Wednesday, July 29, 2020

29/07/20: Federal Deficit in COVID19 Era

Roger, we need a new scale for the chart.

Latest data for U.S. Federal deficit through June 2020 is shocking. Here is a visual:

June deficit was a whooping $864.07 billion, the largest on record. This bring Trump 1 term cumulative deficits to a staggering $5.105 trillion, far in excess to $3.52 trillion average Obama term deficit.

Some historical comparatives:

The sheer scale of fiscal spending is frightening! No question, this is an emergency situation, but do observe that since 1980 through today, the U.S. has seen not a single decade of balanced fiscal policies. And within the next two months, the U.S. Federal deficit for 2020 alone will be in excess of the combined deficits accumulated in two decades between 1980 and 1999. 

29/7/20: COVID19 Update: Russia and BRIICS

An infrequent update on Russia COVID19 stats:

Daily Cases and Deaths:

Russia is failing to arrest the new cases curve and the deaths curve, with both series running at elevated levels through July. Thee decline in new cases around the end of June was also associated with a drop in daily deaths. Since the opening up of the restrictions in advance of the July referendum vote, Russian COVID19 cases and deaths have shown disruption in the prior positive trends. Last 7-days average new cases are running at 5,741, which is statistically indistinguishable from the prior 7-days average of 6,197. Similarly, current 7-days average of 132 is materially indistinguishable from the prior 7-days average of 138.

I noted in late June that Russia is rushing into relaxation of restrictions and this is a mis-guided policy decision that seem to have nothing to do with the pandemic dynamics. It appears that my analysis was correct.

Mortality Rates: 

Russian mortality rates are rising, and are now firmly close to the average of the BRIICS economies:

Amongst all countries with more than 25,000 cases (58 countries & EU27), currently, Russia ranks

  • 22nd highest by the number of COVID19 cases per capita
  • 32nd highest by the number of deaths per capita of population
  • 44th highest by the mortality rate (deaths per 1,000 COVID19 cases)
  • Cumulatively, across all three categories of metrics, Russia scores within the 95% confidence interval for the mean score for the group of 58 countries and the EU27.

29/7/20: COVID19 Update: US vs EU27

Updating my charts for COVID19 cases and deaths for the U.S. and EU27:

New Cases:

U.S. continues to show the way on how NOT to do pandemic response. However, in recent days, there has been a re-acceleration in the new cases arrivals in the EU27 - a trailing outrun of the fairly aggressive restrictions relaxation measures across Europe, and re-opening of some holidays travel. This is something to watch in weeks to come.

Daily Deaths:

No resurgence in new deaths in the EU27 so far, but this is consistent with the lags to new cases and to be expected, given some uplift in new cases arrivals.

The U.S. is clearly experiencing resurgence in deaths, as expected, with significantly longer lags between new cases and deaths than in the earlier phase of the pandemic.

Comparatives between the EU27 and the U.S.

Total deaths in the U.S. continue to pull away from the total number of deaths in the EU27 with the current gap at over 14,000.

The gap in total number of deaths and in deaths per capita of population between the U.S. and the EU27 continues to grow.

While the pandemic continues to accelerate in the U.S., it is the slight uptick in the EU27 new cases that is more concerning, given our general fatigue with pointing out the extent of the public health disaster that the U.S. represents.

But for those inclined to watch the complete meltdown of the American public health system (and the ethical monstrosity of the U.S. public indifference to the risks faced by the others), here is a summary table for the largest advanced economies (Ireland is included for different comparatives) COVID19 stats to-date:

29/7/20: COVID19 Update: Worldwide Cases and Deaths

Updating main charts for global COVID19 cases and deaths through today's data:

Global New Cases:

We are continuing to hit all-time highs in new cases globally as the pandemic shows no signs of moderation.

