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How Bad? Markets Plunges 7% on Powell’s Grim Fed Outlook

Dow plunges 1,300+ points on grim Fed outlook! Another 10,000 to go?

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3 years ago

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This article was originally published by AdmiralMarkets.

One day after the US Federal Reserve warned of a long economic recovery from the impact of Covid-19, the Dow plunged more than 1,300+ points - its worst day since March. The gloomy outlook from the Fed comes even after the central bank has pumped nearly $3 trillion into the financial market since February - and continues to pledge even more to battle the coronavirus recession. The question on everyone's mind is whether this 1,300+ point drop will turn into a near-10,000 point drop back to the low of March which is also the low of the year. Read on to learn more! Dow Jones 30 stock market index plunged

The $3 trillion Covid-19 cure?

In the latest Federal Open Market Committee (FOMC) press conference on 10 June, US Fed Chairman Jerome Powell painted a very gloomy picture for financial markets. The central bank has forecasted that the US economy will shrink by 6.5% this year while also announcing they will keep interest rates close to zero well into 2022. The Fed cut interest rates to zero in March when the impact of Covid-19 landed on American shores. Since then, they have pumped nearly $3 trillion into the financial markets by increasing its bond holdings with $80 billion a month targeting Treasury purchases and $40 billion a month of mortgage-backed securities. Even with this stimulus, the unemployment rate is at its highest since the 1940s and the bank has warned that it is a very long road to recovery. This is why the Fed also pledged to continue its stimulus plan for as long as it takes. Up until this announcement global stock markets were surging higher.
  • The Nasdaq 100 stock market index climbed to a record high just before the FOMC press conference as investors piled into coronavirus-proof shares such as Amazon and Apple which also hit all-time highs.
  • The S&P 500 stock market index turned positive for 2020 early in the week of the FOMC press conference, recouping its losses from the coronavirus-led sell-off earlier in the year and is now up more than 45% from its March low.
The Dow Jones 30 index has also been rising higher. However, global stock markets plunged just one day after the FOMC press conference with most indices down nearly 5% in just one day. Many traders are now eyeing a retest of the March lows which will represent significant downside, akin to a market crash! Let's take a look at the technicals.

How to trade the Dow Jones 30 index

Below is the long-term, monthly price chart of the Dow Jones 30 index (DJI30): Dow Jones 30 index MetaTrader 4 Source: Admiral Markets MetaTrader 4, DJI30, Monthly - Data range: from 1 January 2001 to 11 June 2020, accessed on 11 June 2020 at 1:30 pm BST. Please note: Past performance is not a reliable indicator of future results. With Admiral Markets UK Ltd you can trade Contracts for Difference (CFDs) in stock indices and other asset classes. This product allows you to go long and short a market. You can learn more about the advantages and risks in the 'What is CFD Trading?' article. The long-term uptrend from 2008 to 2020 is clear to see. Since the beginning of 2020, however, the increase in volatility is also evident and has now threatened the continuation of the market continuing higher at these levels. The volatility on the monthly chart is so high that traders may find it more useful to analyse and trade from a lower timeframe such as the daily chart, which is shown below: Dow Jones 30 index MetaTrader 4 Source: Admiral Markets MetaTrader 4, DJI30, Daily - Data range: from 21 May 2019 to 11 June 2020, accessed on 11 June 2020 at 2:30 pm BST. Please note: Past performance is not a reliable indicator of future results. In the daily chart above of the Dow Jones 30 stock market index, the vertical red line highlights the beginning of 2020. It's clear to see the coronavirus-led market crash with an impressive recovery from the March lows. However, the market sell-off that started after the FOMC press conference has been very sharp. This is a significant change from the small pullbacks which developed as the market moved higher in its recovery. It is also a huge warning sign that something is different. Interestingly, the market did not stop at a random price level. Technical analysts will point out the horizontal resistance line at 27,400 as shown by the horizontal black line on the chart below: Dow Jones 30 index MetaTrader 4 Source: Admiral Markets MetaTrader 4, DJI30, Daily - Data range: from 21 May 2019 to 11 June 2020, accessed on 11 June 2020 at 2:45 pm BST. Please note: Past performance is not a reliable indicator of future results. While this may point to the beginning of a reversal, traders will be looking for confirmations such as lower low and lower high cycle formations. This type of cycle formation helps to show that any buyers trying to push the market higher are failing, thereby confirming how strong sellers are. There are significant levels of support the market could fall to before attempting a push higher. However, in the long-term many traders point to the fact there is nothing more central banks can do at this point in time. If lockdown restrictions take time to lift and if fears of a second wave of a coronavirus grip the market, some traders are calling for a retest of the March low. For the Dow Jones 30 stock market index, that will be a near 10,000 point drop from bounce off the 27,400 level. These are certainly interesting, unique and unprecedented times. How will you be trading it? One way to help you make more effective trading decisions is to download the Trading Central Technical Ideas indicator completely FREE by upgrading your MetaTrader 5 trading platform to the Supreme Edition provided by Admiral Markets. This indicator provides you with actionable trading ideas and technical analysis on a wide range of asset classes. To get it free, just click on the banner below and download it today: Download MetaTrader 5 Supreme Edition INFORMATION ABOUT ANALYTICAL MATERIALS: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following: 1.This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research. 2.Any investment decision is made by each client alone whereas Admiral Markets AS (Admiral Markets) shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content. 3.With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest. 4.The Analysis is prepared by an independent analyst Jitan Solanki, Freelance Contributor (hereinafter "Author") based on personal estimations. 5.Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. 6.Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed. 7.Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.  

