Investors are focusing on mobility data as empirical data suggest the global economy has taken a giant step toward normality.
Global investors are continuing to map the reopening of global economies to the overall risk narrative. The global stock markets are moving higher with positive changes in mobility data.
According to recent mobility data, the global economy has taken a giant step toward normality in the last week. Cross-country differences were reasonably stable, though, and the leaderboard hasn’t changed in most regions–except in G10.
New Zealand has reopened with a bang and is now the most open economy in G10. This owes itself to both significant easings of official lockdown measures and normalisation in actual activity as measured by phone mobility.
The high-frequency data inputs around increased foot traffic (phone mobility) traffic congestion, and public transportation use have temporarily replaced PMIs and other such forward-looking metrics in the market code, so consumer movement does matter.
As with most Google Analytics features, analysis can be completed in external spreadsheets and databases. The secret sauce lies in automating queries run. What was considered a tinfoil hat analysis not so long ago has now turned into a godsend for the market, which continues to trade the second derivative of this analysis by measuring how the rate of change of a Q (queries run) is itself changing.
There had been a slight thawing (Monday through Thursday) of the prior week’s trade war tension and then came Friday. From Monday-Thursday, the Hong Kong market was stabilising on the more optimistic run-up view to the National People’s Congress.
Then sentiment got zapped as outflow surged in property and high beta names. The HSI was a flood of selling straight into June despite not being the most ‘liquid’ contract yet. Up until Friday, the rise in open interest was being interpreted as investors bullishly dipping their toes back into the fray, but that view has quickly given way to the authoritarian clampdown reality check.
And while I’m not privy to any board room teleconference calls, although I wish I were a fly on the wall, as I can’t imaging C suite discussions around the HK bill are favourable. But whether these discussions are moving to a mass exit strategy from Hong Kong threatening to leave the gateway to China a permanent banking ghost town only time will tell how this new bill will be interpreted.
“China is trying to defuse the matter by suggesting that the law does not affect the high degree of autonomy of Hong Kong, does not affect the rights and freedoms of Hong Kong residents, and does not affect the legitimate rights and interests of foreign investors in Hong Kong” (Chinese Foreign Minister Wang Yi.)
But if companies feel they cannot guarantee the safety and freedom of their foreign employees, one can only assume that they will be relocated out of Hong Kong. After all, when it comes to most jobs these days other than client-facing activities that can remain on the ground and staffed by locals, most jobs are location agnostic due to internet technology the fact that Covid-19 staying and working from home has proven.
Currency markets saw a tranquil start to activity early on Monday as traders monitored more signs of economies reopening around the world against a deepening rift between the US and China.
But as the dust settles over Hong Kong agreement and if the currency market continues to normalize after the market has a good soak in the NPC’s outpour. Thee EURUSD topside (EU Covid-19 rescue package) and USDCAD downside (higher oil prices) could be the truth-bearers for the US dollar direction into the summer.
International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp