16.03.2020 – Daily Report. Naked horror is raging in global trade. After the closure of the borders in Germany and the largely state of emergency in Europe, the DAX slumps to just over 8,400 points at the beginning of the week. The Federal Reserve’s emergency interest rate cut to almost zero was also seen as a sign of panic. What good are cheap loans when companies are toppling over in droves? People need cash to survive.
Frankfurt Stock Exchange plunges to the floor
What a crash on the German stock market: The DAX staggered far below the 9,000 points and recently fell 7 percent to 8,510 points. Overnight, the crashing US futures had caused pure fear among the bulls. The contracts on the US indices were temporarily traded “limit down”, i.e. the minus was capped at a maximum of 5 percent. Gold remained reasonably stable and fell by 1.6 percent to $1,521.
The Great Fed Disaster
The interest rate move by the US Federal Reserve was seen by many brokers as a signal of desperation. For example, the Fed surprisingly cut the key interest rate by a whole percentage point to almost zero percent. After all, the Fed announced a package of measures in coordination with other central banks. In addition, the guardians of the currency want to buy treasuries and real estate backed debt instruments worth 700 billion dollars. So how bad is the situation for the US banks?
No more US stock buybacks
A report by the Financial Service Forum, a lobby organisation of the most important US banks, fits the bill. According to the report, all major banks in the USA, including JPMorgan and Goldman Sachs, want to forgo share buybacks by the end of the second quarter. So it is precisely when the stock market needs support most that liquidity will continue to dry up. After all, the banks have announced that they would rather support distressed companies.
Corona kills hedge funds
Meanwhile, the blog “Dealbreaker.com” reported the first victim of Covid-19 in the hedge fund industry: Solus Alternative Asset Management, known from investments in Toys “R” Us, will close its flagship fund, limit payouts and otherwise work to sell its assets. Solus cited a massive wave of write-offs as the reason – and the corona crisis is making it difficult to raise cash for them.
Asian stock markets in a low dive
On Monday the CSI-300 in China slipped by 4.3 percent to 3,728 points. As expected, production data from industry and retail trade figures were extremely poor. The Nikkei-225 in Tokyo closed with a minus of around 2.5 percent at 17,002 points. The Japanese central bank announced purchases of index funds and other investments. The central bank maintained ist short and long-term interest rate targets.
DAX earnings fizzled out
The DAX had already delivered a richly set table on Friday for all traders who had the right nose. It went up almost to 10,000, then down again. In the end, the DAX shot up by a meagre 0.8 percent on Friday to 9,232 points. Last week, the DAX yield was thus at an incredible minus 20 percent. The DAX also provided evidence that people don‘t need loans, but real support. A Marshall Plan is needed. Thus, the „Bazooka“, i.e. unlimited credits for small and medium sized companies, promised by Finance Minister Olaf Scholz (SPD) deflagrated.
Therefore Northern Italy
If you are currently wondering why Northern Italy, of all places, was hit so hard by Corona, then remember that thousands of Chinese sweatshops with cheap labour around the clock have replaced traditional production in the Italian fashion and leather industry. Just recently, the blog AltNewsMedia pointed out that in recent years, around 100,000 workers from Wuhan and Wenzhou have moved to northern Italy. This is a case of illegal human trafficking by the Chinese triads. Direct flights between Wuhan and Milan will be available again in April. How many people would have avoided a trip to Florence or Venice or positioned themselves correctly in the market if such backgrounds had been widely covered in the German media?
So if you want to trade properly, then consume as little mainstream as possible. Read with us the dissenting voice – we do everything with our small editorial staff to dig out interesting dissident news that has received little attention so far.
Late Rally in New York
US brokers had also been waiting for unfiltered news from Donald Trump on Friday – and he delivered. By declaring a national state of emergency, he demonstrated determination on the one hand – and on the other hand he circumvented the House of Commons, which is dominated by the bitchy Democrats. The Dems, for example, refuse to accept a massive tax cut. Now Trump is immediately releasing federal funds to the tune of 50 billion dollars. In addition, interest rates for university loans, quick tests, mobile test stations, and drastic entry bans are being introduced. Plus small business loans.
The Dow Jones Industrial Index rose 9.4 percent to 23,186 points. On a weekly basis, the Dow yield was down by a good 10 percent. The S&P 500 recovered by 9.4 percent to 2,711 jobs. And the Nasdaq 100 rose by 10.1 percent. Economic data had not slowed down the late rally on Wall Street either: The consumer confidence of the University of Michigan declined significantly in March from 101.0 to 95.9 points.
Celebration on the oil market already cancelled
Trump also reported the increase in the Strategic Petroleum Reserve in the USA, which supports the domestic oil industry. The reserves currently amount to 635 million barrels, leaving only around 90 million barrels for purchasing. America has bunkered oil in huge salt domes for bad times. After the increase on Friday, however, on Monday WTI collapsed by 5 percent to 30.17 dollars and Brent became 6.8 percent cheaper to 33.02 dollars.
What the day brings
The only important economic data is scheduled for Monday with the Empire State Index at 13.30. As always, you will find the overview here: Market Mover
The Bernstein-Bank wishes successful trades
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