Insights

Top News:

9/14: Amid a flurry of M&A deals, (here, here, and here), investor sentiment was further buoyed by comments that one late-stage Covid vaccine may be available for distribution by year-end.  “Abenomics” may well continue after Japan’s former Prime Minister’s right-hand man, Yoshihide Suga, is all but assured to be his successor.

 

9/15: Presaging a demand shock owing to a second Covid wave, the International Energy Agency trimmed its outlook for worldwide oil demand by 8% year-on-year.

 

9/16:  The Fed maintained its dovish stance at its September meeting, with rate hikes not expected until 2023, at the earliest. Subsequent to the expiry of extended unemployment benefits, U.S. retail spending in August slowed, though rising 0.6% over July’s tally. Meanwhile, interim trial data from one pharma’s antibody treatment against Covid yielded promising results.  Globally, OECD said GDP will shrink by 4.5% this year, still 1.5% better than its June projection.

 

9/17: Six months after the Covid-induced employment crash, the latest weekly jobless claims report painted a stalling recovery picture.  The European CDC issued a warning on a resurgence in Covid cases on the Continent and the U.K. Synchronous with other central banks, both the Bank of Japan (here) and the Bank of England (here) left intact their loose monetary policies to keep the gunpowder dry in a “unusually uncertain” environment.

 

9/18: Initial September reading of consumer sentiment improved better than expected, while the looming election and vaccine progress were cited as two key risks.  An index of leading economic indicators for the U.S. showed that “this summer’s economic rebound may be losing steam.”

 

Heard on the Street:

“The Fed’s new inflation framework has not led to a new policy regime, or fresh action… This reinforces our view that, barring a new exogenous shock to the economy, or a fiscal policy error failing to bring fresh support to the recovery beyond the November elections, markets have seen the peak of Fed stimulus.”

— Lena Komileva, chief economist at G-Plus Economics, as quoted by MarketWatch on 9/17/2020

 

“So recently we have a retracement in the equity market. What was interesting is that gold was very resilient despite the equity’s pullback, suggesting that there’s ongoing buying support.  On top of that, gold is also a very attractive portfolio diversifier. I think a lot of investors have been piling into bonds and REITs (real estate investment trusts), so gold is viewed as an alternative to that, in case that particular segment gives you pressure.”

— Yeoh Choo Guan, head of ASEAN global markets at UBS, as quoted by CNBC on 9/18/2020

 

Longer Game:

Are we heading towards a bipolar world, anchored by two competing tech ecosystems, namely, Chinese autocracy vs. Western-styled democracies?  Axios highlights one such tech alliance between Europe, Japan, and the U.S.

 

One fallout from the Covid pandemic has been an accelerated “de-globalization,” both in rhetoric and in practice.  Some notable economists sound off on its ramifications.

 

Bonus:

According to Bank of America’s September survey of institutional investors, investment dollars flowed into industrials and small caps, as more respondents now believe we’re in an early growth cycle rather than a recession.