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Demography Unplugged with Neil Howe
Exciting news for all listeners: Neil Howe's podcast is undergoing an exciting transformation and emerging with a brand-new name—"Trend Watch". From now on, all upcoming episodes will be exclusively available in full on Substack. But that's not all—Neil's new Substack newsletter launching August 21, 2023, will feature thought-provoking insights on demographic, economic, and generational trends. Stay informed, stay engaged, and stay ahead of the trends!
Visit: www.demographyunplugged.com to subscribe.
Neil Howe’s podcast is designed to help savvy investors and business leaders uncover hidden trends and critical developments driving world markets and economies. It’s like peering into the future. Discover the likely winners (and losers) of “big ideas” as renowned demographer Neil Howe – the guy who coined the term “Millennial” – distills game-changing new developments down to their essence.
Neil Howe is an acclaimed historian, economist, and demographer and the bestselling author (with William Strauss) of The Fourth Turning, the New York Times Bestselling follow-up book, The Fourth Turning is Here, as well as over a dozen books on demographic and social change. The nation’s leading thinker on today’s generations—who they are, what motivates them, and how they will shape America’s future—Howe is Managing Director of Demography at Hedgeye Risk Management, an independent financial research firm, as well as President of LifeCourse Associates, which serves hundreds of corporate, nonprofit, and government clients.
- 50 - Generations in Politics: Interview with Chuck Todd
In this latest issue of my weekly podcast, we replay a recent interview I did with Chuck Todd, who invited me on his podcast “The Chuck ToddCast from Meet the Press.”We had a great conversation and discussed Millennials' and other generations' impact on politics. Trust me, this was a fun interview.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Tue, 25 May 2021 - 49 - A Deep Dive into China's Census
In this latest issue of my weekly podcast, we devote most of our conversation to China's decennial census.The results were mysteriously delayed, which had many insiders suspecting a dreaded population dip. But recently released provisional data show a slight population increase to 1.41 billion people. Could this be? I go behind all the ins and outs of how China counts its population, and provide theories on what the "true" count may be.
Bolsonaro on the defense.Brazil's Senate has opened an investigation into President Jair Bolsonaro's handling of the pandemic. He is accused of threatening governors and mayors to keep their economies open. The investigation is most likely a tool to gather evidence for a possible impeachment trial.India and EU negotiate.The two entities have announced they will begin negotiations on a trade deal. This comes as both the EU and India grow cold on China. So far, their biggest obstacle is centered on vaccine patents.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 12 May 2021 - 48 - Biden Tested, Myanmar Burns, And Immigration Surges
In this latest issue of my weekly podcast, we pay tribute to John Williamson and Walter Mondale, RIP.Williamson died at the age of 84. He is most famous for in 1989 defining the "Washington Consensus," a list of what emerging market economies should or must do to succeed. While his theory is no longer popular, it was highly influential following the Reagan and Thatcher era. Mondale died at the age of 93. He famously lost the presidential election of 1984 in an abject defeat to Ronald Reagan. He only received 13 electoral votes, a historic low for a Democratic candidate. But perhaps his most enduring legacy is elevating the role of the VP.
Myanmar in chaos. Daily protests continue since the military coup began on February 1. Tens of thousands of civil servants, teachers, and doctors are on strike, paralyzing the military's ability to rule. But the generals aren't backing down. They have jailed 3,000 citizens and killed an additional 700 demonstrators. Myanmar is turning into a failed state.
Putin and Xi v Biden.Russia is amassing soldiers on the Ukraine border. And China continues to send warplanes over Taiwan. Both actions seem to be testing Biden. How far can they go before he reacts? Meanwhile, Biden announces US departure from Afghanistan by 9/11/21. Putin and Xi both want to know--at what point does Putin push back?
Surge at the border.The number of working-age Mexicans apprehended at the border has more than doubled in recent months. The increase coincides with a surge in unaccompanied children and family migrants, presenting a major quandary for the Biden administration.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Thu, 22 Apr 2021 - 47 - Biden's Prospects, Israel's Fourth Election, and the Five Eyes Alliance
In this latest issue of my weekly podcast, we discuss the future of Biden's agenda.Last week, the White House officially unveiled its $2T infrastructure package. The plan is popular among the public, and due to reconciliation, it only needs 50 votes to pass the Senate. Biden will also try to pass a minimum wage increase, a voting rights bill, and immigration reform. But these bills can't be passed through reconciliation and will need 60 votes to bypass the filibuster. While their chances of success are slim at best, Biden may take the most popular bill--a higher minimum wage, properly tailored to meet the objections of Senator Joe Manchin--and throw it in the face of Majority Leader Mitch McConnell just in time for the 2022 elections.
Retailers scramble over human rights.After Nike and H&M criticized China's internment of Uyghurs, the Chinese government rallied boycotts against the two brands. Other companies have now taken softer stances on human rights to try and appease the Communist Party. Though there is also the risk Western consumers will punish brands that don't take a definitive pro-Uyghur stance. Much of this drama will play out over sponsorship deals in the 2022 China Winter Olympics.
Netanyahu tries to form a new government.In the fourth consecutive election, there is still no clear coalition government. Netanyahu, now on trial, has been given the first chance at forming a government. Most analysts suspect the country is headed for a fifth election.
Americans grow cold on China.Fully 89% of Americans now consider China a competitor or an enemy rather than a partner. The negative sentiment is higher among Republicans than Democrats, but negative perceptions have risen equally among both groups since 2018.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 07 Apr 2021 - 46 - Immigration, The Lira, and Pineapple Diplomacy
In this latest issue of my weekly podcast, we discuss Biden's immigration strategy. Currently, the White House is using former President Trump's executive orders (notably Title 42) to handle the nearly 6,000 daily border crossings. But what's Biden's long-term plan? It largely mirrors the 2013 Senate bill, penned by the "Gang of 8." Undocumented immigrants could become citizens if they pay taxes, take a background test, and work in the US for an additional eight years.
Turkey's Lira tumbles. Over the weekend, President Recep Erdogan fired central bank head Naci Agbal. In response, the Turkish Lira fell nearly 15% on Monday. The country has always had a problem with irregular CB management. And Erdogan, like all populist autocrats, hates CB heads unless they can keep interest rates low.
#FreedomPineapple.In late February, China tried to squeeze the Taiwan economy. They banned the importation of pineapples from the island. In response, the Taiwan government asked locals and other Asian countries to buy its fruit in a new #FreedomPineapple campaign. In a few days, pineapple orders surpassed the total number shipped to China in all of 2020. Japan was one of the biggest buyers.
More baby bust evidence.According to a new CBS analysis of annual data from 32 US states, births were down by 95,000, or about 4.4%, in 2020 compared to the year before. This is in line with our prior estimate for 2020. Of the states with data available, all of them reported a drop in births except New Hampshire.
Opioid deaths make a resurgence.Opioid overdose deaths in the U.S. have surged during the pandemic. In 2020, the death toll from all drug overdoses climbed to its highest level ever, with opioids accounting for 73% of those deaths.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 24 Mar 2021 - 45 - Infrastructure, Death Rates, and Lula's Return?
In this latest issue of my weekly podcast, we discuss Biden's infrastructure package. The plan will cost nearly $4T over ten years. The money will be divided as follows: $1.4T for straight infrastructure, $600B for clean energy, $400B for manufacturing, $300B for innovation/R&D, and $800B for the caregiver economy. To pass this bill, Senate Democrats will need to use reconciliation. If it does pass, it will be a major win for Biden. Infrastructure has broad bipartisan appeal among the general public.
Lula is eyeing a return to Brazilian politics.In a surprise ruling, a Supreme Court judge has annulled the "lava-jato" convictions against former Brazilian president Lula da Silva. If the verdict stands, Lula could once again run for president. As Brazil's iconic if aging left-wing populist, he could be a strong candidate against Bolsonaro.
Italy’s political parties are in disarray.Since PM Mario Draghi came to power with a large coalition government, Italy’s political parties have struggled to define their future. As the Five Star Movement and the Democratic Party scramble, Lega is looking to fill the gap.
US mortality rate skyrockets. Covid-19 triggered a 15% estimated spike in the mortality rate for 2020, according to the CDC. This jump would mark the largest single-year increase since 1918.
Japan dodges C19 deaths. Last year, the number of deaths in Japan declined for the first time in more than a decade. The decrease appears to have been driven by a large decline in other respiratory illnesses like influenza and stands in stark contrast to the steeply rising mortality experienced by other countries during the pandemic.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 17 Mar 2021 - 44 - Biden's Agenda, Milk Tea Alliance, and Dropping Sperm Counts
In this latest issue of my weekly podcast, we discuss Biden's and the Democrats' agenda.The Senate has passed the massive $1.9B stimulus package. The bill is also set to pass the House this week. This was a major win for the Democrats. Not only is the package popular among the general public, but it has considerable support among Republican voters. Biden has now turned his efforts towards HR.1, a voting reform package. This bill has almost no chance of passing the Senate, and it takes away from Biden's focus. He would do much better by passing popular and widely understood economic measures.
Myanmar protesters have a new target. As demonstrations against the recent military coup continue, protesters have turned towards the China embassy. While some are asking for China’s help, others blame the country for allowing the coup to happen in the first place.
“Quad” summit planned for next week.Biden has organized a meeting between the US, India, Australia, and Japan. The purpose of the conference is to discuss strategies to counter China’s influence in the Pacific. According to inside sources, vaccine diplomacy is high on the agenda.
Italy blocks vaccine exports. Prime Minister Mario Draghi used a new EU mechanism to block AstraZeneca vaccine exports to Australia. He earned huge support among Italy's populists (even Salvini is applauding) by arguing that since the company is behind in their EU contracts, they must first fulfill those agreements.
Is there a new biological threat to fertility? In her new book Count Down, epidemiologist Shanna H. Swan warns of a coming crisis in reproductive health. The book argues that endocrine-disrupting chemicals in our environment are wreaking havoc on sperm counts and egg quality and weaken humankind's ability to reproduce.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Thu, 11 Mar 2021 - 43 - Listener Questions, The Pandemic Baby Bust, and China's Hanification
In this latest issue of my weekly podcast, I answer listener-submitted questions. Is multi-generational housing a long-term trend? Are we transitioning from an ‘era of logic’ to an ‘era of emotion’? Is America paralleling the decline of the Roman Empire? I go in-depth on all of these questions and more.
China accelerates "Hanification" efforts.Xi Jinping's cultural campaign aims to transform all non-Han cultures in China into "Han" culture. These efforts include promoting Han food, Han dress, Mandarin, and the spread of Confucius institutes. It also means the suppression of local languages and religions.
