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Dear Inventors and Investors,
Post-POTUS run-of-the-mill victory-swing alongside Mr Steven Mnuchin, touching bases of stimulus-spending, as well as moderately-positive job's report, the London Rates Desk has slightly less-rosy outlook for us. Fortunately, we had Larry Kudlow explaining mid-April epidemic struggle, which corresponds to a successful, just-in-time Frontera EM's portfolio rebalancing process starting in the late March.
Have a look on the front-end of the steepening yield-curve through 2-10s spread, wink on the stop-and-go duration, fix your smart and savvy eyes on convexity, ride the yield-curve backwards. From the dynamic cash-flow perspective, there is a sign of a run on the U.S. long-term outlook to position our focus on quick V-shape gain in equities, forcing us to turn a blind eye on a beautifully-proclaimed equality in the POTUS speech. Is the situation as good as pictured in the White House Rose Garden up-beat speech? We would all love to hope so, as we all hold the policy of never betting on the moral hazard.
If you happen to struggle under lock-down in California, the anti-Minsky moment is just around the corner. We strongly advise the Broad Beach Bankers Group to focus on 2Y base-line strategy in case of proclivity in global economic recession (APAC & Europe). Regarding the worst-case, price in the what-if of the second wave of the sneaky malaise, as it may drive the most-transparent economies around the World into the 4Y socio-economic decay. Our advice is to look on theta as the stress test, while black pools may sit on the sidelines laughing upon the less-fortunate with delta and gamma models, enjoying the CBOE/CBOT and VIX (iTraxx) options-arbitrage opportunities. We sincerely hope it is not the issue in the most transparent market of the Number-One Economy in the World in terms of PPS per capita GDP in real terms, in line with the highest velocity of money, ensuring transparency and faith in the U.S. $ deflator data-sets.
In the London-desk opinion, this is the precise time to look back into the First-to-Default model and Survival-Time Correlations, for which we internally lack adequate man-power, yet. Not an easy task in the zero-sum World with finite resources of time, however ORC Advisors "Research Division" are here to help with out-of-the box ad-hoc solutions. Ride the curve elsewhere, pre-empt the late-movers and surprise yourselves before the market wakes up over-surprised, ready to join the game and take over, then overtake.
In the BAKU CITY information surfaced Monday post-market hours that Tuesday T-bond auction is cancelled along the entire curve, including our access as the early-movers. Not-so-hidden State-guardian, i.e. OILFUND.az took away all the burden of sterilising the Azeri New Manat "M2 money supply" and did their job peacefully, while Russia lagged waiting for the prospective decision to cut the fed-funds' base "discount window" rate to 3.5% due to plausible weekly action on MOEX.com and stronger Russian Ruble (FX: USDRUBx rubble revaluation dynamics while China devalued the renmibi, confirmed in Ozzie-Yen up-tick).
On Wednesday we took fast, decisive action to seize the opportunity we have positioned ourselves for since April portfolio rebalancing and locked the most plausible 2Y+ (840D) T-note yield on the secondary market at 8.50% through the strong OTC position of our primary dealership network. Frontera Emerging Markets is happy to inform Broad Beach Capital LLC that our joint strategy of studying the Norwegian "Oljefondet" is the way to go also in Azerbaijan.
Further down the week back-end, the dynamics in Azerbaijani Capital City BAKU, enabled local Merchant Bankers to focus on strategic joint ventures and private-equity deals starting off since Thursday, incl. securing the Water Supply in the hot, yet humid region (See incumbent President Ilham Aliyev strategic fresh-ink action in Terter region: https://ona.az/en/sosi%CC%87al/azn-147-million-allocated-to-azerbaijans-land-reclamation-and-water-management-ojsc-14452, Source: ONA News Agency).
Stay tuned for hands-on, no-holds-barred reporting next week and recharge your batteries the coming weekend. Sleep, nutrition and sport is the immunologic system. Come back healthier, as more action is expected in the "Land of Fire", brough to you by Frontera Emerging Markets and our Strategic Partnerships around the globe.