Starting the week with a positive mood in the markets

Good morning,

Yes, the Chinese Manufacturing PMI has shown an unexpected recovery to 50,7, its best reading since January, so we have good news right away. But in Japan the factory activity has collapsed and South Korea is seen its exports drop for three consecutive months.

And we are swimming among the unrest in the US caused by George Floyd’s horrendous killing and Trump deploying the National Guard to preserve order. At the same time, he has pulled the US out of the WHO and Pompeo is accusing China of trying to weaken the free world and also of hiding information on the virus, plus taking measures against this country in exchange for the implementation of the National Security Law in Hong Kong.

So,how come the markets are pushing forward with such a basket of tension oriented news and events? Please share it with me if you know the answer because I have been talking about it with several experts and the general response has been «No idea».

In fact, Goldman Sachs has reviewed its 20% drop prediction to the 2,400 level on the S&P issued some weeks ago and it is know capping the market correction at 2,750 points.

This overall optimistic reaction is very good for the euro, sterling, yen and the commodities currencies (bad for the dollar, in essence), it is pusihng gold forward and even the crude oil.

So we are going to have a very interesting week ahead of us, particularly today with the Manufacturing PMIs in Europe and the US. Enjoy it because I will.