JACK FARLEY: Welcome to the Real Vision daily briefing. It's Friday, April 24th.

We've got Real Vision's Ash Bennington standing by with Tony Greer of TG Macro, and they're ready to give their macro analysis.

But before we go to them, let's go over the biggest stories in markets, as well as on the Coronavirus pandemic.

Starting off with some Coronavirus data, the US confirmed death count has surpassed the 50,000 threshold out of close to 900,000 confirmed cases that we've now had. That's certainly a grim milestone. This comes at a time when President Trump has signed off on the most recent relief package, and states like Georgia are beginning to reopen businesses today.

While in South America, the total confirmed case count has reached 100,000, the majority of which in Brazil, Peru, as well as in Ecuador, where the official death count exceeds 500.

But it's likely that the true number of deaths from COVID in Ecuador is actually much, much higher. According to the BBC, from the beginning of March until mid April, just one province alone, Guayas, reported almost 15,000 deaths. And that's a death rate seven times higher than normal.

The lack of testing and medical supplies has imposed incredible burden on Ecuador, which might be one of the hardest hit countries in Latin America when it comes to the Coronavirus.

Going back to the States now where jobless claims continue to pile up. Yesterday, the cumulative tally coming in at 26 million. Some of these jobs, as we know, are in the service sector. But employees who work at startups are feeling the burden of the shutdown as well.

According to layoffs.fyi, a database that tracks job losses, over 30,000 employees from over 300 tech startups have been laid off since March 11th. The layoffs were concentrated in the San Francisco Bay Area, unsurprisingly, and we're already hearing rumors that the real estate market there is under significant distress. Revenues across almost every industry are taking a serious hit. And with venture capital drying up, it's unlikely that any of these startups recover anytime soon, if at all.

In market news, the S&P 500 is getting quite pricey. If you look at the forward price-to-earnings ratio, over the past month, constituent equities have been bid up, even as the picture for those company's future earnings continues to get worse, making the S&P 500 the most expensive it's been since the 2001 dot.com bubble.

In Europe, equities had a bad day. After yesterday's dismal economic indicators, dovetailed with the ECB president Christine Lagarde's dire warning to EU ministers that GDP for the eurozone could contract by as much as 15%. So far the ECB has been relatively restrained. It's been the dog that hasn't barked, at least compared to the Fed. But it's forecasted to take its QE to the next level. And its recent loosening of collateral requirements has caused some to speculate that it will soon join the Federal Reserve and start buying junk bonds outright as well.

For a more in-depth look at Europe, you might want to check out today's interview with Mark Blyth and Adam Tooze. It's a great conversation about the ECB and the Fed, as well as about fragility in the global economy in general.

And lastly, here are some stories that we didn't have time to cover today. JC Penney is on the brink of bankruptcy, while the Brazilian stock market tumbled today as justice minister Sergio Mauro resigned. And lastly, the insurance industry, worldwide, is bracing for some of the biggest losses in recorded history.

Maybe we'll dive into these stories next week. But for now, it's time to go to our heavy hitters. We have our very own Ash Bennington hosting the great Tony Greer as he makes his glorious return to Real Vision. I know Tony and Ash have some very strong thoughts on everything that's going on in the market, particularly as it relates to the relationship between the equity rally and central bank liquidity. I can't wait to hear what they have to say.

Guys, take it away.

ASH BENNINGTON: Thanks, Jack. It's Friday, April 24, 2020, just after market close in New York. I'm Ash Bennington for Real Vision. This is the Real Vision daily briefing.

Today, we're joined by our first external guest in the history of the show. He's been a host. He's been a guest. He's been a friend of the platform for many years, Tony Greer, editor of The Morning Navigator. Welcome, Tony.

TONY GREER: Thanks for having me, Ash.

ASH BENNINGTON: Thanks for joining us.

TONY GREER: Yeah, we had quite a week. Right? You know, to me, I've looked at the market as trading on a combination of sort of technicals, optics, and sentiment. And this week was another week of that, I feel. We came in after the weekend, and there were some bad optics for sure. Right? We had sort of the price of oil started falling on Sunday night.

You know, the news over the weekend was about the virus, which probably more deaths than we would have liked to hear about, seeing as we're supposed to be coming down the back end of the curve now. Right? So the numbers for the optics were kind of worse than expected.

And there was news circulating about the failure shortcomings of the PPP and SBA loans that were going around. And everybody was getting a little, you know, you started off Monday with that disgruntled feeling, you know. And then we walked face first into that super wild, super-contango trade in oil. Right?

So the optics of oil going down, going negative, people struggling to comprehend exactly what the mechanics of that are, are terrible optics for risk. Right? So we started off with a week where everybody was derisking. You know, everybody pretty much understands that the tanks at Cushing are full. Saudi Arabia continues to send supply over here to exacerbate the storage issue.

