- In 2030 the US budget will reach a crossover point where entitlements and mandatory outlays will outstrip revenues.
- This means there will be no room for non-defence discretionary spending.
- Source: JPM.
Macroeconomics
Snippets on the big picture.
Sanctions
- Nice chart from Net Interest showing global sanctions by type.
- Interesting to see the rise of financial sanctions vs. other sanctions.
- The original source has all the data.
Historical Energy Crises
- A basket of energy commodities – seaborne thermal coal, global gas, European electricity and US gasoline – has risen by a weighted average of 4x since 2018-20 levels.
- This ranks as one of the top three worst price rises in history.
- Source.
ECB Communications
- The ECB, by introducing a new publication – “monetary policy at a glance“, is trying to address the declining and very poor readability of its existing press releases.
- The decline in readability, measured by the Reading Ease Index (REI), is largely down to the introduction of more complex monetary tools (e.g. TLTRO).
Mid-Term Elections 2022
- Incumbent President’s party typically loses seats in mid-term elections.
Export Share
- China has taken full advantage of the pandemic, gaining the most share of export growth.
Net Income by Sector
- Nice chart from GS showing contribution of total S&P 500 net income by sector.
- Interesting to see Financials pretty much hold up over a long period of time, with a blip for the financial crisis.
- Tech has been steadily increasing and Energy declining.
Dynamism
- Despite the prevailing narrative, dynamisms in the US has been consistently falling since the last 1970s.
UK’s Labour Takes the Lead
- Latest opinion polls show Labour taking the lead.
- Source: Wikipedia poll tracker.
Household Net Worth
- US Household Net Worth is up a staggering 128% of GDP.
- The wealth effect alone can, using historic models, add a few points to GDP growth.
- Source: BCA Research.
E-Commerce Sales Share
- Counter to the prevailing narrative – e-commerce hasn’t seen a step change and is almost exactly where a 10-year trend line would have predict it would be as a share of total retail in the US.
- The reason for this is that total retail sales has grown strongly (+13% vs. normally being +2-3%). In absolute terms, shoppers spent $204bn on e-commerce in Q3 2021 but the pre-pandemic trend would have predicted $183bn.
- h/t NZS Capital and Marketplace Pulse.
Chinese Tax Rate
- China has a very low personal tax rate.
ECB Bond Ownership
- The European Central Bank (ECB) owns a large share of government bonds across Europe.
Chinese Working Age Population
- Latest 2020 census in China has painted a worrying picture.
- The working age population is declining faster than expected by models.
- Source: Gavekal.
Real Incomes
- Inflation is eroding real incomes, at almost the same rate it did in the 1970s.
US Homeowner Vacancy Rate
- This rate has fallen to historic lows – a supportive and key variable for housing construction.
Debt Binge
- Fiat money era has led to a spectacular debt binge.
- A great long-term chart from Deutsche.
Debt Productivity
- Debt is becoming less and less productive, in terms of units of GDP added.
- Great analysis from Hoisington on the topic.
Total Factor Productivity
- Europe’s Total Factor Productivity (TFP), a key determinant of long term growth, has substantially lagged the US.
Southern Europe
- Southern Europe has been on a mission to loosen employment protection since the European crisis.
- h/t Capital Economics.
