US Elections – Riding the wave.
Our latest estimates assign a 86% chance of Biden winning and 62% probability for a Blue Wave. Analysing state-level data, our base-case remains that of a Biden victory with chances of a Trump comeback significantly lower vs 2016. Accordingly, we assign higher probabilities to wider US rates on more fiscal stimulus. On stimulus, we expect the arm wrestling on an agreement to continue until after the election, with democrats pushing for a significantly higher number than the one proposed by the administratio
Brexit- Calling the bluff.
Confrontations at the EU summit led Boris Johnson to announce preparations for a no-deal Brexit by the end of the year, unless the EU were to change their stance. With this deadline having passed, Brexit uncertainty carries into November and offers tactical upside potential in cheap GBP and UK assets if positive news materialise.
Covid – Bless you.
Cases rising exponentially into the flu season leave corporates at a crossroads for surviving Q4, as Europe reimposes restrictions. We’re constructive on the timely release of a vaccine in Europe. Strong balance sheets in battered sectors offer upside convexity into the recovery next year.
IMF – No Bazooka.
With the 2020 annual meetings coming to an end we see limited IMF support to EMs for the foreseeable future, with the US more concerned on subsidizing China. A change in administration could reverse course in next year’s Spring 2021 meetings, benefiting and creating opportunities for selected countries. Mexico for example is positioned to benefit from US fiscal stimulus and a softer trade relationship with the US.
To read more on our latest views, please see our Silver Bullet | The Anti-Bubble Portfolio or visit www.algebris.com/category/insights
This document is issued by Algebris (UK) Limited. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Algebris (UK) Limited.
Algebris (UK) Limited is authorised and Regulated in the UK by the Financial Conduct Authority. The information and opinions contained in this document are for background purposes only, do not purport to be full or complete and do not constitute investment advice. Under no circumstances should any part of this document be construed as an offering or solicitation of any offer of any fund managed by Algebris (UK) Limited. Any investment in the products referred to in this document should only be made on the basis of the relevant prospectus. This information does not constitute Investment Research, nor a Research Recommendation. Algebris (UK) Limited is not hereby arranging or agreeing to arrange any transaction in any investment whatsoever or otherwise undertaking any activity requiring authorisation under the Financial Services and Markets Act 2000.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris (UK) Limited , its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
The distribution of this document may be restricted in certain jurisdictions. The above information is for general guidance only, and it is the responsibility of any person or persons in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. This document is for private circulation to professional investors only.
© 2020 Algebris (UK) Limited. All Rights Reserved. 4th Floor, 1 St James’s Market, SW1Y 4AH.
