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CHARTS OF THE WEEK

CHARTS OF THE WEEK

BILAL'S TOP PICKS

The Fed Is Almost Out Of U.S. Treasuries To Buy (Seeking Alpha, 6 min read)

Has gold gotten too expensive? (The Felder Report, 1 min read)

What does the future of energy look like? (JP Morgan Asset Management, 2 min read)

Don’t mix your politics with your portfolio (A Wealth of Common Sense, 3 min read)

Volatility, the vote and taking the long view (BlackRock, 2 min read)

Gold: Less a Hedge, More a Rates Play (BlackRock,3 min read)

Building Bond Portfolios on a Strong Housing Market (Janus Henderson,6 min read)

COVID-19 and the new age of copper: Opportunities for Latin America (Vox EU, 5 min read)

The 7 Things That Matter For Markets Going Forward (A Wealth of Common Sense, 6 min read)

The Coming Equity Shortage (Project Syndicate, 5 min read)

Election 2020: What will happen if the capital gains tax is increased?(Invesco Blog, 4 min read)

Negative rates explained: should UK investors prepare? (Schroders,6 min read)

Fifty Shades of QE: Central Bankers Versus Academic (VoxEU, 3 min read)

The Eurosystem: An accident waiting to happen (Vox EU, 10 min read)

The Danger of Following the Fed (Project Syndicate, 4 min read)

Average inflation targeting and household expectations (Vox EU, 6 min read)

The Economics of Currency Risk (NBER, 24 page read)

How should I position my portfolio if inflation comes back? (JP Morgan Asset Management, 2 min read)

Forecasting the COVID-19 Recession and Recovery: Lessons from the Financial Crisis (ECB, 36 page read)

Gold Will Outperform Stocks Until Inflation Surges  (Seeking Alpha, 4 min read)

Why inflation in the US has been so stable since the 1990s (Vox EU, 7 min read)

What We Learned-And What We Didn’t- From the September 2020 Powell Press Conference (Notes on crises, 6 min read)

Exchange Rates and Domestic Credit – Can Macroprudential Policy Reduce the Link? (IMF, 27 page read) Tighter macroprudential policy and targeted capital controls can reduce an increasing credit-to-GDP gap following an exchange rate appreciation.

Issues arising from the new ‘Powell doctrine’ (Vox EU, 6 min read) Economist Ignazio Angeloni points out that AIT assumes past inflation gaps may alter expectations. Still, there is no evidence that expectations are backwards-looking. The framework is asymmetric too- ‘shortfalls of employment are corrected, excesses are not’. Likewise, the new framework will be abandoned if deflation risk goes away making the framework time-inconsistent.

Raising taxes could tip us back into recession (The Article, 5 min read) George Magnus argues there is no need to raise taxes. [Bearish UK assets]

How US consumers use their stimulus payments (Vox EU, 5 min read) ‘Most respondents report that they primarily saved or paid down debts with their transfers, with only about 15% reporting that they mostly spent it.’

How Have Households Used Their Stimulus Payments and How Would They Spend the Next? (Liberty Street Economics, 6 min read)

A long, uneven and uncertain ascent (IMF blog, 6 min read)

Unemployed With Jobs and Without Jobs (NBER, 18 page read)

US Housing Market during COVID-19: Aggregate and Distributional Evidence (IMF, 39 page read)

Will the AI Revolution Cause a Great Divergence? (IMF, 31 page read) The AI revolution is set to favour advanced countries and pull capital away from developing countries, leading to a transitional GDP decline.

Furloughing (Cambridge INET, 34 page read) Women, and more specifically, mothers were most likely to be furloughed during the recent pandemic. They were also less likely to have their salary topped up beyond the 80% subsidy.

Artificial Intelligence Methods for Evaluating Global Trade Flows (Fed, 27 page read) An example of how AI may take economists’ jobs – algorithms are shown to provide improved predictions of future patterns of trade, relative to traditional models. This could be a game-changer for policymakers who, up and till now, use out-of-date and oversimplified econometric models.

The Great Services Illusion (Project Syndicate, 5 min read) Former MD at UNIDO argues against EM countries focusing on services to develop.

