Morning 2-19

Hard to get the Truth out of China from IFR news


“Perhaps no more obvious in controlled coronavirus information flow, is how the WHO is operating now in China. The WHO team was only allowed in by Monday, nearly three months into the epidemic. Note the US CDC, known to be the top medical emergency teams in the world, is still not allowed in. The WHO team is quarantined in Beijing, not allowed to Hubei, with no plan to put those boots on the ground. Likely as the WHO oversees from afar, they make recommendations, that are controlled and released by China authorities”


We can discuss How many Cases there are in outside of China but that doesn’t much matter right now. Markets want to know when things will get back to normal As I have mentioned before end of February is a date that that has been circled as the beginning of the End. But if it isn’t then further downgrades to World GDP will be forthcoming. From Morgan Stanley ““Macro and micro data suggest production activities are resuming at a slow pace in China, reaching 60-80% of normal levels by end Feb and normalizing only by mid-to-late March. If the spread of the virus is not contained within the next two weeks, the disruption to production could extend into 2Q20.” That’s certainly how treasuries trade.


Chinese Government continue to provide stimulus such as Cash infusions and bailouts for airline industry rumor is that Hainan Airlines is on verge of bankruptcy and will be swallowed up by Air China. Private Companies have stopped paying wages to employees another issue that obviously can slow Consumption


Economic Data:
U.S. PPI and Housing starts Much better than expected, these are January numbers and second Tier in Importance but still very impressive, USA! USA!
Markets:
Spoos Higher Stoxx 600 new all-time highs Bunds and Bonds a bit lower, latest U.S. data pushing yields higher The JPY down .6% vs USD is a bit of a surprise

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