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Tesla rival Stellantis unveils its lowest price electric vehicles

The Big Three automaker unveils details on its low-priced electric vehicles that will be delivered over the next two years.

Published

13 hours ago

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October 18, 2023

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Electric vehicle manufacturers have realized that the prices of their cars are making it more difficult for many of them to compete against makers of lower-priced internal combustion engine vehicles.

Tesla saw its third quarter deliveries fall below market estimates, prompting Elon Musk's company in early October to lower the list price of the Model 3 from $40,240 to $38,990 and its industry leading seller Model Y has recently fallen from $47,740 to $43,990.

Related: Tesla Japanese rivals debut concept vehicles in latest challenge

Tesla top rival Ford already cut the price of its all-electric Mustang Mach-E by up to $4,000 in May and its F-150 Lightning by about $10,000 in July.

Stellantis revealing entry-level electric cars

Stellantis  (STLA) - Get Free Report has been busy revealing low-priced entry-level electric vehicles that it plans to begin selling in 2024 to compete with French automaker Renault in Europe as well as Chinese EV companies. The company in August said it would unveil a second new entry-level Fiat-branded electric vehicle in July 2024 that will be priced less than €25,000 or about $27,390. The company, however, didn't say when the vehicle might be sold in the U.S.

The company said in June that it will deliver the new Citroën e-C3 electric car to Europe in early 2024. The Citroën e-C3 was expected to have a range of 186 miles on a charge and would be among lowest priced EVs on the market. Stellantis had already said it would bring Fiat's best-selling EV, the Fiat 500e, to the U.S. market in 2024 to compete against Tesla and the growing U.S. EV market.

Citroën e-C3 all-electric subcompact hatchback.

Stellantis

Big Three automaker unveils its low-priced electric vehicles

Stellantis on Oct. 17 revealed its updated all-new, all-electric Citroën e-C3, which is its first European-designed, European-built B-segment, or subcompact, EV hatchback. The new vehicle is now estimated to have a 199-mile range, charging 20% to 80% of capacity in as little as 26 minutes. The EV accelerates 0 to 62 mph in 11 seconds with a provisional top speed of 84 mph for everyday driving and traffic in urban and suburban areas.

The company estimates that the vehicle will be priced below £23,000 ($27,900) in the UK. No word yet if the Citroën e-C3 will roll out in the U.S.

In 2025, Stellantis will offer a Citroën e-C3 with a 200 km- or 124-mile range and priced at €19,990 or $21,068, the company said. That price would be lower than any new EV sold in the U.S. today. General Motors  (GM) - Get Free Report Chevy Bolt's lowest manufacturer suggest retail price is $26,500, while the 2024 Nissan  (NSANY) - Get Free Report Leaf has a starting price of $28,140.

