2020-03-27 • Updated
As mysterious as it sounds, the truth is quite mundane: there will be further recovery upwards or another drop. The only thing that observers are certain about is that no one really knows what it will be. It helps little though. However, it is useful to weigh the factors standing behind the two possible scenarios. Here is what we are looking at.
People are worried that the stock market recovered really fast after reaching the last low. The logical question is whether it was a true or false bottom.
Dow Jones was at the low of 18,592 on Monday, and the recent level it rose back to when the markets closed last was 21,200: that’s a 14% rise in 3 days.
S&P started at 2,175 the same Monday, and made it up to the current 2,566: an 18% recovery up to date!
All of this is more than just impressive – it is unseen. This is what makes people worried.
Because it would take months or even a year to have a 10% market decline. Also, it takes many more months and approximately 1.5 years to get back up from a 20% drop. That is, based on the observations and approximations of the previous crises. S&P fell from 3,400 to 2,175 – a 35% drop in 6 weeks. Superfast. After, it reconquers a third of that loss in just 3 days – even faster. Market observers just don’t really know what to do with that speed although they understand what is happening and why. Very importantly, they understand that the world economy itself functions within normal boundaries.
We have a novelty of the current crisis in the fact that most of the previous crises were caused by “internal” economic deficiencies of states. On the contrary, the present one is due to the “externally enforced” depression which is taking place because of the virus rather than purely economic reasons. That is neither good or bad as such, but it definitely adds more uncertainty as the financial authorities and governments essentially have to invent the way out of the situation.
On the other hand, we have a strong commitment and equally strong measures in place from the side of the governments and the central banks. $2trln injected into the American economy is one of the most stunning recent acts taken by the Fed, unprecedented and hopefully as effective, and that is just one example of how state authorities fight the virus consequences, separately and collectively. Therefore, there are many reasons to see the light at the end of the tunnel amid the oddity of the situation.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
Welcome to October, the tenth month of 2023. For this installment of What to Trade, I have handpicked a few of my favorite trade ideas for the month. Let’s go over a few of them.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
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Don’t waste your time – keep track of how NFP affects the US dollar and profit!
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