  • Week-to-date, daily case numbers ranked within top 10 in six days, including four all-time highs in the last 7 days. 
  • Historical mean of daily new cases is currently at 82,601. Last seven days average daily new cases count is 255,262. This is more than 2.2 standard deviations higher than the historical average. 30-days running average is 217,092 which is more than 0.5 standard deviations below the 7-days average.
  • Last local max was observed in early April 2020. Since then, the pandemic trend has been persistently upward.
Global Daily Deaths:

The trend in daily deaths counts is re-accelerating and starting to approach past peak:
  • In the last 10 days, deaths increased 14.1% over the previous 10 days period, reversing the negative rates of growth between June 26 and July 9.
  • Historical mean is 3,269 deaths per day, with the last 30-days average at 5,214 and the last 7 days average at 6,258. Current 7-days average is 0.75 standard deviations higher than the historical average.
  • The rate of new deaths arrivals has been slower than the rate of growth in new cases until 20/07/2020. Since then, the rate of new deaths growth is exceeding the rate of new cases arrivals. Both are positive (chart next):

As noted consistently in my posts, deaths are lagged to cases, but in addition, changes in geography of new cases (with an added change in methodology for attributing deaths in a range of developing countries, compared to the EU methodology) drive lower death counts in recent months. In addition, lags between new cases are being extended, while deaths and death rates per confirmed case are also being held lower by younger demographics of new cases in the U.S. and around the world.

All of this contributed to the growing sense of complacency amongst global policy leaders during the recent period of moderate deaths arrivals - from the late April through mid-July. It now appears that such complacency was premature, as death rates are now rising once again.

Summary tables of the largest pandemic cases by country (countries with > 25,000 cases):

Saturday, July 25, 2020

25/720: Updated: America's Scariest Charts: Unemployment Claims

Updating my Scariest Charts for the latest data, through thee week of July 18, 2020:

First, a summary table and chart for changes in the Initial Unemployment Claims:

Next: Continued Unemployment Claims through the week of July 11, 2020:

Key takeaways this week:

Continued unemployment claims changes:

  • Latest count at 16,197,000, down from 17,304,000 a week ago - a decline driven by both, re-gained jobs and exits from unemployment benefits;
  • Latest week w/w decline is faster than in any of the prior weeks of the current recession;
  • Latest counts are 14,495,000 above the levels recorded in the first week of the current recession and are 14,548,000 above pre-recession trough;
  • At last week's rate of decline, we have 13 weeks of unemployment claims to work through before recovering to pre-recession levels; based on the last 4 weeks average - 19 weeks.
New unemployment claims changes:
  • Latest new unemployment claims filed figures are the lowest in the current recession cycle, but materially close to those recorded in the week of July 4, 2020;
  • Nonetheless, we are now in 18 weeks of continued new unemployment claims filings in excess of 1 million per week.
Longer term view:
  • Discontinuation of emergency $600/week unemployment support payment or curtailing of the benefit is likely to push both of the above series down in the short run in mid- to late-August, with a knock-on longer term effect of increasing longer term unemployment claims in September and onward. 

25/7/20: Markets and COVID19: Unwinding Restrictions

My column for Manning Financial on the direction of the markets in the period of COVID19 restrictions unwinding:

Friday, July 24, 2020

24/7/20: Bonds v Stocks: Of Yields, Investors and Large Predators

Corporates are reeling from the COVID19 pandemic impacts, yet stocks are severely overpriced by all possible corporate finance metrics. Until, that is, one looks at bonds.

Over the 3 months through June 2020, average 10 year U.S. Treasury yield has been 0.69 percent. Over the same period, average S&P500 dividend yield was 2.02 percent. The gap between the two is 1.33 percentage points, which (with exception of March-May average gap of 1.42 points) is the highest in history of the series (from 1962 on).

Given that today's Treasuries are carrying higher liquidity risk (declining demand outside the official / Fed demand channel) and higher roll-over risks (opportunity cost of buying Ts today compared to the future), the real (relative) bubble in financial markets todays is in fixed income. Of course, in absolute returns terms, long-term investment in either bonds or equities today is equivalent to a choice of being maimed by a T-Rex or being mangled by a grizzly. Take your pick.

23/7/20: Globalization and Populism: A Recent Study

I recently came across a fascinating paper by Dani Rodrik, an economist always worth reading. The paper, titled "Why Does Globalization Fuel Populism? Economics, Culture, and the Rise of Right-wing Populism" (NBER Working Paper No. 27526, July 2020) argues that "there is compelling evidence that globalization shocks, often working through culture and identity, have played an important role in driving up support for populist movements, particularly of the right-wing kind."

