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
• Oil plunges to 2002 lows, shares sink again
• Bigger trouble developing in the Euro zone:
• Euro zone sentiment in record plunge as coronavirus strikes
• German economy could shrink by 5.4% this year due to coronavirus: advisors
• Norway says its economy may contract 4% this year
• 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
• Japan ruling party eyes 100 trillion yen stimulus to battle coronavirus
• Exclusive: Japan to boost government bond issuance by $149 billion to fund stimulus - sources
• 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:
• Europe's economic response to epidemic must be quick: EU exec
• Fed's Kashkari Goes Full-On God-Complex, Lectures "This Is Not The Time To Worry About Moral Hazard"
• ECB's de Guindos says 'coronabonds' are not only instrument to fight coronavirus
• 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
• Wall Street rallies, led by healthcare jump

Tuesday, 31 March 2020

• Bigger trouble developing in the U.S. economy:
• U.S. unemployment offices sitting on mountain of pending claims
• Oil ends March with biggest monthly and quarterly losses ever
• U.S. consumer confidence falls less than expected but weakest since July 2017 on coronavirus concerns
• Bigger stimulus developing in the U.S.:
• Trump calls for $2 trillion infrastructure bill to help economy during coronavirus crisis
• Architect of Trump tax cut may run $500 billion coronavirus loan program
• 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?
• Fed broadens access to dollars with repo agreement for foreign central banks
• Global banking systems may need recapitalization, restructuring: IMF
• On top of all the other stuff they've been doing:
• What the Federal Reserve has done in the coronavirus crisis
• Stocks fall, close out biggest quarterly drop since 2008
• Dow sinks, virus pushes it to sharpest quarterly plunge in over three decades

Wednesday, 1 April 2020

• Coronavirus impact ripples across U.S. economy:
• Oil ends lower after U.S. crude stockpiles jump, gasoline demand sinks
• Trump invites oil CEOs to discuss help for ailing industry: source
• U.S. manufacturing contracts; private payrolls post first drop since 2017
• 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
• Bigger stimulus developing all over:
• Explainer: Euro zone mulls package to support economy against coronavirus
• Trump administration looking to infrastructure for stimulus: Mnuchin
• U.S. restaurants seek $325 bln of federal aid due to coronavirus hit
• Fed minion suddenly possessed by deep insight:
• Fed's Rosengren says unemployment rate could 'rise dramatically'
• 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:
• Pelosi urges U.S. Treasury not to delay $25 billion in grants to airlines
• Wall Street's major indexes slammed as virus anxiety grows
• Equities drop as evidence mounts of deep global recession

Thursday, 2 April 2020

• Oil jump lifts Wall Street as jobless claims data surges
• Trump touts 'great' Saudi-Russia oil deal to halt price rout, but details unclear
• Trump says oil output cut could be as high as 15 million barrels a day
• Exclusive: Trump does not plan to ask U.S. oil producers for coordinated cuts - official
• Bigger trouble developing all over:
• Instant View: Weekly US jobless claims top 6 million for first time
• Coronavirus lockdown destroys jobs at record pace in 'paralysed' Spain
• World food prices fall sharply in March because of coronavirus, oil slump: U.N
• Bigger stimulus proving difficult to deliver:
• Thousands of U.S. banks may sit out small-business rescue plan on liability worries: sources
• "This Is Turning Into A Disaster" - Some Americans Might Wait 20 Weeks Or Longer For Stimulus Checks
• On Eve Of Small Business Bailout, Biggest US Bank Says It's Not Ready To Accept Applications
• Fed minions concerned U.S. recession may have started:
• As millions lose jobs, Fed policymakers say recession is here
• Fed's Kaplan sees severe contraction ahead, more stimulus needed
• More government-mandated dividend cuts coming to EU:
• EU tells insurers to suspend dividends, avoid bonuses in pandemic
• 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:
• OPEC+ debates biggest-ever oil cut as pandemic crushes demand
• FedEx hoards cash, slashes CEO pay amid coronavirus threat
• U.S. dairy farmers dump milk as pandemic upends food markets
• 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:
• Richmond Fed's Barkin: Employment numbers to get worse before getting better
• Fed's Daly says goal is to make jobless rate spike temporary: CNN
• Fed's Mester expects unemployment in U.S. to rise as high as 15% - Bloomberg News
• 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.
• 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.

If you're accessing this article on a site that republishes our RSS news feed, since we've been appending daily updates to our regular weekly analysis in our S&P 500 chaos series during the market's current period of heightened volatility, you may want to follow this link to catch up with the latest!

Update 6:30 PM Eastern: Lots of positive news came out today, with the biggest story being that the situation with coronavirus epidemic improving in the hardest hit places in both Europe and in the U.S., where the U.S.' primary financial center New York City has been very much at the center of the greatest concentration of COVID-19 infections in the country. That, plus some additional Fed relief for companies seeking cash and the Japanese government's commitment to a 20% of its GDP stimulus package sent stock prices around the world upward on the day.

The news boosted expectations for S&P 500 dividends in 2020-Q3 and 2020-Q4, but more notably prompted the S&P 500 to rise 7.03% to close at 2,663.68.

With some luck, perhaps the start of a good trend, though we don't think anyone yet fully appreciates the full extent of the impact to the world's economies, which we suspect will be reeling for some time.

Update 7 April 2020, 5:00 PM Eastern: The S&P 500 went through a pretty wide swing today, going from a several percentage point gain to closing down by 0.16% to finish the day at 2,659.41, as it was pulled lower by a drop in oil prices that sent that sector of the market down sharply.

On the other hand, expectations for future dividends in the latter half of 2020 improved, but that may not be fully reflecting what happened in the global oil market today....

In other news, the coronavirus pandemic looks like it will next be hitting Japan fairly hard, with that nation's prime minister declaring a state of emergency, which means lockdowns won't be far behind.

Update 8 April 2020, 7:30 PM Eastern: Another unusually large up day for the S&P 500, with the index rising 3.41% to close at 2,749.98. What made the day unusual was the market's volume of transactions, which was less than half of what it recorded the day before, the lightest for the index since 14 February 2020.

Dividend futures for each of the quarters in 2020 were also up today, but not by enough to explain the rise in stock prices as confirmed by the day's update to the alternative futures chart.

But are we applying the right amplification factor for the S&P 500 since 20 March 2020? We'll explore that question soon!

Update 9 April 2020, 6:30 PM Eastern: If you were doubting the Fed could go any further in its efforts to revive the U.S. economy from the coronavirus recession, you were sadly disappointed today. With the Fed announcing plans to expand its relief efforts to cover businesses with less-than-stellar credit ratings and to expand its backing to non-bank lenders, and developing plans to do more to back main street businesses, Wall Street responded positively to the news. At the same time, the Trump administration began looking past the immediate health crisis to develop plans to restart the U.S. economy, which also provided additional boost.

Together, that news combined to boost both dividend futures, which saw their biggest increase today as the Fed's and Trump administration's actions will help limit the greater reductions investors were fearing. At the same time, the S&P 500 rose 1.45% on a moderate rebound in volume to close the week at 2,789.82. Both are shown in the chart below, and following our discussion of "what is m?", we're showing m = 1.5 beginning 23 March 2020, where it appears this amplification factor has been ranging between 0.8 and 2.0 during these last three trading weeks.

Dividend futures for each of the quarters in 2020 were also up today, but not by enough to explain the rise in stock prices as confirmed by the day's update to the alternative futures chart.

All in all, it was a strong end for the week. With the market closed for the Good Friday holiday tomorrow, we'll be taking an extended weekend after a month of craziness.