The Daily Shot Brief – September 9th, 2020



United States: Morgan Stanley expects Congress to pass a $1.5-2.0 trillion “CARES 2” stimulus package in September.

Source: Morgan Stanley Research


The result will be a substantial boost to consumption (chart below) and GDP growth.

Source: Morgan Stanley Research


All this additional liquidity is likely to give another boost to the stock market. It will also have a positive impact on credit, commodities, and emerging markets. On the other hand, it’s a negative development for the US dollar.


China: Nonperforming loans have been climbing.

Source: @financialtimes Read full article


Smaller banks are significantly less well-capitalized than the Big Five.

Source: Pavilion Global Markets


Equities: The Nasdaq 100 implied volatility has been drifting lower even as the market sold off.

Source: @TheTerminal, Bloomberg Finance L.P.


The trend suggests that some of the massive call option bets (2 charts below) are getting unwound.

Source: @sentimentrader
Source: @ISABELNET_SA, @GoldmanSachs


Credit: With LIBOR going away, the market may need another index that measures unsecured bank borrowing costs. SOFR represents collateralized lending (repo), which is not a good measure of bank credit.

Source: BofA Securities


Could BYI be that index?

Source: BofA Securities


Global Developments: This chart shows futures positioning across different asset classes. There’s a high concentration of long bets in the Swiss franc and the euro.

Source: Deutsche Bank Research


Food For Thought: The increase in alcohol sales during the pandemic:

Source: @WSJ Read full article

Edited by Devon Lall

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