Week in a glance: not a day without records, our positions
Each new week is trying to be even more eventful than the previous one. And so far, in general, it turns out. At least judging by the last week.
The week began with optimism caused by the approval by the Senate of record aid from the US government. Its size exceeds $ 2 trillion, which is unprecedented cases in the history of mankind, and not just the US. In this light, the growth of US stock indices is generally justified and logical, especially if we recall the Fed's zero rates and an essentially unlimited program of quantitative easing. Here, we have another record: the growth of US stock indices on Tuesday became the biggest since 1933. According to experts, the Government and the Central Bank in total are ready to pour in US economy up to $ 6 trillion ($ 2 trillion + $ 4 trillion).
The main problem with the current growth of US stock indices is that it is only temporary. Last week will be remembered by another records, but this time with a “-” sign. For example, the United States has become the world leader in the spread of the epidemic. It takes only 2 weeks. Given the pace of the epidemic in the United States, its economy runs the risk of massive damage. Actually, analysts are already talking about it: at Goldman Sachs expect a drop of 24%, and Morgan Stanley - by 30%. The President of the Federal Reserve Bank of St. Louis, James Bullard, expects a fall in GDP by 50% (!) with unemployment at 30%.
Weekly data on initial jobless claims in the United States confirmed the most pessimistic forecasts. The indicator grew by almost 3.3 million (!). This is an absolute record for the entire history of observation, which is also almost 5 times higher than the previous anti-record.
So the worst for the US economy is yet to come. This means that the stock market is doomed to a further fall. That is why current growth is just a great opportunity for sales.
The next candidate for sales is the US dollar. The largest economic loss in history is not a reason for the growth of its national currency. The dynamics of the dollar last week confirmed this. But the most interesting thing is that the dollar has just begun to move away from the maximum levels, so sales from current prices look like a fairly promising deal. Therefore, we sell the dollar. First of all, against the Japanese yen, in order to further participate in the purchase of an asset-refuge (we are talking about the Japanese yen).
Considering that panic in the financial markets, despite all the measures of governments, remains at the highest levels since the global financial crisis, gold purchases remain another promising idea. Actually last week the asset showed what it is capable of. In just a couple of days, gold rose by more than $ 100. Again, this growth is not yet complete. The re-test 1700 seems to be the inevitable and only logical scenario. But even this peak is most likely not limited to. The further goal is 1800, and there already before 2000 it will be at hand. So we buy gold, there have been no more ideal conditions for its growth for many decades (if at all there have been 100 in recent years).
Another interesting result of the week was the formation of the bottom in the oil market. Despite all the negativity that prevails in commodity markets, oil has clearly exhausted its downward potential. This is logical, current prices are already either lower (USA) or at (Russia) cost price. Vivid evidence in favor of this was the maximum decrease in the number of active oil installations in the United States over the past 35 years (hello another record). That is, current oil prices are indeed below cost. The curtailment of production will lead to a drop in supply in the oil market, which in turn will provoke an increase in oil prices in the future. So there’s basically nowhere to drop oil. This means that oil remains a fairly promising medium-term position in itself and will serve as a hedge for sales in the stock market. OPEC+ is going to end this week. But what if: “The king is dead, long live the king”.
The week began with optimism caused by the approval by the Senate of record aid from the US government. Its size exceeds $ 2 trillion, which is unprecedented cases in the history of mankind, and not just the US. In this light, the growth of US stock indices is generally justified and logical, especially if we recall the Fed's zero rates and an essentially unlimited program of quantitative easing. Here, we have another record: the growth of US stock indices on Tuesday became the biggest since 1933. According to experts, the Government and the Central Bank in total are ready to pour in US economy up to $ 6 trillion ($ 2 trillion + $ 4 trillion).
The main problem with the current growth of US stock indices is that it is only temporary. Last week will be remembered by another records, but this time with a “-” sign. For example, the United States has become the world leader in the spread of the epidemic. It takes only 2 weeks. Given the pace of the epidemic in the United States, its economy runs the risk of massive damage. Actually, analysts are already talking about it: at Goldman Sachs expect a drop of 24%, and Morgan Stanley - by 30%. The President of the Federal Reserve Bank of St. Louis, James Bullard, expects a fall in GDP by 50% (!) with unemployment at 30%.
Weekly data on initial jobless claims in the United States confirmed the most pessimistic forecasts. The indicator grew by almost 3.3 million (!). This is an absolute record for the entire history of observation, which is also almost 5 times higher than the previous anti-record.
So the worst for the US economy is yet to come. This means that the stock market is doomed to a further fall. That is why current growth is just a great opportunity for sales.
The next candidate for sales is the US dollar. The largest economic loss in history is not a reason for the growth of its national currency. The dynamics of the dollar last week confirmed this. But the most interesting thing is that the dollar has just begun to move away from the maximum levels, so sales from current prices look like a fairly promising deal. Therefore, we sell the dollar. First of all, against the Japanese yen, in order to further participate in the purchase of an asset-refuge (we are talking about the Japanese yen).
Considering that panic in the financial markets, despite all the measures of governments, remains at the highest levels since the global financial crisis, gold purchases remain another promising idea. Actually last week the asset showed what it is capable of. In just a couple of days, gold rose by more than $ 100. Again, this growth is not yet complete. The re-test 1700 seems to be the inevitable and only logical scenario. But even this peak is most likely not limited to. The further goal is 1800, and there already before 2000 it will be at hand. So we buy gold, there have been no more ideal conditions for its growth for many decades (if at all there have been 100 in recent years).
Another interesting result of the week was the formation of the bottom in the oil market. Despite all the negativity that prevails in commodity markets, oil has clearly exhausted its downward potential. This is logical, current prices are already either lower (USA) or at (Russia) cost price. Vivid evidence in favor of this was the maximum decrease in the number of active oil installations in the United States over the past 35 years (hello another record). That is, current oil prices are indeed below cost. The curtailment of production will lead to a drop in supply in the oil market, which in turn will provoke an increase in oil prices in the future. So there’s basically nowhere to drop oil. This means that oil remains a fairly promising medium-term position in itself and will serve as a hedge for sales in the stock market. OPEC+ is going to end this week. But what if: “The king is dead, long live the king”.
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