Sector de Productos Básicos y Energía
Commodity prices have been on a tear recently and evidence of rising inflation continues to pop up. On the surface, rising commodity prices and mounting inflationary pressures are a recipe for higher bond yields. But puzzlingly, this is not what’s occurred.…
Highlights The kiwi will continue to benefit from a pandemic-free recovery and normalization in monetary policy from the RBNZ. However, the kiwi is becoming expensive according to most of our models. This will begin to impact growth via the trade channel. For the rest of the year, the NZD/USD could hit 75 cents, but will likely underperform other developed market currencies. Feature Chart I-1NZD And Relative Economic Growth New Zealand has been one of the few countries to get the COVID-19 pandemic under control in short order. Since June of last year, the number of new infections has been practically zero. The vaccination program is lagging most other developed countries, but the authorities expect most citizens will be inoculated by the end of this year. The travel bubble with Australia has opened up the service sector to a recovery that remains the envy of most other developed economies. The New Zealand dollar has responded in tandem with the improvement in domestic conditions (Chart I-1). While the USD is up this year, NZD has still appreciated by about 1% against the dollar. From the March lows last year, the kiwi is up 22%, only trailing the Australian dollar and Norwegian krone within the G10. In this report, we explore the outlook for the kiwi, looking at key drivers such as the pandemic, the commodities boom, and the prospect for monetary policy amidst a hot housing market. In our view, the NZD still faces upside, but less so than other developed market currencies. A Robust Recovery Together with Singapore and Australia, Bloomberg ranks New Zealand as one of the safest places to be during the pandemic. This has allowed the manufacturing PMI in New Zealand to hit fresh highs, easily surpassing very robust activity in the US. Relative economic performance between New Zealand and its trading partners has tended to define the trend in the currency. The services sector is still trailing behind, as most of the world remains under lockdown (Chart I-2). However, a travel bubble has opened up with Australia, and it is fair to assume that service-sector activity is a coiled spring ready to rebound, especially as tourism constitutes a non-negligible share of New Zealand GDP (Chart I-3). Chart I-2A Recovery In Services Underway Chart I-3Tourism Will Boost NZ GDP Employment in New Zealand has already seen a sizeable recovery. The unemployment rate hit 4.9% in December, very close to the Reserve Bank of New Zealand’s (RBNZ) own estimate of NAIRU. Next week’s release should show an even more robust rebound. Inflation remains well contained at 1.5%, but as the economy begins to bump against supply-side constraints, this should change. The quarterly employment survey showed that wages are rising at a 4% clip. Eventually, a labour market that has fully recovered, burgeoning inflationary pressures and an economy open for business will mean the need for the RBNZ to maintain emergency monetary policy settings will be eliminated. A Terms-Of-Trade Boom While the domestic economy has benefited from strong government support, and very accommodative monetary policy settings, the external environment has also provided a gentle tailwind for the New Zealand economy. Over the last few decades, one of the key primary drivers of the NZD exchange rate has been terms of trade. New Zealand’s top exports are predominantly in agricultural commodities. Strong export growth has boosted the trade balance, both in volume and price terms (Chart I-4). An increasing trade balance naturally means that NZDs are being buffeted with demand. China has led the pack in imports from New Zealand vis-à-vis other countries by simple virtue of the fact that the authorities started injecting stimulus much earlier on, which helped ease domestic financing conditions. China is also New Zealand’s biggest export market. While the credit impulse in China is set to slow this year, demand for foodstuffs is less sensitive compared to demand for other higher-beta commodities. This will support New Zealand exports. At the same time, there has been a supply component to the boom in agricultural commodity prices. Adverse weather has impacted the planting season for many agricultural goods. As a result, stock-to-use ratios have begun to roll over, particularly in some of the goods that New Zealand exports (Chart I-5). This is likely to reverse, as farmers take advantage of higher prices and increase productivity. Chart I-4A Terms Of Trade ##br##Boom Chart I-5Falling Stocks Have Boosted Agricultural Prices In a nutshell, the outperformance of the kiwi has been a combination of supply shocks in the agricultural market, and an economy that has had an impressive rebound. Going forward, the kiwi should continue to do well versus the dollar as economic momentum picks up. The Housing Mandate Housing prices in New Zealand have been on a tear (Chart I-6). As a result, the government has mandated that house price considerations be tied into monetary policy decisions. The direct implication of this is that interest rates in New Zealand are set to increase. In the coming months, the labor market mandate for the RBNZ is about to become a lot tougher, because of the opposing forces between financial and economic stability. Tightening monetary policy too fast and too soon will expose the economy to a potential relapse in growth. But allowing housing prices to continue to become unaffordable for most residents is both politically untenable and economically unsustainable. The end game is likely to be as follows: The RBNZ will be quick to tighten monetary policy on domestic grounds and housing market concerns. This will provide a further boost to the kiwi. Yields in New Zealand are already among the highest in the G10, which will only accelerate with tighter monetary conditions. By the same token, the Chinese economy will likely slow as the credit impulse is peaking. This means New Zealand domestic growth will become more important for the NZD than external conditions. Countries with relatively easier monetary policy will see some benefit. Particularly, the Reserve Bank of Australia might lag the RBNZ. If this eventually benefits the Aussie economy, it might hurt the AUD/NZD cross now, but might make way for fresh long positions later (Chart I-7). Chart I-6A Housing Market Boom Chart I-7Where Next For AUD/NZD? Historically, housing prices in New Zealand have correlated quite strongly with the exchange rate. If the RBNZ is successful in engineering lower housing prices, it will also succeed in weakening the NZD (Chart I-8). Chart I-8House Prices And The Kiwi We were stopped out of our long AUD/NZD trade last week for a modest profit of 2.3%. We are standing aside for the time being, but will be buyers of the cross at 1.05. This will likely be realized towards the end of this year when optimism on the kiwi is likely to peak. How High Can The NZD Bounce? Another reason why the rise in the NZD might soon face strong upside resistance is valuation. Usually, a rise in the NZD over a cycle goes uninterrupted until the cross becomes expensive. On this basis, the kiwi might soon peak. Our purchasing power parity (PPP) models point to a 10% overvaluation in the New Zealand dollar (Chart I-9) versus the USD. Chart I-9The NZD Is Expensive One of our favorite metrics for the kiwi’s fair value is its real effective exchange rate relative to its terms of trade. On this basis, the New Zealand dollar is around fair value. On a longer-term real effective exchange rate basis (REER), the kiwi is 7.4% expensive, or 0.7 standard deviation above the mean (Chart I-10). Chart I-10The NZD Is Expensive The equity market in New Zealand looks particularly vulnerable. Heavily weighted in defensive sectors, this bourse will be particularly vulnerable to a rise in yields that will derail potential equity inflows (Chart I-11). Chart I-11Kiwi Stocks Are Expensive Chart I-12CHF/NZD Could Rise With Volatility Another opportunity is to buy the CHF/NZD cross, which looks attractive at current levels (Chart I-12). Should markets experience some form of turbulence, the cross will benefit. Meanwhile, CHF/NZD just dipped to the upward sloping trend line that has dictated support levels for this cross since 2007. Thus, we recommend investors initiate a long position in CHF/NZD. Chester Ntonifor Foreign Exchange Strategist chestern@bcaresearch.com Currencies U.S. Dollar Chart II-1USD Technicals 1 Chart II-2USD Technicals 2 The data out of the US were mildly positive this week. Quarter-on-quarter annualized GDP growth came in at 6.4% in Q1, rising from 4.3% in the previous quarter. Initial jobless claims fell to 553K in the week ended April 23, from 566K the previous week. Consumer Confidence for April came in at 121.7 beating the expected 113. The S&P/Case-Shiller House Price Index rose 11.9% year-on-year in February. Fed maintained the target range for the Fed Funds rate at 0 to 0.25%. The US dollar DXY index was flat this week. Although the dollar advanced earlier in the week with treasury yields posting small gains, it weakened on Wednesday ahead of the Fed meeting. Compared to the record-breaking preliminary PMIs of last Friday, milder data this week and the dovish tone of the Fed aren’t helping the downward trend of the dollar. Report Links: Arbitrating Between Dollar Bulls And Bears - March 19, 2021 The Dollar Bull Case Will Soon Fade - March 5, 2021 Are Rising Bond Yields Bullish For The Dollar? - February 19, 2021 The Euro Chart II-3EUR Technicals 1 Chart II-4EUR Technicals 2 Recent euro area data have been soft. The IFO Business Climate Index inched up only 0.2 points to 96.8 and disappointed expectations of a much more significant increase to 97.8. The BNB Business Barometer of Belgium surprised to the upside and jumped to a decade high of 4.4 from a revised 1.04. The German GfK Consumer Confidence contracted to -8.8 for May and the French Consumer Confidence stayed the same in April. The euro strengthened by 0.5% against the US dollar this week. The uneven data out of Europe reflects differences in COVID restrictions throughout the region. Tighter measures were announced in some German regions and Belgium is easing restrictions. However, overall, we remain optimistic on the outlook for the entire region as the accelerating vaccination effort should support the economy reopening this summer. We are long EUR/CHF. Report Links: Relative Growth, The Euro, And The Loonie - April 16, 2021 Portfolio And Model Review - February 5, 2021 On Japanese Inflation And The Yen - January 29, 2021 The Japanese Yen Chart II-5JPY Technicals 1 Chart II-6JPY Technicals 2 The data out of Japan was scant this week. Bank of Japan maintained interest rates at -0.1%. Retail Sales in March grew 5.2% year-on-year, beating forecasts of 4.7%. The Japanese yen weakened by 0.5% this week. Due to the current state of emergency throughout the country, the Bank of Japan is ready to further ease monetary policy as needed and warned of the likelihood for consumption to stay depressed. That said, our intermediate term indicator is hinting at a rebound in the currency. Report Links: The Dollar Bull Case Will Soon Fade - March 5, 2021 On Japanese Inflation And The Yen - January 29, 2021 The Dollar Conundrum And Protection - November 6, 2020 British Pound Chart II-7GBP Technicals 1 Chart II-8GBP Technicals 2 The data out of the UK this week was positive. The Confederation of British Industry (CBI) retail sales volume balance rose to 20 in April from -45 in March, recording the sharpest growth since 2018. The British pound rose by 0.7% against the US dollar this week. The strong retail sales numbers came amidst lockdowns being lifted. While May will continue to see further restrictions eased, cable faces threats from its own success so far this year as well as UK’s recent political turmoil. Also, both the speculative positioning and our intermediate-term indicator are at elevated levels. Report Links: Portfolio And Model Review - February 5, 2021 The Dollar Conundrum And Protection - November 6, 2020 Revisiting Our High-Conviction Trades - September 11, 2020 Australian Dollar Chart II-9AUD Technicals 1 Chart II-10AUD Technicals 2 The data out of Australia have been soft