Sitmulus (again), new lockdowns and oil prices

21 Eki 2020

The deadline for agreeing on a large stimulus package for the US economy expired yesterday. Republicans and Democrats have not been able to agree (as expected). But at the same time, they continued to radiate optimism and assure that there will be a deal. Trump also added positively, saying that he wants a package larger in size than the Democrats are proposing. Let us remind you that this is the same person who ordered to withdraw from negotiations a couple of weeks ago, because the Democrats are asking too much. In general, schizophrenia as it is. Our trading positions are based on facts, but in fact there are no stimulus yet, so we continue to sell on the US stock market.

Especially when you consider that the global pandemic continues to gain momentum, and Europe is already moving to new full-fledged lockdowns. In particular, Ireland and Wales broke down first and closed their economies. For example, Ireland closed the economy for 6 weeks. Taking into account that in Germany the number of new cases continues to update records, and France, Great Britain and other European countries have been doing this for several weeks, it is obvious that Ireland and Wales can become only the first swallows.

In this light, sell in the oil market are getting more and more relevant. During the spring we already went through what do the lockdowns mean for the global oil demand. And if at that time the losses in demand were partially compensated by the countries that bought oil for future use due to ultra-low prices, now this support should not be expected (the prices are not the same, and the storage facilities are full). So, absolutely everything points in favor of an imminent drop in oil prices.

The earnings season in the US continues. So far, it can hardly be called a breakthrough in terms of financial results. And the tactic of selling before publishing reports generally works much better than buying.