OPEC ++, crash of US labor market and Good Friday ahead

The main events of the week came yesterday, it is not surprising that the afternoon was exceptionally eventful.

We will analyze the events in chronological order. The statistics on jobless claims in the United States again came out worse than expected (6.6 million with a forecast of 5.25 million) and in general shows an extremely sad picture: in just 3 weeks, the number of unemployed in the United States grew by almost 17 million. With this speed, if quarantine lasts a couple of months, there will be little left of the US economy. So PIMCO, with its forecast of a 30% fall in US GDP in the second quarter, may be in the ranks of optimists rather than pessimists.

It is not surprising that the Fed decided, in addition to the measures already announced, to provide an additional $ 2.3 trillion in loans to small businesses and municipalities, as well as support the market for high-yield corporate bonds.

Our basic positions do not change: we sell the dollar and stock markets, we buy gold. Although, of course, such large-scale injections of money provide serious support to the stock market, which again breaks away from reality.

The OPEC + meeting used to be transformed into OPEC ++, since the United States, Norway and Canada were to join the already familiar list of countries. The event for the oil market is more than revolutionary, because it puts an end to the market pricing of oil, making the market controlled by the main producers of black gold.

OPEC + countries agreed to reduce oil production by 10 million barrels per day for 2 months (markets expected a three-month duration). Russia agreed to reduce production by 2 million bpd, and Saudi Arabia by 4 million bpd. There are no details for other countries yet.

In addition, it is expected that today at the G-20 meeting they can agree on an additional 5 million bpd. (possibly referring to the United States, as well as Norway and Canada).

In general, the news is positive for our medium-term positions for the purchase of oil, so now you can sleep more calmly without worrying about their bright future.

Overall, everything is developing according to the most unpleasant scenario so far: the shutdown of most of the world economy does not pass without a trace and the longer the pandemic lasts, the less chance there is to get off with a light fright and recover relatively quickly. According to OECD estimates, every additional month of quarantine subtracts a couple of percent from the growth of world GDP.

There was one more important news yesterday: the Bank of England will temporarily turn on a printing press to cover additional government spending that will be required to mitigate the damage to the country's economy. We do not want to buy a pound after such news at all. So maybe it's time to move on to EURGBP purchases.

Today is a day off in most countries. So the markets will be extremely “thin”.