Fed overwhelmingly announced 50bps rate cut today soon after the US stock market opened.
DJIA once jumped, reacting to the rate cut, though it stays nearly flat since the market opened. It seems be about the response to the market turmoil due to the Coronavirus crisis. But this sudden announcement is a little weird as such rate cut without anticipation tends to surprise the market, which should be avoided.
While today's news are dominated with Coronavirus, this is the Super Tuesday in US. The latest polls suggest that Mr.Sanders has the best chance to win, who is known of Social Democratic ideology. It can be a weigh on the stock prices shortly even though the likelihood is already priced in.
We'll know it.
Comment on 4-Mar-2020 Morning:
Regarding the current outcome of Super Tuesday, Mr.Biden earning votes remarkably, leaving Mr.Sanders behind. Meanwhile, DJIA future is also gaining, which implies today's opening values will be higher.
Tuesday, 3 March 2020
Monday, 2 March 2020
Godfather says: I spent my whole life trying not to be careless.
Godfather's discipline is worth not only for mafia nor yakuza but also for investors and traders.
Don Vito Corleone:
As the share price plunged overwhelmingly plunged last week, modest bounce back could have been expected at the beginning of this week. But how many of them could confidently foresee today's market swing, particularly in US markets where DJIA (Dow Jones Industrial Average) shot up above 5.0% in a single day? There were some positive signs in the markets today, as Bank of Japan and Bank of England ensured their help for the Coronavirus crisis, and Mr.Trump slammed Fed "slow to act". Meanwhile, RBA (Reserve Bank of Australia) will be the first to have the rate decision at 2:30PM on 3-Mar (Local time). Some says that RBA will be forced to cut the rate because of the market turmoil, but US markets closed with huge recovery today and it became unclearer if RBA will cut or keep the rate.
While the markets turned positive today, we didn't get any breakthrough against Coronavirus. For a last few days, we were talking about supply chain problem, travel restriction and economic damage by them. Some says the global GDP could lose a quarter of the forecast even in "mild" scenario whose other scenarios are "modest" and "severe" respectively. The number of cases are now increasing outside of China, including Europe and US as concerned.
As more analysis results came out over the weekend, those mitigated uncertainty of the impact of Coronavirus. But negative outlook looms for coming months possibly beyond 2020. During the financial crisis in 2008, the markets had been down to the bottom on a bumpy ride. It is still likely to see the second round of massive sell-off near future, perhaps in this month again. Who knows?
That's why we have to learn from Godfather's discipline.
Don Vito Corleone:
I spent my whole life trying not to be careless. Women and children can be careless. But not men.Since the worst week for global stock markets, investors and traders should have been pessimistic under the market turmoil due to the fear of Covid-19 so called Coronavirus.
As the share price plunged overwhelmingly plunged last week, modest bounce back could have been expected at the beginning of this week. But how many of them could confidently foresee today's market swing, particularly in US markets where DJIA (Dow Jones Industrial Average) shot up above 5.0% in a single day? There were some positive signs in the markets today, as Bank of Japan and Bank of England ensured their help for the Coronavirus crisis, and Mr.Trump slammed Fed "slow to act". Meanwhile, RBA (Reserve Bank of Australia) will be the first to have the rate decision at 2:30PM on 3-Mar (Local time). Some says that RBA will be forced to cut the rate because of the market turmoil, but US markets closed with huge recovery today and it became unclearer if RBA will cut or keep the rate.
While the markets turned positive today, we didn't get any breakthrough against Coronavirus. For a last few days, we were talking about supply chain problem, travel restriction and economic damage by them. Some says the global GDP could lose a quarter of the forecast even in "mild" scenario whose other scenarios are "modest" and "severe" respectively. The number of cases are now increasing outside of China, including Europe and US as concerned.
As more analysis results came out over the weekend, those mitigated uncertainty of the impact of Coronavirus. But negative outlook looms for coming months possibly beyond 2020. During the financial crisis in 2008, the markets had been down to the bottom on a bumpy ride. It is still likely to see the second round of massive sell-off near future, perhaps in this month again. Who knows?
