Goldman Now Sees 2 Rate Cuts In Next 2 Weeks, Expects "Coordinated" Central Bank Easing

It was just Friday that Goldman finally gave up on its bizarrely optimistic global outlook that it had adopted in late 2019, and instead of seeing no rate cuts - or hikes - in 2020, the bank's chief economist Jan Hatzius capitulated, and said that the Fed will likely cut at least three times in the first half to offset the global economic slowdown due to the coronavirus, late on Sunday, just 48 hours after its first rate forecast revision, Goldman has officially thrown in the towel on even a trace of optimism for the foreseeable future, and now expects not only the Fed to cut 4 times by the end of Q2, but also cautions of a a high risk that the easing it expects over the next several weeks could occur "in coordinated fashion, perhaps as early as the coming week", which of course is disappointing for all those who were hoping the Fed would step in as soon as Sunday afternoon/evening.

In justifying the implosion of its outlook, Haztius writes that "on Friday morning, we downgraded our baseline view of global GDP growth in 2020 from just over 3% to around 2% on the back of developments related to the coronavirus, with weakness concentrated in the first half of the year. We also changed our Fed call to project 75bp of rate cuts by June, starting with a 25bp cut on March 18."

This was on Friday morning. Since then, so over the weekend, it appears that newsflow has taken a decided turn for the worse, and as Goldman adds, "the news on the outlook has remained negative, with significant further increases in infections outside of China and an exceptionally weak China PMI release. Moreover, the statement by Fed Chair Powell on Friday afternoon that the Federal Reserve is “closely monitoring” developments and “will use [its] tools and act as needed to support the economy” strongly hints at a rate cut at or even before the March 17-18 FOMC meeting."

Based on these developments, Goldman is making further adjustment to its Fed call and now projects a 50bp rate cut by March 18 followed by another 50bp of easing in Q2, for a total of 100bp in the first half. Which means that the US Fed Funds rate will be just above zero as the US enters the second half, and has a high chance of tipping negative around the time of the election. Hatzius explains:

The clear signal in Chair Powell’s statement has led the bond market to price in more than 25bp of easing, and the FOMC will not want the cut to come as a disappointment in the present situation.

But wait, there's more: Goldman is now also forecasting rate cuts by most other G10 (and some EM) central banks, including a cumulative 100bp of cuts in Canada, 50bp in the UK, Australia, New Zealand, Norway, India and South Korea, and 10bp in the Euro area and Switzerland. The chart below shows Goldman's new central bank forecasts along with market pricing as of Friday’s close.

https://www.zerohedge.com/economics/goldman-now-sees-2-rate-cuts-next-2-weeks-expects-coordinated-central-bank-easing

Russia Can't Guarantee Safety of Turkish Aviation in Syria After Damascus Shuts Idlib Airspace – MoD

As tensions run high in Syria’s Idlib amid Thursday's spike in hostilities, the Syrian state news agency SANA reported on Sunday that the "Turkish regime's terrorist forces" downed two aircraft - thought to be fighter jets - belonging to the Damascus forces.

The Russian Defence Ministry announced on Sunday that it could no longer guarantee the safety of Turkish aircraft flying over northern Syria, after Damascus moved to close the airspace over the embattled province of Idlib.

Damascus announced earlier on Sunday that it would treat any aircraft that crosses into the airspace of Syria’s northwest as a hostile target.

This comes amid media reports that two Syrian aircraft were shot down in Idlib. Both pilots survived after ejecting, according to reports.

SANA reported that the "Turkish regime's terrorist forces" struck the planes, without specifying whether they were Turkish troops or Ankara-backed militants.

There were no reports on what aircraft have been hit, but are thought to have been fighter jets. The Syrian military is known to operate Mig-29s, Su-22s, and Su-24s.

A source in the Syrian Defence Ministry revealed that Turkish F-16s had twice in during the day crossed into Syrian airspace, shooting down government forces' planes.

In a separate development on Sunday, Syrian air defences destroyed six Turkish UAVs attacking government forces within the day, the source added.

Deterioration of Situation in Idlib

The recent spike in tensions in northwestern Syria occurred on Thursday, as the Syrian army repelled a large-scale assault by terrorists operating in the area. As a result of a counterattack, 33 Turkish servicemen were killed.

