By Bilal Hafeez 19-03-2020
In: post | Newsletter

Macro Hive: COVID Tracker + Exclusives: Boris’ Churchill Moment / Fiscal Opaqueness / Commodities To Outperform

(5 min read)
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Policymakers are announcing new and significant support packages by the day yet markets remain in turmoil. We feature a few different angles on the unfolding crisis. Firstly, I give my take on Boris Johnson’s Churchillian moment where, despite the delayed response to COVID and the poorly-timed budget, I still think there is time to turn around what is an increasingly bad situation. Macro expert Dominique Dwor-Frecaut sticks with her more optimistic approach, laying out three scenarios needed to ensure a V-shaped global recovery.

Macro Dilettante puts forward the case for a change in central bank mandates to target positively sloped real yield curves. While Caroline Grady digs into the fiscal stimuli around the world, highlighting that much of what has been announced does not represent new budgetary spending.

Finally, commodities guru John Butler provides a though-provoking take on how commodities can outperform financial assets during a period of stagflation.

We also include our updated COVID tracker with the latest daily changes on confirmed cases and mortality rates.




Will Boris Fail In His Churchillian Moment? (2 min read) The UK appears to be on a war footing. The enemy is an invisible one, the COVID-19 coronavirus. ‘We must act like any wartime government’, said Prime Minister Boris Johnson recently. We know he is a keen student of war-time leader Winston Churchill, who at the start of his tenure as war-time leader famously said:

Winston Churchill in Power

‘What is our policy? I can say: it is to wage war, by sea, land and air, with all our might and with all the strength that God can give us; to wage war against a monstrous tyranny, never surpassed in the dark, lamentable catalogue of human crime. This is our policy. You ask, what is our aim? I can answer in one word: it is victory, victory at all costs…’

(Bilal Hafeez | 19th March, 2020)


3 Conditions For A V Shaped Recovery (3 min read) A sharp, globally synchronized, COVID-19-related slowdown is underway. Because most governments have been slow to respond, their policy options have narrowed. In order to avoid overwhelming their healthcare systems, they have turned to various degrees of social distancing including its extreme form – countrywide, strict home confinement. Since individuals who stay at home can neither transmit nor acquire the virus, this radical measure is likely to bring about a decline in new cases. China and increasingly Italy, two countries that have implemented mass quarantines, have demonstrated as much…

(Dominique Dwor-Frecaut | 19th March, 2020)


“This Is My Truth, Tell Me Yours” (2 min read) Thinking back through other crises that have occurred since I started my career in 1988, I realised my favourite was my first: 1997/98. It was a world entered into peril, a peril that started in Asia and headed West, to LTCM, Russia, etc., etc. For a Macro risk-taker, what wasn’t to like?

While contemplating the past, my instinct is to recapture memories by listening to music from that period. Glancing at my Spotify downloads from that year I saw the Manic Street Preachers (MSP) and regretted not listening to them in many, many years…

(Macro Dilettante | 19th March, 2020)




Not All Fiscal Stimuli Are Created Equal (3 min read) The fiscal response to COVID-19 is increasing by the day. Several countries have now announced multiple packages after it became apparent that the initial amounts were inadequate given the size of the shock. Many central banks have also acted to ensure additional liquidity is available to the banking sector and some are now directly buying corporate debt. But despite several pledges to do ‘whatever it takes’ to support the economy during the novel coronavirus outbreak, the effective fiscal stimulus currently in place is not as big as the headline numbers suggest…

(Caroline Grady | 19th March, 2020)

Coronavirus: A Stagflationary Supply Shock? (3 min read) The unfolding supply shock from COVID-19 could see a more pronounced period of stagflation than that of the 1970s / early 1980s. Commodities can outperform other financial assets in such an environment by avoiding the rising risk premia and negative real rates impacting traditional financial assets.

Stagflation, a term coined in and still associated with the 1970s and early 1980s, is an economic environment in which growth is disappointingly weak, yet the price level steadily rises. This normally occurs when a negative ‘supply-shock’, such as a spike in imported energy prices, a trade war, or slump in productivity growth, hits an economy. While a net negative for headline growth, this can also place upward pressure on prices even as growth weakens…

(John Butler | 19th March, 2020)

Hive Indicators

Coronavirus COVID-19

COVID-19 Country Tracker

• Many people have asked how long it will take for countries to reach the projected levels I’ve outlined in the tables. The daily growth rate in cases is unstable and depends on factors like the success of containment measures on the one side, and the number of tests on the other side. However, I’ve taken a recent average of growth rates to calculate the number of days it would take to reach projected levels.

• The worse-case scenario would be to reach where Italy is today. So, focusing on that projection, I’ve estimated that 13 countries will reach that level within the next 2 weeks. Switzerland and Spain could reach it by this weekend, Germany and France by next week, the UK in 11 days and the US in 13 days. Therefore, we can see why governments are introducing war-time measures to lock down countries.


(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.)