That's why we have to learn from Godfather's discipline.
Sunday, 1 March 2020
Tail risk factors emerging simultaneously?
Factorizing geopolitical tail risk into three factors, our old men would say Plague, Famine and War.
If we adapt today's situation into them ...
Plague >> Coronavirus (Covid-19). Certainly serious now.
Famine >> Supply chain problems, and goods vanish from super markets. (Due to possible city closures, transport restrictions, ... if Covid-19 spread faster globally.). Locust invasion in Africa.
War >> Tension between Turkey and Syria. Afghanistan (It depends on whether the peace agreement is successfully proceeded.). ...
A lot of geopolitical issues have emerged since the beginning of 2020, of which Covid-19 is the most serious today. Today, few talks about a rich man who secretly escaped in the instrument box from the country where Diamond Princess cruise ship recently docked.
If we adapt today's situation into them ...
Plague >> Coronavirus (Covid-19). Certainly serious now.
Famine >> Supply chain problems, and goods vanish from super markets. (Due to possible city closures, transport restrictions, ... if Covid-19 spread faster globally.). Locust invasion in Africa.
War >> Tension between Turkey and Syria. Afghanistan (It depends on whether the peace agreement is successfully proceeded.). ...
A lot of geopolitical issues have emerged since the beginning of 2020, of which Covid-19 is the most serious today. Today, few talks about a rich man who secretly escaped in the instrument box from the country where Diamond Princess cruise ship recently docked.
Seems little help the financial market as invisible Coronavirus surrounding globally 1-Mar-2020
Since the late last Friday to over the weekend, some good news and bad news are running the world. But as Covid-19 cases continue increasing globally, there is little sign mitigating uncertainty surrounding the societies.
Global stock markets have suffered from massive sell off, which is the worst since the financial crisis in 2008. Although Fed implied their rate cut in March and it recovered the US markets before closing on last Friday, more and more Coronavirus cases are confirmed day after day.
Apart from Coronavirus stories, US and Taliban signed a peace agreement on Staturday, which is a good news in those days. However, it is not good enough news to boost the current grim mood because it is unclear if the agreement actually bring a peace in Afghanistan for coming months. (The Guardian: US and Taliban sign deal to withdraw American troops from Afghanistan)
By the way, the market would little care about another good news of Mr.Boris Johnson's private.
Traders are keen to the tomorrow's market opening of which Asian & Pacific market is on top. Even though the major global markets are closed, the weekend markets help to anticipate the next market opening.
Hong Kong HS50 (Hong Kong),
DAX 30 (Germany),
FTSE 100 (UK),
DJIA (US)
at IG group respectively.
Unless any breakthroughs are implemented, this economic stagnation would be just a beginning and it is too soon to hunt cheap shares. Japan's PM Shinzo Abe called unprecedented school closure in nationwide this weekend, and it will be effective from Monday tomorrow. No such announce has been called for workers yet while some parents who have small children are arguing about difficulty to take care of their children during the school closure. If the situation is becoming worse, it could be inevitable for the government to limit the economic activities and it will be certainly a critical damage to the vulnerable economy as Chinese economy is slowing down already.
European countries are also reacting to Coronavirus spreading by emergency measures, such as cancellation of public gatherings or stricter boarder controls. Travel agencies or flight operators must be affected pretty badly.
Of course, United State is not the exception. It just recorded a first death case by Covid-19 this weekend. US stock market has been strongest for last years, but it is not clear how much Fed rate cut could stop further panic in the markets.
Unlike the financial crisis in 2008, the coronavirus does not only crash the financial markets, but possibly cease the most of people's activity. Nobody wants such draconian measures taken in Wuhan, but nobody wants to be infected by Covid-19, either. In short term, people will demand mental care, rather than vaccine which it expects to take more than a year to be supplied.
