Archives of “June 19, 2020” day

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Flood of Japanese money rushing to USD assets

  
  Analysis
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Bloomberg report on Japanese investors, facing ongoing negative rates domestically, are buying dollars and risk assets

  • “The presence of the Japanese as the main carry trade driver seems to be growing as they must turn to overseas investments”
Demand for higher-yielding American assets growing
  • In April, Japan’s money managers bought the most U.S. corporate debt in eight years and the second-highest amount of equities in five years
  • “Japanese investors use yen to fund purchases of Treasuries or U.S. corporate bonds, for instance, to seek credit spreads and these flows are continuing,” said Koichi Sugisaki, a strategist at Morgan Stanley MUFG Securities Co. in Tokyo.
Check out USD/JPY … its net more or less unchanged, even a little lower, since November last year …. Without all the Japanese money leaving yen into USD it’d have to be lower I guess?
Bloomberg report on Japanese investors, facing ongoing negative rates domestically, are buying dollars and risk assets 

Bridgewater warns of a lost decade ahead for stocks

  
  Analysis
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Bridgewater Associates is a Ray Dalio founded US investment firm. Via an analysts’ note:

Analysts at the firm are warning of a lost decade ahead for equity investors.
Citing:
  • U.S. corporate profit margins could reverse the strong growth seen in recent years.
  • these margins have provided a substantial portion of the excess return of equities over cash
  • reversal is more than merely the current cyclical downturn in earnings
  • “Globalization, perhaps the largest driver of developed world profitability over the past few decades, has already peaked”
  • “U.S.-China conflict and global pandemic are further accelerating moves by multinationals to reshore and duplicate supply chains, with a focus on reliability as opposed to just cost optimization.”
Also warn on rising corporate debt due to the efforts made on the coronavirus pandemic.

Wuhan study says there may be no herd immunity against the coronavirus

  
  Analysis
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Scary stuff

Scary stuff
The nightmare scenario for coronavirus is that there is no vaccine and no natural immunity. We’re months away from finding out anything on a vaccine but a report today on immunity is worrisome.
Chinese and Texas researchers tested 23,000 Wuhan healthcare workers for antibodies of the disease that would help them fight off a new infection. Only 4% had them when they estimated that at least 25% could have contracted the disease.
“People are unlikely to produce long-lasting protective antibodies against this virus,” the researchers concluded in a non-peer-reviewed paper posted on preprint website medRxiv.org on Tuesday.
The study showed the people with more-obvious and stronger symptoms tended to have antibodies. That suggests people who fought it off with mild symptoms may not have developed antibodies.
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