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Edward Harrison

Edward Harrison

I am a former European credit markets and M&A guy who started out as a diplomat. — so I have some pretty diverse interests.

Articles by Edward Harrison

The jobs picture, coronavirus response protocols and mental health

20 days ago

I am waiting for the jobs numbers out of the US as I begin this post. On Wednesday, we got a preview via the private sector unemployment numbers released by ADP. They showed a loss of more than 20 million jobs, which was pretty much in line with estimates. Consensus estimates for the official numbers in a few minutes are for a loss of 22 million jobs and an unemployment rate of 16%. Both of these numbers would be the worst since this kind of record keeping began in the US in 1939.
These job losses are a human tragedy on a tremendous scale, with unknowable long-term personal, economic and mental health consequences. So today, I want to write about this pandemic in those terms because I don’t think enough attention is being paid to it.
Mental health
I am going to start with the

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Handicapping economic outcomes after the third phase of recession

22 days ago

We are now entering the insolvency phase of this recession, where, despite government’s best efforts, the weakest companies go under and unemployment rises. This shakeout will take months. But the economy will rebound out of recession well before the bloodletting is over. And hopefully, we will grin…

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Sweden’s economy holding up as the rest of Europe suffers

23 days ago

Although the title of this post focuses on Sweden, I intend it to mostly be a links post with various sub-themes. The idea is to share the news flow I am seeing across different countries.
Since this is the first links post in a while, there are a ton of links. I will try and divvy them up into buc…

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Entering the third phase of recession

24 days ago

Last week, a friend from business school who I met up with in New York in early March told me she had taken an antibody test for coronavirus and came back positive. Her first thought was about donating blood, whereas my first thought was about whether I had contracted the virus. So I am consulting m…

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My take on the three d’s of depression

28 days ago

Real quick here because I am a bit under the weather
The snapback
This morning I retweeted a tweet by former Fed economist Claudia Sahm about the dire economic numbers in the US, saying:

Can we call this a depression already? What differentiates a deep recession from a depression?
— Edward Harrison (@edwardnh) April 30, 2020
Lakshman Achuthan responded, reminding me of the three D’s of depression, which are depth, diffusion and duration. I know Tim Duy was talking the same way a few weeks back. Here’s Lakshman’s analysis:
In terms of depth, this recession is extraordinarily deep. Already, 26.5 million people have filed for jobless claims, compared with a total of 8.7 million jobs lost during the Great Recession. And it’s not over.
Of course, a recession

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Negative sentiment, the oil price collapse and re-opening business

April 28, 2020

Today’s newsletter is going to be more of a potpourri from the international economic and market news flow than a theme-specific post. Before I proceed, let me say a few words about the dire sentiment associated with this pandemic.Negative sentimentYesterday’s post was relatively upbeat. I was tal…

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Bullish thoughts about Europe’s recovery

April 27, 2020

It’s easy to get pessimistic, looking at the economic outlook from the US, which has been a laggard during the coronavirus pandemic. The United States has a ways to go before a semblance of economic normalcy returns.
But I have been looking at a lot of European data and news flow the past several d…

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Broadening my content filter on Covid-19 and the economy

April 24, 2020

Providing a more global contextA couple of weeks ago, I promised you an ‘internationalization’ of my content filter. I haven’t really delivered on that promise as yet. But, I am going to try and ramp that effort up now. The goal is to give you a sense of what’s happening in various parts of the wor…

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Asset allocation worries and pain in the oil patch

April 23, 2020

There’s no dominant theme I want to discuss today. But, there is a lot of news flow. So I thought it would be a good time to take stock of what’s happening in the economy and financial markets, without presenting an overarching theme. Some stories follow below, with a few thoughts of my own.Oil sec…

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Reality is setting in, but only slowly

April 22, 2020

I woke up in the middle of last night. And I checked my phone really quickly. I know I shouldn’t do it. Studies say it’s bad sleep hygiene. But I couldn’t help myself. I was on edge about all of the market volatility and I needed to know what was happening in Asia and Europe.
I immediately went to …

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Yesterday marked the end of US energy independence

