Independent Strategy

Macro Matters

May 2021

Independent Strategy Blog: Macro Matters

The latest Google activity figures (through to 22nd May) continue to support the strong global recovery narrative with the latest improvement being driven by ongoing gains in Europe.  Indeed France and Germany led the increase in activity last week, with Italy, Spain and the UK also in our top group (alongside Russia).  Mexico, Australia and the US recorded small gains too.

In the last 7 days: Global Daily Infections fell 19.6% and the RO/RE rate has fallen to 0.79 from 0.89 and 1.36 nearly a month ago.  This level of RO/RE indicates a waning pandemic.  Daily infections fell in all regions except Latin America and Asia.  In India daily case fell from 341k/day to 263k/day.

Israel Ceasefire in Gaza fairly predictable, the assault has gone on for a sufficiently long time to serve most political objectives of the warring parties.  As such it is a sustainable halt to hostilities, repeating the cycle we’ve seen numerous times in the past. There are two fights going on here, on is technological and the other political. Israel have struck Hamas very harshly, depleting its stockpiles and damaging its infrastructure.  It has also demonstrated its technological capabilities to defend Israel from rocket attacks (for the most part) — Hamas were not able to overwhelm Iron Dome despite their best efforts.

On a global basis the latest Google activity figures (to 15th May) show a further modest improvement in the recovery rate, maintaining the solid uptrend we’ve seen since the start of the year.  Obviously we’ve seen setbacks in certain places, the most extreme case being India, but this hasn’t been enough to move the global needle.

The headline non-farm payrolls jobs figure surprised on the downside in April, with 266k jobs created versus the median forecast of 978k.  And the March figure was also revised downward by 146k.  Obviously, it was private payrolls that disappointed (+218k vs. 893k survey) while manufacturing jobs contracted slightly (-18k).  Government couldn’t make up for that but did offer a +48k contribution.  The unemployment rate actually ticked back to 6.1%, a result of the 0.2% pt improvement in participation and the work week ticked up again.

Analysing the weekly vaccinations data some things stand out:

  1. Daily infections are falling everywhere except in South Asia (+18% on the week to 384k/day).
  2. EU daily infections are down 19% for last week (vs. previous seven days).
  3. Global vaccinations are up 14% on the week. Some signs of vaccine fatigue in the US (+8%) & UK (+6%).
  4. The EU crossed (what I think is a critical) threshold of 30 vaccinations per 100 population with 33. Share of the population with 1 shot or more is 24% up from 21%.

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