04022021 :: Friday finance

A partial digest:

  • Friday was day 73 of the Biden-Harris administration. Among other things, April 2021 was declared National Financial Capability Month.

    April is recognized as National Financial Capability Month to highlight the value of high-quality financial education to improving Americans’ financial capability…

    The Financial Literacy and Education Commission, a 23-member body of Federal agencies, chaired by the Secretary of the Treasury, was created to coordinate and improve financial education for all Americans. Its members are helping address the financial challenges our country faces as a result of the COVID-19 pandemic…

    High-quality financial education should build on and respond to people’s individual strengths, circumstances, and needs in order to help them work toward their own unique goals. Yet such high-quality financial education has not historically reached all Americans, especially our most underserved low-income and minority communities. This month, all financial educators in Federal, State, local, and Tribal governments, schools, and private sector organizations should recognize the systemic disparities in our society that have acted as barriers to financial well-being for too many families. They should redouble their efforts to better understand and effectively serve historically underserved people and communities, including people of color, low-income individuals, and persons with disabilities.

    …I [Biden] call upon all Americans to observe this month by understanding barriers to financial well-being, and taking action to build their own financial capability and assist others to do so…

  • If what is wanted is for Americans to spend their money to stimulate the economy, if what is wanted is economic “recovery,” Americans must be made to feel safe. The US is one of the last places where many feel safe anymore, if they ever did, whether it’s because of the country’s endemic authoritarianism vis-à-vis its marginalized peoples; racial discord; the horrendous fallout of the pandemic; mass shootings; or villainous politicians.

    Just handing them money isn’t going to cut it. One has to help create security and stability for all, so that all Americans actually feel safe, psycho-emotionally. Otherwise, forget about it.

    A giant infrastructure bill alone can’t do that. Along with other efforts, it would also require focus on societal wounds and early psychotherapeutic education.

  • Quick wrap:

    • Good Friday was a trading holiday.

    • The DXY stayed strong just below 93.

    • Crypto came back to life, with total market cap setting a new all time high of nearly $1.9 trillion as of publication. Many alt coins outperformed BTC for the week, including FIL, DOT, and LINK.

    • Gold was essentially unchanged for the week, after taking a good sized plunge to start with.

      CALL: No change; expecting ever-lower valuations moving forward. Looking for an eventual floor around $1,200/oz.
    • Oil finished up for the week. Suez Canal traffic continues to pick up, again.

      CALL: No change; near to semi-intermediate term, prices could rise further given supply shocks, OPEC+ micromanagement, inflation expectations, "recovery," and more fiscal spending, among other things. Longer term, it's a dying industry.
      [tracking: XLE, GUSH, DRIP]
    • The implosion of Archegos Capital reminds us that the ghost of LTCM is never far.

  • Speaking behaviorally, many people hope to die with lots of cash in the bank because, according to a survey, "Saving as much as I can makes me feel happy and fulfilled.” This man may have something to say about that.

  • Aaand initial claims went back up. Initial jobless claims rose to 719k (SA) for the week ending March 27 from a downwardly revised 658k for the week prior. One year ago, we saw roughly 6 million. To repeat, we are entering the one year ago timeframe when the US began to feel the brunt of the pandemic.

    The four week moving average remains over 700k.

    To add to this, 237k on an unadjusted basis applied for PUA, down from the previous week’s downwardly revised 241k+.

    As of March 13, over 18.2 million people (UA) were still claiming unemployment benefits of some kind, down some 1.5 million from the week prior. In the comparable week one year ago, the US witnessed closer to 2.1 million people claiming unemployment insurance from all programs together.

    Across the board, UI benefits programs saw decreases in continued claims for the week in question from the week prior. The PEUC program saw the largest decline.

  • The latest jobs report was a blowout, at first blush. It’s difficult to feel too optimistic, though:

    • Permanent job losers still number 3.4 million.

    • Those on temporary layoff still number 2 million.

    • Long-term unemployed persons came in little changed at 4.2 million.

