Chile’s central bank cut its monetary policy rate by 75 basis points to 1.0 percent to ease the negative impact on the economy from the global spread of the coronavirus and launch a set of measures “to ensure the normal functioning of credit markets and the effective transmission the increased monetary stimulus.”
It is the Central Bank of Chile’s first rate cut since October 2019 and the second since June 2019, with the rate now haven been cut by a total of 200 basis points.
Although economic data for Chile has yet to reflect the disruptive impact of the virus, the central bank said experience from other countries suggest “the impact on sales and cash flows of the affected companies could be substantial, particularly for small and medium-sized enterprises,” the bank said.
“In these circumstances, the Board has decided to carry out a set of actions aimed at mitigating the negative impacts of these events and smooth the process of adjustments that the Chilean economy will have to deal with,” it said. In addition to the rate cut, the central bank opened a 6-month, conditional funding facility (FCIC) with 4-year loans at interest rates equal to the monetary policy rate.
The central bank said corporate bonds will now be included as collateral for all effective liquidity operations and a banking bond purchase program will be establishes for participants in the open market operations system for up to US$4 billion and finally foreign currency sales will be extended until Jan. 9, 2021.
“The Board estimates that this set of measures will help the economy adjust to this new scenario, by mitigating its impact on households and businesses,” the central bank said.
Further changes in monetary policy, or additional measures, will depend on the evolution of the macroeconomic outlook, the functioning of financial markets and the fulfillment of the bank’s inflation target and financial stability objectives.
The rate cut was decided by the bank’s board at a special meeting, with the board split in its decision regarding the rate cut. The Governor Mario Marcel, the vice governor and a third board member voting to cut the rate by 75 basis points while two other board members voted to cut the rate by 50 points.
The decision regarding the additional easing measures was unanimous. The next policy meeting is scheduled for March 31.
Egypt’s central bank cut its benchmark interest rates by 300 basis points to support economic activity given the current “challenging external environment” while the outlook for inflation remains consistent with reaching the inflation target.
The Central Bank of Egypt (CBE) cuts its overnight deposit rate, the overnight lending rate, the rate on the main operation and the discount rate to 9.25 percent, 10.25 percent, 9.75 percent and 9.75 percent, respectively.
The rate cut, taken at an unscheduled meeting by the monetary policy committee, is the first by CBE since November 2019 when it paused after cutting rates six times and by a total of 650 basis points since February 2018. Including today’s rate cut, CBE has now cut its rate by 950 basis points in two years.
Egypt’s inflation rate eased to 5.3 percent in February from 7.2 percent in January, and CBE targets inflation of 9.0 percent, plus/minus 3 percentage points by the fourth quarter of 2020. The Central Bank of Egypt issued the following statement:
“In light of the recent global developments following the COVID-19 outbreak globally, the Monetary Policy Committee (MPC) decided in an unscheduled meeting held on March 16, 2020 to cut the Central Bank of Egypt’s (CBE) overnight deposit rate, overnight lending rate, and the rate of the main operation by 300 basis points to 9.25 percent, 10.25 percent, and 9.75 percent, respectively. The discount rate was also cut by 300 basis points to 9.75 percent. The MPC’s preemptive decision provides appropriate support to domestic economic activity given the current challenging external environment, while the inflation outlook remains consistent with achieving the inflation target of 9 percent (±3 percentage points) in 2020 Q4. The MPC will continue to closely monitor all economic developments and will not hesitate to adjust its stance to achieve its price stability mandate over the medium term.” www.CentralBankNews.info
There will be many people who look at gold and silver prices and assume lots of gold bugs are selling. They couldn’t be more wrong.
The disconnect between paper prices for precious metals and demand in the bullion markets has never been clearer. Nervous investors are frantically buying coins, rounds, and bars. Dealer shelves quickly emptied of more popular products and delays are now being quoted on many products – especially in silver.
