30/6/20: COVID19 Update: Russia

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 (https://www.themoscowtimes.com/2020/06/10/moscow-sees-58-mortality-spike-in-may-as-russias-low-virus-deaths-questioned-a70532 and https://www.theguardian.com/world/2020/jun/04/st-petersburg-death-tally-casts-doubt-on-russian-coronavirus-figures) we have Moscow and St Petersburg cases in May (peak contagion and deaths growth month in the most severely impacted region in Russia with massive population density). So ca 60% estimate for understatement in Moscow most likely runs at around 45 percent for Russia as a whole. Which would roughly be in line with my model.

Notice, even with adjustment (which yields mortality to-date 44% higher than reported), Russia death rate from COVID19 remains relatively low (see comparatives to BRIICS below).

Key takeaway: Russia is not ready to relax COVID19 restrictions beyond modest local restrictions easing. The country is most certainly not ready for allowing in-person voting.

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

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 population differences and a time lag in the U.S. onset of deaths, relative to the EU27:

Actual cases, daily arrivals:

Actual deaths, daily additions:

The U.S. cases dynamics behave distinctly from every other advanced economy, and not in a good way. U.S. death counts also significantly exceed those in the EU27, as well as every other large advanced economy. Again, not in a good way.

30/6/20: COVID19 Update: World Cases and Deaths

New cases and deaths updated. All commentary in the charts (click to enlarge).

Adding a new graph to collection: this looks at smoothed-trends in both deaths and counts of new cases:

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

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.

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

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.

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

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.

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

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 investment and spending allocations, based on similar expectations. Your reality is that you are down 31.3 percent on where you were supposed to be in value and 29.7 percent in volume. Notice the 'wedge' between volume and value. Deeper deterioration in value than in volume means not only that your revenue fell off, but that you are working harder to deliver on what revenue you do derive. In basic terms, you now need to be selling roughly 5 percentage points more of volume to derive the same euro value.

In simple analogy terms, you are trying to swim back to shore in a gale-force head wind, with a 12 feet swell, and against a roaring riptide. But otherwise, it's a 'V-shaped' looking thingy...

29/6/20: Eurocoin Growth Indicator June 2020

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:

1. 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.
2. 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 growth-inflation 'sweet spot':

28/6/20: COVID19 Update: Top 50 Countries

Here are summary tables of stats for COVID19 pandemic for top 50 countries by cumulative number of cases, plus EU27:

First a 'heat map' legend.

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

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.

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

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. 

26/6/20: Longer-Term Impact of COVID19 on Growth

IMF published updated forecasts this week, and here the summary:

IMF has stopped doing 5 year forecasts this April, due to uncertainty induced by the COVID19 pandemic. 

Looking at the longer run effects of the pandemic, based on October 2019 (pre-Covid19 trends), and earlier growth trend before the Global Financial Crisis (GFC) puts COVID19 pandemic into historical perspective:

The differences between the above trend lines are telling. 

Globally, GFC resulted in a permanent loss of real income that amounts to a cumulative decline of ca 17 percent over 17 years (2008-2024). COVID19 is forecast to result in additional permanent loss of 3.2 percent within 5 years 2020-2024.

Eurozone has been hit even harder. GFC resulted in a permanent loss of real income to the tune of 12.8 percent while COVID19 is currently set to yield a permanent additional loss of income to the tune of 7.1 percent over less than 1/3rd of the post-GFC trend line duration. 

The numbers above are rather 'indicative', in so far as any and all forecasts past 2020 are perilous at the very best. But you get the picture: we are witnessing two consecutive events that result in permanent deviation of economic activity away from the prior trends. And both events are sharp. Even with a 'V-shaped' recovery, we are in trouble (because a V-shaped recovery taking us into mid-2020 means recovering end-of-2019 levels of economic activity, while losing 1.5-2 years of growth momentum (recall, economy was slowing down in H2 2019 on its own, without COVID19). 

As we say... [ok, well, may we do not say it often, but...] this picture is f*ugly...