23/8/20: COVID19 Update: U.S. vs EU27

 

Updating pandemic data for the U.S. vs EU27 comparatives. All comments in charts.

Key takeaways:

• Since the start of August, U.S. averages 51,004 new cases per day and 1,056 deaths per day.  Over the same time, EU27 averaged 12,452 new cases per day and 126 deaths per day.
• Since mid-July, EU27 new cases and daily deaths are now trending up once again, with current daily rates at the levels above those that triggered the first shutdowns in March.
• The EU27 daily counts of new cases are now on a sustained rise since mid-July and currently exceed the levels at which the original EU lockdowns were imposed.
• The U.S. is still experiencing its first wave of infections. The trend in the U.S. suggest that the peak infection has taken place in late July. 

• Overall counts of deaths in the U.S. are now above the EU27, since July 12, with current excess gap at +38,432 up from +9,409 a month ago.
• Deaths 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.
• EU27 death rate per capita has effectively flattened-out at around 303-308 per 1 million prior to August 2, 2020, but is rising once again since then (310.9 currently). U.S. deaths per capita continue to increase (531.9 currently).
• Put differently, current U.S. death rate per capita is 73 percent above that for the EU27. 
• Thus, there are 228 more deaths per 1 million of population in the U.S. to-date than in the EU27.

23/8/20: COVID19 Update: Worldwide Cases and Deaths

 

Updating latest data for COVID19 pandemic - comments in charts

New cases and deaths: daily counts

Key trends in thee above:

• Global number of daily new cases was on an upward trend through July 2020. Since the start of August, however, new daily cases additions have been flat at the levels close to the prior peak trend (< 260,000 per day).
• In the last 30 days, average number of new cases stood at 258,816, with the current 7-days average at 252,383.
• Week-to-date, daily case numbers ranked within top 10 in 1 day, and in 11-25th place in 4 days. 
• Overall, there are some indications in the more recent data that the trend in new cases will likely moderate toward 220-225,000 per day in the next 7-10 days. Such a moderation will not, in itself, be sufficient to mark the end of the first wave of the pandemic.
• Death rates have peaked in mid-April, but the extent of subsequent declines is largely artificially contrasted to past higher rates, due to: 

1. Delayed reporting, especially in April, primarily in Europe (nursing homes deaths);
2. Lags between new cases arrivals and deaths;
3. Shift in new cases to younger demographics; 
4. Improved detection/testing;
5. Shift in the pandemic intensity toward countries with different reporting methodologies.

• In July, average growth in death cases was +5.79%. August-to-date, the average is -2.66%. Last 7 days average is -4.42%. 
• However, deaths are still running at high rates. 30-days average is 5,882 deaths per day and 7-days average is 5,663 deaths.

Trend growth rates:

• New daily cases growth rates are moderating. July average daily growth rate in new cases was 10.35%. This fell to 0.65% in August (to-date).
• In July, average growth in death cases was +5.79%. August-to-date, the average is -2.66%. Last 7 days average is -4.42%. 

Two summary tables of stats: G7+ and BRIICS:

Recent divergence in deaths counts dynamics from the new case counts dynamics can be indicative  of:

1. Improving rates of detection (earlier detection) of cases 

2. Learning from treating COVID19 patients 

3. The pandemic working through a decreasing density of older population impacted by the disease (due to increasing numbers of detections amongst younger patients)

4. Younger demographics of the new geographical concentrations of COVID19, and

5. Differences in cases and deaths recordings from the early stage of the pandemic (countries with deaths recorded on a primary cause basis, as opposed to COVID19 attribution in the presence of virus).

