March 15 Market Update | Technicals, Fundamentals, News
Description:
An analysis for the week ahead.
Points of Interest:
200 weekly moving average; Friday’s low; trend line projected from 2009 and 2011 lows; the 2018 low, as well as 2015 and 2016 distribution area; 2720 balance area for retracement; cycle analysis.
Technical:
Broke out of a week long balance Thursday (i.e., cluster that included a 100.00% projection, 161.80% and 127.20% extension). Friday’s rally failed to take value with it and so now Friday value is overlapping Thursday’s value. /NQ cleared out some poor structure below 8070 to 7550 (i.e., untested POCs or the levels at which the most amount of volume was traded) created by the market getting too long, beneath /ES February high.
Sunday’s open and Monday trading to help us determine if there is a break out of the two day balance area, accepting Friday’s spike and moving lower towards new targets. If we continue the trend, immediate downside /ES targets include 2300, 2140 and 1900. Cycle low at 3/20. Cycle high 3/16-3/17 and 3/24-4/3.
Index Analysis:
$SPX:
SPX
$RUT:
RUT
$NDX:
NDQ
$DJI:
DJI
$NYA:
NYA
$UKX:
UKX
$NI225:
NI225
Futures Analysis:
/GC:
/CL:
/NG:
/ZB:
Fundamental:
‘Help! I’ve Fallen, And I Can’t Get Up!’: According to ARK Investment Management, prior to COVID-19 entering the U.S., consumer confidence, spending and business were improving. "The US Purchasing Managers Index had plummeted to a four year low. Consumers have been responding to record low unemployment rates and accelerating wage gains while businesses have been unsettled by various #trade conflicts and flattening to inverted yield curves." Ark suggests that inverted yield curves (which usually precede recessions) were a commonplace during periods of disruptive innovation, leading up to the 1920s. That said, what does all this information mean for a subsequent recovery? Well, Ark suggests that lags in inventory and capital spending are worrisome; "While real GDP could be hit through mid-year by cancelled flights and conferences and other business disruptions causing another round of inventory and capital spending cuts, the rubber band associated with a global rebound has been stretching for more than a year now." In other words, Ark thinks we may experience a V-shaped recovery. (bit.ly/3d1vpg2)
U.S. Expansion: “Economic activity expanded at a modest to moderate rate over the past several weeks, according to the majority of Federal Reserve Districts” (bit.ly/3aEOTFk). Adding -- "Outlooks for the near-term were mostly for modest growth with the coronavirus and the upcoming presidential election cited as potential risks." BlackRock came out with some statements: "We don't see this as an expansion-ending event — provided that preemptive and coordinated policy response is delivered” (bit.ly/2vm2R01). Also, the OECD lowered it’s GDP growth projections, viewable at (bit.ly/33idzB1), alongside Goldman Sachs’ Q2-Q4 earnings recession projection (bit.ly/39SdNBo). View the article at (bloom.bg/3d4uX0X). Noting -- inflation was uptrending prior to the virus debacle, but shortly after 10-year expectations took a massive poo-poo (bit.ly/2WfhXPU). Inflation stimulates production; more green = more buying = more demand = more production.
‘99 Problems’ And Liquidity Is One: Investors have observed disruptions in the U.S. Treasury market as shown by wide spreads and difficult transaction completion. In a Reuters article syndicated by NYT, "Market participants attributed some of the liquidity gaps to banks and computer-driven trading programs paring back their trading or limiting the size of their trades due to the volatility in markets” (nyti.ms/2TO9JfW). If you want to see how markets traded around the numerous trade halts this week, visit bit.ly/2IO8Fm8. Additionally, the NYSE put out a bulletin basically saying they will stay open and that electronic trading capabilities are sufficient in case any closures are necessary (bit.ly/2QgBawH). Adding, the FRA/OIS spread (a money-market benchmark that measures differences between forward-rate agreements and index swaps) -- a key gauge of banking risks -- rose alongside the widening of dollar swap spreads; “The cost to protect against default on investment-grade credit jumped to the highest in more than a year” (yhoo.it/2QcNeir). Not indicative of impending doom, but interesting nonetheless.
