CDC Warns Americans To Prepare For Coronavirus

Well, good morning, I hope you are well. On Wednesday, February 26, we'll talk about what has been a pretty dramatic two days in the markets, certainly from a stock market perspective. I think the Dow Jones closed down 879 points from the close of about 1031 that we had on Monday, so the continuing dominant theme is of course the outbreak outside of China and the impact that this could have on the spread potential, but also the ramifications as the global economy continues to be at the forefront of investor attention. This time, looking at the asset classes this morning, you could say a little bit of stabilization, but it will definitely be interesting as we move into the rest of the session because from a calendar perspective today there is relatively little time, we have said this before . when we look forward from the beginning of the week on what the landscape is like in terms of events scheduled for this week and certainly it's from a daily perspective what some speakers and things like that are coming out on Thursday and Friday, so traders of Skins still have a relatively clean slate focused on the virus being the defining factor likely to drive near-term sentiment, especially given the context of what has happened over the past two days, so I'm not really going to look at the graphs too much.

I'll let Sam do that, but I definitely want to recap exactly what the current state is and then probably the most important thing for you is what do I think you need? to keep in mind as to then, what could be a trigger point for another extension of the moves we've been seeing if that were to materialize? What should be the headline of the hypothetical news? I think it's wise to think about that now ahead of time so you can be more proactive if you want if that scenario doesn't play out like this, and I should caution that I'm not trying to scare anyone when I talk about these scenarios, but let's look at the main reason. why and what really started this risk aversion matic movement that we have seen since the beginning of operations this week and this is looking at the confirmed cases accumulated outside of mainland China.

Now I'll show you the numbers in China. at one point and it's actually declining quite rapidly in China, but that's not the problem of what markets are facing right now, it's this idea of, actually, this outbreak, particularly Italy, because I'll walk you through it and you'll see that Italy is almost the epicenter now it is like the European version of Wuhan, anyone who has been in Milan moves away and causes problems elsewhere, it is what is happening at the moment and it is difficult to remember when several weeks ago at the beginning it was very difficult make some sense. to accurately qualify what the potential impact could be because we didn't know when China would have actually put the lockdown in place and therefore how many people actually had freedom of movement and that's what happened in Italy where people in Western European cities would have been aware of the

coronavirus

, but you know that transportation connects the infrastructure of the major airports that made sure that it was not even close to closure, so how much movement occurred and aware that they had gone before, they have now been taken to stricter actions and that is what is causing a little There is a little bit of fear in trading in the market when we look at these numbers, obviously South Korea and Japan within the region are much more different, so continue with South Korea.

The context of South Korea is the fourth largest economy in Asia, so it is particularly important in that region from a type of implications point of view on the local but also global economy and its national total of

coronavirus

cases is now at In reality, the latest figures are more than a thousand now and if you think about it, what is once again being one of the main factors here is speed. of which recovered, I think a week ago, South Korea had about 51 cases, now it's over 1000, so it's this kind of compound growth nature that you see in this way that it is has transmission from person to person. virus in other areas of that region Japan yesterday urged companies to have their staff work from home, that's something: we are in a digital world for many jobs, obviously, that doesn't have too many ramifications, I mean, if you're a trader with the one you can trade from home.

I can do my job with an audio squawk from anywhere really realistically; However, for factory workers that is definitely not the case and that is what has happened in China in areas like Wuhan in Hebei province in China, such The dramatic impact on their economy and that bottleneck, yes you want, of them impacting the global supply chain is where as major issues arise, yes, the more apprehensive people become, the more significant the potential impact could be on that side in Hong Kong overnight . We have revealed measures where basically there are measures worth 15 billion dollars. dollars that they have added to their annual budget overnight to boost their economy, now I don't forget, for Hong Kong they haven't, it's like a double whammy now that they have had the implications on their economy from the anti-government protests . that's been going on for many months and what kind of escalation and now we have this virus so we know it's particularly difficult for the Hong Kong Monetary Authority right now and then a quick look at some of these other areas of Italy.

