Picking up the action from last Thursday, 2 April 2020, we find that expectations for future dividends in the S&P 500 (Index: SPX) continued to deteriorate through the end of 2020.
The futures data is suggesting that while dividend reductions have begun to be announced, investors are still expecting many firms to pay out a good portion of the cash they've been setting aside for their 2020-Q2 dividends before suspending them for the rest of 2020, before perhaps resuming a portion of them in early 2021.
At the same time, we're catching up with what may have been a regime change for how investors are weighting the changes they expect in the growth rate of dividends per share, which appears to have taken hold in the stock market beginning on Monday, 23 March 2020. We'll discuss our thinking more on this topic later this week, but for now, we've updated the alternative futures spaghetti forecast chart to show the effect of that potential change.
Compared to last week's market changing news headlines, the week ending Friday, 3 April 2020 was relatively muted.
Monday, 30 March 2020
- U.S. crude dips below $20 as lockdowns wipe out demand
- Bigger trouble developing in the Euro zone:
- Bigger stimulus developing all over, but especially in Japan:
- China unexpectedly cuts reverse repo rate by most in five years to support virus-hit economy
- EU may help banks more with loan losses due to pandemic
- Japan ruling party to propose stimulus package worth 16-17% of GDP, policy chief says
- U.S. stimulus package is biggest ever, but may not be big enough
- Commercial paper rates fall, signaling Fed's program working
- EU minion issues demands for others to act, Fed minion sees no limits for actions, ECB minion sees other options:
- Other news of note:
- Short-selling bans not useful: stock exchanges federation
- Oddly enough, hiding a company's problems by banning the short selling of its stock doesn't make them go away....
- China's factory activity seen recovering in March, but still in contraction after virus shock
- Short-selling bans not useful: stock exchanges federation
- Wall Street rallies, led by healthcare jump
Tuesday, 31 March 2020
- Bigger trouble developing in the U.S. economy:
- Bigger stimulus developing in the U.S.:
- Fed minion says they will do 'whatever it takes'
- Fed will do 'whatever it takes' to help U.S. economy likely in recession, Daly says
- Including bailing out other central banks facing runs on U.S. dollars?
- On top of all the other stuff they've been doing:
- Stocks fall, close out biggest quarterly drop since 2008
Wednesday, 1 April 2020
- Coronavirus impact ripples across U.S. economy:
- Bigger trouble developing in the Eurozone, China, Australia:
- Euro zone factory activity crashed in March as coronavirus spread: PMI
- Pre-recession peak set: Euro zone jobless rate hits 12-year low on eve of virus measures
- China's ports brace for second hit as virus spread wipes out exports
- 'Very material' contraction likely in Australia due to coronavirus: central bank minutes
- Euro zone factory activity crashed in March as coronavirus spread: PMI
- Bigger stimulus developing all over:
- Fed minion suddenly possessed by deep insight:
- Unexpected news:
- Tariff pain turns to gain: U.S. computer, toy stockpiles help meet virus rush
- Chinese buyers snap up U.S. oil purchases at widest discounts ever
- Congressional architect of needless delays for needed relief demands fast delivery of relief:
- Wall Street's major indexes slammed as virus anxiety grows
Thursday, 2 April 2020
- Oil jump lifts Wall Street as jobless claims data surges
- Bigger trouble developing all over:
- Bigger stimulus proving difficult to deliver:
- Fed minions concerned U.S. recession may have started:
- More government-mandated dividend cuts coming to EU:
- Stocks climb on oil price surge despite grim U.S. jobs data
Friday, 3 April 2020
- Bigger trouble developing as businesses go into survival mode:
- Bigger stimulus proving to be difficult to deliver, with government rules and regulations creating barriers:
- Amid confusion, U.S. small business bailout program off to rocky start
- U.S. small businesses flood Bank of America with loan applications
- Why sweetened layoff benefits may be at odds with U.S. loan program
- Fed's dilemma: Picking winners for $4 trillion in credit
- 'Mom & Pop' shops worry they will be squeezed out of small business coronavirus aid
- U.S. gig workers seeking coronavirus jobless benefits hit bureaucratic wall
- Fed minions coming to have concerns about U.S. economy:
- Better news:
- Lockheed Martin adds jobs, increases supplier payments to counter coronavirus impact
- This is a big deal. LMT's actions will move its business to the front of the line for its suppliers, giving it a competitive advantage unless its competitors can follow suit. Given the coronavirus-related shakeout happening in the commercial side of the aerospace industry, that may not be possible for many.
- Lockheed Martin adds jobs, increases supplier payments to counter coronavirus impact
- Wall Street falls as coronavirus shreds U.S. payrolls
Meanwhile, Barry Ritholtz forcefully extracted the positives and negatives he could find in the past week's economics and market-related news.
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