Global stock markets have suffered from massive sell off, which is the worst since the financial crisis in 2008. Although Fed implied their rate cut in March and it recovered the US markets before closing on last Friday, more and more Coronavirus cases are confirmed day after day.
Apart from Coronavirus stories, US and Taliban signed a peace agreement on Staturday, which is a good news in those days. However, it is not good enough news to boost the current grim mood because it is unclear if the agreement actually bring a peace in Afghanistan for coming months. (The Guardian: US and Taliban sign deal to withdraw American troops from Afghanistan)
By the way, the market would little care about another good news of Mr.Boris Johnson's private.
 |
| FTSE 100 Financial crisis (2007 - 2008), down 40% from peak. |
Hong Kong HS50 (Hong Kong),
DAX 30 (Germany),
FTSE 100 (UK),
DJIA (US)
at IG group respectively.
 |
| FTSE 100 Last 2 years, down 16% from peak. Just a beginning perhaps... |
European countries are also reacting to Coronavirus spreading by emergency measures, such as cancellation of public gatherings or stricter boarder controls. Travel agencies or flight operators must be affected pretty badly.
Of course, United State is not the exception. It just recorded a first death case by Covid-19 this weekend. US stock market has been strongest for last years, but it is not clear how much Fed rate cut could stop further panic in the markets.
Unlike the financial crisis in 2008, the coronavirus does not only crash the financial markets, but possibly cease the most of people's activity. Nobody wants such draconian measures taken in Wuhan, but nobody wants to be infected by Covid-19, either. In short term, people will demand mental care, rather than vaccine which it expects to take more than a year to be supplied.
Tuesday, 25 February 2020
Watch out Brazilian stock market on Wednesday, for the first opening this week
Global stock markets plunged for the last two consecutive days. While the scale was relatively smaller than yesterday in Asian & Pacific and European markets, US major stock indices have gone down as much as yesterday. DJIA lost about 1,900 points in just two days.
Japanese and Russian markets opened today for the first time in this week because of their bank holiday, and the impact was well priced in for the last Monday when the other markets plummeted. For example,
Nikkei 225 >> -3.3%.
RTS index >> -5.1%.
Kospi index >> +1.2%.
S&P/ASX 200 >> -1.6%
There is another market being back from the national holidays, Brazilian stock market opening ahead. Tomorrow (Wednesday) is a key for the market opening. While Asian & Pacific markets were relatively mild on Tuesday, US market was devastated again and it could trigger further crash in Asian & Pacific market on Wednesday.(Nikkei 225 future digged 2.4% by last closing.) Then, European markets could follow the negative sentiment as the Covid-19 recently brought anxious mood into Italy and Europe. Unless breakthrough for the corona virus is indicated, the global markets are unlikely to turn optimistic in coming days.
On Thursday when Brazilian stock market finally opens, it is inevitable to face massive loss and it could overshoot like downward spiral as it is the first opening since last week. The scale depends on how the other markets move next 1 or 2 days, but it can go down by 10%.
Japanese and Russian markets opened today for the first time in this week because of their bank holiday, and the impact was well priced in for the last Monday when the other markets plummeted. For example,
Nikkei 225 >> -3.3%.
RTS index >> -5.1%.
Kospi index >> +1.2%.
S&P/ASX 200 >> -1.6%
There is another market being back from the national holidays, Brazilian stock market opening ahead. Tomorrow (Wednesday) is a key for the market opening. While Asian & Pacific markets were relatively mild on Tuesday, US market was devastated again and it could trigger further crash in Asian & Pacific market on Wednesday.(Nikkei 225 future digged 2.4% by last closing.) Then, European markets could follow the negative sentiment as the Covid-19 recently brought anxious mood into Italy and Europe. Unless breakthrough for the corona virus is indicated, the global markets are unlikely to turn optimistic in coming days.
On Thursday when Brazilian stock market finally opens, it is inevitable to face massive loss and it could overshoot like downward spiral as it is the first opening since last week. The scale depends on how the other markets move next 1 or 2 days, but it can go down by 10%.
