COVID-19: Daily Dashboard

* LO estimate or reported figures
Sources: Bloomberg, IMF, World Bank, Lombard Odier calculations

Public health

• Recent Covid-19 trends continue: an increase in global confirmed cases of just over 3%, the slowest growth rate since early March and new deaths rising 6% globally. Italy reported the fewest new cases in a month with the daily new cases falling to 2,972, less than 2% growth. In New York, the first net drop in hospitalizations was reported yesterday
   
• China’s epidemic curve is stabilizing after a modest rise last week. The National Health Commission reported that there were 46 symptomatic and 57 asymptomatic cases on 14 April. Of the symptomatic cases, 36 were imported
   
• California has released a plan to reopen, without a timeline, but sets out criteria including more testing, contact tracing and availability of protection equipment
   
• Harvard University epidemiologists suggest that rolling social distancing programmes will be needed until at least 2022 without a vaccine or effective treatment

• The UK government is likely to announce a three week extension to its lockdown measures, pushing the possible date of easing into May
   
• In Europe, reopening plans continue, including the Czech Republic (see Emerging Market section). Iceland will begin lifting measures on 4 May
   
• Japan reported 267 new cases of confirmed infections on 14 April, showing some stabilization in the country’s epidemic curve
   
• In response to the recent acceleration in the newly confirmed infections, especially among migrant workers, Singapore has mandated the wearing of masks outdoors and begun to reduce exemptions for essential businesses
   
• Trends in the industrialized North Asia remain encouraging. South Korea reported fewer than 50 cases for seven consecutive days and set out its preconditions for a full return to voluntary social distancing regime. Taiwan reported no new case for the first time and Hong Kong reported just three cases
   
• Antibody therapy research is accelerating. South Korea’s government said it hopes that convalescent plasma – blood from recovered patients for treatment – may be used more widely within 3 months
   
• Multiple clinical trials are in progress for repurposed drugs with results expected between May and June

Monetary and fiscal measures

• Ten US airlines will participate in the US Treasury’s Payroll Support Program, receiving a total of USD25 billion in grants and low-interest loans, in return committing to keep workers employed until September. This covers about three-quarters of Q2-Q3’s payrolls
   
• Congressional talks on expanding aid to small businesses have made no progress. Funds may run out by the end of this week
   
• European Central Bank data show that PEPP (Pandemic Emergency Purchase Programme) reached a new high of EUR20.6 bn last week, giving total purchases of about EUR51 bn since the launch last month
   
• In France, a further EUR10 bn increase in the fiscal package will be announced after last week’s expansion that brought the total fiscal package to EUR100 bn
   
• In Japan, the details of the new fiscal package from Shinzo Abe’s cabinet confirm that the headline figure exaggerates the actual stimulus (commonly referred to as “fresh water” portion or “mamizu”). Excluding amounts in the December budget and guaranteed loans, the mamizu portion will be close to JPY16.8 trillion (around 3.1% of GDP). This is larger than Japan’s measures during the global financial crisis
   
• The People’s Bank of China cut the 1-year medium-term loan facility (MLF) rate by 20 basis points to 2.95% on 15 April as expected. This follows late March’s 7-day repo rate cut. The Loan Prime Rate on 20 April will therefore be 3.85%, 20 bps lower
   
• China’s State Council meeting on 14 April announced new steps to boost investment and maintain employment. The government cut corporate taxes and fees by RMB1.6 trillion and provided RMB3.55 tn in low-cost loans from three cuts to its reserve requirement ratio (RRR) and relending programmes. Principal and interest payments on around RMB880 bn loans have been postponed. The government will continue to implement policy measures to lower rental and labour costs and double urban community renovations (OUCR) for almost 7 million households, representing an investment of RMB667 bn this year. Lastly, the government will extend its enterprise income tax policy to firms in the western region.