April 21, 2020

I’m a macro guy. So you’re not coming to Credit Writedowns for trades. But this macro idea – that the US is not going to stay a net exporter of energy for long – came from a trade idea over a month ago. So, let me take you my thinking on this and how I arrived at my conclusion.
If you develop trade…

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The post-coronavirus view of Italian government debt

April 20, 2020

At the weekend, I noticed that the Italian Prime Minister Giuseppe Conte was still touting so-called coronabonds to deal with the devastating impact of this pandemic on Spain and Italy. For some northern European policy makers, this is a complete non-starter.
And while this lack of policy cohesion …

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Economic outcomes from the fight to exit lockdown

April 16, 2020

This is a follow-on post to the one I wrote on 23 March predicting there would be a rush to exit lockdowns because of the economic consequences of the full stop to our economy. I’ve re-read that post. And I stand by my view that the base case going forward is a global Depression.
Irrespective, I am…

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The post-coronavirus corporate earnings reports have begun

April 15, 2020

We are now getting the first data points which will inform the increasing disconnect between a rebound in shares and the freefall in the real economy. And, after yesterday’s rally in share prices, we are seeing a risk-off tone to the market today, on the back of a freefall in WTI oil prices below $2…

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The Three Stages of Recession

April 14, 2020

I participate in a weekday markets briefing at Real Vision these days. I love these. They’re timely, spontaneous and fun. It’s something we started there because markets have been so volatile and fast-moving in the wake of the coronavirus pandemic.
I wasn’t on the Friday show. But it was a great ba…

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Is it too late for a US lockdown and quarantine approach?

April 13, 2020

This post title may not seem relevant right now. But, let me explain it first.  I was looking through my post drafts folder this morning, deleting ones that never made it to publication. And this post title popped up as having been saved for 10 March.
I thought it was an interesting question even n…

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What makes a Great Depression a Depression and not a recession?

April 12, 2020

You’ve heard me throw the ‘D’ word around on a couple of occasions – sometimes to signal policy makers are trying to avoid that outcome, but other times to signal this is looking like one. So, which is it? We don’t know yet. But let me use this post to explain how I’m looking at it – and where polic…

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In defense of the Fed’s junk bond campaign

April 10, 2020

Hopefully you saw my comments from this morning about the Fed. That was for subscribers only. So, if not, the gist was that I do not support the Federal Reserve’s foray into the non-investment grade bond universe. It opens up a whole can of worms that we don’t want opened. And what’s done, can’t be undone because it sets a precedent both for future policy and for market expectations.
But, this is a crisis. And I recognize why the Fed has done what it has. So I thought I would flesh out briefly how I see the Fed’s thinking. What precipitated this post was my wife’s question, “what’s going on?” to which I responded, “the Fed is buying junk”. That’s how we roll in the Harrison household, y’all. But having answered that way, I was forced to explain to her what I am now going to

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The Fed crosses a Rubicon of credit easing by buying junk debt

April 10, 2020

The liquidity fictionWhen the Federal Reserve launched its bond buying programs during the Great Financial Crisis over a decade ago, it told the world that it was merely providing liquidity to markets that had needed it. It was acting as the market maker of last resort, it said, because its role wa…

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How do we achieve minimal economic disruption from Covid-19?

April 9, 2020

Framing the problemThe question on my mind today is about best case economic outcomes. How does a country get through the Covid-19 pandemic with the least bad economic outcome? And in thinking about that question, I want to do three things.
I want to talk about this utilizing as little ‘science’ …

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Europe begins coronavirus backside response planning

April 7, 2020

MarketsAs I write this, futures for the US market show another 3% rally in the offing at today’s open. This follows a 7% move yesterday and belies the pain in the real economy. And so, increasingly, I am seeing comments from market watchers asking how we reconcile the disconnect between markets and…

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Looking forward on coronavirus, the economy and markets

April 6, 2020

This weekend was a good one, with nothing too exciting roiling markets. So, rather than focussing on the near term, let me get out my crystal ball today and tell you what I see coming down the line. I’ll break it up into discrete bits below.Backside coronavirus responseI am sticking with my view t…

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