Daily Analysis - 25/04/2018
Yesterday’s release of Caterpillar Tractor’s quarterly earnings report displayed precisely why this tariff tit for tat tiff is so damaging as well as why the markets are truly spooked by the potential for further market mayhem. 62% of Cat’s variable costs is steel.
We are of the opinion that the fall in the stock was severely overdone yesterday and therefore the price will rebound today. It happens occasionally that markets overreact to things and that after a bit of time they gain a better understanding and footing of the situation. Such is the case with Cat.
The Milan keeps on keeping on with its continued buying of assets on the exchange. This buoyancy is leading the way in the Euro zone. We have seen for the past week that the direction taken in Europe is most expressive in the Milan. In other words when the markets are up in Europe they are up the most in Milan. This is a short term position as we are still recovering from the falls of the last 2 months. Keep your eyes on this and all market index trades. They are subject to manic correction.
The Turkish Lira is showing significant strength against the Euro as well as other trading currencies. The central bank is likely to raise interest rates today in response to a rising inflation in the Turkish economy. The Lira has lost over 80% of its value in US Dollar terms since the beginning of 2015.
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