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23/6/21: Covid19 Deaths and Income Inequality

June 23, 2021

An interesting, although intuitively straight forward note on the determinants of Covid19 deaths: https://twitter.com/youyanggu/status/1407418434955005955. As Youyang Gu @youyanggu states, "I believe income inequality is the single best predictor of total Covid deaths in the US. Not income, but income *inequality*. The R^2 is surprisingly high: 0.35."There are some potentially important issues with this analysis (some are explored here: https://github.com/jsill/usstatecovidanalysis/blob/main/usStateCovidAnalysis.pdf), but the conclusion seems to be qualitatively robust.

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20/6/21: COVID19: Europe and EU27

June 20, 2021

Updating pandemic numbers for the past week for EU27 and Europe:As the charts clearly show, Europe experienced significant declines in new cases and deaths in recent weeks, in part due to improved rates of vaccinations.The third wave is now clearly behind us in both the EU27 and Europe, although European cases are remaining at much higher levels than those in the EU27. A similar pattern is evident in deaths.In terms of Covid19 mortality (deaths per 1,000 cases) the rate of mortality has been effectively flat since week 45 of 2020 and is currently running at around 22 deaths per 1,000 cases in the EU27 and Europe.While these figures show the effectiveness of vaccinations and past lockdown measures, they also present evidence for the need of more robust international efforts in sharing

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19/6/21: COVID19: Worldwide Data

June 19, 2021

With some time passing since my last update, and the rates of vaccinations ramping up globally, it is easy to forget the simple, but devastating fact: we are still in a global pandemic. Here are the latest weekly totals for new cases and new deaths, worldwide:Just as the charts show,New cases have fallen significantly from the pandemic peak (Wave 4), but remain above the prior trough between Waves 3 and 4. New deaths recorded are still at extremely high levels, and showing an uptick week-on-week in the latest data.Meanwhile, mortality of new Covid19 cases is stubbornly at the levels observed over the last two waves of the pandemic:Put differently, the ‘rich’ world is getting vaccinated (albeit with some variation in the rates), while the emerging markets and middle-income economies remain

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8/6/21: U.S. Investor Confidence under Biden

June 8, 2021

My recent comment on the Biden Administration early successes for the Euromoney: https://www.euromoneycountryrisk.com/article/b1rqlvl15wr2mw/special-country-risk-survey-us-investor-confidence-is-returning-under-biden?LS=Adestra2055255%E2%80%A6

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8/6/21: World is more VUCA. Less Risk.

June 8, 2021

For those who have been my students in recent years none of this will come as a surprise: the world around us is becoming less ‘risk-driven’ and more ‘VUCA-prone’. By VUCA, of course, we mean volatile, uncertain, complex and ambiguous. Here is a neat summary via McKinsey:None of the above data sets are ‘risk’ in any structured or definitional sense of that terms. None carry known, easy-to-define probability distributions, none have strictly identifiable impact distributions and none adhere to the normal laws of large numbers. These are uncertain events that are also inter-related through complex contagion pathways. Good luck fitting actuarial tables to them…

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8/6/21: This Recession Is Different: Corporate Profits Boom

June 8, 2021

Corporate profits guidance is booming. Which, one might think, is a good signal of recovery. But the recession that passed (or still passing, officially) has been abnormal by historical standards, shifting expectations for the recovery to a different level of ‘bizarre’.Consider non-financial corporate profits through prior cycles: Chart 1 above shows non-financial corporate profits per 1 USD of official gross value added in the economy. In all past recessions, save for three, going into recession, corporate profit margins fell below pre-recession average. Three exceptions to the rule are: 1949 recession, 1981 recession and, you guessed it, the Covid19 recession. In other words, all three abnormal recessions were associated with significant rises in market power of producers over

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6/6/21: BRIC PMIs for May: Volatile Growth and Surging Inflationary Pressures

