S&P sputtered into month-end - setting-up the forewarned May Day dive to accelerate the retrenching of the prior month's superlative gains. Several other factors contributed to the 'background chatter' as the market pilots, to a degree controlled by progress (or lack) against Covid-19, are sobering.  

The trend (controversy can't end since it's both a health & economic crisis), underway, to reopen various societal and business activities is daunting to all.

Foremost otherwise, might be remarks by New York City Mayor De Blasio, hinting of stretching-out the recovery to a point of reopening the New York economy. He spoke of turning Manhattan streets into Pedestrian Malls; a vision of citizens getting some exercise; thought I don't see how that helps people getting their finances in better shape; given the high cost of living in the City. Given NY's significance as a 'financial center' for GDP or markets in-general; it's heavy-handed taming of optimistic excess addressing little.  

That so little is addressed; and probably remains so; it's no wonder a sober realization remains that until there's an effective 'oral pill' solution, which of course Remdesivir is not; caution is required. That's in markets and in life.So even if New York partially opened as the Mayor contemplates, there's no excitement about taking that guarded step, as some sort of 'green light' to resume robust commerce or travel. NYC remains a serious concern. 

Similarly, while the incredible 'tweet' of Elon Musk about liquidating material assets (including his home) shook Tesla, even more than big layoff's just a day earlier; it's possibly a way for Musk to set-up his disengagement from some aspects of the Company. If he's 'really' liquidating all financial assets, well Tesla stock fits that definition. (This may be more than madness.) That all is after a short-covering rally which surprised lots of traders, considering most automakers, as noted before, whether the German makers or Ford's cancellation of the little-noticed Lincoln EV project, already telegraphed in a cheap-fuel environment.

As to the stock market behavior . . having warned for over 2 weeks that S&P was extended and due for retreat; there's really no surprise here. Our speculation has been as much as a 30-50% retracement, even as upside breadth nicely broadened-out a good bit (normally a healthy sign, as it was, although occurring later in the upside phase dating from March's max-fear 'Inger Bottom' trough, which can also be at the end of a particular trend). I also note that Warren Buffet is still on the sidelines and didn't play the rally; so it's in his interest to look for better big-cap values in the future. He's first to say he doesn't 'time'; but that's no assurance he'll beat March prices (he usually pays up and often ahead of shakeouts; even if winners later-on). 

Meanwhile . . a drop of course could be cut-short 'if' we get favorable news of drug progress beyond reports Gilead's Remdesivir is more effective, in earlier stage patients. (That's good, but as I've mentioned not impressive if it continues requiring hospitalization for an IV drip; as contrasted not just to an oral or inhalation medication; or even an injectable ... hence continuous IV drips will mostly be utilized for hospitalized patients, which tends to beserious cases.) So we'll keep an eye out for progress on the Fuji or other 'oral' treatments that are really want we need; not the brief euphoria that I saw as just that (too much excitement 'as if' it was more) days ago.

Impressively; vaccine progress (became a rush long before the President's 'Warp Speed' pronouncement) is as committed as any in history, since the era of Polio, and beyond the HIV vaccine development (incredibly pending still, after what.. 40 years of research?). Moderna's is already in-testing as it prepares to move to Phase 2; and notably an important new Pfizer Trial starts in Germany within days; while the Oxford vaccine already started.  

Both Oxford's team (which includes Astra Zeneca and the world's largest vaccine manufacturer, which is in India), and also the US Moderna group, prepare to risk their money (or a partnership with governments) on building sizeable inoculation stockpiles even before approval of any vaccine. That speaks to 'commitment' and long-range significance of this pandemic's big threat to mankind, which most recognize of course, while others attempt to marginalize 'as if' it total impact is lesser than it can be. This also is why a market retreat can be worse than a pullback 'if' there's no new drug quickly and hence we have to be prepared for that possibility (it's all variable).  

Stories from China now, of patients 'presumed fully-recovered' from Covid in Wuhan; now 2-3 months later seeing chronic conditions reflecting what is not directly reinfection; but a lingering problem. Awareness of that too is a concern for people reengaging in normal life; if they fear that recovery is not the same as a return to normal living. However we've already observed longer-term damage to lungs was sort of 'a given', once anyone was on a ventilator; but most discounted damage to kidneys, lungs or manifestations at this point not widely recognized; but increasingly starting to be seen and importantly not 'just' on patients that made it after being on ventilators.  

This again goes to the point of needing a vaccine; and knowing the people who grasp the longer-range risks from a Covid exposure (even if recovery from 'acute' disease is seen) may tend to cocoon, or at least be protective, when venturing out, more so that those who maintain a cavalier attitude.  

I realize many who rationalize this, either because they can't grasp the risk significance, view it as some sort of fascist plot (it's not Mr. Musk); not any worse than the 'seasonal flu' (long proven not the case, especially with the lingering effects), or a virus distributed by China to repress everyone else (that's debatable for sure; but there would be no advantage given how this hurt their image, not to mention the increased resumptions of outbreaks in China itself). China's Belt & Road Initiative is set-back by this; although it may contribute to China's rather bellicose attitude towards neighbors.  

In sum: we've tried to focus on market ramifications related to Covid-19 as it drives the ongoing - and irregular - economic and stock market behavior.

I am aware (and agree with certain aspects) of views that markets or even the mass of populations are either manipulated or have to choice but either compel with 'social mandates' or not be allowed to participate in reopening.  

Yes I know most people of course will not develop the disease in any severe way; but that's not really comforting; and I think markets are telling everyone that too. You get rallies instantly upon 'belief' something really works; then discouragement when it becomes clear the euphoria was over a hospital treatment, not a 'pill'.  

Overall: our effort's been to assess what's driving markets; trying to help people prepare for what we believed was severe risk back in January and into early February; and then the market's reflective rebound from one of history's most dramatic 'crashes' (and honored to have identified the 'max-fear' panic low in March); then targeting a building rebound peak, over the preceding couple weeks; with a warning that it was a topping-out process near the high-end of the targeted 50-200 DMA range for the S&P.  

Regardless, we expected the S&P to 'lose its skis' so to speak in late April after it responded to the tremendous fiscal and monetary response from a Fed and Congress; all of which kept earnings largely irrelevant, for now. In the end it remains a problem that requires a health solution but if that takes too long; it will enhance downside volatility and stall ensuing rebounds.