EU set to impose new sanctions.The EU has agreed to sanction four unnamed Russian officials involved in the persecutions of Alexei Navalny. The sanctions will include travel bans and asset freezes. The EU will formally adopt these measures in March.
Births fall in China.From 2019 to 2020, the number of registered newborns in China fell by 15%. The steep drop underscores the demographic headwinds facing the country, which has long struggled with a long-term birthrate decline.
Births fall in Europe. New numbers from Italy and France indicate that these countries are also seeing pandemic-era baby busts. Figures from December 2020 and January 2021 show that births in several major cities have declined 10% to 25%.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 24 Feb 2021 - 42 - GOP in Trouble, End of Split Ticket Voting, and the Plight of the Uighurs
In this latest issue of my weekly podcast, we discuss the current state of the GOP.Last week, ten Republican representatives voted to impeach--and seven Republican senators voted to remove--Donald Trump. That is the largest number of other-party senators voting for removal from office in U.S. history. A day later, Trump excoriated Mitch McConnell, calling into question his leadership. The GOP once prided itself on unity while the Democrats struggled to pull together. Now the tables have turned. The GOP needs Biden to do very badly to have a good chance in 2024--or maybe even 2022.
The number of split delegations in the Senate has fallen to its lowest since the direct election of senators began in 1914. Only six states now have senators from different parties; for most of the last century, this number hovered between 10 and 20.
Three Covid-19 Mutation Takeaways: 1. The newest variants have become mostly resistant to the sera of people infected with older variants. 2. The newest variants are becoming increasingly resistant to the sera of vaccinated persons. 3. The newest variants clearly mutate in real-time in response to changes in the human environment.
Is China committing genocide?In Northwest China, one million Uighurs have been forced into "re-education"/concentration camps. The Uighurs have been forced into factory work with reports of sterilizing the women and separating children from their families. The US and other Western nations have debated whether what is happening in Xinjiang Province is a full-fledged genocide or a (perhaps less sinister?) cultural genocide. This debate coincides with Biden and China clashing over other flashpoints like Honk Kong, Taiwan, and oh yes coup-stricken Myanmar, a "friend" of China that is facing its own genocide charges.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Tue, 23 Feb 2021 - 41 - Listener Questions, China vs UK, and Italy Welcomes an Old Face
In this latest issue of my weekly podcast, I answer listener summited questions.Is Joe Biden a grey champion?Is America in danger of entering a new war? Does policy matter in times of extreme partisanship? Is America paralleling the decline of the Roman Empire? Have pandemic lockdowns created a new baby boom? I go in-depth on all of these questions and more.
We start the podcast with a brief market update and a world news roundup. Former ECB president Mario Draghi has been asked to form a new government in Italy. China is no longer acknowledging British National Overseas passports held by Hong Kong citizens. And Russia has expelled three European diplomats, angering many EU member states.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 10 Feb 2021 - 40 - Election 2020: The Ghosts of Elections Past, Present, and Future
In this latest issue of my weekly podcast, I replay my recent conversation with JT Taylor, Hedgeye's Chief Political Strategist.We look back at the results of the 2020 elections and how changes in demographics and partisanship will affect the Biden White House and the 117th Congress. JT and I also examine the upcoming elections in 2022 and 2024.
We start the podcast with a brief market update and some overall lessons from the recent GME saga.For more on my take on GME, you can turn to this morning's NewsWire.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 02 Feb 2021 - 39 - Housing, Mutations, Navalny, and Why Europe Thinks America is "Broken"
In this latest issue of my weekly podcast, we discuss the threat of Covid-19 adaptive mutations.Moderna-NIH just released their new study on the effectiveness of the Moderna vaccine against the South African mutation. Yes, the vaccine protects against the new variant, but the antibodies' strength is reduced by 4 to 6X. This is the first sign that vaccines will most likely need to be updated in the future.
Suga's public approval plummets. The Japanese PM's approval rating has fallen from 74% in September to 42% in January. This is the result of pandemic missteps, a slow vaccine rollout, and lack of charisma. Come the September elections, his party may look for a replacement.
Conte resigns. After surviving a confidence vote in parliament but failing to secure a majority, PM Giuseppe Conte has resigned in attempts to create a new government. If he fails, the two largest parties will be given a chance to make their own government. But if they too fail, it will trigger new nationwide elections. Salvini can't wait.
Tensions over Taiwan heat up.Over the weekend, China flew eight H6K bombers near Taiwan's airspace, making it the 20th flyby this month. The Biden administration publicly declared support for Taiwan and moved the aircraft carrier Theodore Roosevelt into the South China Sea. Taiwan remains a lively flashpoint between Xi-led China and Biden-led America.Protests break out in Russia.Over the weekend, jailed opposition leader Alexie Navalny released a YouTube documentary accusing Putin of using government funds to build a pleasure palace on the Black Sea. This led to widespread protests throughout the country; over 40,000 demonstrators took to the streets of Moscow. In an unprecedented move, Putin held a press conference to deny the accusations.
Most Europeans now believe the U.S. political system is "broken."New data show that Europeans are turning away from their traditional transatlantic security ties and, in the event of a conflict between America and China or Russia, would prefer to remain neutral.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Thu, 28 Jan 2021 - 38 - The Biden Economy, the Weimar Republic, and Conte's Close Call
In this latest issue of my weekly podcast, we discuss the future of the economy. I predict we will see three distinct phases. In the next few weeks, the economy will continue to decelerate, with accompanying market turbulence, to the mobility drop associated with Covid-19. But going forward over the next several months into the summer, both will go strongly positive, buoyed by the vaccine and Biden stimulus. In 2H, however, look for outlook to darken just when the party is rockin'--due to rising inflation expectations, Covid-19's adaptive mutations, and a new form of political "resistance."
25,000 National Guard troops patrol DC. Capitol Hill hasn't seen this many armed soldiers since 1865. Reflecting on the storming of the Capitol, I draw parallels between the present-day and Hitler's failed "beer hall putsch" in 1923.
Will Biden scrap Trump's executive order? Last year, Trump signed an executive order that US stock exchanges must delist companies working with the Chinese military. Biden has yet to comment on the issue. But with his priorities focused on C19 and growing bipartisan support for being tough on China, he will likely let it stand for the time being.
Italian PM Giuseppe Conte survives a confidence vote.In Italy, former PM Matteo Renzi removed his party from the ruling coalition. This sparked an immediate confidence vote in parliament. PM Giuseppe Conte easily received a majority of votes in the lower chamber. The Senate was a different situation. He narrowly received the most votes but did not secure a majority. Why is the Conte regime still hanging on? Probably because the deputies want to avoid a legislated one-third downsizing of their number due to go into effect as soon as there is another government. Conte will hobble on, greatly weakened.
In 2020, the share of eligible Americans who actually voted was 66.7%.This was higher than in any year since 1900. This follows the off-year election of 2018, in which the share was the highest in 104 years.
Wed, 20 Jan 2021 - 37 - Georgia Elections, Storming the Capitol, and EU-China Agreement
In this latest issue of my weekly podcast, we discuss the Georgia elections.Raphael Warnock and Jon Ossof beat Republican incumbents Kelly Loeffler and David Perdue. Both Warnock and Ossof won by over 0.5%, avoiding an automatic recount. Ultimately this is good news for markets. While traditional wisdom says markets want a divided Congress, the recent chaos has led them to hope for a united government.
Pro-Trump protesters storm the Capital Building. Despite the protesters' wishes, the siege did nothing to change the outcome of the joint session of Congress. Joe Biden's win was officerly certified. In the end, this was a major embarrassment for the GOP leadership. There is a mounting prospect of a fatal splintering of GOP support, with Trump triggering a permanent "Bull Moose" split.
Israel's coalition collapses.After failing to pass a budget on Dec. 22, Netanyahu and Gantz's coalition government was dissolved. This will trigger new national elections in late March. All eyes are on Gideon Sa'ar, a popular former cabinet minister, who recently left the Likud party to start the New Hope party. If victorious, Sa'ar is predicted to create a standard right-wing coalition.
EU and China sign the Comprehensive Agreement on Investment.The new agreement allows EU companies to invest in China in a greater capacity and locks in existing market access to Europe. The countries will not fully finalize the deal for another year. The incoming Biden administration has already signaled they are uneasy with the agreement and want to slow down its implementation.
Public opinion increasingly supports raising the minimum wage.In Florida, a $15 minimum wage initiative was recently approved by 61% of the voters, adding to a growing list of successful efforts to raise the minimum wage at state and local levels around the country.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Thu, 07 Jan 2021 - 36 - Vaccines, Student Debt, and Italy's New Star
In this latest issue of my weekly podcast, we discuss the latest news on vaccines.The FDA reports that the Moderna vaccine is "highly effective" after examining the trial data. They are expected to give emergency approval by Friday. The Moderna vaccine is easier to handle than the Pfizer vaccine because it does not need to be stored at Antarctic temperatures. This will be key to supplying rural communities.
The US is likely to enter an accelerating recovery in 1Q + 2Q. How quickly is open to debate. The biggest economic danger maybe something unexpected politically after Biden steps into the White House. But if we're looking at something purely endogenous to the economy, I would say rising inflation rates along with an even more rapid rise in inflation expectations.
There is a renewed rise of the political right in Italy. Matteo Salvini's Lega party shows declining support, but that decline is being more than made up for by the rise of a new young leader, Giorgia Meloni (age 43), who is leader of The Brothers of Italy. Their motto: "God, family, and fatherland." It's now the third most popular party behind the center-left Democracy and Lega. Meloni is savvy, clever, and nuanced--unlike Salvini. She supports subsidizing a higher birthrate, using the Italian navy to intercept refuges, and denying birth citizenship to immigrants.
With avid fandom declining among teens and young adults, the pro sports world is redoubling its efforts to hook the next generation. Execs are hoping that sports betting will do the trick, along with more short-form videos and behind-the-scenes looks at the players.
Political pressure to cancel student debt is mounting—and so are the tensions surrounding the idea. Economists, activists, and policymakers are deeply divided over debt forgiveness and disagree on whether it would help or hurt the economy.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 16 Dec 2020 - 35 - Retail in a Post-Pandemic World
In this latest issue of my weekly podcast, I replay my recent interview with Brian McGough, sector head of Retail here at Hedgeye. In this interview, we take on the longer-term consequences of six big earthquakes shaking the retail universe. 1. The Home Improvement Effect/Household Formation. 2. E-comm vs. Brick & Mortar shopping. 3. Fast-Fashion, Slow Fashion, and Thrifting. 4. Branding – Relevance then vs. now. 5. Retail Bankruptcies and Mall closures. 6. Amazon vs. Walmart.