Rodrik carries out "an empirical analysis of the 2016 presidential election in the U.S. to show globalization-related attitudinal variables were important correlates of the switch to Trump."

  • "Trump voters were more likely to be white, older, and college-educated. 
  • "...they were significantly more hostile to racial equality and perceived themselves to be of higher social class. 
  • "The estimated coefficient on racial attitudes is particularly large: a one-point increase in the index of racial hostility – which theoretically ranges from 1 to 5 – is associated with a 0.28 percentage point increase in the probability of voting for Trump (Table below, column 1). 
  • "By contrast, economic insecurity does not seem to be associated with a propensity to vote for Trump.

"The finding that Trump voters thought of themselves as belonging to upper social classes ... largely reflects the role played by party identification in shaping voting preferences. When we control for Republican party identification (cols. 2 and 6), the estimated coefficient for social class drops sharply and ceases to be statistically significant."

"Note, however, that racial hostility remains significant, although its estimated coefficient becomes smaller (cols. 2 and 6)."

The other columns in the table above examine attitudes towards globalization (columns 2-5).

  • "All three of our measures enter statistically significantly: 
  • "Trump voters disliked trade agreements and immigration; 
  • "They were also against bank regulation (presumably in line with the general anti-regulation views of (cols. 2-5) the Republican party). 
  • "These indictors remain significant in the kitchen-sink version where they are all entered together (col. 6)."

"In none of these regressions does economic insecurity (financial worries) enter significantly. This
changes when we move from Trump voters in general to switchers from Obama to Trump (cols. 7-12). ... financial worries now becomes statistically significant, and switchers do not identify with the upper social classes. "

"Switchers are similar to Trump voters insofar as they too dislike trade agreements and immigration
(cols. 9-11). But they are dissimilar in that they view regulation of banks favorably. Hence switchers
appear to be against all aspects of globalization – trade, immigration, finance. the regression."

Rodrik postulates "a conceptual framework to clarify the various channels through which globalization can stimulate populism" on both "the demand and supply sides of politics". He also lists "the different causal pathways that link globalization shocks to political outcomes". 

Rodrik identifies "four mechanisms in particular, two each on the demand and supply sides:

  • (a) a direct effect from economic dislocation to demands for anti-elite, redistributive policies; 
  • (b) an indirect demand-side effect, through the amplification of cultural and identity divisions; 
  • (c) a supply-side effect through political candidates adopting more populist platforms in response to economic shocks; and 
  • (d) another supply-side effect through political candidates adopting platforms that deliberately inflame cultural and identity tensions in order to shift voters’ attention away from economic issues."

The full paper, accessible at is choke full of other insights and is absolutely worth reading.

Thursday, July 23, 2020

23/7/20: Irish property and COVID19

My column for The Currency is covering prospects for Irish property markets:

22/7/20: COVID19 Update: USA vs EU27

U.S. continues to race ahead of the EU27 in the total counts of COVID19 cases and deaths:

U.S. is now significantly divergent to the EU27 in death rates per capita, both in terms of the actual rates and the rates of growth:

Notably, the EU appears to have virtually arrested the growth rate in deaths per capita, while the U.S. is experiencing relatively persistent growth in the deaths per capita. However, perhaps the most damning evidence of the systemic U.S. failure to deal with the pandemic is the simple fact that the U.S. excess total deaths (even without adjusting for timing lags and population size differences) continue to race ahead of the EU27.

Daily new cases and daily deaths counts confirm the above conclusions:

Meanwhile, some recent COVID19 newsflow:

Wednesday, July 22, 2020

21/7/20: Stonks and Stinks: S&P500 Net Profit Margins

Stonks reporting season is rolling on. And so far, things are predictably gloomy:

Yeeks! But wait, by sector:

  • Seven out of eight sectors are reporting lower net profit margins than 5 year average, with Utilities being the only sector reporting above average margins;
  • Nine out of nine sectors reported so far have lower net profit margins than in 2Q 2019.
Per Factset: "For the second quarter, the S&P 500 is reporting a year-over-year decline in earnings of -44.0% and a year-over-year decline in revenues of -10.5%."

Double yeeeks!

Meanwhile, what's S&P and stonks are doing? 1 month chart:

and 3 months

Because happiness is just around the corner for all.