lately. CPI in Q1 rose 0.6% versus Q4 last year, below the expected 0.9%. The year-on-year growth of 1.1% also undershot the 1.4% forecast. Trimmed mean CPI grew 0.3% on the prior quarter and 1.1% versus a year ago, both failing to beat expectations. The Q1 export price index rose 11.2% over the prior quarter, compared to the 5.5% rise in Q4. The Australian dollar rose by 1% against the US dollar this week. In addition to both CPI measures disappointing to the downside, a foreseeable peak in the commodity market driven by the slowdown in China can also be a downward drag on the currency especially when the sentiment on the Aussie is elevated. We are short AUD/MXN and were stopped out of our long AUD/NZD trade. Report Links: The Dollar Bull Case Will Soon Fade - March 5, 2021 Portfolio And Model Review - February 5, 2021 Australia: Regime Change For Bond Yields & The Currency? - January 20, 2021 New Zealand Dollar Chart II-11NZD Technicals 1 Chart II-12NZD Technicals 2 The data out of New Zealand have been neutral. Trade Balance in March improved by NZD 33M over a month ago and NZD 1690M a year ago. ANZ business confidence came in at -2 in April, higher than the -4.1 the prior month. The New Zealand dollar strengthened by 1% against the US dollar this week. We discuss the kiwi at length in the front section of this week’s report. The conclusion is that NZD faces near-term upside, but will lag other procyclical currencies over the longer term. Report Links: Portfolio And Model Review - February 5, 2021 Currencies And The Value-Versus-Growth Debate - July 10, 2020 Updating Our Balance Of Payments Monitor - November 29, 2019 Canadian Dollar Chart II-13CAD Technicals 1 Chart II-14CAD Technicals 2 The data out of Canada this week continue to be positive. Both Retail Sales and Core Retail Sales in February grew 4.8% over the prior month, comfortably exceeding the expectations of 3.7% and 4% growth, respectively. The Canadian dollar rose 0.8% against the US dollar this week. The loonie reacted positively to the strong retail numbers as it continues its path upward on strong inflation data of recent months and a hawkish Bank of Canada. However, even as the COVID case count appears to have peaked, there remains downside risks of very elevated commodity prices and our intermediate-term indicator still just off a recent peak. Report Links: Relative Growth, The Euro, And The Loonie - April 16, 2021 Will The Canadian Recovery Lead Or Lag The Global Cycle? - February 12, 2021 Currencies And The Value-Versus-Growth Debate - July 10, 2020 Swiss Franc Chart II-15CHF Technicals 1 Chart II-16CHF Technicals 2 There was scant data out of Switzerland this week. ZEW expectations for April came in at 68.3, slightly higher than the 66.7 from the prior month. The Swiss franc rose 0.4% against the US dollar this week. While the waning of investors’ sentiment and net speculative positioning may point to some softening in the near term, the recent COVID crisis in India can provide support to this risk-off currency. We are long EUR/CHF. Report Links: Portfolio And Model Review - February 5, 2021 The Dollar Conundrum And Protection - November 6, 2020 On The DXY Breakout, Euro, And Swiss Franc - February 21, 2020 Norwegian Krone Chart II-17NOK Technicals 1 Chart II-18NOK Technicals 2 The data out of Norway this week was positive. Core Retail Sales came in unchanged in March versus the prior month, but beat expectations of a 0.9% decline. The Norwegian krone was 0.8% higher against the USD this week. Norway fits the bill in terms of a post-pandemic boom. New COVID-19 cases are under control, the economy is rebounding, oil prices are strong and the central bank is on a path the raise interest rates this year. Being long the NOK is one of our strongest convictions calls in FX. We are long NOK/USD and NOK/EUR. Report Links: Portfolio And Model Review - February 5, 2021 Revisiting Our High-Conviction Trades - September 11, 2020 A New Paradigm For Petrocurrencies - April 10, 2020 Swedish Krona Chart II-19SEK Technicals 1 Chart II-20SEK Technicals 2 Data out of Sweden this week have been mixed. The Riksbank maintained the policy rate at 0%. Trade Balance in March came in at SEK4.1B versus SEK6B in the prior month. Retail sales in March grew by 2.6% month-on-month and 9.1% year-on-year, both an improvement versus the prior period. The unemployment rate in March rose to 10% versus 9.7% the prior month. The Swedish Krona strengthened 0.5% against the US dollar this week, continuing its upward momentum throughout April. The recent accommodative signals from the Riksbank meeting were within expectations amidst elevated COVID case counts and restrictions. Despite its commendable gains so far this month, we remain optimistic on this high beta currency as the eurozone recovery and global reflation are in sight. Report Links: Revisiting Our High-Conviction Trades - September 11, 2020 Updating Our Balance Of Payments Monitor - November 29, 2019 Where To Next For The US Dollar? - June 7, 2019 Trades & Forecasts Forecast Summary Core Portfolio Tactical Trades Limit Orders Closed Trades
Highlights Biden’s first 100 days are characterized by a liberal spend-and-tax agenda unseen since the 1960s. It is not a “bait and switch,” however. Voters do not care about deficits and debt. At least not for now. The apparent outcome of the populist surge in the US and UK in 2016 is blowout fiscal spending. Yet the US and UK also invented and distributed vaccines faster than others. US growth and equities have outperformed while the US dollar experienced a countertrend bounce. While growth will rotate to other regions, China’s stimulus is on the wane. Of Biden’s three initial geopolitical risks, two are showing signs of subsiding: Russia and Iran. US-China tensions persist, however, and Biden has been hawkish so far. Our new Australia Geopolitical Risk Indicator confirms our other indicators in signaling that China risk, writ large, remains elevated. Cyclically we are optimistic about the Aussie and Australian stocks. Mexico’s midterm elections are likely to curb the ruling party’s majority but only marginally. The macro and geopolitical backdrop is favorable for Mexico. Feature US President Joe Biden gave his first address to the US Congress on April 28. Biden’s first hundred days are significant for his extravagant spending proposals, which will rank alongside those of Lyndon B. Johnson’s Great Society, if not Franklin Delano Roosevelt’s New Deal, in their impact on US history, for better and worse. Chart 1Biden's First 100 Days - The Market's Appraisal The global financial market appraisal is that Biden’s proposals will turn out for the better. The market has responded to the US’s stimulus overshoot, successful vaccine rollout, and growth outperformance – notably in the pandemic-struck service sector – by bidding up US equities and the dollar (Chart 1). From a macro perspective we share the BCA House View in leaning against both of these trends, preferring international equities and commodity currencies. However, our geopolitical method has made it difficult for us to bet directly against the dollar and US equities. Geopolitics is about not only wars and trade but also the interaction of different countries’ domestic politics. America’s populist spending blowout is occurring alongside a sharp drop in China’s combined credit-and-fiscal impulse, which will eventually weigh on the global economy. This is true even though the rest of the world is beginning to catch up in vaccinations and economic normalization. As for traditional geopolitical risk – wars and alliances – Biden has not yet leaped over the three initial foreign policy hurdles that we have highlighted: China, Russia, and Iran. In this report we will update the view on all three, as there is tentative improvement on the Russian and Iranian fronts. In addition, we will introduce our newest geopolitical risk indicator – for Australia – and update our view on Mexico ahead of its June 6 midterm elections. Biden’s Fiscal Blowout From a macro point of view, Biden’s $1.9 trillion American Rescue Plan Act (ARPA) was much larger than what Republicans would have passed if President Trump had won a second term. His proposed $2.3 trillion American Jobs Plan (AJP) is also larger, though both candidates were likely to pass an infrastructure package. The difference lies in the parts of these packages that relate to social spending and other programs, beyond COVID relief and roads and bridges. The Republican proposal for COVID relief was $618 billion while the Republicans’ current proposal on infrastructure is $568 billion – marking a $3 trillion difference from Biden. In reality Republicans would have proposed larger spending if Trump had remained president – but not enough to close this gap. And Biden is also proposing a $1.8 trillion American Families Plan (AFP). Biden’s praise for handling the vaccinations must be qualified by the Trump administration’s successful preparations, which have been unfairly denigrated. Similarly, Biden’s blame for the migrant surge at the southern border must be qualified by the fact that the surge began last year.1 A comparison with the UK will put Biden’s administration into perspective. The only country comparable to the US in terms of the size of fiscal stimulus over 2019-21 so far – excluding Biden’s AJP and AFP, which are not yet law – is the United Kingdom. Thus the consequence of the flare-up of populism in the Anglo-Saxon world since 2016 is a budget deficit blowout as these countries strive to suppress domestic socio-political conflict by means of government largesse, particularly in industrial and social programs. However, populist dysfunction was also overrated. Both the US and UK retain their advantages in terms of innovation and dynamism, as revealed by the vaccine and its rollout (Chart 2). Chart 2Dysfunctional Anglo-Saxon Populism? No sharp leftward turn occurred in the UK, where Prime Minister Boris Johnson and his Conservatives had the benefit of a pre-COVID election in December 2019, which they won. By contrast, in the US, President Trump and the Republicans contended an election after the pandemic and recession had virtually doomed them to failure. There a sharp leftward turn is taking place. Going forward the US will reclaim the top rank in terms of fiscal stimulus, as Biden is likely to get his infrastructure plan (AJP) passed. Our updated US budget deficit projections appear in Chart 3. Our sister US Political Strategy gives the AJP an 80% chance of passing in some form and the AFP only a 50% chance of passing, depending on how quickly the AJP is passed. This means the blue dashed line is more likely to occur than the red dashed line. The difference is slight despite the mind-boggling headline numbers of the plans because the spending is spread out over eight-to-ten years and tax hikes over 15 years will partially offset the expenditures. Much will depend on whether Congress is willing to pay for the new spending. In Chart 3 we assume that Biden will get half of the proposed corporate tax hikes in the AJP scenario (and half of the individual tax hikes in the AFP scenario). If spending is watered down, and/or tax hikes surprise to the upside, both of which are possible, then the deficit scenarios will obviously tighten, assuming the economic recovery continues robustly as expected. But in the current political environment it is safest to plan for the most expansive budget deficit scenarios, as populism is the overriding force. Chart 3Biden’s Blowout Spending Biden’s campaign plan was even more visionary, so it is not true that Biden pulled a “bait and switch” on voters. Rather, the median voter is comfortable with greater deficits and a larger government role in American life. Bottom Line: The implication of Biden’s spending blowout is reflationary for the global economy, cyclically negative for the US dollar, and positive for global equities. But on a tactical time frame the rotation to other equities and currencies will also depend on China’s fiscal-and-credit deceleration and whether geopolitical risk continues to fall. Russia: Some Improvement But Coast Not Yet Clear US-Russia tensions appeared to fizzle over the past week but the coast is not yet clear. We remain short Russian currency and risk assets as well as European emerging market equities. Tensions fell after President Putin’s State of the Nation address on April 21 in which he warned the West against crossing Russia’s “red lines.” Biden’s sanctions on Russia were underwhelming – he did not insist on halting the final stages of the Nord Stream II pipeline to Germany. Russia declared it would withdraw its roughly 100,000 troops from the Ukrainian border by May 1. Russian dissident Alexei Navalny ended his hunger strike. Putin attended Biden’s Earth Day summit and the two are working on a bilateral summit in June. Chart 4Russia's Domestic Instability Will Continue De-escalation is not certain, however. First, some US officials have cast doubt on Russia’s withdrawal of troops and it is known that arms and equipment were left in place for a rapid mobilization and re-escalation if necessary. Second, Russian-backed Ukrainian separatists will be emboldened, which could increase fighting in Ukraine that could eventually provoke Russian intervention. Third, the US has until August or September to prevent Nord Stream from completion. Diplomacy between Russia and the US (and Russia and several eastern European states) has hit a low point on the withdrawal of ambassadors. Fourth, Russian domestic politics was always the chief reason to prepare for a worse geopolitical confrontation and it remains unsettled. Putin’s approval rating still lingers in the relatively low range of 65% and government approval at 49%. The economic recovery is weak and facing an increasingly negative fiscal thrust, along with Europe and China, Russia’s single-largest export destination (Chart 4). Putin’s handouts to households, in anticipation of the September Duma election, only amount to 0.2% of GDP. More measures will probably be announced but the lead-up to the election could still see an international adventure designed to distract the public from its socioeconomic woes. Russia’s geopolitical risk indicators ticked up as anticipated (Chart 5). They may subside if the military drawdown is confirmed and Biden and Putin lower the temperature. But we would not bet on it. Chart 5Russian Geopolitical Risk: Wait For 'All Clear' Signal Bottom Line: It is possible that Biden has passed his first foreign policy test with Russia but it is too soon to sound the “all clear.” We remain short Russian ruble and short EM Europe until de-escalation is confirmed. The Russian (and German) elections in September will mark a time for reassessing this view. Iran: Diplomacy On Track (Hence Jitters Will Rise) While Russia may or may not truly de-escalate tensions in Ukraine, the spring and summer are sure to see an increase in focus on US-Iran nuclear negotiations. Geopolitical risks will remain high prior to the conclusion of a deal and will materialize in kinetic attacks of various kinds. This thesis is confirmed by the alleged Israeli sabotage of Iran’s Natanz nuclear facility this month. The US Navy also fired warning shots at Iranian vessels staging provocations. Sporadic attacks in other parts of the region also continue to flare, most recently with an Iranian tanker getting hit by a drone at a Syrian oil terminal.2 The US and Iran are making progress in the Vienna talks toward rejoining the 2015 nuclear deal from which the US withdrew in 2018. Iran pledged to enrich uranium up to 60% but also said this move was reversible – like all its tentative violations of the Joint Comprehensive Plan of Action (JCPA) so far (Table 1). Iran also offered a prisoner swap with the US. Saudi Arabia appears resigned to a resumption of the JCPA that it cannot prevent, with crown prince Mohammed bin Salman offering diplomatic overtures to both the US and Iran. Table 1Iran’s Nuclear Program And Compliance With JCPA 2015 Still, the closer the US and Iran get to a deal the more its opponents will need to either take action or make preparations for the aftermath. The allegation that former US Secretary of State John Kerry’s shared Israeli military plans with Iranian Foreign Minister Javad Zarif is an example of the kind of political brouhaha that will occur as different elements try to support and oppose the normalization of US-Iran ties. More importantly Israel will underscore its red line against nuclear weaponization. Previously Iran was set to reach “breakout” capability of uranium enrichment – a point at which it has enough fissile material to produce a nuclear device – as early as May. Due to sabotage at the Natanz facility the breakout period may have been pushed back to July.3 This compounds the significance of this summer as a deadline for negotiating a reduction in tensions. While the US may be prepared to fudge on Iran’s breakout capabilities, Israel will not, which means a market-relevant showdown should occur this summer before Israel backs down for fear of alienating the United States. Tit-for-tat attacks in May and June could cause negative surprises for oil supply. Then there will be a mad dash by the negotiators to agree to deal before the de facto August deadline, when Iran inaugurates a new president and it becomes much harder to resolve outstanding issues. Chart 6Iran Deal Priced Into Oil Markets? Hence our argument that geopolitics adds upside risk to oil prices in the first half of the year but downside risk in the second half. The market’s expectations seem already to account for this, based on the forward curve for Brent crude oil. The marginal impact of a reconstituted Iran nuclear deal on oil prices is slightly negative over the long run since a deal is more likely to be concluded than not and will open up Iran’s economy and oil exports to the world. However, our Commodity & Energy Strategy expects the Brent price to exceed expectations in the coming years, judging by supply and demand balances and global macro fundamentals (Chart 6). If an Iran deal becomes a fait accompli in July and August the Saudis could abandon their commitment to OPEC 2.0’s production discipline. The Russians and Saudis are not eager to return to a market share war after what happened in March 2020 but we cannot rule it out in the face of Iranian production. Thus we expect oil to be volatile. Oil producers also face the threat of green energy and US shale production which gives them more than one reason to keep up production and prevent prices from getting too lofty. Throughout the post-2015 geopolitical saga between the US and Iran, major incidents have caused an increase in the oil-to-gold ratio. The risk of oil supply disruption affected the price more than the flight to gold due to geopolitical or war risk. The trend generally corresponds with that of the copper-to-gold ratio, though copper-to-gold rose higher when growth boomed and oil outperformed when US-Iran tensions spiked in 2019. Today the copper-to-gold ratio is vastly outperforming the oil-to-gold on the back of the global recovery (Chart 7). This makes sense from the point of view of the likelihood of a US-Iran deal this year. But tensions prior to a deal will push up oil-to-gold in the near term. Chart 7Biden Passes Iran Test? Likely But Not A Done Deal Bottom Line: The US-Iran diplomacy is on track. This means geopolitical risk will escalate in May and June before a short-term or interim deal is agreed in July or August. Geopolitical risk stemming from US-Iran relations will subside thereafter, unless the deadline is missed. The forward curve has largely priced in the oil price downside except for the risk that OPEC 2.0 becomes dysfunctional again. We expect upside price surprises in the near term. Biden, China, And Our Australia GeoRisk Indicator Ostensibly the US and Russia are avoiding a war over Ukraine and the US and Iran are negotiating a return to the 2015 nuclear deal. Only US-China relations utterly lack clarity, with military maneuvering in the Taiwan Strait and South China Sea and tensions simmering over the gamut of other disputes. Chart 8Biden Still Faces China Test The latest data on global military spending show not only that the US and China continue to build up their militaries but also that all of the regional allies – including Japan! – are bulking up defense spending (Chart 8). This is a substantial confirmation of the secular growth of geopolitical risk, specifically in reaction to China’s rise and US-China competition. The first round of US-China talks under Biden went awry but since then a basis has been laid for cooperation on climate change, with President Xi Jinping attending Biden’s virtual climate change summit (albeit with no bilateral summit between the two). If John Kerry is removed as climate czar over his Iranian controversy it will not have an impact other than to undermine American negotiators’ reliability. The deeper point is that climate is a narrow basis for US-China cooperation and it cannot remotely salvage the relationship if a broader strategic de-escalation is not agreed. Carbon emissions are more likely to become a cudgel with which the US and West pressure China to reform its economy faster. The Department of Defense is not slated to finish its comprehensive review of China policy until June but most US government departments are undertaking their own reviews and some of the conclusions will trickle out in May, whether through Washington’s actions or leaks to the press. Beijing could also take actions that upend the Biden administration’s assessment, such as with the Microsoft hack exposed earlier this year. The Biden administration will soon reveal more about how it intends to handle export controls and sanctions on China. For example, by May 19 the administration is slated to release a licensing process for companies concerned about US export controls on tech trade with China due to the Commerce Department’s interim rule on info tech supply chains. The Biden administration looks to be generally hawkish on China, a view that is now consensus. Any loosening of punitive measures would be a positive surprise for Chinese stocks and financial markets in general. There are other indications that China’s relationship with the West is not about to improve substantially – namely Australia. Australia has become a bellwether of China’s relations with the world. While the US’s defense commitments might be questionable with regard to some of China’s neighbors – namely Taiwan (Province of China) but also possibly South Korea and the Philippines – there can be little doubt that Australia, like Japan, is the US’s red line in the Pacific. Australian politics have been roiled over the past several years by the revelation of Chinese influence operations, state- or military-linked investments in Australia, and propaganda campaigns. A trade war erupted last year when Australia called for an investigation into the origins of COVID-19 and China’s handling of it. Most recently, Victoria state severed ties with China’s Belt and Road Initiative. Despite the rise in Sino-Australian tensions, the economic relationship remains intact. China’s stimulus overweighed the impact of its punitive trade measures against Australia, both by bidding up commodity prices and keeping the bulk of Australia’s exports flowing (Chart 9). As much as China might wish to decouple from Australia, it cannot do so as long as it needs to maintain minimum growth rates for the sake of social stability and these growth rates require resources that Australia provides. For example, global iron ore production excluding Australia only makes up 80% of China’s total iron ore imports, which necessitates an ongoing dependency here (Chart 10). Brazil cannot make up the difference. Chart 9China-Australia Trade Amid Tensions Chart 10China Cannot Replace Australia This resource dependency does not necessarily reduce geopolitical tension, however, because it increases China’s supply insecurity and vulnerability to the US alliance. The US under Biden explicitly aims to restore its alliances and confront autocratic regimes. This puts Australia at the front lines of an open-ended global conflict. Chart 11Introducing: Australia GeoRisk Indicator (Smoothed) Our newly devised Australia GeoRisk Indicator illustrates the point well, as it has continued surging since the trade war with China first broke out last year (Chart 11). This indicator is based on the Australian dollar and its deviation from underlying macro variables that should determine its course. These variables are described in Appendix 1. If the Aussie weakens relative to these variables, then an Australian-specific risk premium is apparent. We ascribe that premium to politics and geopolitics writ large. A close examination of the risk indicator’s performance shows that it tracks well with Australia’s