Wednesday, January 26

Wall Street majors ease omicron anxiety


The lack of data on the virulence and dangerousness of the omicron variant of the coronavirus has plunged the markets into a week of ups and downs that could drag on, but the big investors in Wall Street they are calling for calm at a time that, in some cases, is seen as an opportunity.

Despite the stock market falls that have mostly colored international trading floors red in recent days, investment banks, funds and agencies seem to share the consensus that at no time will the scenes experienced during the first half of 2020 be repeated.

And one of the voices that is most promulgating that position is JP Morgan, from where several analysts even now recommend “buying the fall”.

The beginning of the end of the pandemic

If a few days ago JP Morgan analysts they showed signs of remaining impassive to the commotion caused by omicron, describing the current situation as “sporadic setbacks”, this time they go further.

American bank analysts, Marko Kolanovic y Bram Kaplan, they assured in an internal note revealed by Bloomberg that “although it is likely that omicron is more transmissible, the first reports suggest that it may be less deadly, a fact that would fit into the observed pattern of the virus.”

If this premise is fulfilled, Kolanovic y Kaplan they affirm that the doubts generated in this last week may be positive for risk markets, because they would indicate that “the end of the pandemic is near.”

Omicron it would therefore be “the catalyst for the growth of the yield curve, not for its flattening”, according to analysts.

Kolanovic y Kaplan believes that the recent declines in cyclical segments such as commodities may be a good opportunity to position in them and prepare for an improvement in yield curves and even bonds.

A risky position on the part of strategists who row against the current of global trends in stock markets, where the sectors most exposed to new restrictions, such as tourism, have fallen.

A risk stance, however, assumed under the assumption that the new strain of the coronavirus will not be as traumatic for the economy. A perspective shared by other major market players.

More cautious but calm positions on Wall Street

A similar line of imperturbability in the face of the announced catastrophism has been projected Morgan Stanley, from where the executive director of public policy of the US bank, Michael Zezas He called for calm until more information on omicron was had.

In the podcast of Morgan Stanley called Thoughts on the market, Zezas relates that the effects of the new strain of the virus have monopolized conversations with his clients in the last week. Clients who want to know “if the new variant will imply new restrictions and impact the economic outlook.”

And at his discretion, which is based on the reports of his biomedical team, even in the worst case scenario in which local and national governments have to resort to restraint measures again, this will mean “an economic setback, not a disaster.”

ZezasYes, it expresses that opinion supported by the belief that pharmaceutical companies will be able to reformulate their vaccines in the event that omicron escapes their protection, despite the messages issued from Modern that this process could take months.

Fitch, Blackrock, la UE

Another entity that has issued a message urging gathering more data before making early decisions is Fitch, which stated in its analysis on November 29 that “it is too early to incorporate the effects of the omicron variant in its economic growth predictions.”

The credit rating agency, however, expressed its view that “another synchronized global recession like the one seen during the first six of 2020 is highly unlikely.”

Fitch he concedes, even so, that the rise in inflation “would complicate macroeconomic responses if the new variant prevails”, but relies on “improved scientific knowledge compared to the onset of the pandemic” to make his judgment.

Wall Street wants to assuage widespread concern in the capital markets, and makes a communication effort to reach its investors.



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