Asia Open: The Schitts Creek scenario

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "*US. INCREASE IN OBLIGATIONS FOR EU IMPORTED AIRCRAFT FROM 10% TO 15%.“data-reactid =” 11 “>*US. INCREASE IN OBLIGATIONS FOR EU IMPORTED AIRCRAFT FROM 10% TO 15%.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "* CHINA REPORTS 2,009 ADDITIONAL CORONAVIRUS CASES FEB. 15“data-reactid =” 12 “>* CHINA REPORTS 2,009 ADDITIONAL CORONAVIRUS CASES FEB. 15

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "* TAIWAN REPORTS THE FIRST DEATH OF NOVEL CORONAVIRUS“data-reactid =” 13 “>* TAIWAN REPORTS THE FIRST DEATH OF NOVEL CORONAVIRUS

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Schitt’s Creek scenario“data-reactid =” 14 “>The Schitt’s Creek scenario

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "“Schitt’s Creek” is a Canadian TV comedy series about a wealthy video business magnate Johnny Rose (Eugene Levy) and his family who are suddenly broke and forced to leave their spoiled lives to regroup in Schitt’s Creek. If you haven’t seen it yet, give it a try“data-reactid =” 15 “>“Schitt’s Creek” is a Canadian TV comedy series about a wealthy video business magnate Johnny Rose (Eugene Levy) and his family who are suddenly broke and forced to leave their spoiled lives to regroup in Schitt’s Creek. If you haven’t seen it yet, give it a try

<h2 class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Stock markets & nbsp;“data-reactid =” 16 “>stock markets

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The U.S. market is closed due to Presidents Day, so in the absence of an unexpected headline, the shock action may be somewhat subdued, as is usually the case on a U.S. holiday weekend“data-reactid =” 17 “>The U.S. market is closed due to Presidents Day, so in the absence of an unexpected headline, the shock action may be somewhat subdued, as is usually the case on a U.S. holiday weekend

The issue of growth over value continues to play, and like on the last Friday, there was little appetite to increase the risk for the weekend. The US market was nevertheless able to post profits

The bad news is that on Sunday; Authorities reported 2,009 new cases and 142 additional deaths nationwide. The good news, however, is that for a third day in a row, there has been a decrease in new cases of the coronavirus outbreak.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This is good news for the market this morning and us should see the normally predictable settlement of weekend defensive hedges out of the gates and out SPX should push the argument for the “cleanest dirty shirt” for US asset ownership, which is currently particularly pronounced given the likely asymmetric growth impact of coronavirus shock. The growth impact of the virus in China (and therefore in Germany) is currently expected to be more severe than in the United States. “Data-reactid =” 20 “> This is good news for the market that is running this morning and we should see that defensive hedges are typically predictable over the weekend and the SPX should be arguing the” cleanest dirty shirt ” for the ownership of US assets continues to grow, which is currently particularly pronounced given the likely asymmetric effects on growth, and the virus is currently expected to have a more severe impact on growth in China (and therefore in Germany) than in the United States.

The cash flows continue to support the general risk-on issue. EPFR data showed that $ 23.6 billion flowed into fixed income funds in the week to Wednesday, the most significant inflow since 2001. I am surprised that equity inflows were not higher given the ongoing move. The stock markets remain in review mode for the time being.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "However, it is not difficult to be just skeptical How much Investors will be willing to pay the costs for the next few weeks, especially if China's radio frequency data is worse than expected, but to be honest I'm not sure what to expect from the data, but if it is it becomes bad that the trust decreases, the investors could find themselves quickly up the drain ( Schitt’s Creek) without paddle, Let’s face it, the financial markets have not been well known for their rational thinking lately, given the approximately 500 million mainland residents affected by the Covid19 quarantine, and it is not difficult to find more downside risks than upside risks at the moment. “Data Reactide =” 38 “> However, it is not difficult to be skeptical of how much investors will be willing to pay for the next few weeks, especially if China’s radio frequency data is worse than expected. To be honest, I am I’m not sure what to expect from the data, but if it turns out to be bad enough to reduce confidence, investors could quickly find themselves at the creek ( Schitt’s Creek) without paddle, Let’s face it, the financial markets have not been well known for their rational thinking lately, given the approximately 500 million mainland residents affected by the Covid19 quarantine, and it is not difficult to find more downside risks than upside risks at the moment.

