Hey folks, another week where we’ve seen market price expectations continue to challenge all time historical results. Has the lows been made; is the bear market over? Will we make new lows? Get my take in this week’s Round-Up below.
Weekly Sound Bites:
• This week’s move higher (S&P up 17.5% & DOW up 21.3%) in only 3 trading days since 1931 Great Depression in the US…but like 8 out of the last nine weeks, we have seen the market price action close down on Friday in a profit taking mode going into the weekend…however, a lot of this market strength came about due to a massive short covering rally vs a lot of new money being put to work, although I am seeing some money flow back into the markets as big money is nibbling around the edges…given the ultra-low treasury yields, bargain hunters have rushed back into the markets this past week to pick up stocks with high dividend yields…
• In President Clinton’s State of the Union Address in 1996 he stated, “The era of big government is over”…well not quite…in a months’ time the US Economy has moved from the best employment and expansion period in history to the depths of an abyss…the move has been shocking and unexpected….Central banks globally have announced very strong stimulus measures in order to curb the economic fallout…The Feds have slashed key interest rates down to 0% to .25% with a “whatever it takes” QE programs that starts at $700 Billion…in addition, the US Congress passed a $2 Trillion stimulus package (which exceeds the 2008 Financial stimulus) signed by Trump this past Friday that will hopefully provide some near term relief to consumers and businesses across the country…it also represents about 9% of the US GDP…quarantines around the world have had a severe impact on the global economy….specifically, the velocity of money has slowed dramatically and the economic engine has all but ground to a halt…
• There is another risk to the Global economy and that is Deflation…virtually all commodity prices have fallen dramatically during this month…a good example can be seen in the oil markets with WTI dropping below $22 per barrel…and with interest rates so low the biggest key to fighting deflation is to get the Economic engine going again…so once we get this moving and business shutdown restrictions are lifted we will see an immediate reaction across most commodity markets as asset prices will be re-inflated…
• In a bit of good news China seems to be getting back to work as they will be lifting their lockdown on Wuhan as they begin to open their factories and people get back to work…although in looking at the US Jobless Claims report this past Thursday we saw over 3.2 million claims which was up over 1,000% from the previous week…as this large number was expected, markets actually moved higher after the numbers were released…
Weekly Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