The U.S. Mint stopped accepting orders temporarily for the silver American Eagle, Investors have coped with bottlenecks at the U.S. Mint before, but it has been a few years. The truth is that the production capacity for fabricated silver and gold products has always been too small to cope with massive demand surges.
Buying demand for physical gold and silver during the past week was unprecedented, and it is becoming almost unmanageable.
Dealer shelves are suddenly looking a lot like the bottled water section at Costco.
In a sense, we are seeing a perfect storm of events driving demand:
Silver spot prices dropped over $4.00 per ounce in recent days, and gold lost about $175/oz. The largest drops came during the last three trading days. Bargain hunters have been out in droves.
Many bullion investors focused on making preparations for the coronavirus and added to their metal stacks.
The turmoil in equity markets is driving massive interest in physical metal as a safe haven.
The Federal Reserve announced a multi-trillion dollar repo and bond purchasing program – and slashed short term rates to zero. Plenty of metal investors wonder if the wheels are finally coming off as the Fed quintuples down on what is obviously a failed policy; print oceans of money and hand it out to Wall Street banks.
To cap it off, news of the U.S. Mint suspending sales of the silver American Eagle spread through the market Friday. Lots of people rushed to get their hands on available stocks.
Demand for silver has been particularly heated. The gold/silver ratio, the gold price divided by the silver price, has surged to an all-time high of 115 to 1.
Like all preparations, buying physical gold and silver is best done when markets are quiet and prices are low. The past few years were characterized by low premiums and plentiful inventory. Mints and refiners had excess capacity and some – including Elemetal and Republic Metals – are now gone.
Last week, that all changed. Premiums, both bid and ask, spiked on silver products and gold is likely not be too far behind. Investors trying to take advantage of the low silver prices may find they are instead paying a price similar, or even higher, for Silver Eagles than they would have a week ago, despite the $3.00 decline in the underlying spot price.
Order volume on Friday and through to today has been well more than five times our typical activity – something we have not seen before. Mints and refiners will not be able to keep up with anywhere near that level of demand. However, Money Metals’ relationships with suppliers is among the strongest in the industry.
Money Metals Exchange has all hands on deck to fulfill customer orders. We do our very best to inform customers of what they can expect for delivery before their order is placed. That said, we do expect more surprises from the manufacturers struggling to meet demand. Ramping production requires people and equipment – neither of which can be procured at a moment’s notice.
If you are thinking about a bullion purchase, consider gold which offers better availability and is behind silver in terms of the premium increases. Moreover, most silver items now come with some additional delay.
The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.
Key points about Equinox Gold are made in a BMO Capital Markets report.
In a March 11, 2020, research note, BMO Capital Markets analyst Ryan Thompson reported that coverage of Equinox Gold Corp. (EQX:TSX; EQX:NYSE.A) resumed following a period of research restriction related to its merger with Leagold and was transferred to him.
BMO increased its target price on the gold producer, which it rates Outperform, to CA$16.50 per share from CA$12. The stock is currently trading at around CA$7.99. “The new Equinox offers investors a well-capitalized growth opportunity, with increased scale and liquidity,” Thompson wrote.
He also pointed out that the current “valuation appears compelling” and “shares of Equinox can rerate higher as the company delivers on its growth objectives in the coming years.”
He presented the important components of this Canadian company’s story. For one, “a robust project pipeline should result in peer-leading growth,” he noted. BMO models 2020 production at 588,000 ounces (588 Koz), increasing to about 900 Koz in 2021 and resulting in meaningful cash flow per share growth, to US$2 from US$1.31, in the next few years. This takes into account the expansion of Los Filos, the restart of Santa Luz and the start-up and future expansion of Castle Mountain.
To support that growth, Equinox is well funded, Thompson pointed out. It has a CA$40 million equity investment from Ross Beaty, a new CA$130 million convertible debenture and CA$500 million in underwritten commitments from the banking group. BMO estimated that as of the recent closing of the Leagold merger, the new Equinox has about CA$316 million in cash and CA$697 million in debt, for net debt of CA$382 million.