Brian knows more about retail brands than anybody I know, and I think you will really enjoy our conversation.
I also start the podcast with an analysis of Gallup's recent survey on crime. American adults are reporting the lowest crime victimization rate in 20 years. Just 13% of Americans say they were the victim of a crime (such as burglary, robbery, or assault) within the past 12 months. While more data are still needed, these numbers don't lend much quantitative support to the widespread media impression that racial unrest in northern cities is triggering a nationally significant rise in violence.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Thu, 10 Dec 2020 - 34 - Online Dating, "The Metaverse," and Social Media
In this latest issue of my weekly podcast, I replay my recent interview with Andrew Freedman, sector head of Communications here at Hedgeye. The last time Andrew and I got together in June 2020, we discussed "Media in the Pandemic Age," examining how the crisis has impacted consumption trends by generation. This time around, we take a deep dive into three topics: online dating during the pandemic, the ever-evolving potential of interactive media, and the possible regulation of social media. As usual, we start the podcast with a market and Covid-19 update while examining Biden's cabinet picks.
Tue, 01 Dec 2020 - 33 - Vaccines, Republican Women, and New Asia Trade Deal
In this latest issue of my weekly podcast, we discuss the race for a vaccine.Both Pfizer and Moderna announced that preliminary data show that their vaccines are over 90% effective. Yet despite the good news, there are still some major hurdles for these vaccines. 1. They have to be stored at sub-zero temperatures. 2. There is deep public distrust in their safety. 3. There hasn't been time to study their long-term effects (ADE, cross-reactivity, immunity duration, etc.).
Is political polling dead? Pre-election day polls showed Democrats rolling easily into the White House, regaining the Senate, and expanding their majority in the House. While pollsters had the popular vote for the presidency within the margin of error, they failed to predict Senate and House outcomes. They seem to have missed the "shy" Republican voter, who split their ticket.
Republican women expand their numbers.At least 15 new Republican women were elected to Congress this year, a new record for the party. With all the Republican female incumbents holding their seats so far, GOP women are set to more than double their ranks in the House.
Between 2019 and 2020, the number of retired Boomers increased by 3.2 million. Until now, the annual average for this figure has been 2 million. Probable culprit: the pandemic, which is persuading many lower-earning Boomers to call it quits.
15 Asian countries sign a new trade deal.Last Sunday, 15 nations signed the RECP, which streamlines country of origin laws. It is the first trade agreement between China, South Korea, and Japan. Noticeably, India is not in the deal. Prime Minister Modi claimed India would be flooded with "cheap" Chinese goods if they took part.
Hungary and Poland stall EU budget and recovery bill. On Monday, diplomats from Hungary and Poland announced they would veto the long awaited-recovery bill. Their objection stems from a "values" clause which ties grants to having free and democratic institutions.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 18 Nov 2020 - 32 - Navigating Crisis In America
In this latest issue of my weekly podcast, I replay my recent interview with Keith McCullough, Hedgeye's CEO. In the interview, we talk about the election, what the polls got right and wrong, and how 2020 fits into our longer-term 4th Turning perspective on history and generational change. A large section of the interview was spent answering listener questions. And as usual, we start the podcast with an update on the S&P's recent rise while examining how Biden's economic policies could affect the markets going forward.
Thu, 12 Nov 2020 - 31 - States of Play
In this latest issue of my weekly podcast, I replay my recent interview with JT Taylor, Hedgeye's Chief Political Strategist and Paul Glenchur, Hedgeye's Senior TMT Policy Analyst. With the election a few days away, the race for the White House and Congress is on track to be the most divisive and expensive in history. Joe Biden, while fading slightly in his lead over Donald Trump, remains decisively ahead. For Trump to barely squeak by in the Electoral College, he would need an incredible surge to win all of the states in which he is tied or the polls are close. In the Senate, we continue to view a Democratic majority by 1 or 2 seats. The Democrats are nearly certain to lose Alabama, but gain in Colorado, Arizona, in Maine. They need just one more win to break even.
*NOTE: Slides referenced in this podcast are made available with a subscription to the research product below.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Fri, 30 Oct 2020 - 30 - Crisis, Collapse & Conflict: A World At The Crossroads
In this latest issue of my weekly podcast, I replay my recent interview with John Mauldin, founder of Mauldin Economic, and Hedgeye CEO Keith McCullough. We have a wide-ranging conversation from the recent CBO projections to the state of the election to the next Fourth Turning. And as usual, we provide a brief market update while checking in on the race for the White House.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 21 Oct 2020 - 29 - Technology Risks and Opportunities
In this latest issue of my weekly podcast, I replay my recent interview with Ami Joseph, sector head of Technology here at Hedgeye.We discuss the key headwinds and tailwinds for technology in the coming years. The topics we discus range from the growth in cloud software, the shift to modularity, Microsoft's newest GenX CEO, the antitrust thundercloud, and many of the geopolitical challenges facing tech. We also add a market and election update at the beginning of the episode.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 14 Oct 2020 - 28 - Supreme Showdown
In this latest issue of my weekly podcast, I replay my recent interview with JT Taylor, Hedgeye's Chief Political Strategist.We look at the current state of the presidential race and how the Supreme Court vacancy affects the election. We do the same for the Senate and House races. We also take a deep dive into the issues surrounding mail in voting and the possibility of a contested election. JT and I walk listeners through all the possible scenarios if there is an unclear winner. I also add an update on the implications of Trump contracting Covid-19.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Tue, 06 Oct 2020 - 27 - Election Looming, Armenia vs Azerbaijan, and Dementia Rates Rising in Boomers
In this latest issue of my weekly podcast, we discuss the current state of the election.RCP has Biden holding a steady edge at 50% to 43%, and his betting odds are gradually improving at 55% to 44%. The NYTreleased a new report on Trump's finances claiming he pays minimal taxes and has millions of dollars in personally guaranteed debt. The story has three possible implications. Either: (a) Trump has not been a successful businessman; (b) Trump's tax avoidance has veered into tax evasion; or (C) the tax code's generosity to real-estate developers is grossly extravagant. It seems unlikely the report will have a major impact on the election, but it could sway swing voters who touted Trump's business success.
OECD's newest report is better than expected.The newest estimates on GDP were revised and show less damage than previously assumed. In June, world GDP was estimated to drop -6.0% but was revised to only -4.5%. The US had one of the biggest turn arounds. In June, US GDP was estimated to drop -7.3% but was revised to -3.8%.
Economic indicators remain positive.The Markit PMI flashes were released for September. Manu rose to 53.5, driven by strong factory activity. And Services fell slightly to 54.6 but still showing strong growth. The Kansas Fed Manu Index came in at 18 for Sept, while the Dallas Fed Manu Index came in at 13.6. Both readings point to strong regional growth.
Japan elects a new prime minister. Yoshihide Suga won the party election for prime minister with 70% of the vote. Suga is a close ally to Shinzo Abe and served as Abe's Chief Cabinet Secretary for nine years. He has promised to continue Abe's economic reforms. And he has declared four unique policy goals: fertility treatments, re-invigorating bureaucracy, creating a digital policy agency, and cutting the costs of mobile phones. The narrow scoop of these policies fit in with his image as a detail oriented technocrat.
Violence breaks out between Armenia and Azerbaijan.Since the fall of the Soviet Union, both countries have fought for control of the Nagorno-Karabakh region between their borders. Though a ceasefire has been in place for over 20 years, the conflict has never been fixed. The new outbreak in fighting has brought other countries into the fray. Turkey has sent Syrian rebel militias to help Azerbaijan, while Greece and Russia have pledged support to Armenia.
Boomers are scoring lower on cognitive function tests than previous generations of Americans at the same age.Beginning with the Lost Generation, average age-adjusted cognition scores rose steadily across successive birth cohorts, but these results suggest the positive trend may be reversing.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 30 Sep 2020 - 26 - Supreme Court Vacancy, Brexit and Northern Ireland, and Poland's Coalition Collapses
In this latest issue of my weekly podcast, we discuss the new Supreme Court vacancy.Trump wants to fill the position with a woman who has a pro-life background like federal appeals judge Amy Coney Barrett (circuit judge for US Court of Appeals for the 7th Circuit) or Barbara Lagoa (11th Circuit judge US Court of Appeals). Trump has no choice but to try and fill the position; it's a big motivator of evangelical support. And Democrats have no choice but to oppose adamantly. The open seat could significantly impact a close election and may help Trump in legal battles over a close election result.
Economic indicators remained mixed. The Philadelphia Fed Manu Index dropped to 15 for September. That is its lowest reading since May. The Michigan Consumer Sentiment preliminary reading jumped to 78.9 for September. That is its highest reading since March. And the Chicago National Activity Index dropped to 0.79 for August. This reading is more in line with the index's average of around zero.
Poland's ruling coalition collapses.The Law and Justice Party told its smaller party allies to "pack their bags." A few weeks back, Jaroslaw Kaczynski, leader of Law and Justice, proposed an animal rights bill that was opposed by the other parties of his government. Kaczynski did not take the insubordination well and has announced Law and Justice will try to govern as a minority party. If this does not work, new elections will be triggered.
Brexit heats up.Back in January, the UK and the EU agreed on the Northern Ireland Protocol. It would allow the soft border between Ireland and Northern Ireland to remain with no checkpoints. In return, Northern Ireland would have to follow EU custom laws and check any goods coming from the rest of the UK. But BoJo has now introduced a bill in parliament that would give him the authority to scrap the agreement altogether. Joe Biden and Nancy Pelosi have both threatened that if a hard border is reinstated the US will not sign a trade deal with the UK.
Protests expand in Thailand.On Saturday, 20k-50k people filled the streets of Bangkok to protest against the government and the King. This was the largest demonstration yet. Protestors have called for a countrywide strike on October 14 and an immediate boycott of the Siam Commercial Bank, in which the King holds a 24% stake.
In the UK and the US, the number of older women without children will skyrocket in the next 20 years.Since adult children are the group most likely to provide informal care to adults age 80 and over, this sets the stage for a huge increase in demand for paid care that will be difficult to meet.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 23 Sep 2020 - 25 - Around The States In 50 Days
In this latest issue of my weekly podcast, I replay my recent interview with JT Taylor, Hedgeye's Chief Political Strategist.We look into the state of the race for the presidency and how Trump and Biden are doing in all the battleground states. We do the same for the Senate and House races, and also break down voter trends by demographic group. And we end our discussion with all the things that can go wrong in a mail-in election. And by things going wrong, I include here a possible constitutional crisis.
