The last week has seen a number of troubling developments regarding the economy and financial markets, all of which should remind investors of the importance of holding genuine safe haven assets, including pink diamonds.
Some of the developments that caught our eye include:
- An uptick in the number of American’s getting diagnosed with COVID-19, with some 60,000 cases a day being reported (up 10% in the past week).
- The announcement of a 3-day lockdown in Brisbane due to the re-emergence of COVID-19, with other states immediately implementing travel restrictions, potentially ruining the Easter holiday plans of thousands of Australians.
- A huge sell off in stocks last Friday, as highly leveraged Family Office Archegos Capital was hit by a USD $20 billion margin call, forcing it to dump holdings into the market.
- The blockage of the Suez Canal, with one of the world’s largest cargo ships, the Ever Given, stuck for several days, costing the global economy some $400 million per hour.
Some of these issues are only likely to prove short-term distractions, including the Suez Canal blockage, with news this morning that the Ever-Given ship is back on the move, unblocking the canal that sees some 10% of total global traded goods move through it on a regular basis.
The COVID disruptions too are hopefully not enough to send us back into the kinds of lockdowns that we saw last year, especially now that vaccinations are being rolled out across the globe.
Indeed, of all these noteworthy events, it may be the stock sell off that proves the most important for investors, with the ramifications of the Archegos Capital sell down still spreading across the market.
Far from being limited to the hedge fund itself, impacts are being felt in the heart of the financial system, with French Bank Credit Suisse and Japanese giants Nomura Holdings both seeing shares in their companies fall by about 15% on Monday 29th March due to their exposure to Archegos.