Invisible war and the worst forecasts come true

On the one hand, it’s nice when your forecasts come true (we mean our recommendations to sell the dollar this week), on the other hand, you can’t be happy with the reasons that ensured the implementation of the forecasts. The epidemiological situation in the United States continues to deteriorate rapidly. New York risks becoming a ghost town. In just 7 days, 18,000 cases of coronavirus were diagnosed in the city. On Wednesday, the number of calls to 911 rescue service reached historic highs, which had previously been recorded on September 11.

Data on initial jobless claims justified the forecasts of pessimists: an increase of almost 3.3 million. This is a complete failure even against the background of growth forecasts of 1-1.6 million.

In general, everything is bad. And trillions of dollars can’t change this fact. So today we will continue to sell the dollar. The growth of the pound by 700 points over the current week against this background seems quite logical and we expected it when no one wanted to buy it at 1.16. The decision of the Bank of England to leave the rate unchanged did not surprise anyone or scare anyone. By and large, everything that the Central Bank wanted to do, it did at an extraordinary meeting.

But let’s get back to the problems of the world economy.It not know such a tough and swift landing not during the global financial crisis, not during the oil embargo of 1973, and not during the Great Depression. Even the Second World War did not inflict such a strong and sudden blow on the global supply chain (the largest port in the world - Shanghai - in February reduced the volume of activity by 20%, and the volume of imports to the USA from China in the first two weeks of March decreased by 45% ( !) - this has never been happened before). In fact, the global economy is now in a position as if there is a world war. With one exception, there is no war.

So the growth of US stock indices is an opportunity for sales and nothing more. By the way, a good opportunity, given the scale of growth from local lows.

And finally, recall our recommendation to sell the euro against the Japanese yen. The details of the new program of quantitative easing from the ECB were announced yesterday (we are talking about 750 billion euros) - in fact, the Central Bank can buy any number of bonds from anyone.