Cryptoassets continue to remain stable amid the surge in volatility in equity markets, with the all three trading in a narrow trading range over the last 24 hours. Bitcoin is through the $9,000 mark, up 4% this morning at $9,118, while Ethereum and XRP have also made similar gains up 4.5% and 2.9% respectively.
Atul Singh | The coronavirus outbreak is putting a clearly unsustainable global economy to the test.Coronavirus is China’s Chernobyl. It is finishing what Trump’s trade wars started. Global supply chains will change. Trade will slowdown. The decoupling of China and the US will continue. Even as these tectonic changes unfold, a global recession has become more probable.
Nitesh Shah (Wisdom Tree) | With the coronavirus spreading around the world, the market is understandably scared that demand for crude oil will fall hard this year. Brent oil prices have fallen from a peak of US$68/barrel in the first week of January to US$56/barrel currently (24/02/2020). We believe that the backwardation in the Brent oil futures curve is generated by the fact that OPEC is ready to intervene.
Ranko Berich (Monex Europe) | Jay Powell and the Fed have taken the warning financial markets have given about coronavirus over the past weeks to heart and brought out the big guns with a 50bp intra-meeting rate cut. This is a tool that has not been used since 2008, and comes after a serious worsening in the global macroeconomic outlook due to the Covid-19 outbreak shattering previous optimistic assumptions that it would be mostly contained within Q1.
Expectations for coordinated action from the main central banks is growing. The Fed’s messages will be particularly decisive as “it is the only with real capacity to influence the market and the determination to take strong action”, explain experts at Bankinter. The upcoming central banks’ planned meetings are: March 12 (ECB), March 18, the Federal Reserve (FOMC Minutes), March 19, the Bank of Japan and March 26, The Bank of England.
Tom Walker, Schroeders’ co-head of Global Real Estate Securities, believes that the most successful global cities operate in exactly the same way as the FANGs. Modern economies are now driven by innovation rather than heavy industry and manufacturing. The most successful global cities are those that draw in the most talented workers and monetise ideas which drives economic growth.
Degussa | Wherever you look: Prices for consumer goods, real estate, stocks and bonds are on the rise. That means that the purchasing power of money is on the decline. For if, say, stock prices go up, your money unit can buy fewer stocks. What it also means is: While people holding assets, whose prices increase, become “richer”, people holding money get “poorer”
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.