Market news: Durable goods, consumer sentiment, and coronavirus

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Published Date 4/24/2020

The headline on March durable goods orders came in at -14.4% lower than -11% expected. The decline in demand for big-ticket items such as new cars and trucks with the coronavirus sweeping across the country, excluding the transportation sector orders were down just 0.2%, and core capital goods orders were actually up 0.1%. Still, every major category showed a decline except for communications equipment. Automakers have suffered a serious blow from the pandemic. Orders plunged 18.4% in March. Most businesses are going to wait to see how quickly the economy reopens, and demand starts to recover before making major investments, making it even harder for the U.S. to grow. Before the 8:30 am ET release the rate markets were trading unchanged, after the report we saw n change in interest rates that were unchanged from yesterday.

Congress passed the $484B small business aid bill yesterday. So far, in 4 bills, the total is $3 trillion; it has been characterized as bipartisanship. Now we go again for more aid; this time, it doesn't bode well for the bipartisanship. Republicans are lining up against aid for cities and states that Democrats say is essential. Democrats want to provide a sizeable rescue package as part of a broader bill - one that could total at least $2 trillion in the coming weeks. Republicans oppose aiding cities directly, Mc Connell commenting he would rather see states and cities file for bankruptcy rather than shoveling money to them. Yesterday in his daily news conference, Trump commented, "It is interesting that the states that are in trouble ... happen to be Democrat." It is going to get ugly and drag on through the summer between the two parties. The likely end will be trillions more in help; the bill passed yesterday will likely be used up within a week, and more will be necessary. Infrastructure spending is also in the discussions; Republicans want it, Democrats will use it as leverage for direct state aid.

At 9:30 am ET, the DJIA opened +173, NASDAQ +40, S&P +18. 10 yr 0.62% +1 bp. FNMA 3.0 30 yr coupon +3 bps from yesterday’s close and +12 bps from 9:30 am yesterday.

At 10:00 am ET, the final U. of Michigan April consumer sentiment index was thought to be at 68 from 71 two weeks ago. The index improved to 71.8, somewhat surprising kin this situation.

Focus on the virus will be on Georgia and South Carolina with both states beginning to open, Georgia reportedly will begin today. Many big companies remain hesitant to open their doors and won't jump in until more is known. Retailers that have opened are working to reassure shoppers. Dick's Sporting Goods opened some stores this week in South Carolina, Iowa, Nebraska, Oklahoma, and Virginia, after moving to curbside pickup and online orders last month. Georgia is allowing some businesses, including hair salons and bowling alleys, to open Friday, with restaurants and theaters to open next week. South Carolina's governor allowed retail stores to resume operations this week at 20% of normal capacity, or five people per 1,000 square feet, but said local authorities could choose to keep restrictions in place.

Every 100 years there's a major health crisis: 1720 the Plague, 1820 Cholera, 1920 Spanish Flu, 2020 Coronavirus.

Source: TBWS

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