Talk Of Credit Crisis: According to Bloomberg, the fear that a coronavirus-panic and slowdown may cause a credit crisis was ignited this week after financial conditions tightened despite the Federal Reserve’s emergency rate cut (bloom.bg/2TydohN). Now, according to CME Group’s FedWatch tool, the market is pricing in a 100% chance that rates will be cut at the next Fed meeting (bit.ly/2TCxasN). Adding, Bloomberg suggests that signs of stress in the credit market are apparent through multiple channels; credit card and loan delinquencies are appearing on the consumer lending front, while across the world, “Non-bank companies have drastically upped their leverage since the last crisis, as treasurers have taken advantage of historically low interest rates” (bloom.bg/2TydohN). The same article alleges that this increase in debt and leverage is a problem, even in a low rate environment, due to the “profitability drought that is making it harder for companies to service debts.”
Fear Prevails: Some speculation around last week’s sell-off after the emergency rate cut was fed-induced fear -- “A quick response might exacerbate the market sell-off because it could suggest panic on the part of policymakers. It may also be ineffective because monetary policy moves such as rate cuts typically take a while to feed through to the broader economy,” according to Reuters (reut.rs/2v51tid). Since then, the Fed has introduced $1.5 trillion in repo injections, helping buoy the US30Y and DXY (bit.ly/33kdjBS).
‘Hello, goodbye’: Oil took a dump as Saudi Arabia escalated tensions with Russia. The intent of a heavy supply increase is to get the Russian’s negotiating. Read more about this chicken fight at reut.rs/2INzgQc. What happens to the United States? Well, according to Reuters, "'U.S. production is likely less well hedged than the market realizes,' said Michael Tran, managing director of energy strategy at RBC Capital Markets in New York” (reut.rs/2TNGCJQ). Basically, producers bought protective put spreads and collars which only hedged from normal (expected) declines. What happened wasn’t quite expected, and so, some firms, like $APA and $CLR are facing severe trouble. Here are break-even prices for oil producing countries (tmsnrt.rs/2QbTAyI). On a side note, lower oil prices will be good for consumers and growth (bit.ly/2IIFgK2).
Supply Risks: Joe Brusuelas of RSM expects supply shocks to roll from Asia, to Europe and then North America, "with the worst impact for businesses to come in April and May” (bit.ly/3cV15nD). Additionally, an ISM survey indicates that the virus caused supply disruptions for 75% of U.S. companies, leading to a hit in revenues (bit.ly/2IOsp9b).
Delinquency rates move higher (bit.ly/2QhAGq6); I detailed subprime auto-loan issues in a Benzinga.com article I wrote late last year (bit.ly/2vXjFec).
Sentiment: 29.7% Bullish, 19.0% Neutral, 51.3% Bearish as of 3/14/2020. (bit.ly/330VhEp)
In The News:
‘V-Shaped’ Recovery: Despite the rapid increase in coronavirus cases (bit.ly/2VWCvN6) across the rest of the world, China seems to be recovering. According to Bloomberg, “Reservations for domestic flights and hotels in China are recovering from a coronavirus-induced slump as people return to work across the nation” (bloom.bg/38CeEES). Additionally, Chinese cargo flows at ports are recovering, according to Freight Waves (bit.ly/3cHVgK0).
Slowdown Hits Hard: Countries like Italy have seen a rapid rise in deaths (nbcnews.to/3aEJZrU) and international travel is getting beat hard; “Travel analytics company ForwardKeys found that flight bookings to Italy fell by nearly 139% in the final week of February, compared with a year ago, the Washington Post reported,” according to Axios (bit.ly/2Txjdw4). The slowdown in travel is expected to cause almost $113 billion in losses for airlines, according to Guardian (bit.ly/333Y1Rf).
