The Big Imbalance – US-China

The US and China recoveries are tied at the hip. Both countries responded to the pandemic in ways that suited them, with the consequence the global trade imbalance is now essentially a bilateral one between the US and China.  The plunge in global trade has reduced...

Fed No Longer the “Only Game in Town” for Stocks

US equities are beginning to behave more normally. The average pairwise correlation across S&P 500 stocks has plunged (top-left chart), which tells us that stocks are starting to move independently from one another and are no longer driven to the same extent by...

Lockdown Threat = A Two-Speed Economy and Market

Inequalities that existed before this crisis have been amplified by it. One place where this is prominent is in markets. Interest-rate sensitive sectors are seeing a marked outperformance due to their heightened sensitivity to liquidity. Technology has also benefited...

US Economy Bottoming

The key difference between our recession methodologies and the NBER’s is that we rely on leading indicators to identify the end of a recession in real time, whereas the NBER prefers to wait for confirmation from coincident and lagging data, following data revisions....

US Recession May Be Shorter Than Expected

The official dating body for US recessions, the NBER, announced last month the US reached the peak of its expansion in February and is now contracting. The NBER defines a recession as “a significant decline in economic activity spread across the economy, normally...

Plenty of Cover for Fed to Maintain the “Big Ease”

In our Market Ledger, one of the “debits” for the market is chronic insolvency. We have not really begun to see the full impact on jobs and businesses due to improved unemployment benefits, stimulus cheques and business lending schemes, but that will change as...

US Consumer Will not be Coming to the Economy’s Rescue

The latest print from the University of Michigan consumer sentiment survey has shown a fall of almost 12 points, the largest drop since 2008, and takes us back to 2016 levels. Unlike the last three recessions, which had seen consumer sentiment fall into each one...