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Articles by [email protected] (TrueEconomics)

10/7/20: COVID19 Update: Sweden v Nordics

2 days ago

Sweden has been continuing its uncontested-by-anyone-else march toward thee non-existent ‘herd immunity’:

And the pipeline of upcoming intensive care patients seems to be un-abating:

In the mean time, the rest of the Nordics have crushed the curve. And this is without inclusion of Iceland. 

Personally, I cannot understand how Sweden’s resident are tolerating this, but… who knows…

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10/7/20: COVID19 Update: US vs EU27

2 days ago

Updating charts on the U.S. vs EU27 comparatives for COVID19 pandemic:U.S. is now one day away from catching up with the EU27 in terms of total deaths, even without adjusting for the larger EU27 population:

Note: since higher rates of testing – per 1 million population – should result in earlier and better detection of the COVID19 cases, and since the U.S. population is younger, demographically, than that of the EU27, one should expect U.S. death rates peer 1 million of population to be lower than those in the EU27. This difference should furthermore favour the U.S. due to the fact that Europe experienced much earlier onset of community contagion, when neither testing nor treatment were widely available and as accurate/effective as they are today.U.S. vs EU27 cases and deaths – daily

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10/7/20: COVID19 Update: World Cases and Deaths

2 days ago

Updating COVID19 data through today’s ECDC release:

Worldwide, new cases are at a historic high of 227,756, reaching above 200K in three days in a row. In the last 7 days, we have had highest, second and third highest daily counts on record. This is despite the fact that testing remains spotty in higher growth geographies (emerging and developing economies). The trend is accelerating, as well (see last chart, blue line).Deaths:

 In the last seven days, we had three days with daily deaths counts ranked in top 50 overall. The trend remains elevated, but relatively steady. As the chart below shows (orange line), rates of growth in daily deaths are now positive, once again:

The above presents a serious problem to the idea of opening international travel. Simple ‘exclusion’ or

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10/7/20: America’s Scariest Charts Updated

2 days ago

Updating my series of ‘America’s Scariest Charts’ for the latest data releases this week.First: continued unemployment claims for data through the week of June 27th.

Continued unemployment claims fell from 18,760,000 in the week of June 20 to 18,062,000 in the week of June 27. Continued claims are now down 6,850,000 from their pandemic-period peak, which implies a decline of 978,571 per week since the peak. Based on the last two weeks’ average weekly decline, it will take around 28 weeks to return continued unemployment claims to the pre-COVID19 levels.Now, putting current crisis into historical perspective, the following chart uses log scale to show COVID19 recession experience in relation to all past recessions:

Next, new unemployment claims for the week of July 4, 2020. New

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8/7/20: On a Long-Enough Timeline, This Is Not Sustainable

4 days ago

Something will have to give, and on an increasingly more proximate timeline, although we have no idea when that timeline runs its course…

In basic terms, U.S. Bonds yields are only sustainable as long as:There remains a market-wide faith that the U.S. Government will not deflate itself out of the fiscal mess it has managed to run, virtually un-interrupted, since at least 1980 on; 
There remains a regulatory coercion into the U.S. Government bonds being ‘risk-free’ capital ‘instruments’; and
There remains vast appetite for the U.S. dollar as the store of value instrument for everyone – from migrants and legitimate business people in the politically questionable jurisdictions to drug dealers.

Which puts a serious question mark over how long can the U.S. Treasury afford to escalate

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7/7/20: Presidential ‘Porkies’ Series 4, Episode 99,732

5 days ago

So, we have a new Presidential Pearl of Dumbness: https://twitter.com/realDonaldTrump/status/1280209106826125313?s=20. I have compiled some earlier summaries of the same here: https://trueeconomics.blogspot.com/2020/05/2452020-trumpassery-of-coronavirus.html.

Accompanied by an academic institution’s direct fact-checking:

And the actual facts, without the need for media interpreations:

Why are we focusing on countries with > 25,000 cases as in above, instead on looking at global (every country) comparatives? Because COVID19 pandemic is the large numbers case. Countries with fewer cases, especially cases per capita, are experiencing much more volatile dynamics in daily data, which can easily skew comparatives.So here are the descriptive stats for the group of 51 countries, plus

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6/7/2020: Irish Services Sector Activity Index: May 2020

6 days ago

COVID19 impact on services sectors activity in Ireland, data through May 2020:

Huge adverse impact on the economy. Note precautionary purchasing effect on Retail sales in the difference between Wholesale & Retail index and Wholesale sub-index. And some recovery in May, compared to 1Q 2020. But overall, conditions are still dire. And we are not yet seeing the effects of consumer behavior changes on post-restrictions demand. That is still coming…Forward industry view (ex-behavioral aspects) for June 2020, via Purchasing Managers Index:

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6/7/20: Updated: 2Q 2020 Composite and Services PMIs for BRICs

6 days ago

As promised earlier (https://trueeconomics.blogspot.com/2020/07/3720-services-composite-pmis-q2-2020.html), here are the BRIC Services and Composite PMIs for 2Q 2020 with updated Global PMIs. Note: my charts show quarterly PMIs, derived from the Markit’s monthly data.Services sectors:

As the above shows, 2Q 2020, Services sector growth in India and Russia lagged Global sector activity.Manufacturing:

India, Russia and Brazil manufacturing sector activity lagged Global activity in 2Q 2020. The same three BRIC economies also lagged Global Composite PMI development:

Per Markit release, here are the main developments in Global PMIs on monthly basis:

Manufacturing Index Summary:

There are robust forward expectations in all sectors of the Global PMIs, per above. Input prices are

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4/7/20: COVID19 Update: US vs EU27

8 days ago

Updating U.S. vs EU27 charts. Main conclusions in the charts, so click to enlarge these:Death rates and deaths: key here, the U.S. is now within four-five days from completely overtaking the EU27 in the number of total fatalities, without even adjusting for the population size:

Of course, the U.S. already has higher death rates than the EU27, once we adjust for population differences.And U.S. cases are roaring ahead. In fact, the U.S. leads the world in new cases additions, having overtaken this week its own abysmal record peak levels:

Daily death counts are not falling in the U.S. on-trend, despite what you hear from people focused solely on week-on-week comparatives:

The above two charts paint a painfully ugly picture for the U.S. pandemic developments:EU27 are relaxing their

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4/7/20: COVID19 Update: World Cases and Deaths

8 days ago

No over-the-peak, yet for world cases:

Deaths are persistently high, and trending up, and are too far lagged to reflect that last 10 days of massive global uplifts in new cases. 7-days average of deaths is at 4,625, which is 0.62 standard deviations higher than the average, and is slightly above the 60-days average of 4,590:

Death rates and new cases stats for select countries:

50 most impacted (by case numbers) countries in alphabetical order:

Meanwhile, 4th of July crowds are everywhere in the US of A, and weekend crowds are also reported – with no masks – across Europe. Stay safe, everyone! Wear masks!

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4/7/20: ifo Institute Eurozone Growth Outlook

8 days ago

Germany’s ifo Institute issued a new growth outlook for Eurozone economy:"Overall, the eurozone economy is likely to see a sharp recession in the first half of 2020. 
"GDP already contracted in Q1 by 3.6%. 
"In Q2, the decline of GDP is forecast to be historic (-12.3%). 
"On the other hand, the recovery is likely to be quick supported by massive stimuli in some eurozone countries with GDP growth reaching +8.3% in Q3 and +2.8% in Q4 2020. 
"Yet, the GDP level at the end of last year will not be reached by the end of this year."

In 1Q 2020:

GDP fell by 3.6%. 
"The greatest negative contribution came from private consumption. 
"… firms hold back their investments due to liquidity issues and uncertainty on future developments. 
"… external demand was weak and caused exports to

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3/7/20: Labor Market COVID19ed

9 days ago

I have been running a regular update on my ‘America’s Scariest Charts’ covering labor markets developments (see most recent one here: https://trueeconomics.blogspot.com/2020/07/2720-americas-scariest-charts-updated.html). These charts rely heavily on two data sets: Non-Farm Payrolls data (monthly frequency), and initial unemployment claims (weekly frequency). I ignored for now two other data series:Average duration of unemployment: this is, of course, rising, but from low levels, as the COVID19 crisis is still relatively young; and
Continued unemployment insurance claims: these data have been also proximate to the initial unemployment claims through the period of February-May.

Now, with two months of some jobs recovery, it is worth looking at (2) above. So here they are: continued

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3/7/20: Services & Composite PMIs Q2 2020: BRIC

9 days ago

Note: charts below are not updated for full 2Q 2020 data on Global Services and Composite PMIs, which are yet to be reported for June and thus cover April-May period only. I will update these later.Starting with Services sector activity:

BRIC Services index fell from a deeply recessionary 44.9 reading for 1Q 2020 to 40.9 in 2Q 2020, signalling accelerated rate of contraction in the sector across the four emerging markets economies. 1Q 2020 is now the second lowest quarter of index performance on the record, with 2Q 2020 coming in as the worst quarter on the record.China was the strongest performer, with 2Q 2020 index at 52.6, four quarters high, and statistically in a relatively robust growth territory. Historically, this reading is consistent with GDP growth of 4-4.5 percent.Russia

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3/7/20: ECB Jumping the Proverbial Shark?

