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.
Vaccination in Asia - highlighting economies on the low end, yes, a lot of Southeast Asian ones. Vietnam went from hero to zero. The Philippines has never been a hero for Covid but better than Vietnam on the vaccination race, although still bottom.
Peso not doing well today.
Markets went from inflation/reflation to quickly fear of the Delta Variant rather quickly. Are we going to tighten in Asia just yet?
Well, the bond & FX markets say no. 🙅🏻♀️🙅🏻♀️🙅🏻♀️
What about deaths & hospitalization? DV is very infectious & so it can quickly spiral. Most new infections are of DV so govs have to make decisions of whether to do more than necessary or not, esp if population is not vaccinated. In AU, SG, & VN, that means restrictions.
Indonesia next restriction is due today. ID has a lot of Covid cases & only 6% of the population vaccinated. So here we are on 20th July with the race against the virus in Asia raging. The zero Covid strategy is unsustainable for some countries, esp those that depend on tourism.
Some people say, well, what lessons can be learned from India that had this first and cases + deaths falling. First, few countries want to go through what India went through & still is reeling from it. For Vietnam's case, the fast infection is wreaking havoc on the health system.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
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.
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
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.
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?
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.
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.