The question that still reverberates in the financial markets is the extent to which the $ 1.9 trillion coronavirus exemption will be spent, either immediately or if the virus withdraws enough for buyers to be authorized and want to leave.
This column previously indicated surveys of both how the initial $ 600 stimulus was used and plans for the $ 1,400 that went to many households to suggest that much of it will not be implemented in economy.
Another way to look at it is whether households perceive the stimulus as additional income or additional wealth. Studies have shown that the tendency to spend on wealth is only 5%, while the tendency to spend on income varies from 10% to 50%, according to a recent speech by Gertjan Vlieghe, a voting member of the Bank. England’s Monetary Policy Committee.
Dhaval Joshi, chief strategist at BCA Research, says the new stimulus is considered wealth or income depending on whether the recipient household has a low or high income to begin with. But looking at past stimulus checks, there have been no significant changes in either consumption or inflation.
Consequently, he believes that market expectations regarding inflation are taken from the beginning. He also says – in a note written before Thursday’s falling oil prices – that inflation expectations are positively correlated with high commodity prices, even though real inflation tends to fall when commodity prices are high.
“Given that the bond market is useless for predicting inflation, it is also useless for assessing real interest rates,” he says. If the bond market exaggerates the future level of inflation, then the correct inflation-adjusted bond yield should be even higher. “The important thing right now is that, compared to the real bond yield, stocks and other risky assets are even more expensive than they seem.”
Frozen discussions in China
Talks between the United States and China began frozen in Alaska, with public criticism made by each side in its opening statements.
FedEx FDX,
may rise after the delivery service said third-quarter tax gains rose more than analysts anticipated and led to a stronger-than-expected current quarter.
Nike,
may slip after the clothing manufacturer reported slower sales growth than expected in the third fiscal quarter.
Chubb CB,
made an offer of $ 65 per share to buy rival insurer Hartford Financial Services Group HIG,
The Bank of Japan has eliminated targets for the purchase of exchange-traded funds and real estate investment trusts and expanded the range in which it will allow 10-year bonds to be traded.
The oil recovers a little
After a 7% drop in crude oil prices on Thursday, the future is slightly slower CL.1,
they have slowed their fall, but remain below $ 59.80 a barrel. In the future, oil will trade between $ 64 and $ 65 a barrel earlier this week. UBS analysts say they are focusing on the pace of COVID-19 vaccinations, which should help reduce restrictions and support oil demand.
10-year Treasury yield TMUBMUSD10Y,
fell slightly to 1.69%. Futures on the US stock market YM00,
ES00,
NQ00,
were higher as shares in Europe fell UKX,
DAX,
PX1,
Asian stocks closed the week in red, with indices in Tokyo NIK,
Hong Kong HSI,
and Shanghai SHCOMP,
decreasing by about 1.5%.
Bitcoin flows reflect stock flows
It’s bitcoin BTCUSD,
a diversifier? It is a huge market debate, which has been taken by several major banks in the last two weeks alone. Sven Henrich, the technical analyst who runs the Northman Trader website, made this chart, showing that the correlation between weekly bitcoin flows and stocks is at an all-time high.
Random readings
The madness of tulips in the 1600s is often cited by financial market analysts when discussing speculative mania. For lovers of irony, there are non-fungible tulips – that is, illustrations of tulips sold on the blockchain – for sale.
A winged shark? Scientists have wondered about the fossils found in Mexico.
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