After 200 articles, it is time for me to hang the coat up and say goodbye. This will be my last article for BlackBull Markets, and I am glad to have had the opportunity to provide content for clients at BlackBull Markets.
I think 2020 will shape up to be one of the most memorable years that will stick to me – mainly because I was in a position to document the majority of 2020 & the start of 2021. Here's a summary of the key events I wrote up that help shaped the narrative of what 2020 became.
In 6 days, New Zealand citizens went from enjoying the freedom of doing what they pleased to being isolated in their homes. On 19th March, borders were shut down to all but New Zealand citizens and permanent residents. On the 25th March, the entire nation went into government-enforced isolation for one month and three days. This meant non-essential businesses and education institutions would have to close immediately.
New Zealand was one of the first and one of the only countries to isolate its citizens. Prime Minister Jacinda Ardern's message to the nation at the time: "Kiwi's – go home… If in doubt, don't go out".
This was an unprecedented call marking what would be the start of one of the most effective and successful campaigns to stomp the Virus.
Prime Minister Ardern stated that "I have a very keen sense of the magnitude of this moment in New Zealand history and we did not take this decision lightly. But we all absolutely believe this is the right thing to do. If community transmission takes off in New Zealand the number of cases will double every five days."
With New Zealand having to struggle with flare-ups during the year and even in 2021, citizens could see what could have become if they did not enter into the strict isolation – they just had to look at the rest of the world.
With the United States being one of the countries that have opposed a lockdown, trying to balance economic recovery with their citizens' health, help from the U.S government was paramount in preventing the country from turning into disarray.
Most analysts believe, in hindsight, the CARES act was a success and prevent economic disaster by enabling businesses to stay afloat. However, this combined with the Federal Reserve's $120 Billion monthly bond purchase program, many economists' concerns slowly turned to inflationary pressures down the line.
What do you get when demand for a commodity dries up due to lockdowns across the world, and that said commodity is settled physically? Haywire ensues.
Oil prices, specifically WTI Crude Oil, fell into the negatives, falling as much as -$37.63 a barrel. A quick recap of what happened: Trader's on wall street were due to take in physical delivery of Oil; however, there was virtually no space to store it. So they were paying buyers to essentially take this problem off their hands.
Not only did this wreak havoc on the physical oil market, but it also caused trouble in the financial markets. Specifically, many platforms were simply not programmed to take on negative oil prices.
Interactive Brokers, a popular retail trading platform, simply kept prices at $0 once prices went negative. At the time, Steward Glickman, an energy equity analyst CFRA Research stated that "this is off-the-charts wacky," and that "the demand shock was soo massive that it's overwhelmed anything that people could have expected."
With lockdowns in full swing at this point, many businesses that were dependant on consumers being out and about to generate revenue slashed jobs. Notably, tourism and travel businesses such as Airbnb, Uber, and Air New Zealand axing as much as 30% of their original workforce.
However, the shocking number was in the United States. Jobless claims hit 30.3 Million, the largest exodus of jobs during the pandemic in the world, especially Graphed, the jobless claims number look stunning.
Keeping track of the dates? Two months before today, NASDAQ was in recessionary territory. At this point, the NASDAQ rebounded to post not only a positive year-to-date return but a new all-time high.
With the NASDAQ primarily composed of tech firms, it is no surprise that it became the pandemic's defensive poster trade. With many business' revenues plummeting, forcing them to axe jobs, tech firms showed their stride as everyone became dependent on them. The likes of Zoom, Teledoc & Amazon became the darlings of investors in a zero yield, recessionary market environment.
Geopolitical tensions, a weaker dollar, low-interest rates, and massive quantitative easing alongside a slight correlation with the equity markets pushed Gold prices to an all-time high at $2,055 an ounce on this day.
Around this time, I was getting concerned at analysts using the word "valuation" alongside Gold. How can a supposedly "safe haven" play its role in a portfolio if it cannot act as a ballast for risk-on assets? However, that fear has subsided this year as Gold prices have subsided somewhat, playing around the $1,800 level.
