Week in a Glance: Fed and Bank of England, mega-deals and oil

The past week turned out to be very eventful with all sorts of fundamental events. Three leading central banks announced their decisions on the parameters of monetary policy in the USA, Japan and the UK. The OECD has updated its economic forecasts and Japan has a new Prime Minister. Oil showed its best week since June, and a number of mega-deals took place in the US stock market. We will talk about this and much more in today's review.

The Fed, Bank of Japan and Bank of England left the parameters of monetary policy unchanged. And if the US Central Bank made it clear that zero rates are for a long time (at least until 2023), then the Bank of England decided to start discussing the issue of negative rates. For the pound, the news is more than negative, so this week we will continue to look for an opportunity to sell it intraday and mid-term, at least while there is no progress in the negotiations between the EU and the UK.

Also we will buy the Japanese yen this week, as the new Prime Minister of Japan, Yoshihide Suga, was approved last week, who, as Shinzo Abe's right hand, should continue the current economic policy of Japan.

The US stock market was also saturated. The reason is not only " the witching day" on Friday, when it was the day of expiration of futures and options contracts for major US stock indices, but also a large number of megadeals. For example, SnowFlake, which held the largest IPO of 2020 and the largest in the history of a software company. NVIDIA wants to buy British chip maker Arm from Japan's SoftBank Group Corp for $ 40 billion, and Gilead Sciences has offered to pay $ 21 billion for the biotech company Immunomedics.

It is symptomatic that against the backdrop of all this (mega deals, ultra-soft Fed), as well as improved forecasts for economic growth in 2020 from the OECD, the Nasdaq index closed the week below 11,000 (a very negative signal for bulls). Since we have been systematically recommending sells in the US stock market, this signal for us is positive, it proves our rightness.

Oil finished its best week since June. But we believe that this is just a reason for more aggressive sells, because now prices are just much better for this and nothing more. Last week OPEC lowered its forecasts for the oil demand in 2020. Same have done the International Energy Agency and British BP. Trafigura Group (the second largest oil trader in the world) warns that the oil market is again close to a surplus. As for the OPEC + meeting, we have an obvious failure in compliance (its level for the case of the UAE fell to 10%). Only the threats of Saudi Arabia to punish everyone can be treated as some positive for oil.