Trinh Profile picture
19 Jul, 16 tweets, 5 min read
Good morning Hong Kong!! @Trinhnomics is back! Shop open! Just give me some time to clear some admin! So happy to be back!!! Tons to talk about of course!
Created a Maternity folder & dumped all my emails during my leave there & inbox is cleared already by 230pm (tried to go through them since this morning but so many thousands more & needed a new strategy!!!). Okay, now the fun stuff - economics & markets! FX moves since I left👇🏻
Now that I've put all the emails in one folder to worry about later - let's discuss the two themes dominating markets: Delta Variant & inflation. We focus on the Delta Variant first & why Asian FX for the most part (ex TWD & CNY/CNH) have done poorly vs the USD & why the USD rose
I won't go into all the things I missed in Q2 and early Q3 as that is futile like my attempt this morning to delete all the emails to zero. We go 1st into why THB & AUD as well as many ASEAN + India FX haven't done well. So what's the Delta Variant?
To keep it short: it's more contagious (1st reported in India) - as in an infected person can spread to 3-4 vs the original variant spreading to 1-2 (according to Yale Medicine). Meaning, u can get a bunch of people sick very quickly.

So what about vaccinations? Protected?
The Delta Variant has many symptoms like a cold ( headache, fever & sore throat but less of a cough). DV leads to more hospitalization & deaths. Kids + younger adults also susceptible (vs the original).

Pfizer + Moderna 88% effective vs disease & 98% vs hospitalization.
So great if u're vaccinated for those. The AstraZeneca vaccine is about 60% effective against disease & 93% effective against hospitalization. Johnson & Johnson similar to the AstraZeneca results. U can see how things start to diverge as if u got MRNA vaccines then more protected
Pfizer & Moderna are more expensive so u can see how this DV is about the haves & haves not (as in the US vs the world almost & to a lesser extent the DM vs EM). But not all DM is amazing at vaccination. Take Australia. Below are stats from Bbg & it'll take 6mths at current rate.
Meaning, Australia has Melbourne + Sydney under lockdown (they even halted construction) as it goes for zero Covid as vaccination will take a while to do. Therefore, AUD takes a hit from both AU centric factors (lockdowns) plus overall risk-off & USD rallying (we'll discuss later
Why is the THB the worst Asian currency? Well, things haven't really meaningfully improved for Thailand even though it got cheap interest rates & exports OK as it got a raging virus (thanks to the DV) & amongst the WORST vaccination rates in Asia. So Thailand tourism gotta wait.
Thailand new Covid cases (most are the DV) are spiking (& not peaking till August according to the gov) & that means suppression measures as vaccination is woeful & that means its economy suffers.

If 2020 is all about suppression then 2021 is all about the vaccines.
Here is a question: if the AUD languished so much despite few cases (relatively speaking) & decent vaccination say relative to IDR, then why is IDR appreciating vs AUD? (A follower asked me & a great question!)

Well, it's the change of expectations/performance vs level.
As in Australia reacts much more HARSHLY to these cases (lockdown of key economic areas = weaker growth) & so the RBA has to ask the question if it can taper like it said it would etc. Meanwhile, IDR already priced in poorer Covid performance & reaction function of ID is diff.
Here's Indonesia econ data so far since I've been gone - low CPI & PMI not great. The spike of cases + deaths will impact ID but the question is whether BI will cut rates when IDR already weakened? Likely not this wk. Question is whether lockdowns'll be extended beyond 20th July.
As countries grapple with whether they do ZERO Covid (as in shut the borders etc) or live with some Covid but have manageable health system, they need vaccines to mitigate the effects of Covid. Many ASEAN economies are turning to Western vaccines (Thailand doing the other pivot).
Gotta run for now. Will continue my catch up session later. Here's today's moves - all about the Delta Variant (DV), as in fear of global growth & reflation trade fading. Bonds rallying, crude fallin', equities & Asian FX on sale!!!