This is a difficult market environment. There is no moderate fear and no undue optimism. The simple trades to reset over-stretched markets are gone, which has made the traders very careful to make big bets. Although the virus stories don’t have the same headline, this is still a focus, while fears about economic data continue to subside. Fear of unknown data will soon keep investors awake at night. But that didn’t stop the market from frustrating bears in the past, and it doesn’t feel any different now. The reduction in available yields over the course of risk-free government bonds creates incentives for investors to redistribute capital even more into stocks in the resilient US markets.

<h2 class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "oil markets“data-reactid =” 44 “>oil markets

The oil price action continues to be agitated by news flow about Covid-19 infection / death rates and OPEC +’s prospect of agreeing a quota cut to offset the slowdown in demand. Given the upcoming reality check when China’s radio frequency data arrives and the lack of a Russian compliance commitment, any excuse to sell still feels like the current mood on the market. And while the worst is likely priced into the China equation, the convexity of global economic data should not be underestimated as the Chinese economy goes online, especially given the reported 500 million Chinese lives affected by the quarantine are. That is more than 1.5 times the US population !!

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "On Friday, oil market investors consoled themselves after the US Energy Secretary announced the coronavirus found only "minor declines in production" and the agency is "not yet concerned about the final impact." After the markets were closed, the office of the US sales representative & nbsp;announced & nbsp;it would & nbsp;Abolition of tariffs on aircraft imports from the EU, effective March 10 from 10 to 15%, although it was no longer possible to raise higher tariffs on other goods. “data-reactid =” 46 “> On Friday, oil market investors consoled themselves after the US Secretary of Energy found only” slight reductions “in production” from the corona virus and that the agency “is not yet concerned about the final impact.” After the markets were closed, the US commercial agent’s office announced this Abolition of tariffs on aircraft imports from the EUeffective March 10 from 10 to 15%, although it was no longer possible to impose higher duties on other goods.

<h2 class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "gold markets“data-reactid =” 63 “>gold markets

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Lately there has been more gold Movement that hits the eye. While retail sentiment only seems to move at the bottom of corona virus headlines, long-term strategic buyers are beginning to see a weak base for U.S. retail sales. The January headline was the same, but the key element for GDP – retail controls – was weaker and had a flat result against expectations of a 0.3% increase in mother and a significant downward correction for December. The recent trend was weak: 3 million annualized rose just 0.22% and 6 million annualized decreased -0.12%, just the second negative since the GFC (the other was during the December 2018 collapse) ) Quarterly and retail sales are often revised. The next release of retail sales on March 17 will become more important as it may impact the Fed’s current policies. “data-reactid =” 64 “> The recent gold move has even more to offer, and while retail sentiment appears to be only at the bottom of coronavirus headlines, long-term strategic buyers are beginning to notice a soft underlying for them US Retail Sales The January headline was consistent, but the little that matters to GDP – retail controls – was weaker and posted a flat result against expectations of a 0.3% and a significant downward correction for December, with the recent trend being weak: 3 million a year up just 0.22%, and the 6 million a year down -0.12%, just the second negative since the GFC ( the other was during the December 2018 collapse). While it is at the beginning of the quarter and retail sales are revised frequently, the next win wins Retail sales release on March 17 as additional meaning It has the potential to influence the Fed’s current policy.

And while the analyst focused on actions by the ASEAN central bank. It is the Fed that is now wearing the yellow jersey in the rate cut peloton, since the Fed has far more price cuts than the other central banks. From the time coronavirus cases increased in mid-January, the Fed was no longer in the middle of the field, but led the package with 36 basis points, the price of which was lowered. This is a bullish swing in gold history

Nor should the convexity of global economic data with the question of how much of the Chinese economy goes online again be underestimated, especially given the 500 million Chinese who have been affected by the quarantine.

