Our checklist for equities, earnings to watch and stocks that are up Our checklist for equities, earnings to watch and stocks that are up Our checklist for equities, earnings to watch and stocks that are up

Our checklist for equities, earnings to watch and stocks that are up

Equities 6 minutes to read
Peter Garnry

Head of Equity Strategy

Summary:  Equity markets are up to as the Fed has announced open-ended buying of Treasuries and MBS which is indirectly yield curve control. In addition the German government has signed its EUR 750bn stimulus package to help the economy. But before we can get constructive on equities besides the daily ebbs and flows to news we need to see four things happen which we present in this equity update. We also highlight which earnings releases investors should watch this week and finally we look at some of the stocks that have had positive returns despite of the COVID-19 crisis. Not surprisingly we find positive stocks in pharmaceuticals and those that see rising demand on work-from-home trends.

Our optimism on Friday in our research note Have global equities turned a corner? turned out to be a bit premature although many seeds for a turnaround have been planted by policymakers. But like a river it takes time for things dumped in one end to float downstream. One of the main policy actions that’s being scoped in Europe is the idea of coronabonds (read Coronavirus Economics: The case for coronabonds) which will be joint debt issued by the EU. In general the speed of information during a severe crisis is extremely high so we encourage clients and investors to read our daily Market Quick Take.

The biggest news today is the Fed announcing that it will do open-ended Treasury and mortgage-backed securities buying in whatever amount that is needed – this is indirectly yield curve control by design in order to keep marginal cost of funding down. The German government signs off on a €750bn stimulus package to fight the economic impact from COVID-19. In addition the German government has agreed to set up a $600bn rescue fund to provide loans, guarantees and take equity stakes in hard hit companies. The reaction to these measures has been very positive across risky assets.

Four things to watch

Over the weekend we were thinking about a checklist of things we would like to see for us to be constructive on equities again.

  1. Stronghold (our dynamic asset allocation model) to add credit in a repeat of 2008 actions
  2. VIX futures term structure turning positive (Read Turning point indicators #1 – VIX futures term structure)
  3. Financials to significantly outperform utilities (read Turning point indicators #2 – Financials to utilities ratio)
  4. Clear signs of COVID-19 cases and death in the US are flattening (use worldometer for monitoring the development)

Our Stronghold model is now experiencing a market environment that is even more tough than in 2008. In the backtest simulation the market crash evolved slowly enough for the model to be ultra-defensive going into the Lehman Brothers chaos. But more importantly Stronghold was able to aggressively put on risk early on. Already by 17 April 2009 the portfolio had 48% exposure in credit and by 15 May 2009 it had increased exposure to 84%. But it started adding risk on 20 March 2009, so what we would like to see in this crisis is Stronghold to increase exposure to risky assets before we get constructive on equities.


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.