Lots of people are talking, posting, and tweeting, but sometimes, we need to look into the mirror what we wrote.
The Global Macro Insight is only available via subscription for good reasons, and the main one is added value.
I just listed what your scribe wrote into his Global Macro Insight just one year ago :
01/22/2020: Title = Virus in Markets?
Your Scribe has repeatedly explained that since 2016, the markets have been carried by algorithmic forces often disconnected from reality, taking only simple concordances, or temporary correlations, for universal laws of finance…
However, in recent weeks, the extension of the SARS epidemic seems to have become the algorithmic “virus” that your scribe feared.
As it will be associated with a growing number of victims and countries concerned, but also with negative remarks such as a slowdown in world trade and the transport of people due to the hygiene rules which will be imposed, the decline in markets can easily become self-sustaining.
The fact that Chinese e-commerce sites have announced that they will freeze the prices of respiratory masks will only add to the anxiety and fuel the algorithms.
01/23/2020: Title = Contamination
Like yesterday, your scribe uses a word whose meaning applies to the risk linked to the spread of the Chinese coronavirus, and to the domino effect that the various classes of financial assets could suffer.
Last night, WHO could not get a clear vote from its members to qualify the spread of the virus as a “global health emergency”. The decision is postponed until today when the 11 million residents of Wuhan have been placed in quarantine. Chinese authorities have blocked all public transportation, and neither a plane nor a train leaves or arrive in Wuhan.
Goldman already estimates that the slowdown in air transport could cause oil prices to drop $ 3. Your scribe mentioned as of yesterday that you were going to read this kind of reasoning in the press.
The algorithms will wait for the WHO declaration before shifting the markets. The actions of the Chinese authorities could be interpreted positively by the machines. To be continued.
01/27/2020: Title : Brexit & NoExit, infection is all around…
Friday, your scribe shared with you his astonishment about the silence of the WHO to the acceleration of the contagion of the new Chinese coronavirus: “For the authorities (aka WHO), it is to believe that the land borders have an impact on clouds of atomic particles (Remember Tchernobyl), and now on viruses.”
Indeed, it takes at least 15 days before the virus is active, which indicates, due to modern transport that it has already traveled the world, but that we will see the wave (like a tsunami after an earthquake ) only in a few weeks.
It seems that the magnitude of China’s response to the spread of the virus had not disturbed the algorithms before the CDC announced a second case on its soil.
But the most worrying contagion is the concomitant hardening of the violence of social movements around the world.
Volatility will become your best friend, the VIX ETF in the US rose 5.78% on Friday and it is not over!!! Gold and US Treasuries will also be in high demand, which militates for a barbell allowance that your scribe has portrayed in previous GMIs.
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Remember that our GTO performed by +27.7% last year…
