Stage of denial, jobless claims and new pandemic records

9 paź 2020

Financial markets continue to deny the obvious facts (a sharp slowdown in economic recovery, the second wave of the pandemic, the absence of a second stimulus package for the US economy, massive bankruptcies, etc.), replacing objective reality with a subjective perception in the form of hopes and expectations.

After it became clear that the old mantra called “stimulus” was no longer relevant, not even a day passed when a new one was invented: “stand alone bills”.

We are talking about Trump's proposal to take single measures to help the economy. He suggests to start by paying $ 1200 checks for "our great people". That is, they have already forgotten about trillions of dollars and are ready to be satisfied with billions. And this is without taking into account the position of the Democrats, which is more than clear: no single bills - either a package or nothing.
In general, this is the classical stage of denial. All that is required under the current conditions is to stay within objective reality and wait until the stage of denial passes to the next evolutionary stages (anger, bargaining, depression and acceptance).

So our “sell” recommendations for the US stock market remain valid. Moreover, this week recorded an absolute maximum in the number of new cases of coronavirus disease. That is, the second wave is not just a horror story, but part of the current reality and the consequences of this are obvious, since we went through all this in the spring during the first wave.

Jobless claims data yesterday (initial claims) once again reminded that the US labor market will need quarters at best to recover, but most likely years.

Prices in the oil market today are the most favorable for sales. Recall that the current drivers of growth (hurricane Delta and oil strikes in Norway) are of extremely short-term nature, which means the days (hours) of oil price growth are numbered.