A Red Sweep
With few exceptions, most countries affected by the current pandemic opted for a complete or partial lockdown. Thus, working from home is for many, a dream come true. Being able to complete tasks online without seeing your boss, while watching Netflix series and being paid seems ideal. Especially if you are a millennial... But, this situation is not sustainable, because the luxury of working from home depends on the growth of the GDP, which relies heavily on consumption. No consumption means no GDP growth, no growth means no financing and no financing means no salaries for those working in the services sector.
The conditions that led to mass unemployment during the Great Depression are in some ways similar to what is happening right now. It is difficult to restart a frozen engine and it is even more difficult to restart an economy paralyzed by a lack of demand.
Governments should focus more on how to get people out of their houses back to work and limit the lockdown period as much as possible. If the lockdown is too long, it might be irreversible for most of those confined in their houses. The underlying risk of this strategy is to face mass unemployment in a services-oriented economy.
When the Lamb broke the fourth seal, I heard the voice of the fourth living creature saying, "Come." I looked, and behold, an ashen horse; and he who sat on it had the name Death; and Hades was following with him. Authority was given to them over a fourth of the earth, to kill with sword and with famine and with pestilence and by the wild beasts of the earth. (Revelation 6:7–8)
The stock market contraction is relatively smaller than the 2008 crisis and is far from being comparable to 1929. But, we are not yet at the end of the road. Over the past week, the Dow Jones continued to drop and found support at 19,000. After the early week crash, the Brent Crude Oil contract observed a relatively small recovery, but trades in a region of high volatility around 27 USD. The price of the gold ounce was resilient, and it dropped to 1,500 USD only because institutional investors were rebalancing their portfolios.
Financial institutions underperformed the leading market indices and observed more significant contractions. European banks like Societe Generale, RBS or Deutsche Bank seem to be more impacted, while Goldman Sachs is for the moment in a better position. If the current situation continues, several banks would require bailouts as they required in 2008. The analogy stops here because, amid current conditions, the financial sector is not the only one that will need rescue.
Bitcoin had a rather hectic evolution and moved into positive territory after reaching an alarming yearly low level at 4,400 USD. There are signs that the Chinese economy looks for a way back to normality and this could affect positively the Bitcoin price. We may observe spikes and sudden drops in price as speculators will try to arbitrate the few big transactions in the market.
Bitcoin is doing better than other crypto-currencies. Ether and Ripples lost over 60% since the beginning of the pandemic and their outlook is negative.
We all know that the trend is negative. So the only question is how negative it will be? The answer depends on the timeline of the shutdown. A cure or drug diminishing the risk of contagion appears over the next two weeks could hinder the market fall. Under the current scenario, the market can move deeper into negative territory. The equity market could touch the level before the 2008 credit crunch.
General Disclaimer
The information and data published in this research were prepared by the market research department of Darqube Ltd. Publications and reports of our research department are provided for information purposes only. Market data and figures are indicative and Darqube Ltd does not trade any financial instrument or offer investment recommendations and decision of any type. The information and analysis contained in this report has been prepared from sources that our research department believes to be objective, transparent and robust.
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A Red Sweep
Spooky Sell Signal
Gold Shines at New Highs
The ECB Cuts Again
Slowing Disinflation
Golden-Week Rush
China’s Massive Package
The Fed’s Big Rate Cut
The ECB Cuts Again
Banks Turn Bearish On China
Million-Dollar Gold Bar
Bonds Are Back
Black Monday
Diverging Rate Decisions
Still Strong
Smaller Is Better
The Name Is Bond, Green Bond
Landslide Victory
AI-Frenzy Takes a Break
Bye Apple, Hello Nvidia
The Fed Stays Put
An Indian Rollercoaster
The Name’s Bond, Convertible Bond
Nvidia Does It Again
A Small Relief
From Boom To Bust
Higher For Longer
Still Magnificent
Halve And Havoc
Stubborn Inflation
Choc Shock
An End Of An Era
Britain Bounces Back
China's Goal
Bye iCar, Hello iAI
Nvidia Beats Expectations
Germany Overtakes Japan
Riding The Dragon
China’s Falling Behind
India Outshines Hong Kong
Aging Dragon
US Inflation’s Accelerating
Tesla Lost Its Crown
2023 Market Wrap-Up
The Last Samurai
Fed Teases 2024 Rate Cuts
Bond Market's License to Thrill
Cyber Week Bonanza
OpenAI's Leadership Shuffle Drama
Inflation’s Cooling In The US And UK
Back Into Deflation
Triple Hold On Rate Hikes
The US Economy Is Still Flexing Its Muscles
Inflation’s Refusing To Come Down
Investors Are Bracing For A Dip
An End In Sight
Rate Hike Recess
End Of An Era
China's #1 Ambitions Are Fading
Americans’ Piggy Banks Are Running Low
Trying To Break The (Wage-Price) Spiral
China: A Nation In Deflation
Uncle Sam Gets Downgraded
Twin Hikes
Stagnating Dragon
A Tale Of Three Inflation Stories
Silver Is Shining Bright
UK Inflation: Defying Gravity
The Fed Calls A Timeout
A One-Two Punch
Shrinking Dragon
Keep Calm And Carry On
The AI-ffect Of The AI Mania
SLOOS: Crunch Time Looms
Last Republic
LVMH Pops The Bubbly
India Takes The Population Throne
The End Is Nigh
OPEC Drops the Pump
Why Gold Is Glittering
Can't Stop Won't Stop
To Hike Or Not To Hike
China’s An Underachiever
Cash Is King
What Energy Crisis?
The Name’s Bond, Japanese Bond
The AI War Has Begun
Hikes Everywhere
What Recession?
Shrinking Population
Grab Your Box And Leave
A Gloomy Prediction
It's Darkest Before The Dawn
Elon Fires Himself…
Triple Whammy
No More Zero-Covid?
Eight Billion And Counting
Another One Bites The Dust
No Santa Pause
Big Tech, Big Disappointment
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