Market traders driven to manic extremes

Analisi Giornaliera - 26/03/2020

$2 trillion in economic juice

economic-stimulus


As the scale of the economic stimulus bill sinks in matched with our location on the distribution curve of affected people the trading mania will yet expand geometrically. What is beginning to settle into some recognizable pattern is a correlation between what is expected to finally boost inflation and gold, the ancient antidote to economic uncertainty. That is a pattern shaping up to long held expectation. The preliminary job data is out today and the expectation is for around 3 million new filers. At the depth of the great recession, it never topped 665k in a month.

US dollar weakness gaining momentum


The dollar is strong to return some of the value that accumulated during the recent panic. As the inflation picture starts to form in traders’ consciousness, the value of the greenback is likely to fall. The cash being infused into the economies to bolster them up will tempt people to raise their prices. Lavish spending by the government in the absence of strict oversight leads to inflation. The value of all those extra dollars in circulation will lower the value of everything denominated in the currency because so many more of those dollars will be chasing the same goods and service. More (cash) is less (value).

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Johannesburg trading in positive territory


The JSE is gaining strength in what might be a position in the gold/greenback weakness/inflation trade. The index is up 4.65% today and a whopping 20.58% on the week.

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Gold strengthens


Gold prices are at their highest point in nearly eight years. It is up 1.5, 12.7 and 23.17 percent day month and year respectively. We are confident that the trend is likely to persist in the face of floodgates wide opened and 10% of US GDP about to be dispersed.

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