BBVA Research | Covi-19 jolts equities and sovereign yields again as mounting coronavirus cases outside China dashed hopes that the outbreak had been contained. U.S. Treasury 10Yyield hit historic lows, dropping below 1.30%. Elsewhere, the WHO stated that the covid-19 has the potential to become a pandemic, while the U.S. warned not to travel to Spain to avoid potential dangers.
The past three decades have witnessed a dramatic expansion in international trade and the globalization of supply chains. BoA Global Research’s macro teams already see a protracted pause in globalization. They go one step further and argue, in a break with the past, that the world has entered an unprecedented phase during which supply chains are brought home, moved closer to consumers, or redirected to strategic allies. This would have profound implications for automation and manufacturing, and creates myriad opportunities for the geographies to which supply chains are being redirected.
Nitesh Shah, (Director, Research, WisdomTree) | “Nassim Taleb in his book on uncertainty defined “Black Swans”— extremely unpredictable events that have massive impacts on human society. One of the defining elements of Black Swans is that models can explain their existence after the fact. In September 2019 a report compiled at the request of the United Nations secretary-general said “If it is true to say ‘what’s past is prologue’, then there is a very real threat of a rapidly moving, highly lethal pandemic of a respiratory pathogen killing 50 to 80 million people and wiping out nearly 5% of the world’s economy.
Strong general falls in the airline sector on Monday due to the spread of the coronavirus in Italy. According to Morgan Stanley data, 70-100% of the European airlines profits are made in the period from April to September, so a fall in demand or flight cancellations can have a strong negative impact.
Equity markets tumbled worldwide following the wide spread of the coronavirus epidemic beyond China. European stocks dropped most since 2016, with Italy’s MIB index dropping 5.43%, while the declines were more contained in Asia. Elsewhere, implied volatility increased further (VIX 23+6 points).
The current economic expansion now more than 10 years old, long by historical standards, as well as signs of overleverage in the corporate sector, combined with geopolitical uncertainty, suggest the next recession is not far off. According to a new study by Bain & Company, Beyond the Downturn: Recession Strategies to Take the Lead, companies that were well prepared emerged victorious from previous crises. These companies managed to survive, controlling costs and at the same time reinvesting in growth.
Misheck Mutize via The Conversation | There is renewed concern about the sustainability of rising debt levels in many African countries. Much of this debt is being incurred through foreign currency denominated Eurobonds issued on international financial markets. The total value of Eurobonds issued between 2018 and 2019 was more than the value of all bonds sold between 2003 to 2016.
Manuel Moreno Capa | From a practical point of view for the investor, Tesla is not really a car company. As opposed to selling cars, what it actually sells are expectations, future, potential. More or less the same as what many “dotcom” firms sold. That’s why its stock price is so crazy. But if at some point it became a simple car manufacturer, it would end up being valued as rigorously as the rest of the sector, irrespective of how advanced its models were.
BBVA Research / U.S. stock exchanges reopened after President’s Day holidays, in an environment where markets traded in a risk–off mood fashion. Apple Announced forecasts for 1Q20 sales are not going to fulfill expectations amid coronavirus impact, while its share value dropped 2.13 %. Furthermore, HSBC also warned about the impact of the coronavirus on its Asia business. In this context, investors sought shelter in safe-haven assets, while equities halted…
Investors worldwide are trembling at the epidemic that is currently crippling China. With good reason? This is a guest commentary by Frank Sieren. The best-selling author has lived in Beijing since 1994 and reports exclusively from China for Flossbach von Storch AG.