CaixaBank Research | The American political philosopher John Rawls coined the concept of the «veil of ignorance». Under this somewhat cryptic expression lies a suggestive notion: in order to determine which society is the best one to live in, we must ask ourselves: «if I did not know what position I would have in this society, in what kind of society would I choose to live in at birth?»
Heidi Wang-Kaeding via TheConversation | The pervasive influence of red capital in Hong Kong shows the impossibility of putting politics aside when doing business with China. Now, the US’s new Hong Kong Autonomy Act has shattered the illusion of Chinese political and business elites that it is sustainable to take advantage of Hong Kong’s “two systems” when “one country” undermines them.
Scope Ratings | The EU’s forceful crisis-response will increase supply of highly rated euro-denominated government and supranational bonds, which could weaken the sovereign-banking nexus and bolster the euro’s international role.
La Française | “While most of the world’s population was confined to their homes, we witnessed catastrophic news related to the pandemic. However, we also witnessed the positive impacts of lockdown on the environment: cleaner air and clearer skies due to lower levels of airborne particles in major cities,” says Marie Lassegnore, Credit Fund Manager.
Tiffany Wilding and Nicola Mai (PIMCO) | European measures applied to mitigate the effects of the pandemic have contained the unemployment rate in Europe more than in the U.S. While recognizing economic risks from the rising number of COVID-19 cases in the U.S., our forecast sees this success ratio reversing before the end of the year.
Diego Chaves & Olivier Lavinal | On June 20, we celebrated World Refugee Day. This was an opportune time for us all to pay attention to the challenge of forced displacement today. Strikingly, the world is facing the largest forced displacement crisis since World War II, with nearly 80 million people having fled their countries because of persecution, conflict, violence, human rights violations or events that have seriously disturbed public order.
E-toro | Investing patterns have differed dramatically across age groups during the crisis, according to JP Morgan, with older investors backing gold while young ones turn to Bitcoin. Millennials are also targeting stocks while their parents dump equities and turn to bonds.
Alphavalue Research | The industry is still a question mark: the shift to online purchases, to what extent buyers will need to see, touch and feel a product before making up ones’ mind. However with a 15% upside potential, the sector is nearly at acceptable prices. This is entirely due to Inditex (27% upside) and M&S (25% upside but best avoided). The fact that Zalando or Next do not trade wildly above their target prices may also indicate that a Buy window has opened. Time to dip a toe again.
Madrid Nuevo Norte, the urban development in the north of the capital, received the latest and final approval in July. The project has been in the pipeline for 27 years, and now, coinciding with the health crisis, it is ready to go ahead in early 2021. This is considered the largest urban transformation initiative in Europe over the next decade and is a morale booster for Spain’s depressed construction sector after the strict confinement period.
David Page, Head of Macro Research at AXA Investment Managers | The BoE left policy unchanged with Bank Rate at 0.1% and Asset Purchase Target at £745bn by unanimous vote. The Monetary Policy Report included projections for GDP to fall by 9.5% in 2020 and rebound by 9% in 2021. CPI was forecast to fall to 0.25% by end-2020, but to recover to 2% by end-2022. The MPC noted considerable uncertainty, but with risks skewed to the downside. The Report presented some discussion around the outlook for negative interest rates, which it confirmed it was “currently considering”.