Optimism Reigns on Not Much
Summary: In contrast to emerging real economy destruction, the week begins on a positive note, as COVID-19 case growth appear to be slowing in most developed world countries. At the time of writing US futures are making a beeline for limit up and Asian indices firmly green, ASX 200 +4.33%, Nikkei 225 +4.44%, KOSPI +3.75%, Hang Seng +2.29%.
Italy, the new hotspot Spain and the UK have all reported a decline in the daily death toll, from a humanitarian perspective this is great news. President Trump also appears to have dialled back the severity of his warning, at the latest COVID-19 White House presser stated the outbreak was perhaps “levelling off”. "We see light at the end of the tunnel. Things are happening," Trump said, however we would still caution that the road ahead (or tunnel) is long and winding. A levelling off of cases could be more akin to the end of the beginning, rather than the beginning of the end as the real economy effects play out.
When it comes to the real economy effects and second order impacts of the COVID-19 containment measures, these show no sign of levelling off making the days exuberance look rife with complacency. This as Japan moves to declare a state of emergency April 7, Singapore locks down once again and pockets of emerging markets stresses show little sign of abating. The pressure of dollar strength and funding squeeze continues, although swapped lines have helped and dollar borrowing premiums have lessened. The sharp devaluation across multiple EM currencies may eventuate unintended economic dislocations that have capacity to spark risk whilst sentiment remains fragile. Flexible exchange rates will absorb the economic shock to a point before presenting secondary consequences.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.