Comments of the Day
29 April 2020
Video commentary for April 28th 2020
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: megacap tech rebounds looking tired, rotation evidence increasing, oil potenitally bottoming, short-term deflation risk but medium-term inflation risk,
'Instead of Coronavirus, the Hunger Will Kill Us' A Global Food Crisis Looms
This article by Abdi Latif Dahir for The New York Times may be of interest to subscribers. Here is a section:
The coronavirus has sometimes been called an equalizer because it has sickened both rich and poor, but when it comes to food, the commonality ends. It is poor people, including large segments of poorer nations, who are now going hungry and facing the prospect of starving.
“The coronavirus has been anything but a great equalizer,” said Asha Jaffar, a volunteer who brought food to families in the Nairobi slum of Kibera after the fatal stampede. “It’s been the great revealer, pulling the curtain back on the class divide and exposing how deeply unequal this country is.”
Already, 135 million people had been facing acute food shortages, but now with the pandemic, 130 million more could go hungry in 2020, said Arif Husain, chief economist at the World Food Program, a United Nations agency. Altogether, an estimated 265 million people could be pushed to the brink of starvation by year’s end.
While the system of food distribution and retailing in rich nations is organized and automated, he said, systems in developing countries are “labor intensive,” making “these supply chains much more vulnerable to Covid-19 and social distancing regulations.”
Eoin Treacy's view
Transportation networks have been severely impacted by the coronavirus lockdowns and that is having a significant knock-on effect for vulnerable communities all over the world. There is no shortage of food globally, but the uncertainty the lockdowns introduced have disrupted harvest and slaughter schedules. That is putting upward pressure on some commodities prices while depressing others. The international challenge will be in ensuring commodities get to where they are needed in time to protect the lives of people in the emerging markets.
Bank of Japan Looks to Highlight Fiscal-Monetary Double Punch
This article by Toru Fujioka and Sumio Ito for Bloomberg may be of interest to subscribers. Here is a section:
“If you look at what we’re doing from the size of our balance sheet against GDP to our measures compared to the size of the commercial paper and corporate bond markets, the scale of the Bank of Japan’s easing is far larger than any other central bank,” Kuroda said at the briefing.
And
“Impressions matter in this kind of crisis. While the BOJ’s balance sheet is, of course, much bigger than its peers, the response to this kind of crisis is very important. If you look at that, the BOJ hasn’t been as aggressive compared with the Fed,” said Masamichi Adachi, chief Japan economist at UBS Securities and a former BOJ official.
The additional measures announced by Kuroda’s board do show a greater degree of fiscal-monetary policy coordination, with Prime Minister Shinzo Abe’s administration finally submitting an extra budget Monday for its stimulus of more than $1 trillion.
“The government and the Bank of Japan are truly strengthening policy coordination,” said Japan’s economy minister, Yasutoshi Nishimura, following his attendance at the BOJ decision.
Eoin Treacy's view
Japan was among the first countries to close schools but then did not move to close down the rest of the economy until quite recently. That has meant the number of cases has continued to rise. The benefit of lockdown early is the time to opening up again is shortened. That suggests Japan is going to have difficulty opening up swiftly.
Don't lose sight of what you actually own
Thanks to a subscriber for this report from Canaccord Genuity focusing on Australia. Here is a section:
Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area.
It is probably true that Australia is about to have a technical recession. The fires, lockdowns and collapse in Chinese demand are all contributing factors. However, it is also worth remembering that the medium-term response to the coronavirus is likely to be an epic infrastructure development spending spree which will be global in nature. For commodity exporters like Australia that is likely to be good news.
Eoin's personal portfolio - Last updated March 27th
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.