Global Macro


China warns that v-shaped recovery is not coming

Via Bloomie: Relax, eat out and shop. That’s the latest message from the Chinese government to its people, after months of warning them to stay indoors because of the coronavirus. In a bid to jump start consumption that all but disappeared during the outbreak, authorities in some places are distributing vouchers, asking companies to give


Battlefield triage arrives in UK

We’ve already seen it in Italy, now the UK, via The Tele: Intensive care for coronavirus patients is now being limited to those “reasonably certain” to survive, a major NHS London trust has conceded. A department head at Imperial College Healthcare revealed on Sunday that fewer and fewer marginal patients are being selected for ventilator treatment because so


No virus v-shaped recovery

It is structural change not cyclical. Via Joseph Carson, Former Chief Economist Alliance Bernstein: Economic recession is an infrequent occurrence, but in a fundamental sense recessions are the economy’s way of cleansing the “rot” out the system that have been built up over time. This emanates from bad investments, bad loans, bad policies, excessive risk


Global economy risks another Great Depression

University of Michigan economics professor Justin Wolfers contends that the US economy is probably already in recession due to the coronavirus pandemic. He says that unless governments around the world take ‘drastic actions’ to contain the virus, the economic downturn could be as bad as the Great Depression, when the unemployment rate reached 25% in


COVID-19 may not stop in Summer

One factor I have been watching closely is the spread of the coronavirus through summer or tropical countries. For most of February, it appeared travellers brought COVID-19 to summer or tropical countries, but the spread within those countries was limited. That looks to be changing. The raw chart comparing the two still suggests a stark


Apple shuts worldwide

I could point to a hundred stories like this but Apple is representitive: Apple said it will close all of its stores outside of Greater China until March 27 to reduce the risk of the coronavirus spreading. The iPhone maker’s online store will remain open as well as its “Apple Store” app. Apple CEO Tim Cook said the


Morgan Stanley: Credit lock up “reminiscent of 2008”

From Christopher Metli, head of Quantitative and Derivatives Strategy at Morgan Stanley: The stresses in many areas of the financial markets are spreading.  The market is increasingly pricing in a seizing of the real economy as the market awaits more details on the timing and scope of response.  Compounding these problems is growing financial stresses as cash becomes


UK banks join Italy’s in suspending mortgage payments

Yesterday, we learned that Italy has suspended mortgage repayments amid the coronavirus crisis: Italy’s deputy finance minister has said the government will suspend mortgage payments and other household bills across the entire country during the coronavirus outbreak. Laura Castelli, part of the Five Star Movement side of Italy’s coalition government, said in an interview with


Can QE save the world this time?

Via Michael Wilson, Morgan Stanley chief equity strategist: Almost two years ago, we published a report titled The Great Cycle Debate. In that report, I argued that US equities were likely to experience a cyclical bear market that would take several years to complete. This bear market would play out as a consolidation rather than a


COVID-19 global body count

It’s not fun reading. Thr parabola forms: For deaths as well: Mortality rates are not good: Korea has been by far the most aggressive tester (you can do it drive-thru believe it or not) and that may be working to slow the virus: Europe and the US are in big trouble: Winter is still very


Suddenly the v-shaped recovery has turned u-shaped

Via S&P: Growth across Asia-Pacific will slow to 4.0% in 2020, the lowest since the Global Financial Crisis, due to the coronavirus outbreak. A U-shaped recovery should start later in 2020 but by then overall economic damage is likely to reach US$211 billion. That’s according to an article S&P Global Ratings published titled “COVID-19 Now


Shades of Great Depression as drug supply chain freezes

Via The Guardian: The coronavirus outbreak has led India to restrict the export of dozens of drugs including paracetamol and various antibiotics, leading to fears of a global shortage of essential medicines. On Tuesday, concerns over supply chain shortages led the Indian government to place limits on the export of 26 pharmaceutical ingredients and the medicines and


Europe begins shut down as China revives

And so it goes, via Bloomberg: Italy announced a nationwide closing of its schools until March 15 as it redoubles efforts to curb the worst outbreak of the coronavirus epidemic in Europe. The shutdown of schools and universities, set to start Thursday, will further hit an economy that’s expected to contract sharply in coming months.


Morgan Stanley on virus scenarios

Via Morgan Stanley: Disruption, Dislocations and Delayed Recovery With economic activity disrupted and capital markets dislocated, investors are debating if Covid-19 will derail the global cycle. In times of sharp drops in asset markets, pessimistic prognoses are easy to make, but it is at times like this when some perspective is warranted. Coming into the year,


Japanese PMIs plunge on supply chain shock

Down they go: Here is why, via Ambrose Evans-Pritchard: Container shipping from Chinese ports has collapsed since the outbreak of coronavirus and has yet to show any sign of recovery, threatening weeks of chaos for manufacturing supply lines and the structure of global trade. Almost half of the planned sailings on the route from Asia to north