Weekly Market Recap – April 3, 2020

In the Markets

Last week ended the first quarter of 2020; hence, our weekly recap highlights many of the Q1 statistics. The Dow Jones Industrial Average of 30 companies ended the quarter at 21052.53, down 23.2% the period (-2.7% for the week ending April 3rd). The spot S&P 500 index closed Q1 at 2488.65, down exactly 20.0% for the quarter (and -2.1% for the week). The quarterly move for the NASDAQ composite was -14.2 % (down 1.7% on the week), while the Russell 2000 booked a 30.8% decline in Q1, the weekly change was -7.1%.

March’s stock market activity exhibited extreme volatility, as evidenced by the CBOE VIX. In the first seven weeks of Q1, the VIX plodded along between 11 and 20. However, during the final six weeks of the quarter, the volatility index shot from 25 to 85 and then tumbled down to 51 for quarter’s end. At the week’s closing bell, the VIX stood at 46.8. The magnitude of government stimulus efforts probably helped to dampen the volatility, despite the unprecedented unemployment figure (6.6 million claims) that greatly surpassed the previous week’s record claims number.

As global markets reacted to the COVID-19 repercussions throughout the latter half of Q1, world governments counteracted with currency and interest rate intervention. The most active CME bond and note futures (30Year, Ultra, 10Y, 5Y and 2Y) capped the Q1 charts with sharp up moves in sync with the declining yields of long dated sovereign debt instruments. The June U.S. Dollar Index futures chart, as a proxy for all the major currencies, showed a four-legged whipsaw, up-down-up-down, that began the first week of February 3rd. It had ranged from 94.53 to 103.96, and ended Q1 at 99.09, close to the whipsaw’s mean of 99.25. By week’s end it had crept up to 100.68.

Metal futures were volatile, too, with daily ranges greater than they had been earlier in the first quarter. June gold eased 1.8% for the week, closing at 1624.40 per ounce, yet finished the quarter up 4.0%. At $14.49/oz., front month silver, on the other hand, lost 21.4% in the first quarter, which is consistent with our March 20th recap about the ratio between gold and silver spiking to historic highs. The ratio is now 111 ounces of silver per ounce of gold, compared to the record high of 123.78 that traded in the spot bullion market on March 16th. The ratio increased 32.9% in Q1. Platinum futures declined 25.8% in the first quarter, with a 2.8% loss for the week. Palladium regained its strength in the precious metal complex. Despite falling 13% last week, palladium still holds a Q1 gain of 21.1%. Base metals were mixed as CME high-grade copper fractionally firmed 0.3% for the week, while LME aluminum eased 3.5%; their quarterly movements declined 20.6% and 15.7% respectively.

Oil prices sharply rallied last week as the U.S. role gained traction in brokering the Russian/Saudi production war. WTI crude futures and ICE Brent crude futures each gained nearly 7 dollars per barrel for the week (+31.8% and +24.4%). This did not prevent all-time record quarterly decline figures: WTI down 65.8% and Brent down 58.9% in Q1. CME refined petroleum products rallied in sympathy with crude. Heating oil picked up 3.9% on the week and RBOB gasoline gained 16.5%. For quarter end, heating oil fell 49.5% and gasoline dropped 68.5%. Rounding out the energy prices that we report in our recap, CME natural gas continues its downtrend, with the front month softening 0.7% for the week, and ending Q1 with prices sliding 25%.

In the agricultural commodities, March 31st was significant for another reason: the USDA release of its prospective planting report. In a normal spring, farmers project acreage levels showing how much they intend to plant in each crop, but this spring is not normal. This year, in addition to atypical weather/climate coupled with trade/tariff wars, etc. farmers must now consider an additional variable in the formula: the COVID-19 effect. This encompasses global consumer demand and supply chain logistics, along with the pandemic’s local impact on farming states and their communities. The result makes this USDA release even less relevant than it usually is, especially since the data was compiled in mid February, when the scope of the pandemic in the U.S. was less dire. Regarding ag commodity market behavior, it is best to let the prices speak for themselves. Corn was down 15¼ cents for the week (-4.4%) and down 13.7% for Q1. Wheat lost 22 cents last week (-3.9%) and up 1.2% for the quarter. Soybeans declined 27¼ cents last week (-3.1%) and the quarter saw a drop of 8.5%. Cotton eased 35 cents in the past week (-0.7%), and moved 27.1% lower during the quarter. Last week in Bangladesh, the garment industry laid off more than one million workers due to COVID-19, which could potentially affect the global cotton market. According to Forbes, Bangladesh is the “second largest individual country for apparel manufacturing in the world behind China and is where brands like H&M, Target and Marks and Spencer produce much of their goods.” It is not only American business that is becoming unglued.

World Cup Trading Championships®

A. Masters maintains the lead with a 1,171.6% net return, though the competition has closed in, with Michael O’Keeffe at a 943.6% net return. Allen Swiontek regained 3rd with a 229.7% net return. Yuwen Cao moved down a spot to 4th at 219% and former WCTC champion Stefano Serafini joined the leader board in 5th this week at 208.5%.

In the Global Cup, Michael Cook held first place for yet another week with a 233.5% net return. Stefan Seibert held 2nd with a net return of 193.3%, while Wayne Wan held on to 3rd with a 176.9% net return. Following are Robert Miner at 168.6% net and Maxim Schulz at 132.8% net respectively.

In the Forex division of the World Cup Trading Championships®, Nicholas Ridley finished the week in first place with a net return of 120.8%, followed by Chien-Hung Chen at 81.1% and Andreas Plagge at 70.5% net. Miguel Garcia moved to 4th with a net return of 67.8% and Wenchen Zhang finished the week in 5th with a net return of 43%.

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