    • Another 6.9 million individuals not counted in the labor force currently want a job but are not available or actively looking. Of these, 3.7 million were not looking because the pandemic was an impedance.

    • 11.4 million persons indicated that they were unable to work because their employers lost business or simply closed down.

    Meanwhile, 5.8 million people consider themselves underemployed.

    These are still massive numbers. What’s more, the ShadowStats alternate unemployment figure came in at 25.7%.

  • From the same jobs report: 21% of those employed teleworked due to the ongoing pandemic for the month of March. This number has been on the decline. Here’s looking at you, Zoom.

  • Mortgage applications decreased a blended 2.2% (SA) for the week ending March 26, due to a decrease of 3% in refis and 2% in homebuyer applications. ARM activity rose to 3.4% of all applications.

    The report once again neglected to mention the average loan size across purchase applications. MBA’s choice for a 30Y fixed benchmark finally stopped climbing, even declining to 3.33%. The simple national average as reported by Freddie Mac (via FRED) for April 1 was 3.18% on the 30Y fixed.

    At the same time, the forbearance rate as of March 21 fell slightly to 4.96% as more households made their exit in one way or another. Exits, the good, the bad, and the ugly, are picking up as we mark one year plus of being beset by the pandemic in the US.

    Forbearance re-entries increased this last go around, as did loan/trial loan modifications and deferrals/partial claims. Finally, the group that continues to make their monthly payments during their forbearance period shrunk again.

    CALL: No change; housing weakness inbound. For the call to reverse, labor conditions would have to consistently improve, among other things. Again, a giant infrastructure bill might help.
    [tracking: DRV, XLRE, SPG, VNO, WPG]
  • Used car trends: The latest Carvana car count as of April 2 dropped 6.19% to 33,520 vehicles from 35,730 the week prior. Meanwhile, the CarGurus average price index continued rising, this time by 1.00% to $23,023 from $22,796. This is the highest average price registered since said data collection began for this newsletter in November of last year, and the first time breaking $23k/vehicle.

  • Sovereign matters:

    • Chinese government bonds outpaced the rest of the world’s in Q1-2021.

    [tracking: MCHI, EDC/EDZ, VWO, EWU, IEV]
  • The current state of equity: Anti-Asian hate crimes skyrocketed in 2020 across 16 of the largest American cities.

  • During the pandemic alone, the US has witnessed 201,586 fatalities strictly classified as “pneumonia” with no acknowledgement of COVID-19 on the death certificates, per CDC excess deaths data. That’s an average of 440 people per day since the start of 2020. As the CDC points out, many of these could be miscategorized COVID-19 fatalities going unrecognized in official tallies, meaning we’re undercounting. This, in addition to the official coronavirus death toll of 553,527, puts the probable COVID-19 death figure somewhere north of 650k.

    Across all causes of death, we suffered 118% of the deaths in 2020 that we would have expected in non-pandemic times given historical trends. Along with other situations where COVID-19 was not designated as a cause of death but where SARS-CoV-2 likely triggered a condition or exacerbated a preexisting one—heart disease, hypertension, diabetes, dementia—the “real” fatality count is probably much higher.1

    When the average of pneumonia deaths per day begins to decline significantly and consistently, perhaps we'll be able to start saying that we might be gaining the upper hand on SARS-CoV-2. We’re not there yet.

  • NPR reports that some 16.9% of the population in the US has been fully vaccinated, up from 14.3% last week. The vaccination rate was roughly 2%/week for a couple of weeks, and now appears to be accelerating further.

    Simultaneously, infection case loads are growing again, involving especially the B.1.1.7 variant, and there is serious concern.

Footnotes

1

Valenta, Philip. “Death by COVID-19 Hides in Plain Sight.” HedgeHound (June 29, 2020). This research includes the full methodology behind the figures presented here every week, as well as historical pneumonia trends and other details regarding death categorization in the US during the global pandemic. It was last updated on December 4, 2020.