Monday, 24 February 2020
Japanese and Russian stock markets opening just after the bank holiday 24-Feb-2020
Global stock market plummeted on this Monday as Coronavirus (Covid 19) outbreak severely hit South Korea and Italy over the last weekend. One of the big Asian markets, Japan had a bank holiday this Monday and it is opening in a few hours from this time since the other market dived into the bloodbath. Japan is also facing uncertainty of Coronavirus spreading as increasing number of patients even excluding ones from Diamond Princess. Russia had a bank holiday on this Monday, too.
In the mean time, Japanese index Nikkei 225 futures market has gone down around 4.7%, and the index's opening price is also expected down near by the same level after the fair value adjustment.
Along with the Japanese market, other Asian and Pacific markets are also opening in the near time zone. If the other markets were bouncing back from the last miserable closing, the potential damage on Japanese market could be limited. This Monday, Australia's ASX 200 index has gone down by 2.25% but its future market does not indicate clear relief yet. US market was also bearish, which was the worst in 2 years. Dow Jones Industrial Average has lost more than 1,000 points equivalent to nearly 3.6%.
Sometimes, good news are suddenly coming in, but Asian and Pacific markets could not be optimistic yet, particularly Japanese market.
Here is the list of global stock indexes.
In the mean time, Japanese index Nikkei 225 futures market has gone down around 4.7%, and the index's opening price is also expected down near by the same level after the fair value adjustment.
Along with the Japanese market, other Asian and Pacific markets are also opening in the near time zone. If the other markets were bouncing back from the last miserable closing, the potential damage on Japanese market could be limited. This Monday, Australia's ASX 200 index has gone down by 2.25% but its future market does not indicate clear relief yet. US market was also bearish, which was the worst in 2 years. Dow Jones Industrial Average has lost more than 1,000 points equivalent to nearly 3.6%.
Sometimes, good news are suddenly coming in, but Asian and Pacific markets could not be optimistic yet, particularly Japanese market.
Here is the list of global stock indexes.
[Asia & Pacific]
[Europe / Middle East]
(France) CAC 40
(Germany) DAX
(Italy) FTSE MIB
(Norway) OSLOStock Exchange All Index
(Russia) RTSI Index
(Sweden) OMX Stockholm 30
(Switzerland) Swiss Market Index
(UAE) Abu Dhabi Securities Market General Index
(Switzerland) Swiss Market Index
(UAE) Abu Dhabi Securities Market General Index
[Africa]
[North/South America]
Monday, 17 February 2020
How hard to reach the trade agreement between UK and EU?
At the end of last January, UK finally relinquished the EU membership in term. British MEPs, including Mr.Farage seen one of the most prominent Brexiter, have left Brussels.
Although it just started the transition period and people's activities are not practically changed until the period, it is likely the end of "Endless" talks between UK and EU about Brexit. Now, British government whose cabinet ministers were shuffled last week has to negotiate the trade deal with European Commission. The end of the transition period is set on the end of 2020 unless it is agreed to extend the period between UK and EU while Mr.Johnson does not want to do.
Even if UK (and EU) expect to reach the agreement, how it is realistic to reach a decent deal in a year? Due to the tight deadline, both sides tend to prioritize the negotiation issue on top. But the free trade agreements between EU and other large economies took much more time to be finalized, which also requires ratification. Here are some examples.
[EU-Japan Economic Partnership Agreement]
The negotiation had started since 2013,
Reached at the agreement on July-2018,
Ratified on December-2018,
Has been effective since 1-February-2019.
About 6 years to the enforcement.
[EU-Singapore FTA]
The negotiation had started since 2010,
Reached at the agreement on October-2018,
EU member states endorsed on November-2019,
Has been effective since 21-November-2019.
About 9 years to the enforcement.
[CETA, EU-Canada Economic and Trade Agreement]
The negotiation had started since ?,
The negotiation ended on August-2014,
The agreement was signed on October-2016,
Has been effective since 21-September-2017.
More than 3 years + the negotiation period, to the enforcement.
