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Emerging Markets

  1. Brazil's manufacturing-sector contraction is now substantially worse than what we saw after the financial crisis.

  2. Chile's rebound in economic activity was short-lived.

  3. Mexican remittances unexpectedly spiked in March, hitting a record high. Workers from Mexico living in the US tapped their dollar savings to take advantage of the weak peso during the crisis. Alberto Ramos (Goldman Sachs): - The significant acceleration of remittances in March is difficult to square with labor market conditions and sentiment in the US. We speculate that perhaps fearing a significant deterioration of the employment and income prospects in the US, many workers may have capitalized on a favorable USD/MXN level to send part of their accumulated savings in the US back to Mexico.

  4. Separately, Mexico's business activity deteriorated further in April, with the PMI indices hitting record lows.

  5. South Africa's car sales completely stopped last month.

  6. Turkey's core inflation is back below 10%.

  7. New coronavirus cases in India have accelerated.

  8. May is typically not a good month for emerging-market assets.

  9. EM high-yield sovereign bond spreads remain elevated.


  1. Corporate earnings have deteriorated sharply in the first quarter.

  2. Hong Kong's GDP registered the largest quarterly decline on record as the recession deepens.


  1. The Bank of Japan is lagging the Fed in terms of total assets, which could weigh on USD/JPY going down.


  1. The April manufacturing PMI reports continue to show devastation in factory activity.

  2. Italian new vehicle registrations completely stopped in April.

  3. The expected rebound in the Sentix index did not materialize.

  4. The ECB has been deviating from the capital keys in its PSPP securities purchases.

  5. Long-term Eurozone GDP growth forecasts have finally bottomed.

  6. Households' demand for credit tumbled since the start of the pandemic.

  7. Sweden's manufacturing activity crashed in April.

  8. Norway's all-sector PMI stabilized in April but remains deep in contraction territory (PMI < 50).

  9. Central European manufacturing hubs are struggling.


  1. Consumer confidence appears to have stabilized near record lows.

  2. CIBC expects the unemployment rate to remain elevated through next year.

United States

  1. Factory orders registered sharp declines in March.

  2. Economists expect the April payrolls report to show a complete reversal of all the job gains since the 2009 lows.

  3. The largest US cities suffered steeper job losses (in percent terms) than smaller metro areas.

  4. The US unemployment rate tends to be more volatile than what we see in other countries.

  5. Consumer confidence has been more resilient than retail sales.

  6. Many economists suggest that "soft" economic data such as the PMI or regional Fed surveys are substantially underestimating the carnage in output. The latest consensus forecast is a contraction of 27.5% (annualized).

  7. The largest GDP contraction in recent history is expected to usher in deflation.

  8. The collapse in oil prices will also drag the core CPI into deflation territory.

  9. Used vehicle prices are down almost 10% from the same time last year (adding to deflationary pressures).


  1. The growth in the US money supply continues to hit new records.

  2. Money market fund assets are soaring.

  3. TIPS yields could see further downside.

  4. Mortgage rates remain elevated relative to the 10yr Treasury yield


  1. Banks tightening standards on business loans. Tightening standards on credit cards and other consumer debt .

  2. Banks' holdings of credit card balances are declining. A good portion of this drop can be explained by banks taking loan loss provisions against delinquent/risky credit card debt.

  3. Consumer credit risks have yet to catch up with corporate and municipal credit risk.


  1. US shares have widened their outperformance vs. the rest of the world.

  2. And valuations have diverged sharply as well.

  3. Analysts are having a tough time agreeing on earnings estimates, a sign of extreme uncertainty in business conditions going forward.

  4. Recessions tend to correct periods of "creative accounting"

  5. The Fama-French Small-Cap Value Index marked its worst quarterly performance on record.

  6. The Smart Money Index saw a slight drawdown compared to the S&P 500 and is back near its December highs.

  7. Retail investors have been positioned more defensively since the start of the crisis.

  8. The underperformance of US airline shares continues to widen


  1. Crude oil is rebounding, with the June NYMEX contract climbing above $20/bbl.

  2. The Fed's massive injections of liquidity should provide some support for crude oil.

  3. The Saudi - Russia price war was costly as OPEC's production surged (just as demand collapsed).

  4. But production cuts should begin to take effect, and demand is expected to recover.

  5. Moreover, energy CapEx in the US has collapsed, which should curtail supply.

  6. Refining margins are negative not just in Europe but now in Asia as well.

  7. US natural gas futures climbed above $2.1/mmbtu on expectations of slowing output.

  8. On the other hand, European natural gas prices are hitting multi-decade lows.


  1. Precious metals mining shares had a good month.

Global Developments

  1. Lockdowns are correlated with economic performance

  2. Investors' withdrawal of about $140 billion from taxable bond mutual bonds and $28 billion from municipal bond funds dragged bond prices further down during the coronavirus-led selloff, which shows the growing role of mutual funds and exchange-traded funds in the U.S. credit market, says S&P Global Ratings.

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