recent political history (Chart 12). Previous peaks in risk occurred when President Trump rose to power and Australia, like Canada, found itself beset by negative pressures from both the US and China. In particular, Trump threatened tariffs and the Australian government banned China’s Huawei from its 5G network. Today the rise in geopolitical risk stems almost exclusively from China. There is potential for it to roll over if Biden negotiates a reduction in tensions but that is a risk to our view (an upside risk for Australian and global equities). Chart 12Australian GeoRisk Indicator (Unsmoothed) What does this indicator portend for tradable Australian assets? As one would expect, Australian geopolitical risk moves inversely to the country’s equities, currency, and relative equity performance (Chart 13). Australian equities have risen on the back of global growth and the commodity boom despite the rise in geopolitical risk. But any further spike in risk could jeopardize this uptrend. Chart 13Australia Geopolitical Risk And Tradable Assets An even clearer inverse relationship emerges with the AUD-JPY exchange rate, a standard measure of risk-on / risk-off sentiment in itself. If geopolitical risk rises any further it should cause a reversal in the currency pair. Finally, Australian equities have not outperformed other developed markets excluding the US, which may be due to this elevated risk premium. Bottom Line: China is the most important of Biden’s foreign policy hurdles and unlike Russia and Iran there is no sign of a reduction in tension yet. Our Australian GeoRisk Indicator supports the point that risk remains very elevated in the near term. Moreover China’s credit deceleration is also negative for Australia. Cyclically, however, assuming that China does not overtighten policy, we take a constructive view on the Aussie and Australian equities. Biden’s Border Troubles Distract From Bullish Mexico Story The biggest criticism of Biden’s first 100 days has been his reduction in a range of enforcement measures on the southern border which has encouraged an overflow of immigrants. Customs and Border Patrol have seen a spike in “encounters” from a low point of around 17,000 in 2020 to about 170,000 today. The trend started last year but accelerated sharply after the election and had surpassed the 2019 peak of 144,000. Vice President Kamala Harris has been put in charge of managing the border crisis, both with Mexico and Central American states. She does not have much experience with foreign policy so this is her opportunity to learn on the job. She will not be able to accomplish much given that the Biden administration is unwilling to use punitive measures or deterrence and will not have large fiscal resources available for subsidizing the nations to the south. With the US economy hyper-charged, especially relative to its southern neighbors, the pace of immigration is unlikely to slacken. From a macro point of view the relevance is that the US is not substantially curtailing immigration – quite the opposite – which means that labor force growth will not deviate from its trend. What about Mexico itself? It is not likely that Harris will be able to engage on a broader range of issues with Mexico beyond immigration. As usual Mexico is beset with corruption, lawlessness, and instability. To these can be added the difficulties of the pandemic and vaccine rollout. Tourism and remittances are yet to recover. Cooperation with US federal agents against the drug cartels is deteriorating. Cartels control an estimated 40% of Mexican territory.4 Nevertheless, despite Mexico’s perennial problems, we hold a positive view on Mexican currency and risk assets. The argument rests on five points: Strong macro fundamentals: With China’s fiscal-and-credit impulse slowing sharply, and US stimulus accelerating, Mexico stands to benefit. Mexico has also run orthodox monetary and fiscal policies. It has a demographic tailwind, low wages, and low public debt. The stars are beginning to align for the country’s economy, according to our Emerging Markets Strategy. US and Canadian stimulus: The US and Canada have the second- and third-largest fiscal stimulus of all the major countries over the 2019-21 period, at 9% and 8% of GDP respectively. Mexico, with the new USMCA free trade deal in hand, will benefit. US protectionism fizzled: Even Republican senators blocked President Trump’s attempted tariffs on Mexico. Trump’s aggression resulted in the USMCA, a revised NAFTA, which both US political parties endorsed. Mexico is inured to US protectionism, at least for the short and medium term. Diversification from China: Mexico suffered the greatest opportunity cost from China’s rise as an offshore manufacturer and entrance to the World Trade Organization. Now that the US and other western countries are diversifying away from China, amid geopolitical tensions, Mexico stands to benefit. The US cannot eliminate its trade deficit due to its internal savings/investment imbalance but it can redistribute that trade deficit to countries that cannot compete with it for global hegemony. AMLO faces constraints: A risk factor stemmed from politics where a sweeping left-wing victory in 2018 threatened to introduce anti-market policies. President Andrés Manuel López Obrador (known as AMLO) and his MORENA party gained a majority in both houses of the legislature. Their coalition has a two-thirds majority in the lower house (Chart 14). However, we pointed out that AMLO’s policies have not been radical and, more importantly, that the midterm election would likely constrain his power. Chart 14Mexico’s Midterm Election Looms These are all solid points but the last item faces a test in the upcoming midterm election. AMLO’s approval rating is strong, at 63%, putting him above all of his predecessors except one (Chart 15). AMLO’s approval has if anything benefited from the COVID-19 crisis despite Mexico’s inability to handle the medical challenge. He has promised to hold a referendum on his leadership in early 2022, more than halfway through his six-year term, and he is currently in good shape for that referendum. For now his popularity is helpful for his party, although he is not on the ballot in 2021 and MORENA’s support is well beneath his own. Chart 15AMLO’s Approval Fairly Strong MORENA’s support is holding at a 44% rate of popular support and its momentum has slightly improved since the pandemic began. However, MORENA’s lead over other parties is not nearly as strong as it was back in 2018 (Chart 16, top panel). The combined support of the two dominant center-right parties, the Institutional Revolutionary Party and the National Action Party, is almost equal to that of MORENA. And the two center-left parties, the Democratic Revolution Party and Citizen’s Movement, are part of the opposition coalition (Chart 16, bottom panel). The pandemic and economic crisis will motivate the opposition. Chart 16MORENA’s Support Holding Up Despite COVID Traditionally the president’s party loses seats in the midterm election (Table 2). Circumstances are different from the US, which also exhibits this trend, because Mexico has more political parties. A loss of seats from MORENA does not necessarily favor the establishment parties. Nevertheless opinion polling shows that about 45% of voters say they would rather see MORENA’s power “checked” compared to 41% who wish to see the party go on unopposed.5 Table 2Mexican President’s Party Tends To Lose Seats In Midterm Election While the ruling coalition may lose its super-majority, it is not a foregone conclusion that MORENA will lose its majority. Voters have decades of experience of the two dominant parties, both were discredited prior to 2018, and neither has recovered its reputation so quickly. The polling does not suggest that voters regret their decision to give the left wing a try. If anything recent polls slightly push against this idea. If MORENA surprises to the upside then AMLO’s capabilities would increase substantially in the second half of his term – he would have political capital and an improving economy. While the senate is not up for grabs in the midterm, MORENA has a narrow majority and controls a substantial 60% of seats when its allies are taken into account. In this scenario AMLO could pursue his attempts to increase the state’s role in key industries, like energy and power generation, at the expense of private investors. Even then the Supreme Court would continue to act as a check on the government. The 11-seat court is currently made up of five conservatives, two independents, and three liberal or left-leaning judges. A new member, Margarita Ríos Farjat, is close to the government, leaving the conservatives with a one-seat edge over the liberals and putting the two independents in the position of swing voters. Even if AMLO maintains control of the lower house, he will not be able to override the constitutional court, as he has threatened on occasion to do, without a super-majority in the senate. Bottom Line: AMLO will likely lose some ground in the lower house and thus suffer a check on his power. This will only confirm that Mexican political risk is not likely to derail positive underlying macro fundamentals. Continue to overweight Mexican equities relative to Brazilian. Matt Gertken Vice President Geopolitical Strategy mattg@bcaresearch.com Appendix 1 The market is the greatest machine ever created for gauging the wisdom of the crowd and as such our Geopolitical Risk Indicators were not designed to predict political risk but to answer the question of whether and to what extent markets have priced that risk. Our Australian GeoRisk Indicator (see Chart 11-12 above) uses the same simple methodology used in our other indicators, which avoid the pitfall of regression-based models. We begin with a financial asset that has a daily frequency in price, in this case the AUD, and compare its movement against several fundamental factors – in this case global energy and base metal prices, global metals and mining stock prices, and the Chilean peso. Australia is a commodity-exporting country. It is the largest producer of iron ore and is among the largest producers of coal and natural gas. It is also a major trading partner for China. Due to the nature of its economy the Australian dollar moves with global metal and energy prices and the global metals and mining equity prices. Chile, another major commodity producer also moves with global metal prices, hence our inclusion of the peso in this indicator. The AUD has a high correlation with all of these assets, and if the changes in the value of the AUD lag or lead the changes in the value of these assets, the implication is that geopolitical risk unique to Australia is not priced by the market. We included the peso as Chile is not as affected as Australia by any conflict in the South China Sea or Northeast Asia, which means that a deviation of the AUD from CLP represents a unique East Asia Pacific risk. Our indicator captures the involvement of Australia in a few regional and international conflicts. The indicator climbed as Australia got involved in the East Timor emergency and declined as it exited. It continued declining even as Australia joined the US in the Afghanistan and Iraq wars, which showed that investors were unperturbed by faraway wars, while showing measurable concern in the smaller but closer Timorese conflict. Risks went up again as the nation erupted in labor protests as the Howard government made changes to the labor code. We see the market pricing higher risk again during the 2008 financial crisis, although it was modest and Australia escaped the crisis unscathed due to massive Chinese stimulus. Since then, investors have been climbing a wall of worry as they priced in Northeast Asia-related geopolitical risks. These started with the South Korean Cheonan sinking and continued with the Sino-Japanese clash over the Senkaku islands. They culminated with the Chinese ADIZ declaration in late 2013. In 2016, Australia was shocked again when Donald Trump was elected, and investor fears were evident when the details of Trump-Turnbull spat were made public. The risk indicator reached another peak during the trade wars between the US and the rest of the world. Investors were not worried about COVID-19 as Australia largely contained the pandemic, but the recent Australian-Chinese trade war pushed the risk indicator up, giving investors another wall of worry. If the Biden