Of course, it's the one that really caught the attention this week, but you can see that Iran and Singapore have stepped up their efforts. Singapore has banned tourists from South Korea and then Iran's coronavirus death count now stands at 16 in a relatively high proportion compared to confirmed cases there. Instead of looking to other countries, Algeria, the first confirmed case of an Italian who had been traveling back to Germany, the southern state of Baden-Württemberg tested positive for coronavirus after a trip to Berlin and then probably saw quite a bit in the news in at least in england it's about a big hotel in the canary islands locked up in austria, a closed ground, tell your oppa and so you know this is what's causing a lot of this, the big thing yesterday was this headline and I think this will later fall. that discussion about what are we going to look for next if this is going to turn into something more significant in terms of a market correction, particularly in the equity space, and this was yesterday and it was definitely an added or contributing factor to some of the movements we saw and This comes from the American CDC and it says that Americans should

prepare

for the coronavirus crisis in the US.

Quote, it's not so much a question of whether this will happen or if this will happen more, but rather a question of a question of when exactly. Again, these types of comments come out of the National Center for Immunization for Respiratory Diseases and the Center for Disease Control, which is what the CDC does. It means, you know, this is again, it's just going to scare investors and also the public to that extent, if you think about how an economy works, if the public knew to be scared, think about what this has on the effect Domino chain, people.

There will be less travel, so stocks related to tourism, airlines and things like that will be dramatically affected if consumers stop spending money because they don't go to the high street for example, this will hurt retailers in many De different ways, you know, this is where it impacts where the markets trade today, the expectations of the future tomorrow and so we've had some pretty violent moves in the markets so far. This does increase, so it's an important point and I'm going to move here to a Look at North America and the total confirmed cases in the United States right now is 57, so considering the size of the population and also in certain geographic areas like California, for example, the kind of ethnic mix you know, Chinatown in San Francisco is huge and in fact San Francisco has already put parts of that area on a bit more of a formal lockdown just given the size of that population and the possibility of traveling to and from China to that area, but the number in the US is actually quite small and the number has only grown very slowly. but based on what the CDC was saying, the capacity for that, so this number is what I would say, there's a clock in the future that could cause another severe shock to the market now, that's going to happen today, it could happen.

However, what's going to happen in the next few days, I would say we need to be very attentive to the numbers related to the US, for example, New York, and then this brings us to another key city, of course, particularly considering the London cosmopolitan. Is it London that has always seemed uniquely different to me every time I've had the luxury of being able to travel? It's just that London is such an ethnically diverse city that you know it's almost difficult to find an English person in it. London and that means then that the probability of movement and travel I think is much riskier and particularly in a city that has an underground infrastructure like the subway system that is very old, compact and confined in its space, I think the ability to spreading a virus, if it took hold in London, would be quite a dramatic turn for the ability of this to flare up considerably and yes, that's so far in UK terms.

I mean, let's take a quick look if we scroll down. Listed here in the UK there have only been 13 cases so far and if you really zoom in there's a little hotspot here that you can see right in the north of England so London is the place you'll want to pay attention to , maybe Birmingham Manchester Manchester. These are the bigger cities as well, but specifically London, I think if that happens you might have another chance in that sense, so there are things to keep an eye on, like I said, on the Chinese side and as much as now, believe.

The last two days have been more of a fear trade from a real physical standpoint. China has been slowly returning to some degree of normality and this is looking at some of the alternative data that I mentioned before, this is looking at daily coal consumption. Given that the major electricity producers are now obviously a manufacturing hub, the amount of coal consumption is a good precursor to the pace at which they are returning to some degree of normality as they begin to loosen their kind of containment, if you will. . The lot is going down in these different cities, so it's been going up slowly.

This is something called the Baltic Dry Index and those of you who are more experienced will probably have heard of this before. It's something traders monitor, particularly in the commodities space. Of course, these are members of the exchange, so Baltic Dry communicates directly with shipping brokers who evaluate price levels to provide shipping lanes with product to transport and time for delivery for greater speed, so which essentially is a way of acting as a representative for dry bulk shipping. stocks and the general sentiment of the shipping market, so if you think about it, if you're thinking about that production chain, you have the coal consumption rates right at the base of the factory to fuel those machines and then it's about of freight transport, then you can see that if these things start to improve, that is a sign that some degree of manufacturing activity is returning to some degree of normality, so again it is slightly positive and probably has to do with the rebound in Chinese that is easing. after the lockdown they have had since the Lunar New Year and then there is a look at the actual corona numbers here you can see on the graph on the left the number of cases and if you look here the new broader definition in Hubei in that main The province of China has reduced the number of new cases, it is declining quite rapidly and the rest of mainland China and the old definition are also declining quite dramatically.

