Jens Nordvig
Jeff BrownJens Nordvig
Founder, Exante Data
New York
Once the head of fixed-income research at Nomura, where he was also a top currency strategist, Jens Nordvig, 46, left the Japanese bank to found Exante Data in 2016. As its name suggests, Exante uses data sources—many untraditional—to help forecast economic and financial conditions. It was this focus on data that helped the firm see just how big a problem Covid-19 would be—and how to navigate it.
Barron’s: How worried should investors be about the spike in Covid cases in the U.S.?
Jens Nordvig: When I look at the parts of the U.S. that matter from an economic perspective, a lot have taken action that will be sufficient to slow the spread. You have to do it early enough that you have some weeks to see it bear fruit, and that’s what they’ve done in California, and what they’re doing in New York City, too. Michigan and Illinois are places that have taken action recently.
How much will those actions matter for the economy and the markets?
There will be a hit to the economy, but markets know that. We know roughly what is going on with the virus, and roughly what is going to happen with lockdowns in some states. The question is whether the data are going to surprise to the downside because the financial markets haven’t fully internalized the impact on the economy. But I don’t want to get too bearish because the vaccine is like having a global stimulus.
It’s that important.
If we find that there’s a problem with the Moderna [MRNA] and Pfizer [PFE] vaccines, that’s what will take the market down. It could be that we have big issues with cooling the Pfizer one—minus 70 degrees Fahrenheit is pretty cold. It’s extremely good news that we have all these other vaccine options, because if all those vaccines required that, I’m sure we couldn’t generate that amount of cooling.
Where should investors look for opportunities?
We’re very focused on tourism. The vaccine is key to that. The pent-up demand for travel, entertainment, that kind of thing, will be immense.
The airlines are tricky. You still have a question mark around business travel because we now have this structural shift toward work-from-home, so I don’t think it’s going to come back in the same easy way. I feel more strongly about the stuff that is driven by consumer demand: hotels, anything to do with entertainment, restaurants. People are going to want to have social experiences.
Ironically, the countries hardest hit by Covid could benefit from these trends.
There is going to be a difference between the countries that have an elimination strategy and those that don’t. If you’re New Zealand and you don’t have any Covid at all, it’s a tough decision how you open your economy. If you are Mexico, and you’ve never had an elimination strategy, it’s an easy decision. So, some of the countries we look at will be Mexico, South Africa, Thailand, maybe.
How can you play the recovery?
You can trade directly from a currency angle—for example, through the Thai baht and the Mexican peso. Tourism is such a big part of those economies; it’s a big piece of the balance of payments. If there’s a local stock or a local stock index that has those exposures in it, that will be a turbocharged way of doing the trade.
How does China emerge from this crisis?
China has managed to eliminate Covid in a large country, while a lot of Western countries failed to control it well or at all. From that perspective, it’s a win. It shows that what their system was able to achieve was superior to the Western system. China was able to navigate this without shutting down their supply chains.
Demand for Chinese bonds has been impressive.
We have 0% interest rates everywhere in the world, pretty much, except in China. That has generated a regime shift in capital flows. We went from having a trickle of foreign buying of those bonds to something pretty meaningful now. That’s a shift that will be lasting.
Will the boost to China’s economy last?
The shift in global consumption patterns was very bullish for China. Since you don’t go to your local restaurant as much as you used to, you might want to spend on your webcam and electronics and these kinds of things instead. China got a boost, but that will eventually peter out.
Where are you going to go once you can travel?
We are going to Buckingham Palace to see the Queen of England. I promised my kids.
Thanks, Jens.
Share your thoughts on the post-pandemic world: What do you think will be the greatest investment opportunity post-Covid? What will be the most important public policy issue that the U.S. will face? Where would you most like to visit once the virus is no longer a threat to travel? Click here to share your thoughts with us.
Write to Ben Levisohn at Ben.Levisohn@barrons.com
December 05, 2020 at 09:14AM
https://www.barrons.com/articles/mexico-thailand-and-other-countries-have-been-hit-hard-by-covid-19-how-to-invest-in-their-recovery-51607134470
Mexico, Thailand, and Other Countries Have Been Hit Hard by Covid-19. How to Invest in Their Recovery. - Barron's
https://news.google.com/search?q=hard&hl=en-US&gl=US&ceid=US:en
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