We have noted a few times recently that the US economy faces a hiccup later this year and early next as its fiscal stimulus growth pulse crashes with year-on-year comparisons. This goes to the often overlooked fact that when it comes to GDP growth inputs, it is the rate of change in spending that matters
Goldman has a crack: The Treasury has released a new more detailed description of its corporate tax proposals. They are in line with the outline from the White House last week, but include a few new details related to the treatment of foreign income and the minimum tax on book income. Overall, Treasury estimates the
Markets clearly think it’s coming very fast. Fed fund futures are pricing two cash rate hikes for 2022, let alone tapering of asset purchases, which will have to come first: That is far too aggressive to my mind. US inflation is going to fall away next year as commodities deflate while China slows, even if
This is what happens when you have a competent government. Vaccines unleash pent-up demand. The US is entering a rude travel boom. Mobility is surging: Credit card spending on travel is surging: Boosted by stimulus: TSA numbers are climbing fast: My base case is that US travel overshoots this year and next as family, recreational
Goldman has the details: 1. The White House proposes to spend roughly $2.2 trillion over ten years. The Administration expects most of this spending to be complete after 8 years. This appears to be mostly new money with less double-counting of existing spending than in last year’s $1.5 trillion House bill. Of the $2 trillion, around
The evidence continues to accumulate that once populations are vaccinated they rush back into travel. A lot of fun is being had in US travel spending right now: Mobility is through the roof: Travel checkpoints are approaching the bottom of pre-COVID ranges: Likewise, hotel occupancy: It is my view that not only will travel rebound
Some more today on the US economic recovery, which is the leading indicator for the world as the vaccine glut approaches in H2. Goldman sees: The post-vaccine reopening of the economy is barely underway, but our expectation of accelerating sequential growth is transitioning from forecast to fact. Credit card data are consistent with a mid-single-digit
Nobody is going to accuse MB of failing to fight the good fight for better democracy, less unequal capitalism, and a purer version of liberalism. These are our touchstones. We mercilessly unearth the hypocrisies of the elite in pursuit of these goals. But, if you are serious about such reforms as opposed to just holding
The Biden Admininsatrion has already delivered a much larger fiscal support package than anybody in markets predicted. It did so by using the US Budget Reconciliation process which enables Dems to bypass Republican loons in the senate and their favourite tactic of filibustering. The Budget Reconciliation process only requires 50 votes to pass not the
UBS is getting on board with the MB profits boom thesis based upon tearaway US growth, strong fiscal support, a global inventory rebuild and top-line growth landing on lean post-recession business: Revising S&P 500 target to 4250 on strengthening earnings expansion As equities de-rate amidst the jump in rates, much better than expected earnings should
The next cab off the rank for the Biden Administration is a giant infrastructure package. According to Morgan Stanley, Australia does not benefit much. MS estimates that only an additional 7.5mt of steel will be needed per annum. That’s mostly going to be covered by scrap with some small marginal lift in iron ore. The
Will the Fed panic this week? Panic tightening or panic easing? Neither in my view. It just needs to stay the course. Barclays thinks it will be dovish: A number of factors are likely to lead the Fed to considerably improve its outlook for the US economy in March. These include: Progress on vaccinations, case
The Biden Administration is moving swiftly from emergency stimulus support to longer-term infrastructure spending to keep the US economy stronger for longer. Bloomberg has more: An overall spending package worth between $2-4tr will be proposed. It will focus on roads and green infrastructure. It will be funded by tax hikes for corporations from 21% to
Via Morgan Stanley: Most market participants and policy-makers have been surprised by the speed of the recovery. On our estimates, the US economy will reach pre-COVID-19 output levels by the current quarter. From 3Q21 onwards, we expect US GDP to overshoot the path it was projected to follow before the recession. The last time GDP rose
The Australian dollar was hit again on Friday night as the US dollar rallied with higher yields and commodities rolled over with tech stocks and emerging markets. All very typical market action. To the charts! DXY was up again as EUR eased: The Australian dollar dropped against DXY and other developed markets: Brent was soft