June 6, 2021

BRIC PMIs for May 2021 show uneven pace of recovery within the group of the largest Merging and Middle Income economies and a uniform evidence of pressure on inflation side.Brazil: Manufacturing PMI is currently running at 53.0 for 2Q 2021 for two months into the quarter, down from 1Q 2021 reading of 55.9. This marks second consecutive quarter of decreases in Manufacturing sector activity in Brazil. Brazil Services PMI is currently running at a deeper recessionary reading of 45.6, compared to 1Q 2021 at 46.1. As the result, Brazil’s Composite PMI fell from the already recessionary reading of 47.9 in 1Q 2021 to 46.9 in 2Q 2021 to-date. Prices, meanwhile continued to show severe inflation pressures. Per Markit: "The rate of input cost inflation across the private sector softened further

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5/6/21: Ireland PMIs for May: Booming Growth and Inflation Signals

June 6, 2021

Both inflationary pressures and economic activity indicators are going through the roof in May, signaling a roaring run for 2Q 2021 growth. Manufacturing PMI for Ireland is up at 64.1 in May, compared to 60.8 in April. This is a historical high for the series, for the second month in a row.Services PMI for Ireland moved up from April’s 57.7 to May reading of 62.1. This marks third consecutive month of above 50 readings, with all of these being statistically above 50.0 line. Construction Sector PMI (data through mid-May) improved, but remains (at 49.3) still in the contracting activity territory. Markit’s Composite PMI, based on Manufacturing and Services sectors activity indices, rose from 58.1 in April 2021 to 63.5 in May, setting a new all time high. Again, this is the third

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27/521: Euromoney on China’s Belt-and-Road Initiative

May 27, 2021

Euromoney recently covered update of risk analysis involving development of China-led Belt and Road initiative: https://www.euromoneycountryrisk.com/article/b1rs0cw1v2yv4d/ebri-q1-2021-results-chinas-belt-and-road-potential-outweighs-challenges. Includes my POV.

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13/5/21: BRIC Composite PMIs April 2021: Recovery Fragile, Inflation Heating Up

May 13, 2021

April PMIs for BRIC economies show continued strengthening in the recovery in China and Russia, moderation in the recovery momentum in India and deepening collapse in the recovery in Brazil.Since we are into the first month of the new quarter, there is not enough data to go about to meaningfully analyze quarterly dynamics. Hence, I am only looking at Composite PMIs:PMIs in April run stronger, compared to 1Q 2021 averages for Russia (Services only), and China (Services and Manufacturing), while Brazil and India recorded deteriorating PMIs in both Manufacturing and Services, and Russia posted weaker Manufacturing PMI.BRIC as a group underperformed Global PMIs in April in both Services and Manufacturing, although BRIC Services PMI in April was running ahead of Services PMI for 1Q 2021, and

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10/5/21: Ireland PMIs for April: Rapid Growth and Inflation Signals

May 10, 2021

Ireland’s PMIs have accelerated across all two key sectors of Services and Manufacturing in April, while Construction Sector continued to post declining activity (through mid-April).Irish Manufacturing PMI rose from 57.1 in March to 60.8 in April as larger multinationals boosted their activities and increased pass-through for inflation. This marks third consecutive month of increasing PMIs for the sector. Meanwhile, Irish Services PMI rose from 54.6 in March to 57.7 in April, marking second consecutive month of above 50 PMIs readings. In line with the above developments, official Composite PMI rose from 54.5 in March to 58.1 in April. Irish Construction Sector PMI, reported mid-month, was at 30.9 (significantly below 50.0, signaling strong rate of contraction in activity) in mid-April, a

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10/5/21: COVID19: Nordics v Sweden

May 10, 2021

Updating data on comparatives between Sweden (the ‘natural experiment’ for ‘Covid19 is just a flu’ crowd, albeit the pandemic was not treated as such in the country itself) and the Nordics.Note: I define three groups of ‘Nordics’ by composition.First, for completeness: case counts:The above is self-explanatory, but open to arguments concerning diagnostics and tests accuracy. Hence, let’s take a look at deaths counts, which are much harder to ‘fudge’ for the ‘Covid19 is a flu’ crowd:In simple terms, Sweden’s policy approach to the pandemic, as contrasted by other Nordics, has resulted in 6,137 deaths in excess of Nordics 3 group (Finland, Norway, Estonia, Iceland, the Netherlands and Denmark)11,219 more deaths than (population-comparable) Nordics 2 group (Finland, Norway, Estonia,

