Extraordinary uncertainty, Australia closes, WHO warns

1 lip 2020

The behavior of stock markets is similar to the last attack of a mortally wounded animal. Otherwise it is hard to explain his unwillingness to fall, when the second wave of the epidemic from a potential threat turns into a harsh reality and smoothly proceeds to the next stage: the re-closure of economies with all the ensuing consequences.

At the start of the week, WHO openly stated that the worst is yet to come. And it’s hard to argue with them if you look at the news headlines: more and more states in the USA are stopping the process of easing restrictions and vice versa they are starting to tighten quarantine measures against the background of a sharp increase in the number of cases (daily increase is already above 45,000), and the country's main infectious disease specialist warns of an increase of this number up to 100K per day; Australia introduced a four-week lockdown in the second most populous state in the country, etc.

Fed head Jerome Powell, meanwhile, notes an extraordinary uncertainty about the economic outlook for the pandemic.

At the same time, more and more U.S. companies are filing for bankruptcy: retail giants (GNC, Neiman Marcus, JCPenny and many others) and restaurant chains, pioneers of the shale revolution (Chesapeake Energy) and even arms manufacturers (Remington Arms). This week, for example, NPC International Inc (owner of 1,200 Pizza Hut restaurants and 385 Wendy's Co. stores) is planning to file for bankruptcy, while Cirque du Soleil has already filed for the bankruptcy.

To conclude, our pool of positions for today is as follows: sells in the stock markets, dollar buy primarily against the pound and the Australian dollar, oil sales, as well as the Russian ruble.