12/6/20: Summary of the Eurosystem Response Measures to COVID19

Great and tight summary of the Eurosystem monetary policies deployed in response to COVID19 pandemic: https://blocnotesdeleco.banque-france.fr/en/blog-entry/monetary-policy-measures-taken-eurosystem-response-covid-19.  Cumulative total through the end of May, EUR 1.27 trillion.

12/6/20: Post-COVID19 and Human Capital

My The Currency article this week is covering the issues of key talent in start ups and early stage enterprises post-COVID19 pandemic: https://www.thecurrency.news/articles/18174/after-a-crisis-history-shows-many-domestic-businesses-will-struggle-to-retain-rock-star-employees.

I cover the summary points of the article here: https://twitter.com/GTCost/status/1270438048950480896?s=20.

12/6/20: Russia COVID19 Update

Updating data for Russia on cases and deaths:

Russian cases trends remain uncomfortably high and showing no indication of a significant moderation. In the last seven days, new case counts cumulatively fell from 70,920 in the period through 05/06/2020 to 61,328 in the period of the seven days through 12/06/2020. Note: I am using ECDC data based on European time of reporting. While notionally, this shows a decline in the number of new cases reported over the seven days period, this decline is not significant enough to herald abatement of the pandemic pressures, nor is it sustained over the longer period of time, yet. 

Omitting the aberrational outlier in the new cases reported on 02/06/2020, current daily new cases counts are very narrowly in line with the daily counts reported starting from May 17, 2020.

In other words, daily cases data does not support a proposition that Russia should be lifting pandemic containment measures at this time.

Death counts are also relatively stable, and once again omitting the reporting outlier on 02/06/2020, Russia's death counts on the daily basis continue to run within the range that has been established since 21/05/2020. 

Here the death rates (adjusted and unadjusted) for per-1,000 cases basis:

Russia continues to report lower per-case death rates than BRIICS peers. In fact, amongst the countries with more than 10,000 cases recorded (50 countries with the highest case numbers), Russia's current death per 1,000 cases rate ranks 44th, with just 6 other countries reporting lower rate. In contrast, Russia ranks 19th highest in the group in the number of cases per 1 million population, and 28th highest in death rate per 1 million population. Interestingly, on the combined ranks measure across three metrics, Russia is statistically 'average' within the group of 50 countries heaviest hit by the pandemic. The same stands for the median (given that data is severely non-Gaussian, we have to consider both, and more). 

12/6/20: U.S. vs EU27 COVID19 Data Update

Updating comparatives between the U.S. and the EU27 in terms of case counts, deaths, and death rates:

The above shows overall data for cases and deaths counts. The U.S. is showing no moderation in trend and new cases and deaths reported, despite the country being hell-bent on exiting COVID19 pandemic restrictions. The data is yet to show any significant impacts of the ongoing social protests and unrest, which are coming down the line.

Next up, comparatives to the EU27:

Adjusting for the differences in the onset of the pandemic, the U.S. has overtaken EU27 in terms of deaths from the pandemic some days ago and it continues to pull away. Even in absolute day-to-day comparatives, the gap in total deaths counts between the EU27 and the U.S. is closing rapidly. This is important, because the U.S. pandemic is crucially of later vintage than that in the EU27, implying that:

• The U.S. should have lower deaths counts and death rates due to improvements in treatment of COVID19, detection of COVID19 cases and earlier interventions enabled by this lag, compared to the EU27;
• The U.S. should have faster rates of detection of COVID19 cases, leading not only to lower mortality, but also to faster exhaustion of the pandemic curve in terms of new daily cases.

None of the above is happening, implying that the pandemic itself and the public health system response to the pandemic in the U.S. is worse than in the EU27.

To see this more clearly, here are the U.S. death rates per 1 million population difference to the EU27:

The above numbers and trends are woeful for the U.S. and clearly signal poor management of the pandemic response in the country.

12/6/20: Global COVID19 Data Update

Globally, the pandemic is not abating, despite the optimistic talk across a range of countries currently relaxing severe restrictions on social distancing and pandemic-abatement measures:

In my opinion, outside Europe, current relaxation of COVID19 restrictions is premature. Global pandemic cannot be contained with international travel is allowed, and majority of the countries in the Northern Hemisphere currently moving to mid-range phases of pandemic containment measures removal are risking renewed waves of pandemic in late Summer.

11/6/20: America's Scariest Charts Updated

The latest data on initial unemployment claims for the week ending June 6, 2020 is out today (release here: https://oui.doleta.gov/press/2020/061120.pdf). Initial unemployment claims are up another 1,537,120 in one week, though the rate of new additions is down slightly on the revised 1,620,010 new claims in the week ending May 30, 2020.

