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Equity Reports, World economy 7th July 2020

Earnings Season: Q3 Will Be As Weak As Expected

Patrik Lang, CFA Head of Equity Strategy Research, Julius Baer | For Q2 consensus expects S&P 500 earnings to decline 43.9%, which would be the largest y/y earnings decline since Q4 2008 (-69%). For Q3 consensus expects earnings to decline by -25.4% and for Q4 by -12.8% followed by 28% earnings growth in FY 2021. Based on our macro models and historical post-recession earnings patterns, we see upside risk to consensus expectations for both H2 2020 and FY 2021.

inflation board

World economy 7th July 2020

The Other Looming V-Shaped Recovery

DWS | There are a few reasons to think that unlike the economy, inflation could see a V-shaped recovery. Recently published inflation data seem to confirm this theoretical view. Without taking into account the energy component, which, thanks to the oil price, fluctuated wildly in 2020, the inflation rate in the Eurozone was 1.3% in June. That is exactly the same level as at the beginning of the year.

YenJuly2020

Markets, World economy 6th July 2020

Empty-Handed BoJ To Set The Tone For A Mildly Strengthened JPY

Olivia Álvarez (Monex Europe) | The USDJPY pair has remained broadly range – bound after central banks aggressively intervened to stabilise financial markets from the sharp moves triggered by the outbreak of the pandemic. The pair’s range during the onset of the virus widened to nearly 10% between the end of February and mid – March. USDJPY volatility has since subsided, with the range falling to a maximum of 3.5 % after April to date

Wirecard

World economy 6th July 2020

When Does A Technology Firm Stop Being A Technology Firm?

Manuel Moreno Capa | As Nasdaq flirts with historical highs, voices warning that the technology bubble is about to burst are growing. When? Impossible to know, although a good guide may be to analyse which technologies are about to stop being so, becoming just one more company in their corresponding sector. And now we see cases of technology firms which are increasingly similar to the sector they came to revolutionise: methods of payment (Wirecard) or media (Facebook).

home working

World economy 5th July 2020

Is It The Death Knell For Offices?

Mark Callender (Schroeders) |  Some real estate investors believe the successful working from home experiment during this crisis will lead to a long-term decline in demand for offices. We think this is premature. New technologies such as blockchain, robotic process automation and voice recognition probably pose a bigger threat to the office. However, the demand for offices in city centres and close to universities should continue to increase, driven by the growth in tech, life sciences and professional services.

US jobs

World economy 4th July 2020

US Strongest Surge Of New Jobs Since 1939, But No Major Surprise

Janwillem Acket (Chief Economist, Julius Baer) | Even though the June figure of overall non-farm job creation in the US (to which all the major segments of the economy contributed) is a historical high since the records started in 1939, there are bitter aftertastes. In fact, continued jobless claims until 20 June, i.e. during the period of data collection for the non-farm jobs, actually rose to 19.29 M, from 19.231 M a week earlier, and the four-week average until 27 June was still at 1.504 M, only slightly down from 1.621 in the previous week.

UST10Y 10YGerman Bund

World economy 3rd July 2020

U.S. Treasuries Watch: Thinking Globally

Kevin Flanagan, Head of Fixed Income Strategy, WisdomTree | While we don’t envision the UST 10-year yield revisiting the aforementioned 2018/2019 levels any time in the foreseeable future, it no longer has the same tailwind speed ‘at its back’ when ‘thinking globally’.

Indonesiaok

World economy 2nd July 2020

Indonesia Debt Monetization: Not Inflationary But Plenty Of Baggage And Not Doing Much To Help Growth

Trihn D. Nguyen (Natixis) | Currently, 32% of government bonds are held by foreign investors and the price of that debt is 5.4% for the 2-yr and 7.2% for the 10-year. Even after Bank Indonesia (BI) embarked on rate cuts of 75bps in 2020 to 4.25% and outright purchases of government bonds, the government is asking the central bank to take one step further and buy 60% financing needs in 2020 at zero interest.

gold can be considered a sound currency, as the "ultimate means of payment".

Markets, World economy 1st July 2020

The Gold Rally Continues

Carsten Menke, Head Next Generation Research, Julius Baer | The gold rally continues. Prices pushed higher yesterday, approaching USD 1,800 per ounce for the first time since 2011. Looking back, there were just 26 days in gold’s history on which it traded above that level, almost all of them occurring in August and September 2011, i.e. during the eurozone debt crisis. Holdings of physically backed gold products, our preferred gauge of safe-haven demand, recorded 95 tonnes of inflows in June, taking the year-to-date total to more than 710 tonnes. These are the biggest inflows ever.