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According to a revised interpretation of the Mayan calendar, the world is supposed to end today. We will see how that goes. But, more interestingly, today is the “Ring of Fire” solar eclipse. Depending on where you live, it is recommended that you don’t look directly at the Sun (google up for more specific details).
Friday was a fairly volatile day in the markets with quadruple-witching expiration. Renewed concerns about a recovery and COVID-19 tempered the market’s early enthusiasm.
Boston Fed President Rosengren said he thinks an economic rebound in the second half of the year will likely be slower than initially expected due to the continued spread of the virus. In the stock markets early gains turned into losses as fears of another resurgence of the pandemic gripped in many states across US. Apple decided to close retail locations again in Florida, Arizona, South and North Carolina.
Meanwhile, President Trump is going through a torrid week. While he is holding a campaign rally despite concerns over public health, it is reported that six of his volunteers are already infected with the virus. Around 100,000 supporters and Black Lives Matter protesters are to be in the area around the site of the rally.
The US savings rate rose to 33% in April, the highest level ever while consumer spending fell 13.6% which is also a record. The high-income Americans are hoarding their wealth. While online grocery sales have risen by 200% year over year, luxury goods sales could fall by 60% or more for the three months ending in June. With the stimulus checks of up to $1200 hitting millions of households, personal income has gone through the roof. Most of that money has found their way into punting the markets.
EQUITIES
On Friday, the S&P carried to 3156 but the high was not confirmed by the Dow. After repeated attempts to break the support at 3076, the index closed below that level by the end of the day. Believe both the major indexes are poised for further falls starting Monday.
BONDS
Bonds are undergoing some subdivisions but think prices should be capped under 178^15 for the next leg down.
EURO
Euro is playing to book. Strong support exists around 1.1100 and further out at 1.1025. Resistance at 1.1355 should cap the upside.
GOLD
After a lot of sideways trading, Gold closed at its highest level since May 20. As outlined before, our key levels to the topside are 1765 and 1800. While on the downside, we look for a break below 1670 the low on June 05.
Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.
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