administration forces Australia into a democratic alliance in confrontation with autocratic China then this risk will persist for some time. Jesse Anak Kuri Associate Editor Jesse.Kuri@bcaresearch.com We Read (And Liked) ... The Narrow Corridor: States, Societies, And The Fate Of Liberty This book is a sweeping review of the conditions of liberty essential to steering the world away from the Hobbesian war of all against all. In this unofficial sequel to the 2012 hit, Why Nations Fail: The Origins Of Power, Prosperity, And Poverty, Daron Acemoglu (Professor of Economics at the Massachusetts Institute of Technology) and James A. Robinson (Professor of Global Conflict Studies at the University of Chicago) further explore their thesis that the existence and effectiveness of democratic institutions account for a nation’s general success or failure. The Narrow Corridor6 examines how liberty works. It is not “natural,” not widespread, “is rare in history and is rare today.” Only in peculiar circumstances have states managed to produce free societies. States have to walk a thin line to achieve liberty, passing through what the authors describe as a “narrow corridor.” To encourage freedom, states must be strong enough to enforce laws and provide public services yet also restrained in their actions and checked by a well-organized civil society. For example, from classical history, the Athenian constitutional reforms of Cleisthenes “were helpful for strengthening the political power of Athenian citizens while also battling the cage of norms.” That cage of norms is the informal body of customs replaced by state institutions. Those norms in turn “constrained what the state could do and how far state building could go,” providing a set of checks. Though somewhat fluid in its definition, liberty, as Acemoglu and Robinson show, is expressed differently under various “leviathans,” or states. For starters, the “Shackled Leviathan” is a government dedicated to upholding the rule of law, protecting the weak against the strong, and creating the conditions for broad-based economic opportunity. Meanwhile, the “Paper Leviathan” is a bureaucratic machine favoring the privileged class, serving as both a political and economic brake on development and yielding “fear, violence, and dominance for most of its citizens.” Other examples include: The “American Leviathan” which fails to deal properly with inequality and racial oppression, two enemies of liberty; and a “Despotic Leviathan,” which commands the economy and coerces political conformity – an example from modern China. Although the book indulges in too much jargon, it is provocative and its argument is convincing. The authors say that in most places and at most times, the strong have dominated the weak and human freedom has been quashed by force or by customs and norms. Either states have been too weak to protect individuals from these threats or states have been too strong for people to protect themselves from despotism. Importantly, many states believe that once liberty is achieved, it will remain the status quo. But the authors argue that to uphold liberty, state institutions have to evolve continuously as the nature of conflicts and needs of society change. Thus society's ability to keep state and rulers accountable must intensify in tandem with the capabilities of the state. This struggle between state and society becomes self-reinforcing, inducing both to develop a richer array of capacities just to keep moving forward along the corridor. Yet this struggle also underscores the fragile nature of liberty. It is built on a precarious balance between state and society; between economic, political, and social elites and common citizens; between institutions and norms. If one side of the balance gets too strong, as has often happened in history, liberty begins to wane. The authors central thesis is that the long-run success of states depends on the balance of power between state and society. If states are too strong, you end up with a “Despotic Leviathan” that is good for short-term economic growth but brittle and unstable over the long term. If society is too strong, the “Leviathan” is absent, and societies suffer under a pre-modern war of all against all. The ideal place to be is in the narrow corridor, under a shackled Leviathan that will grow state capacity and individual liberty simultaneously, thus leading to long-term economic growth. In the asset allocation process, investors should always consider the liberty of a state and its people, if a state’s institutions grossly favor the elite or the outright population, whether these institutions are weak or overbearing on society, and whether they signify a balance between interests across the population. Whether you are investing over a short or long horizon, returns can be significantly impacted in the absence of liberty or the excesses of liberty. There should be a preference among investors toward countries that exhibit a balance of power between state and society, setting up a better long-term investment environment, than if a balance of power did not exist. Guy Russell Research Analyst GuyR@bcaresearch.com GeoRisk Indicator China Russia UK Germany France Italy Canada Spain Taiwan – Province Of China Korea Turkey Brazil Australia Footnotes 1 "President Biden’s first 100 days as president fact-checked," BBC News, April 29, 2021, bbc.com. 2 "Oil tanker off Syrian coast hit in suspected drone attack," Al Jazeera, April 24, 2021, Aljazeera.com. 3 See Yaakov Lappin, "Natanz blast ‘likely took 5,000 centrifuges offline," Jewish News Syndicate, jns.org. 4 John Daniel Davidson, "Former US Ambassador To Mexico: Cartels Control Up To 40 Percent Of Mexican Territory," The Federalist, April 28, 2021, thefederalist.com. 5 See Alejandro Moreno, "Aprobación de AMLO se encuentra en 61% previo a campañas electorales," El Financiero, April 5, 2021, elfinanciero.com. 6 Penguin Press, New York, NY, 2019, 558 pages. Section III: Geopolitical Calendar
Highlights Rising CO2 emissions on the back of stronger global energy growth this year will keep energy markets focused on expanding ESG risks in the buildout of renewable generation via metals mining (Chart of the Week). EM energy demand is expected to grow 3.4% this year vs. 2019 levels and will account for ~ 70% of global energy demand growth. Demand in DM economies will fall 3% this year vs 2019 levels. Overall, global demand is expected to recover all the ground lost to the COVID-19 pandemic, according to the IEA. Rising energy demand will be met by higher fossil-fuel use, with coal demand increasing by more than total renewables generation this year and accounting for more than half of global energy demand growth. Demand for renewable power will increase by 8,300 TWh (8%) this year, the largest y/y increase recorded by the IEA. As renewables generation is built out, demand for bulks (iron ore and steel) and base metals will increase.1 Building that new energy supply will contribute to rising CO2, particularly in the renewables' supply chains. Feature Energy demand will recover much of the ground lost to the COVID-19 pandemic last year, according to the IEA.2 Most of this is down to successful rollouts of vaccination programs in systemically important economies – e.g., China, the US and the UK – and the massive fiscal and monetary stimulus deployed to carry the global economy through the pandemic. The risk of further lockdowns and uncontrolled spread of variants of the virus remains high, but, at present, progress continues to be made and wider vaccine distribution can be expected. The IEA expects a global recovery in energy demand of 4.6% this year, which will put total demand at ~ 0.5% above 2019 levels. The global rebound will be led by EM economies, where demand is expected to grow 3.4% this year vs. 2019 levels and will account for ~ 70% of global energy demand growth. Energy demand in DM economies will fall 3% this year vs 2019 levels. Overall, global demand is expected to recover all the ground lost to the COVID-19 pandemic, according to the IEA. Chart of the WeekGlobal CO2 Emissions Will Rebound Post-COVID-19 Coal demand will lead the rebound in fossil-fuel use, which is expected to account for more than total renewables demand globally this year, covering more than half of global energy demand growth. This will push CO2 emissions up by 5% this year. Asia coal demand – led by China's and India's world-leading coal-plant buildout over the past 20 years – will account for 80% of world demand (Chart 2). Chart 2China, India Lead Coal-Fired Generation Buildout Demand for renewable power will post its biggest year-on-year gain on record, increasing by 8,300 TWh (8%) this year. This increase comes at the back of roughly a decade of an increasing share of electricity from renewables globally (Chart 3). As renewables generation is built out, demand for bulks (iron ore and steel) and base metals will increase.3 Building that new energy supply will contribute to rising CO2, particularly in the renewables' supply chains. Chart 3Share of Electricity From Renewables Has Been Increasing ESG Risks Increase With Renewables Buildout Governments have pledged to invest vast sums of money into the green energy transition, to reduce fossil fuels consumption and deforestation, thus curbing temperature increases. In addition, banks have pledged trillions will be made available to support the buildout of renewable technologies over the coming years. The World Bank, under the most ambitious scenarios considered (IEA ETP B2DS and IRENA REmap), projects that renewables, will make up approximately 90% of the installed electricity generation capacity up to 2050. This analysis excludes oil, biomass and tidal energy. (Chart 4). Building these renewable energy sources will be extremely mineral intensive (Chart 5). Chart 4Renewables Potential Is Huge … While we have highlighted issues such as a lack of mining capex and decreasing ore grades in past research – both of which can be addressed by higher metals and minerals prices – the environmental, social and governance (ESG) risks posed by mining are equally important factors for investors, policymakers and mining companies to consider.4 The mining industry generally uses three principal sources of energy for its operations – diesel fuel (mostly in moving mined ore down the supply chain for processing), grid electricity and explosives. Of these three, diesel and electricity consumption contributes substantially to mining’s GHG emissions. In the mining stage, land clearing, drilling, blasting, crushing and hauling require a considerable amount of energy, and hence emit the highest amounts of greenhouse gases (GHGs). Chart 5… As Are Its Mineral Requirements The Environmental Impact Of Mining Under the scenarios depicted in Chart 5, copper suppliers could be called on to produce approximately 21mm MT of the red metal annually between now and 2050, which is equivalent to a 7% annual increase of supplies vs. the 2017 reference year shown in the chart. Mining sufficient amounts of copper, a metal which is critical to the renewable energy buildout, both in terms of quantity and versatility, will test miners' and governments' ability to extract sufficient amounts of ore for further processing without massively damaging the environment or indigenous populations' habitats (Chart 6). Chart 6Copper Spans All Renewables Technologies A recent risk analysis of 308 undeveloped copper orebodies found that for 180 of the orebodies – roughly equivalent to 570mm MT of copper – ore-grade risk was characterized as moderate-to-high risk.5 High risk implies a lower concentration of metal in the ore deposits. Mining in ore bodies with lower copper grades will be more energy intensive, and thus will emit more greenhouse gases. Table 1 is a risk matrix of the 40 mines that have the most amount of copper tonnage in this analysis: 27 of these mines displayed in the matrix have a medium-to-high grade risk. Table 1Mining Risk Matrix Another analysis established a negative relationship between the ore-grade quality and energy consumption across mines for different metals and minerals.6 This paper found that, as ore grade depletes, the energy needed to extract it and send it along the supply chain for further processing is exponentially higher (Chart 7). Lastly, a recent examination found that in 2018, primary metals and mining accounted for approximately 10% of the total greenhouse gases. Using a case