Morning Note

A sea of red washed over Asian equities last night. Same for Europe so far this morning, although not as deep, while U.S. equity futures are definitely feeling some pain: Dow’s set to open down over 600 points, the S&P 500 future contract is off 2%, Nasdaq’s is down 1.4% and the Russell 2000 contract is trading 2.5% lower as I type.

The VIX (S&P 500 Volatility Index) is up 14%, at 41.27. That spells danger.

Oil futures are down 3.64%, gold’s contract is down $30 (fear of liquidity event repeat), silver’s is down 2.5%, copper’s down 2%. Ag, save for rice, oats and milk, is in the red as well.

Treasuries are rallying (yields lower).

Feels like last Thursday’s pre-market setup, except for the action in gold and silver. Gold could be suffering from memories of the February/March selloff which took even the kitchen sink, as traders found themselves starved for liquidity. Silver, having had a huge run the past few weeks, likely suffers from some serious profit-taking and a bit of luster-loss as an industrial metal in an industrial environment that likely won’t see the V-shaped recovery so many have been (surprisingly in my view) calling for.

Media say it’s a rise in the COVID numbers. Makes sense for sure, and, in the grander scheme of things, so does this stocks vs corporate profits chart I shared last week:

Click to enlarge…

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