The other thing that people look at, obviously, is not Google in China, but Baidu or BAE that make their search index. You can see that coronavirus and mask tracking for search queries increased at the end of January and has actually been decreasing since then, again, when you try to monitor the general trust of people in those localized areas, you know that This can be quite revealing. science, so the short story here is that right now the market is afraid of what is happening outside of China and, as I just described in those different cities, yes there have been some cases in Algeria, in the Canary Islands, in Germany, these were all the people coming to and from Italy, the northern part of Milan, which shows where an explosion like the one over the weekend occurs in the numbers in that area and what it is likelike dropping these little time bombs in different geographic areas. regions that then explode, of course, so this is the risk and the reason why the markets have moved.

I think now, given that we've had almost a 2,000 point move in the Dow, obviously the technicals are key, that was quite a bit. I saw Charlie doing some really nice trading yesterday. short to the downside, a breakout and there was a simultaneous move and oil and the S&P were all moving in sync, but now I think the technicals are quite important to reevaluate things, but you know, from a fundamental point of view, I think unless you start to see that break in the lights of Germany, France, maybe the UK in London and also the US numbers, I think that's the next episode of a violent movement like the one we just saw From a headline perspective, the other thing that's happening of course is that as stocks naturally get hit, people are flocking to safe havens and so gold has obviously been a clear bet on recent weeks, but one interesting thing here is that US 10-year bond yields are falling around all-time lows.

You can see here what they printed in 2016 and I've been reading a couple of comments from the Bank. This morning a mole came into work and many large financial institutions, Bank of America, are calling for US yields to go down to 1.25 %; Some banks are saying that if the coronavirus really spreads and we have a full-blown pandemic, then in reality 10-year yields have been heading towards 1 percent, or even lower, which makes for a really interesting concept because In the world of negative yielding debt, you know where most German bonds have maturities quite far from a negative yield. got zero negative interest rates in many different countries, the US has been one area where yields have offered some form of yield, but if the US yields ever join the zero club, well then where Where are investors?

Where are portfolio managers looking to put their cash? And you know, I guess the clearest play would be on gold, and that probably emphasizes the reason why gold has been in a decent performance and the last week or so, but the difference between gold and the bonds of course is that there's no yield, there's no coupon with gold so you don't get a regular payout so it's definitely an interesting scenario here if you're starting to come under dramatically more pressure and the key here is So what's the same with the Federal Reserve? Because if you think about it now, the pressure on the Federal Reserve to cut rates is only increasing right now.

I comment and I think the rhetoric of the Fed speeches now is really key to trying to factor in what happens next and Fed Vice Chairman Richard Clarita spoke yesterday but he didn't give any indication of a rate cut Despite the coronavirus turmoil, he said the central bank is keeping a tight lid on the spread of the disease now, this heart makes for an interesting comment. I saw someone mention which sounds very familiar when the US-China trade war was first happening. Remember when you were first blow by blow climbing with you. make tariffs, I will meet with you and the US would be the aggressor and this was having a negative implication for the global economy as time went on during 2018-2019.

Now, what happened there was at the time that the Federal Reserve's communication was I say too early to say the impact of the trade war, however, it began as time went on and tariffs began to increase, it was made it clearly evident that this was having an impact on the economy and we subsequently saw the Federal Reserve cut rates three times, of course, as far as where they are now in a holding pattern is almost like a repeat copy of that process: we are at the beginning of the virus and, rightly, it's hard to understand yet how consequential this is, but in my opinion, the Federal Reserve is going to have to stop at some point.

It almost seems inevitable that the Federal Reserve will probably start cutting again. The problem is, of course, that the rates are already pretty low and, oh, there's only so much ammo space left in the box, so you know. most dramatic setting usa Yield stocks, you know, collapse to zero all of a sudden, then the Fed starts entertaining this idea of ​​Fed rates at zero again, back to the post-financial crisis era, and they have to start warming up. those printers again to start turning on the QE Machine so that happens remember Alex and I have been watching the dixie go up to these levels and up around 100 with sort of a long term trend channel up where we've had some key levels to look at. technically, but if we start talking about the more dramatic scenarios that are not my base case, but if it were to happen, obviously that would also have repercussions on the dollar, what are the expectations in the markets at the moment?

At the moment, well, the next Fed meeting is in a few weeks, it's actually March 18th and this was a bit of a non-event where they were very much expected to hold rates, but obviously things They have started to start in the last few days. and the virus has really taken hold and captured the imagination of traders; The prospect of a rate cut has now risen to 28%, so that is still expected to hold if we attend the April meeting, although that has now changed and a few weeks ago. The market price for a Fed rate cut was tilted toward November and December, which has led to April, where Marcus our price on the 25 basis point rate cut, so this is definitely worth a follow-up.

