New injections of optimism and the deal of the century

2020年11月17日

Like last week, this one started with news from vaccine developers. And if last Monday it was Pfizer with its 90% efficiency, then yesterday Moderna was the generator of optimism. Its vaccine is 94% effective. But at the same time, unlike the Pfizer vaccine, which must be stored at -80 degrees, the product from Modern can be stored in usual home refrigerators. This means that it is easier and more convenient to use it.

The data from Japan and China added optimism as well. Japanese GDP in the third quarter grew by 21.4% (forecasts was 18.9%). China reported growth in industrial production and retail sales (even compared with the same period last year).

Another reason for the uplifting mood was the news that China and 14 countries of the Asia-Pacific region signed on Sunday the largest trade agreement in the world (covering almost a third of the world's population and global gross domestic product).

That is, the markets have a feeling that things are not so bad now, but in the long term everything will be great for sure.

We continue to consider this position to be at least premature. Europe in lockdown (full or partial). As a result, for example, the freeway operator Vinci reported on Friday that traffic in Europe dropped 48% in the first full week of November.

And with China, everything is far from so simple. In the corporate sector, defaults on debts are growing. Even state-owned companies, which were previously considered practically risk-free, are under threat. As a result, problem loans in the banking sector rose to a record 2.84 trillion yuan ($ 429 billion) as of September 30, according to the Chinese banking regulator.

So, our main positions are unchanged: we sell on the stock markets, buy precious metals, sell oil and look for points to buy the dollar.