- Nice way of showing how service inflation has outpaced goods inflation for largely all of the last 25 years.
Macroeconomics
Snippets on the big picture.
Current Situation
- Great chart showing how extreme the current situation is.
- Global survey data points to a record gap between order backlogs and inventory levels.
- h/t Daily Shot.
European Capital Stock
- Europe has too much capital stock when compared to other regions.
- This bodes poorly for future bank lending growth.
Chinese Government
- Interestingly the government sector in China is actually smaller than in the US.
Recovery Timlines
- If history is any guide recoveries tend to last a lot longer than the current four quarters.
Sentiment
- Despite equities at all time highs Societe Generale’s multi-asset risk indicator is flashing risk-off like it did in March 2020.
- h/t The Market Ear.
Inequality in China
- China has one of the worst Gini coefficients, a measure of inequality, in the world.
- More importantly, it has also seen the highest deterioration in this coefficient since 1990.
- Data sourced from this IMF paper (2018) via Hayden Capital Q2.
Inventories
- Inventory to sales ratio in the US is at an all time low, even lower than during 08/09.
- Source: BCA Research.
Trucking Rates Aug 2021
- Trucking rates in the US are looking like they are peaking.
US Petroleum Net Imports
- This is perhaps the most important chart, that has profound implications for the world.
- Source.
Realtors Confidence Survey
- June 2021 survey paints a less than perfect picture.
- “Several metrics indicate that demand is softening although the market is still broadly strong.“
- “The REALTORS® Buyer Traffic Index decreased from 77 in May 2021 to 71 (moderately strong conditions) in June 2021.”
- “On average, a home sold had more than 4 offers, slightly lower than the average of 5 offers in last month’s survey.”
- On top of this inventory (the most important variable for house prices) is starting to bottom seasonally.
- h/t Calculated Risk.
Wages vs. Jobs
- Indexing to pre-pandemic, wages have recovered more than jobs.
- NB a lot of the wage growth has been driven by low-skilled sectors.
Capacity Utilisation
- Although there are clearly bottlenecks right now, there is no overall shortage of capacity.
Mid Cycle Growth Slowdown
- We are likely entering the mid-cycle where growth is slowing, though it will remain at a high level.
- This is a nice chart showing that such slowdowns historically haven’t meant that stocks sell-off.
- Source.
Government Involvement
- Americans increasingly favour more government involvement than less. Lots of implications flow from this.
- Source: GS Research.
Savings by Wealth Level
- This chart disaggregates bank deposit data, using it as a proxy for household savings.
- The wealthiest 10% of households account for 70% of the increase in savings between Q1 2020 and Q1 2021.
- Wealthy households have a much lower marginal propensity to consume.
- This effect, however, is likely to be overpowered by the sheer magnitude of the increase in savings.
- Source: BCA Research.
Schools and Labour Force Participation
- Labour force participation by women with young children (younger than 13 years old) has been noticeably impacted by pandemic related school closures.
- Normalisation here in the autumn could bring this segment back into the labour force.
- Source: BCA Research.
Vaccination and Politics
- US Vaccination rates by state follow the political divide.
- Many Republican-leaning states have more than half of the population still unvaccinated.
- Source: BCA Research.
EM vs. DM PMIs diverging
- “It is not just Asia which is seeing renewed weakness of manufacturing performance, however, with output in Russia coming close to stagnation again in June as rising virus numbers disrupted the economy, and a further steep fall in output was recorded in Mexico.
- As a result, while developed world production continued to grow at a rate close to decade-highs in June, emerging market output growth came close to stalling, its lowest since June 2020.“
- Source.
Long Term Unemployed
- The number of long-term (26 weeks or more) unemployed in the US hasn’t budged this recovery.
- There are still nearly 4m people in this category.
- Source.