Here is the summary of the claims and jobs losses during the current recession as compared to all previous post-WW2 recessions:

Cumulative estimated jobs losses so far in this recession amount to 21,088,120, though this number is likely to change as we get more updates on actual employment figures. Cumulative number of new unemployment claims filed in this recession stands at 40,358,315. This number includes those who were denied benefits in prior filings, but subsequently re-filed their claims. Nonetheless, the number is an important indicator of just how woefully horrific the COVID19 pandemic has been on U.S. labour force.

Updating data for June for Non-Farm Payrolls, and incorporating official number for May 2020, reported last week:

Estimated payroll numbers are now down to the levels las seen in 3Q 2000, effectively implying that COVID19 has ashed more jobs than were created in almost the entire 21 years of this century.

Here is another way to visualize the above data:

Here is what this week's initial claims print means for the index of jobs market performance during the current recession, compared to the already widely-debunked optimistic jobs report of last week for May:

In effect, this week largely destroyed most of the 2.509 million jobs created myth paraded by President Trump last week. In reality, of course, we know that that jobs creation print was to a large extent the outrun of re-registrations and benefits expirations, plus the figment of the BLS data collection methods. For the best explanation of these factors, read: https://www.thestreet.com/mishtalk/economics/surprise-the-bls-admits-another-phony-jobs-report and my take on this is: https://trueeconomics.blogspot.com/2020/06/5620-incredible-jobs-report-meets.html.

8/6/20: 30 years of Financial Markets Manipulation

Students in my course Applied Investment and Trading in TCD would be familiar with the market impact of the differential bid-ask spreads in intraday trading. For those who might have forgotten, and those who did not take my course, here is the reminder: early in the day (at and around market opening times), spreads are wide and depths of the market are thin (liquidity is low); late in the trading day (closer to market close), spreads are narrow and depths are thick (liquidity is higher). Hence, a trading order placed near market open times tends to have stronger impact by moving the securities prices more; in contrast, an equally-sized order placed near market close will have lower impact.

Now, you will also remember that, in general, investment returns arise from two sources: 

1. Round-trip trading gains that arise from buying a security at P(1) and selling it one period later at P(2), net of costs of buy and sell orders execution; and 
2. Mark-to-market capital gains that arise from changes in the market-quoted price for security between times P(1) and P(2+).

The long-running 'Strategy' used by some institutional investors is, therefore as follows: 

Here is the illustration of the 'Strategy' via Bruce Knuteson paper "Celebrating Three Decades of Worldwide Stock Market Manipulation", available here: https://arxiv.org/pdf/1912.01708.pdf.

• Step 1: Accumulate a large long portfolio of assets;
• Step 2: At the start of the day, buy some more assets dominating your portfolio at P(1) - generating larger impact of your buy orders, even if you are carrying a larger cost adverse to your trade;
• Step 3: At the end of the day, sell at P(2) - generating lower impact from your sell orders, again carrying the cost.

On a daily basis, you generate losses in trading account, as you are paying higher costs of buy and sell orders (due to buy-sell asymmetry and intraday bid-ask spreads differences), but you are also generating positive impact of buy trades, net of sell trades, so you are triggering positive mark-to-market gains on your original portfolio at the start of the day.

Knuteson shows that, over the last 30 years, overnight returns in the markets vastly outstrip intraday returns. 

Per author, "The obvious, mechanical explanation of the highly suspicious return patterns shown in Figures 2 and 3 is someone trading in a way that pushes prices up before or at market open, thus causing the blue curve, and then trading in a way that pushes prices down between market open (not including market open) and market close (including market close), thus causing the green curve. The consistency with which this is done points to the actions of a few quantitative trading firms rather than

the uncoordinated, manual trading of millions of people."

Sounds bad? It is. Again, per Knuteson: "The tens of trillions of dollars your use of the Strategy has created out of thin air have mostly gone to the already-wealthy: 

• Company executives and existing shareholders benefi tting directly from rising stock prices; 
• Owners of private companies and other assets, including real estate, whose values tend to rise and fall with the stock market; and 
• Those in the financial industry and elsewhere with opportunities to privatize the gains and socialize the losses."

These gains to capital over the last three decades have contributed directly and signi ficantly to the current level of wealth inequality in the United States and elsewhere. As a general matter, widespread mispricing leads to misallocation of capital and human effort, and widespread inequality negatively a effects our social structure and the perceived social contract."

8/6/20: EIB Economics Rankings 2020

Nice present to be ranked 39th economist in the world this Monday morning: https://www.ieb.es/de-michael-porter-a-daniel-lacalle-descubre-a-los-100-economistas-mas-influyentes-del-mundo/ via IEB:

Thanks! As silly as such rankings might be... still worth a smile. :)

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.