WHAT DO I THINK HERE? This is about Confidence! 08-09 like w/ social media “power” on top of it. It may not be a “financial crisis” like 08-09, obviously. BUT… That was about your bank & fund.
Written on March 5, 2020 by ozan
WHAT DO I THINK HERE? This is about Confidence! 08-09 like w/ social media “power” on top of it. It may not be a “financial crisis” like 08-09, obviously. BUT… That was about your bank & fund.
This is about your children’s school, your plane, your Mom’s movie theater being all empty
Same confidence issue
Plus social media “monster”. The rest is shaving.
Get all your people who know 08-09 trading innnn…
What made robots sell es first at yesterday midnight was this headline, whether justified or not: (BN) Carnival’s Princess Reroutes Ship That Is Linked to Virus Death.
Then we got more scared while NYC was sleeping by these two: “HSBC SAID TO FIND ONE CORONAVIRUS CASE AT LONDON RESEARCH ARM (some news agencies wrongly sent evacuation reports)…
VIRUS Q: any credible explanation to why WHO’s global mortality rate for covid-19 at 3.4% is significantly higher vs everything else we’ve seen / heard so far?)
So: Investors sound more like “I’ve got it” during big Tuesday sell off & quiet/frustrated on mega Wed comeback. Speaks volumes.
Zig zag will continue. As it does now.
It will be like 08-09 trading. Lots of ups & downs.
I wouldn’t be surprised if ECB cuts & does TLTRO next week. I still expect boe, ecb, fed, all to cut whether they want or not.
I wouldn’t be surprised if BoE does emergency cut even though Bailey tried to sound calm
Speaking of which; what a U turn TV interview by Bullard. One almost couldn’t watch
CAD & 50 bps cut also made sense!
Es down 60; 0.97% … 1.1180
Sadly; these level of rates & more cuts to come are bad news for financials.
Empty airports, closed schools. 08-09 like trading is the Motto
Brazil, SoAf etc can’t grow at best of times, so I remain bearish on them. Brazil spending those reserves
Turkey, 6.08, outperformer in “everything going to zero rates” mood & everyone are so bearish against her.
We are all Fenerbahce fans now?? PUTIN: CAN’T LET SYRIA SITUATION HARM RUSSIA-TURKEY RELATIONS
*PUTIN TO ERDOGAN: SITUATION IN IDLIB DEMANDS OUR ATTENTION
*PUTIN SPEAKS AT KREMLIN MEETING WITH TURKEY’S ERDOGAN .
Eyes are also on Oil. OPEC MINISTERS AGREE OIL CUT OF 1.5 MLN BPD - SOURCE. Putin will make the final decision.. as he usually does in this world., beyond oil blah.
There will be more Corona fears in US & UK, I fear
But Trump vs Biden is incredibly news for FAANG & second half.
Just hang on for warm weather. 🧿☕️🌍
But even on that, a friend/client made a fair point! “Problem with the whole warmer weather argument is that Southern Hemisphere becomes winter then too… it’s not like Brazil and Australia and New Zealand don’t have corona right now either ..so clearly can spread in warm weather.”
As I type, “EM FX weak, low-yielders EUR and JPY strong - highlighted this negative correlation yesterday. We’ve had a fair bit of pushback to our bearish dollar view in recent days, “a reply to dollar bulls” in your inbox
http://tiny.cc/x76vkz” (George).
In the “forest,” we say when markets are down, Aditya the bear trader rollsss! ;) Here are his latest thoughts! “(BN) *SOUTH AFRICA REPORTS CASE OF COVID-19 HAS TESTED POSITIVE
HOW IS SA GOING TO DEAL WITH THIS !! THEY CANT DEAL WITH THIS
.. THIS IS POINT AROUND DISPERSION PEOPLE..
people will cut into any rally and dispersion will go up and not come down … we are alredy seeing carry trades being unwound but liquid hedges will underperfrorm… we can see some news flow around china qe or tariff reductions to help growth - wont help a lot of countries and post 1-2 days of stabilisy people will try and cut risk. As we try to rally for today or maybe 2 days we shall see people realise that the ability to control folks from going home is not upto them .. cases have come in london and no one knows as even if a person is small sick one is sent home and soon we can see another country apart from Italy get confirmed cases …. so dispersion will start . good quality vs bad quality assets : oat/bund spread , btps / bund spread .. same goes for italian assets .. em fx we can see countries with bad fiscal and current account see further data get bad like zar even if budget is decent .. and we shall see cee countries price in cuts in rates further and that will get validated as growth falters … so the trade is to look through books and get out of compression trades esp if they were on back of carry argument. PLS CALL FOR TRADES” (Singhal). Yes, please do please I need to feed my children! :)
So what are our latest thoughts from, now calmer “problem is yours, China!” Here is Perry: “In this week’s takeaway, we focus on: (1) the recent measure announce by the PBoC to alleviate the liquidity crunch that SMEs are facing; (2) the outlook of local governments’ fiscal health; and (3) the recent flow dynamics.
