06/6/20: COVID19 Update: Global Cases and Deaths

For anyone deluding themselves that the COVID19 pandemic is going away, here are the latest global counts:

There is no amelioration in the rate of new detected infections. In fact, adjusting for volatility in daily figures, short term trend is close to the very recent historical peak.

Improvements in death counts are still persistent:

However, the above improvements have to be considered in lagged relationship to the increasing case counts, and being driven by the following longer term factors:

1. Improved speed of detection of COVID19 in population in advanced economies is resulting in earlier detection and earlier treatment of the disease, driving down deaths; and
2. Migration of the main clusters of growth in COVID19 detection from the advanced economies toward emerging markets results in greater weight in different (compared to the EU and US) methodologies for classifying deaths, which implies higher rates of deaths from other causes, underlying COVID19, and lower rates of deaths from COVID19.

No matter how you spin the data, current relaxation of economic and social restrictions will either have to be slowed down at the stages of opening up to international travel, or will result in higher risk of the second wave of infections.

06/06/20: COVID19 Update: US vs EU27 Comparatives

Things are going swimmingly in the 'best healthcare system in the World', aka the U.S. of A.:

Putting the above figure into different perspective:

And both deaths and news cases recorded are continuing to rise in the U.S. at a faster pace than in the EU27.

6/5/20: 99% of Police Violence Cases Go Unpunished: The Culture of Impunity

For those interested in the current events in the U.S., here is a data-driven background to police violence as a systemic problem: https://mappingpoliceviolence.org/.

Couple of key charts, focusing on systemic and broad reach of the issue:

The chart above appears to be in part impacted by significant outliers. However, I doubt that removing these will generate a strong enough relationship, especially a linear relationship, between the two data sets.

Another interesting feature of the data: "99% of killings by police from 2013-2019 have not resulted in officers being charged with a crime." Which, of course goes to the heart of the policy brutality problem being a systemic one: no one is held accountable. The Buffalo police department case, currently unfolding, is a perfect illustration. Read the details here: https://buffalonews.com/2020/06/05/57-members-of-buffalo-police-riot-response-team-resign/. In the nutshell, police officer gravely and unnecessarily injures an elderly unarmed and non-violent resident. This is done in witness of the entire squad and the media. Live, on camera. The injured person is displaying immediate signs of head trauma, noticed by the police squad. No one provide any help to him. Worse, one person attempting to do so is pushed away by his colleague. In response, and after massive outrage from the public (only after such outrage), the two police officers being directly involved in the alleged case of unwarranted violence, are placed on suspension, pending an investigation. 57 of their colleagues decide to stage a protest. This is a direct signal of not just defiance by the 57 police officers against the norms of any society and procedures of their own department, but a sign of their conviction that they are above any accountability for their actions. Circling back to the 99% reference, if you work in an environment where 99 of 100 cases of the use of deadly force are left un-addressed, you will act like a judge, a jury and an executioner, while expecting the rest of the society to slavishly adhere to your command and control.

There is a daily, and on some days, hourly, stream of news flow showing live abuses of their power by the police forces. The geography of these abuses does not appear to be well-defined by political voting: liberal and conservative-led states, counties and cities are all subject to this problem. Which indicates that the culture of non-accountability in police forces in the U.S. is not driven by politics, or at the very least, not driven by politics alone. If we are to seek remedies to the problem, we need to understand the underlying causes, first. In my opinion, marginal or methodological changes to the police forces operating manuals won't do the job here, because the cause of this problem is, in my opinion, institutional, not supervisory or compliance. There is a need to break the culture of non-accountability by the police, to remove the perception of police as being somehow above the ordinary resident, and to remove the power of police to shield themselves behind the wall of silence. We need robust and frequent prosecution of police officers involved in acts of brutality and ex excessive use of force, and we need to follow these prosecutions with pursuing criminally and administratively those of their colleagues who aid and abet them in these acts by silence, indifference, false 'solidarity' and non-reporting of crimes.

5/6/20: "Incredible" Jobs Report Meets Reality

Some updates on the jobs report this morning for the U.S.