Disclosure: 1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from BMO Capital Markets, Equinox Gold, March 11, 2020
IMPORTANT DISCLOSURES
Analyst’s Certification I, Ryan Thompson, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Equinox Gold within the past 12 months. Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Equinox Gold within the past 12 months. Disclosure 6A: Equinox Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services Disclosure 16: A research analyst has extensively viewed the material operations of Equinox Gold. Disclosure 17: Equinox Gold has provided at its expense some or all of the itinerant travel for the research analyst related to facilitating a material site visit.
For Important Disclosures on the stocks discussed in this report, please click here.
One would have expected Gold to aim for the stars and beyond amid the coronavirus induced market chaos.
However, the complete opposite was witnessed on Monday as prices plunged over 4% despite the explosive levels of risk aversion. Investors have clearly entered the trading week adopting a ‘sell what you can mentality’ to cover steep losses in stocks, throwing Gold into the direct firing line. With the precious metal’s fate tied to global equities, further losses will most likely be on the cards as equities plunge deeper into the abyss.
In regards to the technical picture, the precious metal is painfully bearish on the daily charts with sellers in the driving seat. A solid breakdown below $1450 could open the doors towards levels not seen since mid-2019 at $1435.
Crude Oil dips below $30
Oil prices tumbled below $30 on Monday as emergency rate cuts by the Federal Reserve and other major central banks failed to soothe fears around the coronavirus outbreak.
The raging price war between Saudi Arabia and Russia compounded to the pain with WTI trading around marginally below $30 as of writing. With the horrible combination of falling demand and oversupply concerns weighing heavily on Oil, the path of least resistance points south. Looking at the technical picture, a strong daily close below $30 may open the doors towards $25.
Pound tumbles towards 1.2200
Sterling has entered the trading week on the wrong side of the bed as coronavirus concerns and Brexit blunted appetite for the currency.
The British Pound has weakened over 4% against the Dollar since the start of March and could extend losses amid the growing uncertainty. Looking at the technical picture, the GBPUSD is under pressure on the daily charts. Sustained weakness below 1.2300 could open a path towards 1.2200.
Japanese Yen remains traders’ best friend
In times of uncertainty and chaos, the Japanese Yen remains a traders best friend.
Appetite towards the Japanese Yen went through the roof this month as risk aversion sent investors sprinting towards destinations of safety. The Yen has appreciated against every single G10 currencies this month and gained almost 2% against the Dollar.
Looking at the technical picture, the USDJPY is under pressure on the daily charts. A breakdown below 106.00 could open a path towards 104.00.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Calibrating the market’s reaction to major data releases in the age of COVD-19 has an increased difficulty.
The market might simply ignore the data in favor of the latest government measure. Or the data can have a bigger impact as traders latch on to any kind of information to guide their trades in a volatile market.
An argument can be made for both cases with tomorrow’s release of UK employment data.
On the one hand, we need to see the underlying impact on jobs, which is key for understanding the evolution of inflation. On the other, traders might dismiss last month’s figures as “old news” since it wasn’t until March that COVID-19 started to have a domestic impact in the UK.
Either way, it’s still important data to have in mind when analyzing the evolution of the economy.
What We Are Looking For
Several bits of data are coming out at the same time, all of which could move the market.
Usually, however, the one that gets the most attention is the Claimant Count Change.
We can expect the UK’s employment situation to have deteriorated somewhat in February. That will already be ahead of any measures taken to stem the current pandemic.
Expectations are for Claimant Count to register 21.4K additions, up from the 5.5K additions in last month. Remember that the higher the number, the worse it is for the pound.
That said, projections indicate that the unemployment rate will tick up only one decimal to 3.9% from 3.8% in January. This would keep it broadly in line with where it’s been since May of last year, and not a concern for BOE policy, yet.
Finally, we can expect the Average Weekly Earnings to rise by 3.0% compared to 2.9% prior. Despite the marginal increase, it would still be in the overall downward trend since the middle of September.
The BOE is paying closer attention to this statistic because it’s more predictive of the inflation rate.