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9/5/21: COVID19: U.S. vs EU27 comparatives

May 10, 2021

Updating data for the U.S. – EU27 comparatives for the pandemic through this week (week 17):Table above reflects several major features of the recent data evolution for the Covid19 pandemic in the U.S. and the EU27, also highlighted in the charts below:Firstly, total number of new cases has diverged in recent weeks. Starting with week 7 of 2021, the U.S. cases continued to fall, while the EU27 cases entered a new upward trend. The new wave – Wave 3 – formed in Europe, whilst the U.S. managed to escape development of Wave 4.For eleven of the last consecutive weeks, the EU27 cases significantly exceeded those in the U.S.As of Week 12, 2021: EU27’s Wave 3 has peaked and we have now witnessed five continuous weeks of declines from the peak, although the EU27 case numbers still substantially

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9/5/21: COVID19: BRIICS

May 9, 2021

Updating data for BRIICS for Covid19 pandemic through Week 17 of 2021 (current week):Almost half of all cumulated cases within the BRIICS (Brazil, Russia, India, Indonesia, China and South Africa) group are now in India (above) and almost half of all deaths are in Brazil (below).The pandemic dynamics have turned decisively in recent weeks: in terms of new cases, India dominates the trend up, with all other BRIICS showing amelioration in the pandemic:Similarly, for we weekly death counts:China data remains utterly unbelievable and hard to trust.Summary table of recent developments:India’s pandemic dynamics are shocking, horrific and show no signs of abating. This is a humanitarian disaster that requires help from the rest of the world – help that has been coming in too-little and

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9/5/21: COVID19: Europe and EU27

May 9, 2021

Updating graphs for Europe and EU27 pandemic data through week 17 of 2021:Some good news with a shade of a reality check:New cases are off their Wave 3 highs, solidly soCurrent case counts are still above Wave 2 trough and well ahead of where they were at the end of Summer 2020.Similar, but a bit more benign trend in weekly death counts:Good news ‘part 3’: mortality rates are declining, again:While the progress on vaccinations across Europe has been less impressive than desired, it now appears that two factors are driving the end of the Wave 3 of this pandemic:Vaccinations roll-outs, andCumulated effects of recent (and in some countries still ongoing) restrictions.Let’s hope these trends remain persistent in weeks ahead and the new variants do not show up with resistance to

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8/5/21: COVID19: Most impacted countries

May 8, 2021

Covering data through this week (week 17) of 2021 for world’s most impacted countries.First: most impacted countries by the rate of infections and by mortality:There is only one large country (population > 100 million) that is listed in both tables: the U.S. Now, a table of countries with more than 1 million cases:The U.S. ranks 8th worst performer in the group of 28 countries with more than 1 million cases, when measured across all three metrics: infections per 1 million of population, deaths per 1 million of population and deaths per 1,000 of diagnosed cases. Looking at major countries groups in the context of the above table:Finally, looking at the most impacted countries from the point of their relative contributions to global totals for cases and deaths:

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8/5/21: COVID19: Worldwide Data

May 8, 2021

Updating worldwide data for the Covid19 pandemic through week 17 of 2021 (current week):We exited Wave 3 that started Week 34, 2020, peaked in Week 1, 2021, and bottomed out in Week 7 of 2021.Since Week 8 of 2021, we are seeing growth of a new wave, Wave 4The latest levels of new infections are now the highest in the history of the pandemic and in the last two weeks of the data, world case counts are in excess of the Wave 3 peak levels.Starting with Week 8 of 2021 we are witnessing a new, Wave 4, of the pandemic emerging. The latest weekly death counts as of Weeks 14, 16 and 17, 2021, rank as 7th, 6th and 5th highest in the history of the pandemic.Good news: Recent decreases in mortality rate are most likely attributable to three key drivers: (1) earlier detection of cases due to

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6/5/21: 75 Top Economics Influencers to Follow 2020-2021

May 6, 2021

With some delay of a few months (tells you the range of my attention span, right?) – delighted to spot this list of 75 Top Economics Influencers to Follow via Focus Economics: https://www.focus-economics.com/blog/top-economics-influencers-to-follow for 2020-2021. Thanks, Focus Economics team!

