The next revolution in the oil market, dollar is in danger

3 de abr. de 2020

The main event of yesterday was another revolution in the oil market. More precisely, Trump's verbal intervention announcing it. It is about the tweet of the President of the United States where he noted that he is awaiting the announcement of an agreement between Russia and Saudi Arabia on the reduction of oil production. The size of reduction is not 2-3 million b / d, but about 10 million or even 15 million (!). This is without a doubt a historical event and the strongest signal in favor of rising oil prices. Actually, yesterday’s + 25%-30% is direct evidence in favor of this. And although there is no official confirmation yet, Saudi Arabia is already gathering an emergency meeting of OPEC +. Also China decided to massively redeem oil for filling to capacity of strategic reserves, while it is so cheap.

We should note that at the start of the week we bought WTI at $ 20 and recommended our readers to do the same. So congratulations to those who follow our advice. + 30% per day on one transaction without leverage - the result itself is outstanding, if not unique.

Yesterday there was another strong blow from the US initial jobless claims data. If last week the number of initial jobless claims reached a record 3.3 million and this seemed like a complete failure, then yesterday's 6.6 million (!) in general, seems to be a transition to some kind of new economic reality.

This reality is extremely negative and toxic for the dollar and the US stock market, especially in anticipation of today's publication of official statistics on the US labor market. Analysts expect a decrease in NFP by 100K. This figure in itself looks extremely depressing, but as it seems to us, -100K can be very favorable figure for the US. If in the labor market in just two weeks of March managed to generate 10 million unemployed, then the scale of the decrease in the NFP can be several times (!) bigger than predicted. We, for example, will not be surprised with the NFP figure in in the range (-500K) - (- 600K). But the markets will almost certainly be surprised. This will be a shock for the dollar, which is likely to be sold, as well as for the US stock market, which will also be subjected to strong downward pressure. The only thing that can save the dollar is the fact that the NFP data for March do not include the last 2 weeks of March. But this doesn’t change anything, since it only postpones the sentence, without changing its essence.

Based on our expectations, we will not even wait for the publication of the data, but start to sell the dollar just here and now. First of all, against the Japanese yen. We will also actively buy gold (negative data are likely to scare already frightened investors).