Blog

23rd March 2020

Monday Espresso

Global markets saw extreme volatility again on Monday March 16. Dow Jones lost over 10% after the unexpected Fed rate cut which took the Fed Fund rate down to 0.25%. Asian stocks dived as China data slumped more than expected in February, with industrial production down by 13.5% and retail sales down by 20.5%.

The coronavirus death toll in Italy rose to 3,405 on Thursday March 19, surpassing the death number in China. Europe has now become the centre of the global pandemic according to the WHO, and is nearly under a lockdown after the EU imposing a 30-day travel ban on non-essential travelling from outside of the EU.

Central banks announced another round of stimulus to counter the COVID-19 risks over last week. The ECB launched a €750 billion pandemic emergency purchase program (PEPP) on Wednesday March 18 in addition to the existing asset purchase program. The BoE cut the interest rate again by 15bps to a record low of 0.1% on Thursday, only eight days after the first emergency rate cut on March 11. Trump signed a $104 billion relief bill on Thursday to pay for Americans’ COVID-19 tests and sick leaves.

Crude oil prices surged over 20% on Thursday, recovering from the sharp losses on Wednesday, as Trump claimed that the US will intervene in the ongoing price war between Saudi Arabia and Russia.

  UK Manufacturing PMI will be released on Tuesday March 24 and is expected to come in at 51.8.

UK CPI will be announced on Wednesday March 25, with an expectation of 1.7% YoY.

+0.69*

-1.0     A score of -1.0 indicates an extremely poor economic outlook, which is accompanied by a high probability of negative returns in risky asset classes like equities. The Risk Barometer tilts our portfolios away from equities during such periods.

0.0       A score of 0 indicates a neutral economic outlook with almost equal probability of positive and negative returns in risky asset classes like equities. The Risk Barometer maintains a balance between equities and other asset classes during such periods.

+1.0   A score of +1.0 indicates an extremely positive economic outlook, which is accompanied by a high probability of positive returns in risky asset classes like equities. The Risk Barometer tilts our portfolios towards equities during such periods.

*as at latest realignment 28/02/20

Notice:

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated, but is not an indicator of potential maximum loss for other periods or in the future.

Risk Barometer

0

as at latest realignment

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    Copia Capital Management

    Fleet House, 8-12 New Bridge Street, EC4V 6AL

    Copia Capital Management is a trading name of Novia Financial Plc. Novia Financial Plc is a limited company registered in England & Wales. Register Number: 06467886. Registered office: Cambridge House, Henry St, Bath, Somerset BA1 1JS. Novia Financial Plc is authorised and regulated by the Financial Conduct Authority. Register Number: 481600.

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