- Open Table has 60,000 restaurants as customers.
- Bookings globally are -99% as of 21st of March.
Macroeconomics
Snippets on the big picture.
Sector PMIs
- Interesting chart of sector PMI in Asia.
- Output fell in all but one sector – Biotech.
Dealer Inventory (repost)
- US Bonds outstanding continues to grow.
- However, inventory of bonds at primary dealers has stayed low since the financial crisis.
- This doesn’t however capture turnover of inventory – which has risen.
- Overall this still creates a very risky situation in terms of liquidity.
- Especially problematic now that Bond ETFs have hit $1 trillion.
PMI and Equities
- Nice chart from IHS Markit showing PMIs against equities YoY change.
- Suggests equities not yet reflecting weak PMIs.
- World Index P/E is about 15x and earnings still need to come down.
Covid
Oil Demand
- Q1 2020 decline in air travel demand is similar to Q1 2009.
- Kerosene demand is going to suffer strongly.
US Consumer
- Amid the carnage probably worth remembering the boost the US consumer is getting.
- Low interest rates = savings on mortgage payments if one refinances.
- Low oil prices = cheaper to fill up the car.
Covid ISM Survey
- ISM did a survey of US companies related to coronavirus.
- 75% of companies reported supply chain disruption.
- 12.8% have adjusted revenue targets downwards on average 5.6%.
- Manufacturers in China report operating at 50 percent capacity with 56 percent of normal staff.
Tourism
- Useful chart during the Covid shutdown – showing Tourism as a % of GDP of various countries.
Bridgewater on Coronavirus
- Month old post from Bridgewater on Coronavirus
- Still has relevant framework to think about the issue.
- This chart is worth keeping in mind – the economic impact is real and is far larger than during SARS.
UK Rebound?
- UK saw PMIs jump nicely.
- Also interesting to see the moderation of Brexit worries.
Dalio on Corona Virus
- Blog post from Dalio on his thoughts on the virus.
- Interesting he states that he isn’t an expert and doesn’t know anything.
- Still worth a read.
Dark Global PMIs
- PMIs, as expected, are showing a lot of weakness.
- Global PMI is down from 52.2 to 46.1 in February (right hand chart)
- The supply shock going on is also staggering (left hand chart).
Italy
- Big interesting read from Spiegel on Italy’s economic sluggishness.
- A nice ending.
- In parting, though, this correspondent nevertheless has hope that the Italians will stay true to their legendary talent for mastering crises with grandezza. The Italians have a wonderful saying for painful moments: “Ballando non duole il piede.” Your feet don’t hurt when you’re dancing.”
Value (cont.)
- “Of all 1,059 5-year rolling cycles observed since 1932, there are only 3 periods with smaller value premiums. The current -6% belongs to the 1% of the weakest periods”
- Typically this type of underperformance has led to 14-19% outperformance in the subsequent 5 years.
Equity Drawdowns by Country
- Chart from Bridgewater of the worst equity drawdowns (declines in equity markets) by country.
- The final column shows if one equal weighted geographically that one’s returns would be much better.
History of Asset Bubbles
- A history of asset bubbles from Bank of America.
Bernie gain = Trump gain
- Interesting chart that shows as Sanders gains so does Trump’s re-election probability.
Labour vs. Profits
- A great set of charts from Bridgewater Research.
- The left hand shows how US company profit margins have trended up largely thanks to productivity gains outpacing real wage growth.
- In other words profits rise because workers are getting paid a smaller share of the output they produce.
- Part of this is due to wages being driven down globally by the emergence of China (right hand chart).
- China has seen rising wages outpacing productivity growth and hence companies grabbing a smaller share.
Valuation and Returns
- This is an interesting chart that shows the performance of the S&P 500 index by different valuation levels.
- Based on data since 1935.
- The current valuation is 18x P/E.
