Unemployment Thursday (Yes Today!)
As I survey the markets:
Equity markets are supported by:
Positive vaccine news
Strong ISM manufacturing index in the U.S., and some other positive economic reports.
Committed Central Banks and Governments
Lack of alternatives
The same markets are not bothered by:
Worsening Covid-19 developments globally, especially in the U.S., over 50,000 new cases yesterday in the U.S. alone
Tokyo reports highest number of virus cases in two months
New sanctions most likely on China
Fed informing that it will take a long time before the U.S. economy returns to normal
Fed’s Bullard says that the U.S. is still in the middle of a crisis
Hong Kong makes national security arrests.
It will be interesting to see if in the coming months, that Europe with its more aggressive lockdown policy sees better relative growth as it opens up, compared to the U.S. which appears to be struggling from shutting down too slowly and reopening too quickly.
Since the middle of May, EU 50 has outperformed both the S&P and Nasdaq! More of this to come?
Since May 15th the EURO is up 4.3% against the USD
Key themes for us:
The equity markets in the U.S. are difficult to buy (valuation, pandemic) but also difficult to short (vaccine, Central Banks)
Gold: we still like buying dips, we expect a test higher on the back of low rates, exploding debt levels and flight to quality.
Brent Crude Oil: Feels to us we are still in a $35 to $45 range, while market deciphers global growth prospects.
EURNOK: benefitting from risk on. Looks to be in a 10.50 to 11.00 range for the summer. Guided by risk on/risk off.
Gold mining stocks/ETFs: We have written many times bout how we like these as part of a portfolio longer term. Still the case.
Please note some interesting graphs from Saxo analysts:
|Ticker||Date Opened||Entry Price||Stop||Target Price||Current Price||% Change|
|LONG Austevoll Seafood ASA (AUSS:xosl)||2020/06/02||76.75||72.00||SPREAD TRADE||78.00||+1.63%|
|SHORT Leroy Seafood Group ASA (LSG:xosl)||2020/06/02||56.75||SPREAD TRADE||SPREAD TRADE||57.20||-0.79%|
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2018: 45 Trades, Hit Ratio 53,66%, Profit +35,87 %
2019: 31 Trades, Hit Ratio 45,16%, Profit +26,97%
– Mark W