| Top U.S. infectious-disease expert Anthony Fauci has yet another warning for President Donald Trump if states ease restrictions too soon. Indian Prime Minister Modi will unleash a $265 billion spending package that amounts to 10% of GDP. And New Zealand equity investors are among the most positive in the region. Here are some of the things people in markets are talking about today. Anthony Fauci, the U.S. government's top infectious-disease expert, told a Senate hearing that "consequences could be really serious" if states ease restrictions too soon. He said at least eight Covid-19 vaccine candidates are in development, though he doubted any will be ready by fall. Wuhan will test its entire population of 11 million after the Chinese city where the pandemic began reported new infections for the first time since its lockdown was lifted. Russian President Vladimir Putin's spokesman is the latest top official to fall ill. A wage-subsidy program in the U.K. was extended, while the health secretary said Britons are unlikely to be able to travel abroad this summer. Sweden will adjust a key element of its strategy after the death rate at care homes spiraled. Cases around the world have topped 4.2 million, with deaths exceeding 286,900. Meanwhile, virus survivors could suffer severe effects for years after the pathogen is gone. Here's how Bloomberg is tracking the pandemic. Asian stocks were poised for declines after U.S. equities dropped in the wake of a warning against a premature reopening of the economy from a top U.S. health official and as traders assessed a dire outlook from Federal Reserve regional chiefs. Treasuries climbed. Futures in Japan and Australia retreated, while Hong Kong contracts earlier edged higher. S&P 500 futures opened lower. The benchmark extended losses as Anthony Fauci, the nation's top infectious disease official, said states reopening too quickly could set back the road to an economic recovery. Meanwhile, some central bank officials said the virus outbreak and a partial shutdown would risk massive bankruptcies that could create a lasting scar. Elsewhere, the yen climbed, crude roses and gold was at $1,702.69 an ounce. Indian Prime Minister Narendra Modi said his government will spend a total of 20 trillion rupees ($265 billion) to help Asia's third-largest economy weather the fallout of the coronavirus pandemic. The package amounting to 10% of the nation's gross domestic product will help the economy get back on its feet after weeks of stay-at-home restrictions, Modi said in a televised address to the nation Tuesday, without giving details. The figure announced by Modi will include more than 5.5 trillion rupees of measures already unveiled by the government and the central bank. "It will focus on areas like land, labor, liquidity and law," said Modi, adding that the finance ministry will unveil details from Wednesday. The spending plan coupled with proposed tax breaks for new plants, and incentives for overseas companies is an attempt by Modi's administration to lure investors. India is hurtling toward its first full-year contraction in four decades, and an estimated 122 million people lost their jobs in April while consumer demand has evaporated. One week investors in China seem content with existing government measures to support the country's slumping economy. The next, they're calling for more stimulus. Judging by the lack of conviction in Chinese financial markets, the outcome of this month's key policy meetings may be the deciding factor for investors. While volatility in stocks and the yuan has eased on expectations Beijing will ensure stability ahead of the May 22 start date, traders have so far been reluctant to go big on risk. Stock valuations are being capped by slumping corporate profits, which are unlikely to recover any time soon from their worst first quarter since at least 2003. Signs of fading momentum can be seen in languishing stock turnover and the CSI 300 Index's torpor: the benchmark hasn't moved more than 2% in either direction for 22 consecutive trading days. It closed completely flat on Tuesday. Beijing has already hinted at more support, with the central bank on Sunday vowing to deploy stronger policies. But the lack of specifics — and the muted reaction in markets this week — suggests concrete stimulus measures may be the only catalyst that investors can count on to break the grind. New Zealand equity investors are among the most positive in the region as Kiwis begin to exit from one of the world's strictest coronavirus lockdowns. The nation's stock market is the second-best performer in the Asia-Pacific since global benchmarks plunged to their March lows, according to data compiled by Bloomberg. A fading infection count and moves to unwind virus restrictions have helped the market recover about 27% from its trough, trailing only South Korea's 33% improvement. Profit forecasts are yet to reflect the economic blow from the outbreak, according to UBS Group AG. New Zealand's earnings-per-share estimates for the next 12 months have fallen about 17% since the start of the year, while expectations for larger neighbor Australia have been cut 21% and MSCI World Index targets have been lowered almost 22%, according to data compiled by Bloomberg. What We've Been Reading This is what's caught our eye over the past 24 hours: And finally, here's what Tracy's interested in this morning It's time for an update on one of my favorite spurious correlations: cryptocurrency and avocados. The price of Bitcoin and Hass avocados are tracking each other once again after breaking down late last year. There's nothing much to say about this questionable relationship except that its resumption coincided with the long-awaited "halving" in Bitcoin. That's when the rate at which new Bitcoin is mined is scheduled to halve, with the number of new coins added to the system dropping from 12.5 every 10 minutes or so, to 6.25. That process has been embedded in Bitcoin's code, which has a limited supply of coins and deflation at the heart of its philosophy. Such "halvenings" have happened before. But of course, Bitcoin enthusiasts claimed the process was the next catalyst for a big bull market as demand would exceed diminishing supply.  Setting aside the fact that it's difficult to have a price catalyst that literally everyone knows is coming, there's another problem with the bull thesis, which avocados can help illustrate. An avocado is something you buy because you want to eat it. Its price is driven by supply (how many avocados farmers have grown) and demand (how many Millennials are eschewing buying houses). Bitcoin is also driven by supply and demand dynamics, but it doesn't disappear every time it gets "used." Its use case is simply to sit there as a store of value or speculation, which means that its price can change to accommodate greater demand and diminishing supply as needed. You can't sit on avocados forever, nor can you chop them up into ever smaller bits in order to accommodate greater demand and a bunch of people clamoring for breakfast. But you can do that with Bitcoin, and that's one reason why the halving doesn't matter much for price. You can follow Bloomberg's Tracy Alloway at @tracyalloway. | 
Post a Comment