Hey everyone, we began to see some profit taking and a more risk off attitude as we closed out this past week. Is this a dip worth buying or shall we hold on a bit more? Get me take here in this week’s update.
WEEKLY SOUND BITES;
• Stocks suffered their worst weekly decline in almost three months after climbing over 40% March 23rd lows, as investors appeared to harvest recent gains and respond to a worsening of the pandemic in parts of the country… two prominent value sectors—energy and financials—fared worst within the S&P 500 Index, while the fast-growing information technology sector held up best…Reflecting the renewed virus fears, Amazon.com, Netflix and other “stay at home” stocks easily outperformed airlines and other shares reliant on the reopening of the economy…so a correction can be good for the markets…we are also seeing that the rising tide of increased Fed Liquidity has lifted many ships, including many “rust buckets”…these “Zombie Companies” (debt service exceeds profits) has increased since the March crash by 18%…keeping them alive longer will have a cost…
• At his post-meeting press conference this past Wed, Jerome “Power Ranger Boom-Boom” Powell surprised some investors with a fairly bleak assessment of the pace of the recovery in the coming months, predicting the unemployment rate would end 2020 at 9.3% and warning of permanent job losses… Powell’s outlook may have been one factor in Thursday’s sell-off—the worst daily decline for the S&P 500 since March 16—but a larger one appeared to be growing fears of a resurgence of coronavirus infections as Americans made their way back..
• The risk-off response to renewed pandemic fears sent the yield on the benchmark 10-year Treasury note sharply lower, reversing most of the previous week’s surge…Credit spreads in the investment-grade corporate bond market widened as investors demanded more yield to compensate for risk, especially late in the week amid increased volatility…
• Also, this past Wednesday we saw the Organization for Economic Cooperation and Development (OECD) say the coronavirus has contributed to the worst economic crisis since World War II. The organization expects the global GDP to contract 6.0% in 2020 versus the year-ago period based on the assumption that the pandemic will continue to recede and remain under control…In over 150 years of data, there has never been a recession that has spanned the Globe to the extent of the 2020 version. The World Bank estimates that nearly 93% of the world’s economies will see an outright drop in their GDP this year…
• Gross domestic product (GDP) in the UK shrank by a record 20.4% in April from March as the country spent the month in a coronavirus lockdown… and in Germany, industrial output and trade data were much worse than expected, shaking confidence in a quick recovery from the pandemic.
Don’t Be A Rat Brain Trader – BE the Red Stipe Zebra !!
Trade Smart !