Afgespeeld
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In this latest issue of my weekly podcast, we discuss the current state of the election. RCP has Biden holding a steady edge at 50% to 43%, and his betting odds are gradually improving at 55% to 44%. The NYT released a new report on Trump's finances claiming he pays minimal taxes and has millions of dollars in personally guaranteed debt. The story has three possible implications. Either: (a) Trump has not been a successful businessman; (b) Trump's tax avoidance has veered into tax evasion; or (C) the tax code's generosity to real-estate developers is grossly extravagant. It seems unlikely the report will have a major impact on the election, but it could sway swing voters who touted Trump's business success.
OECD's newest report is better than expected. The newest estimates on GDP were revised and show less damage than previously assumed. In June, world GDP was estimated to drop -6.0% but was revised to only -4.5%. The US had one of the biggest turn arounds. In June, US GDP was estimated to drop -7.3% but was revised to -3.8%.
Economic indicators remain positive. The Markit PMI flashes were released for September. Manu rose to 53.5, driven by strong factory activity. And Services fell slightly to 54.6 but still showing strong growth. The Kansas Fed Manu Index came in at 18 for Sept, while the Dallas Fed Manu Index came in at 13.6. Both readings point to strong regional growth.
Japan elects a new prime minister. Yoshihide Suga won the party election for prime minister with 70% of the vote. Suga is a close ally to Shinzo Abe and served as Abe's Chief Cabinet Secretary for nine years. He has promised to continue Abe's economic reforms. And he has declared four unique policy goals: fertility treatments, re-invigorating bureaucracy, creating a digital policy agency, and cutting the costs of mobile phones. The narrow scoop of these policies fit in with his image as a detail oriented technocrat.
Violence breaks out between Armenia and Azerbaijan. Since the fall of the Soviet Union, both countries have fought for control of the Nagorno-Karabakh region between their borders. Though a ceasefire has been in place for over 20 years, the conflict has never been fixed. The new outbreak in fighting has brought other countries into the fray. Turkey has sent Syrian rebel militias to help Azerbaijan, while Greece and Russia have pledged support to Armenia.
Boomers are scoring lower on cognitive function tests than previous generations of Americans at the same age. Beginning with the Lost Generation, average age-adjusted cognition scores rose steadily across successive birth cohorts, but these results suggest the positive trend may be reversing.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe. -
In this latest issue of my weekly podcast, we discuss the latest trends in Covid-19. In the US, we are starting to see a very gradual decline in deaths following a more significant month-long decline in cases. Weather is clearly a factor in the dropping infections. An outbreak abroad underlies several themes we have often spotlighted. On Aug 8, in a South Korean Starbucks, an infected person sat under an air conditioner and infected 66 people, all of whom weren't wearing masks. No one wearing a mask was infected. The incident points to the importance of (a) superspreaders, (b) aerosols, and (c) the efficacy of mask wearing.
In the US, economic indicators remain mixed. The Philadelphia Fed Manufacturing Index fell from 24.1 in July to 17.2 in August. This is the index's lowest reading in the last three months. Markit PMI flashes showed rises in both manufacturing (53.6) and services (54.8) for August. Though flash data typically reflect trends in the beginning of the month, and I suspect these numbers will fall with the final readings.
Upset election in Canada's Conservative Party. Erin O'Toole won an unexpected victory against party insider Peter MacKay in the Conservative Party's leadership race. O'Toole is a blue-collar veteran from Ontario. He ran a populist campaign attacking cancel culture and vowing to take back Ottawa from the radical left. At the same time, Prime Minister Justin Trudeau--0'Toole's adversary in any upcoming eleciton--is taking heat from an investigation into a possible ethics violation.
Israel and UAE establish formal relations. This is only the third Arab state (and only Gulf state) to form diplomatic relations with Israel. Other countries like Oman and Sudan are expected to follow the UAE's lead and form official ties with the government. The news was well received in Israel's financial sector, with the prospect of more open relations with Dubai.
Biden still in the lead. The former VP ended the DNC with a speech that focused on kindness, decency, and empathy. He also attacked Trump for his C19 response and the devastation to small businesses. This week the RNC kicked off with the GOP showcasing a diverse list of speakers from Nikki Haley to Senator Tim Scott. The speakers warned of the dangers of a Democratic president and took a noticeably darker tone than speakers at the DNC.
