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

              Lower rates

              Print money

              All of which will lead gold higher in the weeks ahead

A picture is worth a thousand words!  Gold heading higher, although a bit overbought short term.

Support $1,660

Resistance  $1,700

We would expect oil to suffer in the scenario where global activity continues to slow:

Not a pretty start to the week. We think it is too early to buy dips!

Contact us if you are interested in receiving real time trading signals. In doubt? Check out our track record below!

TickerDate OpenedEntry PriceStopTarget PriceCurrent Price% Change
Long EURCHF Put Option, Strike 1.0650, Expiry 15.4.20202020/01/151.0757 (Ask 0.00620)1.06030 (Bid 0.00860)+1.45%
Long EXXY:xetr (ETF)2020/02/0417.3716.9518.7517.83+2.65%

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2019:   31 Trades, Hit Ratio 45,16%, Profit +26,97%

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