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3/5/21: Margin Debt: Things are FOMOing up…

May 3, 2021

Debt, debt and more FOMO…Source: topdowncharts.com and my annotationsRatio of leveraged longs to shorts is at around 3.5, which is 2014-2019 average of around 2.2. Bad news (common signal of upcoming correction or sell-off). Basically, we are witnessing a FOMO-fueled chase of every-rising hype and risk appetite. Meanwhile, margin debt is up 70% y/y in March 2021, although from low base back in March 2020, now back to levels of growth comparable only to pre-dot.com crash in 1999-2000. Adjusting for market cap – some say this is advisable, though I can’t see why moderating one boom-craze indicator with another boom-craze indicator is any better – things are more moderate. My read-out: we are seeing margin debt acceleration that is now outpacing the S&P500 acceleration, even with all the

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26/4/21: What Low Corporate Insolvencies Figures Aren’t Telling Us

April 27, 2021

One of the key features of the Covid19 pandemic to-date has been a relatively low level of corporate insolvencies. In fact, if anything, we are witnessing virtually dissipation of the insolvencies proceedings in the advanced economies, and a simultaneous investment boom in the IPOs markets. The problem, of course, is that official statistics – in this case – lie. And they lie to the tune of at least 50 percent. Consider two charts:AndThe chart from the IMF is pretty scary. 18 percent of companies are expected to experience liquidity-related financial distress and 16 percent are expected to experience insolvency risk. The data covers Europe and Asia-Pacific. Which omits a wide range of economies, including those with more heavily leveraged corporate sectors, and cheaper insolvency

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25/4/21: Impact of foreign shareholders on the performance of the Chinese banks

April 26, 2021

A new paper (pre-print version): Gurdgiev, Constantin, and Jiagi, Li, The Journey of a thousand miles: a decade of impact of foreign shareholders on the performance of the Chinese commercial banks (April 25, 2021). Handbook of Banking and Finance in Emerging Markets, eds. D. K. Nguyen, Edward Elgar Publishing, August 2021, forthcoming., Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3834020. Abstract: We analyze the impact of foreign shareholdings on the performance of 28 Chinese commercial banks over a period of 2010-2019, capturing the period prior to and following the reforms of 2014. Using panel data GMM with instrumental variables, we consider bank performance from three perspectives: profitability, quality of assets and liquidity. The individual performance

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25/4/21: Impact Finance perspective of the systemic threats to blockchain applications

April 26, 2021

New paper (pre-print version): Gurdgiev, Constantin and Fleming, Adam, Informational efficiency and cybersecurity threats: A Social Impact Finance perspective of the systemic threats to blockchain applications (April 25, 2021). Forthcoming, Chapter 12 in Innovations in Social Finance: Transitioning Beyond Economic Value, eds. Thomas Walker, Jane McGaughey, Sherif Goubran, and Nadra Wagdy, Palgrave Macmillan, 2021, Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3834032. Abstract: Crypto-assets and blockchain technologies hold the promise of providing more secure systems for managing public and private data, enhancing public trust in data collection, and increasing the efficiency of social impact finance transactions. However, to-date, blockchain technologies have

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23/4/21: There are no ‘social’ winners amidst this pandemic

April 23, 2021

No one is left unscarred by the #covid19 pandemic when it comes to public approval trends for the major social stakeholders in Ireland: Source: Core Research. Broadly-speaking, the above is expected, although Core Research report contains one glaring omission: it does not survey public attitudes to media/press. Worse, the three improving stakeholder groups are also the three least impacted: own employer, citizens and large companies. Meanwhile, approval of the government is still nosediving. Covid pandemic is certainly testing Irish (and other countries’) key institutional frameworks. The fallout from these tests is going to be long-lasting and deep. We went into the pandemic with huge deficits of trust in key institutions of our societies. And we are becoming more polarized and less

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22/4/21: Pew Research on Public Support for Economic Reforms in the US, UK, France and Germany