“Bruno Braizinha at Bank of America had this perspective, earlier this week: When we abstract from the near-term noise and volatility and refocus on year-end scenarios we find two limiting cases: (1) a U.S. recession scenario with the pricing of the Fed to the Zero Lower Bound, which implies 20 basis points for two-year Treasuries and 50-80 basis points for 10-year Treasuries; or (2) an upswing back to trend growth as the coronavirus outbreak dissipates, which likely implies a Fed on hold after a 50 basis-point cut (two-year Treasuries around 1.1%) and 10-year Treasuries in the 1.5-1.7% range. A 50/50 weighting of these scenarios implies a 1-1.25% range for 10-year Treasuries at year-end. With forwards currently around 1.1%, the market seems to be assigning a marginally higher probability to the bullish rates scenario (bearish risky assets) for end-2020.” (bloom.bg/2TT0JF4)
“There is also reason to worry about international debt. According to the Bank for International Settlements, some $17 trillion is owed by non-U.S. corporations without what CrossBorder Capital describes as “obvious U.S. dollar access.” It is hard to see how this will be refinanced without resort to further quantitative easing, just as some of the worst pain for individuals and small businesses to emerge from the virus may require helicopter money drops. None of this makes a credit crisis inevitable, and it should certainly be possible to avoid a crisis on the scale of 2008. The scale of the fear should increase the scale of the subsequent recovery if credit issues can be eased. But the fear that the coronavirus will be the trigger to spark the next generalized credit crunch is widespread, and is rational.” (bloom.bg/2TydohN)
“High yield and investment grade CDX spreads are at their highest levels in over a year, and have widened materially this week. In the case of the junk, an optimist's explanation might be “well, that’s down to energy – an increasingly small part of the S&P 500, so it shouldn't ring alarm bells.” High-yield CDX had its biggest daily widening since 2015 on Thursday. But it’s fairly rare for the S&P 500 to be up 0.8% or more in a week with investment-grade CDX at least five basis points wider. The last time that happened was in September 2018. In other words, the top of the 2018 markets before that year's fourth-quarter rout in risk assets.” (bloom.bg/2TzvoZ7)
An energy price slump may hurt: “While many drillers in Texas and other shale regions look vulnerable, as they’re overly indebted and already battered by rock-bottom natural gas prices, significant declines in U.S. production may take time. The largest American oil companies, Exxon Mobil Corp. and Chevron Corp., now control many shale wells and have the balance sheets to withstand lower prices. Some smaller drillers may go out of business, but many will have bought financial hedges against the drop in crude.In the short run, Russia is in a good position to withstand an oil price slump. The budget breaks even at a price of $42 a barrel and the finance ministry has squirreled away billions in a rainy-day fund. Nonetheless, the coronavirus’s impact on the global economy is still unclear and with millions more barrels poised to flood the market, Wall Street analysts are warning oil could test recent lows of $26 a barrel.” (yhoo.it/39BlzPY)
With unwinds come reductions in leverage; brokers, including IBKR, suspended intraday margin discounts and made changes to liquidation deferrals. Read more at bit.ly/3aUq34t.
Information I'm Carrying Forward:
Historically, "Epidemics normally have a severe but relatively short-lived impact on economic activity, with the impact on manufacturing and consumption measured in weeks or at worst a few months." (reut.rs/2xjCJ6t)
"The healthy reserves of many states and cities are why we think municipalities are well positioned to weather some economic dislocation,” according to Cumberland Advisors (bit.ly/3cLaXQO).
Exploration and production “firms hold the majority of the $86 billion of debt coming due in 2020-24, implying a higher default risk for the industry.” (bit.ly/3aW3egR)
“Oil prices expected to remain anchored around $65 per barrel through 2024.” (tmsnrt.rs/38Nl3Nx) Visit (tmsnrt.rs/38Nl3Nx) to view strategic choices for Saudi Arabia and Russia to protect prices and/or defend market share; one option includes forcing U.S. shale to slowdown.
