- Gold has broken out from a multi-week consolidation pattern with strong bullish momentum last Friday and today, reaching a new 7-year high price at $1762. Odds are in favor of still higher prices.
- Stock markets have continued to recover from recent lows, despite the Dow Jones & S&P 500 Indices beginning to form bearish “head and shoulders” patterns on their respective daily charts. These indices are trading between their 61.8% and 50% Fibonacci peak-to-trough retracements. However, U.S. indices have already regained almost 60% of their losses from the peak, which is technically significant as an inflection point. Many market analysts think the bottom of this bear market has already been reached, but other analysts see further strong falls likely in stocks over the coming weeks and months. There is a strong divergence of opinion.
- The price of crude oil has continued to rise and is now trading at just above $30 per barrel.
- The rate of increase globally in new confirmed infections and deaths from the coronavirus pandemic seems to have peaked, at least for a first wave, although this may be at least partially due to the pandemic moving into South American countries which tend to have worse reporting systems. Total reported deaths globally peaked on April 18th and daily new confirmed cases on April 24th. However, it can be argued that the number of daily new cases globally is plateauing and not decreasing. Total confirmed new cases stand at more than 4.7 million with an average case fatality rate of 6.68%. The pandemic’s epicenter is still located in the U.S.A., increasingly more so outside than inside New York, but it seems as if the peak of this wave has already been reached there, while this looks more certain also for every European nation. The epicenter is close to moving to South America, with reported deaths there now almost as high as in the U.S.A. Both the total number of new cases and deaths continues to slowly fall daily in the U.S.A. and in the U.K. A world recession or possibly even depression from the pandemic appears to be inevitable, with Goldman Sachs forecasting a 34% drop in U.S. Q2 annualized GDP and other analysts seeing a 30% unemployment rate in the near future. If correct, these will be the worst such numbers seen since the 1930s, but it should be noted many analysts continue to see a much better outlook for U.S. unemployment. The WTO has forecasted that global trade is set to fall by one third. The U.S. now sees an unemployment rate of 15% and a drop in 1st Q GDP of 4.8%.
- Forex markets are dull, dominated by weakness in the British Pound.
- Last Friday saw U.S. retail sales data come in lower than had been expected, with a decrease of 16.4%.
- Germany has reported two consecutive quarters of GDP contraction, so is technically in a recession.
- The rate of new coronavirus infections appears to be increasing most quickly in Russia, Brazil, and India. Russia now has the second highest number of confirmed cases globally. While a strong majority of confirmed coronavirus cases are still in Europe and the U.S.A., with the U.S.A. accounting for approximately one third of all cases, infections are beginning to increase dramatically in South America, which is now accounting for more than one quarter of global deaths. The situation is especially bad in Brazil which is now confirming more than 8,000 new cases and 500 deaths daily. The President of Brazil Jair Bolsonaro, who compares coronavirus to the flu, has issued decrees trying to reopen the country which are being ignored by state governors.