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Market Review
American and European markets have lost some ground again in the past week. Most of the indices went out of the week with slight losses of around 3-4%. There is currently no special news from either the corona crisis or the markets themselves. Market Preview The crash protection risk model has now been partially confirmed on the status green. Due to the calming of the markets that has been going on for some time now, the risk of an imminent crash appears low according to the model. However, the economic outlook has not improved, and an increase in the number of infections could quickly turn the current calm into panic. Despite a temporary all-clear, investors should continue to act very carefully in the current environment. A build-up of the equity quota can be accompanied by put hedges to protect against the scenario of sudden panic losses. In my opinion, there are still many negative records and black swans slumbering in this market
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Market Review
The stock markets around the world have had another positive week. The signs that the panic is completely gone are increasing. This is despite the fact that economic data crosses unprecedented levels (applications for unemployment benefit USA, Chart 1). The corona crisis remains the dominant issue and a solution still seems a long way off. Nevertheless, the familiarization effect has set in among market participants, so that events such as the continuing high death rates in many countries (e.g. France, Italy and Spain with over 10%) and a sudden rapid increase in the numbers in Singapore no longer have any price relevance. As a result of the easing decided by local countries, there is still no negative trend in the number of new infections. In Germany, even the upcoming reopening of the first soccer league, Bundesliga, is pending. The stock markets were able to continue the almost unabated success of the past few weeks. Some of the strongest markets come from the United States, the country most affected by the corona virus. The US indices rose 4-8% on a weekly basis. In Europe the picture is mixed, on average there is a slight gain of approx. +1%. The UK and medium-sized German companies from the MDAX are particularly strong at +4%. The southern European countries, on the other hand, tend to be neutral to slightly negative. The picture is mixed in Asia too. While Southeast Asia is slightly negative, India is losing -5% and lies therefore opposite compared to the global trend. Japan, China and Australia, on the other hand, are strong Asian markets with 4-8% gains in the past week. Market Preview he crash protection risk model provides further signs of relaxation. Even if the green signal on a daily basis has not yet been confirmed, this is becoming more and more likely. In the upcoming week, the global risk status could change from red to yellow. The positive signal is based equally on the regions of America, Europe and Asia. Despite a temporary all-clear, investors should continue to act very carefully in the current environment. A build-up of the equity quota can be accompanied by put hedges to protect against the scenario of sudden panic losses. In my opinion, there are still many negative records and black swans slumbering in this market Market Review
Most stock markets have had a strong week. Almost without exception inidices moved upwards worldwide and ensured a good mood on the stock exchanges. On Thursday evening and on Friday, a public holiday, the tide turned again. Despite the losses that then occur, most stock markets are trading in the positive range of 2-7% on a weekly basis. The positive news about the Remdesivir remedy from the American pharmaceutical giant Gilead Sciences was cited as the reason. Tests have shown Remdesivir's positive effects against Covid-19. However, the proof was limited to the fact that it can significantly reduce the treatment time of the sick from around 15 to 11 days. Certainly good news with regard to impending bottlenecks in the healthcare system, but nothing more. Even the question of whether the remedy promises a greater chance of healing could not be proven. In my opinion, the news was regarded a little too positively by the market. The corona crisis remains the dominant topic. Now that many countries are releasing the lockdown, it is exciting to see how the number of new infections develops. On this website, in addition to the growth rates in the individual countries, I have now also included the change in absolute numbers. The next weeks and months seem to be accompanied by phased changes between tightening and loosening the lockdowns. This will continue until the population is either infected or a vaccine is found. Unfortunately, bleak prospects. Not only for the economy, but also for the everyday life of every citizen. Market Preview Despite the current rally, nothing changed in my statement from the previous week. In my opinion, there are still many negative records and black swans slumbering in this market, investors should continue to exercise great caution. The crash protection risk model already gives partial all-clear and provides the first green signals, which have not yet been confirmed. Since the panic is currently out of the market, you can see at least the first bullish signs on the model side. However, due to the dormant latent risks, I would prefer to build up the equity quota only by accompanied hedging instruments such as put options. |
AuthorBertan Gueler, CFA Archives
November 2022
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