Under The Macroscope

Today we are joined by chief investment officer Theodore Shou who is based in the Hong Kong office of Skybound Capital. Together, he and Matt chat about the state of the Asian markets and the impact and recurrence of Covid-19.

Matt and Jabir speak about the conflict in Gaza and the human, economic and social ramifications.

We’re all also aware of the acute housing shortage across major cities internationally and we take a look at how governments are fighting back.

The NFIB small business survey showed “jobs hard to fill” hit record levels. “Finding qualified employees remains the biggest challenge for small business and is slowing economic growth”. Worryingly, planned price rises, by small business, is rising strongly!

New jobs created totalled just 266,000 when the market expectation, with good justification, was for something closer to a million! To add insult to injury, there was a big, downward revision to March’s payroll of some -140,000.

Have low defaults stymied productivity? Like a magic show, Central Banks (CBs) have become the magicians while the audience is everyone else (Government, Markets). Default rates are not far away from their lowest (2007 before sub-prime started to blow up). Today they are only c3.5% - despite enduring Covid19, endless fiscal and monetary stimulus, rising yields and upwardly rising inflation. Debt has soared but, amidst all the initiatives by CBs at buying it back for QE operations and supporting markets (corporate debt, ETFs……to name a few), effectively there is a giant CB PUT option in place (a safety net) designed to prevent companies from collapsing in almost all sectors. Each cycle brings with it an even bigger round of debt stimulus and so the cycle goes on – until it doesn’t. What Covid19 has done is to enable tech savvy companies to forge ahead while many others are bailed out. Some are investing in new capital equipment and modernising production but CAPEX data is still not strong enough to suggest it is more widespread.

Matt and Jabir chat about the inward investment into Cape Town by global retail giant Amazon. They also touch on the spectacular rise and fall of the European Super League and what it means for the leagues and clubs in general.

It has been a heavy week with releases around Growth (GDP), Retail Sales and Inflation. In a nutshell, they are all rising! Biden’s stimulus package ($1.9TN) is having an immediate effect as evident in the retail sales data. The latter jumped almost 10%. Even excluding Autos, it was still up a formidable 8.4%. The impact was across the board. China’s GDP data released today showed very healthy progress too.

It is with huge sadness that we learnt of the death of Prince Philip, Duke of Edinburgh, Married to the Queen for over 70 years.

Sweden has completed its first study into a digital currency (“e-krona): it concluded that it might take a lot longer to enact than initially thought and the current pilot won’t be finished till early next year. The study acknowledged that although the usage of cash is diminishing, there is no reason to embark on such a project.

Matt and Jabir chat about the year to date and discuss the market growth from this time last year up until now. 

Join us as we take a look at all of the major markets, and the sectors that influence their growth.

Flash PMI readings, measuring activity for Manufacturing and Services are out for March. The Manufacturing data is very strong for the UK, EU and US. Each has a different story - So find out more in this episode of Under The Macroscope.

The Western world is in a tizz and all over the possibility the EU is about to get into a war, a vaccine war, in which it’s threatening to place curbs on vaccine exports from the EU to other regions / countries.

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This week we witnessed Brazil, Russia, Turkey all raise rates. It’s also believed Nigeria and South Africa could follow suit. Meanwhile, amongst Developed markets, Norway has stated it will bring forward its first rate hike end of the year with two more likely in early 2022. So what’s going on?