When should we wait for the second bottom?
What will happen to the markets?
To be honest, I do not expect a second bottom in the financial markets in the next month or two. But these are my personal opinion. Too unanimous are the masses of investors and traders about the imminent arrival of the second bottom. Namely, such a consensus often predicts the opposite.
However, this does not mean that the crisis has passed.
Quite the contrary, in the real economy everything is just beginning.
Even in the USA, despite unprecedented state support measures, many companies found themselves in a very difficult situation. And some of them have already filed applications for protection from prosecution of creditors. Among them: Frontier - telecommunications, LSC Communication - a manufacturer of printing products, Diamond Offshore Drilling and Valaris - offshore drilling rigs, Hertz Global Holdings - car rental.
And it seems that this is only the beginning. We are waiting for news about new bankruptcies.
And if there will be a lot of similar news from large companies, then perhaps we will see another collapse in the American market.
And be sure, the rest will follow.
In the meantime, the global indices led by the S & P500 continue to rebound from the minimum values, while the media scare us and shout from all sides “Everything is lost”, “US-China War”, “Yuan collapse”, “Global inflation", "Bankruptcy of the oil industry,".
My opinion is that you should not act, including in the financial markets, according to the recommendations and emotions of the press.
But there are a few points that should be closely monitored. They can serve as a trigger for new falls:
A new conflict between the US and China, based on claims under COVID-19, if it comes to action. And he can get there. States on the eve of the presidential election need to find the culprit. And China is a clear contender.
As already mentioned - a wave of defaults and bankruptcies.
The second wave of the spread of the virus.
I see we have a couple more months. So we fix profitable positions, increase the cache share.
If you have any questions, or want to discuss further. Get in touch with us, or schedule an appointment here.