This much. Via Deutsche: A week ago, in the wake of news that China had reported a much greater drop in domestic spending in January-February than had been expected, we wrote that the global economy was moving into a severe recession and that Europe and the US would record the largest quarterly declines in GDP
The China bounce rolls on slowly: As the globe crashes: Global economy entering recession.
Via Capital Economics. China has taken another step forard with the reopening of Hebei: However, the global shock is still building. First in services then manufactures. Europe: Asia: And the US: More pain to come just about everywhere.
Via Capital Economics: Europe still falling: Asia too: And US: Some better signs for China. External shock still bearing down.
Via Nouriel Roubini: The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression. In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and
They’re all going to crash: First services, then manufacturing, as we move up the value chain.
Via Capital Economics comes the painfully slow Chinese recovery: About to be derailed by everything else. Europe: Asia: And the US: Globla trade is about to go zero:
In his masterpiece, The World in Depression, Charles A. Kindleberger concludes the major cause of the Great Depression was a paralysis of leadership caused by the decline of the UK and the immaturity of the US. Neither was able to provide leadership and put themselves forward as the economy of last resort after the 1929 crash.
It is structural change not cyclical. Via Joseph Carson, Former Chief Economist Alliance Bernstein: Economic recession is an infrequent occurrence, but in a fundamental sense recessions are the economy’s way of cleansing the “rot” out the system that have been built up over time. This emanates from bad investments, bad loans, bad policies, excessive risk
China continues to crawl back towards normal activity. Via Capital Economics: While the rest of the world advances into shutdown. Europe: Asia: US: And if you think that China can resist a global shock, let alone when it is already on its knees, then think again: The post-virus v-shaped recovery narrative is fantasy for China
Via JPM: As before, we continue to assume that ground zero of the economic weakness is those consumer services with inadequate social distancing: air travel, movies, sporting events, etc. In our reckoning of where to draw the lines, this group represents around 7% of GDP. We assume activity in this group falls to 63% of
University of Michigan economics professor Justin Wolfers contends that the US economy is probably already in recession due to the coronavirus pandemic. He says that unless governments around the world take ‘drastic actions’ to contain the virus, the economic downturn could be as bad as the Great Depression, when the unemployment rate reached 25% in
One factor I have been watching closely is the spread of the coronavirus through summer or tropical countries. For most of February, it appeared travellers brought COVID-19 to summer or tropical countries, but the spread within those countries was limited. That looks to be changing. The raw chart comparing the two still suggests a stark
I could point to a hundred stories like this but Apple is representitive: Apple said it will close all of its stores outside of Greater China until March 27 to reduce the risk of the coronavirus spreading. The iPhone maker’s online store will remain open as well as its “Apple Store” app. Apple CEO Tim Cook said the
Following Peter Dutton’s illness, the hoped for Government response arrived on the weekend, via ABC: Anyone arriving in Australia from overseas will be forced to self-isolate for 14 days, while lockdown measures similar to those in place in European countries remain on the table. The new travel measures, designed to help the Federal Government deal
From Christopher Metli, head of Quantitative and Derivatives Strategy at Morgan Stanley: The stresses in many areas of the financial markets are spreading. The market is increasingly pricing in a seizing of the real economy as the market awaits more details on the timing and scope of response. Compounding these problems is growing financial stresses as cash becomes
Yesterday, we learned that Italy has suspended mortgage repayments amid the coronavirus crisis: Italy’s deputy finance minister has said the government will suspend mortgage payments and other household bills across the entire country during the coronavirus outbreak. Laura Castelli, part of the Five Star Movement side of Italy’s coalition government, said in an interview with
Via Michael Wilson, Morgan Stanley chief equity strategist: Almost two years ago, we published a report titled The Great Cycle Debate. In that report, I argued that US equities were likely to experience a cyclical bear market that would take several years to complete. This bear market would play out as a consolidation rather than a
It’s not fun reading. Thr parabola forms: For deaths as well: Mortality rates are not good: Korea has been by far the most aggressive tester (you can do it drive-thru believe it or not) and that may be working to slow the virus: Europe and the US are in big trouble: Winter is still very
Via S&P: Growth across Asia-Pacific will slow to 4.0% in 2020, the lowest since the Global Financial Crisis, due to the coronavirus outbreak. A U-shaped recovery should start later in 2020 but by then overall economic damage is likely to reach US$211 billion. That’s according to an article S&P Global Ratings published titled “COVID-19 Now
Via The Guardian: The coronavirus outbreak has led India to restrict the export of dozens of drugs including paracetamol and various antibiotics, leading to fears of a global shortage of essential medicines. On Tuesday, concerns over supply chain shortages led the Indian government to place limits on the export of 26 pharmaceutical ingredients and the medicines and
And so it goes, via Bloomberg: Italy announced a nationwide closing of its schools until March 15 as it redoubles efforts to curb the worst outbreak of the coronavirus epidemic in Europe. The shutdown of schools and universities, set to start Thursday, will further hit an economy that’s expected to contract sharply in coming months.
Via Ray Dalio: I will repeat my overarching perspective, which is that I don’t like to take bets on things that I don’t feel I have a big edge on, I don’t like to make any one bet really big, and I’d rather seek how to neutralize myself against big unknowns than how to bet
Via Morgan Stanley: Disruption, Dislocations and Delayed Recovery With economic activity disrupted and capital markets dislocated, investors are debating if Covid-19 will derail the global cycle. In times of sharp drops in asset markets, pessimistic prognoses are easy to make, but it is at times like this when some perspective is warranted. Coming into the year,
With UK wage growth recently hitting an 11-year high: The Johnson Government last week announced that it would drop the salary threshold for “skilled” migrants by £4,400 to £25,600: Those earning less than £25,600, but more than £20,480, could still apply for visas if they had a job in a “specific shortage occupation” or a
Down they go: Here is why, via Ambrose Evans-Pritchard: Container shipping from Chinese ports has collapsed since the outbreak of coronavirus and has yet to show any sign of recovery, threatening weeks of chaos for manufacturing supply lines and the structure of global trade. Almost half of the planned sailings on the route from Asia to north
The ECB is considering counting owner-occupied housing in its calculation of the consumer price index (CPI): Consumer-price indices are meant to reflect the cost of typical baskets of goods and services. The euro area’s have a big omission. They capture rents paid by tenants, but not the costs of buying and owning property—even though two-thirds
With UK wage growth recently hitting an 11-year high: The Johnson Government has dropped the salary threshold for “skilled” migrants by £4,400 to £25,600, which has been attacked by the Labour Party as still being too high: Following recommendations from the Migration Advisory Committee (MAC), the salary threshold for skilled workers wanting to come to
We won’t have the data for weeks but this kind of stuff speaks for itself: Singapore Airlines Ltd said on Tuesday it will temporarily cut flights across its global network in March, April and May due to weaker demand as a result of the coronavirus epidemic. Destinations that are among those with services reduced include
It all comes down to how you want to look at it. If you go with the Chinese data, then there is a miraculous straight-line recovery, new cases are falling every day outside of Hubei (helped by a definition change on 7 Feb): If you look at the rest of the world data, then the
