Market Quick Take - April 15, 2020 Market Quick Take - April 15, 2020 Market Quick Take - April 15, 2020

Market Quick Take - April 15, 2020

Macro 3 minutes to read
Steen Jakobsen

Chief Investment Officer

Summary:  US equities rallied in nearly vertical fashion yesterday, tacking on over four percent of gains and taking the major tech stock index, for example, all the way to it late December levels. Clearly, the mantra of Never fight the Fed is afoot. But we note financials and small caps have badly underperformed, a sign of a Wall Street versus Main Street narrative in this Covid19 crisis.

Main street versus Wall Street, that is the narrative here after the incredible rally extension for the big name tech stocks, and risky, highly levered companies like Tesla over the last couple of sessions, all seeming to enjoy the “Don’t fight the Fed” mantra. Meanwhile, banks are underperforming and small caps with less access to the Fed’s liquidity H-bombs have retraced only some 35% of the losses from 2020 highs. 

What is our trading focus?

  • 10YBTPJun20 – the Italian 10-year sovereign bond future – the yield spread between Italy and Germany has widened again in the wake of the Eurogroup deal to fund the Covid19 emergency as the market apparently doesn’t see this as providing enough solidarity – this presents further downside risk for BTP futures if the Italian position on the viability of its EU membership sours further.
  • US100.I (NASDAQ 100 Index) and US500.I (US S&P500 Index) – the NASDAQ 100 has rallied all the way through its 61.8% retracement, leaving the 9000 area as the last resistance before the all-time highs of 9780; NASDAQ 100 is now only down 1% YTD and trades at 42% valuation premium to global equities (MSCI World). The broader US S&P 500, on the other hand has so far topped out well short of its 61.8% retracement (2930) and small caps have not even achieved. We continue to watch market breadth as a key indicator.
  • US financials (XLF:arcx) and European banks (BNK:xpar) – financials in focus today as JPMorgan and Wells Fargo Q1 results showed big jump in provisions for credit losses with most notably jump in consumer credit card segment and energy loans. The outlook presented by management was very uncertainty and investors were left blind on guidance post Q2.
  • OILUKJUN20 (Brent crude) and OILUSMAY20 (WTI crude) –  Crude oil’s failure to rally following the historic OPEC++ production cut agreement highlights the continued downside risks. At best the deal may help stabilize the market until lockdowns are being lifted and demand returns. Focus today on EIA weekly stock report, IEA’s Monthly Oil Market Report and Texas oil regulators.
  • AUDUSD and AUDJPY – as yesterday, we note that AUDUSD (and arguably AUDJPY) is an excellent proxy for risk sentiment in the G10 FX space and the price action yesterday took AUDUSD even closer to the ultimate 61.8% retracement level of 0.6450 we have mentioned prominently – a level that has held well. We suspect AUDJPY could provide similar price action as long as it remains below the 70 area. Both are pairs traders can trade on the short side if they believe the global sentiment bounce has been to robust.
  • Tesla (TSLA:xnas) – up 100% from March lows yesterday in a stunning comeback and testimony to money chasing hot NASDAQ stocks. Meanwhile the US car market is collapsing and cheap gasoline makes ICE vs EV fundamentals better. Who switches to new and more expensive technology during an economic recession?

What is going on?

Dash for trash? – it should be noted that many of the US equities rising the most in this latest short squeeze or rally, depending on your point of view, were high risk names like AMD and Tesla, Inc. This could be a sign of heavy small trader involvement in this rally, a contrarian signal.

Covid19 – some European car manufacturers have declared plans to open factories across Europe in coming weeks. Us President Trump withdrew funding from the World Health Organization, saying that is failed its basic duty and is too reliant on China. In the USA, the US saw its single deadliest day of Covid19 deaths, with over 2,400. There, US President Trump maintains the opinion that the Federal government can declare when the US should re-open for business, but the governor of the US’ most populous state, California, declared a cautious agenda of steps, like testing and contact tracting, that must be followed if activity is to normalize in there.

Australia April Consumer Confidence – dropped to the worst reading ever at 75.6 and thus below the worst level of the financial crisis of 79.1.


What we are watching next?

The mood in Europe – as we note above, the Italy-Germany yield spread widened badly yesterday (by over 20 bps to 216 bps total) in the first trading day in Europe after the Eurogroup deal was agreed late last Thursday. Italy’s premier Conte spoke out against the deal agreed by his own finance minister and claims that the country will never accept funds from the ESM, the main portion of the agree package. An EU existential crisis is simmering until proven otherwise.

The crude oil market remains under some considerable pressure as recent supply cuts have done little to off-set the historic slump. Focus today the weekly stock report from the EIA, Monthly Oil Market Report from the IEA and whether Texas oil regulators will order a 20% cut in shale oil production.

US Retail Sales today and US earnings report and how the market treats specific news a well as the “Don’t fight the Fed” narrative.


Economic Calendar (times GMT)

  • 0730 – Sweden Mar. CPI – The market (SEK traders) concerned that Sweden’s Riksbank gets very reactive to weak inflation readings.
  • 1230 – US Mar. Retail Sales – expectations are for -8% month-on-month headline
  • 1230 – US Mar. Industrial Production
  • 1400 – Bank of Canada meeting  - Canada’s economy at even greater risk than US, given private leverage and scale of oil industry – USDCAD a focus here if Bank of Canada adds further measures.
  • 1430 – EIA’s weekly stock and production estimate report

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.