As a sign of the uncertainty of our times, we have two divergent views on the risk environment. Dominique Dwor-Frecaut argues that we could be seeing VIX heading lower, which in turn could be supportive for risk markets from credit to EM. I take a more bearish view, and argue for caution around EM.
I also write on which countries are currently the biggest COVID hotspots – the two main ones are Japan and Mexico but read the piece to see the others. Finally, commodity guru, John Butler, returns with part two of his guide to investing in commodity markets.
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.
As a sign of the uncertainty of our times, we have two divergent views on the risk environment. Dominique Dwor-Frecaut argues that we could be seeing VIX heading lower, which in turn could be supportive for risk markets from credit to EM. I take a more bearish view, and argue for caution around EM.
I also write on which countries are currently the biggest COVID hotspots – the two main ones are Japan and Mexico but read the piece to see the others. Finally, commodity guru, John Butler, returns with part two of his guide to investing in commodity markets.
Enjoy!
Bilal
A Positive Risk (Lower VIX) Scenario For Q2 (4 min read) I am bearish volatility based on the feasibility of restarting economies without rekindling the epidemic and on the policy response. This suggests buying investment grade credit and equities in the US and UK as well as EM carry. Based on the Fed balance sheet plans, the USD could be about to embark on a multi-year down trend…
(Dominique Dwor-Frecaut| 9th April, 2020)
Emerging Markets Are Not Out of the Woods Yet (1 min read) The past week or so saw a recovery in almost all risk markets, including emerging markets (EM). So is all well in EM? We’d be more cautious. For one, growth expectations have collapsed just like in developed markets (DM). But unlike DM, inflation expectations remain high (Chart 1). This is likely due to the greater weighting towards…
(Bilal Hafeez | 9th April, 2020)
Where Are The Global COVID Hotspots? (2 min read) Whether it’s confirmed cases, deaths, testing, or ICU beds, we’re inundated with data on COVID-19. In fact, it’s hard to keep track of which countries are improving and which are not. We try to stay on top of developments with our daily COVID tracker but even then, we could be missing the wood for the trees. Here, we take a step back and look at weekly changes in cases and deaths across all the major developed and emerging countries. This should give us a sense of momentum in the trends…
(Bilal Hafeez | 9th April, 2020)
Commodities: An Investment Framework, Part II (8 min read) Part I of this series explained why commodities investing is generally problematic: it doesn’t necessarily diversify a portfolio of financial assets, and worse, commodities tend to underperform financial assets in most economic environments. In this second part, the focus shifts to how commodities investing can nevertheless enhance portfolio returns…
(John Butler | 9th 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.)