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Is the recovery real?

Dernière mise à jour : 15 juil. 2020




The idea that we are witnessing a divergence, a discrepancy, between the trend of the major financial lists, in particular those in the United States, which are discounting a V-rate trend in the trend of production, and the real economic data that are increasingly difficult to reconcile with the possible imminent recovery of pre-Covid income levels. The obvious risks are linked to the increase in infections in the United States, as well as in many other countries, and the upcoming US elections.

The past week opens with the meeting of Chancellor Merkel and President Macron, on the eve of the German semester at the European Council, in which both reaffirm the need for a more cohesive and united Europe, which can respond vehemently to the greatest economic, health and social crisis the world has experienced since the Second World War. Both hope for the start of the 750 billion Next Generation, of which 500 billion in grants, or resources that can be made available to individual states to strengthen health, employment, accelerate the digitization process, and deal with the current economic crisis. The obvious inadequacy of the post-Covid European response could finally register a change of course and lay the foundations for a forthcoming phase of European integration. France and Germany send a strong political signal on the irreversibility of the Euro and on the planning for greater fiscal cohesion.

In addition, it is noted that the PMI index on the expectations of the purchasing managers of manufacturing companies in the euro zone rose more than the consensus in June, as did German retail sales compared to a lower-than-expected number of unemployed people.


On the US side, the Federal Reserve has sent reassuring signals since the board's last meeting on expansive monetary policy and, from the minutes, it is clear that control of the rate curve will not yet be introduced, a monetary policy instrument introduced during the Second World War but then abandoned. The gap between Wall Street and Main Street widens with, on the one hand, the Nasdaq which records its historical highs and, on the other, the peak of the last seven years in the number of companies that went bankrupt in the first six months of 2020. In recent weeks, macroeconomic data have been recorded well above expectations, especially in terms of employment and, at the same time, data on new contagions are hitting new records to the point that even the most adverse states to containment measures have had to reintroduce. the closure of certain activities and the prohibitions on the free movement of citizens.

Figures on infections are also on the rise in Brazil, which has exceeded the threshold of 60,000 deaths, in India there are more than 600,000 cases and 17,834 deaths and Sweden have been exceeded 70,000 cases, Tokyo, in the last week, have had 50 new daily cases with peaks that has reached more than double.

Finally, on Friday, the Bundestag ruled positively on the fulfillment by the European Central Bank of the requirements set in May by the German Constitutional Court. The ECB's government bond purchase program was deemed "proportionate" by the Federal Parliament. This news can be interpreted positively, also thanks to the large parliamentary majority that supported the decision, because it does not prevent the Bundesbank from continuing to implement the Quantitative Easing program.

However, it is noted that the macroeconomic data provided may not be reliable as the entire world economy experienced a profound contraction in production and consumption in the lockdown period and, in some cases, the closure of the public statistical offices may have prevented data collection. This could lead to a revision of the latest published indicators, characterized by an unexpected positivity, due to the fact that these are based on estimates and not on findings.

Some economists point out that the inaccuracy of the macroeconomic data that is being used, due to the difficulties in their collection, could seriously invalidate the estimates and analyses that are currently being made on the basis of these.

While it is certain that the world economy is no longer in a phase of contraction, the determination of the current recovery is less clear and the likely economic scenarios cannot ignore the consequences that could arise following a change in the US presidency and a recovery global pandemic.



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