The problem with the markets is that the Coronavirus is not some abstract financial tool, but instead a deadly virus that can affect people’s loved ones. This personal fear is not only contagious but will continue to play into investors and speculators psyche. Hearing ambulances in your neighborhood, around the clock, makes the threat seem incalculably close. Such fear will continue to force markets downwards and rightfully so.
Some new pieces of economic data will be released this week illustrating how damaging the Coronavirus lockdowns have been.
The principal focus on Monday, will be updates on the Coronavirus. Considering the worsening condition of many American cities, the markets will almost certainly open lower. Additionally, Donald Trump extended the federal quarantine guidelines until April 30. This action is a clear reversal to the “reopening of America” by Easter, that the markets had already priced in.
The Consumer confidence index will be released on Tuesday and is expected to be positive. This report will cover data from March, and will be one of the first pieces of economic data illuminating the effect of Coronavirus on the American consumer. The trends delineated by this report will dictate how fast the economy will recover. Another interesting piece of data is the Chicago Purchasing Managers’ Index (PMI). This report will speak to the health of the manufacturing sector in the Chicago region. It will be interesting to see how much slower industrial production is since the beginning of the outbreak.
While many news outlets will be focusing on the employment report which will tell us how many non-farm jobs were added to payroll, I am personally more interested in Motor vehicle sales. Seeing how robust vehicle sales are for March, will give us a rough picture of how Ford, General Motors, and Tesla will be able to weather the storm. Tesla has an extremely leveraged balance sheet and without revenue Tesla will be pushed to the brink.
Weekly jobless claims and factory orders for the February period are expected on Thursday. Weekly jobless claims are expected to hit 4.0 million topping the previous record of 3.28 million set last week. These jobless claims will most likely balloon to more than 13 million by June. Considering these huge increases another stimulus package is inevitable. Also, Congress has enabled the Federal reserve to use its infinite balance sheet to lend to areas of the economy where liquidity has dried up. This reverses precedent set during the ’08 recession underlying how serious the crisis is becoming.
After a long week of volatility, by both the crazy numbers from the days before and updates on the Coronavirus we can expect the Unemployment rate and the ISM non manufacturing index. With a previously low unemployment rate we can start realizing the beginning of record high rates in the near future. Another supposedly “cyclical” report is the ISM non manufacturing index. This index measures employment trends, prices, and new orders in non-manufacturing industries. With this data it’ll be clear to see how fast the service industry is contracting.
All of this data comes at a time when we as a society have decided money is worthless and lives matter more than livelihoods. It is a tremendous time to see people, governments, and society collectively choosing humanity over human fiction.