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Market quarantine

 In Newsletter

Issue No. 121

 

Assets Covered: United States S&P 500, NYMEX WTI Crude Oil Futures, USD/CNY

 

We’re in a weird place. Some places are recovering while others panic. Western supermarket shelves are empty, and public markets can’t get a bid. You know the drama, so we’re not going to tediously recap it for you. But the public health quarantines we’ve seen circle the globe and a very unhelpful Saudi attack on crude markets have had a fantastically negative effect on markets. All of them.

 

To support our Complete Intelligence clients, we’ve done complementary mid-month forecasts in both February and March to bring updated perspectives both on broad market assets, as well as specific client elements (procurement raw materials, supply chain impacts and bill of material components). Our clients have appreciated these proactive measures, and we stand by to support our clients through the volatility and the market recovery process. If we can help you, please email our CEO directly at tnash@completeintel.com.

 

So, where do we see markets headed?

 

For equities, it’s not an incredibly positive picture. Given travel restrictions, quarantines, and the general fear in markets, our AI-driven platform indicates that we’re pretty range bound for the next few months. While we do expect slight recovery in the S&P 500 off of this week’s lows, we don’t see a rapid return to the 3,000 level that had become a critical threshold. Of course, this could change very quickly if a vaccine is discovered or recovery rates change, but we’re not disease experts, so it appears equity market malaise is here to stay.

 

complete intelligence S&P 500 Forecast 2020

United States S&P 500 forecast through June 2020.
This chart was generated using CI Futures. Book a demo to see it in action.

 

With crude, we see a slightly different story. Our platform is indicating a likely recovery of WTI crude prices in April into the 40s. Perhaps we’ll see the Saudis relent on their threats to flood the market. But after a some brief optimism, we do expect WTI to settle in the low 40s owing to the heavy economic drags on transportation and leisure activities.

 

complete intelligence wti forecast 2020

NYMEX WTI Crude Oil Futures forecast through June 2020.
This chart was generated using CI Futures. Book a demo to see it in action.

 

Finally, for currencies, one of the most relevant currency pairs we see at the moment is US Dollar- Chinese Yuan. This is an important trading relationship, the (as far as we know) origin of the current pandemic and – arguably – the most important geopolitical relationship in the world. With the Corona recovery already well advanced in China and the US mid-cycle, we may have expected a bit more movement in this currency pair. Instead, we expect a relatively stable outlook through Q2, although we do see deterioration of the Renminbi later in the year.

 

 

complete intelligence currency forecast 2020

USD/CNY Rate forecast through June 2020.
This chart was generated using CI Futures. Book a demo to see it in action.

 

Fear abounds at the moment and volatility is high. Please be careful and let us know if there is any way we can help you and your firm though the uncertainty.

 

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Global Markets and Supply Chain in Panic Mode: Coronavirus and the Economy