DMU – Trump Calls For Helicopter Cash; ECB Launches New QE; Oil and Industrials Lead Stock Price Falls; Bond Yields Up Though

Contents

USA – Oil and industry stocks lead more falls; Trump wants $500bn in cash payments to tax payers; VIX at 75
UK – Down again, 8 out of 10; Lockdown coming; Gilts up again
Continental Europe – ECB launched €750bn bond-buying programme; Stocks continue to fall
Elsewhere – Lower yen supports Japanese exporters; Everyone else down
WTF – Perspective
Links
Numbers
Ts & Cs

USA

It’s much of the same again I’m afraid to have to tell you. Stocks continued to fall in value across the globe with oil & gas and industrial stocks generally leading declines.

While the Dow Jones, S&P 500 and Nasdaq Composite were falling by between 6.3% and 4.7%, investors are reacting to moves to support the financial system as measures to tackle the spread of the virus grip more countries.

Trump has asked Congress to approve $500 billion in cash payments to voters, sorry, tax payers, i.e. the helicopter payments I was talking about yesterday. He’s also seeking $50 billion to loan to airlines.

The Dow fell by enough in one day to trigger another 15-minute suspension of trading. And the VIX (the volatility index) which normally trades between 15 and 25 is flying around 75 at the moment.

Not much positive to provide at the moment as we go through the worst of the virus and actions to curtail its spread.

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UK

The FTSE 100 and FTSE 250 closed 4.0% and 6.6% lower yesterday. That’s eight days of falls out of the past 10 trading days.

More companies are announcing cuts to profits and dividend reductions or removals. Hotels, cruise companies, airlines and the like are all battling to survive the hiatus. With a lockdown coming to London, various companies that rely on footfall across the country are issuing warnings.

Gilt yields have climbed again though. This might have something to do with the government having to issues billions of them in order to pay for the drastic financial support packages that are being lined up at the moment (more bonds being sold means that their prices fall and if the price of a bond falls, its yield rises).

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Continental Europe

The European Central Bank has launched its €750 billion bond-buying programme. But this has had little visible effect as far as confidence in stock prices goes.

The Euro Stoxx 50 as well as the German and French benchmark indices closed the day 5.6% or more lower. Losses were less in Italy, but the country has suffered another peak in the contagion and death rates of the virus. These generated an appropriately worried response among the country’s investors on Tuesday.

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Elsewhere

Japanese exporters are having a sliver of light provided by the rising value of the dollar. That makes the yen relatively low and, therefore, exports less expensive to overseas buyers.

Elsewhere, it’s just more misery. Stocks are down as virus concerns dominatemonetary (central bank) and fiscal (government) measures to provide financial relief.

The falls are relatively modest though, with Chinese, Taiwanese and Indian stocks falling by between around 1.0% and 2.0%.

The big faller this morning is the Korean Kospi. It has slumped by 8.4% Trading on the index was suspended for 20 minutes after the downward movement triggered a break.

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WTF (What’s The Fact?)

Perspective

It’s not Armageddon.

That was a God-awful film with Bruce Willis and Ben Affleck in which Hollywood drowned in its own jingoistic libido.

No, this is more like Mary Poppins in which some strange virus is affecting Dick Van Dyke and making him talk like a drunk Australian (from the “East End” of London, about 12,000 miles East).

Just be grateful it’s not Frozen, that really would be the end of the world.

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Links

Investopedia – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point
Guffipedia – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies
Guardian – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott)
Times of India – Why use five words when 37 will do?
Daily Mail – Click it. I dare you.

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Numbers
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