Things you need to know:

• Futures surge on hopes of a plan – trading limit UP
• Germany prepares to announce its own stimulus plan to save their economy
• UK prepares for Rona – orders a lockdown for the next 3 weeks.
• Italian infections and deaths appear to be slowing
• Try the Halibut

KENNY POLCARI, Editor
Chief Market Strategist, and Consultant

Circuit breaker limits today

Level 1 – S&P must fall 7% – 156.62 pts

Level 2 – S&P must fall 13% – 290.86 pts

Level 3 – S&P must fall 20% –447.48 pts.

Yesterday morning, US futures were indicating a lower open as Washington, DC falls down. Congress refuses to pass a rescue package and that sent stocks on another wild ride. The Democrats and Republicans haggle it out – the rising level of anxiety continues to cause investors to be on edge and then in another surprise announcement. Yesterday morning – at 8 am – the FED announces another “we will do whatever it takes” effort to try and calm the markets – with a wide-ranging plan to try and help this disaster by pledging to extend loans and buy up billions of dollars of gov’t debt. The pledge came with no boundaries, no guardrails – just a complete commitment to buy anything! In the statement, the FED said:

“It has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery one the disruption abates.”

Futures did an about face and surged for about an hour, but failed to hold onto those gains as the 9:30 am bell rang. As the day wore on – investors were glued to their seats – watching the drama unfold as Nancy, Chucky, Mitch and Kevin all took to the podium at different times pushing their own agendas to try and get this to pass. Disagreements over funding for hospitals, small businesses, the newly unemployed and large businesses all taking its toll on the conversation as a second vote failed. As the morning turned to afternoon – the market weakened and by 4 pm – the Dow lost another 582 pts, the S&P gave up 67 pts, the Nasdaq lost 18 pts and the Russell ended the day down 11 pts.

Word that the Italians are beginning to see a slowdown in the number of new cases and a slowdown in the number of deaths did try to shed some excitement on the markets. The virus moves across the continent – the UK announces a complete “lockdown” for the next 3 weeks. That country attempted to slow the scourge and this cast more negativity across the markets.

Here in the US – NYC, CA, FL, MA, CT, NJ, WA, all imposing different levels of lockdown. For the most part – the message is simple – shelter in place – stay indoors and remain calm. Congress will continue to negotiate the terms of this massive stimulus package – but do not expect any of them to negotiate in good faith. It’s all about not letting a good crisis get in the way of their “wishlist.” Both Stevey Mnuchin and Larry Kudlow taking to the airwaves to urge lawmakers to get this deal done. Democrats want more accountability and they want “enhanced unemployment protections for laid off workers.” In addition – they want to add in climate into this bill. Specifically, what the airlines will do about their carbon footprint! Really? Is this the time to argue over the industry’s carbon footprint?

This morning – we see US futures surging and trading limit UP overnight. European and Asian markets also soaring as investors there react to the latest FED asset purchase program while we wait for to see if Congress passes this bill today. Germany is about to unveil a massive stimulus program to help protect their economy.

In early trading the FTSE IS +4.4%, CAC 40 + 5.09%, DAX + 6.51%, EUROSTOXX +5.8%, SPAIN +4.6% AND ITALY I S+6.64%.

As of 6 am – Dow futures are up 930 pts, S&Ps are ahead by 113, the Nasdaq is higher by 375 pts and the Russell is tacking on 60 pts. The excitement today is all around the stimulus bill that congress is working on. Word has it that they are close to a deal (but don’t count on it) and that is enough to get the algo’s all worked up. If another vote fails today in Congress – then I suspect that we will see the market do a complete turnaround. But let’s remain optimistic. Thursday will bring us initial unemployment claims and the thought is that we could see that number go to 3,000,000 people. That is against what has been a number in the 200,000 range. So if they haven’t done anything by then – then expect them to do something when that number is reported. A surge of unemployment claims this week – is only going to add to another surge next week – so stay tuned.

Economic data today includes US market Manufacturing PMI and US Markit Services PMI. Both are expected to be just south of 50 – at 43.5 and 42 respectively. These numbers do suggest contraction – so it has begun – the only question now is: Are those numbers really realistic?

Oil is rallying – and is up nearly 4% at $24.98/barrel as investors react to the US stimulus bill and package that is being discussed in DC. But do not lay back just yet. Oil – like stocks – has been pummeled and has broken all kinds of technical supports levels. So, like stocks, it will thrash around as it tries to find stability. For now – it feels like a trading range of $20 – $30/barrel.

Take good care.

Kenneth Polcari
Chief Market Strategist, Consultant
kpolcari@slatestone.com

Seared Halibut w/White Wine & Artichokes

Begin with 4-6 pieces of halibut. (with or without the skin – depends on what you like)

On med heat – Add – 3/4 stick butter, a bit of olive oil and 2 sliced shallots… sauté shallots until soft 3 or 4 mins. Add sliced artichoke hearts and sauté with the shallots – 3-4 more mins… turn up the heat and Add halibut and sear on one side… flip the halibut, and then bathe in white wine… bring to a boil, then reduce heat to med low & cover and steam for 10 mins… test to make sure the halibut is cooked to perfection…

*Artichoke hearts can be frozen or if canned – just rinse and slice in half.

Serve – on a warmed plate – with steamed French cut green beans seasoned with olive oil, salt and pepper and roasted butternut squash. As always include a mixed green salad dressed in a red wine Vinaigrette. The colors of the veggies (green and yellow) accented with the whiteness of the Halibut make for an eye appealing – sensory stimulating presentation.

Buon Appetito.