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US employment fell by 4x expectations, showing a 701K decline in March, but this was not the story of the day. A 40% intraday rally in oil following a series of Trump remarks helped the loonie and prevented further. A new Premium Insights' trade was issued for Premium subscribers after the US jobs, which will remain into the weekend.

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US Crude shot up nearly 40% above $30 from an 2-decade low after Donald Trump managed to intervene verbally in oil by claiming producers will step up with massive output cuts. Traders (and us) remain in doubt as to whether a global deal can really be done.

The US President's infatuation with exaggeration and half-truth struck the oil market Thursday. After tipping off CNBC, he tweeted that he expected Russian and Saudi Arabia to cut oil production 10-15 mbpd.

Even with all of OPEC included, a 10-15 mbpd cut was an enormous sacrifice. Soon after Russia revealed it hadn't even spoken to Saudi Arabia. Crude fell back to $24 but rose again when the Saudis called an emergency OPEC+ meeting.

Yet, the statement from Saudi Arabia hinted at the truth: The plan was to call for all oil producing countries to work together to cut 10-15 mbpd. That is a monumental task that's a longshot at best and crude fell to $23.50. Still, the market held out hope when Texas, Mexico and Alberta officials hinted that they were interested in cooperating.

Later, Exxon said it wasn't interested in cooperating with anyone. They've avoiding shale for years and have the balance sheet to withstand this slowdown. No doubt they want to buy assets later for pennies on the dollar. Their stance makes it highly unlikely the US will cooperate.

The hard reality is that it might not even matter if they do. Trafigura estimates that coronavirus has cut global oil demand by 35 million barrels per day. Low estimates are at 20 mbpd.

Oil is unlike other commodities because it's difficult and costly to store. Every country has some reserves but 1 million barrels are tough to store. 35 million barrels per day is an impossible glut. A look back at the major inflection points in crude shows that a 1-2% over or undersupply can dislocate the market over time. Current oversupply is 30%.

There are two solutions: Solve the virus or let the market sort it out. This rally could extend to $36-37 on further optimism or OPEC+ jawboning but it's ultimately doomed.

US nonfarm payrolls collapsed by 701K, the biggest 1-month drop since the financial crisis, while jumped to 4.4% from 3.8%, posting the biggest monthly rise since 1975. Most crucially, the jobs figures were based on the survey week of March 12th, meaning it missed the bulk of job losses and the subsequent two months will be markedly worse.

The only real change in fundamentals Tuesday was the turn of the calendar, but that was sufficient to spark further risk-off trades. The yen was the top performer while the Canadian dollar lagged. Today, gold, silver and GBP are at the lead. US weekly jobless claims numbers are up next (more below). The Premium Insights' short in #DOW30 opened on Tuesday was closed yesterday at 21360 for 1070-pt gain, with suggestions on what/where to keep position posted & sent.

Talk of month-end rebalancing and quarter-end flows completely captivated markets in the waning days of March and the turn in the calendar was the signal to sell. It was a classic and much more orderly risk-off day as USD/JPY fell to a three-week low, yield fell and stocks declined.

It's a signal we're entering the second-phase of coronavirus. The Fed stopped it from being a financial crisis and that was some reason for temporary cheer but we're now in the heart of the biological crisis with the economic crisis still to come.

Even in Italy where the crisis has clearly hit some kind of plateau, there's no visibility towards a return to 'normal' and reopening of the economy. In China, a region of 600,000 people was locked down on a sign of the virus' return.

Back in the US, the Fed announced it will allow US banks to use more leverage in order to contain the sharp drop in Treasuries liquidity and escalating deposits amid the coronavirus pandemic.

Looking ahead, the market will once again focus on weekly US initial jobless claims. The consensus is 3.5m up from 3.28m last week but estimates are extremely wide from 1.5m to 6.5m. At this point, the survey is probably overrated and won't be a lasting market mover. We would love to know true measures of job losses but this survey is more of a test of the processing ability of US employment claims than a true measure.

For reference, Canada now says it has processed 2.1m jobless claims benefits in the past two weeks. That's a full 10% of the workforce and would correspond to 21 million job losses in the US in the same period. Is that magnitude priced into US assets? It should be but probably isn't. Frequently during this crisis we see markets reluctant to fully accept the dark reality of this crisis until it's delivered by official sources. With non-farm payrolls also surveyed before March 12, we may have to continue to wait.

