Global, new, confirmed cases of COVID-19 have fallen by almost half since their peak in early January, while fatalities are down sharply too. It seems probable that a mixture of non-pharmaceutical interventions (NPIs), voluntary social distancing, existing immunity, seasonality and vaccinations have all played a role. Until now, disentangling the precise effects of each has proven challenging, making it difficult to forecast the evolution of the disease with any accuracy. However, there is good reason to believe that this will change as the impact from vaccines becomes increasingly pronounced. This chart is taken from Fathom’s Recovery Watch newsletter. Click here to subscribe to Recovery Watch.   Refresh this

In March, Fathom Consulting argued that the impact of the crisis on inflation was ambiguous, with the lockdowns affecting both the supply and demand sides of the economy in equal measure. That view has broadly been vindicated, with the fall in UK inflation since then largely due to short-term fluctuations in energy prices and the impact of government intervention. Indeed, it is worth noting that, after adjusting for changes in taxation, twelve-month inflation has been rising since May and is almost back to 2%. The decline in UK headline inflation in August was largely due to the introduction of the

Exceptional volatility in asset returns through 2020 can sometimes hide the big picture, which is a very strong risk-off move over the year to date. Risk assets in general have posted negative returns, while safe assets have prospered. That remains true as a generalisation even though some risk assets have rallied — specifically, US equities. The strength of US equities reflects the huge stimulus from macroeconomic policy, both monetary and fiscal. And it also reflects the degree to which the US market as a whole is regarded as a safe haven in troubled times. Once the acute phase of this crisis

The increase in COVID-19 cases in Europe has put governments in the unenviable position of trying to limit the damage to public health, while avoiding stringent measures to limit economic and social life. For the moment, European leaders appear to be stuck in the middle. Governments have opted for lighter measures such as enforcing the wearing of masks in more places, or putting a curfew on the hospitality industry. If the pandemic situation continues to worsen, all leaders will be forced to come down more clearly on the side of mitigation or suppression. Suppression was the choice for almost all

The first half of 2020 saw the steepest global recession in recorded economic history, including the two world wars, the depression of the 1930s, and all other events going back for three hundred years at least. But the good news is that the third quarter looks positive, perhaps strongly so, and a V-shaped recovery, globally, remains our central case, with the level of GDP reaching its pre-crisis level by the second half of next year. Refresh this chart in your browser | Edit the chart in Datastream This chart is taken from Fathom’s Recovery Watch newsletter. Click here to subscribe. Refinitiv Datastream Financial time series database which allows

In our Global Economic and Markets Outlook for 2020 Q4, a preview of which was sent to clients earlier this week, we present a central scenario where the global economic recovery continues uninterrupted. We use high-frequency smartphone data to conclude that, on a cautious assessment, around one-half of the fall in global economic activity through the first half of this year was recovered during the third quarter. Very few major economies publish monthly estimates of GDP, but where these data are available, they point to a V-shaped recovery. Canada had made up around one-half of its lost output by June,

The number of official confirmed COVID cases is rising in Europe and in other countries around the world, such as India. This is a concern for authorities, but drawing inferences from a time series of officially confirmed case data (such as the one in our chart) without considering changes to testing capacity may be problematic. The number of tests being conducted on a daily basis has increased significantly in all of the countries in this chart, while the true number of cases was being significantly underreported earlier this year. In the UK, for example, more than ten times the number

In the near term, US inflation appears to have turned a corner with April, the trough in the twelve-month growth rate, now firmly behind us. Given that lower rates in the second quarter were primarily driven by falling oil prices (due to short-term excess supply), headline inflation is likely to continue to recover. Fathom Consulting questioned investors’ increasingly bearish outlook for inflation as far back as the 19 March when we argued that COVID-19 had had an impact on both the demand and supply sides of the economy and that it was far from certain that the net impact on

Q2 saw the share of national income accounted for by labour compensation in the UK rocket. But this is mostly a denominator effect: national income collapsed, while furloughed employees have maintained all or most of their income. Once the furlough scheme is withdrawn, there is a risk that many of these people will be stranded in unemployment. Their income will fall, and so will their spending. Unless there is aggressive action taken now to avert this risk, it could easily lead the UK (and the global) economy into an L-shaped ‘recovery’. Refresh this chart in your browser | Edit the chart in

The S&P 500 closed at an all-time high yesterday, completing a not-quite-symmetrical V-shaped recovery. The rally has come against the backdrop of a global pandemic as well as record declines in GDP and through time has been met by market observers with the various stages of grief: denial, anger, bargaining, depression and acceptance. As some have quipped, nothing changes sentiment like price. On that front, there is some justification for the gains over the past few months: equities are forward-looking; interest rates are likely to be even lower for even longer; record fiscal and monetary stimulus; the impact of large technology companies; and much-compressed vaccine timelines among other factors. These arguments collectively add up, but like many things this year, the S&P 500’s incredible rebound still feels weird. Refresh this chart in your

Global coronavirus infections plateau Refresh this chart in your browser | Edit the chart in Datastream This chart is taken from Fathom’s Recovery Watch newsletter. Click here to subscribe to Recovery Watch.

Daily new cases appear to be rising throughout Europe following fairly comprehensive economic reopenings implemented over the past couple of months. The increase in cases in many European countries during summer, when outdoor activities are much easier to accommodate, does not bode well for the months ahead. It raises questions about the feasibility of the vaunted goal of widespread reopening while containing the virus. Difficult choices may lie ahead. Refresh this chart in your browser | Edit the chart in Datastream __________________________________________________________________________________ Datastream Financial time series database which allows you to identify and examine trends, generate and test ideas and develop view