Economic impact

• The International Monetary Fund published its World Economic Outlook on 14 April, forecasting a global contraction of 3% for 2020, followed by a recovery next year with growth of 5.8% in 2021
   
• The UK’s Office for Budget Responsibility (OBR) estimated a fall in GDP of as much as 35% in Q2 and job losses of 2 million, assuming the lockdown lasts three months
   
• In the US, an Institute for Supply Management (ISM) survey from the second half of March showed a majority of business expecting an average 5% drop in demand for products.

Portfolio positioning

• The trend has turned more positive in the past days, but we do not believe that all the conditions for a sustained equity market rally are in place just yet. We continue to monitor the slowdown in European and US infection rates and the likelihood of a second wave of infections in Asia. Market attention will gradually shift away from the outbreak and towards exit strategies and the economic impact. There are both negative and positive catalysts ahead: positive Covid-19 developments may be mitigated by worrisome news flow including weak economic data, dividend cuts and credit rating downgrades
   
• We continue to adjust our portfolio exposures. Most recently, we have increased exposure to policy-backed, undervalued assets, such as investment-grade credit
   
• We have also readjusted our global equity exposure in line with our tactical targets, and rebalanced our regional equity allocation by reducing our position in global emerging markets and increasing exposure to Asian equity markets. We have taken profit on the short leg of the put spread trade.

Sources: Bloomberg, IMF, Lombard Odier calculations

Three levels of response to contain the current shock to H1 2020, limit defaults, and avoid an unemployment spiral
 

• A public health response: to contain the spread of the virus, and gain time so that cases do not overwhelm hospital capacity 
   
• A monetary response: to avoid a funding shortage and ensure liquidity at a cheap borrowing cost
   
•  A fiscal response: perhaps in the form of tax rebates or income transfers, to partially shield economic actors from the temporary blow.

* LO estimate or reported figures
Sources: Bloomberg, IMF, World Bank, Lombard Odier calculations

Public health

• Several emerging countries are still recording 10%-plus daily growth rates: India, Indonesia, Mexico, Turkey and Russia. Of these, Russia shows the sharpest growth in daily cases at 15%
   
• Turkey has the highest new cases per capita (49 new cases/million), as well as the highest death rate (16 deaths/million)
   
• Chile, Poland and South Africa show slowing growth rates in daily cases. South Africa’s cases may increase as more tests are conducted in rural areas and overcrowded settlements and the country has lengthened its lockdown until 30 April. Daily cases need to drop to 44 per week on average (from 93 now) before easing the lockdown, according to the government
   
• Brazil cases are also tapering, though remain relatively high at close to 8%. Daily confirmed case increases are over 1,400 and the death toll is at 6 deaths/million

• The Czech Republic will gradual reopen restaurants and shops over the next two months
   
• In Mexico, protests in the public health sector are increasing over a lack of Personal Protective Equipment (PPE), a lack of protocols and rising infections. An estimated 10% of Mexico’s 5,014 cases are healthcare professionals.

Monetary and fiscal measures

• Bank Indonesia kept its 7-day reverse repo rate at 4.5% compared with expectations for a 25bp rate cut. The central bank announced measures to support local growth and credit, cutting the reserve requirement ratio for commercial banks by 200bp and maintained its inflation forecast of 2%-4% for 2020 and 2021
   
• The South African Reserve Bank unexpectedly cut its benchmark interest rate by 100bps, taking interest rates to a record low of 4.25% on 14 April
   
• Turkey’s regulator cut the currency swaps and derivative deals that local banks can carry out with foreign investors.

Economic impact

• South Africa’s central bank said the economy may contract as much as 6% in 2020, compared with an earlier estimate of a 2-to-4% contraction. The GDP 2021 forecast was raised to 2.2% from 1% previously
   
• Indonesia’s central bank said it expected GDP growth for this year at 2.3%, revised down from 4.2%-4.6%.

Sources: Bloomberg, WHO, IMF, Lombard Odier calculations

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