Bankinter | The price of oil rebounded strongly yesterday (Brent $63.3, +1.4%; West Texas $59.5, +2.1%), due to the cold weather in Texas, the main US oil state, which is causing supply problems. Therefore, the rise is one-off. In our view, a strong and sustained rise in crude oil prices poses a risk for the stock markets due to the impact this would have on economic growth.
Our strategists have identified a list of European companies with the best and worst pricing dynamics, which is a good way to play reflation. This is in line with our estimates which keep unchanged the narrative that global growth and inflation will surprise on the upside this year, even more strongly, as the global inflation surprise index has entered positive territory for the first time in two years. Moreover, the index is at 10-year highs for the US, while leading indicators point to further rallies on the way.
Sebnem Kalemli-Ozcan (The Conversation) | Rolling out a vaccine to stop the spread of a global pandemic doesn’t come cheap. Billions of dollars have been spent developing drugs and putting in place a program to get those drugs into people’s arms. But amid an uneven distribution of vaccines – with poorer countries lagging far behind richer nations – another concern presents itself: the cost of not vaccinating everyone. My colleagues and I sought to find out what the total hit to the global economy of uneven vaccination distribution might be.
Bonds that lost their investment grade rating and came to be considered by the high-yield rating agencies exceeded $200 billion (about €166 billion) in 2020, the highest annual peak on record to date, according to BNY Mellon IM. According to its data, some $1.5 trillion (€1.25 trillion) in bonds are rated ‘BBB-‘, the lowest rating before losing investment grade, so the firm expects the universe of so-called ‘fallen angels’ to increase in the current year.
Christian McCormick , Shannon Zheng (Allianz GI) | China’s new STAR market has been billed as the country’s answer to the Nasdaq – the technology-focused US exchange. Its listing rules make it easier for the country’s tech and science startups to list domestically, thereby supporting the fast-growing sectors that are driving China’s growth. Since opening in July 2019 with 25 listings, the STAR market now comprises almost 200 firms – and nearly 500 are in the IPO pipeline.
Fernando Alberca | The US Securities and Exchange Commission confirmed yesterday that Tesla had reported a $1.5 Bn bitcoin purchase. The firm has also enabled customers to buy its vehicles with this cryptocurrency. In the last weeks, Musk had been asking in Twitter whether bitcoin had sufficient liquidity to handle large volumes, but, as he had also encouraged on ironies of cryptocurrencies in the past, bitcoiners considered Musk’s words to be just another manifestation of his peculiar sense of humor.
Venkatesh Shankar via The Conversation | What’s in store for Amazon as Bezos steps down from his CEO role later this year? I believe that Amazon’s future – and humanity’s – is inextricably linked to the rise of artificial intelligence. Starting with Alexa, the company’s virtual assistant, Amazon is betting on AI. Amazon’s future success will depend on how the incoming CEO – current head of cloud computing Andy Jassy – navigates these new technologies while pushing the company into more industries, such as health care and financial services. His challenge is to keep Bezos’ legacy and Amazon’s disruptive culture alive.
Peter Isackson | There have been enough commentaries in the past week on the great GameStop affair to fill several editions of Encylopaedia Britannica and possibly Wikipedia as well. After all, we should really be asking this questions: are Wall Street share prices not simply fluctuating numbers on a hyperreal tracking system operated by that archetypal form of artificial (i.e., inhuman) intelligence we call “free markets?” Is Wall Street something that both exists and doesn’t exist at any given moment?
AllianzGI | This lunar new year, China has much to celebrate – including resilient economic growth, widespread success at suppressing Covid-19 and a steady transformation into an advanced economy. That’s why the ox is a suitable symbol for a country that continues to do the hard work needed to maintain its trajectory. Over the course of 2021, this economic strength may enable China to do something that other major economies haven’t been able to: ease back on the massive stimulus that the government is pumping into the economy.
Jinyue Dong (BBVA Research) | From the regional peak if 7.167 in May 2020 till now around 6.477, RMB to USD eschange rate seems to have been entering into a one-way appreciation trend whit its accumulative appreciation for around 9.6%, gaining most of lost ground of the previous depreciation triggered by China-US trade war since 2018. Not only the RMB to USD spot rate, but also the RMB CFETS basket has displayed quite a similar pattern from 91.39 to around 96, accumulatively 5%. That means, CNY has not only outperformed USD, but also against a broader basket of currencies.