Week in a Glance: pandemic records, Brexit, US stimulus and IMF

The main event of the week from the point of view of the current, and most importantly potential consequences, were new pandemic records. The number of new cases in the world has exceeded the 400K, while in Europe the current records exceed the spring ones by several times (in some cases, by 5-6 times), and the United States is very close to record levels as well, already exceeding 70K.

We think there is no need to explain what this means for the world economy and single countries. We already went through all this in the spring and the scale of the consequences is more or less clear. Seen in this light, the stubborn reluctance of markets to look around the corner continues to amaze. For example, airlines reported last week: revenues collapsed by 80%, the drop in profits is measured by hundreds (!) of percent. And this is just one of many examples of the catastrophic consequences.

However, stock markets are hovering around historic highs rather than incorporating the potential impact of a second wave in prices. They were not scared by the updated forecasts from the IMF, which expects a weaker recovery of the global economy in 2021. Despite this, we will continue to sell in the stock markets, especially in the US.

Last week we saw the complete lack of progress and, it would seem, an end to the talks on stimulus in the United States: according to Mnuchin, one should not count on a package of assistance to the US economy before the elections. But the markets continue to believe and hope that the injection of a couple of trillion dollars is very close and the god of money will still get more money.

In the fields of Brexit, everything is extremely turbulent. The EU summit showed that the Europeans are not going to make concessions, but they do not want to leave the negotiating table, passing the initiative ball to the British. Johnson, after waiting for the end of the summit and making sure that there were no additional proposals, once again stated that in this case there is no point in further negotiations and Britain is ready to leave without a deal. If these words will turn into action this week, the pound will be in trouble.

Oil prices are still extremely favorable for short positions. So we will sell oil this week.

As for the coming week, the same topics will most likely be procrastinated: the pandemic, stimulus in the US and Brexit.