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Here is this week's Game Plan
Remember that US & Canada are shifting to Daylight Savings, so depending on where you live it will appear as if North America wakes up 1 hour earlier than usual and data is issued 1 hour earlier.
Over the weekend China issued a gloomy trade report which is likely to reinforce fears that economic growth halved in the first quarter to the weakest since 1990. Beyond that, the Covid-19 continues to advance across the globe, with South Korea, Italy, Germany, Greece, Iran and even the US showing more cases. The market will be keeping a close eye on the credit markets, as stress in high-yield credit is the most unwanted side effect of slowing global growth, weak demand and rapidly rising investor fear.
Heightened volatility is the name of the game.
Themes for the Week:
Covid-19: the virus is the main protagonist and will continue to drive markets in the week ahead, as it spreads across the globe.
Credit Market Stress: after the REPO issues, now Credit Default Swaps are soaring (Especially in Europe) as the Covid-19 has added stress to an already stretched market. One instrument to keep on your watchlist is PHIYX (Pimco High Yield Fund) which is linked to the credit market and will potentially anticipate the moves in SP500.
ECB: the ECB meeting this week should generate some nice volatility as markets are not sure what to expect. A 0.10% cut is priced in by markets, but not by analysts who are not convinced the ECB will cut rates. Whenever there's uncertainty, there's room for volatility.
Fiscal Support: just as we noted last week, more governments will be going on spending sprees to support the economy. These measures are inflationary in the longer term, and at best can give some confidence in the short-term.
Data in the week ahead:
I remain bearish on Dax/Eurostoxx and Crude. I am cautiously bullish Gold. I'm bearish USD and CAD vs. Jpy and Chf.
Please take care of yourselves and your family. Prevention is the best medicine against the Covid-19 so be vigilant but do not panic. The mortality rate remains around 3% at best. As Dalio said recently "The most important assets that you need to take good care of are you and your family. As with investing, I hope that you will imagine the worst-case scenario and protect yourself against it. "
Over the weekend China issued a gloomy trade report which is likely to reinforce fears that economic growth halved in the first quarter to the weakest since 1990. Beyond that, the Covid-19 continues to advance across the globe, with South Korea, Italy, Germany, Greece, Iran and even the US showing more cases. The market will be keeping a close eye on the credit markets, as stress in high-yield credit is the most unwanted side effect of slowing global growth, weak demand and rapidly rising investor fear.
Heightened volatility is the name of the game.
Themes for the Week:
Covid-19: the virus is the main protagonist and will continue to drive markets in the week ahead, as it spreads across the globe.
Credit Market Stress: after the REPO issues, now Credit Default Swaps are soaring (Especially in Europe) as the Covid-19 has added stress to an already stretched market. One instrument to keep on your watchlist is PHIYX (Pimco High Yield Fund) which is linked to the credit market and will potentially anticipate the moves in SP500.
ECB: the ECB meeting this week should generate some nice volatility as markets are not sure what to expect. A 0.10% cut is priced in by markets, but not by analysts who are not convinced the ECB will cut rates. Whenever there's uncertainty, there's room for volatility.
Fiscal Support: just as we noted last week, more governments will be going on spending sprees to support the economy. These measures are inflationary in the longer term, and at best can give some confidence in the short-term.
Data in the week ahead:
- UK GDP m/m
- UK Annual Budget
- US CPI
- ECB Decision
I remain bearish on Dax/Eurostoxx and Crude. I am cautiously bullish Gold. I'm bearish USD and CAD vs. Jpy and Chf.
Please take care of yourselves and your family. Prevention is the best medicine against the Covid-19 so be vigilant but do not panic. The mortality rate remains around 3% at best. As Dalio said recently "The most important assets that you need to take good care of are you and your family. As with investing, I hope that you will imagine the worst-case scenario and protect yourself against it. "
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