Due to a short-term growing fear in the US of a second corona wave and the ongoing demonstrations against racial discrimination, the markets have given away some of the gains of the past few weeks this week. But this is not a bad sign, on the contrary, for those who have not yet invested, there is a second optimal entry point. For everyone who has not yet got on the train, it is high time to jump up, the seats in the first class are filled but there is still enough space in the second class – the train is gaining momentum and we will soon see new and higher mountains climb. In our opinion, now is the time to act and enter the stock market!
WHC analysis of the situation
Due to the current COVID19 crisis and the resulting freezing of various economic sectors, the stock market also had to fall. But like after every stock market crash or stock market correction, new buying situations and new profit opportunities arise. As the past shows us, old highs were repeatedly reached and then far exceeded.
For this purpose, we have inserted a graphic that shows the stock market crashes / stock market corrections in the years 2000, 2008 and just now 2020 and their effects.
As can be seen very well from the chart, the old highs were repeatedly reached. It is important to know in the current investment decision that the stock exchange is always a good 6-12 months ahead of the real economy, because investors naturally invest when they speculate on future profits of the stock corporations.
We currently have a special situation, the current crisis was not caused by a financial crisis like 2008 or by the bursting of a bubble like 2000 the .COM bubble or by a bank failure like 1930 which led to an economic crisis, but by a pandemic. That means, however, that orders still exist, that trade relations still exist, that demand is still intact, only that the time has been postponed due to the lock downs, but it can be expected that as soon as normality comes back more and more, the economy will start up again relatively quickly and that’s exactly what we see on the stock exchange. Since March 24th the markets have been rising again and have already made up 10% of the losses, now is the time to invest, now there is a gift of 20% return on the market to pick up, now the clever investor is buying !!!
The year seems to be ending well and even Donald Trump is giving in, and a positive end to the negotiations with China on a trade agreement is within reach. According to the global economy, which is currently declining, an agreement between the two largest economic powers would be a good step for stability on the world markets. Even though some analysts are convinced that we will bottom out in the global economy next year and that it will be up again in 2021, you should not lose sight of the fact that we have seen rising markets since October 2008, a correction would be understandable. Next year there may be many surprises, questionable as to how the economy is developing, a possible trade agreement between China and the United States, Brexit and, last but not least, the election of the President in the United States, we can be curious as to which forecasts prove to be true and which are more likely to be wrong are located.
A small agreement in the trade war between China and the US and the market is reacting very positively. Together, the punitive tariffs will be lowered at the same time! We saw a new all-time high in the Dow Jones, the key stock index that tracks the 30 largest US companies. Furthermore, US economic data and fundamentals are encouraging, although it is repeatedly pointed out that the upturn is cooling off somewhat. The quarterly figures of the companies are also positive and prove once again that the economy currently has a solid foundation in the USA.
Things are looking very different in Europe, economic experts expect economic growth to slow down next year, and even recession for some EU states. The most famous candidate for this eventual development is Germany. Due to the slump in the car industry, the Germans have already this year and certainly next year to fight. To what extent this prognosis comes true and shows effects on the entire EU, according to which Germany is the economic engine number 1 in Europe, we point the next year.
After withdrawing US troops from Syria, Turkish President Erdogan has not waited long to attack Kurds in northern Syria, who were previously US allies and under their protection. But which circles could Erdogan’s ego-trip apparently want to exterminate the Kurds?
Turkey is a NATO country and so here too, Article 5 roughly outlines that if one NATO country is attacked, the other NATO countries must come to the aid. This means that the Syrian army would oppose Turkey in this conflict if the other NATO countries were called upon to support Turkey. Now we are spinning the situation further on the one hand Turkey with Germany, France, England USA, etc., on the other side Syria with Iran and Russia as allies – looks almost like a 3rd World War II scenario.
NATO countries have decided not to provide arms to Turkey, but Erdogan, if necessary, gets them from Russia anyway, how grotesque? In the scenario just outlined Erdogan fights the Syrians with the same weapons but under NATO auspices – with all the love Turkey should decide whether it is a civilized western country and NATO member, or rather stands alone and just like the wind is blowing looking for its alliances.
What does this mean for the markets? The eyes are on many things at the moment, firstly the conflict on the Syrian-Turkish border, secondly Brexit, which perhaps still has a last-minute deal, thirdly, the negotiations on China-US trade relations, which may also end positively until the end of the year, fourth, the further FED decisions, another further interest rate cut seems possible, and fifth, last but not least, the quarterly results of the third quarter. So all in all a heap of fuel for market movement, but just this we want to make money for our customers, only downtime is hated us!
