Macroeconomics

Snippets on the big picture.

Macroeconomics

Small Business Tax Refund Boost

  • “Recently, the IRS has accelerated payouts from a pandemic-era tax benefit known as the Employee Retention Credit (ERC). We estimate over $220 billion has been disbursed so far ($130 billion this fiscal year) and data on outstanding claims suggests there’s at least another $120 billion yet to be distributed. The use (and in some cases abuse) of this benefit should provide a meaningful tailwind for small business balance sheets and consumption through the end of the year and into 2024.“
  • h/t Redubrn,
Macroeconomics

China Strike Tracker

  • A very handy tool that tracks strikes in China – both statistics and as a map.
  • Latest monthly numbers have seen a spike.
  • “Worker strikes have reached a new height after the pandemic,” Aidan Chau, a researcher at CLB, told Nikkei Asia. “Many protests are related to slowing demand in international trade.” (Nikkei Asia).
Macroeconomics

German Political Risk

  • The rise of the AfD (the right-wing populist party) in German polls has been remarkable.
  • With elections looming in October 2025, this political risk will soon be on investor’s horizons.
  • In this context, this interview with Wolfgang Munchau, former co-editor of FT Deutschland, is a must-read to understand the woes of Europe’s largest economy and how these reflect in politics.
  • Interestingly he highlights another possible surprise on the left political spectrum – “there may soon be a party on the Left led by Sahra Wagenknecht, a very sort of maverick politician, who has left or who is on the verge of leaving the Left Party, who may be forming a new party of the Left. And that party was also on opinion polls at potentially 20% of the electorate.”
Macroeconomics

Unusual Decline in Net Interest Payments

  • Despite the sharp rise in Fed Funds rate, company net interest payments have actually fallen.
  • “We have concluded that a sizeable proportion of huge, fixed-rate borrowings during 2020/21 still survives on company balance sheets in variable rate deposits. Companies have effectively played the yield curve in reverse and become net beneficiaries of higher rates, adding 5% to profits over the last year instead of deducting 10%+ from profits as usual.” 
  • Source: Soc Gen (via themarketear).
Macroeconomics

Panama Canal

  • Unprecedented drought in the Panama Canal is forcing some ships to offload 40% of their cargo.
  • It takes 200m liters of water per ship, that is pumped from Gatun lake.
  • Last year we had drought issues in the Rhine.
  • The coming El Niño weather pattern could lead to more issues for global transport supply chains.
  • Chart source: Tema ETFs.
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