- WTI Crude Oil has continued to recover after trading at a low just above $6 per barrel two days ago due to a strong lack of demand for crude oil globally due to the coronavirus pandemic triggering economic shutdowns. It has recovered to reach over $15 per barrel. We may have seen a long-term low price, but the relative lack of demand is likely to persist for a while.
- Most stock markets rose yesterday, most notably the U.S. stock market. Stock markets have been surprisingly strong even as the economic damage of the coronavirus pandemic increases. U.S. indices have regained more than half of their losses, which is technically significant as an inflection point. Many market analysts think the bottom of this bear market has already been reached, but other analysts see further strong falls likely in stocks over the coming weeks and months. There is a strong divergence of opinion. If we see U.S. indices break below lows reached earlier this week, this might indicate a stronger bearish movement beginning.
- The rate of increase globally in new confirmed infections from the coronavirus pandemic is showing signs of beginning to plateau or even fall, although this may be at least partially due to the pandemic moving towards less developed nations, with total confirmed cases of over 2.6 million and a case fatality rate of 6.98%. The number of daily reported deaths globally yesterday rose and is close to an all-time high. The pandemic’s epicenter is still located in New York, but even there it seems likely that the peak of this wave has already been reached, as it probably has in every European nation, but not in the U.S.A. yet as a whole. A world recession or possibly even depression from the pandemic appears to be inevitable, with Goldman Sachs forecasting a 34% drop in U.S. Q2 annualized GDP and other analysts seeing a 30% unemployment rate in the near future. If correct, these will be the worst such numbers seen since the 1930s, but it should be noted many analysts continue to see a much better outlook for U.S. unemployment. The WTO has forecasted that global trade is set to fall by one third.
- Data from New York City suggests that 0.18% of the entire population of the city has recently died while infected with the coronavirus, which is one of the strongest pieces of hard evidence that the disease has a significantly higher mortality rate than any common flu. Similar data from Bergamo, Italy suggests an estimate from between 0.20% to 0.50%, indicating that claims of coronavirus having a significantly lower IFR are unlikely to be accurate. If the case fatality rate is 0.8%, this suggests that almost one-quarter of all New Yorkers have been infected with the disease so far.
- There is increasing discussion of the economic cost of the pandemic in hard hit countries and talk of reopening economies, especially in the United States where the unemployment rate is currently estimated to have hit 15%. Some nations (mostly in Europe) have begun to relax restrictions, notably Germany, Poland, Norway, the Czech Republic, Albania, Italy, and Israel. It is becoming clear that the nations which have suffered least from this first wave are New Zealand, Australia, Norway, Austria, and Israel. The situation appears to be worsening in Brazil, Turkey, Russia, India, Singapore, and Japan, although the Indian lockdown has been surprisingly efficient.
- While the vast majority of confirmed cases are still in Europe and the U.S.A., with the U.S.A. accounting for a little less than one third of all cases, infections are beginning to increase notably in Latin America, especially in Brazil which is confirming more than 2,500 new cases daily. The President of Brazil Jair Bolsonaro has been seen in public recently suffering from a dry cough, leading to speculation he is infected, as he continues to play down the disease as no worse than the flu.
- The price of Gold rose yesterday to trade above $1700 again, but we need to see a daily close at about $1727 or higher before a serious bullish run begins to look likely.
- Currency markets are currently dominated by relative strength in the Australian Dollar, while the U.S. Dollar looks likely to be the weakest currency today.
- Markets have been affected recently by high relative volatility, but this has decreased back to more normal levels, although stocks are still showing relatively high volatility.