise sharply.
2)This is for another day but there will be major side effects from everything the Fed is doing and with the dramatic spike in its balance sheet.
3)Initial jobless claims totaled 3.28mm, almost double what was expected and at the upper end of the broad range of estimates even though many were a shot in the dark.
4)The mortgage market was shaken to its core this week (h/t BH) thanks in part to the Fed’s massive buying of MBS (unintended consequence) where lenders are getting thrown upside down on their hedges that they put in place to allow buyers to lock in rates. This on top of servicers that are getting stuck coming up with capital to pay lenders without payments coming from borrowers along with worries about job losses and fears that payments won’t get made, further clouded by all the margin calls going on in MBS and lender warehouse lines getting cut. The end result is a rise in mortgage rates to the highest level since middle of January at 3.82% when the 10 yr Treasury yield was around 1.80%. The result was a 34% drop w/o/w in refi’s after a 10% drop in the week prior. They still though are up 195% y/o/y. Purchases fell almost 15% w/o/w and are now down 11.2% y/o/y as many buyers obviously now worry about jobs and open houses become virtual.
5)Markit said its services PMI fell to 39.1 from 49.4 while manufacturing was down only slightly below 50 at 49.2 from 50.7 in February. The reasons for the numbers are obvious and Markit tried to quantify it by saying “The March PMI is roughly indicative of GDP falling at an annualized rate approaching 5%, but the increasing number of virus fighting lockdowns and closures mean the 2nd quarter will likely see a far steeper rate of decline.”
6)The final UoM March consumer confidence index and likely taken within the past few days, thus timely, fell to 89.1 from 95.9 initially and down from 101 in February. That’s the lowest since October 2016. UoM said “To avoid an extended recession, economic policies must quickly adapt to a new era that will reorder the spending and saving priorities of consumers as well as the relative roles of the public and private sectors in the US economy…Consumers still believe that the current downturn will be temporary as half anticipated better times over the next 5 years, the same proportion that was recorded last month. Optimism about the longer term outlook, however, was mainly voiced by those over age 65.”
7)In the Eurozone, the March manufacturing PMI fell to 44.8 from 49.2 while services were almost cut in half to 28.4 from 52.6.
8)In the UK, manufacturing fell to 48 from 51.7 while services plunged to 35.7 from 53.2. For the UK and parts of Europe, “Any growth was confined to small pockets of the economy such as food manufacturing, pharmaceuticals and healthcare.”
9)French business confidence fell 10 pts m/o/m to 95 in March and which was 2 pts below expectations. That is the lowest since March 2015. As seen in other data points, most of the weakness from February was seen in services, retail and employment. Manufacturing was softer but less so while construction was actually unchanged.
10)The revised March German IFO business confidence fell to 86.1 from 87.7 initially and down from 96 in February.
11)German consumer confidence fell down to 2.7 from 8.3.
12)Italian economic sentiment fell to 81.7 from 97.8 with consumer confidence down by 10 pts m/o/m and manufacturing down by a similar amount.
13)Japan’s manufacturing and services March PMI dropped to 35.8 from 47.
14)Australia’s manufacturing and services composite index fell to 40.7 from 49.
15)The preliminary read of Singapore’s Q1 GDP has a 10.6% q/o/q SAAR decline and down 2.2% y/o/y.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.