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

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…

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…

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…

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? https://t.co/zjElEQNO59
— 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

The modelI have a bit of a problem. I am not sure how to put today’s post together. What I plan to dissect is the economic outlook as we escape coronavirus lockdowns. But, economies are so complex and the outlook is so uncertain that it’s hard to represent what’s likely to happen on a macro level. …

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…

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…

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…

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…

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 …

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…

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 …

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…

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…

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…

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…

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…

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

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…

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’ …

Morning thoughtsLet’s hit on several themes today that I’ve covered in the past which are advancing.
The overall context here is that we have escaped a first wave of dreadful information flow, with policy makers doing their utmost to take worst-case scenarios off the table. Now, we are preparing f…

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…

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…