Stock market this week
Latest update: 22-03-2020 20:36
The peak in corona infections appears to have been reached
Last week was mainly dominated by major coronavirus outbreaks in Europe. These major outbreaks forced European governments to take far-reaching measures. Despite the fact that mortality rates are still rising rapidly in Europe, the growth in the number of new cases of disease is slowing down.
The deceased were infected on average 3 to 4 weeks ago. New cases were infected about a week ago. The new cases of disease therefore provide a more recent picture of the number of new infections.
Almost all European countries have experienced the same of decreasing numbers of new cases in recent days. Looking at Europe there is reason to get a bit of hope that the worst will be over soon.
Unfortunately, that cannot be said about the US. Or should I actually say about New York. Because in all other American states and cities it is still not too bad. In New York, however, a rapidly increasing number of new cases at the end of last week.
Major measures are now being taken. But it remains to be seen whether they will arrive on time. New York is not only a big city. It is also the financial heart of the US.
If things go wrong there, that's not good for the American stock markets. So it's going to be a weird stock market week. Growing hopes in Europe and an imminent risk in New York.
This is transient
It started in China and then went all over the world. In China it is almost over. Some individual cases here and there, but no major outbreaks. Almost all Chinese factories are back in business, shops are open again and the economy is recovering.
About the same story for all of Asia. Some minor outbreaks and restrictions, but it is under control in Asia. The peak seems to be near in Europe. The last major problem is New York. The end is starting to come a bit in sight.
That is not to say that there will not be a single new case of disease. That is still possible. But then they are manageable and more individual cases. Then COVID-19 has become a disease like so many other diseases. That enormous damage to the economy has then stopped.
Looking at how things went in China and South Korea, I am optimistic enough to say that we can largely leave this behind within 2 to 3 weeks. Nevertheless, the economic damage will be enormous.
However, this is not an economic or financial crisis but an event. Perhaps best to compare with 9-11. Even then people were afraid. Not for an illness but for an attack. Even then people stopped traveling. But after a while, the anxiety subsided and people went again.
Consumer confidence also took a hit back then. But once an impressive negative event is over, the economy will recover quite soon afterwards. The economic damage caused by COVID-19 is many times greater than that of 9-11.
On the other hand, governments and central banks are now intervening much, much more vigorously. The goal is clear. They want this to remain a temporary event and not to spill over into an economic or financial crisis. I am convinced that they can manage this.
In fact I think they do even more than is strictly necessary. Because if this is largely over in a week or 3, then they have pumped a lot of money into the system. Then in a while if consumers leave the event behind, we will experience very strong economic growth. And of course also much higher exchanges.
2 gigantic boxes full of money
Never has there been so much money on the sidelines. Investors from small to large have sold en masse in recent weeks. Whether one sold at a profit or at a loss, the money has been withdrawn from the market and is ready to invest again.
Stock markets that are winding down and a bit of hope around the corona virus is enough to get investors back in. When stock markets start to rise strongly, suddenly nobody wants to miss the departing train.
All the money that has been withdrawn from the financial market in recent weeks will suddenly return to the market. This will cause huge stock market increases. Because investors who have not sold in the past few weeks are not going to do that.
Extremely many buyers and almost no sellers. Then it can go up very fast. The second box of money comes from the central banks. They thereby support the financial markets. The QE actions of central banks have been the main force behind stock market rises in the past 10 years.
Now it is not the case that central banks suddenly put all the money in the market. It has already been indicated that this will be done throughout the year. That ensures that this will be another buy the dip year.
The best bargains hit rock bottom. When everything is at its worst. For European stock markets, the bottom was in principle last week. At the beginning of this week, however, the situation in New York may still be troubling us. I base my timing on the following:
In China the peak came after 6 weeks and in South Korea after 2 weeks.
Governments worldwide have taken significant measures. That will help a lot.
Air traffic is almost stopped, many borders are closed. It limits new infections.
Because of coronavirus anxiety, people have become much more careful. That will help.
Major outbreaks have always occurred under weak sunlight and during temperatures between 0 and 10 degrees. Temperatures rise and the UV (sunlight) strength rises very quickly. The AccuWeather meteorologists made a calculation.
In the period from 15 to 30 March, UV strength in Milan will increase by 29.5% and in New York by 36.2%. You can read it here: https://www.accuweather.com/en/health-wellness/increased-uv-exposure-may-limit-spread-of-new-coronavirus/703393
The WHO gives the following answer to the question whether a UV lamp can kill the coronavirus. A UV lamp should not be used to sterilize hands or skin because it can cause skin cancer. That warning is justified.
But it is not an answer to the question. That all coronaviruses including MERS and SARS do not survive irradiation with UV-C light (strong sunlight) has been investigated and proven years ago.
It is a fact that more and more hospitals are using robots with UV light to disinfect COVID-19 spaces. Given all the information and data, I make my investment decisions with that COVID-19 cannot withstand heat / strong sunlight.