Right after the incident, the Russian Defence Ministry revealed that the dead Turkish troops were mixed with Nusra terrorists who had been present in the province. The ministry also said the Turkish contingent was operating outside observation posts it previously established under the provisions of deals agreed upon by Turkey, Russia and Iran in 2017 in Astana, and again in 2018 in Sochi.

https://sputniknews.com/middleeast/202003011078445372-russia-cant-guarantee-safety-of-turkish-aviation-in-syria-after-damascus-shuts-idlib-airspace–mod/

Macron: France Ready to Help Greece, Bulgaria to Cope With Huge Influx of Migrants

France expresses solidarity with Greece and Bulgaria and is ready to offer assistance to protect borders from arriving migrants, French President Emmanuel Macron said on Monday.

On Sunday, Greek government spokesman Stelios Petsas said that the situation with migrants on the country's northeastern border with Turkey presented a threat to the national security. The spokesman added that Greece would stop accepting asylum requests for a month and expedite repatriations of migrants coming to the country illegally.

"Expressing full solidarity with Greece and Bulgaria, France is ready to contribute to the efforts of European countries to provide them with immediate assistance and to protect borders. We must work together to avoid a humanitarian and migration crisis," Macron wrote on Twitter.

The stampede near the northeastern Greek town of Kastanies was triggered by the Turkish announcement on Saturday that it had opened its borders to Europe to Syrian refugees citing the lack of promised assistance as the reason.

On Saturday, Turkish Prime Minister Recep Tayyip Erdogan said Ankara opened borders to Europe, citing lack of aid from Brussels. Tens of thousands of migrants who have recently been in Turkey moved towards the country's border with Greece and Bulgaria. Greece, in its turn, shut its borders and sent military equipment to prevent migrants from entering the country.

https://sputniknews.com/news/202003021078446254-macron-france-ready-to-help-greece-bulgaria-to-cope-with-huge-influx-of-migrants/

Will the fighting end after the elections? - analysis

Like the two previous elections, Netanyahu has made himself once again the focus of this election. It’s all about him.

Israelis already know the drill. Sadly.

After two elections, the most likely scenario based on current polling is that there will again be deadlock, meaning that there is a strong chance Israel will once again head to the polls during or after the summer.

The decision Israeli voters will make on Monday has the potential to determine the future of their state and it is not a simple one. On March 17 the bribery trial of Prime Minister Benjamin Netanyahu will begin and Israel will find itself in a situation it has never been in and never should’ve been in: a sitting Prime Minister standing trial for grave corruption charges.

Despite this, Netanyahu seems to be entering Election Day strong and with positive momentum. In the last week his polling numbers have increased - both in terms of the number of seats Likud will receive but also when it comes to the gap between him and Benny Gantz on the question of who is more suitable to serve as prime minister.

Almost no one talks about his pending trial - what it will mean for Israel, how he will be able to continue running the country while standing trial and what it does to the soul of the nation when it’s leader stays in power and sits on the defendant bench simultaneously.

To some extent, Netanyahu is right that what seems to unite his opponents is simply the desire to remove him from office, what is know as the “Anything but Bibi” camp. On the other hand though, the “Only Bibi” camp is no less cultish in its refusal to recognize reality - this prime minister has been in office already now for more than a decade consecutively and has a trial about to begin which despite his declarations will take up a lot more of his time than just an hour a day.

Cigars and alleged bribery don’t bother these supporters. They talk about Netanyahu being an underdog who is persecuted by the police, the attorney-general and the media. He seems to keep Israel safe so why change anything?

On the other side, there is legitimate criticism of Blue and White and the campaign it has run. There have been mistakes (like the recording that came out last week of his top adviser saying Gantz is weak on Iran) and more. The bottom line is that as impressive as Gantz seems to be he hasn’t swept up the masses and led to a move of votes across camps - from the Likud to Blue and White.

Like the two previous elections, Netanyahu has made himself once again the focus of this election. It’s all about him. None of the attempts to divert the focus - to annexation, Naama Issachar (remember her?) or even Gaza - have worked. It remains a fight between those who want Netanyahu to stay and those who don’t.

What will happen is difficult to predict. Will Netanyahu get the 61 seats on the Right with Avigdor Liberman or will he fall short and then try to get some members of Blue and White to defect over to his side? Will Gantz be willing to form a minority government with Arab support and will Liberman even let him?

On Monday night we will have a better clue where things are headed but the real work will start on Tuesday, the day after elections when the sides will begin to actively recruit defectors.

The voting might come to an end at 10 pm on Monday, but the political bickering is still far from over.

https://www.jpost.com/Israel-Elections/Will-the-fighting-end-after-the-elections-analysis-619437

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