study of Chile, the world’s largest producer of the red metal, the researchers found that fuel consumption increased by 130% and electricity consumption per unit of mined copper increased by 32% from 2001 to 2017. This increase was primarily due to decreasing ore grades.7 As ore grades continue to fall, these exponential relationships likely will persist or become more significant. Chart 7Energy Use Rises As Ore Quality Falls Bottom Line: While technology can improve extraction, it cannot reduce the minimum energy required for the mining process. This increased energy use will contribute to the total amount of CO2 and other GHGs emitted in the process of extracting the ores required to realize a low-carbon future. Trade-Off Between CO2 Emissions And Economic Development A recent Reuters analysis highlights the gap between EM and DM from the perspective of their renewable energy transition priorities.8 Of the 17 UN Sustainable Development Goals (SDGs), “Taking action to combat climate change” takes precedence over the rest for DM economies. This is largely because they have already dealt with other energy and income intensive SDGs such as improvements in healthcare and poverty reduction. The large scale of unmet energy demand in developing countries poses a huge challenge to controlling CO2 emissions. The populations of these countries are growing fast and are projected to continue increasing over the next three decades. Rising populations, make the issue of a "green-energy transition" extremely dynamic – i.e., not only do EM economies need to replace existing fossil fuels, but they also need to add enough extra zero-emission fuel sources to meet the growth in energy demand. Bottom Line: Coupled with the increased amount of energy required to mine the same amount of metal (due to lower ore grades), rising energy demand resulting from a burgeoning population in EM economies - which use fossil fuels to meet their primary needs - will require more metals to be mined for the renewable energy transition. This will further increase the amount of carbon dioxide and other greenhouse gas emissions from mine activity, and increase the risk to indigenous populations living close-by to the sources of this new metals supply. ESG risks will increase as a result, presenting greater challenges to attracting funding to these efforts. Ashwin Shyam Research Associate Commodity & Energy Strategy ashwin.shyam@bcaresearch.com Robert P. Ryan Chief Commodity & Energy Strategist rryan@bcaresearch.com Commodities Round-Up Energy: Bullish OPEC 2.0 was expected to stick with its decision to return ~ 2mm b/d of supply to the market at its ministerial meeting Wednesday. Markets remain wary of demand slowing as COVID-19-induced lockdowns persist and case counts increase globally. The production being returned to market includes 1mm b/d of voluntary cuts by Saudi Arabia, which could, if needs be, keep barrels off the market if demand weakens. Base Metals: Bullish Front-month COMEX copper is holding above $4.50/lb, after breaching its 11-year high earlier this week. The proximate cause of the initial lift above that level was news of a strike by Chilean port workers on Monday protesting restrictions on early pension-fund drawdowns, according to mining.com. After a slight breather, prices returned to trading north of $4.50/lb by mid-week. Last week, we raised our Dec21 COMEX copper price forecast to $5.00/lb from $4.50/lb. Separately, high-grade iron ore (65% Fe) hit record highs, while the benchmark grade (62% Fe) traded above $190/MT earlier in the week on the back of lower-than-expected production by major suppliers and USD weakness. Steel futures on the Shanghai Futures Exchange hit another record as well, as strong demand and threats of mandated reductions in Chinese steel output to reduce pollution loom (Chart 8). Precious Metals: Bullish Rising COVID cases, especially in India, Brazil and Japan are increasing gold’s safe-haven appeal (Chart 9). The US CFTC, in its Commitment of Traders (COT) report for the week ending April 20, stated that speculators raised their COMEX gold bullish positions. At the end of the two-day FOMC meeting, the Fed decided against lifting interest rates and withdrawing support for the US economy. However, officials sounded more optimistic about the economy than they did in March. The decision did not give any sign interest rates would be lifted, or asset purchases would be tapered against the backdrop of a steadily improving economy. Net, this could increase demand for gold, as inflationary pressures rise. As of Tuesday’s close, COMEX gold was trading at $1778/oz. Ags/Softs: Neutral Corn and bean futures settled down by mid-week after a sharp rally earlier. After rising to a new eight-year high just below $7/bushel due to cold weather in the US, and fears a lower harvest in Brazil will reduce global grain supplies, corn settled down to ~ $6.85/bu at mid-week trading. Beans traded above $15.50/bu earlier in the week, their highest since June 2014, and settled down to ~ $15.36/bu by mid-week. Attention remains focused on global supplies. The uptrend in grains and beans remains intact. Chart 8 Chart 9 Footnotes 1 Please see Renewables, China's FYP Underpin Metals Demand, published 26 November 2020, for further discussion. It is available at ces.bcaresearch.com. 2 Please see Global Energy Review 2021, the IEA's Flagship report for April 2021. 3 Please see Renewables, China's FYP Underpin Metals Demand, published 26 November 2020, for further discussion. It is available at ces.bcaresearch.com. 4 We discussed these capex issues in last week's research, Copper Headed Higher On Surge In Steel Prices, which is available at ces.bcaresearch.com. 5 Please see Valenta et al.’s ‘Re-thinking complex orebodies: Consequences for the future world supply of copper’ published in 2019 for this analysis. 6 Please see Calvo et. al.’s ‘Decreasing Ore Grades in Global Metallic Mining: A Theoretical Issue or a Global Reality?’ published in 2016 for this analysis. 7 Please see Azadi et. al.’s ‘Transparency on greenhouse gas emissions from mining to enable climate change mitigation’ published in 2020 for this analysis. 8 Please see John Kemp's Column: CO2 emission limits and economic development published 19 April 2021 by reuters.com. Investment Views and Themes Strategic Recommendations Tactical Trades Commodity Prices and Plays Reference Table Trades Closed in 2021 Summary of Closed Trades
Commodities were a bright spot on Tuesday, despite uninspiring performances by other risk assets. Our Commodity & Energy strategists have been arguing that idiosyncratic forces are buoying industrial commodities: a capex deficit in metals, and production…
Surging demand on the back of a construction and infrastructure boom has produced record-high steel prices in China, which will set the stage for the next leg of copper's bull run. Government-mandated reductions of up to 30% for the remainder of this year to…
COMEX copper peaked at $4.30/lb on February 24, up a remarkable 103% since its late-March 2020 lows. Since then it has traded mostly sideways, but recently perked up and is nearing its February top. Our Commodity & Energy strategists’ most recent forecast…
Aspectos destacados
Hay señales tentativas de que el sobrerendimiento del crecimiento de EE. UU. está disminuyendo.
La recuperación del sector manufacturero en el extranjero ya está tomando el liderazgo frente a EE. UU. Esta tendencia pronto rotará al sector servicios.
Por lo tanto, los inversores a largo plazo deberían comenzar a acumular euros en las caídas.
La economía canadiense está mejorando más rápido de lo que evaluamos en febrero.
Esto sugiere que el CAD podría superar al resto antes de lo esperado.
Análisis
Gráfico I-1
El euro impulsa el DXY
Crecimiento relativo, el euro y el loonie
Crecimiento relativo, el euro y el loonie
La economía de EE. UU. ha sido la que ha superado en crecimiento este año. Por ello, los rendimientos han subido más rápido en EE. UU. y el dólar ha ganado demanda. Desde el inicio del año, el índice DXY ha recuperado 2,5% de sus pérdidas anuales frente a las monedas de los mercados desarrollados. Mientras tanto, el repunte ha sido amplio, con el euro, el yen y la corona sueca soportando la mayor parte de la caída (Gráfico I-1).
Nuestra postura es que el sobrerendimiento del crecimiento rotará desde EE. UU. al resto del mundo más adelante este año. Esto debería perjudicar al dólar y beneficiar a las monedas procíclicas. Esta semana analizamos el euro y el dólar canadiense (loonie), dos monedas que deberían beneficiarse de este cambio.
EUR/USD y el ciclo manufacturero
La relación entre los rendimientos de los bonos y la economía es circular. Los rendimientos de los bonos a largo plazo pueden considerarse un mecanismo clave de señalización sobre las perspectivas de crecimiento de una economía. Al mismo tiempo, los rendimientos de los bonos afectan directamente a las condiciones financieras, especialmente cuando suben demasiado rápido. Desde el punto de vista de la previsión cambiaria a corto plazo, determinar el punto de inflexión en el que el alza de los rendimientos se vuelve restrictiva podría ser extremadamente beneficioso para pronosticar el crecimiento económico relativo.
Gráfico I-2 muestra que siempre que el rendimiento relativo de los bonos entre EE. UU. y la zona euro sube un 1%, el crecimiento relativo a corto plazo posteriormente se inclina a favor de esta última, con un retraso de aproximadamente 12 meses. Esto es importante ya que la correlación entre EUR/USD y el crecimiento relativo es bastante fuerte a corto plazo (Gráfico I-3). Por lo tanto, aunque la subida de los rendimientos entre EE. UU. y la zona euro puede perjudicar a EUR/USD en el corto plazo, comenzará a beneficiar al crecimiento relativo euro/EE. UU. a más largo plazo.
Gráfico I-2
Rendimientos relativos de bonos y el ciclo manufacturero
Rendimientos Relativos De Los Bonos Y El Ciclo Manufacturero
Rendimientos Relativos De Los Bonos Y El Ciclo Manufacturero
Gráfico I-3
Los datos económicos sorprenden al alza en la zona euro
Los datos económicos sorprenden al alza en la zona del euro
Los datos económicos sorprenden al alza en la zona del euro
Flujos de bonos y otras señales de mercado
A pesar del aumento en los rendimientos del Tesoro estadounidense, no hemos visto mayores compras europeas de bonos estadounidenses este año (Gráfico I-4). Durante el mercado alcista del dólar de 2011 a 2020, existía una correlación directa entre el aumento de los rendimientos estadounidenses y mayores compras de Treasury. Una diferencia en esta ocasión es que otros mercados de bonos de refugio, como Canadá, Australia, Nueva Zelanda e incluso el Reino Unido, ofrecen rendimientos atractivos hoy. Los rendimientos de EE. UU. no han subido mucho frente a otros países del G10 en conjunto. Esto seguirá limitando la magnitud de la caída que puede sufrir el euro.
Por otro lado, el alza del euro podría ser bastante sustancial. Desde la perspectiva de la paridad de poder adquisitivo, el euro puede subir un 15% solo para reajustar su descuento relativo frente a EE. UU. Los ajustes por PPP tienden a tardar varios años, pero si EE. UU. continúa siguiendo políticas inflacionarias, entonces por definición, el valor razonable del euro también aumentará (Gráfico I-5).
Gráfico I-4
Los europeos no han aumentado las tenencias del Tesoro
Los europeos no han estado aumentando sus tenencias de bonos del Tesoro
Los europeos no han estado aumentando sus tenencias de bonos del Tesoro
Gráfico I-5
El euro sigue ligeramente ##br##subvaluado
El euro sigue ligeramente infravalorado
El euro sigue ligeramente infravalorado
Otros factores cíclicos también sugieren que el euro podría experimentar un rebote en forma de muelle comprimido. Los precios del cobre se han disparado este año y la relación tradicional con el euro ha estado desviada (Gráfico I-6). Mientras que el cobre se beneficia del giro desde el carbono hacia una electricidad más limpia, el euro también puede beneficiarse. Las economías europeas tienen décadas de experiencia en tecnologías renovables y podrían comenzar a ver entradas significativas de capital en estos sectores una vez que el capital de inversión se despliegue. Esto hace que la previsión de Bloomberg de EUR/USD en 1.23 a finales de 2022 sea demasiado pesimista (Gráfico I-7).
Gráfico I-6
El euro podría experimentar un rebote en forma de muelle comprimido pronto
El euro podría experimentar pronto un rebote como de resorte.