We also start the podcast with a brief discussion on market turbulence and recent economic indicators.The ISM Manu PMI for August came in at 56, beating expectations. And the ISM Non Manu PMI came in at 56.9, still showing growth but slowing down. In China the Caixin Services PMI for August came in 54, pointing to a stabilizing economy.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 16 Sep 2020 - 24 - The Fed Worries, Abe Steps Down, and India Clashes Again with China
In this latest issue of my weekly podcast, we discuss the Fed's annual retreat at Jackson Hole. Beamed in virtually to the retreat, Jerome Powell formally announced that the Fed is changing its policy of pre-emptively raising rates to avert future inflation. The Fed will wait until inflation is modestly or well above +2% before they raise them. Those who attended also heard from eminent economists who presented historical evidence linking epidemics and economic depressions (even brief ones) to negative long-term economic performance. By "negative" we mean lower real rates of return and slower population growth. By "long-term," we're talking about twenty or thirty years. The mood of the discussion was downbeat at best.
US economic indicators were mostly positive.The Kansas Fed Manufacturing Index rose from 7 in July to 23 in August. And the Dallas Fed Manufacturing Index also rose from -3 in July to 8 in August. While these are both high readings, diffusion indexes measure the rate of change rather than absolute strength. The readings are measuring the massive swings from record-breaking lows in April and May. The ISM Manufacturing PMI rose from 54.2 in July to 56 in August, marking its biggest expansion since November 2018.
77% of Americans believe that the country is further divided as a result of C19.According to a new Pew poll, this is a significantly higher share than in the thirteen other developed nations surveyed. The US (along with the UK) also stood out in how negatively it rated the government’s response to the outbreak. It's clear that Covid-19 is Trump's greatest liability going into the election.
Is the convention bump a thing of the past? Before 1992, it wasn’t unheard of for candidates to see favorability increases of five to 10 percentage points after party conventions. But in recent years, post-convention enthusiasm has faded. In the past six elections, the incumbent party’s candidate has seen, on average, a favorability bump of just two points. And this year seems to be no different. Probable explanation: In a polarized America, everybody has already made of their minds. Polls have hardly changed since either the DNC or RNC.
US shows support for Taiwan.The White House declassified six assurances Reagan made to Taiwan in 1982. Among them were promises that the US wouldn't make a date to end arm deals nor would they pressure Taiwan to negotiate with China. The move was aimed at showing China that the US is fully committed to the island.
Abe to step down.On Friday, Prime Minister Abe Shinzo announced he would be stepping down for health reasons. The party will vote on his successor by mid-September, but only parliament and regional party heads will be allowed to vote. This will better enable Abe to choose his successor and keep his legacy of conservative nationalism alive.
India and China clash on disputed border. Near the highly contested Himalayan border zone, China supposedly landed a plane within Indian territory. While troops from both countries had a standoff, violence was avoided. The altercation is a step back from the two countries' ongoing talks to settle the border dispute.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 02 Sep 2020 - 23 - A Virtual RNC, Canada's New Conservative, and the Boomer Housing Apocalypse
In this latest issue of my weekly podcast, we discuss the latest trends in Covid-19.In the US,we are starting to see a very gradual decline in deaths following a more significant month-long decline in cases. Weather is clearly a factor in the dropping infections. An outbreak abroad underlies several themes we have often spotlighted. On Aug 8, in a South Korean Starbucks, an infected person sat under an air conditioner and infected 66 people, all of whom weren't wearing masks. No one wearing a mask was infected. The incident points to the importance of (a) superspreaders, (b) aerosols, and (c) the efficacy of mask wearing.
In the US, economic indicators remain mixed.The Philadelphia Fed Manufacturing Index fell from 24.1 in July to 17.2 in August. This is the index's lowest reading in the last three months. Markit PMI flashes showed rises in both manufacturing (53.6) and services (54.8) for August. Though flash data typically reflect trends in the beginning of the month, and I suspect these numbers will fall with the final readings.
Upset election in Canada's Conservative Party. Erin O'Toole won an unexpected victory against party insider Peter MacKay in the Conservative Party's leadership race. O'Toole is a blue-collar veteran from Ontario. He ran a populist campaign attacking cancel culture and vowing to take back Ottawa from the radical left. At the same time, Prime Minister Justin Trudeau--0'Toole's adversary in any upcoming eleciton--is taking heat from an investigation into a possible ethics violation.
Israel and UAE establish formal relations.This is only the third Arab state (and only Gulf state) to form diplomatic relations with Israel. Other countries like Oman and Sudan are expected to follow the UAE's lead and form official ties with the government. The news was well received in Israel's financial sector, with the prospect of more open relations with Dubai.
Biden still in the lead.The former VP ended the DNC with a speech that focused on kindness, decency, and empathy. He also attacked Trump for his C19 response and the devastation to small businesses. This week the RNC kicked off with the GOP showcasing a diverse list of speakers from Nikki Haley to Senator Tim Scott. The speakers warned of the dangers of a Democratic president and took a noticeably darker tone than speakers at the DNC.
A new study predicts that millions of Boomers and Xers will struggle to sell their homes.I take listeners through the author's arguments and point out the paper's strengths and weakness. I do agree that the YoY growth rate in housing units over the next two decades will be lower than anything we have seen historically. But I do not agree that the slow demand growth will be entirely borne by single-family exurban and rural homes.
**********The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 26 Aug 2020 - 22 - DNC Goes Virtual, Putin Watches Belarus, and World Pop Peaking?
In this latest issue of my weekly podcast, we discuss the Democratic National Convention.This week the DNC will run from Monday through Thursday night. The convention has stressed Biden's moderation. On Monday night, unusually, four prominent Republicans were to invited on stage to denounce Trump and endorse Biden. While the on-line "infomercial" format might fire-up the base, the lack of a live audience probably dampens the excitement for most Americans.
Still no progress on stimulus. The large $600 federal UI bonus terminated on the week ending July 25. My take? Many people can't afford to live on the unaugmented state benefit. They are either not bothering to pick them up or they are going back to work for less money. Going back to work may give an immediate boost to employment--which you can see in the Real-Time Population Survey for the last two weeks. But it is also--and perversely--going to reduce aggregate demand by pulling down DPI and act to reduce (a) the economic growth multiplier, (b) the investment accelerator, and (c) inflation pressure.
Biden chooses his VP.Last Friday, Joe Biden announced Senator Kamala Harris as his running-mate. Harris was a risk averse choice. She has been vetted by the media, she is comfortable on the national stage, and her ethnicity is a draw for both Asians and African-Americans. While the Senator brings charisma to Biden's campaign, the needless "identity politics" process by which Biden chose Harris was a turnoff for most Americans.
Economic indicators slow down.Retail sales MoM came in at +1.2% for July, below expectations of 1.9%. The growing number of C19 cases is believed to have kept shoppers home. Michigan Consumer Sentiment remained unchanged from June to July as consumers await a new stimulus bill. And the NAHB Housing Index hit a 22 year high, coming in at 78 for July.
US solidifies relations with Taiwan.The White House has finalized plans to sell Taiwan 66 new F-16 fighter jets. HHS Secretary Alex Azar also visited the island to meet with President Tsai Ing-wen. China has responded by conducting new military demonstrations and flying fighter jets across the Taiwan Strait median line.
Belarus embroiled in protests.Since President Lukashenko won reelection with 80% of the vote, massive demonstrations have gripped the country with accusations of election fraud. Hundreds of thousands have filled the streets calling for Lukashenko to step down. Putin has publicly declared Russia will invade Belarus if "western" protesters threaten the stability of the country. Should we brace for a repeat of the Ukraine invasion? This is definitely Putin's "near abroad."
A new study predicts that the world population will peak decades ahead of the UN forecast thanks to declining fertility rates. Instead of the year 2100, the study estimates the global population will peak in 2064 and that the elderly will also make up a larger share of the total than the U.N. projects.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Wed, 19 Aug 2020 - 21 - Stimulus Outlook and Final Stretch of 2020 Election
In this latest issue of my weekly podcast, we discus the current state of the market.The S&P500 is closing in on its previous high in early February, despite the global economy experiencing the greatest supply shock in history. Why are stocks on the rise? For one, there is $3 trillion on the Fed's balance sheet. The federal government has spent over $3 trillion in stimulus. And the Fed has nailed the yield curve to the floor.
The rest of the podcast is a replay of my conversation with JT Taylor, Hedgeye's Chief Political Strategist, on stimulus and the 2020 elections.If you missed the webcast and would like to see accompanying slides, visit us to find out more and subscribe.
Tue, 11 Aug 2020 - 20 - Inflation, TikTok, and The Possibility of a Contested Election
In this latest issue of my weekly podcast, we discuss the possibility of future inflation.There are already multiple warnings signs that inflation is coming. The US dollar continues to fall as industrial metals and agricultural prices rise. Gold is up 18% since early May. And since mid-May, M2 is up YoY 23%. We've never seen such rapid YoY growth in the money supply since we have data (that is, going back nearly to the Civil War). One possible exception came in 1944, at the peak of global war. IMO, if C19 gets milder and a generous stimulus passes, get ready for rising inflation. Granted, these are big if's.
Economic indicators remain mixed.The ISM Manf PMI came in at 54.2 for July, showing substantial growth. The Markit Services PMI came in at 49.6 for July, marking six straight months of contraction. Michigan Consumer Sentiment fell from 78.1 in June to 72.5 in July. And US GDP QoQ came in at -9.5% for Q2. That was significantly better than Europe's GDP readings in Q1, though the Eurozone is currently growing faster than the US.
Trump targets TikTok.Last Friday, President Trump announced TikTok (owned by the Chinese company ByteDance) would be banned in the US over national security concerns. By Sunday, Microsoft announced it was in talks to but the US part of the company. Trump has given the two companies until September 15 to make a deal.
Apple increases production in India.Foxconn, who produces Apple's products, has moved production of the IPhone 11 out of China and into India. This is the first time an Apple flagship product will be made outside of China. Apple is trying to diversify its production in advance of further deterioration in US relations with China.
Libyan civil war reaches a decisive moment. The Turkish backed Tripoli government is placing troops around the city of Sirte. Russian mercenaries, supporting the eastern government of General Haftar, currently hold the city and are constructing defenses. Egypt has declared that if Sirte falls to Tripoli, they will invade Libya to repel Turkish influence. Is war looming between Turkey and Egypt?