Covid-19 briefing: heterogeneous impacts of the pandemic (Bank Underground, 5 min read) Summarises recent literature finds ‘workers in jobs with close proximity to others had the most adverse labour market outcomes’ and ‘workers in more vulnerable jobs  tend to be less educated, have lower incomes, and are more likely to be renters.’

The international dimension of an incomplete EMU (ECB, 59 page read) ECB finds ‘euro area stress shocks are significant not only for the euro area but also for the rest of the world’.

Scotland after Sterling (Project Syndicate, 4 min read)

Post-COVID Capitalism (Project Syndicate, 4 min read)

3 Reasons to Expect Election Result Delays (Schwab, 3 min read)

Regional Heterogeneity and US Presidential Elections (INET, 35 page read)

Most Americans Want To Wait Until After The Election To Fill The Supreme Court Vacancy (FiveThirtyEight, 6 min read)

Election 2020: What happens if we don’t know the results for a while?(Invesco, 3 min read)

“Buy British”: The Viability of a Nationalist Commercial Policy (VoxEU, 3 min read)

What Ruth Bader Ginsburg’s Death Means for America (The Atlantic, 5 min read)

A Big Chunk of White Americans With Degrees And People Of Color Are Behind Trump (FiveThirtyEight, 3 min read) ‘If the race is really tight, Trump’s maintaining this sliver of Black support could be critical’

Golfing with Trump. Social capital, decline, inequality, and the rise of populism in the US (CEPR) Finds that the rise in vote for Trump in 2016 was the result of long-term economic and population decline in areas with strong social capital.

Greek & Turkish Military Strength Compared (Sounding Line, 2 min read) Tensions are growing between both nations. Infographics shows Turkey has a larger military. [Bearish Greek bonds]

Why Minnesota Could Be The Next Midwestern State To Go Red (FiveThirtyEight, 5 min read) ‘Most ominously for Democrats, there is evidence that Minnesota is becoming redder over time, with 2016 being a particular inflection point.’

Shinzo Abe’s shock resignation and the legacy that will follow (CGTN, 4 min read) Chinese take on Abe’s resignation: ‘even though he tried to normalize Japanese relations with China, his effort was half-baked.’

Global connectedness and market power make firms more resilient to domestic COVID-19 shocks (Vox EU, 6 min read)

Covered Interest Parity in long-dated securities (Norges Bank, 33 page read)

Greater inflation risks ahead (BlackRock, 5 pages read)

How Traders Used Google Searches To See The Economic Recovery In Real Time (Bloomberg Odd lots, 41 min listen)

Hedge Fund Family Ties (Shidler College of Business, 25 page read)

Asian Intervention in the Foreign Exchange Market is Back. Bigly (Brad Setser, 5 min read)

Global Money Dispatch (Credit Suisse, 17 page read) Zoltan Pozsar calculates the G-SIB risk scores for US banks and finds that JPM’s score has increased which could mean ‘much less FX swap intermediation at J.P. Morgan going into year-end and a year-end turn much worse than what’s currently being priced by the market’ [Bearish FX Xccy basis]

Long vs Short Time Scales: The Rough Dilemma and Beyond (arXiv, 33 page read) An econometrics-heavy paper tests the robustness of the rough fractional volatility model over different time scales. It confirms the Hurst exponent is less than 0.5 for shorter time scales, but exhibits a convexity effect in the log-log plot.

Short-term forecasting of the COVID-19 pandemic using Google Trends data: Evidence from 158 countries (Applied Econometrics, 27 page read) Finds Google data can predict COVID cases.

One Belt, One Road, One Way? (Maastricht University, 23 page read)

Chinese Open Source Data Collection, Big Data, And Private Enterprise Work For State Intelligence and Security: The Case of Shenzhen Zhenhua (NBER, 5 page read)

The Big Cycles of China and Its Currency (Ray Dalio, 15 page read)

Lop-sided Chinese recovery (Twitter, 3 min read) Michael Pettis remains pessimistic on China despite the recent upbeat data. Faster growth in IP relative to consumption may cause a slowdown in growth due to unsustainable debt levels. Beijing should focus more on improving domestic demand rather than pushing supply-side policies. [Bearish CNY]

Digital currency and the new cold war (OMFIF, 6 min read)Argues that China’s move into digital currency is a new front in the US-China cold war.

