Pelosi, Mnuchin Narrowing Gap on Stimulus, to Talk Again Tuesday While Trump has said he’s ready to match the $2.2 trillion spending level demanded by Democrats — or go higher — Senate Majority Leader Mitch McConnell has consistently warned that most GOP senators will oppose any coronavirus relief package that big.
From Howard Marks’ latest Memo:
(…) But this is not an academic matter. The trillions of dollars paid out thus far were not stimulus payments, but support. They weren’t made to get the recipients to spend so much as to keep them and the economy
alive. In short, the amounts distributed to the unemployed, families with incomes below $100,000, companies and institutions were designed to replace lost income and maintain, rather than stimulate, the economy. Individuals got money so they could buy the necessities of life. Companies got money to replace lost revenues, so they could continue to employ people. These needs have not dried up, even as the disease has ground on and the supplemental unemployment benefits have expired. (…)Another pressing need can be found at state and local governments. Their revenues have withered as the take from taxes and fees has declined. But their need to spend is unabated savings in connection with the slower economy and in fact it has grown.
The economic recovery everyone’s counting on is not an independent event, unaffected by developments. Rather, it is highly dependent on progress against the disease, as described above, but also on the continuation of fiscal expenditures in the interim. (…)
Jerome Powell has made clear that fiscal help is more critically needed than monetary support:
- “fiscal support has been essential in the good progress we see so far”
- “the power of fiscal policy is really unequaled by anything else.”
US voters no longer see Trump policies helping recovery Final pre-election FT-Peterson poll shows more believe president is hurting the economy
What about the Fed?
Axios informs us that Americans’ trust in the Fed fell again in October, with just 34% saying they have a fair amount or a great deal of trust in the central bank in the latest Axios/Ipsos poll. While trust in the Fed rises with age, income level and among those who say they know more about the institution, there was not a single group where even half of respondents said they trusted the Fed. Most groups register below 40%, including college graduates, higher-income earners and Americans between 50 and 64 years old.
Gallup tells us that 45% of Americans have “none” or “very little” confidence in Congress.
So, beware this next headline:
Consumer Confidence Rises Again in October
This measure of confidence, or lack thereof, is from Refinitiv. Yes, it rises again…very slowly, from the abyss…
WHAT IF NO DEAL?
If Joe Biden wins November’s presidential election, there is a reasonable chance that the Democrats will keep the House and take the Senate. Under this scenario, we would expect further fiscal support to be the administration’s number one priority. Reports suggest that advisors are pushing for an immediate $1 trillion support package. Meanwhile, Biden’s policy platform will require a big increase in spending that is only partly offset by fresh taxes on corporations and high earners. The overall impact would be a large net fiscal stimulus versus the counterfactual, with associated upwards pressure on GDP growth (real and nominal) as well as higher budget deficits, with some upside risk to inflation and interest rates.
(…) our baseline expectation is that a Trump second term would be hamstrung by House Democrats, and any prospective fiscal support would be comparatively small. In this scenario, a second-term Trump administration would have its biggest impact on foreign policy. Sino-US tensions have already increased sharply. Without the need to win another election, it seems possible that President Trump could take a more confrontational approach to Beijing. (Refinitiv)
A holiday unlike any other we’ve seen
From Deloitte’s holiday retail report: Shoppers expect to spend $1,387 per household during the holiday season this year, down -7% YoY.
38% of shoppers plan to spend less YoY because of concerns around economic instability
Note the propensity to save, almost double the last few years.
McKinsey’s survey sounds similar:
Despite increased optimism in the economy, most Americans continue to believe that the impact of the crisis on their routines and personal finances will last beyond the next four months. Compared to prior weeks, consumers report a slight decline in overall spending and will continue their shift to essentials. Americans are approaching the holiday season with similar spending caution, particularly low- and middle-income Americans.
Pandemic boosts automation and robotics Companies turning to technology provide boost to global trade but labour market will feel implications
U.S. Home Builder Sentiment Logs Another Record High
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased 2.4% to a record 85 during October from 83 in September. The index has risen 19.7% during the last twelve months. (…) The NAHB figures are seasonally adjusted. Over the past 15 years, there has been a 70% correlation between the y/y change in the home builders index and the y/y change in new plus existing home sales.