Neither party may accept the results of the 2020 election.As the 2020 election looms, Trump has repeated goaded liberals by refusing to say whether he will "accept" the results of the fall election. But a new report from the Transition Integrity Project says that the left may similarly reject the election results if Trump wins. With mail-in voting, results could take weeks to determine, and there is a significant chance that whoever looses will claim foul play. The only earlier parallel, suggests the report, may be the brokered election of 1876--after which the Democrats agreed to allow the Republican Rutherford B. Hayes to assume office only in return for putting an end to Reconstruction.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 05 Aug 2020 - 19 - C19 Pessimism, China Sanctions, and Libyan Civil War Goes International
In this latest issue of my weekly podcast, we discuss Americans' growing gloom regarding Covid-19.Over the last month, Americans are becoming more pessimistic about whether the pandemic is getting better or worse; about how long it will last; and about its long-term impact on the economy. The shift has come after nearly four weeks of rising daily case numbers--and after nearly one week of rising daily death numbers. According to Pew, 71% of Americans now say that thinking about the state of their country makes them “angry.” Only 17% say “proud.”
Economic indicators start to show improvement.The NFIB Business Optimism Index for June rose to 100.6. Though with recent surges in Covid-19 cases, this index could significantly drop for July. Industrial production in the US for June was +5.4%, beating expectations of +4.2%. In China, exports YoY unexpectedly rose +0.5%. This was due to exporting large quantities of facemasks and medical equipment. China's Q2 GDP YoY came in positive at +3.2%.
Cancel culture divides liberals. Last week, many prominent liberals sparked controversy by signing a Harper's Magazine letter calling for an end to cancel culture. One of the signers, Bari Weiss, resigned from the NYTafter citing bullying from her coworkers regarding the letter. That's the second major resignation from the NYT in the last month. In the broader scheme, cancel culture threatens to split the Democratic Party just as Biden gains ground in the polls.
Trump signs the Hong King Autonomy Act.The president has 90 days to submit a list to Congress of Chinese officials who helped erode HK's autonomy. He must also submit a list of finical institutions that worked with said officials. The executive office is then given one year to deal out sanctions.
Poland holds presidential elections.President Andrezk Duda won reelection in the closest race in the country's history. He won with 51% of the vote against his opponent's 49%. Duda ran on a socially conservative platform while rallying against the "influence" of Western countries.
Turkey and Egypt inch closer to war.The two countries have become entwined with the Libyan civil war. Turkey supports the north-western Tripoli government, while Egypt supports the eastern government of General Khalifa Haftar. Egypt has declared they will invade Libya if the port city of Sirte is captured by Tripoli/Turkey.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 22 Jul 2020 - 18 - Trump Defends Statues, China vs The World, and C19 Threatens Retirement Dreams
In this latest issue of my weekly podcast, we discuss Trump's odds of victory.For the last few weeks, according to futures markets, Trump's odds of beating Biden have been in steep decline. Trump still faces steep odds. But last week he seemed to be making a comeback. Biden's advantage has eased from 23% down to 18%. While the media fiercely criticized his 4th of July speech, his patriotic take on America's past presidents and defense of statues at Mount Rushmore most likely left a good impression on most who listened.
Economic indicators start to show improvement.ISM released its US June PMIs, showing growth in all sectors. Manufacturing came in at 52.6, beating expectations of 49.6. Non-manufacturing came in at 57.1, crushing expectations of 50.1. Unemployment for June declined to 11.1% from 13.3% in May. For China in June, the Caixin manufacturing PMI was 51.2 and the services PMI was 58.4.
US and UK respond to Hong Kong security law.Last week China passed the controversial Hong Kong Security Act. The US Congress responded by passing legislation that would penalize foreign banks that do business with Chinese officials who undermine Hong Kong's autonomy. The bill was passed with unanimous consent by the House and Senate, and will most likely be signed by Trump. The UK has responded to China by announcing a pathway to UK citizenship for the 3 million Hong Kong residents.
Edouard Philippe resigns as Prime Minister.France's Prime Minister resigned on Friday as Macron attempts to shake up his cabinet. With growing unpopularity, Macron is trying to restart his government before the 2022 election.
Ethiopia threatens Egypt's water supply. Ethiopia is planning to complete it colossal hydropower dam on the Blue Nile. Egypt, downriver from the dam, relies almost exclusively on the Nile for freshwater. If Ethiopia starts filling the dam is built without an agreement between the countries, Egypt has threatened to bomb it.
COVID-19 sets back Americans' plans to retire. According to a new report, Millennials are more than twice as likely as Gen Xers or Boomers to have withdrawn (or plan to withdraw) money from their retirement savings due to the pandemic. But no generation reports feeling very financially secure: The median Millennial has only $23K in retirement savings. Even the median Xer has only $64K in retirement savings.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 07 Jul 2020 - 17 - Rising Cases and Crime, Reflation, and The Future of Hong Kong
In this latest issue of my weekly podcast, we discuss the possibility of re-inflation.Gold and industrial metals are all on the rise. And at the same time, the US dollar is declining. What does all this mean? Well for China, they might be able to salvage a positive GDP growth for 2020. But for the US, this could mean a return to inflation. Re-inflation would force the Fed's hand to take away the punch bowl and could threaten to cut the S&P boom.
Economic indicators remain largely negative.The MNI Chicago PMI for June came in at 36.6, considerably missing expectations of 45. Personal income MoM is down -4.2% for May, while personal spending is up +8.2% for the same month. The Kansas City Manufacturing Index had its first growth since February coming in at 2 for June, but still missed expectations of 8.
Cases and crime rates are on the rise. With 7-day average cases now shooting over 40K and positive test percentages rising, the C19 pandemic is officially back in surge mode. 35 states now report rising case numbers; only 3 report falling case numbers. The opening up of the economy has not only accelerated infections, it has also re-ignited violent crime--which is now rising steeply in major cities like NYC, Indianapolis, Milwaukee, and New York. In the last three weeks of June, there have been 75 shootings in Atlanta. During the same period the previous year, there were only 35.
Trump continues to sink in the polls.RCP puts Trump's approval rating at 41% with his disapproval rating at 56%. These are his worse numbers since his first year in office. John Bolton's new book and the new controversy over Trump ignoring intelligence that Putin was putting bounties on US soldiers don't promise to turn this trend around.
China passes Hong Kong security bill.China has officially passed the security bill that will allow state security agencies to police Hong Kong. While the bill's contents are still unknown, many see this as the end of Hong Kong's freedom. The US Senate has passed a bill to apply sanctions on Chinese individuals who help erode Hong Kong's autonomy. The bill also allows for sanctions on businesses that do transactions with these individuals. This has the potential to disrupt global trade--and geopolitics.
Who will be Biden's VP pick?In most elections, the VP rarely matters much. But given Biden's age and infirmities, the spot is suddenly getting a lot more attention. Futures markets have Senator Kamala Harris as his number one pick, but this combination could clash. IMO, two of the strongest contenders are Representative Val Demings from Florida and Senator Tammy Duckworth from Illinois. Both are moderates and should play well with independent voters.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 30 Jun 2020 - 16 - COVID on the Rise, The Fed Keeps Smiling, and Americans Feel Depressed
In this latest issue of my weekly podcast, we discus the good, bad, and the ugly surrounding the markets.On the bad news front, COVID-19 cases are rising. Emerging markets continue to see skyrocketing rates of infection. And in the US, Western states are now seeing a rise in cases. Another point of concern is 2nd quarter earning reports. These will be released in the next few weeks and have the potential to spook markets. On the good news front, the Fed is here to save the day. The Fed is all in to enhance liquidity and now they are putting caps on the yield curve. With higher and higher levels of debt, the US is beginning to look a lot like Japan.
Indicators continue to show contractions. In the last week, we received June Flash PMI numbers for the US, Eurozone, and Japan. All three areas had readings under 50, meaning contraction. In the US, manufacturing came in at 49.6, services at 46.7, and composite at 46.8. Eurozone readings were all in the mid-40s, and Japan readings were in the mid-30s with services at 42.4.
COVID-19 changes how candidates campaign. Over the weekend, Trump's rally in Tulsa drew a crowd of only 6,200 people, while the stadium could seat 19,000. In the pandemic age people are nervous to attend large events, making political rallies a less effective tool. Candidates will have to rely more than ever on social media to get their message across, a skill the Trump campaign was particularly savvy at in 2016.
Brazil's government is in chaos.Last week a series of arrests and search warrants were served to many of President Jair Bolsonaro's political allies. They are accused of paying reporters to write false stories about Bolsonaro's political enemies. The raids led the Education Minister, Abraham Weintraub, to resign and flee the country.
Americans report record levels of unhappiness.The NORC released a report on American happiness, using GSS data going back to 1972. Here's the topline summary. The pandemic has triggered an unprecedented drop in the share of Americans feeling "very happy" and an unprecedented climb in the share feeling "not too happy." But interestingly, Americans feel relatively well off financially, something you wouldn't expect in a recession.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 24 Jun 2020 - 15 - Swing States, Race for the Senate, and More Stimulus?
In this latest issue of my weekly podcast, I interview JT Taylor, Hedgeye's Chief Political Strategist. Together we discuss everything from the race for the White House, to the state of the Senate, to the future of stimulus. With the current state of the pandemic and the George Floyd protests there is now an expanded list of swing states. If Trump loses any of the states he won last election, Biden could easily be victorious. Looking to the Senate, Democrats are hoping to take control. With at least six toss up elections, Republicans have everything to lose, while Democrats have everything to gain. And when it comes to stimulus we expect a new bill after July 4. While some Republicans may not want to spend trillions of dollars, Donald Trump and the Democrats are all in.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 17 Jun 2020 - 14 - Cases Rise, OECD Warns, Most Americans Support Protesters' Goals, Trump Sinks
In this latest issue of my weekly podcast, we talk about markets in the short term versus the economy in the long term.Markets are still on the rise, with the Fed promising to keep interest rates near zero. But while the market is rising, the future of the economy is uncertain. Soon PPP and UI bonuses will run out with congress giving no signs of additional stimulus. Additionally, a recent OECD report predicts devastating GDP losses around the world without a second wave--and even worse with one. The medium and long-term future remain uncertain.
Good news: COVID may be less deadly.Data out of Italy suggest fewer people are dying from COVID infections. While the disease probably isn't changing, doctors are simply becoming more experienced with COVID patients. It's better to be patient 100,000 than patient 1.
Americans think racism is a major problem. A recent poll from Monmouth University asked participants what they thought about the Floyd protests. 76% of Americans think racism is a major problem, and 57% think that protests are fully justified. Only 18% believe there is no justification. With Biden both supporting protests and taking a middle approach on reform, he is growing a larger base of support. This has been a good week for him--and a terrible week for Trump.
