BBVA Research | Bureaucratic missteps by the CDC and the FDA, contradictory messages from elected officials, disregard for intelligence reports, science and experts, lack of medical equipment, years of underfunding public-health departments, spread of misinformation, and private healthcare institutions with misaligned incentives created the perfect storm. Unfortunately, the number of deaths will increase further. According to the Institute for Health Metrics and Evaluation, total deaths could reach 205K to 524K by December 1, implying that Covid-19 will rank as the third leading cause of death in 2020, after heart disease and cancer.
SAO PAOLO | By Benjamin Cole at Marcus Nunes’ Historinhas | Slated to be No. 2 at the Fed is Stanley Fischer, who espouses adjustable inflation-targeting more than the locally preferred shooting for steady increases in nominal GDP (Market Monetarism), who knows?—it may amount to the same thing in practice.
MADRID | By Luis Arroyo | This week is tapering week, and we will see the Fed’s first step towards a reduction of the quantitative easing. There is consensus about what the economic data show: every single indicator (except inflation) are more and more vigorous.
LONDON | By Barry Knapp at Barclays | Tuesday night’s two-year budget agreement between the heads of the House and Senate Budget Committees, Paul Ryan and Patty Murray, looks to be the culmination of a difficult process that has succeeded in stabilizing the US federal government fiscal position for the investable horizon. We have maintained that, since 2010, public policy uncertainty – stemming in part from government spending reaching a post-WWII high, and the associated budget deficit –has helped weaken business confidence and investment.
LONDON | By Barclays analysts | A new equilibrium has emerged where the Fed has managed to anchor front end rates via rates guidance while preparing markets for tapering. This environment remains risk friendly, but its stability is vulnerable to the speed of the recovery.
SAO PAULO | By Benjamin Cole at Marcus Nunes’ Historinhas | It is an old trick question: What state has not one but two of the 12 regional banks of the United States Federal Reserve System? Is it New York state, the nation’s financial, commercial and manufacturing powerhouse when the Fed was founded in 1913? Answer: Missouri.
SAO PAULO | By Marcus Nunes | It is encouraging that Obama may soon have to fill up to 5 slots in the Board of Governors of the Federal Reserve. Maybe it´s expecting too much that he´ll think that´s a very important thing to happen at times like the present. He´s already ‘failed’ in a previous instance when he had 3 slots to fill, leaving them open for a long time and even failing to get an appointee approved! The low quality of some recent Fed Governors is glaring.
SAO PAULO | By Marcus Nunes | Professor of Economics James Hamilton reviews new research on “Summarizing monetary policy.” He talks about the existence of a “shadow” short-term interest rate in the U.S. economy that might in some circumstances be quite negative.