"Despite historically low interest rates, U.S. companies are being unusually frugal, holding back on issuing new debt and pumping up their balance sheets with cash … Historically, when interest rates are low and the economy is strong, companies have levered up to increase capital expenditures and buy assets in order to expand. The opposite is happening now." (bit.ly/3cJ7phV) Adding, firm’s have reduced spending (bit.ly/2TTo5fj) which may weaken the economy; The BLS released a report which turned negative for the first time in a while (bit.ly/33jCKDB).
"Still, consumer fundamentals remain healthy. Personal income jumped 0.6% in January, the most since February 2019, after gaining 0.1% in December" (reut.rs/38z3uRp)
"The shrinking goods trade deficit could somewhat limit the downside to GDP growth. A third report on Friday, the Commerce Department said the goods trade deficit contracted 4.6% to $65.5 billion in January. Goods imports tumbled 2.2% last month and exports dropped 1.0%." (reut.rs/3cBq3rX)
"A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months … While China’s government has cut interest rates, ordered banks to boost lending and loosened criteria for companies to restart operations, many of the nation’s private businesses say they’ve been unable to access the funding they need to meet upcoming deadlines for debt and salary payments. Without more financial support or a sudden rebound in China’s economy, some may have to shut for good." (bloom.bg/39DjNxK)
"While the coronavirus is disrupting supply chains for manufacturing, some sections of the industry do not appear to be experiencing significant distress. The Chicago Purchasing Management Index rose 6.1 points in February to a reading of 49.0, the highest level since August 2019, a fourth report showed. The joint MNI Indicators and ISM-Chicago survey suggested a marginal impact on businesses in Chicago area from both the coronavirus and last month’s signing of a “Phase 1” trade deal between the United States and China" (reut.rs/2VRvT2t)
Disclaimer:
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me.
An analysis for the week ahead.
Points of Interest:
200 weekly moving average; Friday’s low; trend line projected from 2009 and 2011 lows; the 2018 low, as well as 2015 and 2016 distribution area; 2720 balance area for retracement; cycle analysis.
Technical:
Broke out of a week long balance Thursday (i.e., cluster that included a 100.00% projection, 161.80% and 127.20% extension). Friday’s rally failed to take value with it and so now Friday value is overlapping Thursday’s value. /NQ cleared out some poor structure below 8070 to 7550 (i.e., untested POCs or the levels at which the most amount of volume was traded) created by the market getting too long, beneath /ES February high.
Sunday’s open and Monday trading to help us determine if there is a break out of the two day balance area, accepting Friday’s spike and moving lower towards new targets. If we continue the trend, immediate downside /ES targets include 2300, 2140 and 1900. Cycle low at 3/20. Cycle high 3/16-3/17 and 3/24-4/3.