Trump to pull troops from Germany.President Trump has declared the withdraw of 1/3 of American troops stationed in Germany. A Pew poll from last year found that 82% of Americans support US troops in Germany, while only 52% of Germans say the same thing.
Brazil tampers with data.Over the weekend, Brazilian president Jair Bolsonaro ordered the government to erase the data on the state website reporting COVID caseloads--and then replaced the data with his own. Bolsonaro claims that the previous data were wrong and and slandered his government. A judge has ordered that he reinstate the old numbers within 48 hours.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 10 Jun 2020 - 13 - Protests in US, Hong Kong Becomes a Powder Keg, and EU Fires Fiscal Bazooka
In this latest issue of my weekly podcast, we talk about the nationwide protests over the death of George Floyd.In American history, eras of declining youth violence typically give rise to calls for a higher standard of justice from law enforcement officers. That's happening today. Since the mid-1990s, the crime rate in America has fallen dramatically, making the current mood ripe for reform--from the First Step Act, to #cut50, to more humane policing. Thank the Millennial Generation for this improvement. As for the November elections, the ongoing protests could pose a possible threat to both Dems and Reps. While progressives could be accused of being soft on authority, conservatives could be accused of lacking any sense of community. On balance, Joe Biden is better positioned to come out of this in a stronger position.
Economic indicators continue to hit record lows.The Chicago Fed National Activity Index came in at -16.74 for April, its lowest reading on record. Markit services and composite PMI flashes were in the mid-30s for May, while the final manufacturing PMI was confirmed at 39.8. In China, the NBS Manufacturing PMI came in at 50.6 for May, showing little improvement.
Brexit talks are nearing a deadline.The UK and the EU have until the end of June to decide if negotiations will continue past 2020. While talks have come to a stand still, Boris Johnson is determined to make a deal as fast as possible. With the EU economically struggling from its shutdown, Johnson thinks he has the upper hand.
Investors pull back from Brazil.As COVID worsens and Bolsonaro plunges into embroiled in scandal, investors are leaving Brazil--almost as fast as Jair's advisors are fleeing his cabinet. A recent IIF report estimates that from February to May, investors have pulled $11.8 Bn from Brazil's stock market. Similarly, $18.7 Bn has been pulled from Brazil's bond market. While other emerging markets have seen money flowing back since April, Brazil ain't seeing anything flow back yet.
Salvini dodges investigation.Last August, Matteo Salvini, then serving as Italy's interior minister, blocked a rescue boat full of immigrants from docking on Italy's coast. Under Italian law, Salvini's actions count as kidnapping. Yet, being a government official, he is granted immunity unless parliament votes to revoke his protection. In a vote last week, a subcommittee voted 13-7 to keep Salvini's immunity intact. This may actually be a win for the Democrats and their prime minister, Giuseppe Conte, if it actually prevents "Il Capitano" from becoming a martyr.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 02 Jun 2020 - 12 - V for Vaccine, Brexit Deadline, and Conspiracy Theories Thrive
In this latest issue of my weekly podcast, we talk about the hope for a vaccine. On Monday, markets rose with the news of positive results from the latest Moderna study. While the study was technicality a phase 1 trial, testing if the drug is safe for human consumption, they also did preliminary tests on its effectiveness. Of the 8 patients tested, all showed levels of antibodies equal to or above those of someone who has recovered from COVID19. While RNA vaccines are extremely promising, there is still debate if they will ultimately create immunity.
The House passed a $3 Trillion COVID bill. While the House of Representatives passed a comprehensive bill for COVID relief, its survival is all bet dead in the Republican-controlled Senate. As the extra $600 bonus to unemployment ends on July 31, there will surely be a showdown on the extension or ending of the generous benefits.
Economic indicators continued to be bleak.In the US, industrial production MoM came in at -11.2% for April, marking the index's largest drop in its 101-year history. Retail sales came in at -16.4% for April, with clothing taking the biggest hit at -78.8%. For China, industrial production YoY came in at +3.9% for April. The increase is most likely do to catching up on backlogs as Chinese retail came in at -7.5% for April. Japan had its second consecutive Q of contraction, confirming our belief from Nov that Japan is in a recession.
Brexit talks resume.The UK and the EU have until the end of June to decide if they will extend negotiations past 2020. You read that right; it's a deadline for a deadline. Johnson has said in the past he does not want to extend talks, and COVID could act as an accelerator to finish the deal.
Conspiracy thinking on the rise.In today's politics, conspiracies like QAnon and a new world order has gripped the internet. The believers of such theories tend to be conservative, evangelical, male, and between 30-60 years old. Gen X is especially susceptible to these theories, having never trusted the government and growing up a healthy diet of the X-Files.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 19 May 2020 - 11 - The Catch-22 of Debt, Youth Supports Lockdown, & China's New Beef with Aussies
In this latest issue of my weekly podcast, we talk about the "no-win" argument against containment.In Sweden and some parts of the US (including the White House), politicians are arguing that containment as a strategy offers no advantage. They say that the same number of people will die with containment as they would pursuing herd immunity, but meanwhile containment destroys the economy. This argument misses success stories like Taiwan, South Korea, New Zealand, and Australia--all countries that have embraced "suppress and lift." They have suppressed. And now they are lifting.
The young favor stay-at-home orders.Last week, we saw that a large majority of Americans support lockdown. This week we have the data by age, thanks to a Yahoo/YouGov poll. Of those under 30, 69% would favor a national stay-at-home order, while only 48% of those over 65 say it should be up to state discretion. In general, Millennials are more supportive of strict lockdown measures. Which may seem paradoxical, since the young are much less at risk of dying and much more at risk of unemployment.
Skyrocketing debt is a catch-22 situation. The CBO now projects that the federal budget deficit in FY2020 will clock in at 17.9% of GDP. Is this an issue? If interest rates remain close to zero, even massive debt is painless. But interest rates can only stay at zero indefinitely in an economy that never grows again.Yes, servicing or paying back this massive new indebtedness at positive interest rates will be a challenge. But my biggest fear is the possibility that the long-term new normal means zero interest forever. In which case, we may not have to worry about debt... but we will certainly have to worry about the survival of capitalism.
Economic indicators were again negative.The Non Farm Payroll for April was -20.5 million jobs, its biggest drop on record. The unemployment rate came in at 14.7% for April, while the U6 rate was closer to 23%. The employed share of the population fell further, from 61% to 51%. (The lowest it got in 2010 was 58%.) The NFIB Small Business Optimism Index came in at 90.9 for April, above expectations of 80. In China, the Caixin Services PMI came in at 44.4 for April, marking three straight months of contraction.
Around the world, political tensions are high.In France, Macron faces a possible break up of his en Marche party. 58 members in parliament have threatened to break away to create a new party. In El Salvador, Nayib Bukele, the 38-year-old president, is using COVID to become the new face of authoritarianism. He is ignoring courts and storming the legislative assembly with armed soldiers. And China has banned Australian beef imports in retaliation against Australia's push for a WHO investigation into COVID19's origin. The west and China are now facing deteriorating relations over the spread of the virus.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 12 May 2020 - 10 - Americans Support Restrictions, Salvini Eclipsed, and Biden's Basement
In this latest issue of my weekly podcast, I discuss Americans' broad backing for stay-at-home orders.Recent polls from the WP/University of Maryland and the AP show Americans are largely supportive of statewide restrictions. 80% of Americans support stay-at-home orders, while 22% think restrictions on public gatherings don't go far enough. If states that reopen see significant second waves, governors will have hell to pay.
Economic indicators continue to fall. In the US, the ISM Manu PMI fell from 49.1 in March to 41.5 in April. It was its steepest contraction since April of 2009. The Richmond Fed Manu Index saw its lowest reading on record, coming in at -53 for April. In Europe, flash GDP growth QoQ came in for Q1: Euro-Zone -3.8%, Italy -4.7%, and France -5.8%. In China, the Caixin Manu PMI read 49.4 for April, showing no growth for the second month in a row after its catastrophic fall in February.
Why are markets rising?Despite catastrophic economic projections, the total fall in the S&P 500 in February and March was quick and shallow... and now the index has regained about half its decline. Why? We run through a gamut of explanations. Many investors see the pandemic as a V-shaped natural disaster that will be over and done, without second waves. Others say the Fed and Congress are preventing major defaults by holding everyone harmless. Paul Krugman argues in the NYTthat investors around the world have nowhere else to put their money but into US equities. Unquestionably, the Great Lockdown is hurting small businesses and contractors most and large (S&P) businesses least. State handouts are also favoring the big guys. There are two long-run sequels to this story. The good outcome for the S&P over the next year is probably bad for America. And vice versa.
Italy has a new rising star.The Governor of Veneto, Luca Zaia, was the first politician within Italy to set up rapid testing. While the neighboring providence Lombardy had 14,000 deaths, Veneto only had 1,500. National polls say that Zaia dealt with the virus better than any other politician. A member of the League Party, some are predicting he will take over the party from Salvini.
Democrats are still uneasy about Biden.While Biden is still ahead in the polls, the candidate still has some significant issues. David Axelrod and David Plouffe, Obama's 2008 campaign managers, recently wrote an op-ed in the NYT that Biden needs to get out of his basement and get on social media. During a national crisis, a leader who stays (literally) underground doesn't inspire confidence. And with a recently surfaced sexual assault allegation from his Senate days, Democrats are reminded that Biden represents the past. Younger voters want to move on to something beyond Trump. Biden voters (and there aren't many passionate ones) simply want to imagine that Trump never happened.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 05 May 2020 - 9 - Eye of the Storm, Dems vs China, Boris' Approval Soars
In this latest issue of my weekly podcast, I discuss the market "narrative" surrounding COVID19.The market expects immediate and total recovery with no second wave, unlimited stimulus support, and for the market to rise higher than before. But right now, we are in the eye of the storm. By June, we could be seeing the start of a second wave and waking up to the true economic damage.
Continued stimulus? Right now, both Democrats and Republicans support big government spending. We expect more spending in the near future, but this support could sour. In 2011-2012, both parties pulled back spending at the peak of the financial crisis. Will Republicans fall back on their small government stances?
Democrats challenge China. In the Obama years, Biden was the front-man on easing US-China relations. But when Trump came into office, the president took a different tone on the country, demanding new deals and starting a trade war. Yet in a stunning move, Biden has now started calling Trump weak on China. Much of this comes from China's disrespect of human rights and Trump's silence. Nevertheless, this is an unexpected turn from the former VP, who probably has spent more time with Xi than any other American politician.