The Fed took further steps to relieve the US dollar crunch on Tuesday and we look at what is happening and why. USD strength is resurfacing today, but gold, silver and GBP remain higher against the greenback. The US ADP employment survey for March dropped to -27K, the lowest since 2017, but economists indicate the worst from Coronavirus hit was far from captured in the report.  Meanwhile, the US March ISM manufacturing index fell to 49.1 vs 45.0 expected, from 50.1. Tuesday's Premium short in the DOW30 is currently +1000 pts in the green. Below is today's weekly Premium video for English speakers, focusing on indices, sectors and gold.

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The Fed added to its USD-swap program on Tuesday, adding swaps for every country that has holdings at the New York Fed. Dollar liquidity is less severe than two weeks about but continued whippy moves in FX suggest that trouble-spots remain.

It's important to remember that the US is a major net debtor with inbound investment exceeding outbound. Lately, foreign firms, governments and central banks need to dollars. Normally they can borrow in USD but those markets have closed so their next option is to sell USD-denominated assets, like Treasuries.

The emerging thinking suggests that any renewed decline in indices may not trigger the same level of USD buying/Gold selling as was seen 2-3 weeks ago due to the highly targeted Fed effors to relieve stress in USD funding.

The Fed doesn't want that so they're stepping up to lend against those assets via swap lines in the hopes that markets will calm and assets won't need to be sold. It appears to be working but it's important to remember that it's not a long-term fix. Unless foreign economies find a footing in the weeks ahead, that selling pressure will resume. Of course, the Fed is buying what they're selling but many of those dollars will be converted to domestic currencies and that will put downward pressure on USD.

Initial jobless claims remains the best real-time look at employment but there are widespread reports of people unable to file because of the huge backlog, especially in hard-hit states.

فيديو إرشادي جديد حول إستعمال خدمة توصياتنا في تداول العملات و المؤشرات و الذهب و النفط. الفيديو الكامل

Each of equities indices, bonds and the US dollar rallied to start the week, save for oil prices which continued their battering. Is it a sign of a bottom, or quarter-end rebalancing? The Australian dollar was the top performer while the Canadian dollar lagged. China's official PMIs are due up next. In the Premium  Insights, Wednesday's USDJPY short at 111.20 hits final target 108.00 on Friday, while the DOW30 short and EURUSD long were closed on Friday for 990 pt & 215-pip gain respectively.  Below is Ashraf's video for subscribers on Gold/Silver/Indices open to all.

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We're hesitant to take a signal from Monday's trading because of uarter-end flows that drove an unusually strong bid in everything USD-denominated.

On the fundamental side, we highlighted the Dallas Fed yesterday and it was far worse than anticipated at -70.0 vs +1.2 previously. Comments in the report highlighted strains on cashflow and worries about solvency. The area is being hit particularly hard because of low oil prices.

On that front, Brent hit at 17-year low of $21.65 and WTI fell below $20 once again. In Canada, oil is trading at less than $4 and that showed in the loonie. However it's clear that quarter-end flows were a factor in trading on the day as Canadian oil company shares rallied strongly despite falling prices.

Flow-driven trading may continue into Tuesday as the new month gets underway but should be less of a factor beyond that.

From Ashraf's Tweets

Increasingly the market will turn to data as March numbers begin to roll in. One coming up at 0100 GMT is the China PMI for March. The manufacturing number is forecast to rebound to 44.8 from 35.7 and services to 42.0 from 29.6. Real-time numbers like car sales and vehicle traffic show a spotty rebound in China but these numbers might offer a better idea.

This video was created last week for Premium members. I'm opening access to everyone to benefit (here). فتح فيديو المشتركين من الاسبوع الماضي للكل يبدأ الجزء العربي في النصف الثاني من الفيديو 

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تذكير: توقيت الندوة غدا ٩ مساء بتوقيت مكة و ليس ١٠ .هل تداولت من قبل في سوق الدببة؟ انضم لهذه الندوة الالكترونية المجانية لتتعرّف على أفضل الأسهم المناسبة لمرحلة الركود الاقتصادي. موعدنا يوم الثلاثاء 31 مارس في الساعة 9 مساءً بتوقيت مكة للتسجيل من السعودية  للتسجيل من باقي دول العالم

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