On the first point, despite instructions from the authorities to financial institutions to delay the repayment of SME loans and to waive any additional interest or penalty fees incurred if SMEs are unable to service their loan repayments, NPLs will continue to rise. Why? (1) The notice will delay banks from recognizing the NPLs only after 30 June; and (2) more importantly, we expect growth in China to slow to ~4.6% in 2020 from 6% in 2019.
On the second point, following the outbreak of the coronavirus, the central government has introduced a number of fiscal measures to support growth. However, these measures will only further strain local government fiscal deficits. It is likely without finding alternative channels to increase fiscal revenues, China’s fiscal deficit is likely to print in a high-single-digit figure by the end of 2020.
On the third point, although bond inflows into China have been strong, equity outflows have also been strong. This coupled with corporates keeping their proceeds offshore, as evidenced by the low FX conversion ratio, should keep RMB on a weaker footing.”
Meanwhile, Mallika & Goel claim: “Trading the virus in Asian FX began as an alpha exercise determined by countries’ relative economic exposure, first to tourism and then to Chinese demand and supply chains. More recently, Asian assets have been overwhelmed by beta moves, driven by sharp dollar weakness and the dramatic US rates rally. We are not inclined to chase the beta to dollar weakness in USA/Asia. The only precedent for USD/Asia moving lower in a period of falling growth was in late-2007, which ended spectacularly badly. USD/Asia does not follow the DXY lower in periods of equity weakness, which we expect to resume as earnings are revised lower. We expect FX vols in Asia to move higher, and despite the recent jump, we still see value in buying forward vol in flat curves where implied vols are still historically cheap, like KRW.”
Canada cut 50 bps and she was correct. I think India will do same & TLTRO. I think Madame Scarf should follow.
Denial is a beautiful river in Egypt, my terroir & but this will get more serious, real economy/streets effect wise!
World goes South, Motherland goes North :) sooo typical if u have experience of over a decade on trading floors.. Trenches: “We are trading opposite of global equities.. Cash +1.7%, BAnks +1% Mkt is willing to play on a +ive outcome from Erdogan & Putin meeting which has started in Moscow. A constructive outcome would be priced in one more round here. Overall mkt is willing to stay calm but at the end global macro will dictate the direction I reckon 6.07.”
Meanwhile; It is coming Home. [RTRS] (BBVA.MC) - ECB SENDS LETTER TO BANKS OVER CONTINGENCY PLANS FOR CORONAVIRUS-LETTER SEEN BY REUTERS. [RTRS] (BBVA.MC) - ECB TELLS BANKS TO REVIEW THEIR BUSINESS CONTINUITY PLANS AND WHAT ACTIONS CAN BE TAKEN TO PREPARE TO MINIMISE POTENTIAL ADVERSE EFFECTS OF CORONAVIRUS SPREAD.
Steve L .. cnbc live,.. talking abt what 3 big agencies told him about DM credit. I mean rating agencies are urss if 08 taught us smtg but … es downn 60.. “3 agencies told me they are more concerned on HY.. not IG”
A lottt of “are Credit Markets next” chatter on all TVs.. that is the hot button.
BOC clear and unambiguous on COVID19- ” However, COVID-19 represents a significant health threat to people in a growing number of countries. In consequence, business activity in some regions has fallen sharply and supply chains have been disrupted. This has pulled down commodity prices and the Canadian dollar has depreciated. Global markets are reacting to the spread of the virus by repricing risk across a broad set of assets, making financial conditions less accommodative. It is likely that as the virus spreads, business and consumer confidence will deteriorate, further depressing activity.” (Ruskin).
Watch Arizona debate Bernie vs Biden next week.
I agree w/ Alan on next one, and find it “sad” that Warren doesn’t drop for Bernie. Like centrists did on their side for Biden! “Betfair have Biden 75% to be Democrat candidate; 33% to be next President. Both look too low. Corona and Biden bounce have made the Presidential race meaningfully tougher for President Trump, now seen as 57% to have a 2nd term. In any event, the risk bounce on Biden, will soon dwarfed by the immensity of the global Corona story. Unfortunately count me as a skeptic that the risk bounce can last.”
This won’t be Armageddon. But there are next fear legs to this for USA, UK, Western growth.
I like all world rates lower (will CBT cut again? ;)) & I continue to predict 100 up, 100 down days for SPX led by social media & robots.
Be safe. “Don’t touch your face.” Hug your children.
Norwich Canaries eliminating Mourinho; see life can still be “funny.! :)
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