Economic indicators continued to be bleak.US Markit PMI flashes were released for April. Manufacturing came in at 36.9, while services came in at 27.0, and composite read at 27.4. The Kansas Fed Manufacturing Index came in at -62 for April, its lowest reading since the series began in 2001. The Dallas Manufacturing Index had a similar record low at -73.7.
Around the world, leaders see boosts in their approval ratings.Governments that have taken aggressive action against the virus have been rewarded with soaring popularity.Johnson, Macron, Conte, Merkle, and Morrison have all had double-digit increases since February. In South Korea, the leading Democratic Party was losing support in late 2019, but in recent national elections, they won by a landslide.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.
Tue, 28 Apr 2020 - 8 - Madness of Reopening, Indicators Hit Bottom, and Big Brother is Watching
In this latest issue of my weekly podcast, I discuss my three crisis signals: the US dollar, commodities, and gold.The USD continues to ride high despite Fed success in sinking our sinking yield curve. On the commodities side, oil has spiraled downward, going as low as $-36. And gold remain elevated but slightly down over the last week. The equity rebound momentum is slowing, and IVol has been flat at just over 40.
What's the plan?The US, along with other nations, still doesn't have an exit strategy when it comes to COVID-19. With new "confirmed" US cases per day still hovering around 30,000 (and with total new cases per day up around 300,000+), reopening the economy will surely create a second wave. Equity investors have recently been framing the narrative as a one-and-done natural disaster, so they have been filtering out all the nightmarish economic prints as they arrive.
In economic news, US indicators saw record lows.The CB Leading Index MoM was -6.7% for March. That is the largest decline in its 60-year history. The Chicago Fed National Activity Index, usually slow to register, dropped to -4.19 for March. It has only been lower two other months since 1967. The Empire State Manf Index registered at -78.2 for April, which is its lowest reading on record. And the Philadelphia Fed Manf Index came in at -56.6 for April, its lowest number since July of 1980. Stay tuned next week for flash Markit PMIs for April.
No bump for Trump. The president has yet to see the large rise in approval ratings that usually accompanies a crisis. On the other hand, governors across the nation are seeing large popularity (and visibility) surges as they battle the virus head on.
Big Brother strikes. Over half the world is on government-enforced shutdown. Surveillance is rising. A large share of businesses and ordinary people are becoming wards of the state. Authoritarians are using using this pandemic to consolidate power as they implement suppression-test-and-trace. Liberal western democracies, on the other hand, are struggling to come up with any viable battle plan. Is Big Brother needed to battle COVD-19?
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 21 Apr 2020 - 7 - Market Panic, Political Strain, History of Pandemics, and Where's the Exit?
In this latest issue of my weekly podcast, I discuss measures of market panic that have either started to ease or that remain elevated.On the easing side,implied volatility as measured by the VIX is today around 40: That's only half of its peak of just over 80 a few weeks back, but it's still twice as high as it was two months ago. Credit spreads have also shrunk but are still closer to their highs than to the pre-crisis levels.On the elevated side,the USD, relative to other major currencies, is higher than any time in our history. Commodity prices are all down and keep going down. And gold continues to rise.
In early March, the market panicked over two vast and unquantifiable risks.The first was the exponential growth in pandemic cases and deaths--no one had any idea how bad it would get; and the second was the policy response by governments--no one had any idea if political leaders would respond to the economic deep freeze with sufficient monetary and fiscal stimulus. But by the last week of March and the first week of April, the market came to regard both risks as suddenly smaller and more manageable. But this narrative may be wrong...
What's the exit strategy?If we simply relax the lockdowns, we will push the R0 back above one. And once again, we will experience exponentially rising--rather than exponentially falling--infections. One exit strategy would be a vaccine. But a safe and effective vaccine is at least a year away. Some are embracing the "invisible" herd immunity theory, that vastly more people are being infected by C19 than the number who become symptomatic. The result is that in a very short time we'll wake up and find that we're all mostly immune because we've already been infected. But recent findings that only a very small percentage of the Italian population has developed immunity makes this theory a pipe dream.
The pace of destabilizing political change is quickening.In geopolitics, the US, Europe, and China have each made it clear that it will pursue its own interests. The regional strains within the EU have been put on fast-forward--with Italy, Spain, and Greece once again ready to throw off their Euro-bondage. And China-U.S. relations are deteriorating fast with China now putting the full-court press on Taiwan.
How do pandemics change history?Disease and epidemics are NOT mere random accidents of history. Typically, these great epidemics occur after eras of rapid population growth, of rising mobility and long-distance travel, and of growing urbanization and population density.
Will COVID-19 end globalization? Global trade already entered an era of regression over a decade ago. On an economic level, most of the easy gains that came from forty years of tariff cutting came to an end when the average tariff rates on products approached zero. Meanwhile, at an ideological level, globalization as an ideal has lost its luster on all fronts. Now here comes the pandemic recession of 2020, where nations are now fully prioritizing their own interests. This new hit to globalization will endure long after the current "pandemic" recession ends.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Wed, 15 Apr 2020 - 6 - All COVID-19: Severity, Duration, Policy Response, Market Reaction
In this latest issue of my weekly podcast, I discuss the big question that is the focus of the world's attention: the trajectory and duration of the COVID-19 pandemic. If you look at total cases or deaths in RoC terms--or look at the geographic extent of the pandemic-- the news over the past week has not been good. There is no letup in the total exponential growth rates. 9 days ago, we were at 10,000 deaths outside of China. Last night we were at 38,000 deaths. Ten days from now we are on track to be over 100,000 deaths.
China is starting to recover bit by bit from its total shutdown in Feb. The official NBS manf PMI swung back up to 52.0 in March from its record low of 35.7 in Feb. The media is sure to misconstrue this as China returning back to normal. No, that's NOT what this means. Each PMI measures the share of all managers who answer better or worse to questions like "how is your production or orders or employment compared to last month?" A reading of just over 50 in the NBS means that China's big SOE factories are producing just a bit more than they did in Feb. It does NOT mean they are back to normal.
The COVID-19 policy reaction is by far the biggest monetary and stimulus whollop the developed world has ever tried.The Obama stimulus package in 2009 amounted to 5.5% of GDP… while the CARES package just passed is scored at 9.2% of GDP. The upmoves in equity markets coincided well with these moves. Also with the decision by the EU to get rid of its circuit breakers, ECB President Christine Lagarde's decision to override earlier limits to buying member country sovereign debt, and Germany's decision to run a sizable deficit itself.
The federal add-on to state unemployment benefits of $600, basically constitutes a nationwide $20 per hour payment to be unemployed rather than employed.If it is our intended policy to maximally shut down the American economy until at least the end of July, let's declare that upfront. But surely we can set up a better system than forcing companies to lay off employees for them to get this deal.
Can the US ramshackle fiscal system actually deliver the kind of relief we're talking about in a timely manner? Banks are by nature wary of risk, but now they are being told it's all guaranteed, don’t worry about risk, just push the money out the door. This isn't their line of business. Similarly, the Small Business Administration has been put in charge of handing out $350 billion in loans. The SBA has always been known as a sleepy little agency that normally hands out less than one-tenth of that amount every year. Wish them luck...
The Spanish Flu lasted 15 months.It started in the early spring of 1918, while World War I was still raging and Germany was rolling forward into France during its Ludendorff Offensive. It eased off a bit during the summer and fall, then it raged back in its deadliest wave in the late fall of 1918 and the winter of 1919. For 2020, recall what Dr. Anthony Fauci said after hearing President Trump's proposal--which he since rescinded--to open American up for business by Easter: "You don't make the timeline." said Fauci, "The virus makes the timeline."
The smart suppression strategy will enable us to do something more intelligent than to simply turn our economy's master switch either on or off. Smart suppression starts by finding out who already has antibodies and can be presumed to be immune. It also means widespread testing, the tracking of all contacts, and enforceable self-isolation and quarantining.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. Visit us to find out more and subscribe.Tue, 31 Mar 2020 - 5 - Recession or Depression? QE Infinity & the Opening of Fiscal Floodgates
In this latest issue of my weekly podcast, I discuss whether this recession could become an extended depression.Public figures and economists are projecting single or double quarter collapses in U.S. GDP never before experienced since the birth of quarterly data in 1947. Most major economies in the world are going into shutdown mode in response to the COVID-19 threat, and that's like turning off a giant master switch in the global economy that no one has ever seen turned off before.
3M Treasury bills have been driven all the way to the mat. As of market close yesterday, the 3M was yielding 0.02%. So the nominal short-term yield is now essentially zero. As for the 10Y, the Fed has been trying to pull its yield down as well--but this is a more difficult task, even after hundreds of billions of dollars in long-term purchases.
A recession is always triggered by some particular event. But that doesn't mean it's unpredictable. Our late-cycle economy was slowing down in any case. Some one thing or another would have triggered a recession by the beginning of this fall.
On Thursday look for the total initial jobless claims filed in the week for March 15 through 21.The number is expected to be a blockbuster--some are predicting 1 million, others 2 million. Keep in mind that the previous weekly high for initial claims--set in March of 2009--was only 665,000. My staff and I have looked at the available state numbers, and we think the total could be even higher… maybe as high as 4 million initial claims filed in one week.
There is a viable endgame--which I call "smart suppression."It requires, first a serious lock-down that lasts long enough to suppress new infections and deaths. And then it requires widespread testing--both with the PCR throat test and with a serum antibody test--along with a system for monitoring and tracking positives, for following up with their contacts, and for keeping the highest risk people isolated. It would be a big operation. But it would save our economy.
What about fiscal policy? Now that the Fed has fired its bazookas, Congress is loading its howitzers.The administration's fiscal stimulus plan started out at $1 trillion. Then, after negotiations with Dems and further signs of economic stress, that size has ramped up to closer to $2 trillion. $1 trillion is nearly 5% of GDP. We're already running a 5% of GDP deficit. Consider too that tax revenue will fall by several % of GDP. So if we spend an extra $1 trillion this CY we will be running a deficit of 12 or 13 or 14% of GDP. In just one year this would generate the largest deficit since World War II.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. The product includes monthly reports and videos, weekly newsletters, and coming soon a new live Q&A with Neil. Visit us to find out more and subscribe.Tue, 24 Mar 2020 - 4 - Markets Swoon, Fed Zeroes Out, Fiscal Tsunami Looms, & Fourth Turning Grinds On
In this latest issue of my weekly podcast, I discuss the epic market swings. As of Monday close, the SP500 is down -29.5% from its recent high 18 days ago. Over the last week, hundreds of stocks we're hitting circuit breaker limits every day. On two mornings, Monday and last Thursday, the entire NYSE hit it's negative 7% circuit just after opening. The VIX hit 83, an all-time record. It surpasses the 2 readings of 80 during the worst of the '08 crisis.
