In this case, no one in the world considered a scenario where half of the world’s population went into lockdown.  

With that, we continue to see the fractures that emerge from this environment.  First, it was the Treasury futures market. 

Remember last month, in a time when the Fed is trying to force borrowing rates down, slashing rates to zero and cranking up the printing press, the yield on 10-year Treasury futures went UP.   Why?  1) A few hedge funds blew up, and were forced to liquidate long treasury positions (a position that had been working very well for them, until the moment it didn’t).  And 2) global central banks have been desperately selling Treasuries to meet the demand for U.S. dollars from their financial institutions.  To resolve this dangerous market dislocation, the Fed had to step in as the unlimited buyer of Treasuries, to get the market under control.  

Now we have oil.  Not surprisingly, it appears that (at least) the largest oil ETF didn’t factor in the scenario where the global economy shuts-down (demand destroyed), and then two of the most powerful oil producers collude to flood the world with oil supply.  That creates a situation where there is little-to-no storage around the world for oil.  The problem:  When the May oil futures contract expires, the holders of this contract are obligated to take delivery of physical oil.  There’s no place to put it. So, no one wants it. 

So when a multi-billion dollar oil ETF, like USO (designed to track the price of oil), has to sell their May oil contracts, to move into June contracts, they find no buyers. 

And with that, today, we get this chart …