How alternative data can lend clarity amid uncertainty (BlackRock, 5 min read) Foot traffic indicated a Chinese rebound in May. Similarly, natural language processing provided timely signals on the direction of fiscal policy globally by measuring sentiment from thousands of analyst reports. [Bullish Alternative Data]
Scarring body and mind: the long-term belief-scarring effects of covid-19 (NBER, 31-page read) Long term changes in behaviour and ‘perceived probability of an extreme, negative shock’ in the future is shown to have substantial and persistent long-run cost for the US economy. According to the model, one-year loss during the pandemic is 6-9% of GDP. However, the damage from belief scarring mechanism is up to six times as large. [Bearish US Growth]
The Great Debt Cleanup (Project Syndicate, 7 min read) EM debt restructuring and cancellation should be allowed in some instances as international markets appropriately discipline EM economies through the threat of capital flight. A new international body is needed to decide in which situations debt forgiveness is appropriate for EM to prevent escalation of crises.
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