The first will be the first, not the last ones. With many apologies to the Gospel according to Matthew, Italy, which was the first in Europe to be heavily affected by the virus, could also be the first to go out from this tragic tunnel.
- PMI indices Italians report a more marked rebound than in other countries and anecdotal evidence of a strong desire for recovery is growing.
Of course, the recovery it will not resemble the departure of the Falcon 9 to the ISS (which is not the Istituto Superiore di Sanità, but the International Space Station), but neither is it probable setback, as the virus appears to be in clear retreat.
Outside of Italy, the epidemic situation in Italy is worrying America (North and South): the Latin American populations do not like distancing (especially when they live, not by choice, in the favelas) and protests in the USA they create gatherings…
Anyway, the support to the economy – from balance sheets and money – is impressivealmost everywhere, even if it will not be able to fully compensate either the emerging damages or the loss of profits.
The great forecasters – from the Monetary Fund to the OECD to the EU Commission – are redoing the GDP calculations but I'm out of compasses: past history has nothing to indicate the trajectory of an economy wounded by a virus, and econometric models are not equipped to take into account the black swans, which as such are unpredictable.
Instead of the compass we are content to look at the data day by day. May data signal a variegated "less worse" compared to the April nadir (or February for the China). And let's pray for the vaccine.
But perhaps it will not be necessary to wait and go that far: if they are confirmed Italian clinical evidence, who ring a row of zeros in the newly hospitalized, the virus will be declassified from an angel of death to a serious flu. Against which the Italian medical teams have developed a successful therapy rediscovering ancient cures.
Inflation ignore the rivers of new money flowing around the world, and the temperature of prices is downhill, both at the level of prices al best before date that of those at the production.
The main factor lies in the weakness of the question, and then there is the (re)discovery of online sales, which increase their share of the total, squeezing producers' margins. And still there are the industrial reserve armies, as Marx would have called them, swelled by huge job losses.
In the market of crude the production cuts, forced by the fall in the sales of derivatives (transport and mobility have been heavily affected), have brought the prices back just under $40: in any case a much lower level than the 50-70 d/b that prevailed in 2018-2019. A level, however, that allows American shale oil to survive. The other raw materials give signs of stabilization, following the improved medical and economic health of the number one absorber, China.
I long rates, both in America in that Germany, have stopped falling and are showing slight signs of an increase (if a slightly less negative rate can be called that in Germany). It is like to think that these hints of ascent are due to “least worst” of demand prospects, given that they cannot be due to the difficulties in financing the huge budget deficits: the St. Patrick's Well of the Central Banks.
In Italy the yields of btp are again - but this time beneficially - against the tide: after having risen when the other yields were at a standstill, now they got off, thanks to Europe and the massive support that emerges. But every rose has its thorns: the fall of inflation weighs down i real rates.
THE euro this time it gets stronger: in the relay between interest rate differentials and growth differentials, one month prevails and one month prevails the other. But this time there is another guest at the currency table: Europe struck a blow with the Recovery Fund and other measures; international capitals are realizing that European countries are able to agree and counter the blow of the coronavirus. And the demonstrations and protests in America over well-known racist events certainly don't help the greenback. The renewed tensions between the USA and China (accomplice the case of Hong Kong) have affected (with the approval of Beijing), the yuan, which, moreover, has recovered somewhat in recent days.
Le Bags they continue to believe in the best of all possible worlds, and maybe they are right. But, as they predicted – the old joke is from Paul Samuelson – seven of the last five recessions, they will also be able to predict seven of the last five rounds.
National accounts data on US corporate net profits in the 1st quarter of this year, which fell by more than $100 billion, continue to signal an overvaluation of share prices Wall Street. This it is not an invitation to buy put on the American Stock Exchange. As another great economist, Keynes, observed: "The market can remain irrational longer than you can remain solvent."
Followed by three articles on the real economy, inflation and interest rates, money and exchange rates
