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By Bilal Hafeez 28-05-2020
In: post | Newsletter

Exclusives: US Labour Recovery / Sustainable Levels Of Debt / COVID Social Bonds

(4 min read)
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Today, we saw a big drop in US continuing claims which lends some support to the recovery narrative. V-shaped advocate and regular contributor Dominique Dwor-Frecaut delves into potential labour market inefficiencies in the US fiscal response to COVID and how they could be fixed in her latest piece.

We keep getting questions about how high government debt levels can be sustained, so we invited John Nugée from Laburnum Consulting to share his thoughts. He puts the topic into historical perspective.

South Africa expert, Peter Attard Montalto, writes that it’s time to think outside of the box and gives his take on COVID-19 social bonds. We also feature a written summary of my podcast interview with Argentina’s former central bank governor and finance minister, Alfonso Prat-Guy.

With the EU recovery fund still in focus, I’d also recommend reading Susan Wegener’s note on Merkel’s legacy that we published a few days ago. Finally, in our latest US election tracker, we find a dip in Trump’s approval rating and in our Global COVID-19 tracker, we find that EMs are still at the peak of their battle.




Inefficient COVID-19 Relief Unlikely To Stop V Shaped Recovery (3 min read) The US administration’s initial policy response to COVID-19 has provided the majority of workers with replacement income larger than their previous compensation. As a result, the labor market recovery is likely to be delayed. Nevertheless, I am still expecting a V shaped recovery as policies are becoming more efficient and as the administration faces few limits on deficit spending…

(Dominique Dwor-Frecaut | 28th May, 2020)



Are Rising Debt Levels Affordable?

Are Rising Debt Levels Affordable? (5 min read) As governments around the world take on huge quantities of debt in an effort to support their economies, two questions repeatedly arise: won’t all of this borrowing be inflationary? And how will it be afforded and paid back? In this article we address the affordability question. This is two questions in one. Firstly, is the debt affordable? Many people focus on just one statistic, the ratio of…

(John Nugée | 28th May, 2020)


Will The Crisis Shake Some Deeply Rooted Investing Trees? (7 min read) How should an investor price a government bond? Is the risk of repayment all that matters, or is it important to consider what the proceeds will be spent on? Can an investor actually decide that it is ‘ok’ if a government doesn’t service its contractual obligations for a period because it’s the ‘right thing to do’? Having worked with emerging markets in Africa, these kinds of questions are not quite as new to me as they are to the world…

(Peter Attard Montalto| 28th May, 2020)



Argentina Alfonso Prat-Gay


Podcast Review: Macro Hive Conversations With Alfonso Prat-Guy (8 min read) We were delighted to have Alfonso Prat-Gay, Argentina’s former central bank governor (2002-2004) and finance minister (2015-2016) as our podcast guest on Friday. We covered so much interesting ground that we decided to distil his key thoughts into a note in case you don’t have time to listen to the podcast. Although I highly recommend you do!

(Caroline Grady | 28th May, 2020)

Merkel’s Legacy Moment (4 min read) Of the events that COVID-19 has suspended or cancelled, the commemoration of the 75th anniversary of Victory in Europe Day was not one; the end of World War II was sacrosanct. As Walter Steinmeier, President of Germany, gave his speech on 8 May 2020, did he think what effect his words would have on Angela Merkel?

(Susan Wegener| 26th May, 2020)

Hive Indicators

US Election Tracker – Trump’s Approval Rating Back Down Within Range President Trump’s approval rating is now back within range after an earlier bounce on the back of easing in lockdown restrictions (Chart 1). With less than six months to go before the election some states are extending postal voting to address concerns over in-person voting during COVID…

(Bilal Hafeez | 28th May, 2020)


Trump Shadow


Coronavirus COVID-19

Global COVID-19 Tracker – EMs Still At The Peak Of The Battle In EM, South Africa leads on cases with a 7% increase, reaching a total of 24,300. This makes it the most affected country on the African continent. It is followed by Egypt which saw a 5% increase and has reached 18,800 cases. The 5% increase is also shared with Nigeria, almost all Latam economies, and India…

(Bilal Hafeez, Stefan Posea | 28th May, 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.)