Young Mongols | Aubrey Menard | December 21st, 2020
US capital control imposition is one of the gray swans of 2020
Bilal Hafiz, CEO of financial strategy firm Macro Hive, said post-trade war capital controls with China are among the gray swans for 2020..
«Gray swans» – these are potentially significant events that are considered unlikely, but still possible. Hafiz suggested that the US is focused on trade in goods and services with China, making the introduction of capital controls «real opportunity» to protect American business.
«The bigger question is that the strongest US asset is intellectual property and its corporate performance, Hafiz said Thursday on CNBC. – In recent years, we have seen significant Chinese investments in Silicon Valley, Chinese companies are buying American companies, so the US can say “Hold on, we won’t accept this anymore”».
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«What we could see is a more extreme step in this direction. When the US says that almost all Chinese investment in the US should stop, it will be seen in the context of the Cold War between the US and China.», – he added.
Another of the most likely scenarios among the 10 «gray swans» Macro Hive is Japanese intervention in foreign exchange markets as it seems to be running out of traditional monetary policy options in an effort to stimulate its economy.
«They, in fact, do not have many options in the field of monetary policy, they are already buying bonds, they are buying shares. The only thing that has worked for Japan in the past is interference in the foreign exchange markets, so they may have the opportunity to intervene», – Hafiz said, adding that it would spark a US backlash given the Trump administration’s emphasis on currency rates..
Among other events from the category «gray swans», listed by Macro Hive, there have been a surge in inflation in the euro area; Apple buying Disney; Tesla and Hyundai partnership; interaction between the United States and banks through cryptocurrency and drone attacks on American facilities in the Middle East.