NAB Morning Call

Monday 20th April 2020

Friday’s industrial production numbers from China on Friday gave investors hope that a swift economic recovery is possible globally once lockdown measures are eased. NAB’s Tapas Strickland says New Zealand might announce some steps in that direction today, whilst progress on antibody testing could help a selective escape from home confinement for people in all economies. Meanwhile oil prices hit an 18 year low on Friday. With a significant fall in US rigs Phil Dobbie asks whether President Trump will impose a short-term tariff on imports – something he suggested was possible a fortnight ago.

Friday 17th April 2020

Many countries have announced extensions to their lockdowns over the last 24 hours. President Trump will be talking shortly, but NAB’s David de Garis expects him to backtrack on his earlier talk of lifting restrictions soon, against the wishes of various State governors. His country is accounting for an increasing proportion of COVID-19 casualties and the unemployment claims numbers overnight were a sobering reminder of the economic impact. Markets, though, have been relatively subdued – perhaps because any bad news was expected.

Thursday 16th April 2020

You’d expect the markets to be primed for a lot of negative economic data, says NAB’s Gavin Friend in today’s podcast. Yet the size of the drops in numbers from the US has had a psychological impact on investors – with massive falls in US industrial and manufacturing production and retail sales. Those numbers are for March, so a bigger impact is expected in April. Oil also continues to weigh on markets, with inventories up further in the US, continuing to push prices lower. There’s also discussion on Australians consumer confidence numbers and widening bond spreads across Europe.

Wednesday 15th April 2020

Australia joined the bull run in the share market yesterday, clocking up 20.7 percent growth since March 23rd. Since then US equities have continued to rise on the hope that virus infections are levelling off and lockdowns will be eased soon. In the US an announcement is expected any day. Phil Dobbie talks to NAB’s Tapas Strickland about the positive impact this is having on the strength of the Aussie dollar, even after a disturbing set of numbers in yesterday’s NAB Business Survey. That sentiment was echoed in an IMF report, but trade figures from China yesterday surprised on the upside.

Tuesday 14th April 2020

The US Fed has extended its QE shopping list. Agreeing to buy junk bonds from corporations that are suffering the impacts of the Corona virus. Phil Dobbie asks NAB’s Ray Attrill whether it’ll work, given some government and central bank measures are failing to cut through. The market was impressed initially, but shares fell again today. Oil prices are also falling again, despite the OPEC+ agreement to cut oil production. Clearly, it’s not enough, or there’s concerns that participants won’t follow through. In Europe an agreement has been reached to provide support for governments through the European Stability Mechanism. It’s not gone down well with Italy, who will undoubtedly have to borrow the most and, therefore, pay back the most. Meanwhile, the Aussie dollar continues to be the best performing G20 currency. We look at why that is, and look ahead to today’s NAB Business Survey, US earnings and China’s trade data.

Thursday 9th April 2020

There’s more optimism today that countries are reaching the peak of COVID-19, which is pushing US equities higher. NAB’s Gavin Friend says it’s another day where the curve is driving markets. Yet many countries are still reporting record fatalities, the WTO is suggesting world trade could fall by 32 percent. After 16 hours EU finance ministers failed to reach agreement on how to fund stimulus measures within Europe and the EU chief scientist, Mauro Ferrari, quit saying he was extremely disappointed by the EU’s response to the pandemic. Oil prices are rising in the hope that OPEC+ will reach a solution to oversupply, but will Russia insist the US is part of any cuts and, if so, will President Trump play ball. And Joe Biden looks set to be the Democrats nominee for this year’s Presidential elections.

Wednesday 8th April 2020

It’s staggering that, with so much uncertainty still remaining over the length and depth of the Corona virus, that US equity markets are close to a bull run – a 20% increase since March 23. On today’s Morning Call, NAB’s Ray Attrill talks about how the optimism is being driven by the infection and fatality curves for COVID-19 in Europe and the US. There’s also discussion about the RBA meeting yesterday and the bank’s attitude to tapering it’s new QE program; the EU meeting underway to discuss the potential for Corona Bonds that could help direct funding to countries most in need – should Germany play ball – and tomorrow’s FOMC minutes. But it’s mainly all about the curve.

Tuesday 7th April 2020

Equities have bounced back in a big way today on the hope that countries will start to ease restrictions and get more people back to work, as the death rate from COVID-19 starts to plateau. But NAB’s Rodrigo Catril reminds us that all eyes will be on any resurgence in infections as lockdowns are lifted. As a reminder of the virulence of this disease, the UK the British Prime Minister was moved into hospital on Sunday night and then, on Monday night (UK time) his condition worsened, and he was moved into intensive care. The RBA meeting today is likely to come and go largely unnoticed and most data releases pre-date the onset of country lockdowns.

Monday 6th April 2020

Hope is a rare commodity these days – unlike oil. In parts of Europe the morbidity rate from the Carona virus seems to have slowed (slightly) as lockdowns seem to be having an impact. It’s also having a monstrous impact on the economy as well, of course. NAB’s Tapas Strickland says that, whilst Friday’s non-farm payrolls showed a 700k fall, there are estimates that the April number could see a fall of between 15 and 20 million. Meanwhile, could oil prices call today? They peaked at the end of the week on the hope that President Trump would engineer a solution to the Russia-Saudi standoff, but nothing has happened yet. The US has threatened tariffs to protect its domestic industry if no progress is made.

Friday 3rd April 2020

Oil shot up in price overnight – as much as 47 percent for Brent Crude – after President Trump tweeted that Russia and the Saudis would be cutting as much as 15 million barrels a day. Phil Dobbie asks NAB’s David de Garis who really spoke to whom, and the reaction if this all amounts to nought. Meanwhile, shock jobless numbers from the US, with 10 million new claims in a fortnight. Sadly, there’s little end in sight for this turmoil, with more than one million Carona virus cases now recorded globally, and the US now in third place for fatalities. Tonight’s non-manufacturing ISM numbers from the US will provide further evidence of the downturn, whilst the Caixin Services PMI from China will hopefully provide at least one positive.