The new Citroën e-C3 will be available in three versions You, Plus and Max. The You version's standard equipment includes LED headlights, Citroën Advanced Comfort Suspension, Active Safety Brake, the new Citroën Head Up Display, ‘My Citroen Play with Smartphone Station’ for infotainment, electric door mirrors, auto lighting, rear parking radar, rear spoiler, cruise control, manual air conditioning, and six airbags.

Plus vehicles include 17-inch alloy wheels, Citroën’s two-tone paint with contrasting roof, decorative roof rails, front and rear skid plates, the 10.25-inch color touchscreen with smartphone mirroring, Citroën Advanced Comfort Seats, auto wipers, power-folding and heated door mirrors, leather-effect steering wheel, 60/40 folding second-row seat, and driver seat adjustment.

The premium Max version additionally has LED rear lights, rear privacy glass, enhanced seat textiles, automatic air conditioning, 3D navigation, wireless charging, rear camera, electrochrome rear-view mirror, and rear power windows.

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Putin, Xi In Beijing Pitch For ‘Alternative World Order’ As Biden Departs A Burning Middle East

Putin, Xi In Beijing Pitch For ‘Alternative World Order’ As Biden Departs A Burning Middle East

As a Rabobank note has highlighted, the main…

Published

14 hours ago

on

October 18, 2023

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Putin, Xi In Beijing Pitch For 'Alternative World Order' As Biden Departs A Burning Middle East

As a Rabobank note has highlighted, the main theme on display during Xi Jinping and Vladimir Putin's Wednesday talks in Beijing was one of "common threats" bringing the two "dear friends" closer, according to a press readout. Observed Rabobank earlier in the day, "Meanwhile, as the Middle East rages and the West recoils, Xi Jinping welcomes Russia’s Putin and a host of Global South leaders, ex-India, to his Beijing Belt and Road Forum to talk about what an alternative world order might look like. The ‘global’ Western press mostly failed to even cover it."

Putin said at a media briefing following the meeting with his Chinese counterpart, "We discussed in detail the situation in the Middle East." He added: "I informed Chairman (Xi) about the situation that is developing on the Ukrainian track, also quite in detail." The Russian leader then emphasized: 

"All these external factors are common threats, and they strengthen Russian-Chinese interaction."

AFP/Getty Images

CNN subsequently called it a "pitch for a new world order" at a moment crisis has gripped the Middle East.

Yet, almost simultaneously, Bloomberg reported that Biden is overseeing a fast unfolding disaster in the Middle East:

President Joe Biden’s 7.5-hour trip to Tel Aviv signaled full US backing for Israel but fell short on another key goal: winning over Arab leaders.

Amid growing signs the conflict may be spinning out of control, Biden made plain that the US will protect its ally, sending a clear message to rivals in the region like Iran to stay out of the fight. With one US aircraft carrier in the area and another on the way, Biden promised a new package of “unprecedented support.”

The Bloomberg headline aptly reads, "Biden’s Whirlwind Israel Trip Fails to Calm Fears of Wider Middle East Conflict." At this time, Lebanon, Jordan, and Egypt are on edge - with Western and Saudi embassies reducing staff and issuing travel advisories. 

Meanwhile, related to Xi's Belt and Road (the purpose of the gathering in Beijing), Putin praised the potential for it to usher in a "fairer, multi-polar world" as Moscow and Beijing grow closer based on "deep friendship": 

In his speech at the opening ceremony, Putin hailed Xi’s flagship foreign policy Belt and Road Initiative as “aiming to form a fairer, multi-polar world,” while touting his country’s deep alignment with China.

Russia and China share an “aspiration for equal and mutually beneficial cooperation,” which includes “respecting civilization diversity and the right of every state for their own development model” – he added, in an apparent push back against calls for authoritarian leaders to promote human rights and political freedoms at home.

This is at a moment Putin is "wanted" by the International Criminal Court (ICC) and shunned and sanctioned by the West, while at the same time Global South countries are expressing growing anger at Israel's unrelenting bombing of the Gaza Strip, as the Palestinian death toll soars into the thousands.

Directly related to this, a Thursday UN Security Council resolution brought by Brazil and seeking a ceasefire in Gaza was shot down, given the US was the only "no" vote.

