Aidan Yao (AXA) | A sudden rise in tensions has cast a dark shadow over Sino-US relations. While the trade war has been the most eye-catching instance, increased “decoupling” has also occurred in areas of technology, investment and social exchanges as the two countries have put up “walls” against one another. But every cloud has a silver lining.
DWS | Once again, strange things begin to happen in the subprime (that is, higher risk) segment of the US consumer loan market. We can see it, without going any further, in the delinquency rates of credit card balances held by thousands of small US commercial banks. Since autumn 2016, the percentage of delinquent loans (defined as loans with overdue balances for thirty days or more that continue to accrue interest) among these banks has doubled to approximately 6%, a figure higher than the levels reached during the financial crisis 2008. On the contrary, the loan books linked to credit cards of the one hundred largest banks are much more healthy.
Neil Dwane (Allianz) | The financial markets are signalling that the situation in the Middle East won’t get out of hand, but US-Iran friction could continue for some time. The defence industry and oil and gas-related sectors could remain well-supported, but overall we believe investors should be cautious yet patient. Look to higher-quality stocks with lower correlations to the broader market and “hunt for income” if headline volatility is a risk you wish to avoid.
Libby Cantrill (Pimco) | We’ve seen a significant reduction or even outright elimination of many of the downside risks that have created clouds of uncertainty both in Washington and in financial markets over the past several months. The most substantial clarifying event was the announcement of the Phase 1 deal between China and the U.S.
DWS | The USA is a divided nation. This idea has been repeated for some time in reference to American politics and society. However, since the end of the financial crisis, this division is increasingly palpable also in the economic sphere.
|Profiting from his return to Europe to celebrate the 70th anniversary of NATO, Donald Trump used the platform to launch the opening salvos in a new skirmish in his endlessly improvised “America First” trade wars. This time, Trump claims to be retaliating against France’s effort to resist the unfettered domination of the giant American tech monopolies that have spread across global markets, leaving little margin of maneuver to potential competitors who can’t match their size and reach.
A&G Banca | With a exports still in contraction, although perhaps less than a few months ago, it is the American consumer who has sustained the global cycle.
VV. AA. (The Conversation) | Online misinformation has significant real-life consequences, such as measles outbreaks and encouraging racist mass murderers. Online misinformation can have political consequences as well. The problem of disinformation and propaganda misleading social media users was serious in 2016, continued unabated in 2018 and is expected to be even more severe in the coming 2020 election cycle in the U.S.
As Peter Kinsella, UBP’s global FX strategist highlights, the US dollar bull market has likely run its course as we enter 2020. Indeed, since 1995, long-cycle inflections in the US dollar exchange range have coincided with long-cycle under/outperformance of US equities relative to non- US equities.
Jessie J. (Unigestion) | Growth drivers have stabilised considerably since June, following the end of the slowdown that started in January 2018. The “mid-cycle” pause called by Fed Chair Jerome Powell has led to a one-of-a-kind situation: world growth remains decent while monetary policy has become once again incrementally more accommodative.