Morning Look

3 days at home and already ate all the food he hoarded.

Futures are up about +1.5% so far. Kind of boring unless we’re up or down 8 or 9% though.

Heres a look at Europe so far.

  • STOXX Europe 600: -1.2%
  • Germany’s DAX: -1.8%
  • U.K.’s FTSE 100: -1.7%
  • France’s CAC 40: -1.1%
  • Italy’s FTSE MIB: +0.2%
  • Spain’s IBEX 35: +1.1%

It’s looking more likely that this virus is going to push us into recession. Bloomberg’s Recession Probability Index is at its highest point of this cycle. It’s currently showing a 53% chance of a recession within the next 12-months. That seems low, but not a surprise after all, we’ve been through.

The average recession lasts 7-months.

The pain tends to linger following a 20% market drop. According to BofA, “The 25 bear markets from 1929 to-date saw corrections continue for 85 days on average (81 median) following the dip below 20% into bear territory on an average pullback of 18.41% (15.61% median). While history does show us examples of quick turn arounds after moving into a bear market, the tendency is for the pain to linger, with further downside over the two to three months that follow the initial 20% drop”.

There will be great shorting opportunities on rallies. We will probably go from a buy the dip to a sell the rip mentality at least for the short to intermediate-term.

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