A Tale of Two Cities: in the great book by Charles Dickens the two cities were London and Paris. Today, in an imaginary Tale of Two Worlds the two worlds would be the West on the one hand and l'Asia on the other. The former staggers under the shock wave of a virus that it cannot tame, while the Asian continent has managed to keep the Covid-19. The numbers are merciless: combining the US and Europe, the cases of coronavirus to date are more than 20 per million inhabitants, and increasing. The corresponding number in Asia is just over 3 thousand, and stable.
They matter cultural factors, but they also matter the efficiency and severity of the response: in Australia and New Zealand – Western countries to honor – that number is even lower than in Asia. Finally the virus will be defeated, thanks to science (the vaccine is approaching), but in the meantime i damage to the economy they have been and will be huge.
In America theoutcome of the elections presidential is positive for the economy, even if Trump's snarling resistance introduces some element of uncertainty in the handover phase. The US locomotive still has to bear the weight of further unavoidable health restrictions even if, thanks to the generous transfers, the indefatigable American consumer has further ample room to widen the purse strings (the household savings rate is roughly double the historical average) and the "honeymoon", traditionally granted to the new President, could catalyze this spending power.
Even in Italy consumers, if not tireless as in America, seemed to hold (September retail sales had returned to pre-virus levels), but even here we must take into account that the consequences of the new restrictions are not yet incorporated into the data will be severe.
in Lancet last month we said that the infections were spreading, in Europe even more than in America. Now the relay reversed, And is America that has took the run-up (the elections, with rallies, crowds and various gatherings, had a large part). In Europe (not in Italy) there are signs of stabilization in the dynamics of infections; in our country we have to settle for a slowdown in the increase of rate of positivity, which is high.
Everywhere Economic data are aging prematurely in the face of the sudden and acute resurgence of the virus. To this obsolescence, in the era of Big Data, trying to remedy with real-time monitoring, who make use of Google keywords, credit card spending data, restaurant reservations… And these monitoring give bad news starting from the second half of October.
Inflation remains assignor, both at the level of consumer prices that at the level of producer prices. The only exception are the Use, as befits a country where the economy is less weak than elsewhere (the China, but prices there were affected by a large fall in pork prices).
The Chinese economy, which continues to be the world's largest absorber of raw material, pushed up the quotations of the latter, and also the Petroleum it remains above $40/b.
The pandemic has affected the inflation measures? A weighty IMF study recalculated i weights of the various categories of expenditure (with the lockdowns, the share of expenditure for essential goods has increased, and that for discretionary goods has decreased). Using credit card data, and recalculating the indices, it turns out that during the lockdown “true” inflation, understood as an erosion of purchasing power, was a few decimals higher a bit in all the main areas of the world, except in Southern Europe (where we are…).
Sui long rates levels are not much changed from last month, except for i T Bond, where 10-year yields are si get close to 1%, to then quickly drop again, in connection with the slight rise in inflation (in any case still below the famous 2%) and with the better stability (so far) of the real economy.
Stable the Bunds, while the BTps they reiterated their previous good performance, and even touched a yield of 0,60%, before settling at a level slightly above, but still below that of US Treasuries. Of course, many will argue that it is thanks to ECB, who buys btp full blast. But it does the same Fed with American bonds, and in any case the Fed and the ECB are doing nothing but their duty: given that the inflation dragon has long since fallen asleep, the Central banks act according to their statutes, and support the economy.
Compared to the previous month, i real rates (deflated by core CPI, which excludes food and energy) remained stable. To really help the economic recovery they should be much lower, but anyhow…
The change of theeuro against the dollar. The US elections did not have much effect on the course of the greenback and the dollar/euro remained in the 1,17-1,19 range, where it has been since August, after the sharp rise since the beginning of the year.
Where instead there was astolen is in the Chinese currency exchange: lo yuan, which a month ago was quoted at 6,71 against the dollar, is strengthened at 6,62. As befits the currency of an economy that has done best of all: according to the latest forecasts, which did not yet consider the recent effects of the second pandemic wave, at the end of next year the US economy will still be at 2019 levels, while the Chinese economy will be 10% bigger.
And i stock markets? The correction of the second half of October is short duration, and in November the stock prices, boosted by the US elections and buoyed by the news on vaccines, returned close to all-time highs. Trump had declared that if he were elected, Wall Street would take off like a rocket. Wall Street has left, but for other reasons…
The strange couple" Bags-gold no longer dance cheek-to-cheek like before. From August to todaygold has lost something and the Bags they went up. As indeed should happen in a well-tempered world.