Right now, the last thing I wanted. mention that it was oil, these are the oil infantry numbers from yesterday, however, I am going to make a slightly bold statement. I don't care about their infantry numbers, it doesn't matter because what matters is the virus, which is the dominant issue right now. and if you look at oil yesterday, oil is playing the same narrative as the global asset reaction to the virus, that as stocks go down, oil is about a loss of consumption, it's about a bad economic future for the global economy and if really, then if I put my camera away, let's go back to that technical chart that we've been looking at on many occasions over the last few weeks, look where we are, we're back at some interesting key levels, remember we had that intervention verbal on behalf of OPEC and they were also talking about the prospects of a 600,000 cut, potentially an emergency meeting, they didn't need to do that because the markets bounced dramatically last week, yet here we are again at these key levels around the price of $50 which in the futures we are trading below at this time.

I would say keep an eye on the lows we printed in early February. We get there and start going down to 49. So this could mean more weight and a pretty dramatic technical move. So a lot. further down and that might be something we certainly need to keep an eye on as we move forward in the next few days, so in terms of the infantry data, things like the API that we need to do, of course, we'll have later on, I mean , it's more of a short-term distraction to another, otherwise broader, bigger situation that's going on and that's a much stronger influence beyond the short-term volatility you'll see in the smug post, okay , Sam will be coming, but while he's doing this I'm going to quickly go over the schedule, since I said it's pretty quiet this morning, there's not really much going on, so I'd say more or less a US focused session and again it's about the markets taking a little bit of inventory of where we are right now keep an eye on those numbers keep an eye on those other major cities in the western world I think the markets have acclimated a little bit now to the acceleration of the numbers in areas like Korea and Japan. everything about continental Europe and the United States now we are going to see more outbreaks ok speakers the latest a couple of people Panetta from the ECB will be out shortly christine lagarde is talking about there being no expected text that's at 1:30 The head of the EU negotiated Brexit Michelle Barney speaking at 2:00 Once again, I expect tough talks, but nothing that really moves the market for the pound would be my base expectation: the feds' cap plan, the Kashkari feds, which are voting members, one neutral, one moderate, will speak in the afternoon and later tonight, any fixed income trader will have the five-year bond.

Note that $41 billion from the US Treasury is fine too, good luck, listen too Sam. I think level selection is now pretty key to having good strategic frameworks around any business considerations because then it's not like I don't feel it. Basically, I like to see markets recover aggressively. I think the best case, like yesterday, I think you have to plan accordingly for either scenario, maybe a little bit of consolidation and then when the US gets to decision time, then the Americans when the volume. Above, do we see a repeat or do we see a bit of a pullback to recoup some of the losses we've had lately?

Alright guys, good luck, see you in the chat room. Hey guys, yes, I would definitely do that. I don't think it's necessary to get too involved in a bias as such, if we bring oil here, it catches my attention. I think this is a good guide, if you're looking for $150 you might be able to do something like this. either a little bit of sentiment for the day and below there then okay there's still a little bit of pressure and we go down or maybe you know you're looking for the stock to stay shorted then you know okay I think There are some big levels.

Going up here in oil, this will be placed on the weekly chart. I mean, aside from the yearly lows, you can see why this area is so important, which brings me to the rectangle here just at some levels that we had at the beginning of 2019. which in December 2018, you must feel that if you clear this up , then you know there is room for it to go down towards 47 and if we place the trend line here on the weekly chart, you can see how important this is as a zone. It was at this moment my opening and I have to save the day to make this go higher.

We had a good bounce, but obviously these fears and rejection from a previous area washed me away or that would have been amazing to look back on. I should have of course, but yeah, hold and I think at these lows here, this trend line for oil and then the intraday handle of $50 as a good guide as you liked to mention that the Dow here got the daily continuation trend line, it's a good guide as well so you can see that we broke last night, came back to test the 27,000 hand or some support from October last year and went up beyond that and then with disappointing resistance at what was the previous load from December and also The retest of this trend line and no S&P had a similar trend line with your fingers actually held, just bring that over here maybe it's a little bit lower actually I have to check from where it is, but that's yes, here we go thinking because it went through it, it's not like that, that's the load from December 2018, you can see it there on the camera, it's going to move, that's how you bring that, it's a good guide here.