The index of present sales conditions rose 2.3% to 90 in October, a new record high. The index level is 15.4% higher over the last twelve months. The index of expected conditions in the next six months increased 3.5% to a record 88 and is 15.8% higher y/y. The index measuring traffic of prospective buyers held m/m at 74 (37.0% y/y). (…)
The Great American Move Accelerates
Never before have space and location been more important. The housing industry continues to benefit from The Great American Move. We continue to track the acceleration of movements to exurban communities—those in the affordable West and South.
Many growing families rely on 20-foot moving trucks when moving to a larger home, ideal for 2–3-bedroom homes or large apartments. We just updated our analysis of U-Haul rental rates between cities, which gives us insight into migration patterns:
With the shift to staying home and technology now enabling work from home, buyers can relocate. Not only did the eight California markets we track experience the most outmigration in the country, they all also showed more out-migration than one year ago.
Retirees and first-time buyers are now making the move south and seeking more space. New York, Baltimore, Boston, and DC were the next 4 largest out-migration markets. Renting a truck from Washington, DC, to Houston cost $1,600 pre-COVID-19 and now costs $2,900. This equates to $1,200 more to leave.
Previously, Seattle and Portland have been in-migration markets. They have flipped to out-migration markets for two quarters in a row, now that buyers are moving to more attainably priced locations or further out submarkets.
Pre-COVID, the cost to rent a 20’ truck from Seattle to Austin was $1,446. Now that same truck costs $2,567—a $1,121 difference!
Good podcast on housing (tks Mark): Ivy Zelman on the Single-Family and Multi-Family Housing Markets
Covid-19’s Global Divide: As West Reels, Asia Keeps Virus at Bay A surge in coronavirus infections is forcing U.S. states and European countries to shut down bars, open field hospitals, and limit social gatherings, but in much of Asia, such measures are becoming distant memories.
Meanwhile, there is less and less divide within the USA.Unlike previous waves, this surge is all over
The COVID Tracking Project. Map: Naema Ahmed/Axios
Moderna CEO Expects Covid-19 Vaccine Interim Results in November Moderna Chief Executive Stéphane Bancel said the federal government could authorize emergency use of the company’s experimental Covid-19 vaccine in December, if the company gets positive interim results in November from a large clinical trial.
(…) if sufficient interim results from the study takes longer to get, government authorization of the vaccine may not occur until early next year. (…) Mr. Bancel’s comments suggest Moderna’s timetable isn’t far off from Pfizer’s, which said last week it expects to seek U.S. authorization of emergency use of its vaccine by late November. (…)
Markets Are Tuning Out a Lot of Unpleasantness Stocks are showing a heroic faith in the prospects for fiscal stimulus, ongoing central bank support, and the swift arrival of a Covid vaccine.
(…) activity has been trundling along at a significantly lower level than usual for months:
(…) Amid such conditions, and with authorities in disarray over how to deal with the pandemic, how can stock markets remain so close to all-time highs? In brief:
- There is hope that a fiscal stimulus will be along shortly, as a result of Democratic victories in the U.S. elections (even though betting markets are moving to give Trump a better chance of holding on to power);
- Central banks are still largely trusted to keep the lid on interest rates at historically low levels — which effectively leaves investors with little choice but to buy stocks rather than bonds; and
- A vaccine should be along shortly (or possibly not).
Whether this is masterly tuning out of political noise, or dangerous obliviousness to elevated risks is a matter of taste. (John Authers)
Lawmakers on Both Sides Call for Antitrust Action Against Big Tech
Seek truth from facts (实事求是)
In December 1978, Deng Xiaoping delivered an important speech at the Closing session of the CCP Central Committee working conference. Under the headline “Emancipate the mind, seek truth from facts and unite as one in looking to the future“, Deng delivered a blow to the partisans of the status quo and bolstered the reformists, urging the Party to move beyond its dogmatism, excessive centralization of power and “bureaucratism”.
To seek the truth from facts is an appeal to reason and science that first appeared in the Book of Han, a monumental collection of historical, scientific and philosophical essays published in China at the beginning of the first century A.D. It was quoted by Mao during a speech delivered in 1938, as an appeal to pragmatism and it became part of the CCP doctrine although logic and science were sidelined during the heights of the Cultural Revolution. It was astute from Deng Xiaoping to use it back in a speech intended to jumpstart a wide ranging agenda of reforms, dubbed the “Four modernizations”, which radically changed the Chinese society, the Chinese economy and for that matter the global economy. Two decades later, in the early part of 1992, during his famous “Southern tour” Deng chose the city of Shenzen as a springboard for a second wave of economic liberalization and reforms.
It is tempting to draw parallel between Deng Xiaoping’s southern trip and Xi Jinping’s trip to Shenzen to celebrate the 40th anniversary of the Shenzen special economic zone. Domestic and external conditions have hugely changed since then. However, the emphasis on science and innovation is as important today as it was forty years ago when China was faced with the existential goals of technological catch up – first and foremost for military reasons – and economic growth – to contain social discontent and to enlarge the CCP’s power base .
As reported by the South China Morning Post, “Shenzhen should build high grounds for technology and innovation with global influence. It should plan innovation chains around its industries and plan its industries around innovation chains,” Xi told over 800 officials and entrepreneurs from the mainland, Hong Kong and Macau. The speech came two weeks before a key Communist Party plenum which will approve the country’s new five-year plan. The emphasis is put on the potential of the Greater Bay Area which includes Hong Kong and Macau. It could be seen as another way of minimising the role played by Hong Kong as a gateway between China and the rest of the world, all the more as there are now not only physical but also financial bridges connecting Hong Kong to its sister cities in the Bay Area, through the so-called “Bond Connect” and the Stock Connect.
Meanwhile in the United States, the fatherland of Benjamin Franklin, Melvis Dewey and Thomas Edison, the political polarization that has been ramping up since the global financial crisis of 2008 has given birth to “fake news” and “alt-truth” trough the build-up of so-called “informational bubbles” that comfort people in their stereotypes and jingoistic tendencies. The fact that the bizarre Q-Anon conspiracy theory achieved some form of respectability tells you a lot about the widening gap between the political discourse and the hard facts. Some factions in the American left are not devoid of such practices, especially when it comes to launching a cancel culture against what they perceive as a white male dominant capitalist establishment. The 2020 election could serve as a pivotal moment to move back to facts or as a catalyst toward an even further slide into informational bubbles and ideological dislocation. Perhaps the US political establishment should be well advised to … seek truth from facts.
From Morning Consult:
Nearly 40% of Republicans Who Have Heard of QAnon Believe Its Claims Are at Least Somewhat Accurate
Those who have heard of QAnon were asked whether they believe the conspiracy theory’s claims are accurate or inaccurate.
That even 16-18% of Democrats and Independents would find anything credible is incredible. But 38% of Republicans? Where are the facts?
More fake stuff: 42%!
Five stars? Fake reviews on Amazon during the pandemic have reached levels typically only seen during the holiday shopping season. About 42% of 720 million reviews assessed by monitoring service Fakespot from March through September were unreliable, up from about 36% in the same period last year. The surge coincided with lockdown measures. (Bloomberg)
The polls are wrong. The U.S. presidential race is a near dead heat, this A.I. ‘sentiment analysis’ tool says
An analysis of the emotions being expressed on social media indicates that the upcoming U.S. presidential election may be a much closer contest than many commentators and pollsters believe.
That’s the conclusion of Expert.ai, a company with offices in Modena, Italy, and Rockville, Md., that uses an A.I. technique called “sentiment analysis” to understand the emotions being expressed in social media posts.
The company’s analysis puts Democratic candidate Joseph Biden ahead of President Donald Trump, 50.2% to 47.3%, a margin that is much narrower than the double-digit lead that Biden has over Trump in most national opinion polls. (…)
Trump was the focus of far more social media activity than Biden, accounting for almost 60% of all the posts Expert.ai analyzed, compared to slightly less than 17% for Biden. But Biden ranked higher in terms of positive emotions such as “success” and “hope,” while Trump scored higher on negative emotions such as “fear” and “hatred.”
The only positive emotion on which Trump scores better than Biden, according to a statement from Expert.ai, is “action.”
Walt Mayo, Expert.ai’s chief executive officer, said the company’s ability to analyze hundreds of thousands of social media posts in real time gives it “insight into what voters are discussing and how their attitudes are evolving as we get closer to the election.” (…)
But here’s a real “no contest”!
97% of the jokes Stephen Colbert and Jimmy Fallon told about the presidential candidates in September targeted President Trump, AP’s Dave Bauder writes from a study by George Mason University’s Center for Media and Public Affairs. That’s 455 jokes about Trump, to 14 for Joe Biden. That doesn’t even count 64 jokes made about Trump’s family or administration. (Axios)