Therefore, I no longer expect major outbreaks and I expect the current major outbreaks to rapidly deteriorate. The WHO also indicates that COVID-19 can also spread in warm weather.
This is true because there are also small outbreaks in warm countries with strong sunlight. But a rapid spread that caused a major outbreak has never occurred in warm countries with strong sunlight. Only those very big outbreaks cause enormous economic damage.
In Europe, the peak has already been reached in new cases. The numbers are already declining in a number of countries. For the figures I use the website: https://www.worldometers.info/coronavirus/#countries
You can click on the country on that website and then view all the data for that country. From a number of major European countries below the new cases of the past 4 days:
Italy: March 19: 5322 20: 5986 21: 6557 22: 5560
Germany: March 19: 2993 20: 4528 21: 2516 22: 2350
Spain: March 19: 3308 20: 3494 21: 3925 22: 3107
France: March 19: 1861 20: 1617 21: 1847 22: 1559
The same picture in almost all European countries. The number of new cases no longer increases or begins to decrease. Just too early to speak of a downward trend. But the peak seems to have been reached and that is of course very good news.
Final conclusion: Considering everything, I expect that this week we will experience another corona low, mainly because of New York. Stock exchanges will suffer from this.
For Europe, I expect that we will see a steadily decreasing number of new cases during this week in almost all countries. Given the measures and the sun's strength, I expect that we will see the peak in new cases in New York by the end of this week.
As a result, and thanks to windfalls in Europe, stock markets can already recover. For the stock markets it is not necessary that the last patient has left the hospital. When investors realize that the worst is over, stock markets are already rising.
This increase will continue to continue on news reports that new cases of illness continue to decrease, much that is now closed can and will open again, borders will open again and aircraft will fly again. I therefore see this week as the ultimate time to pick up the bargains with the ETF website.
The gold and silver price
We've had a few weird weeks. Gold went up first but then had to go back a bit. But with a gold price of just under $ 1500, we have little reason to complain. Because a year ago, the gold price was $ 1300.
Silver is a different and somewhat strange story. The silver price has been falling sharply recently. But silver traders are almost completely sold out. A few who still have some silver coins for sale (Holland Gold) ask (21 euros) $ 22 for an ounce.
At another provider I even saw the double price. The value of a coin is always at least 10% higher than the silver price. Because a coin must be made and the trader must earn something from it.
But now with a silver price of less than $ 12.50 asking almost double is unprecedented. However, almost all coin dealers are completely sold out. Delivery time at least 4 weeks or unknown.
Physical silver is hard to come by and it is extremely expensive. And silver on paper has been dumped on the stock exchange. A physical product that is almost no longer available and only at extortionate prices while it is worth nothing at the stock market. That skew is not going to last long.
The question I have is at what price have silver mining companies sold their silver? Did they do that at the high physical price or against (perhaps partly because of contracts) for the low paper price?
I have not been able to find that out. We will only see it again in the first quarter figures. It is, of course, to be expected that silver mining companies have received a better price for their silver than the price on paper suggests.
To date, mining companies have not suffered much from COVID-19. The mines are located in remote areas. All mining companies have taken measures by allowing few external visitors to enter the mine. In Argentina, mines have been shut down by order of the government for 11 days.
This is also the week for gold and silver mining stocks to hunt for bargains. I do not do that because I have always been fully invested with my portfolio on the mining websites (other than ETF website).
If stock markets fall due to New York, gold, silver and mining shares are likely to fall temporarily. But for the slightly longer term, it looks great for gold and silver.
Extremely low interest rates and gigantic stimulus packages that cause gold and silver to rise sharply. The mining shares will of course also benefit from this. Mining shares will also see a boost from the first quarter figures.
With a week to go, the gold price has not been that high on average in a quarter in 7 years. Gold mining companies are going to come with huge profit increases. The figures for silver mine shares can be very good. Because the physical silver price is much higher than the silver price on paper.
The stock market forecast for this week
First down because of New York. The first days of the week in New York can seem worse than it is. Because they have almost not tested there for a while and are now suddenly going to do a lot.
If stock markets fall because of New York, those are buying opportunities. Because I expect the worst with the coronavirus to end sooner than everyone thinks. I will keep you informed with daily updates.
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The weekly forecast for the AEX
I don't expect that we will start the week off right. Reason for me to hunt for bargains. I already did that last week. Last week I bought a total of 12 ETFs.
That same week I was able to sell 11 for the short term strategy with an average profit of more than 6%. Weeks such as last week and this week are great starting times for beginning or long-term investors.
Because you can now buy 30 to 40% or even more cheaper than more than a month ago. Buying exactly on the bottom never succeeds, so you should not try that either.
But whether you think the coronavirus will be over in 2 weeks or 3 months. Once it will be over and stock markets will rise again.
This website is about the stock market. It is my job to translate what happens in the world into the consequences for the stock market. However, I fully realize that behind all those stock market reports is now a great human drama.
I wish all the sick and next of kin a lot of strength. With emphasis on all because unfortunately there are more diseases than just COVID-19. Those sick and deceased should also not be forgotten.