«2021, the odyssey of the economy towards the happy ending», headlined the Lancet beginning of the year. Today it is possible to confirm that judgment, with a doppio caveat. On the one hand, the virus recession has changed traditional responses to crises; within countries the normally less cyclical sectors – services – were more affected than theindustry. Outside the countries, where the crisis normally hit less hard - the emerging countries - this pattern was confirmed, thanks to China, but large slices of emerging – the South American and Caribbean countries – they did worse than advanced economies, unlike what happened in the Great Recession.
Now among the famous 'fundamentals' of economies – emerged or emerging – it will also be necessary to put the social cohesion and respect for the rulesThese are qualities that explain much of the different responses of the planet's economies to the shocks of Covid-19. Of course, compliance with the rules also depends on theauthoritarianism, quite different from the authority of leadership (an increasingly rare commodity). It's easier to enforce them when the authorities hide knotty clubs behind the invitation to "respect".
There has long been another ordeal between East and West, a challenge between the capitalist-liberal model western and the authoritarian-heterodirected model embodied by China. Both in economic growth and in the fight against the virus, the latter has done better. True, there are many powerful and compelling reasons for don't be fooled by the advantages of authoritarianism. But there is no doubt that, in the minds of many, the Chinese model has gained ground.
The most timely indicators – in Europein Italy and especially in America - they say that we're on the right path in the exit from the pandemic economic crisis. But the virus is not defeated. Contagions slow down in advanced economies (after all, restrictions are good for something, pace of 'aperturists'), but continue elsewhere, and, globally, there is a resurgence, driven by the most contagious variants.
The danger is the same as always: progress in infections leads to relaxation, and relaxations lead to new infections, with a compulsion to repeat that ping-pong between easing and restrictions already given in the past. We will only get out of it with a decisive acceleration in the vaccinations, following the example of Great Britain and the United States, where the percentage of the population vaccinated is close to 50% in the first and exceeds one third in seconds (theEurope continental stands on 15%, while worldwide, the percentage is still very low, on 5%).
Inflation, apart from temporary factors (VAT increase in Germany and changes in price baskets in Europe) shows no signs of rising. And even if there is an uptick (a little more pressure is to be expected, if not downright desirable) it is unlikely to be such as to change the waited. For price pressures to become permanent, it must be buyers and sellers (and among these there are also job buyers – businesses – and job sellers – workers) are convinced that inflation is upon us; and it must be there question – demand for goods, services and work – is strong and growing. Neither of these two conditions is satisfied at present.
And it is good to remember what we have already said ad abundantiam. Let us quote the latest Lancette: “the powerful continue to be underestimated structural factors – other than demand and costs – which keep a lid on prices. Factors ranging from globalization atimmigration, from online sales to the thousand ways – many in place and many still in potential – that allow the digital revolution to find cheaper ways to produce goods and services”.
Raw materials and oil, which had given clear signs of awakening in the last month following the recovery in manufacturing, were not bothered by the brief closure of the Suez Canal, and they show no signs of further increases. The magic of supply and demand is always there. True, the demand for raw materials increases, but so does the supply.
I long rates they remain at slightly higher average levels than in recent months, but they give no signals – as indeed, we have just said, inflation does not give them – to continue the ascent. Philippine Finance Minister He said they are preparing to issue dollar bonds before rates rocket higher. US Treasury Secretary, Janet Yellen, said monetary conditions will remain supportive of the recovery, and the Fed Chairman Powell made dovish statements about the continuation of QE (as, indeed, did, on the other side of the Atlantic, the Lagarde). The yields of T Bond, which had exceeded 1,7%, have returned below that level (to put things in perspective, we recall that at the end of 2019, just before the virus, T-Bonds were down 1,9%). Decidedly, markets seem to believe Yellen & Co. more than the Philippine Finance Minister. The yields of Waist e btp are little changed compared to last month, and the spread continues to fluctuate around the 100 mark.
Monetary conditions will remain favorable to recovery, it was said. And this affirmation, which is both an observation and a resolution, is confirmed by the real rates that for T-Bonds, BTPs and Bunds they keep on zero or subzero. If the recovery does not continue, it will certainly not be due to credit: both availability and cost are not obstacles.
For the you change, fundamentals seem to favor the dollar, Both for the growth differential that for the rate differential, nominal or real. But even here there is no matter for abrupt changes. Against euro the exchange rate had flirted with 1,17, but is now back close to 1,19. It almost seems like that markets have other things to think about and leave the changes alone. Perhaps a little less peaceful is the exchange of the yuan: nothing happens by chance in the Chinese currency e geopolitical factors may explain the sting of a slight depreciation of the yuan.
I stock markets they stay on nice stable, and we don't see – apart from brief corrections – how the weather can turn ugly. The economies are clearly in recovery, the second half of the year will be much better than the first – thanks to expansionary policies and to the 'sacred chalice' ofherd immunity – and the alternatives to equity investing are not particularly attractive. The yields of bonds, as mentioned, will remain low, the flow from ETF funds gold they continue and the Bitcoin it is attractive only for lovers of extreme sports.
