WOOD - 'Dangerous Divergences'

• In the latest World Economic Outlook Report, the IMF said "the dangerous divergence in economic prospects across countries remains a major concern".
• While the IMF focused on the "vaccine divide" between developed and developing nations, there are other divergences at play.
• For example, the Fed tapering versus the persistently dovish ECB and Bank of Japan, or higher USA versus lower China inflation rates.
• The US economy diverging from a weaker global environment allows the Fed to taper/normalize while an emerging market downturn happens in the background.
• Risk assets have been very sensitive to Fed policy tightening and emerging market risks particularly China. I reiterate my buy USD and sell commodities call.

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