20/8/20: All Markets are Now Monetized

 

While the economy burns, the stock markets are literally going bonkers. Here are the main implied volatility options:

Which are symmetric, in so far as they treat volatility as symmetrically-valued to the upside and downside. And here is another way of looking at the same concept via repricing speed, or the rate of change in actual P/E ratios of S&P500 over longer time horizons, in this case: 20 weeks running P/E ratios change:

Source of the chart is @longvieweconomics. What does the above show? We have S&P500 at an all-time high. S&P500's PE ratio (PER) is only slightly below the 2000 peak. And, we have the fastest rate of S&P over-valuation increase in history - full 85 percentage points trough to peak. Both, the fundamentals and the momentum of their deterioration are absolutely out of control. Of course, this is just the stocks. One must never mention the massive bubble blown up by the Fed in the bonds markets. 

The 20-weeks moving change in weekly yields for Aaa-rated bonds maxed out at historical high of -44.06% (remember, lower yields = higher prices) in the week of July 31st this year. Top three historically highest rates of change took place in the three weeks of July 24th-August 7 this year. Overall range of bonds repricing is in the range of 60 percentage points in the current cycle:

This is plain horrendous: there is nothing in the macro and micro fundamentals that can warrant these changes. Except for the expectation of continued monetary accommodation of the Wall Street into the infinitely long future. 

19/8/20: The VUCA World of World Trade

 

WTO projections for global merchandise trade by volume:

Let's take a closer look. Optimistic scenario is for a 13% y/y drop in merchandise trade flows. Pessimistic one is for a 30% drop. Swing is 17 percentage points. These are not forecasts, but are uncertain guesses. We are in a VUCA world, folks.

Let's take a second look: COVID19 shock will be permanent (new trend line post-recovery is permanently below old trendline and flatter) with a minor impact post-2022 that will compound over longer period of time. In pessimistic scenario, the impact appears to be also permanent, but seriously severe.

On a linear trend projection, pre-2008 consistent trend would have left us at around 155 index reading in 2022. 2009-2019 trend would have gotten us to around 122 index reading. Optimistic scenario would leave us around 119 in 2022; pessimistic - at around 95. Wait... optimistic gap for COVID19 and GFC impacts to no GFC and no COVID19 impact is... 33 points! One third of 2015 annual level of trade activity. GFC but no-COVID19 gap to pre-2008 is between 36 points and 60 points. 

And the final look: notice 2019 line... it is virtually flat. As WTO notes (see Chart 4 here: https://www.wto.org/english/news_e/pres20_e/pr855_e.htm) there was, basically, no growth in trade in 2019, before the COVID19 hit. 

We are in a VUCA world, folks.

18/8/20: COVID19 Update: U.S. vs EU27

 

Updating charts for EU27 vs U.S. comparatives:

High level comparatives: U.S. and EU27 shares of global cases, deaths and population

Dynamics of cases and deaths:

Key takeaways from the above:

• Deaths 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, albeit the second derivative is moderating.
• EU27 death rate per capita has effectively flattened-out at around 303-310 per 1 million prior to August 2, 2020, but is rising once again since then.
• Overall counts of deaths in the U.S. are now above the EU27, since July 12, with current excess gap at +33,342 up from +5,817 a month ago.
• U.S. deaths per capita continue to increase.

• Controlling for the gap of 7 days in the first deaths reported, U.S. has a higher death rate per 1 million population than the EU27 rate.
• Even without timing adjustment, current death rate per 1 million of population in the U.S. (521) is in excess of the EU27 (309.0).
• Put differently, current U.S. death rate per capita is 69 percent above that for the EU27. 
• Since the start of August, U.S. averages 52,406 new cases per day and 1,024 deaths per day.  Over the same time, EU27 averaged 11,366 new cases per day and 118 deaths per day.
• Since mid-July, EU27 new cases are now trending slightly up once again, and deaths are starting to rise as well.
• The EU27 daily counts of new cases are now on a sustained rise since mid-July and currently exceed the levels at which the EU lockdowns started.

18/8/20: COVID19 Update: Worldwide Cases and Deaths

 

Updating World counts and major cases through August 18, 2020 (ECDC timing):

First, top countries by case numbers (> 25,000 total cases) (color coding legend in the second part of the table):

Next, dynamics of new cases:

Some moderation in new cases growth rate (7-day average trend is flat, with early signs of possible reversal downward after months of increases).

