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
For more information about Algebris and its products, or to be added to our distribution lists, please contact Investor Relations at algebrisIR@algebris.com. Visit Algebris Insights for past commentaries.
Any opinion expressed is that of Algebris, is not a statement of fact, is subject to change and does not constitute investment advice.
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 Investments, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
© Algebris Investments. Algebris Investments is the trading name for the Algebris Group.
