Tuesday , June 2 2020
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Conference Call Replay

Summary:
Here is the link for the replay of the conference call I hosted earlier today. I shared two ways in which this crisis is different from what we have seen in the last generation. Unlike the Great Financial Crisis, the tech bubble, and the S&L Crisis, the current crisis did not begin in the financial sector, but the real economy. Also, what follows from that is that this crisis is about liquidity, while the GFC was about counter-party risk. In the call, I covered five main topics: The economic hit like we have never experienced as significant parts of the economy are shutdown. Flash March PMIs tomorrow will give an inkling and the weekly jobless claims, which surged by a third in last week’s, are forecast to jump five-fold (~1.45 mln) in this Thursday’s report and

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Here is the link for the replay of the conference call I hosted earlier today. I shared two ways in which this crisis is different from what we have seen in the last generation. Unlike the Great Financial Crisis, the tech bubble, and the S&L Crisis, the current crisis did not begin in the financial sector, but the real economy. Also, what follows from that is that this crisis is about liquidity, while the GFC was about counter-party risk.

In the call, I covered five main topics:
  • The economic hit like we have never experienced as significant parts of the economy are shutdown. Flash March PMIs tomorrow will give an inkling and the weekly jobless claims, which surged by a third in last week’s, are forecast to jump five-fold (~1.45 mln) in this Thursday’s report and that is unlikely to be the peak. See the chart above (09 peak was ~665k).
  • The US monetary policy response is three-fold: a) rates and asset purchases, b) other facilities to support commercial paper, money markets, asset-backed securities, corporate bonds, and soon, small and medium-sized businesses, and c) adjust the regulatory and macroprudential rules to the current crisis.
  • Briefly sketched how other countries are responding, especially Germany and the UK.  Also, how countries are varying in their responses, which will generate different results.
  • Described the two general hypotheses about the dollar’s surge: safe-haven vs. shortage and why I am more inclined to the latter.
  • Why a historical perspective may help in these dark days, that the resiliency of the human spirit and unstoppable force people pulling in the same direction. The response may begin slowly, but the machinery of governments, central banks, industry, and hardworking people has now become engaged. Things that are ruled out in normal times becomes possible, nay, necessary now.

US Initial Jobless Claims SA, 1988-2019

Conference Call Replay

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Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

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