Weekly Reports | Feb 28 2020
For a more comprehensive preview of next week's events, please refer to "The Monday Report", published each Monday morning. For all economic data release dates, ex-div dates and times and other relevant information, please refer to the FNArena Calendar.
By Greg Peel
And the band played Waltzing Matilda…
As I write, the ASX200 is down over -3% and nearing the August 2019 low. Back then the market had suffered a -6% pullback on trade war fears which now seem almost trivial.
Forget the trade war, the ghosts of 2008 are now rattling their chains. That was a Global Financial Crisis which was undeniably confusing for all and sundry, being triggered by complex financial instruments, but ultimately the powers that be knew what to do, and it was the Fed’s QE1 which saved the day the following year.
This is a Global Health Crisis, and while such crises are not new, this one is enigmatic. Even WHO is unsure what the real incubation period is. It will be months before a treatment, if there is one, can be tested and approved, and up to 18 months before a vaccine can be deployed.
One day there is going to be a buying opportunity, and when that day comes, the rebound will be head-spinningly swift. But as to when that day might be, nobody knows. Sell now, retreat into a cave.
The situation renders next week’s economic and corporate calendar rather moot.
Local results season is now effectively done and dusted, and about as relevant as yesterday’s newspaper. Australia’s December quarter GDP is out next week and already looks set to disappoint, given surprisingly weak component releases in the lead-up. While the numbers will take account of the drought, the bushfires peaked in January and the virus is all March quarter.
The RBA meets ahead of the GDP release. Will it cut, or will it decide a rate cut under these circumstances is not going to help at all, and plead with the government to finally step up to the plate?
Next week’s run of global PMI numbers for February will provide some early indications of economic impact.
Australia will see monthly numbers for job ads, building approvals, trade and retail sales.
The US will see jobs numbers.
The Fed is now being increasingly tipped to cut at its March meeting, but that’s not until the 18th. The Beige Book is out next week.
More notably, the daily lists of stocks going ex-dividend begin to significantly grow next week.
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