Equities Lower, Rates Lower, Gold Up
So much to cover so will use bullet points:
Coronavirus is spreading outside of China and currently most focus is on Italy, South Korea and Japan
This will further strain the supply chain system for the global economy
Equity markets globally open 2% to 3% lower across the board
Investors worried that with markets near all time highs, there is not much room for higher levels
U.S. yields are trading lower with the 30 year U.S. trading at all time low
Fear is forcing investors to buy safe haven assets
Bernie Sanders seems to be gaining a foothold on the Democratic nomination
Still early days, we wait for Super Tuesday to see if he is still the front runner
Smaller currencies trade lower with Australian dollar leading the move lower
China/Asia slowdown will hit the Australian and New Zealand markets hard
In a very worrying development, China has cancelled their annual legislative meetings due to virus!
As China watchers say, watch what the leadership does and not what they say!
This will worry the market, that perhaps China does not have things under control
Airline shares are taking a beating this morning
Easyjet -11%, IAG -8%, Ryanair -9%
Austria halts trains from Italy and consider border controls
Venice Carnival is closed
Vietnam is reporting trouble with supply chain issues
Look for failures to hit Chinese medium and small businesses.
U.S. budget deficit for first 3 months of budget year: $389 billion, up 25% from last year according to Grant’s
And this is during the good times….
Gold is rallying hard, both as a flight to quality, and fears that the only possible reaction by the global leaders:
More fiscal spending i.e. higher deficits
All of which will lead gold higher in the weeks ahead
|Ticker||Date Opened||Entry Price||Stop||Target Price||Current Price||% Change|
|Long EURCHF Put Option, Strike 1.0650, Expiry 15.4.2020||2020/01/15||1.0757 (Ask 0.00620)||1.06030 (Bid 0.00860)||+1.45%|
|Long EXXY:xetr (ETF)||2020/02/04||17.37||16.95||18.75||17.83||+2.65%|
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