Index Analysis:
$SPX:
SPX
$RUT:
RUT
$NDX:
NDQ
$DJI:
DJI
$NYA:
NYA
$UKX:
UKX
$NI225:
NI225
Futures Analysis:
/GC:
Fundamental:
‘Help! I’ve Fallen, And I Can’t Get Up!’: According to ARK Investment Management, prior to COVID-19 entering the U.S., consumer confidence, spending and business were improving. "The US Purchasing Managers Index had plummeted to a four year low. Consumers have been responding to record low unemployment rates and accelerating wage gains while businesses have been unsettled by various #trade conflicts and flattening to inverted yield curves." Ark suggests that inverted yield curves (which usually precede recessions) were a commonplace during periods of disruptive innovation, leading up to the 1920s. That said, what does all this information mean for a subsequent recovery? Well, Ark suggests that lags in inventory and capital spending are worrisome; "While real GDP could be hit through mid-year by cancelled flights and conferences and other business disruptions causing another round of inventory and capital spending cuts, the rubber band associated with a global rebound has been stretching for more than a year now." In other words, Ark thinks we may experience a V-shaped recovery. (bit.ly/3d1vpg2)
U.S. Expansion: “Economic activity expanded at a modest to moderate rate over the past several weeks, according to the majority of Federal Reserve Districts” (bit.ly/3aEOTFk). Adding -- "Outlooks for the near-term were mostly for modest growth with the coronavirus and the upcoming presidential election cited as potential risks." BlackRock came out with some statements: "We don't see this as an expansion-ending event — provided that preemptive and coordinated policy response is delivered” (bit.ly/2vm2R01). Also, the OECD lowered it’s GDP growth projections, viewable at (bit.ly/33idzB1), alongside Goldman Sachs’ Q2-Q4 earnings recession projection (bit.ly/39SdNBo). View the article at (bloom.bg/3d4uX0X). Noting -- inflation was uptrending prior to the virus debacle, but shortly after 10-year expectations took a massive poo-poo (bit.ly/2WfhXPU). Inflation stimulates production; more green = more buying = more demand = more production.
‘99 Problems’ And Liquidity Is One: Investors have observed disruptions in the U.S. Treasury market as shown by wide spreads and difficult transaction completion. In a Reuters article syndicated by NYT, "Market participants attributed some of the liquidity gaps to banks and computer-driven trading programs paring back their trading or limiting the size of their trades due to the volatility in markets” (nyti.ms/2TO9JfW). If you want to see how markets traded around the numerous trade halts this week, visit bit.ly/2IO8Fm8. Additionally, the NYSE put out a bulletin basically saying they will stay open and that electronic trading capabilities are sufficient in case any closures are necessary (bit.ly/2QgBawH). Adding, the FRA/OIS spread (a money-market benchmark that measures differences between forward-rate agreements and index swaps) -- a key gauge of banking risks -- rose alongside the widening of dollar swap spreads; “The cost to protect against default on investment-grade credit jumped to the highest in more than a year” (yhoo.it/2QcNeir). Not indicative of impending doom, but interesting nonetheless.
Talk Of Credit Crisis: According to Bloomberg, the fear that a coronavirus-panic and slowdown may cause a credit crisis was ignited this week after financial conditions tightened despite the Federal Reserve’s emergency rate cut (bloom.bg/2TydohN). Now, according to CME Group’s FedWatch tool, the market is pricing in a 100% chance that rates will be cut at the next Fed meeting (bit.ly/2TCxasN). Adding, Bloomberg suggests that signs of stress in the credit market are apparent through multiple channels; credit card and loan delinquencies are appearing on the consumer lending front, while across the world, “Non-bank companies have drastically upped their leverage since the last crisis, as treasurers have taken advantage of historically low interest rates” (bloom.bg/2TydohN). The same article alleges that this increase in debt and leverage is a problem, even in a low rate environment, due to the “profitability drought that is making it harder for companies to service debts.”
Fear Prevails: Some speculation around last week’s sell-off after the emergency rate cut was fed-induced fear -- “A quick response might exacerbate the market sell-off because it could suggest panic on the part of policymakers. It may also be ineffective because monetary policy moves such as rate cuts typically take a while to feed through to the broader economy,” according to Reuters (reut.rs/2v51tid). Since then, the Fed has introduced $1.5 trillion in repo injections, helping buoy the US30Y and DXY (bit.ly/33kdjBS).
‘Hello, goodbye’: Oil took a dump as Saudi Arabia escalated tensions with Russia. The intent of a heavy supply increase is to get the Russian’s negotiating. Read more about this chicken fight at reut.rs/2INzgQc. What happens to the United States? Well, according to Reuters, "'U.S. production is likely less well hedged than the market realizes,' said Michael Tran, managing director of energy strategy at RBC Capital Markets in New York” (reut.rs/2TNGCJQ). Basically, producers bought protective put spreads and collars which only hedged from normal (expected) declines. What happened wasn’t quite expected, and so, some firms, like $APA and $CLR are facing severe trouble. Here are break-even prices for oil producing countries (tmsnrt.rs/2QbTAyI). On a side note, lower oil prices will be good for consumers and growth (bit.ly/2IIFgK2).