El euro podría experimentar pronto un rebote como de resorte.
Gráfico I-7
El sentimiento sobre el euro se ha reajustado ligeramente
El sentimiento hacia el euro se ha reajustado ligeramente.
El sentimiento hacia el euro se ha reajustado ligeramente.
Finalmente, estamos cortos en EUR/JPY como cobertura táctica con stops ajustados en 131. También estamos elevando nuestro orden de compra limitada en EUR/USD de 1.15 a 1.16.
La recuperación canadiense se está acelerando
Gráfico I-8
La encuesta de perspectivas empresariales en Canadá fue alentadora
La perspectiva de la encuesta empresarial canadiense fue alentadora.
La perspectiva de la encuesta empresarial canadiense fue alentadora.
La recuperación canadiense está tomando forma más rápido de lo que evaluamos en febrero, lo que la última Encuesta de Perspectivas Empresariales corroboró. Tanto las intenciones de inversión como el crecimiento de las ventas futuras fueron bastante fuertes, siendo las primeras las que alcanzaron un máximo de varias décadas (Gráfico I-8). En particular:
Dos tercios de las empresas ven ventas que superan los niveles previos a la pandemia;
la mayoría de las empresas afirmaron que la segunda ola tiene menos o ningún impacto en las ventas, en comparación con la primera;
y las limitaciones de capacidad siguen siendo altas en ciertas industrias, pero en general las preocupaciones inflacionarias permanecen relativamente contenidas.
La solidez de la encuesta nos sorprendió, dado que una segunda ola de infecciones está golpeando y la mayor parte del país está en confinamiento. Dicho esto, la fortaleza del gasto en inversión se está convirtiendo en un tema clave en un contexto global, lo que sugiere que Canadá podría recibir flujos significativos de IED en los próximos años.
Los mercados han empezado a descontar un ritmo más rápido de alzas de tasas en Canadá (Gráfico I-9). Esto ha sido algo poco frecuente en la última década y, junto con nuestros colegas de Estrategia Global de Renta Fija, seguimos creyendo que hay menos probabilidades de que Canadá lidere el ciclo de alzas. Sin embargo, esto podría cambiar si el impulso en la economía le permite superar el crecimiento de EE. UU.
Gráfico I-9
Los mercados están descontando alzas más rápidas en Canadá
Los mercados están descontando subidas más rápidas en Canadá
Los mercados están descontando subidas más rápidas en Canadá
El FMI estima que el crecimiento real del PIB canadiense será del 5% este año y del 4,7% el próximo año. El crecimiento podría ser mucho más fuerte que estos niveles, según el Índice de Confianza Bloomberg Nanos (Gráfico I-10).
Gráfico I-10
El PIB canadiense se está recuperando
PIB canadiense en recuperación
PIB canadiense en recuperación
El informe de empleo ha mejorado enormemente desde nuestra evaluación de febrero (Gráfico I-11). Al observar los subcomponentes del BoC Monitor, la debilidad se centraba en variables económicas. Esto está cambiando, ya que la tasa de desempleo canadiense está cayendo más rápido que la tasa de desempleo de EE. UU. (Gráfico I-12). Eso es un desarrollo alcista para el CAD.
Gráfico I-11
La recuperación del empleo en Canadá es sólida
La recuperación del empleo en Canadá es sólida
La recuperación del empleo en Canadá es sólida
Gráfico I-12
El empleo canadiense alcanzando al de EE. UU.
El empleo canadiense se acerca al de Estados Unidos
El empleo canadiense se acerca al de Estados Unidos
El mercado inmobiliario canadiense se está acelerando. En general, los precios de la vivienda han subido 10% con muchas ciudades superando con creces estos niveles (Gráfico I-13). La trayectoria de los precios de la vivienda en Canadá ha sido la siguiente: apoyo gubernamental y medidas macroprudenciales que llevan a una convergencia en los precios entre ciudades de bajo y alto precio. Específicamente, Vancouver (y hasta cierto punto Toronto) están viendo un crecimiento de precios más suave, mientras que otras ciudades se recuperan. Sin embargo, a medida que los precios comienzan a desviarse de los ingresos nominales en las ciudades de menor precio, el riesgo de medidas macroprudenciales más amplias aumenta considerablemente.
El segundo punto es crucial, ya que el aumento de los precios de la vivienda en Canadá ha sido más pronunciado que en otros países, como Australia o EE. UU. Esto significa que tanto el aumento del endeudamiento como la caída de la accesibilidad probablemente presenten un riesgo macro clave para la economía canadiense. La construcción residencial es una parte no despreciable de la economía canadiense (Gráfico I-14).
Gráfico I-13
El mercado de la vivienda canadiense se ha calentado
El mercado inmobiliario canadiense se ha calentado
El mercado inmobiliario canadiense se ha calentado
Gráfico I-14
La construcción residencial está en auge
La construcción residencial está en auge
La construcción residencial está en auge
Conclusión: Los desarrollos recientes aumentan las probabilidades de que el Banco de Canadá aumente las tasas pronto en lugar de más tarde. Esto permitiría nuevas ganancias para el CAD.
El CAD y el petróleo
Los precios del crudo son otro motor de gran importancia para el CAD. De hecho, durante la mayor parte de este año, las tasas de interés no han sido un factor importante dado que el BoC descartó cualquier mejora a corto plazo en las perspectivas canadienses. La crisis de Covid-19 junto con el lento progreso de la vacunación también perjudicaron la recuperación, frenando la apreciación del loonie (Gráfico I-15).
Nuestros estrategas de materias primas predicen que el Brent alcanzará $75 en 2023. Esto es superior a lo que descuentan los mercados a futuro. El aumento de los precios a futuro será sinónimo de un CAD más alto.
Sin embargo, Canadá vende la mezcla Western Canadian Select (WCS), que históricamente se ha negociado con un descuento significativo respecto al Brent o WTI (Gráfico I-16). Las normas medioambientales más estrictas perjudican a Canadá, ya que la WCS tiene un mayor contenido de azufre. La capacidad de oleoductos también sigue siendo un cuello de botella importante para llevar el crudo canadiense a las refinerías de EE. UU.
Gráfico I-15
El loonie se ha rezagado
El loonie se ha rezagado
El loonie se ha rezagado
Gráfico I-16
Los precios del petróleo canadiense podrían rezagarse en la recuperación
Los precios del petróleo canadiense podrían quedarse rezagados frente a la recuperación
Los precios del petróleo canadiense podrían quedarse rezagados frente a la recuperación
Lo redentor en esta ocasión es que la correlación entre CAD/USD y los precios del crudo está aumentando más rápido que para otras monedas, a medida que EE. UU. comienza a emprender proyectos de infraestructura significativos (Gráfico I-17). Alrededor del 50% de las importaciones de petróleo de EE. UU. proceden de Canadá. La crisis de Covid-19 también ralentizó la producción de petróleo en EE. UU. en relación con Canadá, lo que ha ayudado a aumentar la correlación entre los precios del petróleo y la moneda. Los flujos de cartera hacia Canadá se han acelerado este año, beneficiando a las acciones petroleras y al loonie.
Gráfico I-17
La sensibilidad de USD/CAD al petróleo ha aumentado
La sensibilidad del USD/CAD al petróleo ha aumentado
La sensibilidad del USD/CAD al petróleo ha aumentado
Conclusiones de inversión
Gráfico I-18
El CAD está barato
El dólar canadiense está barato
El dólar canadiense está barato
El CAD sigue barato. Cotiza una desviación estándar por debajo de su media a largo plazo, en términos del tipo de cambio efectivo real (Gráfico I-18). Un retorno a la media generaría aproximadamente un alza del 10%. Nuestro modelo de PPP es menos optimista, sugiriendo que el loonie está barato en torno a un 5%. Esto aún coloca los 84-85 centavos al alcance. Si la incipiente recuperación canadiense se convierte en una aceleración genuina, el CAD podría repuntar aún más.
Chester Ntonifor Foreign Exchange Strategist chestern@bcaresearch.com
Divisas
Dólar estadounidense
Gráfico II-1
Técnicas USD 1
USD: Análisis técnico 1
USD: Análisis técnico 1
Gráfico II-2
Técnicas USD 2
Análisis técnico del USD 2
Análisis técnico del USD 2
Los datos económicos de EE. UU. han sido robustos esta semana:
El IPC de marzo subió 2.6% interanual y 0.6% mensual, superando ambas expectativas.
El IPP de marzo registró 4.2% interanual y 1% mensual, superando las expectativas.
La encuesta Empire Manufacturing registró una recuperación significativa de 17.4 a 26.3 en abril.
Las ventas minoristas fueron particularmente fuertes, registrando 9.8% mensual en marzo.
El índice del mercado de la vivienda NAHB se mantuvo fuerte en 83 en abril.
El índice DXY cayó 0.5% esta semana. La caída en los rendimientos de los bonos fue sorprendente, dado los datos robustos. Esto probablemente indica que las posiciones cortas en bonos se están convirtiendo en una operación masificada. El índice DXY está girando a la baja en abril; una tendencia que apoya su patrón estacional.
Enlaces a informes:
Arbitraje entre toros y osos del dólar - 19 de marzo de 2021
El caso alcista del dólar pronto se disipará - 5 de marzo de 2021
¿Son alcistas los rendimientos de los bonos para el dólar? - 19 de febrero de 2021
El euro
Gráfico II-3
Técnicas EUR 1
EUR: Análisis técnico 1
EUR: Análisis técnico 1
Gráfico II-4
Técnicas EUR 2
EUR Análisis Técnico 2
EUR Análisis Técnico 2
Los datos recientes de la zona euro han sido ligeramente positivos:
Las ventas minoristas crecieron 3% mensual en febrero frente al 1.7% esperado.
El sentimiento económico ZEW tanto para Alemania como para la UE en abril fue inferior al pronosticado.
La producción industrial cayó 1% en febrero respecto al mes anterior.
El IPC alemán registró 0.5% mensual, en línea con las previsiones.
El euro subió 0.5% frente al dólar esta semana, sumando una segunda semana de apreciación. La nueva ola de Covid-19 puede lastrar a EUR/USD en el corto plazo, pero también ha reajustado los indicadores de sentimiento y posicionamiento. Nuestro indicador de plazo intermedio se ha girado sustancialmente a la baja, lo cual es alcista desde una perspectiva contraria.