A new study predicts that millions of Boomers and Xers will struggle to sell their homes. I take listeners through the author's arguments and point out the paper's strengths and weakness. I do agree that the YoY growth rate in housing units over the next two decades will be lower than anything we have seen historically. But I do not agree that the slow demand growth will be entirely borne by single-family exurban and rural homes.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
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In this latest issue of my weekly podcast, I discuss my three crisis signals: the US dollar, commodities, and gold. The USD continues to ride high despite Fed success in sinking our sinking yield curve. On the commodities side, oil has spiraled downward, going as low as $-36. And gold remain elevated but slightly down over the last week. The equity rebound momentum is slowing, and IVol has been flat at just over 40.
What's the plan? The US, along with other nations, still doesn't have an exit strategy when it comes to COVID-19. With new "confirmed" US cases per day still hovering around 30,000 (and with total new cases per day up around 300,000+), reopening the economy will surely create a second wave. Equity investors have recently been framing the narrative as a one-and-done natural disaster, so they have been filtering out all the nightmarish economic prints as they arrive.
In economic news, US indicators saw record lows. The CB Leading Index MoM was -6.7% for March. That is the largest decline in its 60-year history. The Chicago Fed National Activity Index, usually slow to register, dropped to -4.19 for March. It has only been lower two other months since 1967. The Empire State Manf Index registered at -78.2 for April, which is its lowest reading on record. And the Philadelphia Fed Manf Index came in at -56.6 for April, its lowest number since July of 1980. Stay tuned next week for flash Markit PMIs for April.
No bump for Trump. The president has yet to see the large rise in approval ratings that usually accompanies a crisis. On the other hand, governors across the nation are seeing large popularity (and visibility) surges as they battle the virus head on.
Big Brother strikes. Over half the world is on government-enforced shutdown. Surveillance is rising. A large share of businesses and ordinary people are becoming wards of the state. Authoritarians are using using this pandemic to consolidate power as they implement suppression-test-and-trace. Liberal western democracies, on the other hand, are struggling to come up with any viable battle plan. Is Big Brother needed to battle COVD-19?
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe. -
In this latest issue of my weekly podcast, I discuss the market "narrative" surrounding COVID19. The market expects immediate and total recovery with no second wave, unlimited stimulus support, and for the market to rise higher than before. But right now, we are in the eye of the storm. By June, we could be seeing the start of a second wave and waking up to the true economic damage.
Continued stimulus? Right now, both Democrats and Republicans support big government spending. We expect more spending in the near future, but this support could sour. In 2011-2012, both parties pulled back spending at the peak of the financial crisis. Will Republicans fall back on their small government stances?
Democrats challenge China. In the Obama years, Biden was the front-man on easing US-China relations. But when Trump came into office, the president took a different tone on the country, demanding new deals and starting a trade war. Yet in a stunning move, Biden has now started calling Trump weak on China. Much of this comes from China's disrespect of human rights and Trump's silence. Nevertheless, this is an unexpected turn from the former VP, who probably has spent more time with Xi than any other American politician.
Economic indicators continued to be bleak. US Markit PMI flashes were released for April. Manufacturing came in at 36.9, while services came in at 27.0, and composite read at 27.4. The Kansas Fed Manufacturing Index came in at -62 for April, its lowest reading since the series began in 2001. The Dallas Manufacturing Index had a similar record low at -73.7.
Around the world, leaders see boosts in their approval ratings. Governments that have taken aggressive action against the virus have been rewarded with soaring popularity. Johnson, Macron, Conte, Merkle, and Morrison have all had double-digit increases since February. In South Korea, the leading Democratic Party was losing support in late 2019, but in recent national elections, they won by a landslide.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
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In this latest issue of my weekly podcast, I discuss the big question that is the focus of the world's attention: the trajectory and duration of the COVID-19 pandemic. If you look at total cases or deaths in RoC terms--or look at the geographic extent of the pandemic-- the news over the past week has not been good. There is no letup in the total exponential growth rates. 9 days ago, we were at 10,000 deaths outside of China. Last night we were at 38,000 deaths. Ten days from now we are on track to be over 100,000 deaths.