China’s semiconductor drive stalls in Wuhan, exposing gap in hi-tech production capabilities (SCMP, 3 min read) Shows China’s path to tech independence will be rocky. [Bearish China tech]

Xi says China ready to work with Russia to safeguard WWII results (Xinhuanet, 2 min read) Shows new alliances China is trying to forge. [Bullish RUB]

Tsai authorities deserve a stern warning from Beijing (Global Times, 3 min read) Chinese editorial warns Taiwan about recent US aircraft recon flight into Chinese airspace. [Bearish Taiwan]

Engineering the soul of China (Standpoint, 6 min read) Argues that there is war of values between the US and China led by Xi separating Chinese values from Western values.

China’s urbanisation has fuelled economic growth, but without redirection it will come at a cost (SCMP, 3 min read) Argues that much of China’s urbanisation strategy has been wasteful.

Building ESG momentum in US equities (Amundi, 7 min read)

The Core of the ECB’s New Strategy (Project Syndicate,4 min read)

Green Asset Pricing (ECB, 35 page read)

ESG investing looks like just another stock bubble (Advisor Perspectives, 3 min read)

Economic Aspects of the Energy Transition (NBER) Paper argues that we are not correctly accounting for the increase in electricity prices.

Forced Feminist Firms  (NBER, 34 page read) Reduced turnover, increased productivity and female leadership are important mechanisms leading to observed performance gains of private and public firms. Mounting pressure to improve female representation can, therefore, lead to positive growth externalities. 

Competition Heats Up For ESG ETFs (Banking Exchange, 3 min read) New data finds ‘number of tracker funds with a dedicated ‘sustainable’ focus hit 534 by the end of the second quarter of 2020.’

Did ESG improve resiliency during Q1 (Jon Hale, 8 min read) Summarises recent academic papers and finds ‘companies valuing stakeholders during pandemic had higher institutional flows and less negative returns’. [Bullish ESG]

Eat clean: The hottest trends as food moves into an ESG-conscious age (CityWire, 2 min read) ‘The way in which food is produced and consumed will come under increased focus in the wake of the pandemic’.

CHARTS OF THE WEEK

BILAL'S TOP PICKS

The Fed Is Almost Out Of U.S. Treasuries To Buy (Seeking Alpha, 6 min read)

Has gold gotten too expensive? (The Felder Report, 1 min read)

What does the future of energy look like? (JP Morgan Asset Management, 2 min read)

Don’t mix your politics with your portfolio (A Wealth of Common Sense, 3 min read)

Volatility, the vote and taking the long view (BlackRock, 2 min read)

Gold: Less a Hedge, More a Rates Play (BlackRock,3 min read)

Building Bond Portfolios on a Strong Housing Market (Janus Henderson,6 min read)

COVID-19 and the new age of copper: Opportunities for Latin America (Vox EU, 5 min read)

The 7 Things That Matter For Markets Going Forward (A Wealth of Common Sense, 6 min read)

The Coming Equity Shortage (Project Syndicate, 5 min read)

Election 2020: What will happen if the capital gains tax is increased?(Invesco Blog, 4 min read)

Negative rates explained: should UK investors prepare? (Schroders,6 min read)

Fifty Shades of QE: Central Bankers Versus Academic (VoxEU, 3 min read)

The Eurosystem: An accident waiting to happen (Vox EU, 10 min read)

The Danger of Following the Fed (Project Syndicate, 4 min read)

Average inflation targeting and household expectations (Vox EU, 6 min read)

The Economics of Currency Risk (NBER, 24 page read)

How should I position my portfolio if inflation comes back? (JP Morgan Asset Management, 2 min read)

Forecasting the COVID-19 Recession and Recovery: Lessons from the Financial Crisis (ECB, 36 page read)

Gold Will Outperform Stocks Until Inflation Surges  (Seeking Alpha, 4 min read)

Why inflation in the US has been so stable since the 1990s (Vox EU, 7 min read)

What We Learned-And What We Didn’t- From the September 2020 Powell Press Conference (Notes on crises, 6 min read)

Exchange Rates and Domestic Credit – Can Macroprudential Policy Reduce the Link? (IMF, 27 page read) Tighter macroprudential policy and targeted capital controls can reduce an increasing credit-to-GDP gap following an exchange rate appreciation.

