Global lockdown

California Dreamin’ of Lockdown End

California lockdown
California lockdown

California announcing it will start to ease its lockdown by Friday has been a  catalyst for a turnaround. Investors have been waiting for the US to follow the same path as Europe in reopening its economy. It’s another sign the worst of the pandemic is behind us.

Worst is over?

California Governor Gavin Newsom has said some California businesses in certain sectors will reopen on the condition that they can offer curbside pickup. California was one of the first to lockdown six weeks ago, so it holds that most of the States will be in a similar position inside the next couple of weeks.

Markets have settled into a period of calm. It’s May, but for the moment, both buyers and sellers have gone away. There’s a growing sense that the worst for the global economy is right now, while lockdowns are in place, and coronavirus treatments are unproven. It follows that it only gets better from here as lockdowns ease, and treatments are found.


Encouraged by the lockdown easing in California, European shares have opened higher on Tuesday. Markets in China and Japan are still closed, but shares were up elsewhere in Asia.

Carnival (CCL) was the top riser on the FTSE 100 and on the news. It will resume cruises in August. It’s a smart move that helps tell customers and shareholders the company is still alive while giving Carnival a chance to collect some bookings revenue. August is still three months out, and plenty could change, but the timing fits the timeline indicated by many governments on easing travel restrictions.


The Aussie dollar is up after the RBA kept rates Australian rates on hold, but we suspect gains could be capped by rising US-China trade tensions. RBA Governor Philip Lowe said the central bank predicts a -10% contraction in Q2 but -6% for 2020. Official forecasts are released Friday.

The euro has been falling ahead of the decision from Germany’s top court on whether Germany can participate in the ECB’s expanded QE program. Euro weakness implies the program will continue to debase the euro, suggesting investors don’t see much risk from the decision. Since the court signed off QE in the last crisis, and this one is worse, it feels like a foregone conclusion they sign off again.


Crude Oil is having its best string of daily gains this year. The May contract for US crude falling into negative territory was intuitively a low point. The next front-month futures expiry is not for more than two weeks, so bearish traders are holding back for the right moment to assess storage capacity. It’s still possible we’ll witness another negative WTI price if nobody wants delivery again come expiry, and with tankers filling up, Brent is headed for the same fate.

Opening calls

Dow Jones to open 264 points higher at 24013

S&P 500 to open 28 points higher at 2870.

Chart: Bitcoin

(Source LCG / TradingView 5/5/20).

The price of Bitcoin is potentially at a key juncture just days ahead of the big halving event eagerly anticipated by the crypto world.

Kind Regards.

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