Macro Briefing: 30 November 2020

Trump reportedly will add China’s SMIC and CNOOC to defense blacklist: RTRS
Fauci warns of ‘surge upon a surge’ for Covid-19: NPR
Biden expected to announce economic team this week: NYT
Biden fractures foot while playing with his dog: AP
Congress faces deadlines on gov’t spending and stimulus: BBG
China Mfg PMI shows growth for 9th straight month in Nov: CNBC
Will Senate Republicans block Biden’s judicial nominations? PLTC
OPEC+ considers extending cuts to oil production: RTRS
German 10-year bond yield slips to 3-week low, near -0.6%: RTRS
Financial data consolidation: S&P Global near deal to acquire IHS Markit: WSJ
This week’s US payrolls report for November on track for another gain: BBG
US Treasury yield curve continues to reflect a steepening bias:

Book Bits: 28 November 2020

The Money Plot: A History of Currency’s Power to Enchant, Control, and Manipulate
Frederick Kaufman
Summary via publisher (Other Press)
Half fable, half manifesto, this brilliant new take on the ancient concept of cash lays bare its unparalleled capacity to empower and enthrall us.
Frederick Kaufman tackles the complex history of money, beginning with the earliest myths and wrapping up with Wall Street’s byzantine present-day doings. Along the way, he exposes a set of allegorical plots, stock characters, and stereotypical metaphors that have long been linked with money and commercial culture, from Melanesian trading rituals to the dogma of Medieval churchmen faced with global commerce, the rationales of Mercantilism and colonial expansion, and the U.S. dollar’s 1971 unpinning from gold.

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Research Review | 27 November 2020 | Inflation

The Trade-off between Inflation and Unemployment in an MMT World
Emilio Carnevali (Northumbria U.) and Matteo Deleidi (Roma Tre U.)
October 2020
This paper is focused on Modern Monetary Theory’s (MMT) treatment of inflation from an open economy perspective. It analyzes how the inflation process is explained within the MMT framework and provides empirical evidence in support of this vision. However, it also makes use of a stock-flow consistent (open economy) model to underline some limits of the theory when it is applied in the context of a non-US (relatively) open economy with a flexible exchange rate regime. The model challenges the contention made by MMTers that measures such as the job guarantee program can achieve full employment without facing an inflation-unemployment trade-off.

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Macro Briefing: 27 November 2020

Supreme Court blocks restrictions on religious gathers to fight virus: CNN
Dr. Fauci worries that Covid-19 will soar during the holiday season: USAT
US Covid-19 hospitalizations rise above 90,000 for first time: WSJ
Trump says he’ll leave if Electoral College votes for Biden: CNN
Eurozone economic sentiment drops sharply in November: BBG
Will Black Friday offer lifeline to struggling stores? AP
Has Covid-19 ended the era of Hollywood blockbuster films? BBC
Bitcoin drops sharply after reaching record high: CNBC
Amazon ramps up its global workforce to over 1.2 million: NYT
Disney to lay off 32,000 as virus takes a toll on its theme parks: MW
US jobless claims rose for 2nd week; highest level in five weeks: CNBC

Happy Thanksgiving 2020!

It’s been a rough year, but there’s always something to be thankful for. On my short list in 2020: American democracy survives. It’s taken a beating recently, but the challenges are also powerful reminders of what’s at stake. Judge Billings Learned Hand said it best: “Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it.”

The Delicate Art Of Forecasting Inflation Risk

US inflation was low before the pandemic started and as the nation heads into what’s shaping up to be a rough winter of resurgent Covid-19 the odds appear low for higher pricing pressure in the near term. But as investors, economists and policy makers consider life on the other side of the coronavirus crisis, contemplating the possibility of firmer inflation is gaining traction as a forecasting exercise.

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Macro Briefing: 25 November 2020

Yellen, incoming Treasury Sec, will be key voice in Biden’s economic policy: NYT
Biden team lays out foreign policy agenda for new administration: CNBC
Biden administration will inherit one of the weakest labor markets in history: PLTC
Dow Jones Industrials rise to record 30,000: WSJ
Coronavirus cases flooding hospitals in America’s heartland: RTRS
US jobless claims expected to hold at high level in today’s update: WSJ
Richmond Fed Mfg Index slipped in Nov but remains solidly positive: RF
US consumer confidence falls as coronavirus cases rise: PLTC
US home price index’s 1-year gain accelerates to 6-year high: WSJ

Beta Is A Useful Risk Metric—If You Use It Correctly

In a world awash in identified risk factors, the original quantitative profile of investment risk long ago fell from grace. If you spend ten minutes on the internet searching for research that finds beta to be irrelevant, at best, you’ll quickly line up reading material for a month. But the majority of the criticism focuses on beta’s weakness for parsing individual stocks. By that standard, beta suffers several well-known and reportedly fatal flaws as a risk measure. But applied to asset classes in the context of portfolio design and management, beta’s far from dead.

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Macro Briefing: 24 November 2020

Key gov’t agency (finally) recognizes Biden’s win: CNN
Biden selects former Fed chief Yellen as Treasury Sec: WSJ
Eurozone falls back into recession in November, survey data shows: IHSM
German business sentiment falls again, suggesting Q4 economic decline: RTRS
Chicago Fed president: expects rates to stay near zero through 2024: RTRS
Bitcoin above $19,000 for first time since 2017: BBG
US economic growth accelerated in Oct via Chicago Fed index: CF
US PMI survey data: “recovery gains further momentum” in November: IHSM