Morning Note

For a third day in a row U.S. equity futures are rallying hard in the pre-market, in the face of some dire headlines:

GDP shrank 4.8% in Q1 amid biggest contraction since the financial crisis

Boeing to cut output, thousands of jobs on vanishing debt demand

GE says first-quarter revenue declined 8%, expects this quarter to be the worst

Ford rating can fall further into junk

Of course you wouldn’t expect the Dow future contract to be pointing to a +500-point open based on the above, of course you’d typically expect the opposite, times 2 or 3. However, there was another headline that is definitely worthy of cheer:

Gilead reports ‘positive data’ on remedesivir coronavirus drug trial

We’ll see if the market can hold this rally through the day. 

Regardless of the market, let’s pray that the Gilead news holds and fast-tracks into a mass-distributable treatment as soon as humanly possible!

The Fed wraps up its April policy meeting today; all eyes will be on Chairman Powell as he addresses the press at 11am pt.

Beyond today’s headlines and their implications, the equity market reality is that the S&P 500 currently trades at last August levels, a point where arguably stocks were priced for perfection. Trading at that level today, as RealVision’s Ed Harrison pointed out yesterday, is hard to fathom (save for the bear market script we've been painting herein):

“...it’s really almost impossible to believe that we could be sitting here 8 months later and we’re at the same level. When we know that in all likelihood shares were fully priced that point in time. So we’ve had a massive event, a complete shutdown of the economy, and we’re still in this range. How much longer can investors hold up is the question.”

I'll circle back with more on that soon…

Asian equities were generally mixed overnight, although Australia and India turned in impressive rallies. Europe is screaming higher along with U.S. futures. Gold futures are down .60% while silver’s July contract is up 1.2%. Industrial commodities are higher across the board. Treasuries are trading up (yields down), which no doubt reflects the frightening GDP number...

With regard to the GDP number, keep in mind that the COVID hit occurred only after March was underway...