And dynamics of daily deaths counts:

Hopefully, the gentle drop in the trend (14 days moving average) is going to be sustained from here on.

13/8/20: Federal Deficit Keeps Climbing in July

 

Federal fiscal position for July has been published (https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0720.pdf) and the numbers are interesting. Remember, this year, July was personal income tax filing month, as opposed to the usual April. So, over April and July 2020, total Federal receipts were at USD 805.350 billion, which is up on USD 786.893 billion in April and July 2019. Sounds good and it improved significantly monthly contribution to the annual deficit, with Federal deficit in July coming in at USD62.99 billion, or USD223.3 billion worse than April 2019 (which registered a surplus). 

So here is where we stand:

Average cumulative per-term Federal deficit for Obama Administration was USD 3.523 trillion. The same for President Trump's tenure to-date (not yet a full term) is USD 5.078 trillion. Of this, USD 1.889 trillion. Hence, ex-COVID, President Trump's first term deficit currently is running at USD 3.190 trillion. There are still 3 months of the Federal Fiscal Year running and 5 months of the calendar year left. If we are to assume that Federal deficits in August-December were to remain on the levels of 2019 (stripping out effects of COVID19 pandemic), President Trump will end his last year in office with a cumulated per-term deficit of around USD 3.664 trillion, which is - and remember, this is excluding COVID19 effects - a higher deficit than accumulated, on average, across two terms of the Obama Administration. 

Now, back to those charts above: COVID19 related increases in deficits have been staggering. So far, from April 1, through July, these amount to around USD1.89 trillion. Non-COVID deficits have been equally staggering. 

Here is an interesting thing: while public health took out USD624 billion in 2020 from January through July, Pentagon took USD608 billion. Who is handling the pandemic in the U.S. is quite not as clear as who is spending the money like the proverbial drunken sailors.

Another interesting thing: net interest payouts by the Federal Government. These are defined as "Net interest consists of interest paid on Treasury securities and other interest that the government pays (for example, interest paid on late refunds issued by the Internal Revenue Service) minus the interest that it collects from various sources..." (https://www.cbo.gov/publication/56073). Which means there are lags in Fed remitting interest payments, but much of that is already in the numbers. So far, the U.S. has managed to rake in USD 309 billion worth of net interest expenditures in the FY2020. 

12/8/20: Post-Covid Economy: The Winds of Change

 

Yesterday, I gave a talk about the state of the global, European and Irish economies at the Omnipro event in Dublin. Here are my slides from that talk:

12/8/20: Beware of Longing for Pre-COVID19 Days

 

We tend to focus on shorter-term and sharper shocks than on longer-term trends, a sort of 'boiling a frog' conundrum in our behavioural biases. Hence, with the development of the current pandemic, we seem to have forgotten a simple fact of pre-COVID19 reality: things weren't going all too happily for the global economy in 2019 before the pandemic struck.

Here is a reminder: look at the economic policy uncertainty measures from the late 1990s through today

As it says in the chart comment box, economic uncertainty was running at elevated levels well before the pandemic struck. 

Here is another way to see this point:

There is a 'problem', folks, even though there is no Houston to page about it. The legacy of the Global Financial Crisis did not dissipate when non-performing loans were finally (largely) wiped out from the banks balance sheets. Since the 'recovery' from the Great Recession, we have been living in a state of perpetual precariat all the way into the current pandemic shock. This state of precariat has been evident in the world data and the European data, so the problem is not 'demographic' or at least not that of ageing. May be it is generational? 