Supply Risks: Joe Brusuelas of RSM expects supply shocks to roll from Asia, to Europe and then North America, "with the worst impact for businesses to come in April and May” (bit.ly/3cV15nD). Additionally, an ISM survey indicates that the virus caused supply disruptions for 75% of U.S. companies, leading to a hit in revenues (bit.ly/2IOsp9b).
Delinquency rates move higher (bit.ly/2QhAGq6); I detailed subprime auto-loan issues in a Benzinga.com article I wrote late last year (bit.ly/2vXjFec).
Sentiment: 29.7% Bullish, 19.0% Neutral, 51.3% Bearish as of 3/14/2020. (bit.ly/330VhEp)
In The News:
‘V-Shaped’ Recovery: Despite the rapid increase in coronavirus cases (bit.ly/2VWCvN6) across the rest of the world, China seems to be recovering. According to Bloomberg, “Reservations for domestic flights and hotels in China are recovering from a coronavirus-induced slump as people return to work across the nation” (bloom.bg/38CeEES). Additionally, Chinese cargo flows at ports are recovering, according to Freight Waves (bit.ly/3cHVgK0).
Slowdown Hits Hard: Countries like Italy have seen a rapid rise in deaths (nbcnews.to/3aEJZrU) and international travel is getting beat hard; “Travel analytics company ForwardKeys found that flight bookings to Italy fell by nearly 139% in the final week of February, compared with a year ago, the Washington Post reported,” according to Axios (bit.ly/2Txjdw4). The slowdown in travel is expected to cause almost $113 billion in losses for airlines, according to Guardian (bit.ly/333Y1Rf).
“Bruno Braizinha at Bank of America had this perspective, earlier this week: When we abstract from the near-term noise and volatility and refocus on year-end scenarios we find two limiting cases: (1) a U.S. recession scenario with the pricing of the Fed to the Zero Lower Bound, which implies 20 basis points for two-year Treasuries and 50-80 basis points for 10-year Treasuries; or (2) an upswing back to trend growth as the coronavirus outbreak dissipates, which likely implies a Fed on hold after a 50 basis-point cut (two-year Treasuries around 1.1%) and 10-year Treasuries in the 1.5-1.7% range. A 50/50 weighting of these scenarios implies a 1-1.25% range for 10-year Treasuries at year-end. With forwards currently around 1.1%, the market seems to be assigning a marginally higher probability to the bullish rates scenario (bearish risky assets) for end-2020.” (bloom.bg/2TT0JF4)
“There is also reason to worry about international debt. According to the Bank for International Settlements, some $17 trillion is owed by non-U.S. corporations without what CrossBorder Capital describes as “obvious U.S. dollar access.” It is hard to see how this will be refinanced without resort to further quantitative easing, just as some of the worst pain for individuals and small businesses to emerge from the virus may require helicopter money drops. None of this makes a credit crisis inevitable, and it should certainly be possible to avoid a crisis on the scale of 2008. The scale of the fear should increase the scale of the subsequent recovery if credit issues can be eased. But the fear that the coronavirus will be the trigger to spark the next generalized credit crunch is widespread, and is rational.” (bloom.bg/2TydohN)
“High yield and investment grade CDX spreads are at their highest levels in over a year, and have widened materially this week. In the case of the junk, an optimist's explanation might be “well, that’s down to energy – an increasingly small part of the S&P 500, so it shouldn't ring alarm bells.” High-yield CDX had its biggest daily widening since 2015 on Thursday. But it’s fairly rare for the S&P 500 to be up 0.8% or more in a week with investment-grade CDX at least five basis points wider. The last time that happened was in September 2018. In other words, the top of the 2018 markets before that year's fourth-quarter rout in risk assets.” (bloom.bg/2TzvoZ7)