Also missed by the mainstream media was the following pro-China sentiment expressed by a top Palestinian official over a week ago:

China will soon lead the world, and it supports the “Palestinian position, whatever it may be,” according to Fatah’s Central Committee member Abbas Zaki.

In a public address that aired on Palestine TV on Sept. 29, Abbas Zaki called on the United States to “reconsider its stance” with regard to Israel or risk becoming irrelevant. The Israelis, he said, were “sons of bitches,” “murderers” and agents of instability, while the Palestinians are “messengers of peace.”

“I know that there is serious change in Europe and even in the United States,” said Zaki.

But, he added, “do not forget the emerging camp, which is on your side—the Chinese camp. China is going to lead the world, and it proclaims: ‘There can be no stability and progress without the liberation of Palestine, with East Jerusalem as its capital.'”

Putin too, has expressed more sympathies with the Palestinian side, days ago warning Israel of the "catastrophic" death toll its attacks on Gaza will result in. He has also held calls with Arab leaders, seeking to mediate peace and a possible two-state solution.

Tyler Durden Wed, 10/18/2023 - 19:40

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Survey delivers bleak news for remote workers

Remote work is increasingly under fire.

Published

14 hours ago

on

October 18, 2023

By

Covid-era alternative work solutions have come under fire as businesses increasingly deploy a carrot-and-stick approach to convincing employees to return to offices.

Technology titan Meta Platforms  (META) - Get Free Report, which owns Facebook, threatened poor performance reviews if workers failed to attend offices three times weekly. JP Morgan Chase  (JPM) - Get Free Report CEO Jamie Dimon recently suggested workers uncomfortable with returning to offices should look for employment elsewhere.

Workers don’t like the idea of giving up the flexibility afforded by remote work, but a recent survey shows that these workers may face an uphill battle if they hope to continue working from home.

A woman working on a laptop in a cafe, on Sept. 14, in Edmonton, Alberta, Canada. (Photo by Artur Widak/NurPhoto via Getty Images)

NurPhoto/Getty Images

Remote work loses its luster

Companies big and small rushed to offer flexible alternative work schedules like remote and hybrid work during Covid. Remote work quickly became a key benefit used to fill jobs created by those who took early retirement and newly created positions in response to demand growth fueled by easy-money policies.

Related: Facebook issues more tough-luck news to workers

Remote work initially appeared to be a win/win for companies and employees. It allowed businesses to source job candidates nationally rather than locally and sometimes save money by closing expensive offices. Meanwhile, workers could live in the suburbs rather than crowded cities and save money by eliminating expensive childcare costs.

Unfortunately, the love affair with remote work has soured over the past year.

Businesses, from technology to financial services, have rolled back remote work, citing a need for increased collaboration and greater productivity. Many companies have likely sought to reduce the number of remote workers as part of layoff plans or to fill otherwise vacant office spaces.

Businesses are winning the return-to-office battle

Worker surveys suggest employees prefer remote work. However, they’re losing the battle with employers demanding more office face time.

The Census Bureau’s latest Household Pulse Survey shows remote work has reached a new post-pandemic low, with declines seen in all 50 states, reports Bloomberg.

More Jobs:

The survey showed that fewer than 26% of households include someone who works remotely at least one day weekly. That’s a significant drop-off from the high of 37% in 2021. A total of 31 states had remote work rates above 33% at the peak. Now, only seven states exceed that hurdle.

States with the highest percentages of remote workers are typically Democratic states, mainly on the east and west coasts. Middle America and the South boast some of the lowest rates of remote work.

There’s also a more significant push for a return to office (RTO) in major metro markets where office building valuations are tumbling because of empty offices. During its recent quarterly conference call, Goldman Sachs  (GS) - Get Free Report told investors that it reduced valuations on office properties in its portfolio by 50%.

The impact of lower valuations on financial companies could contribute to the stricter return to office demands. Big banks like JP Morgan have been among the most vocal in demanding RTO, and they’re also heavily exposed to commercial real estate.

For instance, in addition to loans held on commercial properties, JP Morgan is building a new multibillion-dollar headquarters in New York City.

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