April 22, 2021

Here’s an interesting insight from Pew Research surveys:Set aside France results. Look at the U.S. and UK: 50-51 percent of the countries’ population feel the existent economic system needs major changes or "complete" reform. While U.S. Right stands out as the least supportive of economic reforms across the Right spectrum voters in all four countries, U.S. Left shares the highest propensity for reforms with the French Left. This, of course, does not mean that what the U.S. Left sees as necessary reforms is aligned with what the French Left sees, but in terms of propensity to support reforms, the U.S. Left is closer to the more ‘radical’ French Left than to the more ‘conservative’ German Left.There are other insights from the data accessible

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19/4/21: COVID19: BRIICS

April 19, 2021

BRIICS are now in a fully-developed Wave 4 of the pandemic, like much of the rest of the world. This is confirmed across both new case numbers and weekly deaths counts:I highlighted in the table below two BRIICS countries with seriously questionable data quality: China and India. China has been routinely reporting numbers that simply are out of line with anything reported by other countries around the world. India’s death statistics appear to be similarly out line with experience in most countries. In the past, Russia received a lot of criticism for its reporting of Covid19 deaths, but their numbers do not appear to be out of line with other countries reported statistics.These are six largest emerging and middle income economies in the world, and their pandemic dynamics, in the end, hold

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19/4/21: COVID19: Most impacted countries

April 19, 2021

Updated tables for world’s most impacted countries and regions below. Starting with the countries with the highest recognized levels of infections:Followed by the countries with the highest rates of mortality:Andorra, Montenegro and Czechia are top three countries in the world in terms of infections ratesGibraltar, Czechia and San Marino are top three countries in the world in terms of mortality ratesOf larger countries, with population > 100 million, the U.S. is the only country featured on both lists, while Mexico is on the list of countries with highest mortality.A set of table for countries with more than 250,000 recorded cases:There are 57 countries on the list as of Thursday last week. Across three metrics used (infections rate, deaths per capita and mortality rate per case),

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17/4/21: COVID19: Europe and EU27

April 18, 2021

Looking at Europe and EU27 data for Covid19 pandemic through Week 14 of 2021 (week ending Thursday, April 15):Since Week 7, the EU27 are in Wave 3, although it appears that this wave might have peaked around Week 12. Latest weekly case counts are below week 12 reading and are lowest in three consecutive weeks. Nonetheless, latest weekly counts rank 10th highest in the history of the pandemic.EU27 weekly death counts are currently (week 14, 2021) rank 16th highest in the entire 67 weeks-long history of the pandemic.As summarized in the table below, EU27 new cases are this week down 9% on 4 weeks average, while death counts are up 6%

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17/4/21: COVID19: Worldwide Data

April 18, 2021

Despite the ongoing efforts to accelerate vaccinations, we can now, sadly, confirm that globally, we are in the fourth wave of the pandemic:As reminder,  we exited Wave 3 that started Week 34, 2020, peaked in Week 1, 2021, and bottomed out in Week 7 of 2021. Since Week 8 of 2021, we are seeing growth of a new wave, Wave 4 which has now reaching the peak of Wave 3. The latest level of new infections is now second highest weekly count in the history of the pandemic, at 4,833,991 cases compared to 5,284,581 cases at the peak of Wave 3 in week 1 of 2021.There is a two weeks lag in the dynamics of deaths counts compared to the dynamics of new cases registrations. Nonetheless, we can now confirm Wave 4 development based on weekly deaths as well as on weekly new case counts. The latest weekly

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17/4/21: Collapsing Labor Force Participation: A Secular Trend

April 17, 2021

For those of you following this blog this would be a familiar sight: I have been worrying about the underlying structure of the U.S. labor markets for some time now. The ongoing recovery appears to be relatively robust in terms of headline figures, e.g. GDP growth rates and declining continued unemployment claims. But in reality, it has been nothing but the return to trends that persisted before the pandemic – trends that are extremely worrying.I covered the fact that longer term unemployment has now gone through the roof: https://trueeconomics.blogspot.com/2021/04/14421-share-of-those-in-unemployment-27.html. And beyond this, there is a bigger problem of historically low levels of labor force participation. We are witnessing a massive pull-away within the skills distribution in the U.S.

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