As Crypto soars, non-digital-gold is plunging, with futures breaking below $1800 for the first time since July. Since the election and vaccine news, gold futures have crashed from $1960 to $1798…
The big question is, will gold find support at its 200DMA, or is this a systemic breakdown that ignores the future deficit-spending collapse of credibility in the global reserve currency?
As it appears — for now — that digital gold is preferable to real gold…
Herd Immunity Threshold Now Expected By Mid-2021Tyler DurdenTue, 11/24/2020 — 09:45
By Jim Reid, chief credit strategist at Deutsche Bank
Monday’s are the new Friday’s. AstraZeneca/Oxford Uni kept the vaccine Monday theme going this morning by revealing their vaccine is effective (70% average) albeit with the tantalising prospect that the technique that suggested 90% effectiveness (half dose first followed by the full dose) could be used for all rather than the 62% effective treatment (two full dosages). In terms of why a half dose might be more effective first it could be with how it better primes the immune system.
Today’s chart of the dayupdates when we could first vaccinate the vulnerable and then achieve herd immunity in the G10 if we assume that AstraZenenca/Oxford eventually migrates to the 90% efficacy rate, one and a half doses are used, and we assume pre-orders are filled on time for the three vaccines to report so far. Japan and the UK would be first, shortly followed by the US with Australia and the EU lagging a bit but there by around the end of H1.Although logistics may slow things down, remember other vaccines could come on stream and accelerate the process.
For EM much is hanging on AstraZeneca/Oxford. It is substantially cheaper with EM countries being offered it at cost which is part of the reason it has been pre-ordered by so many of them. It has the real opportunity to provide a global solution. If the half dose/full dose technique is proved to be more effective it will also reduce the volume of vaccine used meaning more can go around.
Other advantages are that it uses well known vaccine technology rather than the new m-MRA technique used by Pfizer/BioNTech and Moderna which may encourage wider uptake, and also that it can be stored at fridge temperature for six months relative to the –70C to –20C for Pfizer, and –20C for Moderna (can be stored in a fridge for a week before use).
Overall the Monday news from the last couple of weeks has been an incredible victory for science and a personal view is that we’ll be getting back very close to normal life in Q22021.
The post-election plunge in fear and surge in greed has not gone unnoticed by Nomura’s Charlie McElligott:
…the speed by which implied vols have continued to collapse since then (with the latest risk boost from the announcement of Janet Yellen as Treasury Secretary — more on that later) has simply escalated beyond anything I could have anticipated…
Why? McElligott explains:
Well, US financial conditions are hitting all-time easiest levels in real-time (UST yield curves low and flat, Credit at tights, lower USD and said destruction of Eq vol)…
…which after the failed QT experiment and the scar-tissue contained therein has made “loose fin conds” an unspoken “de facto mandate” of the Fed and global CB’s.
Additionally, McElligoot notes that the announcement of Janet Yellen as Biden’s Treasury Secretary effectively greenlights:
1) “lower forever” policy support, big fiscal advocacy (even though the magnitude of that is dependent on the Republican Senate coalescing, which is difficult to imagine at this juncture) and,
2) quasi-debt monetization, as the Fed and Treasury evolve closer to one like-minded entity
And everyone’s all-in, as the cross-asset-strategist notes that
The feedback from clients is universally bullish into year-end, where any sort of corrective move would be a dip to buy — aligning into the post-election vol compression pairing with pro-cyclical YE seasonality and the upcoming financial conditions crush from uber-dovish CB’s in December ECB and Fed meetings
But McElligott does have a warning about this apparently premature exacerbation…
This actually /perversely brings forward the timing on profit-taking on the Calendar Spreads we’ve been advocating discussed to take advantage of this anticipated 2020YE vol collapse vs stickier 2021 optionality, as the term structure steepening nears overshooting
Finally, we do note that while Nomura’s clients are buying every dip with both hands and feet, it appears the ‘Insiders’ are the ones selling to them…
Who are you going to believe — fast-money momo-chasers or the executives at the firms dumping into ever more stratospheric valuations?