Sunday, July 19, 2020

19/7/20: American Exceptionalism on Kool-Aid

American exceptionalism literally transcends education bounds. Here's one instalment: - a well-meaning one.

In attempting to allocate fault for the disaster of the U.S. public policy response to COVID19 pandemic (see latest on that here:, we are now desperately ignoring the fact that not only the White House Administration of today is unfit for purpose, but the U.S. public health and education systems are also far from being exemplary.

So here is a summary of thee health outcomes for the U.S. of A. compared to other advanced (and some middle-income) economies, with an added reference to education quality metrics:

No, no 'Hell, yeah!' America. So back to Kool-aid.

19/7/20: COVID19 Update: USA vs EU27

Updating charts for the U.S. vs EU27 comparatives for COVID19 pandemic:

U.S. vs EU27 in absolute number of cases and deaths:

Key takeaway from the above chart: on 12/07/2020 the U.S. has surpassed the EU27 in the absolute number of deaths related to COVID19. The U.S. now continues to pull away from EU27 in absolute number of deaths attributed to COVID19.

EU27 vs U.S. in per capita deaths:

Key takeaways from the above chart:
  • Death rates per capita: the U.S. has overtaken the EU27 since May 18, 2020, and the trend for the U.S. continues to be worse than that for the EU27.
  • Overall counts of deaths in the U.S. are now above the EU27, since July 12, with current excess gap at +5,817 up from -2,867 two weeks ago. This is a swing of 8,684 excess deaths in the U.S. compared to the EU27 within a span of 14 days.
Distance between EU27 and the U.S. in deaths per capita:

Key takeaways from the above chart:

  • Current U.S. death rate per capita is 42 percent above that for the EU27. Two week ago, this gap was 33 percent.
  • Without timing adjustment, current death rate per 1 million of population in the U.S. is 428. This compares to a much lower rate of deaths per capita in the EU27 at 302.2.

Daily New Cases and Deaths:

Key takeaways from the above charts:

  • Since the start of July, U.S. averages 58,995 new cases per day and 736 deaths per day. Over the same time, EU27 averaged 4,263 new cases per day and 106 deaths per day.

Main takeaways from all charts:

  • U.S. new cases are now going parabolic (charts 1 and chart 4 above). 
  • This is not a 'new wave', but the disastrous trailing of the original pandemic. 
  • Deaths are lagging this development, for a number of reasons, covered in the last chart above, but these lags are showing signs of exhaustion. If this exhaustion is confirmed, deaths counts in the U.S. will accelerate beyond prior peak of 3,300 daily (using 14 days average).
  • As new cases continue to pile up and lags in hospitalizations are exhausted, we will see a run on the U.S.hospitals capacity. This can further accelerate deaths counts.
  • While only the future can tell, the above dynamics suggests that we are nearing an end game for the U.S. fight against COVID19, the one that is increasingly likely to end in the surrender of the U.S. health system to the pandemic, rather than the other way around. 
  • A Malthusian Hellhole is beckoning the U.S. of A.

Newsflow of MAGA:

19/7/20: COVID19 Update: Worldwide Cases and Deaths

News flow from the Land of the Dumb and Dumber:

Global charts:


Week-to-date, new daily case numbers have ranked within top 10 in history of the series in five days, including three all-time highs set within the last five days. The trend is still to the upside despite usual under-reporting of new cases associated with weekend data.


COVIDIOTS special alert: deaths numbers are not falling. Since the start of July, earlier shallow contraction in daily new deaths counts has been reversed to a 3-5% increase. In the last 10 days, deaths increased on average at 5.93% daily, reversing the negative rates of growth between June 26 and July 7. The rate of increase in daily deaths counts is trending up.

Trends in growth rates:

Another COVIDIOTS special alert: New daily cases growth rates and new daily deaths growth rates are now positive. New deaths counts growth rates have been trending, with some volatility, around 3% average since the end of May 2020. In the last 10 days, deaths increased on average at 5.93% daily, reversing the negative rates of growth between June 26 and July 7.

Both sets of data now indicate risk of a re-acceleration of the pandemic since the end of April troughs.

Summary tables of largest cases, countries with > 25,000 cases (note Japan & Kyrgyzstan are close to 25,000 to breach the bound within 1-2 days):