Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Chief Investment Officer
Summary: Markets put in a positive session yesterday and managed some stability overnight, though the major US average is still below a key pivot. Today marks the end of month and quarter, an interesting test of how much this recent bounce in equity markets is down to large portfolio rebalancing flows.
We are going into quarter-end today and still watching the key pivot levels for risk appetite as noted below for overall direction.
What is our trading focus?
What is going on?
China reported official PMIs for March, with the Manufacturing PMI at 52.0 vs. 35.7 in Feb. and Non-manufacturing at 52.3 vs. 29.6 in Feb..
US Dallas Fed Manufacturing survey fell to -70 in March¸ far and away its lowest reading ever and below the global financial crisis worst reading of -59.9.
Covid19 – Italy reported its lowest growth in case numbers in almost two weeks, Denmark announced the intent to begin path to normalization after Easter, WHO says EU outbreak may be topping, US outbreak still in growth phase as New York City epicenter has now seen 1,000 deaths. several Asian countries seen on top of their respective outbreaks are showing a rise in new cases.
Crude oil rise from an 18-year low but is still down by 65% on the quarter, its worst ever. Supported by signs of a recovery in the Chinese economy, Putin and Trump announcing they are in a dialogue together with US shale oil companies calling on regulators to discuss production cuts.
The outlook remains dire with Goldman Sachs seeing demand down by one quarter while Rystad Energy an oil consultancy, suggest that as much as 36 million barrels of oil production per day could be at risk from Covid19 related demand destruction.
Hungary’s parliament granted Prime Minister Orban the right to rule by decree indefinitely – an unprecedented move for any EU member. EURHUF closed at cycle highs as the HUF is down some 6% against the euro this month.
What we are watching next?
The quarter-end and 2641 area in US S&P500 – as we discuss above, the 2641 level is the local bull/bear line in the S&P 500, the most prominent global risk barometer. The next Fibonacci retracement levels of note are the 50% at 2785, and perhaps the most important, the 61.8% at 2930.
US Consumer Confidence reading today for March – was 130 in Feb and expected to move a near record 20 points lower to 110 – but for perspective, back in 2009, this indicator bottomed out at 25.
Japan stimulus package – said to be large and comes after the disappointment of needing to delay the Olympic games for a year – this could offer JPY support on a particularly strong stimulus push.
Path to the other side of Covid19 – this remains the medium term key.
Calendar today (times GMT)
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