U.S. reductions in interest rates to the Zero-line is necessary – the only means in the crisis

The S&P 500 went with a total increase of 0.66 per cent from a very volatile week. The Dow Jones hit with minus three percent in the past five trading days hard

U.S. reductions in interest rates to the Zero-line is necessary – the only means in the crisis

The S&P 500 went with a total increase of 0.66 per cent from a very volatile week. The Dow Jones hit with minus three percent in the past five trading days harder. But not only stocks fluctuated. The yield on ten-year US government bonds fell by up to 0.66 per cent, however, easily recovered with a 0.76 per cent out of the race. The yield on ten-year Confederation bonds fell to minus 0.71 percent, also an all-time low. The recession fear is – that you see on the Oil market. Despite the announced reduction of production quotas by OPEC, the price of North sea Brent crude oil, for example, fell sharply to US $ 45 per Barrel. Gold rose on the week by almost US $ 100 to 1.675 U.S. dollars per fine ounce. In the coming weeks, the negative news is likely around the Coronavirus is not slimming, and I expect continued volatile markets.

Coronavirus: China as a blueprint for the crisis?

it is Noteworthy that the Chinese CSI 300 ended the week with a Plus of over five percent. Also, the Price to levels prior to the outbreak of the Coronavirus-crisis have been regained. Since the beginning of the year, the market grew by good one per cent. The Chinese government has taken drastic measures – not only in terms of quarantine and health, but also with monetary and fiscal policy measures. In the meantime, the capacities of the companies are depending on the province in 70 to 90 percent again.

the end of the month to the production across the country again over 90 percent. Here pays for itself, that it has maintained sufficient liquidity to supply the company before the bankruptcy. Also, the gross domestic product should be able to – after the sharp slump in the first quarter – in the second recover.

China: foreign trade breaks with a

How strong the Coronavirus, or the foreclosure and the closure of the value chains impact on the economy, are beginning to show data on the foreign trade of China's customs administration. In the first two months of the year, exports declined by 17.2 percent compared to the previous year, the imports declined due to the subsequent consumption effects of only four percent. Consequently, another threat to the imports in March, while the export situation, the restart should improve factories.

The slip in the trade balance into negative territory could turn around, consequently, in the coming months. However, this naturally depends on how other countries deal with the Coronavirus crisis. And the now-announced foreclosure of Northern Italy is not too much optimism.

Oil prices: market in turmoil

Due to the weak economy and exacerbated by the Corona epidemic decreased the demand for Oil. Then the OPEC decided last week, surprisingly, to reduce the need for support to 1.5 million barrels per day. The goal was to stabilize the prices. Russia should join OPEC proposals, but refused to accept. Now Saudi Arabia is pulling a u turn: The Kingdom no longer wished to stabilize prices, but in the future, to gain market share. The production will be raised in the first step of ten to twelve million barrels per day of additional capacity is available. In a first reaction, the Tadawul Index of the stock exchange in Riyadh fell to 8.3 percent, the share of Saudi Aramco, fell by as much as about ten percent, which is below the emission rate of the last year. First analysts are already forecasting that Oil prices below $ 30 per Barrel – not good prospects for Oil companies and their Financiers.

U.S. markets: rate cuts to Zero expected

According to the US labour market report were created in February, 273.000 new jobs, the Figures for the previous months was revised to 85,000 to the top. The unemployment rate fell to 3.5 percent, wages increased year-on-year by three percent. You might think that everything is okay. It is also, however, the data were collected prior to the Coronavirus crisis, the explanatory power is therefore limited. As important will be how the Virus will impact in the future on the labour market. The President of the St Louis Fed, James Bullard, said, pursued the Situation and stand ready to respond if necessary. 18. March meeting of the monetary policy Council officially back. The market is already factoring in the meantime, lowering the benchmark interest rate at zero percent until December of this year. The Fed's efforts alone will not be sufficient to solve the problem, however. For this purpose, a worldwide concerted support of the liquidity and the markets would be either necessary, and/or a significant response from the ECB.

What this week is important

In the course of the week

the report season for the fourth quarter of 2019: In Germany, adidas, Deutsche Post, and Schaeffler to open in the United States, Adobe, Oracle, and Cap your books.


• industrial production and foreign trade of Germany in January. After the strong increase in order intake, the industry could be increased, the same applies for the exports. Without the stresses caused by the Coronavirus in the following months, this would not be but as a small bright spot for the battered German industry.

• Sentix investor confidence for the Euro area in March is likely to crash because of the

the current market and news.


• China's Inflation in February could give an indication of whether the Coronavirus epidemic to be more strain on the demand or the supply side of the economy.

• the GDP growth in the Eurozone in the fourth quarter of 2019. The pre-reported weak dynamics should be confirmed. For the first time, published Details of the statement provide information about the composition of growth.

• primaries of the Democrats in six other U.S. States. After

the withdrawal of other candidates will show up, if Joe Biden, his Momentum from the "Super Tuesday" may hold or whether or not Bernie Sanders a Comeback.


• U.S. consumer prices in February. Inflation and core inflation rate are expected to be at slightly above two per cent. For the Fed, the data is likely due to the dominant Coronavirus-is a Worry at present, however, only play a secondary role.

• Britain's Finance Minister, Rishi Sunak submits the budget for the current year. The interest is in particular possible support measures against the consequences of the Coronavirus.


• Council of the ECB. Currently, it is expected that a further reduction of the Deposit rate by 0.1 percentage points to minus 0.6 per cent, as well as other support measures in response to the Coronavirus epidemic.

• U.S. initial claims for unemployment benefits for the first week of March. Because of their timeliness, the data are regarded as a good recession indicator. A higher increase would be fuelled with appropriate concern.


• U.S. consumer confidence index of the University of Michigan in March is likely to be significantly decreased. The scale should give a first indication of how big the Concerns of consumers in the U.S. and around the Coronavirus are.

the number of the day: 6.000

The South African Gin manufacturer Indlovu flavoured his juniper liquor with roots, grasses, fruit and bark – everything is on the menu of an elephant. This is no coincidence, because Indlovu wins the "Botanicals" made from elephant dung. 6,000 liters of Gin has created the company in this way. The pachyderms, it is said, are very picky and eat only the best raw materials. It's only fair that a portion of the profits will be donated to your protection.

today you Show your good taste.


Ulrich Stephan

chief investment strategist for Private and corporate customers

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Date Of Update: 09 March 2020, 10:00