Independent Strategy

Macro Matters

June 2021

Independent Strategy Blog: Macro Matters

Looking at the Google activity data through to 26th June it looks as if there are some early signs that the recent pick up in infections/increase in risk perceptions has started to eat into activity a little.  But even in places where infection rates have risen fairly rapidly – the UK for example – the corresponding drop off in activity has been mild.

Covid-19 Database Weekly Update: Vaccinations, Daily Infections, Fatalities and Active Cases for regions and countries covering the last 7 days, up to 30 June 2021. Key investor relevance: 

  1. The data shows a sharp split between developing countries, doing better, and developed countries still mired in the pandemic, but now with rising vaccinations from a low base
  2. The major risk is that the Delta variant spreads in developed countries that have opened up.  Of course, there is now a greater tolerance for “just living with acceptable levels of Covid-19”.  But there are limits.

Total global vaccinations rose 11.8% or by 260mn – roughly stable on the week.  Vaccinations per 100 of the population is now above the critical 30 level in all regions except South Asia (India 20), Russia (24) and Africa (3).  Share of population fully vaccinated: world 10%, EU 24%, US 45%, UK 46%, South America 11%, Asia (ex China, which does not report) 7.9%.

Google mobility indices show a further and broad based improvement in the week to June 12th.  Global economic has all but recouped its post-Covid losses, but mobility is still some distance behind (a deficit of ~17% based on the data), although the trend here remains an improving one too.

Working through the latest Google mobility update (through to 5th June) you get an increasing sense of normality.  Although most places are still showing activity levels below where they were pre-pandemic, the gap looks pretty small and momentum remains strong.  Of our survey group four recorded w/w declines but really this is part of the ebb and flow rather than anything more sinister going on.  Even India has managed to move higher as the recent Covid wave there continues to abate.

While the US added 559k jobs in May according to the non-farm payrolls report, this marked another downside surprise for the series where the median estimate was up at 650k.  There was a modest upward revision to the April numbers (278k vs. 266k initially reported) but that doesn’t move the needle.  Private payrolls growth came in at 492k while manufacturing payrolls added 23k job and government 67k.  The unemployment rate dropped to 5.8% from 6.1% but this was aided by a decline in participation (61.6% from 61.7%).

The latest Google mobility update (through to 29th May) continues to show strong progress towards normalisation of the global economy. Of our survey group only three (23% of sample) recorded a w/w decline in activity and all of this was in places that shouldn’t really be a cause for concern. And the most notable victim of the virus (India) has finally managed to bounce. We also saw upticks in Japan, where an increase in cases had also worried.

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