2020 Vision: An Early Guide to the US Election

Divided government outcomes tend toward legislative gridlock. And though divided governments could still influence the outlook through regulatory reinterpretations and resulting impacts to business sentiment, they are unlikely to deliver transformative policy in a macro sense.

Morgan Stanley - 2020 Vision: An Early Guide to the US Election

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06 November 2019



Video commentary for November 5th 2019


Eoin Treacy's view

A link to the full video is posted in the Subscriber's Area. 

Some of the topics discussed include: trade war peace breaking out supports global stock prices, gold pulls back, oil steady ahead of Saudi Aramco IPO, bonds susceptible to additional weakness, Dollar firm, 



Abe, Moon Break Ice After Worst Japan-South Korea Fight in Years

This article from Bloomberg may be of interest. Here is a section:

Moon and Abe shared the view that the relationship between South Korea and Japan is important and re-affirmed in principle that issues between the two nations should be resolved via dialogue, the presidential office said in a text message. Abe conveyed Japan’s “basic stance” on bilateral issues in his exchange with Moon, the Tokyo-based Kyodo News agency said separately, citing the Japanese foreign ministry.

The brief, 11-minute meeting at the Association of Southeast Asian Nations summit in Bangkok came as a long-simmering feud escalated into a trade-and-security dispute, leading to boycotts of Japanese imports and the decision to scrap an intelligence-sharing pact. The encounter followed a break-through meeting last month between Abe and South Korean Prime Minister Lee Nak-yon.

Moon proposed high-level talks, if needed while Abe said every effort should be made to resolve the feud, Moon’s office said. Abe last met Moon in September 2018 and passed up a chance to meet him for formal talks during Group of 20 events in Osaka in June.

The remarks were the most positive yet since South Korean courts issued a series of rulings last year backing the claims of Koreans forced to work for Japanese companies during the country’s 1910-45 occupation of the Korean Peninsula.


Eoin Treacy's view

Six weeks ago sentiment was skewing rather negatively towards the opinion that acrimonious disputes between neighbours like Japan and South Korea, the UK and EU and competitors like China and the USA were going to get worse, a lot worse. Today peace seems to be breaking out globally and that is removing a risk premium from markets.



2020 Vision: An Early Guide to the US Election

Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

Divided government outcomes tend toward legislative gridlock. And though divided governments could still influence the outlook through regulatory reinterpretations and resulting impacts to business sentiment, they are unlikely to deliver transformative policy in a macro sense. Hence, divided government is unlikely to deliver policy that counteracts the current late-cycle economic condition.

A more surprising observation might be that we see some symmetry to the potential direction of the macro impact in both unified government scenarios. While far from assured, both open the possibility of fiscal expansion, fueled in part by messaging driven implicitly by ideas such as the Laffer Curve and MMT.

This conclusion appears to cut against investor expectations, at least as it pertains to the "Blue Wave" scenario. Our survey suggests investors see a Democratic White House as both less likely to pursue cycle-extending policies like fiscal stimulus and more likely to coincide with risk-asset weakness. Perhaps it is because investors also see Democrats as more likely to pursue policies that will challenge profitability in key sectors, such as prescription drugs and health insurance.


Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area.

The one thing I see around my neighbourhood in west Los Angeles is the houses that were posting Bernie Sanders signs in 2012 are now supporting Elizabeth Warren. The big question is whether the Democrat’s administrative body will favour anointed conventional candidates like Joe Biden over the progressive wing of the party in the same way it did for Hilary Clinton versus Bernie Sanders.



One-Shot Drug for Sicily's Rare Blood Disease Costs $2 Million

This article by James Paton and Chiara Albanese for Bloomberg may be of interest to subscribers. Here is a section:

Dozens of gene therapies for a range of devastating illnesses are on their way. These single-dose drugs, tailored to each patient, can potentially deliver a lifetime of benefits.

But that’s reflected in their prices, which are likely to increase pressure on already stretched budgets. To make it easier for government payers to digest Zynteglo, Bluebird plans to spread out the cost over five years, with payments contingent on its success.

As a one-time therapy, Zynteglo could save governments money in the long run by cutting the need for expensive ongoing care. Treating one beta thalassemia patient today can cost as much as €60,000 a year, says Aurelio Maggio, a blood-disease specialist at the Palermo center. That’s €3 million over five decades. With multiple wonder drugs for other conditions set to reach the market soon, the upfront bill could take a heavy toll on Italy’s finances. The price tag for the therapy is twice the $900,000 that SVB Leerink analyst Mani Foroohar expected. Given the large number of patients in the country with the ailment, “the stakes are much higher,” he says.


Eoin Treacy's view

One-shot therapies to genetic conditions represent incredibly exciting solutions to many previously untreatable diseases. The reason we are seeing the kinds of therapies appear for relatively unknown ailments is because they can get accelerated approvals from the FDA because they are treating orphan diseases. The bigger prize is to treat diseases which represent some of the biggest chronic conditions in the market today.



Eoin's personal portfolio: precious metals long initiated


Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.


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