Issues arising from the new ‘Powell doctrine’ (Vox EU, 6 min read) Economist Ignazio Angeloni points out that AIT assumes past inflation gaps may alter expectations. Still, there is no evidence that expectations are backwards-looking. The framework is asymmetric too- ‘shortfalls of employment are corrected, excesses are not’. Likewise, the new framework will be abandoned if deflation risk goes away making the framework time-inconsistent.

Raising taxes could tip us back into recession (The Article, 5 min read) George Magnus argues there is no need to raise taxes. [Bearish UK assets]

How US consumers use their stimulus payments (Vox EU, 5 min read) ‘Most respondents report that they primarily saved or paid down debts with their transfers, with only about 15% reporting that they mostly spent it.’

How Have Households Used Their Stimulus Payments and How Would They Spend the Next? (Liberty Street Economics, 6 min read)

A long, uneven and uncertain ascent (IMF blog, 6 min read)

Unemployed With Jobs and Without Jobs (NBER, 18 page read)

US Housing Market during COVID-19: Aggregate and Distributional Evidence (IMF, 39 page read)

Will the AI Revolution Cause a Great Divergence? (IMF, 31 page read) The AI revolution is set to favour advanced countries and pull capital away from developing countries, leading to a transitional GDP decline.

Furloughing (Cambridge INET, 34 page read) Women, and more specifically, mothers were most likely to be furloughed during the recent pandemic. They were also less likely to have their salary topped up beyond the 80% subsidy.

Artificial Intelligence Methods for Evaluating Global Trade Flows (Fed, 27 page read) An example of how AI may take economists’ jobs – algorithms are shown to provide improved predictions of future patterns of trade, relative to traditional models. This could be a game-changer for policymakers who, up and till now, use out-of-date and oversimplified econometric models.

The Great Services Illusion (Project Syndicate, 5 min read) Former MD at UNIDO argues against EM countries focusing on services to develop.

Covid-19 briefing: heterogeneous impacts of the pandemic (Bank Underground, 5 min read) Summarises recent literature finds ‘workers in jobs with close proximity to others had the most adverse labour market outcomes’ and ‘workers in more vulnerable jobs  tend to be less educated, have lower incomes, and are more likely to be renters.’

The international dimension of an incomplete EMU (ECB, 59 page read) ECB finds ‘euro area stress shocks are significant not only for the euro area but also for the rest of the world’.

Scotland after Sterling (Project Syndicate, 4 min read)

Post-COVID Capitalism (Project Syndicate, 4 min read)

3 Reasons to Expect Election Result Delays (Schwab, 3 min read)

Regional Heterogeneity and US Presidential Elections (INET, 35 page read)

Most Americans Want To Wait Until After The Election To Fill The Supreme Court Vacancy (FiveThirtyEight, 6 min read)

Election 2020: What happens if we don’t know the results for a while?(Invesco, 3 min read)

“Buy British”: The Viability of a Nationalist Commercial Policy (VoxEU, 3 min read)

What Ruth Bader Ginsburg’s Death Means for America (The Atlantic, 5 min read)

A Big Chunk of White Americans With Degrees And People Of Color Are Behind Trump (FiveThirtyEight, 3 min read) ‘If the race is really tight, Trump’s maintaining this sliver of Black support could be critical’

Golfing with Trump. Social capital, decline, inequality, and the rise of populism in the US (CEPR) Finds that the rise in vote for Trump in 2016 was the result of long-term economic and population decline in areas with strong social capital.

Greek & Turkish Military Strength Compared (Sounding Line, 2 min read) Tensions are growing between both nations. Infographics shows Turkey has a larger military. [Bearish Greek bonds]

Why Minnesota Could Be The Next Midwestern State To Go Red (FiveThirtyEight, 5 min read) ‘Most ominously for Democrats, there is evidence that Minnesota is becoming redder over time, with 2016 being a particular inflection point.’

Shinzo Abe’s shock resignation and the legacy that will follow (CGTN, 4 min read) Chinese take on Abe’s resignation: ‘even though he tried to normalize Japanese relations with China, his effort was half-baked.’

