Another sad jobless, earnings and a bit about ruble

1 mag 2020

The main events of yesterday were centered around statistics from Europe and the United States, as well as reporting by US corporations.

The data came out habitually weak. But on the whole, quite unexpectedly, Europe looked relatively less weak then the United States. Partially this can explain yesterday's growth of the euro against the dollar (besides this, traders talk about the end of the month and the related rebalancing of investment portfolios, which provoked a sharp increase in demand for the euro). EU GDP for the first quarter fell, but not by 4.8% in the United States, but by 3.8%. Unemployment increased, but only slightly (from 7.3% to 7.4%), which looked particularly contrasted with information from the United States, where the number of jobless claims increased by another 3.8 million, and expectations of unemployment in the United States at around 20 % are already perceived as a given.
In this regard, the McKinsey & Co. report turned out to be quite revealing, which states that up to 57 million US workers will suffer from the economic consequences of the pandemic.

In general, everything is still extremely bad in the USA and the Eurozone. Accordingly, the stock market, both the United States and Europe - is an excellent object for sales.

As for the relatively good reports from US giants, we recall that you should not confuse the exception with the rules. The rule is that, with rare exceptions (Microsoft, Facebook, Alphabet, Amazon), the financial conditions of the vast majority of US corporations has deteriorated sharply: we are talking about a drop in sales by tens of percent and profits at times. So there is still no reason to buy in the US stock market.

The ECB meeting did not bring any surprises. The rate was left unchanged, and the head of the Central Bank of Europe, Christine Lagarde, warned that the region would experience an unprecedented economic downturn. In general, according to the results of the week of the Central Banks, the Bank of Japan turned out to be the most aggressive.

Beating the dollar in the foreign exchange market, which was systemic and consistent throughout the first half of the week, yesterday became quite chaotic. The dollar suffered losses against the euro and the pound, but it strengthened against the Japanese yen, Canadian and Australian dollars. Friday is generally good for taking profits in the EURUSD and GBPUSD purchases. So today we tend to sell these pairs within the day. Naturally, we will do this without fanaticism and with mandatory comparatively small stops.

And one more thing about our favorite position - the sale of the Russian ruble. Yesterday, extremely unfortunate news appeared for him. According to Bloomberg, the Russian Federation plans to allow the Central Bank to print money for the purchase of government bonds. The purpose of this maneuver is understandable - to close the black hole in the budget. But the signal for the ruble is negative. On the one hand, this is a recognition of the lack of domestic demand for government bonds in sufficient volume (external demand in the current conditions is weak). On the other hand, this is the launch of a printing press, which means inflation. There is another aspect of the problem. Formally, all this is proposed so as not to touch the reserves. On this occasion, there is an assumption that the authorities are very afraid to show that the king is naked - this means a strong discrepancy between the nominal size of the National Wealth Fund and the real liquid assets that are available. In general, the ruble's prospects are not yet in doubt. So feel free to sell.