9 days ago

ECB’s money-printing press has been running overtime these weeks. So let’s put the Euro area central banks’ monetary policy shenanigans into perspective, comparing them to the Global Financial Crisis (GFC) related measures, the Euro area sovereign debt crisis and the subsequent painful recovery:

Good thing: ECB has deployed COVID19 response at scale and fast. Bad thing: it is highly uncertain how much growth all of this activism is going to sustain. From 2000 through 1Q 2020, there is zero (statistically) relationship between current GDP growth (nominal) and ECB assets accumulation in the same year and in prior year:

Even ignoring statistical significance, the relationship itself is not positive, especially in the lagged data. In other words, there is absolutely no evidence of

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2/7/20: COVID19 Update: US vs EU27

10 days ago

A quick update of key charts for USA vs EU27 comparatives for COVID19:First up: deaths per 1 million. U.S. continues to tear away from the EU27 already unenviable record:

The basket case of American ‘public health’ system is shining across the board: in numbers roaring above the past records:

And in deaths counts staying well above those in Europe:

At this stage, it is plain evident that the U.S. healthcare system is not fit for purpose.Unless its purpose is to bankrupt those getting ill, in which it excels. U.S. delinquencies on all consumer credit and leases were up in 1Q 2020 some 11.28 percent year-on-year even before COVID19 pandemic hit. As the bills mount, and healthcare bills come poring for the unfortunate households caught up in the pandemic, things are going to get much

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2/7/20: America’s Scariest Charts Updated

10 days ago

Some updates from the US Labour Markets to our America’s Scariest Charts series today.First, headline official Non-Farm Payrolls data for the month of June 2020 is out today. Here is the visual:Total Non-Farm Payrolls dropped during the COVID19 pandemic to the crisis-period low of 130,303,000 in April 2020. This marks a drop of 22,160,000 on pre-crisis high – a decline of 14.53%, the sharpest drop on record for any recession. Since then, the payrolls improved in May and again in June. Payrolls rose 2,699,000 in May and by 4,800,000 in June, prompting the White House (and the army of its trolls) to herald an ‘unprecedented’ ‘tremendous’ recovery. However:Despite these gains, current employment levels remain 14,661,000 below pre-COVID19 highs.  Relative to the pre-COVID19 trend, current

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1/7/20: COVID19 Update: Three Charts on COVID19 Developments in Major Emerging Markets

11 days ago

Via Danske Bank Research, three really neat sets of visualizations for abating COVID19 crisis dynamics in major emerging markets:

Note: the number of tests per capita in Russia is in part explaining the lower death rates from COVID19 there. Russia runs earlier testing and interventions, leading to longer stays in hospitals, higher hospitalization rates with lower ICU use rates, allowing for earlier interventions. However, Russia also produces death statistics for COVID19 that are different in methodology to the EU27 standards. Specifically, Russia claims to carry out more autopsies in cases of all deaths, allowing it to attribute deaths to primary causes, e.g. cardiac failures, that may have COVID19 as underlying trigger.

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1/7/20: Manufacturing PMIs Q2 2020: BRIC

11 days ago

BRIC economies reported their June manufacturing PMIs, so we can update Q2 2020 data. Here is the chart:

Despite improving PMIs in all BRIC economies through June 2020, quarterly readings remains deeply recessionary in all BRICs except for China.Brazil Manufacturing PMI averaged 40.6 in 2Q 2020 down from 1Q reading of 50.6. Brazil Manufacturing sector growth was slowing down from the start of 4Q 2019 and was showing anaemic growth (statistically, zero growth) in 1Q 2020 before COVID19 restrictions kicked in. June 2020 monthly reading rose, however, to 51.6 – signalling pretty robust growth on a monthly basis for the first time since the end of February. Some good news, but not enough to lift 2Q 2020 average above 50.0 mark.
Russia Manufacturing PMI remains below 50.0 in June, as it

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30/6/20: COVID19 Update: Russia

12 days ago

Russia is going to the voting booths and the country is – by a mile – nowhere near being ready to relax COVID19 restrictions. This is risking tragic consequences in the near future.Cases and deaths are still high. For deaths, this holds even if we do not correct for Russian reported death rates, influenced by hell knows what – different methodology (yes), shoddy local reporting (may be), lags in reporting (probably), Kremlin conspiracy (probably not, but who knows) and so on.

