Something does not add up

Yesterday proved eventful to say the least as the equities initially continued with the bounce off the lows but the metals detached and started to drift and for the greater part the trade customers are standing aside or selling LME against unwanted physical metal. Then the Fed came in with a 50 bps cut as an emergency measure to combat the effects of the Coronavirus and the first time such action has been taken since 2008. These days the markets are so full of algorithms that see the headline and automatically buy everything. However after rallying 400 points the Dow reversed and dropped 700 as human minds realised the real issue that the global economy is going to suffer just the same as the Chinese one has. To drive the point home in this mornings date from China the Caixin Services PMI for February collapsed to 26.50 from the January number of 51.80 and that is the reality of what is to come. China appears to have pretty much contained the outbreak with only 200 reported cases yesterday but to achieve this has used its huge powers to restrict movement and effectively lock down the country. Such a lockdown outside China is more unlikely and as the outbreak spreads other economies including the USA will temporarily almost grind to a halt. Major corporations will start posting profit warnings and it is hard to see how the equity markets will not fall further no matter how much cheap money is available. In metals there seems to be another disconnect and that is in the LME stocks , the physical markets are dead but there has been concerted efforts to try and keep copper above $5700 with yesterday’s 17k tons of cancelled warrants looking like nothing more than an attempt to influence the price as who actually wants the metal? With major banks such as Goldman Sachs and Morgan Stanley saying the worst is yet to come it feels as if there could be issues with metals secured financing as there are some big physical trading books out there and the buyers are standing well aside.Face masks , rate cuts and liquidity are simply not going to make the effects of the Coronavirus go away how many trillions of dollars are tied up in interlinked multi asset investments and whose nerve will break first?