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Weekly Memorandum 4/6/2020

Stocks closed down slightly last week, but are up nice in the pre-market to start this week. There definitely are some opportunities under the hood of the market, but they are few, far, and between. A V-shaped bottom in equities is unlikely, but as always, we will let price determine our actions in the market. Our work suggests we could see a recovery rally here for the next few weeks, followed by an eventual retest, or perhaps even lower-lows.

The big mover last week was Crude Oil, which surged nearly 50% higher from its low on March 30. This could be a major development in the market, as it has the potential to re-inflate inflation expectations, which is desperately needed right now.

T-Notes closed at their highest weekly level in history last week, but are down slightly this morning. Gold and silver didn't do much last week, but have nice gains to start off this week.

The U.S. Dollar continues to display its resilience, and remember, QE does not create inflation. Stagflation continues to be our radar once we get out from this deflationary wave. The dollar can't crash if other countries are doing the same monetary policy-- sometimes even more aggressively, than us.

Coronavirus continues to be the elephant in the room, but it does seem that the rate of death is slowing in areas like Italy and New York City. The key now is to develop a transition for those that are less-vulnerable to start working again, while still protecting those at high-risk. If this crisis has taught us anything, it's that we generally live in a reactive versus a proactive society. This needs to be something we reexamine going forward.

The best time to prepare for war is in peacetime. The best time to work for peace is during war.

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