(These are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations. By the time you synthesize this, things may have changed.)
Macro Dragon: Bojo in ICU = Key Implications for GBP / UK Recovery
Folks as a pin going forward during this turbulent times, let us please remember:
The Covid-19 crisis with all its challenges, stress, chaos & opportunities will also eventually pass. What defines humanity & ourselves as individuals is how we both individually & collectively act under adversity. Think of how you want to look back over this period, doing your part to keep your family healthy, society healthy & functioning. Keeping a cool head, when others are losing theirs, maintaining an objective list of positive aspects & negative aspects of the policy responses & economic shock the world is / could go through. And lastly gratitude, sympathy & empathy for one another. Parts of Asia got / are getting through this & so too shall the RoW.
The one big positive from all this, is it reminds us we are all One. Plus we are not at the top of the food chain. Covid-19 does not care if you are rich, poor, what your ethnicity & skin color are, what passport/s you hold, nor what you age or profession is. Our greatest achievements are almost always those that we collectively do with others & sometimes as in this case, potentially as species.
Lastly keep your mind open to growth & opportunities.
Top of Mind…
- We already covered the wk ahead on Fri Macro Dragon: Chu Chu!, which will be shorter given good Friday holidays around the world on 10 Apr. The wk also has an inflation theme out of the US & CH
- The deck of probabilities is against Bojo – who is likely the one unique leader that can lead the UK out of the EU, as well as economic recovery from the Covid-19 epidemic. Our thoughts are of course with him, his family & the UK
- Lastly if you think Bojo is the only world leader with Covid-19, think again. KVP would take any bet that the leaders of Brazil & Mexico, who have flaunted any physical distancing measures are more than likely to have it. Watch this space
- Once again Covid-19 is accelerating political risk & leadership globally
- The risk to the Macro Dragon’s bearish US equities skew (retest the 2200 lvls & make new lows), has its gone from being an outlier (3-4wks back) to being super consensus.
- Does not make it wrong, but the continued price action from US equities – monster +7% on US S&P equities overnight to 2663 – says that the upside continues to be the path of least resistance as shorts get squeezed & the euphoria over lower numbers coming out of Italy, Spain & NY
- In the GFC it took 2yrs to lose c. 10m jobs, so far we have done that in 2 wks during the Covid-19 crisis. And as we talked about yest, the tail-end (which CH, SK, JP, SG, TW) of Covid-19 is not as clear cut as it seems – things don’t just restart symmetrically, let alone global travel opening up
- Lets see how this wk plays out, at this rate it may go down as the most bullish wk ever seen in US equities. Still 3 trading sessions left.
We could continue to be in a gang buster period of volatility both to the up & down side until at least mid-Apr to back-end of May. Some, time decay is needed in the system, both from a Covid-19 spread (past peak velocity upwards), even bigger & even better government / fiscal / monetary policy response, to overall heads of governments giving this the 2nd & 3rd order consequences thinking that it needs. This to shall pass. Keep you minds & hearts open
Good luck to everyone out there, be nimble & position accordingly