The moment the coronavirus wave is sweeping Europe. It remains to be noted whether this is something bad or just something we will be informed to live with. Markets think we’re going to be informed to live with it. That’s the big picture.
But the risk, of course, is that European governments will react more depending on how the governments of Australia and New Zealand have responded to mini-epidemics and like Sweden or the southern states of the United States.
Many political leaders say that as long as the number of coronavirus cases increases, whether it’s just a sore throat and a fever day, or a week in an intensive care unit, the economy will have to be constrained. It’s a fight between those who need to block the release of a vaccine and those who need us all to resist. Over the weekend, the Spaniards took to the streets in giant crowds, some without masks, to protest against their governments’ return to restrictions.
As a result of this fight, it is now noticeable that the economy is losing its magic, Barclays Capital economists say.
Last week’s economic knowledge was a slowdown in activity after the initial recovery when the blockades in China, Europe and the United States ended.
Uncertainty is expanding to the fullest in Europe, and in the United States, anxiety about investor elegance is a Congress discussing recovery and a new Cold War with China.
“Our outlook for the global economy included a strong recovery in activity after the exit of economic blockades, but they also predicted that the expansion momentum would slow and become more asymmetrical as the locks climbed in the rearview mirror,” said Christian Keller, director of economic studies at Barclays in London. “Incoming knowledge is consistent with a global economy that is moving away from a widespread and unequivocal upward momentum.”
In words: some countries are larger than s. The ones that open: well. The ones who close: bad.
In the driver’s seat, whether we like it or not, there’s China.
China: Better one more double
China’s capital investment increased for the fifth month in a row, expanding by 6% year-on-year in July thanks to the same long-standing gains on genuine real estate investment.
Credit trends, structure and an uptick in Asian expansion are expected to continue with China’s investment recovery for the rest of the year.
China, the epicenter of the global pandemic, does not accept as a certain number of SARS-Cov-2 cases, with fewer than 100,000 deaths. But some others believe that the first edition of SARS that swept China in 2002-03 would possibly have led to a build-up of immunity sufficient to keep this new incarnation at bay. This would possibly explain why Asian countries have had few pandemic disorders than Europe and all of the Americas.
“We’ve been China for a long time,” says Vladimir Signorelli, director of Bretton Woods Research, a firm for macro-investment studies. Signorelli prefers the X-Trackers China A-Shares ETF, known in the market as “Asher”. (Box: I like KurE from KraneShares, but I don’t have it yet).
Yes, July retail sales in China were excellent. The speed of recovery from family spending is slower than the impatient market would like. But strong profits in auto sales helped stabilize commercial production, which remained at 4.8% annualized in July.
Keller says he sees dangers in his forecast of 5.2% of annualized GDP in the third quarter in China, mainly due to slowdown in Europe and Australia, and geopolitical tension with the United States.
‘First World’, place
The U.S. Hard Labor Market It is regressing, but there is a threat of additional layoffs with the return of restrictions in some states, according to a recent study through the predictive generation corporate RIWI and the Employment Quality Index. Perhaps most importantly, demand remains weak in the services sector, and since urban centers like New York continue to see closed businesses, the market place is combined with the impact of the consequences of this pandemic.
At the moment, it is literally In God We Trust, the word published on the dollar bill; bonds are introduced into the economy through the Fed and Treasury.
The news is that U.S. retail sales In July they were older than their February readings, and knowledge of task programs recommends that labor market dynamics are greater than bears believe.
Households have changed their spending patterns to goods, while travel and food prices are low.
Car sales also behaved well here, with a 3.4% increase in July from June sales and after falling by about 20% from its peak. Manufacturing production in the United States is now 8.3% below pre-pandemic levels.
The pandemic in Europe is experiencing a wave of moments. The question for all is whether the Europeans will order everyone to stay home again. If there’s one thing we’ve learned about the virus, it’s that we’re hiding from SARS 2. On the other hand, we have also learned that governments do not play and will prevent things quickly.
Mediterranean summer coastal towns are blamed for the recent accumulation of new SARS 2 cases.
Markets will be watching for the peaks of death. Mortality rates, if higher than expected or in line with the first wave mortality rate, are negative readings for the quantitative boost budget that temporarily exchange bad news.
As an example of a decrease in reopening: the UK recently added France to a list of countries that other people will have to quarantine when they arrive, and EU countries have tightened restrictions and other activities again. The slow reopening in Europe is on hold.
This week’s Flash PMI knowledge in Europe gives investors new clues about slowing down the economy. Barclays’ Keller said it expects the Composite Perspective PMI to succeed at 53.8, 1.1 points less than in July, but still in expansion mode.
“We remain of the view that a particular decrease in mortality rates and greater overall preparedness of countries to deal with new epidemics means that wider blockages will be avoided,” says Keller, a bullish view of market share.
Professional associations have warned of the “disastrous consequences” of closures.
Small businesses in America’s urban centers are losing patience. Between forced business closures and violent demonstrations in a handful of cities, the prestige quo is too much.
In addition, other outdoors in epicenter cities who have not suffered death at all and disease are tired of all restrictions. A recent ipsos poll, published last week, showed that more people who otherwise thought they would be fired or that someone they knew would be fired if the economy didn’t reopen soon.
Politicians in an election year will probably avoid talking about forcing other people to lock up, Barclays economists say. If Wall Street still elects the winner of the presidential election, pro-block policymakers lose in November.
Dirk Effenberger of UBS Global Wealth Management, head of investment risk, said the landscape is looking for smart actions for the next 12 months, as long as government stimulus measures are not blocked either.
“We’re in mode,” Says Effenberger.
I spent 20 years as a journalist for the most productive in the industry, adding as a member of the Brazilian-based staff for WSJ. Since 2011, I have focused on business and made an investment in the