LESS UPSIDE RISK: A ‘fourth wave’ of global virus cases is underway (see chart) as we head into the northern hemisphere winter. This will dampen but not derail the economic re-acceleration that was underway, and depress ‘reopening’ stock themes from travel to tourism. Economies and consumers are increasingly resilient to each new wave. Whilst expectations are already low for many reopening segments. ‘Zero-tolerance’ areas like China could be hurt most.
RISING CASES: Global new virus cases are over 500,000 daily, up a third from November lows. This is led by a surge in Europe, leading to new lockdown restrictions, and may worsen as winter advances. The Oxford ‘Stringency Index’ which measures the degree of economic lockdown restrictions varies significantly by country. China is over 70, Germany at 55 and the US a relatively lax 45, reflecting the very different policy approaches. But all remain well-above the zero pre-pandemic level, showing the still significant virus impacts on economies.
IMPACTS: Each virus wave is seeing lesser economic impacts. Consumer behaviours have adjusted. 53% of the world population have now received at least one vaccine dose. The number of approved vaccines and treatments continues to grow. The death rate has fallen to 1.3% of cases, a fraction of pre-vaccination levels in earlier waves. The latest European forward-looking PMI rebounded from a six-month low to an expansionary 56, showing this resilience in practice.
TODAY: Fed in focus with its last meeting minutes, giving insights into the pace of their policy tightening. We also see their favoured PCE inflation measure, forecast to accelerate to 4.9%.
All data, figures & charts are valid as of 23/11/2021