Wednesday, March 25, 2020
Halfway through another trading week, and following the biggest single-day market gain on the Dow since 1933, pre-market futures are moderate and mixed. Yesterday’s Senate agreement on a $2 trillion relief package to deal with the coronavirus fallout, Fed maneuvers to keep markets sufficiently liquid and an ebbing of the tide of COVID-19 contagion in China are helping restore spirits.
A lot of focus currently is on places like New York, where the coronavirus looks to have found its U.S. epicenter and Governor Andrew Cuomo gives daily updates on the needs and concerns of treating the pandemic in real time. Currently, more than 26K New Yorkers have tested positive for COVID-19, and the state now counts more than 270 fatalities due to the disease — far and away the most affected state in the union. But Cuomo states plainly that his state is only the beginning; we can expect more of this sort of thing across the nation, especially as other government officials opt to not take action to stop the spread of the coronavirus.
The Senate’s agreement still awaits passage this morning, though expectations are high the package will be approved. The House has created its own bill to deal with the crisis, so until both sides have concluded what needs to be appropriated we continue to try to make do with what we’ve got.
Durable Goods for February came in better than expected at +1.2%, above the upwardly revised January headline of +0.1%. Digging into these figures we see a bit of a different story: ex-Transportation came in at -0.6%, worse than the -0.4% estimate. Core capital goods orders (non-defense, ex-aircraft — a proxy for business investment) came in at -0.8%, beneath the -0.5% anticipated and the +1.1% reported the previous month. Shipments were down 0.7%, while ex-Defense came in at +0.1%.
While these numbers do assist in plotting our economic development over time, it’s clear they will resemble very little what we expect to see for March and beyond. Durable Goods, like everything else in our current economy — to say nothing of the Services side, which employs more than two-thirds of all American job holders — will be falling sharply; at what point there will be some rebound in these figures is, literally, anyone’s guess at this point.
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