Although the stock exchanges of the world usually fall into a light hibernation during the summer months, it was quite different in 2019. Furthermore, news of China-US trade disputes swept through the gazettes and the Iran crisis also had its place in the news, rounded off by a G7 meeting. With Donald Trump, every day continues to be a new beginning, which sounds today as if the president wanted an agreement with China, sounds like tomorrow again after total trade war. On one day he sanctions the Iranian foreign minister on the other he offers talks on a nuclear deal. Trump is like a box of chocolates “You never know what you’ll get”
Of course, the markets react to any comment, volatility increases and uncertainty grows. According to which the interest rates of the 2-year government bonds were higher than that of the 10-year-olds in August, which may indicate an approaching recession, there was a veritable sell-off on the New York stock exchanges. But in the last week of August, markets stabilized again, recalling that economic data in the US was stable, unemployment was low, and the Fed was looking to see further interest rate cuts. Even though analysts disagree, we expect to see further rises in the markets, at least until next year’s presidential election. It is also to be expected that Donald Trump will be playing for time with regard to the trade agreement with China, and then conjure it up at the right time in the election campaign in order to have arguments for re-election.
In any case, the next few weeks and months are going to be very exciting and there are some chances to make a profit!
After meeting with US President Donald Trump twice, North Korea dictator Kim Jong Un has now given Putin a chance to travel to Russia. If the US and Russia disagree on some points, it seems that both want at least a nuclear-free North Korea. Putin also put Jong Un close to finding a solution with the US in this matter.
Markets are doing less, focusing more on global economic development and possible renegotiation of an alternative to TTIP. Developments in the markets are very positive in the first quarter and analysts agree that the uptrend is still going further.
Trump in action! First, he said before the G20 summit he is actually content with the current situation in the trade dispute with China and does not even know if he wants an agreement and after the food with President Xi Jinping they told the world that it would be truce for at least the next 90 days in the trade war. The market responded positively to that and after the last few weeks of haircuts, the leading indices again showed hefty premiums. Of course, market participants and the world are hoping that the China-US trade dispute will be resolved in the next 90 days and a viable future-oriented solution will be found. But you never know Trump?!? Another chunk is the Climate Change Conference in Poland this week, even though Brazil and the US have turned their backs on the Paris Agreement, there is still hope that the rest of the world will come up with a sensible agreement that will sustain CO2 emissions and, perhaps, Brazil and the US gets back into the boat. Whether one believes that man is entirely to blame for climate change, or that man is not at fault, or takes the middle ground, and believes that the earth has repeatedly climatic changes but man has accelerated the change, under Stroke would be a low CO2 emissions in any case to advocate, so the gas is not exactly healthy and a burning of our fossil fuels anyway borders on madness, who thinks about what else they offer for medicine, industry etc.
All in all, a turbulent start to the “most contemplative” month of the year, for the economy is also showing a positive image, the barometer for the trade, the rush on Black Friday, shows absolute good weather, let’s see how the year ends!
After massive haircuts on the US exchanges, the major indices such as Dow Jones and S & P500 have already lost all profits of the year and the Nasdaq Composite is also in correction mode. But do not panic, after the course since 2010, it is only understandable that there is a correction, this is also called profit taking. In our opinion, we are still in a bull market, which means we continue to believe the markets are going up. This correction is now the last good entry opportunity to participate in the upcoming win. According to our assessment, the markets will stabilize again after the congressional elections and once again show us the usual picture of rising prices. Right now everything has come together, rising key interest rates, the crisis in Saudi Arabia, the account reversals between Italy and the EU and of course the “extraordinary” policy of Mr. Trump, that in this situation investors secure their profits is only understandable, but as I said for all who are not there yet, now it’s time !!!
In the last two days, we saw massive sell-offs on the US stock exchanges and also globally, investors were driven by further expected interest rate increases of the Fed and the still ongoing trade dispute. There is good news about the second, China and the US want to get together for talks at the G20 summit. The situation is different with regard to the projects of the Fed, which would like to carry out another rate hike in 2018 and three next year. Many investors therefore fled to the Savemarket – the government bonds what drove the interest on just that even further. The Dow Jones lost almost 2000 points in the last week, but as serious as it sounds, we are still in a normal correction (down to a minus of around 10%) and are still a long way from a crash. However, this development shows how fragile the market is still after the economic and financial crisis of 2008, even 10 years later. A countermovement would be desirable and many investors see this current time as an excellent starting momentum!