Battling Ulcerative Colitis, a chronic digestive condition that also forced him to step down as Prime Minister in 2006 – 2007, Shinzo Abe resigned on this day as his health condition worsened. This marked the end of an era of what analysts and economists called "Abenomics", named after the economic reforms Mr. Abe implemented to assist Japan out of its GDP slump. Most notably, implementing negative rates alongside quantitative easing.
At the time I wrote Shigeru Ishiba, the former defense minister, was regarded as the best pick from voters and the likely replacement candidate for Mr. Abe. However, Chief Cabinet Secretary Yoshihide Suga was picked as Prime Minister. The Japanese Yen initially sold off on the news, on the compounding of pandemic concerns in Japan alongside political instability.
It was around this time the benefits of a strict lockdown became clear. Two over-arching methods were taken to control the Coronavirus across the world – Elimination or Suppression. "Hard and Fast", or "Low and Slow".
Elimination ensured all community transmission was non-existent in society. This required stringent community movement restrictions, contact tracing, and effective quarantine measures for the infected alongside everyone else.
Suppression attempts to balance economic damage and the Virus spread, where measures are enacted, allowing businesses to operate as much as possible while minimizing the Virus's spread.
We found out that that the elimination strategy was superior to the suppression strategy. If every country used the elimination strategy, not only would the world have got on the road to recovery faster, but more importantly, fewer lives would have been lost.
On this day, Joe Biden became President-Elect Joe Biden after beating President Donald Trump with 306 electoral votes to 232. It was a tight race near the middle, with odds on betting sites for Biden winning dropping below $1 at one point.
However, as recounts were finalized, a sea of blue started emerging before not too long, President-Elect Joe Biden was ratified. President-Elect Joe Biden officially became President Joe Biden on the 21st January, 2021.
It was an end of an era of Trump – however, as we all know, he didn't leave without a fight.
I would say this was when people worldwide could see the start, of the beginning of the return to normal. On this day, Pfizer and BioNTech SE announced that their vaccine prevented 90% of symptomatic infections in a vaccine trial. Equities jumped on the news.
With countries such as the United Kingdom and the United States having no control of the spread of the Coronavirus, they were dependent on a vaccine rollout to achieve herd immunity. At the time, Head of Macro Research at Barclays stated that if the 90% efficiency rating proves correct, it would have "[increased] the odds of a quicker return to normalcy."
The United Kingdom was the first to approve Pfizer's vaccine and was the first country to approve a Coronavirus vaccine. Shortly after, U.S equity markets hit all-time highs.
Looking back, it has helped. Cases and deaths are down in many nations that had little/no control over the Virus. Cases and deaths in countries like the United Kingdom
This date was significant, as it was the day Former Vice President Mike Pence was scheduled to count the electoral votes. Usually, a non-event, many Trump supporters looked to Pence to overturn the election results in swing states. However, Pence did nothing of the like, stating that the United States Constitution does not give him the power to do so. The New York Times and many other sources noted that Trump told Pence before he was set to ratify the results, "You can either go down in history as a patriot or do down in history as a pussy”.
During the count, President Trump said in a live statement, "If you don't fight like hell, you're not going to have a country anymore." Thousands of protesters proceeded to storm the Capitol. Capitol police were overwhelmed, and soon, the protesters were able to enter the Capitol building. Pipe bombs and Molotov's were found in the building.
Unfortunately, five people died during the attack – 4 protestors and one Capitol Police Officer, Brian Sicknick.
Shortly afterward, on the 8th of January, President Donald Trump was banned from Twitter due to breaching their "Glorification of Violence" policies. He was also impeached a second time, for inciting the riots.
OPEC+ supply cuts, demand resurgence, and positivity in vaccine rollouts pushed oil prices back to pre-pandemic high. At the time, Goldman Sachs became bullish on Oil, calling $65 on Brent Crude Oil. It currently sits at around $67 right now, with revised prices calling for $75 and even $85 a barrel from Brent Crude oil.
This marks a legendary comeback from Oil's low in April.
You can read my article here, but I am sure you all know what happened—a short squeeze on steroids.
Summary of what has happened in February:
Phew. What a hectic past couple of months, eh?
Stay safe, and trade safe.