The Next Major Event
Over the weekend, there was a semi-coordinated effort by major world central banks to ease monetary policy.
The BOE already cut rates outside of a scheduled meeting. And, with the latest global moves, expectations are increasing that they might not wait until the next meeting to act. At the last meeting, the consensus was for another rate cut of 50 basis points at the next meeting.
With all the news on coronavirus, attention has moved away from Brexit negotiations. However, the talks continue, with both sides continuing to try to leverage brinkmanship in their favor. The UK has threatened to leave without a deal before June, which is another factor spooking markets.
Should either of the sides signal more directly that a deal is unlikely, with the media largely distracted, it might come as a surprise to the market.
The other pending issue is that, so far, neither the UK government nor the BOE has announced specific programs to support SMEs. That said, they have said discussions are ongoing. That is a potential measure that could support the market if announced soon.
Or, if it’s disappointing in scope, it could lead to further declines.
Aside from the ZEW Economic Sentiment, the calendar for the EUR is thin this week. Therefore, EUR traders will want to keep an eye on the upcoming data.
In January 2020, the German ZEW registered its highest print since July 2015. However, the numbers coming out tomorrow are expected to nosedive.
In terms of projections, a reading above 0.0 points would paint a healthy picture. A result below that, on the other hand, would be a sign of concern.
The current expectation is for the data to come in at -25 points. This would be a huge disappointment, pointing to a severe slowdown in economic activity within a short amount of time… Especially considering that things had just started to get better.
2020 Started with a Bang
In January 2020, we saw a print of 26.7. This indicated that the German economy was on the road to recovery, with healthy business activities starting to stimulate the economy.
This was largely attributed to the conclusion of the trade war between the US and China, which improved the situation not only for Germany but also for the EU as a whole.
This is because Germany relies heavily on trade. Therefore, the end of the trade war gave new impetus and negated the pessimistic impact of the tariffs on the German economy.
The coronavirus pandemic has stopped all the major economies of the world in their tracks.
As China is a major trade partner for Germany, a halt of production there has brought everything to a standstill.
The virus has ensured that the supply chain remains severely disrupted. Factories in the Asian Giant have been running on a skeleton staff, with many closed until the situation improves.
Closer to a Real Recession Now
Things have been gloomy for quite a while now.
In fact, over the past two years, economic activity has been limited thanks to the trade war. It not only weighed heavily on the global economy, but also prompted investors and businesses alike to adopt a wait and see approach.
Now, with the trade war wounds barely healing, it looks like the coronavirus will be far worse for the economy than the back and forth tariffs ever were.
Looking at the polls and business sentiment today, it seems that this time around, we are finally heading towards a recession.
Germany and the EU are taking stern measures to curb the spread of COVID-19. Chief among these are border closures and nation-wide lockdowns, which will undoubtedly have severe economic implications. However, the extent to which the deteriorating effects on the economy will go remains to be seen in the near future.
Don’t expect Germany and the EU to perform any miracles in the meantime. Right now, it looks like the downtrend in the economy will linger for a while.
Investors are shying away from making any commitments amidst the chaos of the coronavirus, and airports are either running at minimum capacity or are completely shut down.
OPKO Health shares traded more than 30% higher after the company reported its subsidiary BioReference Laboratories has formed a partnership with the N.Y. State Department of Health to provide COVID-19 testing for the first public drive-through testing facility on the East Coast.
OPKO Health Inc. (OPK:NYSE) today announced that its BioReference Laboratories Inc. business unit is “now accepting specimens for testing of coronavirus disease (COVID-19) from healthcare providers, clinics and health systems throughout the U.S. The company additionally reported that BioReference has established a partnership with the New York State Department of Health to offer testing at the first public drive-through testing facility on the East Coast. The firm stated that the facility will be located in New Rochelle, N.Y., and that it expects to begin offering up to 5,000 tests daily at other satellite testing sites starting next week.