Global connectedness and market power make firms more resilient to domestic COVID-19 shocks (Vox EU, 6 min read)

Covered Interest Parity in long-dated securities (Norges Bank, 33 page read)

Greater inflation risks ahead (BlackRock, 5 pages read)

How Traders Used Google Searches To See The Economic Recovery In Real Time (Bloomberg Odd lots, 41 min listen)

Hedge Fund Family Ties (Shidler College of Business, 25 page read)

Asian Intervention in the Foreign Exchange Market is Back. Bigly (Brad Setser, 5 min read)

Global Money Dispatch (Credit Suisse, 17 page read) Zoltan Pozsar calculates the G-SIB risk scores for US banks and finds that JPM’s score has increased which could mean ‘much less FX swap intermediation at J.P. Morgan going into year-end and a year-end turn much worse than what’s currently being priced by the market’ [Bearish FX Xccy basis]

Long vs Short Time Scales: The Rough Dilemma and Beyond (arXiv, 33 page read) An econometrics-heavy paper tests the robustness of the rough fractional volatility model over different time scales. It confirms the Hurst exponent is less than 0.5 for shorter time scales, but exhibits a convexity effect in the log-log plot.

Short-term forecasting of the COVID-19 pandemic using Google Trends data: Evidence from 158 countries (Applied Econometrics, 27 page read) Finds Google data can predict COVID cases.

One Belt, One Road, One Way? (Maastricht University, 23 page read)

Chinese Open Source Data Collection, Big Data, And Private Enterprise Work For State Intelligence and Security: The Case of Shenzhen Zhenhua (NBER, 5 page read)

The Big Cycles of China and Its Currency (Ray Dalio, 15 page read)

Lop-sided Chinese recovery (Twitter, 3 min read) Michael Pettis remains pessimistic on China despite the recent upbeat data. Faster growth in IP relative to consumption may cause a slowdown in growth due to unsustainable debt levels. Beijing should focus more on improving domestic demand rather than pushing supply-side policies. [Bearish CNY]

Digital currency and the new cold war (OMFIF, 6 min read)Argues that China’s move into digital currency is a new front in the US-China cold war.

China’s semiconductor drive stalls in Wuhan, exposing gap in hi-tech production capabilities (SCMP, 3 min read) Shows China’s path to tech independence will be rocky. [Bearish China tech]

Xi says China ready to work with Russia to safeguard WWII results (Xinhuanet, 2 min read) Shows new alliances China is trying to forge. [Bullish RUB]

Tsai authorities deserve a stern warning from Beijing (Global Times, 3 min read) Chinese editorial warns Taiwan about recent US aircraft recon flight into Chinese airspace. [Bearish Taiwan]

Engineering the soul of China (Standpoint, 6 min read) Argues that there is war of values between the US and China led by Xi separating Chinese values from Western values.

China’s urbanisation has fuelled economic growth, but without redirection it will come at a cost (SCMP, 3 min read) Argues that much of China’s urbanisation strategy has been wasteful.

Building ESG momentum in US equities (Amundi, 7 min read)

The Core of the ECB’s New Strategy (Project Syndicate,4 min read)

Green Asset Pricing (ECB, 35 page read)

ESG investing looks like just another stock bubble (Advisor Perspectives, 3 min read)

Economic Aspects of the Energy Transition (NBER) Paper argues that we are not correctly accounting for the increase in electricity prices.

Forced Feminist Firms  (NBER, 34 page read) Reduced turnover, increased productivity and female leadership are important mechanisms leading to observed performance gains of private and public firms. Mounting pressure to improve female representation can, therefore, lead to positive growth externalities. 

Competition Heats Up For ESG ETFs (Banking Exchange, 3 min read) New data finds ‘number of tracker funds with a dedicated ‘sustainable’ focus hit 534 by the end of the second quarter of 2020.’

Did ESG improve resiliency during Q1 (Jon Hale, 8 min read) Summarises recent academic papers and finds ‘companies valuing stakeholders during pandemic had higher institutional flows and less negative returns’. [Bullish ESG]

Eat clean: The hottest trends as food moves into an ESG-conscious age (CityWire, 2 min read) ‘The way in which food is produced and consumed will come under increased focus in the wake of the pandemic’.

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Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and No...

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