Amir Kahanovich (Photo by Inbal Marmari)
“When the strategists on Wall Street prepared their threat list for 2022 the corona was not really there. In the latest Bank of America survey, fund managers rated the corona only in fifth place (after inflation, interest rate hikes, the slowdown in China and asset bubbles). It’s not that they are not They thought that more Variantians might come, but that the world is ready to navigate through them, “says Emery Kahanovich, the chief economist of Phoenix-Excellence, today.
The market talks about the robots starting to operate and pushing the market down, Kahanovich says that “new movement restrictions in the world began to sharply lower the price of oil and when it fell below the technical levels of an average moving to 100 and then to 200 days. Robots left to trade on Thanksgiving began Selling shares … When these also crossed technical levels, banks and options traders came into action and began to close positions and make the move even worse.
“Many expect / hope that on Monday, when humans will return to trade, they will explain to robots that it is a deadly virus and that they have nothing to fear from it. On the contrary, it brings with it a lot of good things like fiscal, monetary and technology-intensive incentives (which will not replace them).
“On the other hand humans will make sure that the cartridges of policymakers are pretty empty, entering the last alignment of the year as markets are after sharp rises and bullish positions towards 2022, so tactically they have more to lose. “Volatility, the VIX, has jumped by 54%, the sharpest in ten months, to 28 points) and not many want to be there at the moment, which will make it difficult for the market.”
One who was not surprised by the risk of a new variant (except of course Ayalon Musk who has already exercised it) was the Bank of Israel, which often warned that it was too early to talk about interest rate increases while the flow of variants continued to reach and cause uncertainty even in the medium term. Says Kahanovich. “Now the new variant can convince him of his rightness and delay further interest rate hikes even in a scenario where this variant turns out to be under control. In the US the market still expected early last week almost three interest rate hikes in 2022 starting in June in September.
“What was even more surprising was the reaction of the index-linked bonds – many Wall Street economists predicted that the negative real return would begin to rise towards ‘normalcy’ in 2022, as the central bank cooled inflation expectations through interest rate hikes. But the cooling of expectations that came on Friday surprisingly led to a drop in real yields. “It seems that the strong pressure on the decline in real yields reinforces the idea that their PMs are deep in negative territory, and that the yield on nominal bonds mainly reflects inflation expectations and if these do start to cool in 2022, most of the market move will come from declining nominal yields.”
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