2 trillion reasons to calm down and 3 million reasons to worry

26 Mar 2020

The main event of yesterday was the approval by the US Senate of an emergency $ 2 trillion emergency plan. The plan provides $ 1,200 direct payments to low-income Americans, $ 500 billion will be provided in the form of loan guarantees, $ 350 billion will be used to help small businesses.

Against the background of this information, the markets perked up a bit. But for now, we see no reason for global repositioning. The pandemic is in full swing, the damage from it is measured in tens of percent of GDP, so we will use any increase in stock indices for selling shares.

After all, things are bad. New York is becoming the center of an epidemic in the United States and is under siege. California (a quarter of the US economy) may remain in the lockdown for another 8-12 weeks. India is quarantined for three weeks. Great Britain closes Parliament. So repositioning is still very premature.

In addition, today markets will face one more challenge: US jobless claims. A number of experts voice fantastic 3 million initial jobless claims (the average figure recently has been 220K). Recall that the most significant jumps in the indicator were about 8 years ago during the hurricane Sandy. But even then the number was less than 281K (this value was recorded last week). That is, 3 million claims against this background look as terrible and scary as possible.

So dollar sales are still relevant today. Recall that the Fed is ready to make an unlimited injection of dollars, which is a threat to the dollar # 1.

In the oil market, meanwhile, there is an active undercover fight. Nothing is known about its actual results. But, in our opinion, a telephone conversation between US Secretary of State Mike Pompeo and Crown Prince of Saudi Arabia Mohammed bin Salman is very revealing. The Trump administration is clearly trying to persuade Saudi Arabia to abandon the plan to dramatically increase oil supply as part of a price war with Russia