Since the US stock markets are trading at record highs and the downside risks according to my watchlist outperform the upside risks by 2: 1. It is not difficult to find out why gold markets are offered.

Given declining bond yields due to corona virus concerns and the impact of existing tariffs on the US economy. However, considering geopolitical tensions such as the recent standoff between the US and Iran, there is potential technological divergence between Washington and Beijing. Gold should be on everyone’s lips given the possibility of a trade war between the US and the EU

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Stock market liquidity?“data-reactid =” 85 “>Stock market liquidity?

Liquidity for equity? The following table does not show that. The Fed’s balance sheet has so far remained almost unchanged this year and has shrunk in the last phases of January. The same applies to reserve balances. Yes, both rose sharply in the fourth quarter of last year, but have made no further progress this year.

Well, markets will soon be able to test liquidity theory as the New York Fed reported that its 14-day repo offers will increase by $ 5 billion to $ 25 billion by March 3 and from March 3 onwards Would cut $ 20 billion. Overnight stays will decrease by $ 20 billion to a maximum of $ 100 billion. On Thursday, the Fed provided $ 30 billion over 14 days and $ 48.85 billion overnight.

Yet bill purchases total $ 60 billion / month. Perhaps the idea is to return to more conventional balance sheet management sooner rather than later.

<h2 class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Currency markets“data-reactid =” 105 “>Currency markets

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Asia FX“data-reactid =” 106 “>Asia FX

<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The mainland authorities have mainly focused on targeted measures such as Individuals supported new lending facilities, with the macro response more fiscal (additional pre-financing rate for local government) than monetary (net OMO inflow of just 140 billion in the past two weeks) and USDCNY Fix was mostly in line with the model after the initial lowballing adjustment to LNY. With the OMOs due at RMB 1.2 billion early next week, the focus is on whether PBoC will roll them with MLF and at a cheaper price (before the LPR reset on the 20th). The focus in the rest of the region is on the Singapore budget (18th), the MPC of Bank Indonesia (20th) and the BOK (27th). “Data-reactid =” 107 “> The authorities on the mainland have relied mainly on targeted measures such as individual lending options. The response of the macro policy was more fiscal (additional pre-financing rate for local government) than monetary (net OMO supply of only 140 billion . in the last two weeks), and the USDCNY fix largely corresponded to the LNY adjustment model after the initial low. Since the OMOs are due at RMB 1.2 billion early next week, the focus is on whether PBoC agrees with them MLF and at a cheaper price (before the LPR reset on 20th) region rolls on Singapore Budget (18th), Bank Indonesia MPC (20th) and BOK (27th)

Although the risk premiums for corona viruses are falling and the vols there are taming a gigantic swath of economic slaughter left behind in Covid-19, the province of Hubei, although it reported no fewer infections the previous day, is in full swing for the region’s economic plans

If the past week is indicative of this, investors will look for a way to buy Asia FX, but may be wary of adding higher currency risk before assessing the depth of the economic impact. Given that regional decision-makers are taking lengthy, actionable measures to thwart the old effects of Covid-19, this should be seen as growth positive. However, the market seems to lack a catalyst for a real trend, and I expect the consolidation to continue until a blue sky appears likely.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The yuan“data-reactid =” 110 “>The yuan

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "USDCNH slipped from the high of 6.9917 and traded at 6.9830-80 in Asia last Friday, but again in the NY time zone. However, there was no demand for long USD gamma. Instead, the curve to the south indicates that traders appear to have priced in a possible RRR drop on Friday. If this is not the case, the forward points reverse higher and pull the point for the ride with them. The decrease in the daily number of viruses has a positive impact on regional risk as the curve now focuses again on PBoC policy measures that should be optimistic about the yuan. “Data-reactid =” 111 “> USDCNH slipped from the high of 6.9917 and was trading at 6.9830. 80 last Friday in Asia but again in the New York time zone, but there was no demand for long USD Instead, the curve to the south indicated that traders had apparently priced in a possible RRR cut on Friday, so when it didn’t, it doesn’t come forward points reverse higher and pull the spot for the ride The decrease in the daily number of viruses has a positive impact on regional risk as the curve now focuses again on measures by the PBoC that should be optimistic about the yuan

