Leverage is being punished these days...as recently as last month it was being celebrated. During a decade of low interest rates and easy money folks levered up and reached for yield.

Volatility surged higher across markets this week...prices changed with astonishing speed...bid/offer spreads were ridiculous...credit spreads widened with a vengeance and depth-of-markets got scary thin. Global stock market cap tumbled >$16 Trillion in 3 weeks...more than China’s annual GDP.

Link to Victor Adair podcast on HoweStreet.com recorded March 11, 2020.

https://www.howestreet.com/2020/03/gold-usd-bonds-victor-adair/

"It's all FEAR & GREED right now...and there is no Greed." Victor comments on stocks, bonds, crude, FX and gold.

At market extremes you are trading nothing but psychology. So...is it time to sell panic? Or is the hysteria just beginning?  What’s your time frame? What’s your pain threshold? Volatility has exploded as liquidity has vanished. Bid/offer spreads are wide but not deep. Credit spreads are widening.

The stock market surged to All Time Highs the first 2 weeks of February...ignoring red flags from the bond market, the US Dollar and gold...but the day of reckoning finally arrived and the market crashed with astonishing speed and determination. Waves of selling triggered more selling and prices tumbled like dominos.

Starting January 24^th the S+P futures closed red for 3 consecutive Fridays...fearing bad virus headlines over the weekend...but this past Valentines Friday (ahead of a 3 day weekend) the S+P futures closed green...not exactly an “all clear” signal but at least “an indication” that the market was pricing less fear.

Commodities have been hammered since the virus became front page news...but bonds, gold, the US Dollar and stocks have all rallied...which begs the question, “Are markets anticipating a global economic slowdown exacerbated by the virus...or are they looking past that and anticipating massive fiscal and monetary stimulus?”

Emotional reactions to Coronavirus headlines churned price action across markets the past 2 weeks. This week, in lieu of my usual Trading Desk Notes I’ve attached the Power Point – and my opening remarks – that I will be presenting at the World Outlook Financial Conference February 7^th in Vancouver, British Columbia.

Market psychology turned decisively “risk off” this week with many global stock indices hitting YTD lows...the “looming recession” idea is back in vogue as analysts factor in the knock on effects from the coronavirus hitting an already weak global economy.

The major North American stock indices hit ATHs this week...initially shrugging off virus concerns...but when the virus headlines became increasingly scary ahead of the weekend stocks and commodities fell while bonds, bullion, the US Dollar and the Japanese Yen rallied.