(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: Preview WK #7 & Virus Update...
Preview of WK 7 & Thoughts…
- Central bank wise, we have decision out of New Zealand (rates expected to be held at 1.00%) & Mexico (Rates expected to be cut to 7.00% from 7.25%). There is quite a bit of Fed speak, with Powell set to testify before the Senate banking Panel. We’ll also be hearing from RBA’s Lowe & Norges Bank’s Olsen.
- Econ wise, CPI & PPI out of China, alongside loan data are likely to be ignored given the focus on the virus. We do also have CPI & retail sales out of the US, that is likely to be very much not ignored. Lastly IP & Flash GDP data out of Europe will be key.
- Lastly for WK 7, it will be interesting to see if the New Hampshire primaries (Tue Feb 11 US time) will be just a touch better than the cluster %&#! that was the Iowa Caucuses – which likely resulted in Trump being the real winner & Peter-B getting some wind knocked out of his sail. Speaking of which, KVP may owes Vega some mula… as its looking “skin of teeth” close between “The Bern” & “Buddha Pete”. Looks like we have a recount in order.
- Later today, don’t forget NFP 163k e 145k p, AHE 3.0%e 2.9%p & U/R 3.5% e/p – can imagine post those big beats on ISMs Mfg & Non-Mfg. earlier this wk, that it better be stellar numbers, as in-line to misses may take some starch out the market as we go into the wkd. As per last Fri, we’d likely see a big jump in confirmed cases globally & in China as we get back after it on Mon morning.
2019-nCoV Update Fri Asia Mrn 7 Feb…
Quick update & thoughts on the Virus since our Thu check in:
- As of this Fri Asia morning, the figures are 31,028 (28,276 +10% DoD, lower than yest’ +15%) confirmed cases, +636 (565) deaths & c. +1,507 (1,150) recovered. KVP reckons closer conservative number of infected now is likely +50,000 to 100,000 on the mainland… & before it is all over we are likely going to be well in the 6 figures… if we are not already there. Likewise, likely real numbers internationally are much higher, because quite simply there are a lot of countries & entire continents that are just not set up to screen for (which we know is a lot probability anyway), let alone contain & treat the confirmed cases. Seriously even the countries than can do these things, are not necessarily executing on them as they should.
- If there is only one thing you can read today, make time for this excellent perspective piece from a Linked-In post by Mario Cavolo. Cavolo is a US expat whose home for the last few decades has been China. The piece does help give a reset of the villainization that China & people of Chinese heritage (so not just mainland Chinese) have been going through around the world – post the outbreak of this virus. The author points out how there was another virus outbreak in the US, USA 2009 H1N1 Virus (swine flu), that lead to close to +300,000 & over 60m Americans infected (& over 760m globally) – yet there was no immediate government response, there was no shutting down the virus’s ground zero, nor closure of flights, nor scapegoating of the US.
- Point here is not that 2019-nCoV is equal to 2009 H1N1 virus, but their treatment by the vast majority of global media outlets & the west are skewed so viscerally. Part of these may also be that social media & social network platforms were nowhere near as prevalent today, as they were 10yrs ago. It does suggest that we should stop & think what would have happened/or would happen if there is a virus outbreak in our respective countries / communities.
- Think a key takeaway is what we have flagged on Macro Dragon from wk one of following the Virus – the data in China, unfortunately is not likely to matter for markets in the near-term (which is dumb! But what can we say Mr/Mrs Market are quite the bi-polar individuals), especially for the US. It’s really going to be about the data abroad, as that will be construed as cleaner, more reliable & with less vested interests.
- So Japan is seriously breaking away from the pack internationally, they had 45 yest. & it looks like an additional 41 more cases have been found – the majority of these cases are tied to a floating Petri dish, which is a Cruise Ship called Yokohama that is in full lock-down (this is super lucky by the way for their respective countries). So we are standing at c. 86 cases in Japan at the moment (obviously not really “Japan”). SG +2 to 30. TH is 25. +4 in HK to 25. SK stays at 23, +1 in AU to 15, GER +1 to 13, US stays 12, TW +5 to 16, Vietnam +2 to 12 & Macau still at 10.
- KVP is getting more towards the view that similar to the USA’s H1N1 Virus, that pretty much spread unchecked globally with zero consequences for the US – that we may just get to a point globally where we accept that 2019-nCoV is going to be here to stay. Again, this is not a walking dead or head exploding mutagen. This is a virus that is of the same strain as the common cold or the flu – the greatest risks are to those with weak immune systems and/or have other on going medical conditions. And just like how you get the cold or the Flu, rest & recuperation – helping the body’ own immune system is generally the pathway to recovery. Again this is based on the mixed information & data that we know today.
- Still not yet sure we are close to peak hysteria & need for education globally on this. For once, hope to be wrong here.
- One thing is for sure, the market currently does not care nor is it pricing the fact that China is going to take a lot longer to get back to running at its usual run-rate.
- Just amazed that the Macau names continue to rally even post their initial technical bounce & post the government suspending operations for half a month (which would not surprise KVP if it was extended). Even if we were to cure the virus overnight & halt all spread globally, who is going to gamble next wkd in Macau? There is a fear to taboo element here that will take time to work its way out of people’s psyche, which will again make it that more challenging for tourism linked to China & from China.
Have a fantastic, gratitude & abundant filled wkd ahead everyone, stay healthy as well as keep your mind open to profitable & abundant opportunities. Life happens for us, not to us.
Some Anchor Pieces from #SaxoStrats: