The Dividend Cafe - Daily Covid and Markets Podcast - Monday, April 20

Episode Date: April 20, 2020

We cover the market, the latest in health data, plenty on housing prices, the PPP Part Two stimulus program, and oil prices - plus more Links mentioned in this episode: CovidAndMarkets.com DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, financial food for thought. of a recap on the day that was today. Please go to covidamarkets.com for more charts and information summarizing the day. But in a nutshell, the market ended up down over 500 points today. The futures had been pointing to down about 300. It kind of stayed in that range throughout the day. At one point, it was only down 175, ended up going down further. And then the last 90 minutes of trading added a couple hundred more points and closed down over 500 points. As far as the technicals of this market, though, the resistance level that technicians are talking about in the S&P 500 of 2871 was indeed breached on Friday as the market closed at 2874. Now, it's important for those listening to know that I take that type of thing about as seriously as I take my horoscope to repeat the same joke I

use in the covidomarkets.com today. But nevertheless, the technical side of things is pointing to a handful of circumstances that some may want to pay attention to. The breadth on Friday was the six different 99th percentile day we've had since the March 23rd lows in the market, meaning on six different days you were in one of the top percentiles in history of how many stocks were up versus down. The 77% of healthcare stocks are at their 20-day high right now. That is an extremely historical reality. It's right now the highest percentage in over 30 years, just sort of speaking to a lot of the momentum that exists in the healthcare sector.

I think a lot of people have wondered whether or not a chance of a short squeeze still existed if in fact a lot of the shorts are already covered. Did some of the juice that helped create this market rally go away? And I was very surprised to see what level of short interest as a percentage of the S&P ETF is still sold short. It's well over 25%. It's come down a tiny bit, but there still remains quite a bit of short interest, something in the range of not quite double, but almost double what it has been for the last year or so. And then even if you go back further, a much higher percentage over the last three or four years. Now, I think it's worth pointing out, by the way, I don't think that a lot of that short position

is speculators that could get squeezed out. I think most of it is probably hedging, and hedgers are often less prone to be squeezed short than speculators are. On the health front side, there's still more data that needs to come in here for Monday that I'll recap tomorrow. But the data that we do have, I think, is mostly positive. There were 167,000 tests done yesterday, one of the best days that we had had in our country so far. Today, as a press time, the number is only 138,000. Maybe some more reporting will come in in the hours ahead. But again, really, really meaningful move down in terms of hospitalizations in New York City and just overall better numbers as far as slowing the rate of growth, bending the curve. And one thing I thought was interesting, Germany's case growth is now down to only 1.8%.

it was interesting, Germany's case growth is now down to only 1.8%. And you're seeing now retailers, auto dealerships starting to open there. A lot of talk about this antibody testing effort. I think it's worthwhile talk. I'm paying a lot of attention to it. Stanford survey driving a lot out in the Bay Area. Now New York is aggressively pushing for antibody testing. is aggressively pushing for antibody testing. Again, the premise behind it, I think, investigatively, informatively, is to see if, in fact, there's a lot more of the population that's already been exposed to COVID, in which case there is a lot more of an immunity built up

than we have realized, and that would have a lot of impact on the magnitude of economic reopening. We're going to follow it closely, not in any way to go about second-guessing policy decisions. There'll be time enough to do that, but that's not my motive right now. It may become my motive later, but I'm just simply focused right now on what the economic reopening impact would be. The serious or critical cases around the world are down to 3.4% of total active cases, about 56,000 out of almost 1.7 million.

So a really meaningful decline there on a global scale. They haven't voted yet, but the Senate did take efforts today to set the stage for a vote tomorrow. Procedurally, that went through. And so if, in fact, the White House and leadership are as close as we're being told, then there may be another Senate vote tomorrow. I suspect the House will have more shenanigans where someone demands a roll call vote and they'll have to figure out how they do this. But it appears that they're going to be adding not just the $250 billion to the PPP program, Paycheck Protection, but in

fact, something closer to $500 billion, which would add not only the reload of Paycheck Protection, more to that Emergency Disaster Assistance Fund for businesses, more to hospital support, about $75 billion, and another $25 billion for testing subsidies as well. $25 billion for testing subsidies as well. An awful lot of the time was spent today talking about basically that the oil prices had gone negative, that they were at $4, at $1, all that kind of stuff. And I don't know what to say other than it was just one of the most embarrassing days of media coverage I've ever witnessed. The May contracts are expiring tomorrow. So you have those that are actually in the physical market, which is a very teeny tiny part of oil traders that are

sitting with a whole bunch of oil, the producers that were willing to pay to offload excess oil they didn't need. And then tomorrow, the June contract is trading at over $20. And so the idea that we had this sort of constant oil price and that it was below zero is, I don't even, and the, excuse me, some of the big energy companies themselves barely moved on it. I mean, they were, all the energy stocks were down a little today, but not much. Not like if the product they sell was zero. And so it was this very outlier anomaly kind of event. I understand it's complicated to explain, but my point being

that right now the forward contract for WTIO is trading over $21. And so we'll see where those things go from here. Okay, that's kind of the basic recap of today in COVID and markets. Always praying for better medical news, for health and safety. Believe in the sanctity of human life. Want to see people not only not in pain and struggling, but also living and flourishing. So that's our hope. And to the degree that human flourishing is tied into the economic and investment and financial aspects of your life, we hope this information is helpful. Please reach out to us with any questions anytime.

Thank you for listening to The Dividend Cafe, financial food for thought. LLC. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities. No investment process is free of risk and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinion, news, research, analyses, prices, or other information contained in this research is provided as general market commentary. It does not constitute investment advice. The team at Hightower should not be in any way liable for claims and make no express or implied representation Thank you.