David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Biden Reopens Path to Nomination That Was Out of Reach Days Ago

    This article by Justin Sink for Bloomberg may be of interest to subscribers. Here is a section: 

    In politics, you have to win to win. And in the crucial Super Tuesday primaries in 14 U.S. states, Biden did just that, and Democratic voters singularly obsessed with defeating Trump finally began coalescing around their candidate.

    There’s still a long road ahead for the former vice president. His chief rival, Bernie Sanders, won California -- the biggest prize of the entire nominating race -- where a runaway victory could give the Vermont senator enough delegates to blunt Biden’s gains on Tuesday. And the former vice president’s turnaround was made all the more remarkable because of his plunge from front-runner status, bruised and battered by a meandering campaign, lackluster fundraising and trademark gaffes.

    Still, the whirlwind three days following Biden’s convincing win in South Carolina -- which propelled top rivals like Pete Buttigieg and Amy Klobuchar back the former vice president -- underscored the extent to which Democrats were ready to unite behind anyone perceived as ready to take on Trump.

    “Just a few days ago the press and the pundits had declared the campaign dead,” Biden told supporters in Los Angeles. “I’m here to report, we are very much alive.”

    This section continues in the Subscriber's Area.

    RBA Cuts Rates to 0.5% as China Slowdown Continues

    This article by Michael Heath for Bloomberg may be of interest to subscribers. Here is a section:

    “The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower,” Lowe said. “It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”

    In this case, though, Australia’s central bank isn’t going to have to face the downturn alone, with fiscal support in prospect.

    “The Australian government has also indicated that it will assist areas of the economy most affected by the coronavirus,” Lowe said. Before the RBA meeting, Prime Minister Scott Morrison said the Treasury is working closely together with the other agencies “to address the boost that we believe will be necessary.”

    Morrison urged major banks to pass on any RBA cut. The four top lenders have all since confirmed that mortgage rates will be reduced by the full amount.

    The RBA now has only one 25 basis-point cut left in the locker before it reaches its effective lower bound of 0.25%. Lowe will find himself dragged toward quantitative easing, should the economy need further monetary stimulus.

    This section continues in the Subscriber's Area.

    Treasury 10-Year Yield Sets Record Below 1% on Virus Fears

    This article by Liz Capo McCormick for Bloomberg may be of interest to subscribers. Here is a section:

    Though the Fed met Wall Street’s hopes for aggressive action with its half-point reduction, Chairman Jerome Powell seemed to unnerve markets by saying it’s unclear how long the virus’s impact will last. Traders were already pricing in another rate cut later this month, with more to come in June.

    “The market is trading right now on a lot of fear and uncertainty,” said Gary Pollack, head of fixed income at DWS Investment Management. “The Fed certainly didn’t bring calm, and the virus continues. The Fed’s relatively large move also made people wonder what they know that we don’t.”

    The central bank’s decision came a few hours after Group-of-Seven finance chiefs issued a coordinated statement saying they were ready to act to shield their economies from the virus. Policy makers faced pressure to act after the OECD warned the world economy faces its “greatest danger” since the 2008 financial crisis.

    This section continues in the Subscriber's Area.

    Gold Jumps With Fed Cut Seen Paving Way for Other Central Banks

    This article by Justina Vasquez for Bloomberg may be of interest to subscribers. Here is a section:

    The move on Tuesday comes after Group of Seven finance ministers and central bankers stopped short of taking action earlier Tuesday, disappointing markets that had been looking for a policy response to the virus. Bullion climbed 70% from December 2008 to June 2011 as central banks increased money supply on an unprecedented scale.

    “Gold traders are happy today because this is what they have been waiting for,” Naeem Aslam, chief market analyst at Ava Trade, said by email. “I think the floodgate is wide open and other central banks like Bank of Canada are also likely to follow the same path.”

    The central bank also said it is “closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

    This section continues in the Subscriber's Area.

    Email of the day on repo market liquidity

    The coronavirus scare is obviously a factor for markets at the moment, but the repo crisis remains in the background too. First question - what are your thoughts on relative (best and worst) asset class performance if the repo crisis flares up on top of the coronavirus pandemic. Second related question - does the coronavirus effect (eg reduced rates, lower company profits, high yield bond risks etc) make it more likely that repo will get worse?

    This section continues in the Subscriber's Area.

    RBI Chief Sees Room to Cut India Rates as Virus Dents Growth

    This article by Stephanie Flanders for Bloomberg may be of interest to subscribers. Here is a section:

    Speaking in an interview with Bloomberg News in Mumbai just hours before finance ministers and central bank chiefs from the G-7 economies were scheduled to discuss policy options, Shaktikanta Das said “there is a strong reason for coordinated policy action.” For India, options include a rate cut and supporting the market through liquidity measures, he said.

     Inflation, which had kept the central bank from easing since December, is expected to moderate, he said in an interview at the RBI’s headquarters. He argued the bank’s flexible inflation-targeting framework allows the central bank to look through recent price pressures and loosen policy.

    “We’re ready for a response should the situation warrant,” Das said in a meeting room decorated with framed portraits of his predecessors. “I think the G-7 countries are having a conference. And going forward, in the near future, I do expect some discussion through video conference or telephone conference among the central banks of the large economies, including India.”

    This section continues in the Subscriber's Area.

    Email of the day on COVID-19 from Dr. David Brown

    Coronavirus!

    It's been a huge advantage for me as an investor in recent weeks that I also understand viruses very well. At one time in my career I led a viral disease research centre with 320 scientists and support staff. That was BSL3 level containment (HIV, HCV, Influenza etc). BSL4 required for coronavirus is a different game altogether. It worries me that the outbreak of COVID-19 started in Wuhan and only 300 yards from the 1st BSL4 lab in China that opened only 2 years ago. What a coincidence!

    I am now doing different research (on rare genetic diseases) through my startup company Healx Ltd. Three weeks ago, I gave a presentation to staff about the virus for their own safety and for continued operation of the company if an outbreak occurs here in Cambridge. They may have thought I was exaggerating at the time. Today, things have escalated even more rapidly than I expected back then. However, we have planned for home working, and stocked up on all necessary supplies in the company. We have done the same at home too, though my wife also thought I was going a bit too far! I hope she is right, but it's better to be prepared for the worst while hoping for the best. 

    This section continues in the Subscriber's Area.