Archives of “April 6, 2020” day

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German DAX leads the way higher in the European equitys today

  
Analysis, Global Indices

Major indices higher across the European continent.

The German DAX is leading the way higher in European equity’s today as they look to ease coronavirus restrictions.
The provisional closes are showing:
  • German DAX +5.71%
  • France’s CAC, +4.78%
  • UK’s FTSE 100, +3.10%
  • Spain’s Ibex, +4.13%
  • Italy’s FTSE MIB, +4.0%
Looking at the hourly chart of the German DAX below, the price today moved above its 200 hour moving average (green line in the chart below) for the 1st time since February 21. That is bullish.
Last week the price tested that moving average line, but stalled against the level and moved back lower. The low from last Thursday and Friday was able to find support buyers against its 100 hour moving average (blue line in the chart below). That too was bullish.
In trading today the market gapped above that moving average line and has moved higher through the day.
The next targets would look toward the swing high from last week at 10096 and the swing high from March 25 at 10137. Above that and the 38.2% retracement of the move down from the February high would be targeted at 10371.77.
Getting to and through the 38.2% retracement target would be the minimum retracement for the buyers. Failure to extend above that retracement level, and the move higher is simply a plain-vanilla correction for the index. I would expect the buyers to give up if that retracement level cannot be broken.

Warren Buffett isn’t betting on airlines but might be betting on the yen

  
  Analysis

Berkshire Hathaway to borrow in yen this week

Berkshire Hathaway Buffett
A story you’re probably not hearing much about right now is the surge in corporate borrowing. Lower rates, a demand for cash and the Fed’s ‘buy everything’ policy is leading to records in investment-grade borrowing.
An interesting one that’s going to market this week is Berkshire Hathaway. Warren Buffett’s company is going to borrow in yen this week in a multi-tranche sale with maturities extending to 40 years.
Borrowing in JPY is a relatively new thing for Buffett. He first tapped the yen market in September but he went big with a 430 billion sale (about $4 billion) in what was the biggest-ever issue by a non-Japanese company.
The talk on this issue is an 8-part sale from 3-40 years from +65 to +160 bps. That’s undoubtedly attractive and it may just be a follow-up to the Sept sale. I can’t find anything on the total values here but even if it’s bigger than the Sept sale, the dollar values here aren’t anything close to large by Buffett standards. Still, it’s something to think about.
In other Buffett news, filings late on Friday revealed that he was selling shares in airlines. There had been chatter that he may step up and buy and airline or invest heavily. That’s evidently not the case and airline shares are lower today despite the broad market rally.
So a bet on the yen and a sale of airlines assets? The world is dying to know what Buffett is doing right now and he’s been quiet since the market panic hit. Maybe actions speak louder than words.
USDJPY

Why OPEC+ will cut even without US participation

  
Analysis, Crude
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You don’t need $20 oil to kill shale

There’s a narrative emerging around OPEC+ and shale: The mainstream thinking is that Russia and Saudi Arabia want to drive crude prices lower to kill US frackers.
I don’t think it’s correct, or at least not wholly correct.
The reality is that shale didn’t make any money in 2019 at $55 oil. Even at that price, it was on its way to mass insolvencies, albeit at a slower pace. I’ve been writing about the bust in shale for more than a year.
All this talk that OPEC+ wont’ cut without the US is a bluff. Why? Because shale is still going bust at $30-$40 oil.

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