The US economy is entering a rude boom. It has tailwinds from monetary and fiscal policy, vaccine policy and catch-up growth plus, in due course, renewed investment into shale oil. So much we already know. But, before long, it will also turn on its head, via Goldman: 1. Senate passage of the nearly $1.9trn American
Over the weekend we saw another 1.9tr stimulus package passed in the US. This comes on top of what is an accelerating vaccine rollout and second leg virus recovery. Before long, we can expect US shalers to add a third leg of renewed oil investment to the boom as prices skyrocket. In short, the US
BofA with a terrific little insight into what consumers buy the moment that they feel confident that they’ve seen off the virus: Post-vaccine behavior–generational data: We focus on spending trends amongst traditionalists which are aged 73–92 and are therefore most likely to have received the COVID vaccine. In particular, spending on airfare surged for traditionalists
BofA with the lastest charts: The latest update to University of Washington’s IHME Covid-19 model shows dramatic improvement in the trajectory for the US Covid-19 situation between now and the summer. They no longer predict another spike in daily infections due to the more infectious mutated variants, all that remains is a bump–i.e. a March
Readers will know that we have a very bullish outlook for the economic recovery this year. Indeed, we see the US at Chinese-style growth rates for the next year before coming off. The reasons for this are: An ongoing global inventory cycle in goods production that has American wholesalers and retailers short of stock. A
The trade de jour is the steepening yield curve and rising inflation. I have noted many times that the inflation narrative is much more cyclical than it appears owing to early cycle constraints that will fade relatively quickly into 2022. The other driver, so say the narrative, is MMT and runaway US fiscal support. Goldman
Via the FOMC: Despite a sharp spike in unemployment since March 2020, aggregate wage growth has accelerated. This acceleration has been almost entirely attributable to job losses among low-wage workers. Wage growth for those who remain employed has been flat. This pattern is not unique to COVID-19 but is more profound now than in previous
The press is lamenting the failed impeachment bid of Donald Trump today after the US senate failed to convict the president, though it certainly impugned his character. Lost in the bruhaha is that impeachment was never likely to succeed and a much more serious and large-scale plan is underway to kill off Mr Trump. It
As we know, the world enjoyed an unprecedented K-shaped recovery last year as goods boomed via stimulus and work from home. But high tough services completely busted amid social distancing. Now, it is becoming plain that inflation trends are following exactly the same pattern. Via some great charts from The Daily Shot on the US
It’s been a long and hard road including, in my view, the expression of Donald Trump’s revenge on the American people for giving him the boot, but the US is on track to whip COVID-19 by mid-year. Levels are still high but falling fast. Via BofA: The number of people hospitalized with COVID-19 in the
House impeachment managers introduce video evidence as part of their case against Donald Trump, depicting one of the darkest days in American history. pic.twitter.com/7G2Jf1PEnQ — Josh Campbell (@joshscampbell) February 9, 2021 The trial begins. The ABC reports on possible outcomes: “It seems very likely that Trump will be acquitted,” Professor Ackerman said. “From the point
For years, MB has campaigned for higher wages on the basis that it is what capitalism needs to survive. This position is based on sound economics, that is higher wages drive productivity gains, the longer-term input of rising living standards. And the understanding that unfettered capital chasing ever lower-wage jurisdictions is a race to the
Via BofA: As negotiations over the $1.9tr fiscal package continue, we are increasingly focused on the views of key swing voters in the Senate.•Atruly bipartisan deal will likely require support fromthe10 Republicans who have put forward a$618bn proposal. •The size of a Democrat-only bill will depend on what is acceptable to the most moderate Democrats—most
BofA: The University of Washington IHME Covid-19 model estimates that daily Covid-19infections in the US peaked on December 23rdaround 340,000 and have since declined about 18%. In three months they estimate infections 70% off the peak, in line with the post-Labor Day low. That the number of infections peaked in December makes sense as we
Via Goldman: As expected, congressional Democrats released a budget resolution for FY2021 that, once passed, would give them the option to pass coronavirus relief legislation through the reconciliation process with a simple majority in the Senate without Republican support. After President Biden met with moderate Republican senators, the White House quickly signaled its support for
