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Posted (edited)

Following up on last week's post we had some big numbers and moves happen. Non-farm payrolls were -700k vs -100k expected. Analysts were off by 700%! If that is not scary by itself, then is the fact that those numbers were pre-COVID-19 lockdown! April, which is the month we will be getting data more up to date is going to be scary to say the least. My predictions on 15% unemployment mid-year might even not be enough! In my opinion, we can safely say unemployment rate will end up more than 10% if it already is not. Those numbers will keep increasing. The stimulus bill has given incentive to be unemployed. The benefits of being paid your full salary for a year, while getting extra weekly benefits until July 31st, has raised the question of why an individual should even risk to work or look for a job under these conditions or afterwards? Switching to Europe, no progress has been made as Germany still refuses to grant liquidity and relief through bond purchasing, with Spain and Italy hurting the most, France starting to get irritated, we can expect those tensions to keep rising. As I will attach below is the total exposure on credit obligations France has on Italian banks, we want to pay close attention to how things develop. Nonetheless, the combination of those events and dollar strength has weighed on the EUR, and as mentioned last week, has fallen. It closed on Friday at 1.08 dropping from 1.11 at the start of the week. A pull back could be expected but I see it reaching the mentioned target of 1.05-1.06 eventually. The pound also took a beating dropping as well but still far off my target. As risk-off sentiment keeps growing, more and more investors will be pulling out their money off the stock market. This is important for GBPUSD as of late is closely correlated with the performance of the SPX. My prediction for the SPX still stands and I believe the sooner the market realizes the economic downside the better. In my opinion, the market is currently underestimating the economic consequences we have suffered. Lastly, let’s talk about oil. After Trump’s tweet mentioning production cut agreement with the Saudis and Russia, oil made a historic surge up to 40%, with Kremlin dismissing any confirmation. However, a meeting is expected on Monday to discuss current oil prices. I say take it with a grain of salt and watch as things develop. No matter the supply cuts the problem here is aggregate demand which cannot be addressed at the moment.

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Edited by tasosbtj777

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Posted (edited)

Crude oil setup. In my opinion, oil likely to make a move as production cuts agreement to go through. Tight stop loss.

Edit 2: Locked in profits as uncertainty arises about the amount of BPD cuts.

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Edited by tasosbtj777

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