Political reaction:

Reality bites:

New initial unemployment claims last week: 1,603,000. Putting this into perspective:

Which brings latest non-farm payrolls figures back to 1Q 2000 levels:

So, yeah, right, "tremendous" or put differently, we have 20 years worth of jobs destroyed. Non-farm payrolls increase of 2,509,000 is a good thing at the tail end of May, but the average weekly new unemployment claims increases from March 14 through May 30 currently stand at 3,527,650. This means the "tremendous" gains are just 71% of the weekly average losses.

Beware of morons brigades pushing the successories posters.

3/6/20: BRIC Composite PMIs for 2Q 2020

Having covered Manufacturing PMIs for 2Q 2020 for the BRIC economies here: https://trueeconomics.blogspot.com/2020/06/1620-3-months-of-covid19-impact-bric.html and Services PMIs here: https://trueeconomics.blogspot.com/2020/06/3620-bric-services-pmi-may-2020.html, time to update charts for Composite PMIs.

Brazil Composite PMI for 2Q 2020 is currently running at 27.3, the lowest on record, and marking a major decline on 46.9 reading in 1Q 2020. This implies that Brazil economy is currently registering sharply contractionary growth indicators in two consecutive quarters from the start of 2020. 

Russia Composite PMI for 2Q 2020 currently stands at 24.5, also a historical low, marking second consecutive quarter of sub-50 readings. The last time Russian quarterly PMIs were statistically significantly below 50.0 was in 1Q and 2Q 2014. 

India Composite PMI for 2Q 2020 is currently registering the sharpest downturn of all BRIC economies at 11.0, down from strongly expansionary 54.8 in 1Q 2020. This marks the sharpest fall-off on pre-COVID19 reading for any BRIC economy and signals that the Indian economy is effectively stoped functioning.

China is the only BRIC economy so far to show signs of post-pandemic recovery. China 2Q 2020 Composite PMI is currently running at 51.1 which is statistically above 50.0 marker, signalling weak, but positive expansion. Still, 51.1 marks the second slowest growth reading in the Chinese economy since 2Q 2016. 

As the chart above indicates, Brazil, Russia and India all are currently running 2Q 2020 Composite PMIs below the Global Composite PMI (which is at 31.25 as of the end of May), while China Composite PMI is running well-ahead of the Global Composite PMI.

3/6/20: BRIC Services PMI: May 2020

Services PMIs for BRIC economies are out today, so we can updated 2Q figures to include data for May. The latest monthly print imply slight moderation in the economic contraction in Brazil, India and Russia, with return to Services sector growth in China. This marks the first month since end of January with China posting positive growth in Services (reading of PMI above 50).

Brazil Services PMI was statistically unchanged in May at 27.6, compared to April 27.4 reading. Last time the Brazilian Services sectors posted PMI reading consistent with no contraction (at 50.4 - statistically zero growth) was back in February 2020. Current running average PMI for 2Q 2020 is at 27.5, marking the lowest reading on record.

Russia Services PMI was up from an absolutely disastrous 12.2 reading in April to a somewhat less disastrous reading of 35.9 in May. The index has been at at 37.1 in March. 2Q index reading so far is at 24.1, an absolute historical low, marking the second quarter in a row of sub-50 indicator readings, consistent with sharp contraction.

China Services PMI was the only BRIC Services indicator that managed to reach above 50 in May. May index at 55.0 was consistent with a major recovery momentum compared to 44.4 recorded in April. At 49.7, however, the 2Q figure is still outside positive growth territory.

India Services PMI continued to show fundamental weaknesses in the economy. May Services PMI reading of 12.6 was an improvement on April reading of 5.4, but 2Q 2020 reading is currently at 9.0. 1Q 2020 Services activity reading was at 54.1, implying that Indian services activity has literally stopped on the dime in April-May 2020.

Overall, BRIC 2Q 2020 Services PMI is currently at 35.7, down from 1Q 2020 reading of 44.9. 2Q 2020 is currently the lowest quarterly PMI reading for BRIC in history.



