Pre-Market Note

US equity futures have erased most of their steep overnight losses. Asia had a rough night.

The dollar is up this morning, gold and silver trading notably off -1% and -3.7% respectively. Copper’s up on mine closures due to the virus. Looks like profit-taking in gold and silver.

“Goldman Sachs says the bottom in equities is in”. The bulls are hanging onto such headlines, and, like Goldman, they have faith that the Fed can save the day. Thing is, if indeed the Fed orchestrates what, if we don’t go lower, would be the swiftest, and one of the weakest bear markets in history (I remain skeptical) — against what will absolutely be dubbed the Greatest Recession Since the Great Depression — they will in effect have taken the whole “privatize gains, socialize losses” mantra to full fruition. What would that mean in the long-run for equity returns? The moral hazard of their foray, particularly into junk bonds, is extreme!

Friday saw the S&P complete a 50% retracement of the decline thus far. The past two bear markets saw early rallies that took it right there before rolling over and plumbing new lows.

Wall Street assurances, stimulus, and the technicals aside, conditions right here scream stay cautious…

Volatility — with the VIX in the 40s — will remain high, in both directions…


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