Enlaces a informes:
Revisión de cartera y modelo - 5 de febrero de 2021
Sobre la inflación japonesa y el yen - 29 de enero de 2021
El enigma del dólar y la protección - 6 de noviembre de 2020
Yen japonés
Gráfico II-5
Técnicas JPY 1
Análisis técnico del JPY 1
Análisis técnico del JPY 1
Gráfico II-6
Técnicas JPY 2
Análisis técnico del JPY 2
Análisis técnico del JPY 2
Los datos de Japón han sido mixtos:
Los pedidos de maquinaria registraron otro mes de disminución, cayendo 8.5% mensual en febrero frente a un aumento esperado de 2.8%.
Sin embargo, de forma más positiva, los pedidos de máquinas herramienta crecieron 65% interanual en marzo.
El IPP de febrero fue 0.8% mensual, mejor de lo esperado.
El yen japonés subió 0.4% frente al dólar estadounidense esta semana y sigue siendo una de las monedas del G10 con mejor desempeño en abril. Nuestro indicador de plazo intermedio se ha hundido y los especuladores están netamente en corto con la moneda. Mantenemos la posición corta en EUR/JPY como cobertura de cartera.
Enlaces a informes:
El caso alcista del dólar pronto se disipará - 5 de marzo de 2021
Sobre la inflación japonesa y el yen - 29 de enero de 2021
El enigma del dólar y la protección - 6 de noviembre de 2020
Libra esterlina
Gráfico II-7
Técnicas GBP 1
GBP: Análisis técnicos 1
GBP: Análisis técnicos 1
Gráfico II-8
Técnicas GBP 2
GBP Análisis técnico 2
GBP Análisis técnico 2
Los datos recientes del Reino Unido han sido ligeramente positivos:
El PIB de febrero creció 0.4% respecto al mes anterior, quedando ligeramente por debajo del aumento esperado de 0.6%.
La producción industrial y manufacturera y la producción de la construcción superaron las expectativas en febrero, creciendo 1%, 1.3% y 1.6% mensual, respectivamente.
El déficit comercial con la UE aumentó a 16.4B en febrero.
La libra esterlina subió 0.3% frente al dólar estadounidense esta semana, situándose en la mitad entre las monedas del G10 y estable frente al euro. Salimos de nuestra posición corta en EUR/GBP la semana pasada para tomar ganancias debido al éxito de la vacunación en el Reino Unido y la fase esperada de recuperación relativa de otras economías. El posicionamiento neto especulativo elevado en la libra también nos deja neutrales.
Enlaces a informes:
Revisión de cartera y modelo - 5 de febrero de 2021
El enigma del dólar y la protección - 6 de noviembre de 2020
Revisión de nuestras operaciones de alta convicción - 11 de septiembre de 2020
Dólar australiano
Gráfico II-9
Técnicas AUD 1
AUD Análisis Técnicos 1
AUD Análisis Técnicos 1
Gráfico II-10
Técnicas AUD 2
AUD Análisis técnico 2
AUD Análisis técnico 2
Los datos recientes en Australia fueron sólidos:
Las condiciones empresariales del NAB fueron 25 en marzo frente a 17 en febrero.
El índice de confianza del consumidor Westpac para abril subió 6.2% mensual hasta 118.8, el más alto desde agosto de 2010.
La recuperación laboral sigue en marcha. Se crearon 71K nuevos empleos en marzo frente a expectativas de 35K. La tasa de desempleo también cayó de 5.8% a 5.6%.
El dólar australiano se mantuvo estable frente al dólar estadounidense esta semana. Sin embargo, los datos robustos recientes, el aumento de los términos de intercambio y los elevados rendimientos de los bonos hacen que AUD/USD sea una operación adecuada de recuperación. Dicho esto, dada la proximidad de México a EE. UU., donde los datos económicos recientes son fuertes, estamos cortos en el par AUD/MXN.
Enlaces a informes:
El caso alcista del dólar pronto se disipará - 5 de marzo de 2021
Revisión de cartera y modelo - 5 de febrero de 2021
Australia: ¿Cambio de régimen para los rendimientos y la moneda? - 20 de enero de 2021
Dólar neozelandés
Gráfico II-11
Técnicas NZD 1
Análisis técnico del NZD 1
Análisis técnico del NZD 1
Gráfico II-12
Técnicas NZD 2
Análisis técnico del NZD 2
Análisis técnico del NZD 2
Hubo escasos datos de Nueva Zelanda esta semana:
El RBNZ mantuvo la tasa oficial de efectivo en 0.25% y su programa de compra de activos sin cambios en un contexto de un mercado inmobiliario caliente, citando incertidumbre sobre las perspectivas de crecimiento.
El índice de confianza empresarial NZIERB se situó en -13% para el primer trimestre frente a -6% en el cuarto trimestre, una primera caída en cuatro trimestres.
El dólar neozelandés se mantuvo estable frente al dólar estadounidense esta semana. El día del anuncio de la tasa, el NZD repuntó mientras la curva OIS se aplanaba, lo cual es un desarrollo desconcertante. Creemos que la curva OIS tuvo la respuesta apropiada. El riesgo alcista a corto plazo para el kiwi es la burbuja de viajes planificada con Australia. Estamos largos en AUD/NZD.
Enlaces a informes:
Revisión de cartera y modelo - 5 de febrero de 2021
Divisas y el debate valor versus crecimiento - 10 de julio de 2020
Actualizando nuestro monitor de balanza de pagos - 29 de noviembre de 2019
Dólar canadiense
Gráfico II-13
Técnicas CAD 1
Técnicas CAD 1
Técnicas CAD 1
Gráfico II-14
Técnicas CAD 2
Técnicas de CAD 2
Técnicas de CAD 2
Los datos recientes de Canadá han sido sólidos:
La Encuesta de Perspectivas Empresariales del Banco de Canadá fue robusta. El indicador de sentimiento registró 2.87 en el primer trimestre, frente a 1.3 en el cuarto trimestre y el nivel más alto desde 2018.
El informe de empleo de marzo fue espectacular. Hubo 303K nuevos empleos frente a una expectativa de 100K. La división entre tiempo parcial y tiempo completo fue saludable, 175K frente a 128K. Esto redujo la tasa de desempleo a 7.5% en marzo, superando tanto las previsiones como la lectura de febrero de 8.2%.
El dólar canadiense subió 0.3% frente al dólar estadounidense esta semana. Dedicamos parte de la sección inicial a discutir el dólar canadiense, que puede ser un poco vulnerable a corto plazo, pero podría alcanzar 84 centavos en los próximos 12 meses.
Enlaces a informes:
¿La recuperación canadiense liderará o seguirá al ciclo global? - 12 de febrero de 2021
Divisas y el debate valor versus crecimiento - 10 de julio de 2020
Más sobre devaluaciones competitivas, el CAD y la SEK - 1 de mayo de 2020
Franco suizo
Gráfico II-15
Técnicas CHF 1
CHF Técnicos 1
CHF Técnicos 1
Gráfico II-16
Técnicas CHF 2
Análisis técnico CHF 2
Análisis técnico CHF 2
Hubo escasos datos de Suiza esta semana:
La lectura de desempleo fue 3.3% en marzo, inferior tanto a la previsión como al mes anterior.
El franco suizo se mantuvo estable frente al dólar estadounidense esta semana, manteniéndose como uno de los de mejor desempeño entre las monedas del G10 en abril. Como indicamos en el informe de la semana pasada, el franco podría estar listo para un rebote tras su infrarendimiento en los primeros tres meses de este año. Aunque el CHF puede continuar su apreciación frente al dólar estadounidense, estamos largos en EUR/CHF por preocupaciones de valoración, pero manteniendo stops ajustados en 1.095. Nuestro indicador de plazo intermedio para USD/CHF también está listo para una reversión.
Enlaces a informes:
Revisión de cartera y modelo - 5 de febrero de 2021
El enigma del dólar y la protección - 6 de noviembre de 2020
Sobre el breakout del DXY, el euro y el franco suizo - 21 de febrero de 2020
Corona noruega
Gráfico II-17
Técnicas NOK 1
NOK Indicadores Técnicos 1
NOK Indicadores Técnicos 1
Gráfico II-18
Técnicas NOK 2
NOK Indicadores técnicos 2
NOK Indicadores técnicos 2
Los datos recientes de Noruega han sido mixtos:
El PIB en febrero cayó 0.5% mensual.
Los precios de la vivienda aumentaron 3.4% trimestral en el primer trimestre.
El IPC de marzo fue 3.1% interanual, frente a expectativas de 3.4%.
La decepción del IPC se debió principalmente a una caída mensual de 0.6% en los precios de bienes de consumo.
La corona noruega se mantuvo estable frente al dólar estadounidense esta semana. A pesar de la esperada subida de tasas del Norges Bank este año, la más temprana entre las naciones del G10, la NOK podría ver riesgos a la baja a corto plazo dado los débiles datos de inflación de este mes y la posible debilidad en los precios del petróleo debido a nuevos confinamientos por el virus a nivel mundial. Estratégicamente seguimos largos en NOK junto con SEK para una eventual caída del dólar.
Enlaces a informes:
Revisión de cartera y modelo - 5 de febrero de 2021
Revisión de nuestras operaciones de alta convicción - 11 de septiembre de 2020
Un nuevo paradigma para las petromonedas - 10 de abril de 2020
Corona sueca
Gráfico II-19
Técnicas SEK 1
Técnicos de SEK 1
Técnicos de SEK 1
Gráfico II-20
Técnicas SEK 2
Análisis técnico del SEK 2
Análisis técnico del SEK 2
Los datos recientes de inflación en Suecia han sido fuertes:
La medida CPIF, favorecida por el Riksbank, subió 1.9% interanual frente al aumento de 1.5% en febrero.
El aumento fue solo 1.4% sin energía, pero la mayoría de las medidas de inflación se han recuperado con fuerza desde los mínimos de 2020.
La corona sueca, que subió 1.4% frente al dólar estadounidense esta semana, fue una de las monedas del G10 con mejor desempeño tanto esta semana como en abril. Los swaps de inflación a 5 y 10 años se mantienen bien anclados por encima del nivel de 2%, lo que sugiere que los mercados no consideran el aumento de la inflación sueca como transitorio. Esto podría adelantar las expectativas de alzas de tasas. El mayor rendimiento real a 2 años en Suecia frente a EE. UU., debido a la mayor inflación en EE. UU., también apoyará al SEK. Sin embargo, los nuevos casos de Covid-19 siguen siendo una preocupación.
Enlaces a informes:
Revisión de nuestras operaciones de alta convicción - 11 de septiembre de 2020
Actualizando nuestro monitor de balanza de pagos - 29 de noviembre de 2019
¿Hacia dónde va el dólar estadounidense? - 7 de junio de 2019
Operaciones y previsiones
Resumen de previsiones
Cartera principal
Operaciones tácticas
Órdenes límite
Operaciones cerradas