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The ringgit“data-reactid =” 112 “>The ringgit

For the ringgit, a medium-level carry currency, it is very important that growth expectations accelerate in order to recover sustainably. And with another rate cut, largely priced in swap markets and 10-year bond curve, and with 10-year MGS trading this week with 3.0% yields at all-time lows, it could be down to equity flows to do much of the heavy lifting this week as offshore blond flows could potentially become more neutral after significant inflows in the past three months. Look for the ringgit that is leading the yuan today

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Thai baht“data-reactid =” 114 “>The Thai baht

The USDTHB remains well above the 31.00 level as the Forex trader best expresses the negative ending of the Covid 19 outbreak at this stage by a long USD versus THB.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Singapore dollar & nbsp;“data-reactid =” 116 “>Singapore Dollar

The foreign exchange and interest rate curves in Singapore usually already calculate a shift from MAS to neutral. While reducing new flu cases has ex-Hubei already helped to consolidate Asian currencies. However, if the response to SARS were indicative, a “positive announcement shock” such as lifting the travel ban could be needed to move the Singapore dollar the other way.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "G-10 foreign exchange markets“data-reactid =” 118 “>G-10 foreign exchange markets

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The yen“data-reactid =” 119 “>The yen

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Why isn't that? yen Work? Can’t you even get me going? Aside from the fact that Covid-19 poses a significant short-term downside risk to the Japanese economy, negative interest rates and a magnetic attraction to the 110 level have made it an expensive offer to panic and then move on. “Data-reactid =” 120 “> Why doesn’t the yen work? Doesn’t even get me to work? Also, Covid -19 poses a significant short-term downside risk to Japan’s economy, negative interest rates and a magnetic attraction at 110 levels expensive offer made to panic and then sit on it.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The euro & nbsp;“data-reactid =” 121 “>The Euro

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Are you concerned about your short euro position? & nbsp Bet that next to President Trump's Twitter feed will be revealed when the EUR USD In the event of violations of 108, the ECB’s strategic review shows a Hawkish tendency, especially given the current weakness of the euro. I think this supports the euro if it does. G10 traders will focus on the interest rate markets, as this should lead to a measurable recovery in short-term EU interest yields. Given the gloomy economic outlook in Germany, I think you should sell rallies up to the 1.09 hold, not before. While the downward option volume is exploding, cash remains somewhat neutral at this point, suggesting the market is well positioned for a downward move, and in this low-volume environment, short-term positioning looks somewhat extreme at the moment. “Data-reactid =” 122 “> Are you concerned about your short position in euros? Do you bet? Aside from the fact that President Trump’s Twitter feed will be disclosed if the EURUSD violates 108, the ECB’s strategic review points out a Hawkish trend, especially given the current weakness of the euro, and I think this supports the euro. If it does, G10 traders will look to interest rate markets, as this should lead to a measurable recovery in short-term EU yields Given the gloomy economic outlook in Germany, I currently believe that they should continue to sell rallies The 1.09 grip, not before .. While the volume of the down option is exploding, cash remains somewhat neutral at this point, suggesting that the market is well positioned for a downward move in this low volume environment The short term posi tion of ironment looks a little extreme at the moment

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Australian dollar“data-reactid =” 123 “>The Australian dollar

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Aussie, which continues to trade super beta against China risk, is rising this morning due to the improvement in regional risk sentiment as China reported a decline in new cases of the coronavirus outbreak for a third day in a row. “data-reactid =” 124 “> The Aussie, The risk of swapping the super beta for China is increasing this morning due to the improvement in regional risk sentiment as China sees a decline in new cases of coronavirus outbreaks for the third year in a row reported.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This items was originally published on FX Empire “data-reactid =” 126 “> This article was originally published on FX Empire

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