The last few weeks have been a wild ride for investors to say the least. After months of traditional offshore markets hitting all-time highs, Covid-19 has wreaked absolute havoc. Here are some significant records:
- The largest one day point moves down and up for the Dow.
- The US treasury yields to all time lows.
- US Investment Grade bond yields at all-time lows.
- Worst week in returns for US markets since the financial crisis.
- Oil has biggest intraday drop since the Gulf War in 1991. (Record petrol price drop for SA at R1.94 per litre)
- The Rand hits fresh lows against the US Dollar (R19.35)
Powell, the Fed chairman, did an emergency rate cut of 0.5 percent on the 3rd March and spooked markets that continued their selloff, a rarity as interest rate cuts are traditionally bullish for stocks.
After all the carnage it was interesting to see how the so-called safe haven investments reacted.
Government bond yields dropped to all-time record lows (investors flocked to them for safety), gold stumbled a bit in the first weeks but after the rate cut, shot up significantly.
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There has been an intense argument that Bitcoin is digital gold and the new “safe-haven” investment – that it would see major price climbs amidst global instability.
So far, this has not been the case as crypto held uncorrelated for a week but sold off heavily on the 12th of March, extremely disappointing, but all is not doom and gloom.
What is most interesting though is the rapid recovery of Crypto - returns in USD as of 13th April 2020 look considerably better than 3 weeks ago:
|
YTD |
1 Y |
|
|
DCX10 |
-4% |
-7% |
|
BTC |
-5.99% |
31.77% |
|
GOLD |
13.23% |
32.93% |
|
DOW JONES |
-18.04% |
-9.24% |
|
S&P 500 |
-14.52% |
-3.11% |
|
NASDAQ |
-8.70% |
3.80% |
While the “safe-haven” and ”uncorrelated asset class” narratives are as yet questionable, the other long term value propositions are still very much in play. And with trillions of dollars being printed to fight the economic impact of Covid-19, even more so.
Some of the predicted drivers of the DCX10 recovery:
- An ever-weakening Rand
- Retail and institutional crypto adoption
- The Bitcoin, BSV and BCH halvings in less than 40 days
- Record low interest rates and money printing by central banks
#GetOffZero #Hodl
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