Complete Intelligence


Signs of Broader Recovery

Tony Nash joins BFM 89.9 The Business Station to discuss possible broader recovery. Where are the markets heading? In which direction will U.S. equities likely trade for the rest of the month? How much will that impact the ongoing debate on further fiscal stimulus? And how about the US unemployment data and is China on the recovery path?


This podcast first appeared and originally published at on October 1, 2020.

BFM Description


US jobs data will be released tomorrow but are we expecting better numbers? Tony Nash, CEO of Complete Intelligence sees a stronger pace of recovery for the US economy with improving macroeconomic data. He however does not expect a recovery in oil prices as demand remains weak while there are no supply shocks.


Produced by: Mike Gong


Presented by: Wong Shou Ning, Roshan Kanesan


Show Notes



WSN: But the question is where our markets are heading? So to help us answer that question, we have on the line with us Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Now the question, in which direction will U.S. equities likely trade for the rest of the month? Is risk aversion making a comeback to financial markets given the political and economic uncertainties?


TN: We expected a down month in September and that’s what we got. We’re also looking for a pretty difficult month in October, not quite as far down as September has been. But I think you’re right on the uncertainty side, one of the big unknowns is stimulus coming out of the US government. And obviously that would help move markets in other countries as well.


We should know by the end of this week if there will be more stimulus or the magnitude of that stimulus coming out of the U.S. So the real question around whether things will rally or fall is when the US will open up and when other countries will kind of fully open up, not partially open up. We look at, you know, Europe’s doing pretty well actually in opening up. Asia is doing pretty well. The U.S. is still kind of a patchwork.


So we won’t really know the near-term direction. But I guess I think over the next month we’re looking at at a bit of a fall.


WSN: And meanwhile, the Fed is extending the dividend by that limit with Wall Street banks till 2021. The announcement came out last night. So what does it tell us about the finance sector?


TN: We’ve been expecting a rotation into financials for some time, and that tells us that if dividends and buybacks are limited, those banks, obviously there’s a risk factor there, meaning that the regulators want those banks to hold on to their cash. But it also means that that the regulators also aren’t sure about when things will be back to normal. So that conservative approach forcing banks to hold on to their liquidity tells us that there’s not a lot of confidence in the next quarter or two. So we’ll really have to see the pace of recovery here in the U.S..


WSN: And Tony, just one more question on the U.S. and that’s the job data that’s coming out later today. Right? So there is out on Friday and it’s going to be the last one before elections. Are you expecting a good number? And how much will that impact the ongoing debate on further fiscal stimulus?


TN: You know, we do expect it to be a good number, the ADP number was out today and it kind of usually comes before the U.S. government’s non-farm payrolls number. The labor number. It was 750000 jobs added. That was one hundred or more thousand greater than was expected. Now, the U.S. Labor Department typically is higher than ADP. We expect the Department of Labor report on Friday to be about 900,000. So this is really good. Companies are coming back online. They’re employing there are fewer people out of work. That’s good for the recovery.


We keep hearing hesitation about the pace of recovery. We’re not sure of the pace. But from an employment perspective and even things like retail sales, the indications are good. So, you know, we’re hoping for the best. And unemployment is telling us that things are moving in the right direction.


WSN: And if you look at the recent EPA and EIA inventory reports are telling us that all demand tells us about the oil demand projections for the rest of the year. So what do you think? Do you think recovery’s a long way off?


TN: We do, actually. So production is up about 15 percent or so. Demand is still down 20 to 30 percent. So, you know, it’s not a good pricing environment for crude or for petrol. Downward pressure will still remain in those markets. We won’t see, say, Brent, north of 50 for some time. We won’t see WTI north of 45 for some time. There is a possibility we keep hearing we’ve heard for months about the possibility of a supply shock as demand comes back, which would push prices up. We’re just not seeing that at this point. And it’s going to be several months. If that does happen, it’ll be several months before it happens.


WSN: And one last question on China. The manufacturing PMI for September came in at 51.5 higher than market forecast. How much should investors consider a place in this figure? Does this number suggest that China is well and truly on the recovery path?


TN: I would be really careful of I’m looking at a China PMI. I’m aware of PMI generally, but I’d be I’d be careful of the China PMI. I haven’t believed it well, for years, if it really is ever, partly because it’s a kind of a second derivative of real data. It’s an opinion survey of future expectations and it’s an index of that opinion survey.


I know that sounds confusing, but you’re really far away from real data when you’re looking at a PMI number. And with China, the uncertainty and murkiness around Chinese economic data is something to be careful of.


So I would say if I’m investing in China, if I’m looking at data in China, the stuff that I’ve always found more important was first-hand information. What’s actually happening on the ground with your vendors, what’s actually happening in cities on the ground?


I’m not saying that China is suffering. I’m not saying China’s experience a massive pullback. I’m just not sure about the rate of recovery in China.


WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, giving us a somewhat optimistic view of the U.S. economy, saying that all the indicators are that recovery is their unemployment numbers should improve.