BioReference Laboratories’ Executive Chairman Jon R. Cohen, M.D., commented, “Cases of COVID-19 are increasing across the U.S., making access to testing a critical component in helping healthcare providers identify infected patients more quickly. BioReference has been working expeditiously to develop and offer this test that will yield high-quality and accurate results…I believe that the private sector should be part of the solution in controlling the COVID-19 outbreak and am proud that BioReference can assist Governor Cuomo as he leads N.Y. State through this crisis.”
The company states that BioReference Labs provides comprehensive testing services for medical groups, employers, government and other institutions. The company operates a network of 10 laboratory locations, and has medical staff support of greater than 160 medical doctors, Ph.D.s and other professional level scientists and clinicians and participates in network with the five largest health plans in the U.S.
OPKO Health is a diversified healthcare company that operates in the areas of diagnostics, genetic testing and pharmaceutical development and marketing, the company stated.
OPKO Health has a market capitalization of around $951.2 million with approximately 669.8 million shares outstanding and a short interest of about 12.5%. OPK shares opened more than 15% higher today at $1.64 (+$0.22, +15.49%) over yesterday’s $1.42 closing price. The stock has traded today between $1.61 and 2.18 per share and is currently trading at $1.90 (+$0.48, +33.68%).
Disclosure: 1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. 6) This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
The current DXY structure hints at a bullish 5-wave impulse consisting of cycle degree waves I-II-III-IV-V.
In the above chart, we can see the final part, impulse V, being formed. It consists of primary sub-waves.
With the primary corrective wave ④ completed, a move towards 100.37 can be expected in wave ⑤. The target would respect the tenancy of impulse waves ③ and ⑤ being equal.
A different view can be provided on the above DXY depiction, where the primary corrective wave ④ is seen as incomplete.
The correction could take a flat formation, consisting of intermediate sub-waves (A)-(B)-(C). But any corrective pattern can be expected.
With the flat formation in mind, a raise to the 98.81 area can be followed by a decline near 97.42.
Both targets take into account the fact that all sub-waves of the flat formation are usually equal in size.
One would have expected Gold to aim for the stars and beyond amid the coronavirus induced market chaos.
However, the complete opposite was witnessed on Monday as prices plunged over 4% despite the explosive levels of risk aversion. Investors have clearly entered the trading week adopting a ‘sell what you can mentality’ to cover steep losses in stocks, throwing Gold into the direct firing line. With the precious metal’s fate tied to global equities, further losses will most likely be on the cards as equities plunge deeper into the abyss.
In regards to the technical picture, the precious metal is painfully bearish on the daily charts with sellers in the driving seat. A solid breakdown below $1450 could open the doors towards levels not seen since mid-2019 at $1435.
Crude Oil dips below $30
Oil prices tumbled below $30 on Monday as emergency rate cuts by the Federal Reserve and other major central banks failed to soothe fears around the coronavirus outbreak.
The raging price war between Saudi Arabia and Russia compounded to the pain with WTI trading around marginally below $30 as of writing. With the horrible combination of falling demand and oversupply concerns weighing heavily on Oil, the path of least resistance points south. Looking at the technical picture, a strong daily close below $30 may open the doors towards $25.
Pound tumbles towards 1.2200
Sterling has entered the trading week on the wrong side of the bed as coronavirus concerns and Brexit blunted appetite for the currency.
The British Pound has weakened over 4% against the Dollar since the start of March and could extend losses amid the growing uncertainty. Looking at the technical picture, the GBPUSD is under pressure on the daily charts. Sustained weakness below 1.2300 could open a path towards 1.2200.
Japanese Yen remains traders’ best friend
In times of uncertainty and chaos, the Japanese Yen remains a traders best friend.
Appetite towards the Japanese Yen went through the roof this month as risk aversion sent investors sprinting towards destinations of safety. The Yen has appreciated against every single G10 currencies this month and gained almost 2% against the Dollar.
Looking at the technical picture, the USDJPY is under pressure on the daily charts. A breakdown below 106.00 could open a path towards 104.00.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
