/ 4 May 2020
As the COVID 19 crisis unfolds, making the unimaginable a reality, one should start thinking what would be the medium to long-term political and economic consequences. We know that this kind of event has always consequences. The 2001 terrorism attack changed forever the travelling experience and the Big Recession of 2008 caused a permanent reduction in world GDP growth, a situation many believe led to the increased in populism around the world.
/ 27 Abr 2020
Thomas Huxley, more commonly regarded as “Darwin’s Bulldog” for his staunch advocacy of Charles Darwin’s theory of evolution, was writing about the general failure of wonderful scientific theory in the face of overwhelming contrary empirical evidence, but he may have been very prescient in his condemnation of much of modern macroeconomic theory. Late last week, the US Congressional Budget Office released its preliminary projections for the Federal budget deficit for 2020 and Corporativo | Interno 2021, and it didn’t, by any stretch of imagination, make the most satisfying of reading for those who see surging interest rates in the shadow of ballooning budget deficits!
/ 20 Abr 2020
Is China a roadmap to recovery? China´s GDP decreased sharply in the first quarter, registering a fall of 35% in annualized terms compared to last quarter of 2019. However, the level of activity was unequal during the period. The February activity shutdown gave space to a sharp recovery in March, as the restrictive measures were relaxed. Production and demand increased fast in March. As expected, retail sales report showed some sectors lag the recovery, specially restaurants, tourism and non-essentials, as clothing and durable goods. The resumption in domestic activity should continue in the second quarter, while there will be a downward pressure coming from the export sector, due to the expected collapse of global demand.
/ 30 Ago 2019
The two questions we receive most often are: 1) Why are global equities continuing to rally despite disappointing economic data, and 2) Why are earnings being revised down in every region we follow? Those who are bearish point to the action in the bond market where the recent drop in yields and inversions in parts of the US Treasury curve suggest that the dovish pivot is too little, too late. In our view, the equity markets are looking through the current soft patch and have faith that the dovish reversal from global central banks as well as Chinese stimulus will halt the slide in growth and reverse the deterioration in earnings expectations. This current period could be somewhat like 1994 or 1998 where the Fed provided mini-easing cycles in the midst of the longer-term tightening period due to volatility that came from outside the US.