The yield curve is in turmoil due to Fed cutting. This weekend when Chairman Powell took the Fed funds rate all the way down to zero. So yes, the Fed has emphatically de-inverted the yield curve. The 3M is now 0.24% while the 10Y is still hung up at a relative lofty 0.73%. For the first time in a long time, we see a yield curve with a visibly positive slope. But the Fed sees this as a problem and is bent on stimulating the economy at BOTH ends of the yield curve.
We're entering a critical phase of the Fourth Turning. We're moving towards massive fiscal measures which will work through national mobilization of people and resources. Japan’s PM Shinzo Abe last week announced a $120 billion stimulus package. The South Korean and Australian governments are similarly proposing large stimulus programs. And the EU is expected to enact the "unusual events" clause of its constitution, which essentially scraps all the budget rules and allows national governments to spend whatever they want.
The virus, unfortunately, is doing just fine… and that's what's causing the havoc. At last count, confirmed cases outside of China is about 90,000--a number that is doubling every four days. And deaths outside of China is now over 3,000--a number that is also doubling every four days. A couple of days ago, deaths outside China exceeded deaths inside China (at least those we know about) for the first time.
The US delayed far too long. The federal government needed to mobilize public health services and the nation immediately. Most importantly, as many people as possible needed to be tested; everyone who's positive needed to be isolated; and data teams needed to track down all persons that they contacted. Simultaneously, the government needed to initiate social distancing and nationwide shutdown policies to suppress transmission and buy time
Economic data are at last pointing to the devastating impact of China's shutdown in FEB. From January to February, retail sales are down 20.5%. Industrial Production is down 13.5%. Fixed asset investment is down 24.5%. And vehicle sales are down an incredible 79%. Because China is just over a month ahead of the rest of the world in virus time. So, in a sense, by looking at the deltas in the China indicators, we are all looking at our own future.
Historically, epidemics favor an expansion in the power of political authorities. The sweeping and centralized mobilization of citizens in Singapore, Taiwan, and South Korea is already being compared favorably to the slower and less coordinated response of western Europe and the United States. Confucian societies respond well to epidemics because citizens sign on quickly and fully to top-down authoritarian policies. Western cultures have many strengths, but this isn't one of them.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. The product includes monthly reports and videos, weekly newsletters, and coming soon a new live Q&A with Neil. Visit us to find out more and subscribe.Tue, 17 Mar 2020 - 3 - Equities, Yield Curve, Global Econ, Crude Oil, and Sanders All Take a Swan Dive
5:50: In this latest issue of my weekly podcast, I discuss which equities crashed and by how much. Energy and financials have fallen the fastest. Energy due to the plunge in oil prices, and financial due to the plunge in the yield curve. Around the rest of the world, the equity plunge was equally steep. The Global Dow is down 15.2% over the last 10 days and was down 7.7% yesterday. The markets that have fallen the most are mainly emerging market countries in Latin America and the weaker economies of Europe.
10:20: Last Tuesday, the FOMC enacted an emergency rate cut of half a percent.And yes, on cue, the yield curve de-inverted. But here's the interesting thing. If the Fed Funds rate had simply sunk to the Fed's lower bound of 1.0%, we would still be brutally inverted given how far the 10Y has gone down.Typically, when the markets are not expecting any future Fed cuts or hikes, the 3M Treasury yield should be very close to the overnight Fed Funds rate. Undoubtedly, the markets think that the overnight Fed Funds rate will soon be lower. Much lower. Are you prepared for the possibility that the Fed could be hitting the zero bound on near-term rates by as early as March 18… or April 29?
18:45: How much will the virus slow down the global economy? We can't yet measure what it's doing to economic activity outside of China because the spread has been too recent. But we do have some idea of what has happened inside China. Their PMIs came in last week for February at the lowest levels ever seen. the Caixin Manf PMI was 40.3; it has never before been below 47. The Caixin Services PMI was 26.5; it has never before been below 50. Right now, the data on subway traffic, rail and plane tickets, migrant traffic, and so on indicates that people are still very slow to return to work and that the deep freeze is still on.
23:20: The price of crude oil sank.What set the stage for the drop was steady downward global pressure on oil consumption and prices over the last 18 months, due to cooling global trade and industrial production. But what delivered the sudden hit was Russia's refusal to go along with Saudi Arabia's steady plan to ratchet down oil exports. Why did Russia refuse? Apparently, Putin is furious that American shale oil producers are getting a free ride from all this production cutting by OPEC and its Vienna Group allies. U.S. producers sure aren't cutting their production. Putin thinks that a somewhat lower price would put a lot of high-cost U.S. producers out of business.
37:30: Is it all over for Sanders? The odds favor Biden, but Sanders still has a shot. All eyes are on the Michigan primary. If Bernie loses Michigan by a significant margin, well then maybe we can start really marking down his odds. But if he wins or comes close, his campaign could recapture vital momentum. Right now, Biden is ahead in the polls in Michigan by 22 pp. But remember, that was exactly how much Hillary Clinton was ahead of Bernie in the state back in 2016--when Bernie staged an amazing come-from-behind victory and beat her.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. The product includes monthly reports and videos, weekly newsletters, and coming soon a new live Q&A with Neil. Visit us to find out more and subscribe.Tue, 10 Mar 2020 - 2 - Yield Curve Steepens, Corona Spreads, Finns Take Leave, Pundits Fear The Bern.
2:50: In this latest issue of my weekly podcast, I discuss how the yield-curve inversion has drastically steepened once again.By end of market yesterday, the 10Y closed at only 1 bp above its all-time low yield on July 5, 2016. Meanwhile, the 3M dropped to 1.53%. 10 days ago, the 10Y-3M inversion was thin, only 2 bp. At close of market yesterday, it had widened to 15 bp. The odds of another cut are now sharply rising. See "Power of the Spread, Revisited" for further yield-curve analysis.
12:35: Markets have woken up to the coronavirus.The official case and death numbers coming out of China ate still being greatly under-reported. Instead of 78,000 infected--which is the official total caseload to date--the actual number is closer to 1.5 to 3 million. It's probable that COVID-19 will eventually spread around the world. Over the weekend, we began to learn how the spreading virus will slow down economic activity. This could get much worse.
30:45: In Asia, few indicators are being released. The full economic impact of the coronavirus is still unknown. News did come out of Japan, which reported a -6.3% annualized decline in 4th quarter GDP. This bit of bad news was underway well before the coronavirus. At the same time, all of Japan's PMIs for Feb came in under 50. Almost certainly, Japan has now entered another recession.
31:45: U.S. economic news was mixed.Regional Fed manufacturing indexes were up. And another blast in building permits indicates that our housing sector is still booming. On the other hand, industrial production is still declining MoM. And, most seriously, the flash Markit PMI for services and composite in February surprised on the low side.
33:55: Finland passes one of the most generous family leave policies in the world.Prime Minister Sanna Marin led her all-female coalition of party leaders to give both parents 7 months of paid family leave after having a child. Finland is the most demographically challenged of Europe's Nordic nations.
35:15: Sanders surges into first place.He has won the popular vote in every primary thus far. Political sages are now shaking their heads saying that "socialist" can't possibly beat Trump. Yet, I'm not persuaded by the argument. Virtually all Americans have heard of Sanders by now and know that he calls himself a "socialist." And yet he is beating Trump in 9 out of 10 of the head-to-head polls monitored by RealClearPolitics. Trump won in 2016 by being the populist and anti-establishment wrecking ball. He'd better watch out. Unless he moves quickly in 2020, he may become the victim of that wrecking ball.
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The content featured here is a small part of Hedgeye’s Demography Unplugged, a game-changing market intelligence product brought to you by historian, demographer and best-selling author Neil Howe. The product includes monthly reports and videos, weekly newsletters, and coming soon a new live Q&A with Neil. Visit us to find out more and subscribe.Fri, 28 Feb 2020 - 1 - Trump’s Economy, Irish Nationalism, Goodbye Biden, Hello Sanders
3:00: Is all this bullishness related to Trump?A lot of it hinged on President Trump's extraordinary week from his acquittal to his State of the Union address to the Democratic mess in Iowa. The possibility of Trump's re-election this year suddenly ratcheted much higher. That's positive to a lot of global investors who like Trump. And it's even positive to a lot of investors who dislike Trump because it removes uncertainty.
12:35: Coronavirus remains worrisome.According to the official numbers, 43,000 are now infected, over 1,000 have died, and roughly 4,000 have recovered. The daily death toll continues to accelerate: Yesterday, it exceeded 100 in 24 hours for the first time. I'm confident these numbers are all gross underestimates. Even if the 1,000-fatality count is accurate, many health experts are pointing out that it is inconceivable that only 4,000 have recovered.
17:50: Leader of Germany’s CDU party stepped down.Annegret Kramp-Karrenbauer (AKK) had long been regarded as the frontrunner to succeed Angela Markel. Her stepping down came after she had instructed CDU politicians in Thuringia not to vote for the Free Democrat candidate for that state’s local prime minister. The CDU members defied her wishes and joined the far-right Alternativ fur Deutschland party in electing the Free Democrat. The vote with the AFD shows the weakness of Merkel's successors in being able to keep the CDU unified.
20:20: In Dublin, the nationalist party, Sinn Fein, squeaked out a narrow victory.The party is best known for its IRA origins and for its steadfast advocacy of reunification with Northern Ireland. It marks an interesting challenge to UK PM Boris Johnson. He now faces the possibility of eventual exit referendums in both Northern Ireland and Scotland.
21:35: Joe Biden is in a downward tailspin. His poll numbers in New Hampshire have plummeted since his fourth-place finish in Iowa. Once his bubble of inevitability has been punctured, voters will be less motivated to support him in the South. What's more, he's running out of money and is being forced to choose where to cut his ad spend.
24:00: Bernie Sanders is closing in on the Democratic nomination.What does Bernie have going for him? He has authenticity and a fiercely loyal cadre of core supporters. He also has high support among the young and working class. And finally, Sanders has money. Who else could beat him? Pete Buttigieg can only survive if he has a strong finish in a few of these educated, affluent, and white Northeastern states. Bloomberg has unlimited funding. But all that money is likely to become a salient campaign issue--and not one that helps him.
Tue, 18 Feb 2020
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