PATIENCE IS A VIRTUE

Sunny spots are rare this winter. Economic data in in Europe and China have continued to underwhelm. Key euro area indicators including PMIs, Ifo and Sentix are at multi-year lows, following a sharp contraction in industrial production in Q4.

Highlights:

  • Underwhelming macro data and lingering political uncertainties (trade war, Brexit, US government shutdown) offered little support to global markets into the new year.
  • Yet risk assets have been climbing a wall of worry since Christmas, rebounding nicely from a panic sell-off in December. More dovish central banks, Chinese policy support and hopes of a US/China trade deal are reassuring investors that policy makers will address downside risks.
  • We subscribe to Fed’s Powell underlying message: patience is a virtue. We trim but retain a pro-risk allocation tilt, slightly reduce our underweight in Govies and keep an overweight in credit.

Download the full publication below

PATIENCE IS A VIRTUE

RELATED INSIGHTS

CHINA’S RECOVERY CONTINUED BUT A BIT SOFTER THAN EXPECTED
China's economic recovery continued in Q3 2020, although a bit softer than expected. Real GDP growth rose to 4.9% yoy, slightly below the Reuters consensus expectation of 5.2% yoy, but still a substantial upturn from the 3.2% yoy in Q2. On a quarterly base, growth dynamics softened to 2.7% qoq, after 11.7% qoq and -10% qoq in the two previous quarters.
Citywire video-interview with Peter Marber
Watch Peter Marber, fund manager of this global, non-directional, long/short approach to Emerging Markets debt, in a video-interview by Citywire.
COVID-19 FACTS & FIGURES
According to the IMF’s Managing Director, strong international cooperation on coronavirus vaccine could speed up the world economic recovery and add $9 trillion to global income by 2025. A WHO trial found that Remdesivir, Hydroxychloroquine, Lopinavir and Interferon have little or no effect on hospitalized Covid-19 patients. Gilead Sciences has questioned the findings of the WHO study saying data appeared inconsistent.