I have covered BRIC Manufacturing PMIs for May 2020 here: https://trueeconomics.blogspot.com/2020/06/1620-3-months-of-covid19-impact-bric.html.

2/6/20: COVID19 Update: Russia

Updating charts for COVID19 for Russia:

Noteworthy: Russia cases and death counts are now breaking out of the prior trend, both to the upside.

2/6/20: COVID19 Update: EU27 vs U.S.

Updating my charts comparing EU27 to U.S. experiences in the pandemic:

2/6/20: COVID19 Update: Worldwide Numbers

Updating through June 2, 2020 ECDC data:

Daily counts are accelerating on-trend with no trend inversion and close to historical peaks:

Death counts are lagging daily counts, but persistent decline in counts over the previous weeks has now been arrested:

While advanced economies are seeing sustained improvements in the cases counts and deaths counts reported daily, emerging and developing economies now lead new counts and new deaths growth.

Brazil has now overtaken Russia to take the second place in the world in the number of overall cases detected. The U.S. continues to lead.

1/6/20: COVID19 and European Banking

McKinsey research note on European banks' potential losses due to COVID19 is quite on the money:

With more than 1/3rd of European executives expecting "a muted recovery that would lead to sharp drops in banks’ revenue, a squeeze on their capital, and a hit on return on equity", European banks can expect revenues to drop by 40 percent plus, and ROE drop 11 percentage points in 2021.

And the problems are strategic. COVID19 is actually accelerating changes in customers' demand for services. "McKinsey’s European customer survey shows how customer behavior and needs have changed over the past month: digital engagement levels have climbed up to 20 percent, the use of cash has halved, 30 to 40 percent of customers have expressed a greater need for advice, while 20 to 40 percent want products to help them through the crisis.4 Pension shortfalls are a particular challenge with those close to retirement facing a very immediate problem."

Alas, European banks, especially those operating in the 2008-2014 crises-hit economies, such as Ireland, Italy, Spain and Portugal, are utterly unprepared for these shifting trends. I wrote about these problems in a series of two article for The Currency here: https://www.thecurrency.news/articles/4810/a-catalyst-for-underperformance-how-systemic-risk-and-strategic-failures-are-eroding-the-performance-of-the-irish-banks and https://www.thecurrency.news/articles/3833/culture-wars-and-poor-financial-performance-just-what-is-going-on-within-irelands-beleaguered-banks.

1/6/20: U.S. political culture and mass protests: "Russia-gate" Season X, Episode Z

The U.S. media has been quick in accusing Russia of stirring the current wave of violence that is sweeping across the U.S. cities. As daft as it may sound, Russia has now been effectively elevated to the national cause of every malaise in many major U.S. media outlets. As quipped on Twitter by Seva Gunitsky, politics professor at University of Toronto,

Well, the problem, of course is that the U.S. leads the rest of the advanced economies in domestic political violence in recent years.

The above chart comes from Samuel J. Brannen Christian S. Haig Katherine Schmidt "The Age of Mass Protests: Understanding an Escalating Global Trend", Center for Strategic & International Studies, 2020. Note that Europe in the above includes countries that are outside the EU27, such as Russia and Ukraine. The entire continent of Europe has consistently fewer anti-government protests than North America, which includes Mexico and Canada. North American data here is heavily dominated by the U.S.

And this is not a new phenomena. Police brutality and racism, racially-based violence and violent protests are not new for the U.S., and all of these events predate the existence of Russia as an independent state, as established here: http://peterturchin.com/age-of-discord/united-states-political-violence-database/. The full paper is here: http://peterturchin.com/PDF/Turchin_JPR2012.pdf.

1/6/20: 3 months of COVID19 impact: BRIC Manufacturing PMIs

BRIC Manufacturing PMIs are out for May, showing some marginal improvements in the sector. However, of all four economies, China is the only one that is currently posting activity reading within the statistical range of zero--to-positive growth. Brazil, Russia and India remain deeply underwater.

Please note, these are quarterly PMIs, not monthly, based on GDP-weighted shares of manufacturing sectors and monthly PMI data points.