I think they are for stocks later if we get below there. then I might as well be quick and go down to 3100. I think today is a day where you don't need to enter with a bias. I think just turn on that trend line, let's set your pivots on your range, major highs, major lows and you know the areas. to keep an eye on whether there are any other trend lines to maybe move forward, I mean possibly spend a little 15 minutes today and see if we're getting squeezed off those lows, so it's really worth taking a quick look and then also the maximums. as a little guide, but you know, now you have some key levels that you need to tick off and they are these new areas that you can trade from.

I think now, anywhere between those two points, you know it's not going to be. the highest probability when predicting what happened, you can see what has become a bit of support now, which was a key level, but will this really be the bottom? So we will raise oil all the way, if we break out, does that mean we have a guarantee? To make new lows with them, I'm not too sure, so be a little careful, I think, and you know, change what you see. I think one of the operations I would prefer is if we break all of these. lows and you get that continuation or up, we would break 3160 and you can get apush towards 3175, which becomes, you know, a very key resistance level, so I think we are going to go down or up, no.

Honestly, I don't really have any bias about it. I've only traded as it comes out, but that's this morning at its lowest point from yesterday, almost so I'm in charge of keeping a key view if we put this in the journal. I mean, a lot of these markets have incredible wealth backing. If there wasn't a coronavirus drama floating around, you'd be saying, well, what a place to drag on; However, of course, if we were here in another scenario, there would probably be another reason. but technically I mean, I would look here, they have the high, you know, they hit incredible support, the low that we had since October and it has recovered incredibly well from there, the top favorite of the Nasdaq, I think every stock has. dipped and tested previous support areas, however, the same was true for the Dow and S&P, which have found resistance here.

You have the nurse who, if you want to align, she understands how about the minimum that you have since January 27th. The team came back with fan resistance, albeit relatively choppy, but we couldn't close above there and now we're back down and that's the way I would look at all of these levels here, just those key points, at least 60 minutes to go. Define your levels and then exchange. Other than that, if you think there's an opportunity to do it, move on to the currencies you said yesterday, they're probably better things or easier moves, maybe elsewhere and the euro can see this having decent pops and then slow moves towards down, decent breakouts and I think looking at this, if we build a little bit of support again, in this assessment we will go up or down, I'm not too sure for the euro, but this is another area where I would have that guidance.

I think if we can get below 108 75. then we can start to go down as a little bit of support today for this move up. I would say 108 91 on the futures, this is at the previous 15 minute resistance, as long as we are above there, I think I know 109 can come in and then we put this at 240. You can see how important it is just above where we are operating as a resistance area. You can see what is the maximum that we have bet on day 13, approximately, the minimum. 11. right around there 109 let's say up to the top 1482 the bottom, as well as a level where maybe endurance wise people could start to get a little more excited.

I know I'm patiently waiting for some of these previous loads to come in at just a little bit above that too 109 57, you can see that triple bottom here on the daily chart from September of last year, except for the 19th, so people are looking at our decent recovery so far for the euro, but it had had a massive move down and I think gold surprised a lot of people yesterday it had had a massive move up, but we went down. yes sir no we are just covering a little bit but we just couldn't break that area here it looks marked 1660 and this is the importance of the market telling you what is happening if someone explains to you what happened yesterday okay.

Gold has to be through the roof, right? It just couldn't break this resistance, so you know, absolutely important level that I'm marking today, the r1, yesterday's highs, let that be the guide, but what will it really be? happening there, you could argue that we were trending a little bit from those lows, so let's look at a little bit of the trend line here, as well as a guide to the price below there. Well, we can start to retrace, but for me it's about that 1661 upside. just couldn't get over that level yesterday, this watcher watches what's happening there and then you can see that the price will potentially find resistance at all of these points here 16 66.6 naughty number that 16 72 is also a little bit above so keep an eye on that .

Going forward, take a quick look at how the stock has progressed over the last few minutes while I've been doing this, the decks are still testing that area, keep an eye on that closed finger below and on the hour we start pushing down, but as I He said there are plenty of support levels right where we are at stops and plenty of long-term resistance levels a little above as well, so be patient, let the market tell you what's going on, and again, don't feel like you have to. equalize. If you are in a trade today, you are not one to chase, be patient and trade what you see.

I hope you have a good trading day. If you have any questions, let us know and I'll see you all later.