Global Macro


No virus v-shaped recovery

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


Global economy risks another Great Depression

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


COVID-19 may not stop in Summer

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


Apple shuts worldwide

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


Morgan Stanley: Credit lock up “reminiscent of 2008”

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


UK banks join Italy’s in suspending mortgage payments

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


Can QE save the world this time?

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


COVID-19 global body count

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


Suddenly the v-shaped recovery has turned u-shaped

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


Shades of Great Depression as drug supply chain freezes

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


Europe begins shut down as China revives

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.


Morgan Stanley on virus scenarios

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,


Japanese PMIs plunge on supply chain shock

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


ECB wants housing included in CPI

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


UK “Labour” Party demands migrant slave wages

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


It sure looks like Asia is in recession

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


UK mulls wave of low-paid “skilled” migrants to crush wages

With UK wage growth recently hitting an 11-year high: The Migration Advisory Committee (MAC) has recommended the Johnson Government drop the salary threshold for “skilled” migrants by more than £4,000: Skilled migrants from outside the EU currently need to have a job offer with a minimum salary of £30,000. But the Migration Advisory Committee (MAC)


Australia is about to become coronavirus ground zero

There are two angles to examine as coronavirus spreads in China and South East Asia. The first is health related. The second is economic. Australia is about see a wave of new Chinese tourists and students just as coronavius slips the CCP noose. Some 350k Chinese toursists arrive through the January/February period, a large swath


Is coronavirus an economic threat?

Unleash the panic, at News: International airports are screening passengers for a mysterious SARS-like disease that has been confirmed as passing from human-to-human and has also jumped China’s borders. The number of cases of the new coronavirus “2019-nCoV”, which causes a type of pneumonia, has surpassed 220 and authorities are concerned it could spread quickly.


IMF downgrades global growth, hoses Australia

Via the IMF: Tentative Stabilization, Sluggish Recovery? Global growth is projected to rise from an estimated 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent for 2021—a downward revision of 0.1 percentage point for 2019 and 2020 and 0.2 for 2021 compared to those in the October World Economic Outlook (WEO). The