India Pulls the World into the Abyss, Bank of Canada and ECB

22 Apr 2021

India keeps on churning out anti-records literally every day. Yesterday, they crossed the mark of 300K cases per day (more than a third of the global number of cases), and the number of deaths per day confidently exceeded 2K. And this despite the fact that we see only the tip of the iceberg, since the level of testing is insufficient to form any objective picture. But even what is seen is enough to panic.

Tellingly, financial markets largely ignore what is happening in India. The only one who somehow tries to take into account in prices the deepest crisis in the country's economy, which has been the driver of the growth of the entire world economy in the last 10 years, is oil. But even there, the decline is more than moderate. The Indian stock market has not moved away from the highs even by 10%, which is fundamentally at odds with any logic and common sense. Or the markets are hoping for a miracle and decided to wait for it. We believe that there are no miracles, which means that the same SENSEX can and should be sold.

In general, the stratification of realities has been seen more precisely. Let us recall the recent reports by OPEC and IEA, which raised their forecasts for the growth rate of oil demand amid a sharp deterioration in the pandemic situation in the world. Despite the fact that the same organizations in the previous months lowered their forecasts against the background of an improvement in the epidemiological situation.

Also, consider the results of yesterday's meeting of the Bank of Canada. The rate was expectedly left unchanged, but at the same time the Central Bank revised its forecast for GDP growth in 2021 from 4% to 6.5%. The steps are clearly premature, since only a few countries in the world were able to more or less stabilize the pandemic situation. And in the modern globalized world, the problems of the world are necessarily transformed into the problems of a single country.

The ECB will announce the results of its meeting today. Most likely, the monetary policy parameters will not be changed, but economic forecasts may be revised. In addition, you should pay attention to the data on jobless claims in the United States.