The pipelines are full so that you can't even move oil to and from Cushing. And if you're along the front contract there, and you don't want it, you will certainly pay somebody to take it off your hands. So I'm sure everybody's gone through that by this point in the week, but I just thought I'd mention it because it's interesting.

So what we saw, at the beginning of the week, was what I'm calling, I'm identifying really as this longer lockdown rotation that we're in. Right? So we saw we're going to be locked down longer than expected. Obviously, we've got a big demand problem to deal with first, so oil would fit that description. You know, we saw weakness in typical sectors, utilities, industrials, transports, all of that stuff straight down. And it ran us into a pretty big de-risking day on Tuesday, where we saw a little bit of a big cap meltdown, where finally, Apple and Google went down.

The funniest thing about this tape is that the equity market can be such a lagging indicator sometimes. You know, like it took oil to go to minus $25 to derail the big cap retracement rally in tech that was going on. So we finally saw it on a Tuesday. And you really can't hide the rotation of what's going on at 40 vol. You look up at the end of the day, and it's crystal clear.

You know, Monday and Tuesday we had energy literally getting slaughtered alongside the optics of the May crude oil contract coming off. And then it went into an opposite situation on Wednesday where now the law of small numbers started to play in crude oil's favor, where once everybody got the May contract out of their system, once you read that the USO ETF had rolled mostly into June, mostly into August, everybody was now running from this issue. And now crude oil is rallying in large denominations from it's, you know $7, $8, $11 lows back into the teens to more reasonable numbers.

And what that does automatically is it gets the risk appetite going again. Right? What it does when gold is rallying alongside it, I thought was really interesting this week, that sort of gold took the lead as the animal spirits leader. You know, gold all of a sudden, you know, when you look at stocks like Newmont and American Barrick Gold that are gapping open higher, there's fear of missing out buying going on, in all of a sudden gold mining stocks, it looks like there may have been a serious portfolio reallocation or something like that. Or maybe it's big short coming. But it seems like people want to be on the gold stocks, and go with this breakout.

So that's sort of got the markets back into accepting a little bit more risk this week, accepting that what is going on at the Fed and their balance sheet is going to actually have an effect. And you saw stocks get back on their feet in the middle of the week by Wednesday and Thursday,

Thursday, once again, we had to live through those euro PMIs. We had to live through the shock and awe economic data of the virus lockdown now. We saw services PMIs over in Europe into the teens, which is, quite frankly, terrifying. You know, it's terrifying, but at least we know that it's temporary.

You know, it's terrifying because we're trying to price in a recession or a depression, and we would like this to be a recession, and one that's over quickly if we can restart the economy.

Unfortunately, there's going to be a lot of economic damage that's already done.

ASH BENNINGTON: Right.

TONY GREER: Also Thursday we got the labor force data, another 4 and 1/2 million unemployment claims, which now gets us to 26 million over the five weeks. With the labor force, Ash, at 165 million people in the first place, 25 million is a big divot to be applying for unemployment claims. The population of that is equal to the population of the 10 biggest cities in the country, just for some scale. So imagine all of that being unemployed and trying to find their way back after this. It's going to be quite an economic feat to behold.

What we also saw on Thursday that was really important for me, who is still playing a sort of bullish bench to the retracement, we saw some bodies float to the top. And what I mean by that is we lived through a period of very severe and extreme de-leveraging in that period from call it the end of February into the beginning of March, when the S&P bottomed down at 21.75. And put in some extreme tick prints, which are the tick indexes measured exactly how much of the market is trading on the bid versus how much is trading on the offer. And when it puts in a number of consecutive huge numbers on the downside, you know that these are liquidations that are happening in the markets.

And we had a period there where we had 10 out of 15 days with tick prints bigger than minus 1,500. And those are 10 extreme, extreme sessions that really happen once or twice a quarter. And here we go. We had 10 out of 15 sessions of selling. And that's why it was so extreme.

But this week, at least, we learned what it was all about. Headlines came across the tape. We saw the SAC 10 traders lost 200 million euro in the virus route. We saw that investors pulled $33 billion from hedge funds during the first quarter. And that's certainly part of the liquidation route. We learned that Alberta Investment Management Corp Got caught losing $3 billion selling volatility. Right? So these are the blow-ups that go along with that tape decimation that we live through. And these, for me, are the reason that I'm not expecting a waterfall again when the equity market dips necessarily.

You know, things could change. But if things remain the way they are, I think that that heavy selling has been done, and we're through that. And now we've moved into this phase where we're in the longer lockdown rotation round.

ASH BENNINGTON: And that brings us to today.

