How to Read the Dashboard
Our crisis dashboard includes signals from three areas: 1) public health, 2) the consumer sector and 3) financial markets. By pulling big data from traditional sources (earnings growth and gross domestic product, for example) and nontraditional sources (like Google Trends and Glassdoor), we can create a better mosaic of the road back. Public health, of course, is the key: until vaccines are broadly available, the cascading impact of the virus may continue.
The dashboard color codes (red, yellow or green) indicate the current state of each signal, while the arrows indicate the trend (improving, deteriorating or unchanged).
What’s Changed Since Our November Update?
As much of the world heads into the winter months, individuals and investors continue to process a tug-of-war between surging COVID-19 cases, restrictions that dampen economic activity, the rollout of the first wave of vaccines and—in some regions—uncertainty over additional fiscal stimulus. Even as vaccine distribution begins in earnest, London has moved to the tightest COVID-19 restriction regime to counter an alarming rise in infections, which will add another hit to an economy struggling with the effects of the pandemic. Since our last update, household finances and employment have deteriorated while financial markets have seen an upward trend based on several key metrics.
- Globally, the number of confirmed coronavirus cases—currently about 74 million—continues to rise and deaths recently topped 1.6 million. Conditions are deteriorating, but treatments have advanced since earlier this year and vaccines are being rolled out—led by Pfizer and BioNtech. Others from Moderna, Oxford and AstraZeneca are also promising.
- The R0, which tracks the average cases spread by one person, remains around 1.0 globally, led by countries like the US with an R0 of 1.2. Italy and the UK have improved after imposing more lockdown measures, with the R0 returning to 1.0. Germany’s has dropped from 1.4 to about 1.1.
- US hospitalizations have risen to an estimated 104,000, up from approximately 60,000 in July. California, Texas, and Pennsylvania lead the country in total hospitalizations.
- Many US school districts are grappling with COVID-19 cases in students and faculty, resorting to shutdowns while they get the situation under control. Other schools continue to blend virtual and in-person schooling, but major districts like New York City have decided to stay open.
- Higher education continues to struggle, with outbreaks prompting some schools to quarantine students or send them home. According to a New York Times survey of over 1,600 US colleges and universities, more than 321,000 COVID-19 cases have been reported since the pandemic started, up 50% since last month.
Travel and Leisure:
- Airline flights originating in the US have rebounded from their lows, stabilizing at about 43% lower year-over-year as people have started traveling for the holidays. Transportation Safety Administration travel data is down roughly 50% year over year, but that’s still more than one million daily travelers.
- China flights remain flat year over year. However, Europe flights have declined modestly from last month, with Germany down about 83%, the UK down 85% and Spain down 75% as countries renew lockdowns.
- In the US, “OpenTable” bookings have declined as the weather turns colder and cases rise—bookings are down 75% from last year. Global bookings have improved slightly, now down 47% year over year. The boost was spurred by lockdown easing in Europe, where bookings have begun to improve: the UK , for example, is down 50% after being down nearly 100% during lockdowns.
- Despite struggling earlier in the year, Airbnb decided to proceed with its initial public offering on December 10, and has garnered a market cap of approximately $75 billion.
- Mobility data, particularly in Europe, is still down about 39% from March, though it’s improving slightly as countries emerge from lockdown. Australia and Brazil remain bright spots, up 22% and down 11%, respectively.
- Existing home sales have maintained their strong momentum. Sales are up 26.6% year-over-year in October, as lasting work-from-home arrangements drive the need for more space. The number of people searching for home loans has continued to rise, up approximately 20% year over year.
Employment & Household Finances:
- US jobless claims have picked up slightly in recent weeks, and 71 million people have filed for unemployment benefits since mid-March. The US unemployment rate fell to 6.7% with November’s jobs numbers, though the economy added fewer jobs than expected. Globally, job postings are down 13% versus 2019.
- Credit card spending data is still down 5% versus 2019 levels, signaling a slowdown by the top three-quarters of consumers. The bottom quarter is still spending 10% less than it was last year, as the absence of new fiscal stimulus stings.
- Congress remains at an impasse on additional fiscal stimulus measures, but there has been an uptick of hope recently with a bipartisan stimulus package under consideration.
- Based on Simfund data, bond funds continue to see inflows: about $47 billion over the four weeks ended December 2. Vaccine & post-election optimism has drawn massive equity inflows of nearly $114 billion over the past four weeks.
- According to The Investment Company Institute, money-market fund assets remain around $4.3 trillion, down from a peak of $4.8 trillion in mid-May. This suggests that investors continue to deploy cash into bonds and stocks.
Financial Conditions (Policies, Spreads and Curves):
- High-yield spreads have continued to tighten over the past several weeks, falling below 400 basis points to 379, based on the average option-adjusted yield spread of the Bloomberg Barclays US Corporate High Yield Index.
- The 10-year US Treasury yield remains below 1.0%, at 0.94%.
- Oil prices have gradually climbed since early November to the high $40 range per barrel, with West Texas Intermediate Crude trading at approximately $47.
- After several weeks of volatility, gold continues to slide from its August peak to roughly $1,860 per ounce. Bitcoin has recently reached all-time highs above $20,000, eclipsing its prior late-2017 peak.
- Per Bloomberg consensus, 2020 earnings-per-share estimates are up from their June lows in both the US (the S&P 500 Index) and world (MSCI World Index). The market remains focused on a normalization of 2021 earnings, with US stocks trading at about 21 times earnings and global stocks at about 20 times.