Did the Fed manage to bring down the panic?

By 16/03/2020News
Morning Stock News

Gold   1544,66
(+0,99%)

EURUSD   1,1123
( +0,22%)

DJIA   21945
(-3,85%)

OIL.WTI  31
(-5,98%)

DAX   9621,20
(+ 0,01%)

On Friday, all risky and non-risky assets showed a powerful rebound. Nevertheless, the week was the worst for the markets in the last ten years. The last time this kind of volatility was observed in the crisis of 2008. This is exactly what we will recall today for investors who came to the market later and cannot know what was going on then.


Chart of the day S&P500

Chart of the day S&P500


Indices

In a wave of panic in 2008, the Fed did things that it had never done before. For example, at the extraordinary meeting the interest rate was reduced by 0.75 base points at once. The market was immediately optimistic, and it literally took off that day. Look at the chart above. Does it remind you of anything? A panic sale, then the Fed fills the market with money and Friday’s green candle is almost equal to the previous red.

But what happened next, the cold autumn of 2008? It turned out that the market was just beginning to fall. The minimums were shown after 4 months and a huge number of speculators, working with the leverage and buying “at the bottom” broke. Nobody knows the future. What will happen in the next 3-4 months is a mystery. The main thing, taking into account the sharply increased volatility, is to be extremely attentive when using a leverage.


POUND

We haven’t paid attention to the British currency in a long time. After Brexit, the situation has calmed down. However, for the last 5 trading days, the pair pound / dollar fell by 9 points. Most likely, these are another speculators’ games. Other things being equal, it is easier to observe quarantine measures on a separate island than in united Europe. Meanwhile, the British pound keeps a positive swap paired with the EURO. Accordingly, its decline, especially against the backdrop of the EURO, looks excessive.


GOLD

In spite of Friday’s reigning positivity associated with new liquidity, gold fell sharply again. Investors and speculators are in complete confusion. The critical support level is the price of 1500$ per troy ounce. It is possible that this week we will see a break-down, which will be false and will form the low of 2020.


What’s waiting for us today?

03.00 Industrial production level in China for February

13.30 New York Federal Reserve Manufacturing Index for March

21.00 Total volume of securities purchases by foreign investors in the USA for January


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