There must be some kind of way outta here, said the joker to the thief…

Market Update: 15 April 2020

As exit strategies are pondered globally, spare a moment for a few facts:

  • Japan cases doubled in the past week (albeit still from a small amount per capita) as did Singapore.
  • Of 62 deaths in Australia, 1 case was in their 50’s – the remainder 60 or above.
  • Both Children and Teens caught COVID19 – albeit combined not even 1/3 that of the largest demographic being women in their 20’s (highly plausible health workers on the front line).
  • Of the population with cases:
    • 2% were 80 or above – with a 20% mortality rate
    • 9% in their 70’s – with a 4% mortality rate
    • 14% in their 60’s – with less than 1% mortality.

But the Swedes tried to isolate the elderly only and as you’d expect cases were higher (1,133 per 1mil vs our 251 per 1mil), but deaths rose as well to 102 per 1mil vs our 2 per 1mil. It’s not so cut and dry.

No reason to get excited, the thief he kindly spoke.

Markets still happy… S&P closed up 3% – are we still bearish? Well again technicals tell us the line in the sand is the Elliott Wave at 2851 (high overnight… 2851). Some pretty awesome fundamentals might be needed to breach this or a leap of faith perhaps?

AUD made new highs to 0.6448 but failed to remain so far – back at 0.6410 and given it remains the Weapon of Choice for risk/commodity currency liquidity, it may again be the canary in the coalmine should hope deplete.

The DXY (USD index) is at least one thing that’s back to where it started and only – finding some support 0.5% lower.

So let us stop talkin’ falsely now, the hour’s getting late*.

What if we’re wrong and it goes through these levels? Well we’ve suggested AUD Options for some time and besides being in the money, the one thing besides time decay is Vol lower… a 3month Call option in AUD is around 11% – down from the heights of 25%… so it’s cheaper to be wrong.

*All along the watchtower by Bob Dylan (although I prefer the Hendrix rendition).

S&P Elliot Wave (Major) at 2,851


3month AUDUSD ATM option vol

Sources: Bloomberg

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