Investors are desperate for more data to quantify the coronavirus impact on the economy and earnings, and then map the duration of a possible recovery ahead.
Decline in the volatility index shows the market has moved on from outright shock to grinding resignation that things are bad and will be so for a while.
Waiting for enough data on coronavirus-infection trajectories to form a trackable metric for a shutdown timetable. Waiting to gauge how much erosion of corporate balance sheets occurs as the commercial halt carries on – which will also dictate how many further layoffs and defaults will test the economy. Waiting for a sense of whether the stock market has priced in anything like a plausible path for business ahead.
Last week, stocks were down some 2%, but failed to break down significantly despite a load of lousy news, from accelerating outbreaks in additional states, to brutal 6-million new weekly unemployment claims, to huge retailers furloughing hundreds of thousands of employees collectively. To some observers, this was a win in the form of losing less.sliding below 47 from 65, and from a peak a few weeks ago above 80.
Similarly, Julian Emmanuel of BTIG says, "If history is any sort of guide, we expect a 'divergent' retest of the March lows in April, as the public health and economic bad news is likely to reach its parabolic peak in coming weeks prior to the date for easing social distancing, April 30."The credit market will have plenty to say about whether such an equity floor can hold and any rallies get traction.
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