Tag Archives: COVID

Overview: Anxiety is running high. Rather than ease its Covid restrictions, a surge in cases is seeing more areas in China come under restrictions. The US reports CPI and of the ten reports this year, seven of them have been stronger than expected. The turmoil in the crypto space has gotten noticed even by those not involved. Asia Pacific bourses fell, led by Hong Kong, and Europe’s Stoxx 600 is off for a second day. US equity futures are slightly firmer. US and...

There are three potential inflection points. The first is a pause from the Fed; if nothing else, Powell signaled it was too early to think about it. The second is for the Bank of Japan to change monetary policy. Governor Kuroda has signaled that it is not time. Conventional wisdom is there will not be a change until Kuroda's term ends next April. However, we note that the surveys suggest economists and BOJ inflation forecasts for next year have converged. The third...

Overview: A consolidative tone has emerged ahead of the outcome of the FOMC meeting later today. The focus is not so much on the 75 bp rate hike, but on its forward guidance. Many expect the Fed to signal it will return to a 50 bp move next month, but we are not convinced that it will go beyond indicating that 50 bp or 75 bp will be debated in December, depending on the data. The market has a 5% terminal rate discounted. The Fed does not need to validate it now....

The Federal Reserve has been on a mission lately to make sure everyone knows they are serious about killing the inflation they created. Over the last two weeks, Federal Reserve officials delivered 37 speeches, all of the speakers competing to see who could be the most hawkish. Interest rates are going up they said, no matter how much it hurts, no matter how many people have to be put on the unemployment line, because that’s the only way to kill this inflation, to...

Overview: The euro traded below parity for the second time this year and sterling extended last week’s 2.5% slide. While the dollar is higher against nearly all the emerging market currencies, it is more mixed against the majors. The European currencies have suffered the most, except the Norwegian krone. The dollar-bloc and yen are also slightly firmer. The week has begun off with a risk-off bias. Nearly all the large Asia Pacific equity markets were sold. Chinese...

It all became very clear to me sitting out there today, that every decision I’ve ever made, in my entire life, has been wrong. My life is the complete opposite of everything I want it to be. Every instinct I have, in every aspect of life, be it something to wear, something to eat… It’s all been wrong. Every one. – George Constanza If every instinct you have is wrong, then the opposite would have to be right. – Jerry Seinfeld From the Seinfeld episode “The Opposite” I...

Overview: Aside from political economic risks, three other challenges are emerging. First, the new sub-variant of Covid is spreading rapidly. BA5 reportedly is accounting for around 80% of the new cases. It is better able to evade antibodies from vaccines and earlier infections. Hospitalization rates are also climbing. Dining, retail, and travel may be impacted. Second, the World Health Organization declared monkeypox a global emergency. The US may make a similar...

Overview: The dollar jumped yesterday making new highs against most of the major currencies, including the euro, sterling, the dollar-bloc and the Scandis. The yen and Swiss franc held in better, but the greenback still closed firmly against the yen despite a six-basis point decline in the 10-year yield. The Swiss franc rose to its highest level against the euro since the lifting of the cap in early 2015. After opening sharply lower, the S&P 500 and NASDAQ...

Overview: While the World Health Organization debates about downgrading Covid from a pandemic, the rise China and Hong Kong cases is striking.  A lockdown in Shenzhen and restrictions in Shanghai, coupled with a record fine by PBOC officials on Tencent drove local stocks sharply lower.  China’s CSI 300 fell 3% and a measure of Chinese stocks that trade in HK plunged more than 7%.  The Hang Seng itself dropped 5%.  Covid in China and Hong Kong adds to the risk of...

The economic news recently has been better than expected and in most cases just pretty darn good. That isn’t true on a global basis as Europe continues to experience a pretty sluggish recovery from COVID. And China is busy shooting itself in the foot as Xi pursues the re-Maoing of Chinese society, damn the economic costs. But here in the US, the rebound from the Q3 slowdown is in full bloom. Just last week we had pending home sales, ADP employment, both ISM reports,...