Abolishing the relationship when UK was a member state of EU and building the trade agreement from scratch, one year sounds too short to enforce the agreed deal. It implies No-deal Brexit is inevitable rather than it as the worst option. In case of No-deal Brexit, WTO rules will be basically applied to the trades between EU and UK, which is likely to happen.
The market seemed not pricing in No-deal Brexit, but as soon as UK legally rejects any extensions of the trade talk, the market will pessimistically react.
[Updated on 16-Oct-2020]
EU and Australia started their trade negotiation in May 2018, and it seems the agreement has not been made by now since the negotiation is kicked off. It looks unrealistic for UK to reach a full agreement with EU by the end of 2020.
Although it just started the transition period and people's activities are not practically changed until the period, it is likely the end of "Endless" talks between UK and EU about Brexit. Now, British government whose cabinet ministers were shuffled last week has to negotiate the trade deal with European Commission. The end of the transition period is set on the end of 2020 unless it is agreed to extend the period between UK and EU while Mr.Johnson does not want to do.
Even if UK (and EU) expect to reach the agreement, how it is realistic to reach a decent deal in a year? Due to the tight deadline, both sides tend to prioritize the negotiation issue on top. But the free trade agreements between EU and other large economies took much more time to be finalized, which also requires ratification. Here are some examples.
[EU-Japan Economic Partnership Agreement]
The negotiation had started since 2013,
Reached at the agreement on July-2018,
Ratified on December-2018,
Has been effective since 1-February-2019.
About 6 years to the enforcement.
[EU-Singapore FTA]
The negotiation had started since 2010,
Reached at the agreement on October-2018,
EU member states endorsed on November-2019,
Has been effective since 21-November-2019.
About 9 years to the enforcement.
[CETA, EU-Canada Economic and Trade Agreement]
The negotiation had started since ?,
The negotiation ended on August-2014,
The agreement was signed on October-2016,
Has been effective since 21-September-2017.
More than 3 years + the negotiation period, to the enforcement.
Abolishing the relationship when UK was a member state of EU and building the trade agreement from scratch, one year sounds too short to enforce the agreed deal. It implies No-deal Brexit is inevitable rather than it as the worst option. In case of No-deal Brexit, WTO rules will be basically applied to the trades between EU and UK, which is likely to happen.
The market seemed not pricing in No-deal Brexit, but as soon as UK legally rejects any extensions of the trade talk, the market will pessimistically react.
[Updated on 16-Oct-2020]
UK PM mentioned Britons should get ready for no-deal Brexit today as it is still unclear to reach an agreement so-called Canada-style deal. He would seek an alternative like Australia-style deal.
The Guardian: Boris Johnson tells UK: prepare for a no-deal Brexit
“A lot of progress has been made on such issues as social security and aviation, nuclear cooperation, and son on,” he said, but “for whatever reason, it’s clear from the [EU] summit that after 45 years of [UK] membership they are not willing, unless there’s some fundamental change of approach, to offer this country the same terms as Canada”.
He said that given there were only 10 weeks left until the transition period ended, he had to make a judgment about the likely outcome and to prepare the country.
“I concluded that we should get ready for 1 January with arrangements that are more like Australia’s – based on simple principles of global free trade,” he told reporters in a pooled broadcast statement.
EU and Australia started their trade negotiation in May 2018, and it seems the agreement has not been made by now since the negotiation is kicked off. It looks unrealistic for UK to reach a full agreement with EU by the end of 2020.
Ref.
EU-Japan trade agreement on track to enter into force in February 2019
The EU-Singapore agreements explained
Canada-European Union Comprehensive Economic and Trade Agreement (CETA)
CETA – The European-Canadian Economic and Trade Agreement
Australia - Trade - European Commission
EU-Japan trade agreement on track to enter into force in February 2019
The EU-Singapore agreements explained
Canada-European Union Comprehensive Economic and Trade Agreement (CETA)
CETA – The European-Canadian Economic and Trade Agreement
Australia - Trade - European Commission
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