China is starting to recover bit by bit from its total shutdown in Feb. The official NBS manf PMI swung back up to 52.0 in March from its record low of 35.7 in Feb. The media is sure to misconstrue this as China returning back to normal. No, that's NOT what this means. Each PMI measures the share of all managers who answer better or worse to questions like "how is your production or orders or employment compared to last month?" A reading of just over 50 in the NBS means that China's big SOE factories are producing just a bit more than they did in Feb. It does NOT mean they are back to normal.
The COVID-19 policy reaction is by far the biggest monetary and stimulus whollop the developed world has ever tried. The Obama stimulus package in 2009 amounted to 5.5% of GDP… while the CARES package just passed is scored at 9.2% of GDP. The upmoves in equity markets coincided well with these moves. Also with the decision by the EU to get rid of its circuit breakers, ECB President Christine Lagarde's decision to override earlier limits to buying member country sovereign debt, and Germany's decision to run a sizable deficit itself.
The federal add-on to state unemployment benefits of $600, basically constitutes a nationwide $20 per hour payment to be unemployed rather than employed. If it is our intended policy to maximally shut down the American economy until at least the end of July, let's declare that upfront. But surely we can set up a better system than forcing companies to lay off employees for them to get this deal.
Can the US ramshackle fiscal system actually deliver the kind of relief we're talking about in a timely manner? Banks are by nature wary of risk, but now they are being told it's all guaranteed, don’t worry about risk, just push the money out the door. This isn't their line of business. Similarly, the Small Business Administration has been put in charge of handing out $350 billion in loans. The SBA has always been known as a sleepy little agency that normally hands out less than one-tenth of that amount every year. Wish them luck...
The Spanish Flu lasted 15 months. It started in the early spring of 1918, while World War I was still raging and Germany was rolling forward into France during its Ludendorff Offensive. It eased off a bit during the summer and fall, then it raged back in its deadliest wave in the late fall of 1918 and the winter of 1919. For 2020, recall what Dr. Anthony Fauci said after hearing President Trump's proposal--which he since rescinded--to open American up for business by Easter: "You don't make the timeline." said Fauci, "The virus makes the timeline."
The smart suppression strategy will enable us to do something more intelligent than to simply turn our economy's master switch either on or off. Smart suppression starts by finding out who already has antibodies and can be presumed to be immune. It also means widespread testing, the tracking of all contacts, and enforceable self-isolation and quarantining.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe. -
In this latest issue of my weekly podcast, we talk about the hope for a vaccine. On Monday, markets rose with the news of positive results from the latest Moderna study. While the study was technicality a phase 1 trial, testing if the drug is safe for human consumption, they also did preliminary tests on its effectiveness. Of the 8 patients tested, all showed levels of antibodies equal to or above those of someone who has recovered from COVID19. While RNA vaccines are extremely promising, there is still debate if they will ultimately create immunity.
The House passed a $3 Trillion COVID bill. While the House of Representatives passed a comprehensive bill for COVID relief, its survival is all bet dead in the Republican-controlled Senate. As the extra $600 bonus to unemployment ends on July 31, there will surely be a showdown on the extension or ending of the generous benefits.
Economic indicators continued to be bleak. In the US, industrial production MoM came in at -11.2% for April, marking the index's largest drop in its 101-year history. Retail sales came in at -16.4% for April, with clothing taking the biggest hit at -78.8%. For China, industrial production YoY came in at +3.9% for April. The increase is most likely do to catching up on backlogs as Chinese retail came in at -7.5% for April. Japan had its second consecutive Q of contraction, confirming our belief from Nov that Japan is in a recession.
Brexit talks resume. The UK and the EU have until the end of June to decide if they will extend negotiations past 2020. You read that right; it's a deadline for a deadline. Johnson has said in the past he does not want to extend talks, and COVID could act as an accelerator to finish the deal.
Conspiracy thinking on the rise. In today's politics, conspiracies like QAnon and a new world order has gripped the internet. The believers of such theories tend to be conservative, evangelical, male, and between 30-60 years old. Gen X is especially susceptible to these theories, having never trusted the government and growing up a healthy diet of the X-Files.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
