Bitcoin and gold feature first on our list of exclusives this week. In this piece, John Butler discusses why US corporations may diversify their ever-increasing excess cash holdings into other assets with better potential long-term returns. Next, Phil Suttle talks inflation expectations for the next decade. Supply-side issues, global disintegration and loose policy measures put him in the inflation camp. In her weekly piece, Dominique Dwor-Frecaut points out that a recent spike in delinquency rates is overstating the issue of missed loan repayments in the US.
We also have two great pieces on FX. Firstly, we take a look at Korea, whose stocks have started to weaken following the spectre of a slowdown in economic activity – we do not expect this to put more downward pressure on the already undervalued KRW. Viraj Patel, writes an impactful piece on global currency appreciations. An FX Strength Aversion Index puts CHF and EUR among the most likely to push back at stronger currencies.
Finally, we publish our weekly China growth tracker. The overall short-term growth measure is down, but the country continues to show growth resilience in the face of geopolitical developments.
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
Bitcoin and gold feature first on our list of exclusives this week. In this piece, John Butler and Andrew Simon discuss why US corporations may diversify their ever-increasing excess cash holdings into other assets with better potential long-term returns. Next, Phil Suttle talks inflation expectations for the next decade. Supply-side issues, global disintegration and loose policy measures put him in the inflation camp. In her weekly piece, Dominique Dwor-Frecaut points out that a recent spike in delinquency rates is overstating the issue of missed loan repayments in the US.
We also have two great pieces on FX. Firstly, we take a look at Korea, whose stocks have started to weaken following the spectre of a slowdown in economic activity – we do not expect this to put more downward pressure on the already undervalued KRW. Viraj Patel, writes an impactful piece on global currency appreciations. An FX Strength Aversion Index puts CHF and EUR among the most likely to push back at stronger currencies.
Finally, we publish our weekly China growth tracker. The overall short-term growth measure is down, but the country continues to show growth resilience in the face of geopolitical developments.
Enjoy!
Bilal
Could US Companies Start Buying Gold And Bitcoin? (5 min read) US corporate cash holdings have risen to record highs in recent years, both outright and as a percentage of net worth. A majority of that excess cash is on the balance sheets of the large tech companies. With the Covid-19 shock having dampened near-term investment prospects, it is unlikely that this cash is deployed soon.
(John Butler, Andrew Simon│ 20th August, 2020)
The Inflation Outlook In A Post-Covid World (6 min read) One of the most interesting (and important) debates underway is the inflation outlook for the post-Covid-19 (C-19) world. In the near term, the C-19 crisis has worked to lower headline inflation rates across the global economy. In the G7 economies, the inflation rate fell from 2%oya in January to 0.2%oya in May.
(Phil Suttle│ 20th August, 2020)
Spike In MBA Delinquencies Shows Debt Forbearance Is Having Intended Effect (2 min read) The Mortgage Bankers Association (MBA) Q2 delinquency spike likely overstates the extent of delinquencies and suggests that the administration debt forbearance policy is protecting households’ ability to spend.
(Dominique Dwor-Frecaut│ 20th August, 2020)
Korean FX Markets To Ignore COVID Second Wave (2 min read) USD/KRW has stabilised around 1185 – its post-COVID lows – in recent weeks. This comes even as Korea faces a second wave of COVID-19 cases. The scale of the wave is much smaller than the first, but nevertheless authorities have introduced measures to contain the outbreak, which has raised the spectre of a slowdown in economic activity.
(Bilal Hafeez│ 20th August, 2020)
The Return Of Global Currency Wars (5 min read) A strong dollar can be a problem for the global economy (especially highly indebted emerging markets). But on the other end of the spectrum, no country wants to foot the cost of a strong currency right now. As the global economy moves from crisis to recovery mode, this tension could lead to a new chapter in the Cold Currency War that began in the aftermath of the Global Financial Crisis.
(Viraj Patel│ 20th August, 2020)
China Growth Tacker – Resilience In Chinese Growth Our overall short-term growth tracker is down on last week, but remains high relative to historical values (Chart 1). The long-term growth tracker has moved into positive territory for the first time since Jan 2020.
(Bilal Hafeez│ 20th August, 2020)
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)