TONY GREER: . Yes so you know, we'll go to today, and today really sort of helped to define the week, but what it was was the S&P really just continuing to rotate around, 50 being moving average resistance level to me, as a technician, which was the first logical stop off of the lows. Right? So now the market is deciding whether it can advance from here or not. It's still trading on sentiment optics and technicals. So the technicals we've got down. We see that we've stopped at this important level. But today was really a continuation of the week.

You know, we saw strong gold miners. We saw strong energy. Oil services rally. You know, we're seeing levered stocks actually be able to rally in the energy department, which is very interesting. We saw strength in the cannabis sector for the first time in awhile off of the lows. We're seeing biotech holdup because of the need for more testing and more biotechnology in this whole entire battle. And we saw a strong dollar again this week. So these are the things that, to me, are sort of holding the tape together right now.

ASH BENNINGTON: Right.

TONY GREER: And so that sort of brings us to a close where the tape is still in this rotation and a consolidation mode. We didn't really make any decision as to which way we're going to break this week, but it sort of coils us up a little bit tighter. And I think that when we have the next large magnitude move, that's a move that I probably wouldn't want to fade after having a week like this where there was so much distribution in the markets, there was a lot of stock changing hands in big cap stocks. You know, they had really volatile rallies this week, and wound up not having much of a change, all things considered. But it's going to be interesting to see, of course, how we play out.

So I'd love to hear you know what things look like on your side, Ash, and sort of what spin you're looking at in the markets. My biggest concern that I'll just touch on now is going to be food inflation with the most recent shutdowns in a lot of the meat-producing plants, because many of the meat-producing workers have caught Coronavirus. So if they've got to shut those plants down, now we're going to have product that's going to get wasted and probably not make it out of the warehouse. That means that it's not going to make it to the shelves. That creates a whole other level of emotion on top of the high volatile markets that we're living through right now.

ASH BENNINGTON: Right.

TONY GREER: So there are a lot of landmines to navigate. But my posture, not that you're really looking for it, but my idea is that the S&P is probably, given what's going on at the Federal Reserve, given the fact that we broke through 4.2 trillion on the upside of the balance sheet and are now at something like 6.7 trillion in a month, to me that's sort of widening the Overton window as to where we might go with the balance sheet now.

I mean, I'm approaching it as is going to be no limit as to what they take on the balance sheet. I'm imagining that there's going to be tremendous public push-back from the fact that we've learned that a lot of sort of larger small businesses have gotten their loans that they have applied for. And I saw a number of something like 1 in 15 of smaller businesses got loans that they applied for. So that's going to cause devastating economic damage if the data is really that tilted. And that's the thing that, to me, is the 800-pound gorilla that's marching on around there in the future that we're going to have to eventually encounter is when this data actually comes home to roost on the tape. And then we're going to see what's priced in and what's not.

ASH BENNINGTON: Right. Yeah, that's a very sort of granular summary on the technical side and also on the fundamental side for the last week. And it sets us up very nicely, I guess, to ask some of the bigger questions as you alluded to about where we are right now, what it is we should be looking at, what it is we should be worrying about, what it is we should be looking to lead us out of a potential downturn.

You know, the single data point or series of data points that I found most interesting was an article that came out the New York Times a couple of days ago that detailed a series of potential models forecasting the trajectory of this disease. And it was interesting to me, because you know, very simply, the models are all over the place.

You've got these eminent scientists associated with various eminent institutions coming up with different forecast models, and they all look completely different. Right? And for guys like us who watch markets, the fact that we're watching epidemiological studies should make us a little bit nervous. That should tell us that there's a lot of uncertainty in this market.

And the level of uncertainty around the trajectory of the disease, which is the feeder into the timeline to reopen the country and to get the economy moving again, is something that gives me a bit of pause.

One of the great things about Real Vision is we have these really cool subscribers. And they engage with us in the comments. And one of the guys, Peter C, wrote a post, and we went back and forth a little bit. And he said, hey, take a look at this epidemiological calculator.

TONY GREER: Right.

ASH BENNINGTON: So I go up to the website. And it basically draws a series of curves based on sliders that they used for input, like the r0 number we keep hearing about, the number of people who get the disease and what have you. And you read the footnotes at the bottom. And I'm not trying to be smarter than I am, but I know the differential equations are things that are a little out of my league. But when you see that it's an exponentiation function, you're raising things to a certain power, you move the little slider. You ooch it a little bit to the left, you ooch it a little bit to the right, and the entire curve shifts. Right?

So you don't have to be a mathematician to realize you're dealing with extreme sensitivity to these initial inputs. And the curves change dramatically as a consequence of that. And that's what we're seeing play out, I believe, in the New York Times. You're seeing these models that are very difficult to forecast because they're so sensitive to the