Tag Archives: 5) Global Macro

Markets remain unsettled even as policymakers worldwide continue to take aggressive emergency measures; the dollar continues to power higher Fed rolled out another crisis-era program last night; US Senate passed the House virus relief bill by a 90-8 vote ECB held an emergency call last night and announced an additional bond purchase program to the tune of €750 bln that now includes commercial paper SNB kept rates steady at -0.75% as expected; BOJ continues to flood...

All bubbles pop, period. The financial elites are pushing a narrative that asset prices, sales and profits will all return to January 2020 levels as soon as the Covid-19 pandemic fades. Get real, baby. Nothing is going back to January 2020 levels. Rather than the “V-shaped recovery” expected by Goldman Sachs et al., the crash in asset prices will eventually gather momentum. Why? It’s simple: for 20 years we’ve over-invested in speculative bubbles and squandered...

This is why it’s imperative to go big now, and make plans to sustain the most vulnerable households and small employers not for two weeks but for six months–or however long proves necessary. That governments around the world will be forced to distribute “helicopter money” to keep their people fed and housed and their economies from imploding is already a given. Closing all non-essential businesses and gatherings will crimp the livelihood of millions of households and...

Subtract their immense debts and they have negative net worth, and therefore the market value of their stock is zero. To understand why the financial dominoes toppled by the Covid-19 pandemic lead to global insolvency, let’s start with a household example. The point of this exercise is to distinguish between the market value of assets and net worth, which is what’s left after debts are subtracted from the market value of assets. Let’s say the household has done very...

Market sentiment is likely to open this week on an upswing after the Fed’s emergency rate cut and expanded QE were announced Sunday afternoon local time.  Yet as we have seen time and again this past couple of weeks, added stimulus has had little lasting impact on markets as the virus numbers continue to worsen.  Europe is now reporting more daily cases than China did at its peak.  We remain negative on EM until the global growth outlook becomes clearer. AMERICAS...

The decline phase of the S-Curve is just beginning. Globalization and Imperial Pretensions have been decaying for years; now the tide has turned definitively against them. The Covid-19 pandemic didn’t cause the demise of globalization and Imperial Pretensions; it merely pushed the rickety structures over the edge. It’s human nature to reckon the current trend will continue running more or less forever, and that temporal, contingent structures are...

President Trump spoke to the nation last night and did little to calm markets; reports suggest that the Democrats are working on a bill Fed easing expectations are intensifying The ECB decision will be out at 845 AM ET; over the past 17 ECB decision days, the euro has finished lower in 11 of them Reports suggest the Bank of Japan is “likely to strengthen stimulus” next week; Australia announced details of its AUD17.6 bln stimulus plan The dollar is broadly firmer...

This is the upside of hyper-litigiousness: prevention is prioritized as the most effective means of limiting future liability. Never mind prevention or vaccines; the big question is “who can we sue after this blows over to rake in millions of dollars?” Yes, this is pathetic, tragic, perverse and evil, but that’s reality in a hyper-litigious society like the U.S. Many people are struck by the apparent over-reaction of Corporate America to the Covid-19 threat, but this...

The dollar is stabilizing but remains vulnerable to disappointment as markets await details of US fiscal measures US reports February CPI; Joe Biden moved closer to clinching the Democratic nomination BOE delivered a surprise 50 bp rate cut to 0.25% and initiated a new lending scheme; UK government releases its budget today; UK reported weak data RBA Deputy Governor Debelle laid out the likely path for unconventional policy; China reported disappointing money and...

Christine Lagarde will chair her third ECB meeting Thursday.  She faces growing risks of recession but also widespread skepticism within the ECB regarding the efficacy of negative rates.  Markets have priced in several rate cuts this year.  Here, we discuss what measures the ECB may take this week. POLICY OUTLOOK It’s worth noting that even with the complicated voting rights system, a formal vote is not always needed to act.  For instance, at the September 2019...