Nitesh Shah (Wisdoom Tree) | OPEC+ had been readying itself for an earlier-than-originally scheduled meeting. That drove oil prices higher. However, disputes about compliance levels with quotas are casting doubt on moving the meeting to 4th June. If the meeting does go ahead this week, oil prices are likely to recoup intra-day losses on 3rd June. That could take Brent above US$40/bbl and WTI above US$38/bbl.
Simon Peters (eToro) | Bitcoin has passed the much-feted $10,000 resistance level, the first time since the crash of February 2020 when it dipped to $3,850 due to Covid-19 fears.
Intermoney | Argentina has once again been subject to a credit episode, as ruled yesterday by the International Swaps and Derivatives Association (ISDA), which involved the activation of the well-known CDS insurance. Argentina has accumulated 8 default episodes, four of which have occurred since 1980. Whatsmore, it could be considered that one more may have been added to these figures – namely the defaults of the southern country which would bring the total to 9.
BofA Global Research | The collapse in global oil benchmarks and weak North American differentials forced US and Canadian E&Ps to quickly dial back activity in order to avoid the cash burn from negative operating margins. Producers shut-in output, choked back wells, deferred completions and well starts, and pulled forward or extended oil sands maintenance to avoid exposure to low prices. In total, May oil curtailments may have exceeded 2.5mn b/d across the US and Canada and many producers pre-maturely announced plans for additional shut-ins during June. Since many of these plans were unveiled, oil prices have strengthened to levels where shutting-in no longer makes sense and should actually encourage producers to quickly restore production. For this reason, we expect June curtailments, particularly in the US, to be a fraction of the previously announced levels.
Saurabh Jha via Fair Observer| When the COVID-19 pandemic is dissected in the 2020 presidential election debates, Donald Trump will be at a disadvantage. The coronavirus has killed over 100,000 Americans and maimed thousands more. The caveat is that deaths per capita, rather than total deaths, better measure national failure, and by that metric the US fares better than Belgium, Italy and the United Kingdom.
Jun Du , Agelos Delis, Mustapha Douch & Oleksandr Shepotylo via The Conversation | Although the global economy was fragile at the start of 2020, many hoped for increased international trade following the US-China Phase One trade deal. COVID-19 has scuppered those hopes, bringing the world’s factories to a standstill and severely disrupting global supply chains.
Addam Vettese (eToro) | Samsung has made it easier for users of its smartphones to buy and trade cryptoassets. Yesterday, the smartphone company announced a partnership with cryptocurrency exchange Gemini, with Samsung’s Blockchain Wallet now integrating with the Gemini mobile app, allowing users to buy and sell cryptocurrencies. Users will also be able to view their Gemini account balances in the Samsung Blockchain Wallet app, as well as transfer their crypto into cold storage through Gemini’s Custody feature.
Yves Bonzon (Julius Baer)| The tensions between Washington and Beijing seem to be increasing almost every day. After the US administration ratcheted up its criticism of China’s response to the coronavirus outbreak, trade tensions have again heated up. News has emerged that China would like to renegotiate the phase-1 trade agreement signed earlier this year as it is increasingly viewed as unfair domestically. This has categorically been ruled out by US President Donald Trump.
Philippe Waechter (Natixis AM) | The CFNAI index, calculated by the Chicago Fed, is the best measure of the economic situation as it is. It is a composite of 85 indicators published in one month. It includes industrial production, retail sales, employment and many more. It is published late compared to the surveys, but it perfectly reflects the state of the business cycle. It reads on average over 3 months and when it is greater than -0.7, the probability of recession is almost zero. Below this threshold, the risk of recession is high. See here for more details. In April, the index dropped more than 10 points to -16.74 from -4.97 in March. Its three-month average was -7.22 compared to -1.69 in March. The indicator is well below the threshold of -0.7. As the graph shows, The index is also well below the measures observed in 2008/2009. The shock is of a different kind and magnitude never before seen. This curve has the same pace as that of employment which in April contracted by 20.5 million.
Ricard Murillo Gili (via Caixabank Research ) | The paralysis of economic activity will lead to a fall in global GDP not seen since 1930. Are there latent financial fragilities that could amplify this decline? In a more demanding financial environment, the high levels of debt will be put to the test, its quality will deteriorate and mechanisms that amplify economic stress could be activated due to the interconnections that exist between different assets.