NAB Morning Call

Thursday 19th March 2020

We’ve seen big falls in equities and oil, as well as widespread selling of government bonds, even gold is being ditched. The only winner is the US dollar. Phil Dobbie asks NAB’s Tapas Strickland when we can expect to see this volatility end – is there a single piece of news that could signal there’s an end in sight? Meanwhile the oil price war continues, with prices down to levels we haven’t seen this century. Expect more stimulus measures from world governments, plus a rate cut from the RBA. We’re also starting to see economic data, such as German IFOs, that relate to dates since the growth of the COVID19 spread.

Wednesday 18th March 2020

Okay, it might not meet the technical definition of helicopter money, but President Trump is hoping to land $1,000 into the bank accounts of most Americans in the next two weeks. He gave the news at a press conference around the time that the UK’s Chancellor Rishi Sunak was promising extended loans to business and a three-month mortgage holiday for some. Phil Dobbie asks NAB’s Ray Attrill which approach will work best, with Ray suggesting that both approaches show governments are taking the threat to their economies seriously and changes are fast moving. Perhaps that’ll stabilise equity markets. Meanwhile the Aussie dollar has fallen below the post GFC low, not helped by the continuing argy-bargy over oil.

Tuesday 17th March 2020

Despite extreme measures by the Fed yesterday, cutting interest rates by a full 1%, and the return of QE, markets were far from impressed, with Monday seeing another massive fall in US and European shares. Phil Dobbie asks NAB’s Gavin Friend what needs to be done to satisfy markets that there’s a plan to see us all through to the light at the end of the tunnel. Data for China yesterday show how hard the virus has hit, signalling how other economies are likely to suffer. Is this the time for even more serious stimulus, given government and central bank officials seem to be repeating the call that they are ready to do “whatever it takes”?

Monday 16th March 2020

The RBNZ has slashed rates this morning to a quarter percent, promising to keep them at that level for a year. It’s the latest emergency move by central banks, with an expectation that the Fed cut rates a full one percent later this week. Phil Dobbie talks to NAB’s Rodrigo Catril about moves by central banks and governments – is enough going on to calm markets about the enormous volatility we saw at the end of last week? They also discuss moves on oil prices and the G7 meeting later today, which could see further announcements on a more globalised approach to tackling the virus impacts.

Friday 13th March 2020

Markets are in free fall as containment measures impact heavily on business, not least President Trump’s ban on visitors from mainland Europe. Central banks are doing what they can – not much in the case of the ECB – but the focus is on the inaction of governments to provide sufficient stimulus. NAB’s Gavin Friend says that the UK, at least, has had a coordinated approach, whilst the US argues politics and the Eurozone largely fails to respond. Even where action is being taken, Phil Dobbie asks whether the injections are enough. As Christine Lagarde commented, spending pledges from Eurozone governments amounted to just €27 bililon – just 0.25 percent of GDP. Does that seem a realistic response to such a massive global crisis?

Thursday 12th March 2020

The Bank of England and the UK government launched a coordinated approach on tackling COVID-19, with an emergency rate cut and fresh fiscal stimulus. Today measures are expected from the Australian government, and tonight the ECB will announce their moves, but when can we expect fiscal measures from European governments? And what about the US? Phil Dobbie talks to NAB’s David de Garis about the latest market news, as the WHO finally declares the virus a pandemic. And oil prices continue to fall, with inventories in the US much higher than expected. Another day of concern, for traders, businesses and the public.

Wednesday 11th March 2020

Markets have bounced back a little today, even though the battle over oil seems to be getting worse. On today’s Morning Call podcast NAB’s Tapas Strickland says the market recovery has been driven by hope of a stimulus package from the White House, together with President Xi’s visit to Wuhan, taken as a sign that the virus is under control and China is getting back to business. Phil Dobbie asks, if governments are slow to respond with appropriate stimulus measures, could we see another collapse in market sentiment? The first test could be the UK budget tonight, but the markets will be also wanting the White House to get measures through Congress.

Tuesday 10th March 2020

There has been a massive fall in oil prices, as bond yields fall further to new lows, whilst the US dollar has lost more ground and equities fall further, even causing trading to cease for a while in New York. The week hasn’t got off to a good start. So, what will cause things to turn around? NAB’s Rodrigo Catril suggests regions that will do well will be those where there’s a coordinated response from governments and the central bank. But, Phil Dobbie asks, if the response isn’t far-reaching enough could we be on the verge of GFC number two?

Monday 9th March 2020

The rush to bonds continued on Friday, hitting new lows for Treasury yields, even as equities in the US saw a last-minute push and actually finished the week up a little. Phil Dobbie asks NAB’s Ray Attrill whether we’ll see a correction early today, particularly as a battle is emerging over oil supplies. Russia is refusing to cut supplies, leading to a likely price war with Saudi Arabia, pushing oil to multi-year lows. Meanwhile, COVID-19 continues to spread, with a large part of Northern Italy now in lock-down. So, will the markets be heartened by contingency plans from governments this week?

Friday 6th March 2020

Markets have switched back to risk-off mood – as if they ever really went away – with big falls in equities, a shift to safer haven currencies and weakening bond yields, as the number of COVID-19 cases nears 100,000. Phil Dobbie talks to NAB’s Gavin Friend about the latest market moves, predictions on the impact of the virus on the global economy, and the latest responses from governments around the world. Normally, the US non-farm payrolls wold be a topic of discussion at this time of the month, but like so much data lately, it has somewhat been overtaken by events.