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More from @Trinhnomics

20 Jul
Okay, I think there is a silver lining playbook for this delta variant🤗. Been thinking about it for the past two days, especially for Asia.
What do we know? a) Virus mutates & the delta variant is rather infectious but there is something effective at reducing infection & hospitalization - vaccines esp Pfizer & Moderna; b) Asia isn't fully vaccinated & virus is causing countries to use the old playbook - restrictions.
In Asia we got India getting that massive wave that resulted in deaths/hospitalizations/higher poverty & something countries want to avoid through lockdowns - fresh ones are happening in Singapore, Indonesia, Vietnam, Australia, Thailand etc. Not good for growth & sustainability.
Read 15 tweets
20 Jul
Good morning - here's what is going on in Asia regarding new Covid infections - charts look messy but key point is that infections are going up on the Delta Variant, even for previously good places like Australia, Vietnam and Singapore.
Added South Korea to the mix (this is net change 1 day) & it's not looking good either: Question is whether Bank of Korea can hike/tighten as it wants to given not the spike of the virus in Korea as well as Asia?
Added India to the mix & you can see that it's high but down from the worst in Q2. This Delta Variant (DV) is wreaking havoc across Asia esp as we are behind in Covid vaccination esp the Pfizer/Moderna one that proven to be more effective.
Read 8 tweets
18 Feb
Deaths of Covid-19 by age:

81% of total deaths were of people greater than 65 years of age in 2020.

32% of total deaths by >85 and older.

140 people died from age 0-14 out of 460,234 or 0.03%
41,096 more MEN died of Covid-19 than WOMEN 👈🏻
Other than hospitals/healthcare settings, nursing homes were the #2 place of deaths or 21% of total Covid-19 deaths.
Read 4 tweets
11 Feb
May I add electric cars? If u want to live without fossil fuels, it'll be almost impossible. Speaking of oil, watch this documentary by the BBC called Planet Oil & how it has taken over everything. Don't delude urself to think u are green & not black.…
Must watch it to understand the world we live in, if u're not already aware of the role of oil & its derivative in your life. Once u do, u'll find the hypocrisy of vegan shoes etc.

Everything u touch has fossil fuels, including electricity to charge ur phone to read this tweet.
People think oil = the energy that powers your car & therefore if you buy an electric car, say a Tesla, your green cred is up.

But that is delusional thinking. That electric car requires oil to even be manufactured & very energy intensive. And its source of power is fossil fuel.
Read 7 tweets
11 Feb
After that deflated CPI in China, US Jan headline & core inflation decelerated (lower than expectations & MoM lower than before). US 10yr moved lower to 1.12% but the debate on inflation continues: w/ weak demand but supply shocks, will we get stagflation?

Plus, there's fiscal!
Let's look at how the vaccination efforts are going globally:

The US is doing much better with 67.2% of supply used up & that 14 doses per person (I know many people that have gotten the shots). UK is great.

In EM, Chile is standing out. In the EU, Spain not badly either.
The experience of the US shows that after a slow start, there is a steep learning curve & the process gets faster (assuming you have the vaccines to deploy) and hence the distribution of existing supply has shot up in the US sharply. Don't assume linear progress for distribution.
Read 4 tweets
10 Feb
Good morning: and China CPI for January went negative -0.3%YoY & that mirrors other data like PMIs that show growth momentum sagging on weak demand. Obvs a lot of this is on the base effect + food but it now reveals that demand is a challenge & the PBOC is going to pay attention.
US CPI tonight & markets expect an increase (yield curve has steepened on expectations of CPI higher on fiscal & supply constraints).

Btw, if u ever wonder how a country grows out of its debt, it's nominal GDP or inflating its way out of it. Real rates in the US still negative!
Just like that, Korea unemployment rate went back to the 1990s (remember the Asian Financial Crisis). The KOSPI has been on a tear thanks to low rates & retail investors piling in, pushing up valuations. But jobs are MIA while real estate prices higher. Pres Moon got a problem.
Read 5 tweets

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