An energy price slump may hurt: “While many drillers in Texas and other shale regions look vulnerable, as they’re overly indebted and already battered by rock-bottom natural gas prices, significant declines in U.S. production may take time. The largest American oil companies, Exxon Mobil Corp. and Chevron Corp., now control many shale wells and have the balance sheets to withstand lower prices. Some smaller drillers may go out of business, but many will have bought financial hedges against the drop in crude.In the short run, Russia is in a good position to withstand an oil price slump. The budget breaks even at a price of $42 a barrel and the finance ministry has squirreled away billions in a rainy-day fund. Nonetheless, the coronavirus’s impact on the global economy is still unclear and with millions more barrels poised to flood the market, Wall Street analysts are warning oil could test recent lows of $26 a barrel.” (yhoo.it/39BlzPY)
With unwinds come reductions in leverage; brokers, including IBKR, suspended intraday margin discounts and made changes to liquidation deferrals. Read more at bit.ly/3aUq34t.
Information I'm Carrying Forward:
Historically, "Epidemics normally have a severe but relatively short-lived impact on economic activity, with the impact on manufacturing and consumption measured in weeks or at worst a few months." (reut.rs/2xjCJ6t)
"The healthy reserves of many states and cities are why we think municipalities are well positioned to weather some economic dislocation,” according to Cumberland Advisors (bit.ly/3cLaXQO).
Exploration and production “firms hold the majority of the $86 billion of debt coming due in 2020-24, implying a higher default risk for the industry.” (bit.ly/3aW3egR)
“Oil prices expected to remain anchored around $65 per barrel through 2024.” (tmsnrt.rs/38Nl3Nx) Visit (tmsnrt.rs/38Nl3Nx) to view strategic choices for Saudi Arabia and Russia to protect prices and/or defend market share; one option includes forcing U.S. shale to slowdown.
"Despite historically low interest rates, U.S. companies are being unusually frugal, holding back on issuing new debt and pumping up their balance sheets with cash … Historically, when interest rates are low and the economy is strong, companies have levered up to increase capital expenditures and buy assets in order to expand. The opposite is happening now." (bit.ly/3cJ7phV) Adding, firm’s have reduced spending (bit.ly/2TTo5fj) which may weaken the economy; The BLS released a report which turned negative for the first time in a while (bit.ly/33jCKDB).
"Still, consumer fundamentals remain healthy. Personal income jumped 0.6% in January, the most since February 2019, after gaining 0.1% in December" (reut.rs/38z3uRp)
"The shrinking goods trade deficit could somewhat limit the downside to GDP growth. A third report on Friday, the Commerce Department said the goods trade deficit contracted 4.6% to $65.5 billion in January. Goods imports tumbled 2.2% last month and exports dropped 1.0%." (reut.rs/3cBq3rX)
"A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months … While China’s government has cut interest rates, ordered banks to boost lending and loosened criteria for companies to restart operations, many of the nation’s private businesses say they’ve been unable to access the funding they need to meet upcoming deadlines for debt and salary payments. Without more financial support or a sudden rebound in China’s economy, some may have to shut for good." (bloom.bg/39DjNxK)
"While the coronavirus is disrupting supply chains for manufacturing, some sections of the industry do not appear to be experiencing significant distress. The Chicago Purchasing Management Index rose 6.1 points in February to a reading of 49.0, the highest level since August 2019, a fourth report showed. The joint MNI Indicators and ISM-Chicago survey suggested a marginal impact on businesses in Chicago area from both the coronavirus and last month’s signing of a “Phase 1” trade deal between the United States and China" (reut.rs/2VRvT2t)
Disclaimer:
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me.
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
