In today’s letter, we feature two pieces on COVID-19. One by Dominique Dwor-Frecaut which argues that COVID news and possible re-openings should augur well for risk markets. Meanwhile, I take a look at demographics and COVID death rates and find massive inconsistencies across countries. It makes me more cautious on the news.
We have a provocative piece by commodity guru John Butler on the potential inflationary consequences of the recent oil moves. Finally, former DB economist, Caroline Grady, takes a look at today’s raft of PMI data – there’s not much good news in then, except that they can’t really go much lower.
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In today’s letter, we feature two pieces on COVID-19. One by Dominique Dwor-Frecaut which argues that COVID news and possible re-openings should augur well for risk markets. Meanwhile, I take a look at demographics and COVID death rates and find massive inconsistencies across countries. It makes me more cautious on the news.
We have a provocative piece by commodity guru John Butler on the potential inflationary consequences of the recent oil moves. Finally, former DB economist, Caroline Grady, takes a look at today’s raft of PMI data – there’s not much good news in them, except that they can’t really go much lower.
Enjoy!
Bilal
Incremental COVID-19 News More Likely Positive Than Negative (4 min read) Incremental news on COVID-19 is likely to point towards greater healthcare capacity and lower mortality rates than current consensus. On balance, this is bullish for risk assets, despite risks of second waves after the reopening of some economies. As the global COVID-19 curve flattens, policymakers are considering gradually lifting mitigation measures. Such moves however could lead to a resurgence of infections…
(Dominique Dwor-Frecaut | 23rd April, 2020)
Does Age Explain COVID Deaths Across Countries? (2 min read) Age is one of the clearest contributing factors to COVID fatalities. Study after study is finding that the case fatality rate (CFR) for the elderly is much higher than younger segments of the population (Chart 1). For example, the CFR for those in their thirties is between 0.1% and 0.3% across a range of countries. Meanwhile, for those in their seventies, it is between 4.8% and 12.8%. That’s an order of magnitude higher – someone in their seventies is 16 to 116 times more likely die from COVID-19 than someone in their thirties…
(Bilal Hafeez | 23rd April, 2020)
Could We Get An Oil-Driven Stagflation Shock? (7 min read) Over the past week we have witnessed an unprecedented collapse in the benchmark US WTI oil future price to outright negative levels. This was due to the Covid-19-related collapse in demand and the inability of many producers to ‘shut-in’ production quickly enough to avoid reaching the effective storage capacity limit. As a result, producers were potentially willing to pay storage facilities to take the oil off their hands…
(John Butler | 23rd April, 2020)
PMI Decline Far Eclipses The GFC (2 min read) The huge economic cost of the COVID lockdowns is becoming evident. European PMIs have collapsed to a level far below that recorded in the financial crisis in April and far, far worse than expectations, highlighting the difficulties in modelling the COVID shock. The historic decline in employment confirms fears over permanent scarring from the ongoing crisis, while the rapid decline in prices raises the likelihood of near-term deflation…
(Caroline Grady | 23rd April, 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.)