Here is an interesting view on generational changes via Pew Research: https://www.pewsocialtrends.org/essay/on-the-cusp-of-adulthood-and-facing-an-uncertain-future-what-we-know-about-gen-z-so-far/.  As education levels rose across generations, state of insecurity rose as well. Quote; "There are already signs that the oldest Gen Zers have been particularly hard hit in the early weeks and months of the coronavirus crisis. In a March 2020 Pew Research Center survey, half of the oldest Gen Zers (ages 18 to 23) reported that they or someone in their household had lost a job or taken a cut in pay because of the outbreak. This was significantly higher than the shares of Millennials (40%), Gen Xers (36%) and Baby Boomers (25%) who said the same. In addition, an analysis of jobs data showed that young workers were particularly vulnerable to job loss before the coronavirus outbreak, as they were overrepresented in high-risk service sector industries." Note that GenZ has higher levels of educational attainment of any generation. And yet, they are more susceptible to labour market shocks. 

The younger generations are also progressively more attuned to news flows and more anxious about key structural (non-COVID shock) problems we face. 

Have the mid-2010s been a pivoting point toward the new Age of Anxiety? Did COVID19 pandemic exacerbate this onset of the new age? In the long run, these are more important questions than the coronavirus threat alone.

11/8/20: COVID19 Update: U.S. vs EU27

 

We are becoming numb to the sheer size of the public health disaster that is unfolding in the U.S. Numb, careless and utterly devoid of any concern for those around us. Here are the latest numbers:

See the dashed orange line in the chart below? That is the count of total COVID19-attributed deaths in the U.S. 

Yes, it has been thus from July 12 on: the U.S. continues to pull away from Europe in terms of total deaths counts. Higher testing rates, or better health care system, or the American Way of Life are clearly not doing anything worth hanging on the wall as a point of pride: Americans are dying from the disease that the rest of the developed world has managed to contain (at least for now). 

The #COVIDIOTS crowd is reproducing on social media various shades of logical garbage, along the line of 'My neighbour was reported to have died from COVID19, even though he was hit by a car" as some sort of a palatably consistent argument that coronavirus pandemic is just a 'Democrats Hoax' or a conspiracy of the 'doctors and the 1-percenters'. Yet, the reality is that even if you assume (do not do this at home) that some 25% of COVID19 attributed deaths are 'fake' or 'errors', you still get U.S. death rates from COVID19 in excess of those in thee EU27. 

Facts:

• Current U.S. death rate per capita is 63 percent above that for the EU27. Two week ago, this gap was 49 percent.
• Overall counts of deaths in the U.S. are now above the EU27, since July 12, with current excess gap at +27,104 up from +12,913 a month ago.
• Even without timing adjustment, current death rate per 1 million of population in the U.S. (499.6) is in excess of the EU27 (307.0).
• EU27 death rate per capita has effectively flattened-out at around 303-310 per 1 million.U.S. death rate per capita continues to rise.
• Since the start of August, U.S. averages 54,489 new cases per day and 1,036 deaths per day. Over the same time, EU27 averaged 9,842 new cases per day and 105 deaths per day.
• Note 1: European cases are rising once again (chart below) - a worrying sign that relaxing some of the restrictions might be triggering a risk of a new wave of the pandemic.
• Note 2: As the second chart below shows, there is some indication that European deaths are also rising, albeit with a less pronounced trend than new cases.

It is extremely frustrating for all of us involved with policy formation, statistical data flows, news flows and systemic analysis to watch, paralyzed by the large swaths of American public and political leadership virtual indifference, as the pandemic continues to rage across the country. The U.S. entered this pandemic 

1. At a later date than the EU27 - implying better capacity to prepare, test, diagnose, treat and triage pandemic victims;
2. With a younger (albeit hardly healthier) population than the EU27 - implying lower mortality from thee disease;
3. With vastly more financial and physical resources deployed in healthcare system - implying greater theoretical capacity to deal with the disease;
4. With demographics physically distributed in less densely populated areas - implying lower rate of contagion from the disease, all things being held equal;
5. With some of the Asian and European experiences and best practices already taking shape and becoming available to doctors, managers, public officials, elected politicians - implying theoretical faster 'learning curve' for the U.S.

None of this mattered in the end: the politics of 'exceptionalism' and the unfit-for-purpose public health provision systems too their toll. The U.S. now accounts for roughly 25% of all global cases (officially detected) and for 22% of world's deaths. The country only accounts for 4% of the global population.