Mobeen Tahir (Wisdom Tree) | Following weakness in prices around the middle of March, when liquidity needs created acute selling pressures on gold, the precious metal has resumed its strong run this year with more than 13% price appreciation year to date.
David Lafferty (Natixis) | Central banks have pinned the front end to zero – or lower – but real rates and inflation premiums have some room to rise into the recovery phase – as slow as it may be. Yields will also see some upward pressure when the Fed and other central banks eventually begin to slow QE purchases. At this point, the Fed would prefer not to discuss going negative as the overnight market recently priced. Another sell-off or prolonged shutdown might put negative rates on the table, but we’re not there yet.
Adam Vettese (eToro) | Investment banking giant JPMorgan Chase has begun to provide banking services to cryptoasset exchanges, according to reports. The Wall Street Journal first reported overnight that both Coinbase, the largest US-based bitcoin exchange with more than 30 million accounts, and Gemini, which was started by Tyler and Cameron Winklevoss, have agreed a deal to use JPMorgan’s banking services.
The Norwegian Global Pension Fund, the world’s largest sovereign wealth fund with assets of around $1 trillion, will be subject to a withdrawal of funds by the Norwegian government which could amount to $41 billion, which amount 4,2% of legally established limit on the fund’s reimbursements. Just two months ago, at the height of the market crisis, the big message for the sovereign wealth funds was that they would not resort to redemptions involving asset disposals.
Markus Allenspach (Head Fixed Income Research, Julius Baer) | Investors will recall that the Fed is refinancing existing loans to companies only with a debt-to-EBITDA ratio below 6x and new loans with a ratio below 4x. In other words, the Fed is not lending to companies that were over-indebted prior to the Covid-19 crisis.
Soros was speaking in an interview entitled The Crisis of a Lifetime with the journalist and author Gregor Peter Schmidtz, published by Project Syndicate. He argues that “Donald Trump would like to be a dictator” but cannot because there is a constitution in the United states that people still respect though “that doesn’t mean he will not try”. “I put my faith in Trump to destroy himself, and he has exceeded my wildest expectations”.
Fidelity | Over 100 million travellers hit the Chinese roads during the five-day May Day holiday, the first major test for domestic tourism demand since the Covid-19 containment measures began to be lifted. International travel remains out of the question, but clear signs of a gradual recovery in Chinese domestic tourism could give other countries a boost in confidence as they look to the future.
Simon Peters (eToro) | This week, the Bitcoin block reward halving will happen, possibly as early as today. We don’t know the exact date and time as it happens automatically after 210,000 blocks are mined rather than a defined date and time, but if you want a New Year’s Eve style countdown, check out Bitcoinblockhalf.com I’ve covered the technical details of halving in previous newsletters, so I won’t go over them again. The important thing to note is that the block reward to miners will halve from 12.5 BTC to 6.25 BTC, hence the name of the event.
Janwillem Acket (Julius Baer) | After initial jobless claims topped 33 million since 12 March, US labour market statistics for April showed massive job losses. As was to be expected, the usually cyclically robust services were a major source for redundancies, because they particularly suffered from the lockdown measures. However, there are reasons to expect that April 2020 could mark a low as fiscal and monetary incentives, next to a relaxation of the lockdowns, are prone to start a rehiring wave again.
Anthony Pettinari (Citi GPS) | While we can’t rule out that funding for infrastructure will be included in a new package, it looks far more likely that any package that can be agreed on by the Administrationand Congress will include more money for small businesses, the unemployed, hospitals/health care, and possibly State/Local governments. The good news though is that we expect a post-election comprehensive infrastructure bill that could help propel beaten down state and local economies.