Correcting Russian data on reported deaths is hard, primarily (in my opinion, due to different methodologies in reporting – link below). At the upper tail end of the arguments for adjustment

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30/6/20: COVID19 Update: US vs EU27

12 days ago

World counts update for today can be found here: https://trueeconomics.blogspot.com/2020/07/30620-covid19-update-world-cases-and.html.Now, updating charts for the U.S. and the EU27. Note: normalized charts show cases and deaths adjusted for population differences. 7-days lagged data reflects differences between the two data sets in terms of arrival of first deaths.As always, all comments in the charts (click on the chart to enlarge).Total counts unadjusted for population size differences. Key: this shows the U.S. catching up with (larger in population) EU27 in total numbers of deaths, having vastly outstripped the EU27 in the number of cases already:

Adjusting for population differences:

Illustrating the distance between the U.S. and the EU27 in the number of deaths, adjusted for

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30/6/20: COVID19 Impact on SMEs and Employment

12 days ago

Some really good mapping in terms of financial exposures/risk and COVID19 vulnerabilities within the U.S. small and medium enterprises sectors, via McKinsey & Co:

Source: https://www.mckinsey.com/featured-insights/americas/which-small-businesses-are-most-vulnerable-to-covid-19-and-when. Interactive graphs: https://covid-tracker.mckinsey.com/small-business-vulnerability.Additional: vulnerabilities across jobs https://covid-tracker.mckinsey.com/vulnerable-jobs/industry-occupation.

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30/6/20: Long-Term Behavioral Implications of COVID19 Pandemic

12 days ago

My article on the behavioural economics and finance implications of COVID19 pandemic is now available on @TheCurrency website: https://www.thecurrency.news/articles/19675/debt-distress-and-behavioural-finance-the-post-pandemic-world-be-marked-by-deep-and-long-lasting-scars.

Hint: dealing with COVID19 impact will be an uphill battle for many and for the society and economy at large.This is a long read piece, covering general behavioural fallout from the pandemic, and Ireland-specific data.

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29/6/20: The Scale and Distributional Effects of Monetary Activism During Pandemic

13 days ago

A neat summary of global monetary policy supports deployed during the COVID19 pandemic via McKinsey & Co:

In effect, globally, monetary authorities are underwriting government and private corporate debt for larger companies. This, naturally, will lead to reduced investment and competition from smaller firms, including more innovative ones, raising the relative cost of debt to these companies. Both, directly and indirectly, the monetary policies favour equity investment in top-tier, larger companies, effectively increasing not only the cost of debt, but the cost of capital in the medium term for smaller and medium-sized companies.

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29/6/20: Arithmetic and Retail Sales: Ireland’s Case

13 days ago

Monthly v annual, downside v upside… when it comes to rates of change, COVID19 is a good reminder of how hard, intuitively, arithmetic can be…Take Irish retail sales. Gloriously, monthly changes in retail sales are booming, up 29.5% m/m in volume and 28.4% in value. A ‘V-shaped’ thingy. Un-gloriously, year on year the sales are 26.6% in volume and 29.1% in value. But here’s the ugly thingy: suppose a year ago you were retailing 1 unit (in volume or value). Annual rate of change in these was around 2.55% over 2016-2019 for value and 4.4% in volume. Which means you were ‘rationally’ expecting to be selling 1.0255 units in value and 1.044 units in volume around this time 2020. You are selling, instead 0.705 units in value and 0.734 units in volume. You have, prudently, planned your

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29/6/20: Eurocoin Growth Indicator June 2020

13 days ago

Using the latest Eurocoin leading growth indicator for the Euro area, we can position the current COVID19 pandemic-related recession in historical context.Currently, we have two data points to deal with:Q1 2020 GDP change reported by Eurostat (first estimate) came in at -3.6 percent with HICP (12-mo average) declining from 1.2 percent in January-February to 1.1 percent in March.
Q2 2020 Eurocoin has fallen from 0.13 in March 2020 to -0.37 in June 2020 and June reading is worse than -0.32 recorded in May. This suggests continued deterioration in GDP growth conditions, with an estimate of -2.1 percent decline in GDP over 2Q 2020. HICP confirms these: HiCP dropped from 1.1 percent in March 2020 to 0.9 percent in May. 

Here are the charts:

We are far, far away from the

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28/6/20: COVID19 Update: US vs EU27

14 days ago

Updating charts for the pandemic development in the U.S. and the EU. Take your pick…You can see acceleration dynamics in the U.S. cases in the chart above, and in rates below.The U.S. is now a case-study on how not to do public health response. Now, daily cases and deaths:There are some big revisions, especially in death counts, in the data. Both, U.S. and EU27 reporting remains shoddy and lagged. Even 7-day moving average (mid-point of ‘prevalent’ duration of contagious stage for COVID19) is pretty volatile. One additional caveat is that deaths do not fully reflect health impact of COVID19, since those who recover from the disease often suffer catastrophic long-term damage to their lungs.

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28/6/20: COVID19 Update: World Cases and Deaths

14 days ago

Updating data for global COVID19 pandemic

There are no good news.Global case numbers hit an all-time high on June 27th, and run above 180,000 per day in the last three days. 
Global deaths are trending up, rising above 6700 on June 27th – the highest reading since June 17th and 11th highest number on record.

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